SC TO-I
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE TO
Tender Offer Statement under Section 14(d)(1) or 13(e)(1)
of the Securities Exchange Act of 1934
(Amendment No. ____)
The Scotts Miracle-Gro Company
(Name of Subject Company (issuer))
The Scotts Miracle-Gro Company (Offeror and Issuer)
(Names of Filing Persons (identifying status as offeror, issuer or other person))
Common Shares, without par value
(Title of Class of Securities)
810186106
(CUSIP Number of Class of Securities)
David M. Aronowitz
Executive Vice President, General Counsel and Corporate Secretary
The Scotts Miracle-Gro Company
14111 Scottslawn Road
Marysville, Ohio 43041
(937) 644-0011
(Name, address, and telephone numbers of person authorized
to receive notices and communications on behalf of filing persons)
Copy to:
Ronald A. Robins, Jr.
Vorys, Sater, Seymour and Pease LLP
52 East Gay Street
Columbus, Ohio 43215
(614) 464-6400
Calculation of Filing Fee
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Transaction valuation*
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Amount of Filing Fee**
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$250,000,000.00
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$ |
26,750.00 |
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* |
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Calculated solely for the purpose of determining the amount of the filing fee. This amount
is based upon the purchase of 4,504,504 common shares at the maximum tender offer price of
$55.50 per share. |
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** |
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The amount of the filing fee, calculated in accordance with Rule 0-11(b) of the Securities
Exchange Act of 1934, as amended, and Fee Advisory #5 for Fiscal Year 2007 issued by the
Securities and Exchange Commission, equals $107.00 per million of the value of the transaction. |
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Check the box if any part of the fee is offset as provided by Rule
0-11(a)(2) and identify the filing with which the offsetting fee was previously
paid. Identify the previous filing by registration statement number, or the
Form or Schedule and the date of its filing. |
Amount Previously Paid: N/A
Form or Registration No.: N/A
Filing Party: N/A
Date Filed: N/A
o |
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Check the box if the filing relates solely to preliminary communications made before the
commencement of a tender offer. |
Check the appropriate boxes below to designate any transactions to which the statement relates:
o third-party tender offer subject to Rule 14d-1.
þ issuer tender offer subject to Rule 13e-4.
o going-private transaction subject to Rule 13e-3.
o amendment to Schedule 13D under Rule 13d-2.
Check the
following box if the filing is a final amendment reporting the results of the tender offer: o
INTRODUCTION
This Tender Offer Statement on Schedule TO relates to the offer by The Scotts Miracle-Gro
Company, an Ohio corporation (SMG), to purchase for cash
up to 4,504,504 of its common shares,
without par value, or such lesser number of common shares as is validly tendered and not validly
withdrawn, at a price of not less than $48.50 nor greater than $55.50 per share, without
interest. SMGs offer is being made upon the terms and subject to the conditions set forth in the
Offer to Purchase dated January 10, 2007 (the Offer to Purchase) and in the related Letter of
Transmittal, copies of which are attached to this Schedule TO as Exhibits (a)(1)(i) and (a)(1)(ii),
respectively (which together, as amended or supplemented from time to time, constitute the
Offer). The information contained in the Offer is incorporated herein by reference in response
to all of the items of this Schedule TO as more particularly described below. This Schedule TO is
intended to satisfy the reporting requirements of Rule 13e-4(c)(2) of the Securities Exchange Act
of 1934, as amended.
Item 1. Summary Term Sheet.
The information set forth under Summary Term Sheet in the Offer to Purchase is incorporated
herein by reference.
Item 2. Subject Company Information.
(a) The name of the issuer is The Scotts Miracle-Gro Company. The address of SMGs principal
executive office is 14111 Scottslawn Road, Marysville, Ohio 43041. SMGs telephone number is (937)
644-0011.
(b) The information set forth under Introduction in the Offer to Purchase is incorporated
herein by reference.
(c) The information set forth in Section 8 of the Offer to Purchase, Price Range of the
Shares, is incorporated herein by reference.
Item 3. Identity and Background of Filing Person.
(a) SMG is the filing person and the subject company. The address and telephone number of
SMGs principal executive office is set forth in Item 2(a) above. The information set forth in
Section 11 of the Offer to Purchase, Interests of Directors, Executive Officers and Affiliates;
Transactions and Arrangements Concerning the Shares, is incorporated herein by reference.
Item 4. Terms of the Transaction.
(a) The
following information set forth in the Offer to Purchase is incorporated herein by reference:
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Summary Term Sheet; |
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Introduction; |
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Section 1, Number of Shares; Expiration Time; Priority of Purchases; Proration;
Odd Lot; |
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Section 2, Purpose of the Offer; Certain Effects of the Offer; Other Plans; |
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Section 3, Procedures for Tendering Shares; |
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Section 4, Withdrawal Rights; |
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Section 5, Purchase of Shares and Payment of Purchase Price; |
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Section 6, Conditional Tender of Shares; |
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Section 7, Conditions of the Offer; |
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Section 9, Source and Amount of Funds; |
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Section 11, Interests of Directors, Executive Officers and Affiliates;
Transactions and Arrangements Concerning the Shares; |
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Section 14, U.S. Federal Income Tax Consequences; and |
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Section 15, Extension of the Offer; Termination; Amendment. |
(b) The information set forth in Section 11 of the Offer to Purchase, Interests of Directors,
Executive Officers and Affiliates; Transactions and Arrangements Concerning the Shares, is
incorporated herein by reference.
Item 5. Past Contracts, Transactions, Negotiations and Agreements.
(e) The information set forth in Section 11 of the Offer to Purchase, Interests of Directors,
Executive Officers and Affiliates; Transactions and Arrangements Concerning the Shares, is
incorporated herein by reference.
Item 6. Purposes of the Transaction and Plans or Proposals.
(a) and (b) The information set forth in Section 2 of the Offer to Purchase, Purpose of the
Offer; Certain Effects of the Offer; Other Plans, is incorporated herein by reference.
(c) The information set forth in Section 2 of the Offer to Purchase, Purpose of the Offer;
Certain Effects of the Offer; Other Plans, and Section 9 of the Offer to Purchase, Source and
Amount of Funds, is incorporated herein by reference.
Item 7. Source and Amount of Funds or Other Consideration.
(a), (b) and (d) The information set forth in Section 9 of the Offer to Purchase, Source and
Amount of Funds, is incorporated herein by reference.
Item 8. Interest in Securities of the Subject Company.
(a) and (b) The information set forth in Section 11 of the Offer to Purchase, Interests of
Directors, Executive Officers and Affiliates; Transactions and Arrangements Concerning the Shares,
is incorporated herein by reference.
Item 9. Persons/Assets, Retained Employed, Compensation or Used.
(a) The information set forth in Section 16 of the Offer to Purchase, Fees and Expenses, is
incorporated herein by reference.
Item 10. Financial Statements.
(a) The information set forth in Section 10 of the Offer to Purchase, Certain Information
Concerning SMG, and in Item 8 of SMGs Annual Report on Form 10-K for the fiscal year ended
September 30, 2006, Financial Statements and Supplemental Data, is incorporated herein by
reference.
(b) The information set forth in Section 10 of the Offer to Purchase, Certain Information
Concerning SMG, is incorporated herein by reference.
2
Item 11. Additional Information.
(a) The information set forth in Section 10 of the Offer to Purchase, Certain Information
Concerning SMG, Section 11 of the Offer to Purchase, Interests of Directors, Executive Officers
and Affiliates; Transactions and Arrangements Concerning the Shares, Section 12 of the Offer to
Purchase, Effects of the Offer on the Market for the Shares; Registration under the Exchange Act,
and Section 13, Regulatory Approvals, is incorporated herein by reference.
(b) The information set forth in the Offer to Purchase and in the related Letter of
Transmittal, copies of which are attached to this Schedule TO as Exhibits (a)(1)(i) and (a)(1)(ii),
respectively, as each may be amended or supplemented from time to time, is incorporated herein by
reference.
Item 12. Exhibits.
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(a)(1)(i)*
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Offer to Purchase, dated January 10, 2007. |
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(a)(1)(ii)*
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Letter of Transmittal. |
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(a)(1)(iii)*
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Notice of Guaranteed Delivery. |
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(a)(1)(iv)*
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Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9. |
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(a)(1)(v)*
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Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees, dated
January 10, 2007. |
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(a)(1)(vi)*
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Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and
Other Nominees. |
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(a)(1)(vii)*
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Letter to Participants in The Scotts Company LLC Retirement Savings Plan. |
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(a)(1)(viii)*
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Letter to Participants in the Smith & Hawken 401(k) Plan. |
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(a)(1)(ix)*
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Letter to Participants in The Scotts Miracle-Gro Company Discounted Stock Purchase
Plan. |
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(a)(1)(x)*
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Notice from Merrill Lynch to Holders of Vested Stock Options and Freestanding Stock
Appreciation Rights. |
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(a)(1)(xi)*
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E-mail from Merrill Lynch to SMG Option and Freestanding Stock Appreciation Rights
Holders. |
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(a)(1)(xii)
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Internal communication to associates of SMG and its subsidiaries posted on SMGs
intranet on December 12, 2006 (incorporated herein by reference to SMGs Tender Offer
Statement on Schedule TO filed December 12, 2006 (File No. 1-13292) [Exhibit 99.2]). |
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(a)(1)(xiii)*
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Internal communication to associates of SMG and its subsidiaries posted on SMGs
intranet on January 10, 2007. |
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(a)(2)
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None. |
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(a)(3)
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Not applicable. |
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(a)(4)
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Not applicable. |
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(a)(5)(i)
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Press release, dated December 12, 2006 (incorporated herein by reference to SMGs Tender
Offer Statement on Schedule TO filed December 12, 2006 (File No. 1-13292) [Exhibit 99.1]). |
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(a)(5)(ii)*
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Press Release, dated January 10, 2007. |
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(a)(5)(iii)*
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Form of Summary Advertisement dated January 10, 2007. |
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(b)(i)*
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Commitment Letter, dated December 11, 2006, between SMG and JPMorgan Chase Bank, N.A.,
Bank of America, N.A. and Citigroup Global Markets Inc. and certain of their respective
affiliates. |
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(d)(i)
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Amended and Restated Agreement and Plan of Merger, dated as of May 19, 1995, among Sterns
Miracle-Gro Products, Inc., Sterns Nurseries, Inc., Miracle-Gro Lawn Products Inc.,
Miracle-Gro Products Limited, Hagedorn Partnership, L.P., the general partners of Hagedorn
Partnership, L.P., Horace Hagedorn, Community Funds, Inc., and John Kenlon, The Scotts Company
and ZYX Corporation (incorporated herein by reference to the Current Report on Form 8-K dated
May 31, 1995 and filed June 2, 1995, of The Scotts Company, an Ohio corporation (Scotts)
(File No. 0-19768) [Exhibit 2(b)]). |
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(d)(ii)
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First Amendment to Amended and Restated Agreement and Plan of Merger, made and entered into
as of October 1, 1999, among The Scotts Company, Scotts Miracle-Gro Products, Inc. (as
successor to ZYX Corporation and Sterns Miracle-Gro Products, Inc.), Miracle-Gro Lawn
Products Inc., Miracle-Gro Products Limited, Hagedorn Partnership, L.P., Community Funds,
Inc., Horace Hagedorn and John Kenlon, and James Hagedorn, Katherine Hagedorn Littlefield,
Paul Hagedorn, Peter Hagedorn, Robert Hagedorn and Susan Hagedorn (incorporated herein by
reference to Scotts Current Report on Form 8-K dated October 4, 1999 and filed October 5,
1999 (File No. 1-11593) [Exhibit 2]). |
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(d)(iii)(A)
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The O.M. Scott & Sons Company Excess Benefit Plan, effective October 1, 1993
(incorporated herein by reference to the Annual Report on Form 10-K for the fiscal year ended
September 30, 1993, of The Scotts Company, a Delaware corporation (File No. 0-19768) [Exhibit
10(h)]). |
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(d)(iii)(B)
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First Amendment to The O.M. Scott & Sons Company Excess Benefit Plan, effective as of
January 1, 1998 (incorporated herein by reference to Scotts Annual Report on Form 10-K for
the fiscal year ended September 30, 2001 (File No. 1-13292) [Exhibit 10(a)(2)]). |
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(d)(iii)(C)
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Second Amendment to The O.M. Scott & Sons Company Excess Benefit Plan, effective as of
January 1, 1999 (incorporated herein by reference to Scotts Annual Report on Form 10-K for
the fiscal year ended September 30, 2001 (File No. 1-13292) [Exhibit 10(a)(3)]). |
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(d)(iii)(D)
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Third Amendment to The O.M. Scott & Sons Company Excess Benefit Plan, effective as of
March 18, 2005 (amended title of plan to be The Scotts Company LLC Excess Benefit Plan)
(incorporated herein by reference to SMGs Quarterly Report on Form 10-Q for the quarterly
period ended April 2, 2005 (File No. 1-13292) [Exhibit 10(CC)]). |
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(d)(iv)
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The Scotts Company LLC Executive/Management Incentive Plan (incorporated herein by
reference to SMGs Current Report on Form 8-K filed February 2, 2006 (File No. 1-13292)
[Exhibit 10.4]). |
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(d)(v)
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Specimen form of Employee Confidentiality, Noncompetition, Nonsolicitation Agreement for
employees participating in The Scotts Company LLC Executive/Management Incentive Plan
(incorporated herein by reference to SMGs Quarterly Report on Form 10-Q for the quarterly
period ended July 1, 2006 (File No. 1-13292) [Exhibit 10.1]). |
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(d)(vi)
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Executive Officers of The Scotts Miracle-Gro Company who are parties to form of Employee
Confidentiality, Noncompetition, Nonsolicitation Agreement for employees participating in The
Scotts Company LLC Executive/Management Incentive Plan (incorporated herein by reference to
SMGs Current Report on Form 8-K filed September 18, 2006 (File No. 1-13292) [Exhibit 10.2]). |
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(d)(vii)(A)
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The Scotts Company 1996 Stock Option Plan (as amended through May 15, 2000)
(incorporated herein by reference to Scotts Quarterly Report on Form 10-Q for the quarterly
period ended April 1, 2000 (File No. 1-13292) [Exhibit 10(d)]). |
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(d)(vii)(B)
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The Scotts Company 1996 Stock Option Plan (2002 Amendment) (incorporated herein by
reference to Scotts Quarterly Report on Form 10-Q for the quarterly period ended December 28,
2002 (File No. 1-13292) [Exhibit 10(d)(i)]). |
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(d)(vii)(C)
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Amendment to The Scotts Company 1996 Stock Option Plan 2005 Amendment, effective as
of March 18, 2005 (amended title of plan to be The Scotts Miracle-Gro Company 1996 Stock
Option Plan) (incorporated herein by reference to SMGs Quarterly Report on Form 10-Q for the
quarterly period ended April 2, 2005 (File No. 1-13292) [Exhibit 10(z)]). |
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(d)(viii)
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Form of 1996 Stock Option Plan Stock Option Agreement Non-Qualified Stock Option
(incorporated herein by reference to Scotts Current Report on Form 8-K filed November 19,
2004 (File No. 1-13292) [Exhibit 10.7]). |
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(d)(ix)
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Specimen form of Stock Option Agreement (as amended through October 23, 2001) for
Non-Qualified Stock Options granted to employees under The Scotts Company 1996 Stock Option
Plan, French specimen (incorporated herein by reference to Scotts Annual Report on Form 10-K
for the fiscal year ended September 30, 2001 (File No. 1-13292) [Exhibit 10(f)]). |
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(d)(x)(A)
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The Scotts Company Executive Retirement Plan (incorporated herein by reference to Scotts
Annual Report on Form 10-K for the fiscal year ended September 30, 1998 (File No. 1-11593)
[Exhibit 10(j)]). |
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(d)(x)(B)
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First Amendment to The Scotts Company Executive Retirement Plan, effective as of January
1, 1999 (incorporated herein by reference to Scotts Annual Report on Form 10-K for the fiscal
year ended September 30, 2001 (File No. 1-13292) [Exhibit 10(g)(2)]). |
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(d)(x)(C)
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Second Amendment to The Scotts Company Executive Retirement Plan, effective as of January
1, 2000 (incorporated herein by reference to Scotts Annual Report on Form 10-K for the fiscal
year ended September 30, 2001 (File No. 1-13292) [Exhibit 10(g)(3)]). |
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(d)(x)(D)
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Third Amendment to The Scotts Company Executive Retirement Plan, effective as of January
1, 2003 (incorporated herein by reference to Scotts Annual Report on Form 10-K for the fiscal
year ended September 30, 2003 (File No. 1-13292) [Exhibit 10(g)(4)]). |
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(d)(x)(E)
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Fourth Amendment to The Scotts Company Executive Retirement Plan, effective as of January
1, 2004 (incorporated herein by reference to Scotts Annual Report on Form 10-K for the fiscal
year ended September 30, 2004 (File No. 1-13292) [Exhibit 10(g)(5)]). |
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(d)(x)(F)
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Fifth Amendment to The Scotts Company Executive Retirement Plan, effective as of March
18, 2005 (amended title of plan to be The Scotts Company LLC Executive Retirement Plan)
(incorporated herein by reference to SMGs Quarterly Report on Form 10-Q for the quarterly
period ended April 2, 2005 (File No. 1-13292) [Exhibit 10(DD)]). |
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(d)(xi)
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Employment Agreement, dated as of May 19, 1995, between The Scotts Company and James
Hagedorn (incorporated herein by reference to Scotts Annual Report on Form 10-K for the
fiscal year ended September 30, 1995 (File No. 1-11593) [Exhibit 10(p)]). |
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(d)(xii)(A)
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Letter agreement, dated June 8, 2000, between The Scotts Company and Patrick J. Norton
(incorporated herein by reference to Scotts Annual Report on Form 10-K for the fiscal year
ended September 30, 2000 (File No. 1-13292) [Exhibit 10(q)]). |
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(d)(xii)(B)
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Letter agreement, dated November 5, 2002, and accepted by Mr. Norton on November 22,
2002, pertaining to the terms of employment of Patrick J. Norton through December 31, 2005,
and superseding certain provisions of the letter agreement, dated June 8, 2000, between The
Scotts Company and Mr. Norton (incorporated herein by reference to Scotts Annual Report on
Form 10-K for the fiscal year ended September 30, 2002 (File No. 1-13292) [Exhibit 10(q)]). |
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(d)(xii)(C)
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Letter of Extension, dated October 25, 2005, between The Scotts Miracle-Gro Company and
Patrick J. Norton (incorporated herein by reference to SMGs Current Report on Form 8-K filed
December 14, 2005 (File No. 1-13292) [Exhibit 10.3]). |
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(d)(xiii)
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Written description of employment, severance and change in control terms between SMG and
David M. Aronowitz and Denise S. Stump (incorporated herein by reference to SMGs Annual
Report on Form 10-K for the fiscal year ended September 30, 2006 (File No. 1-13292) [Exhibit
10(k)]). |
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(d)(xiv)(A)
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The Scotts Company 2003 Stock Option and Incentive Equity Plan (incorporated herein by
reference to Scotts Quarterly Report on Form 10-Q for the quarterly period ended December 28,
2002 (File No. 1-13292) [Exhibit 10(w)]). |
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(d)(xiv)(B)
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First Amendment to The Scotts Company 2003 Stock Option and Incentive Equity Plan,
effective as of March 18, 2005 (amended title of plan to be The Scotts Miracle-Gro Company
2003 Stock Option and Incentive Equity Plan) (incorporated herein by reference to SMGs
Quarterly Report on Form 10-Q for the quarterly period ended April 2, 2005 (File No. 1-13292)
[Exhibit 10(AA)]). |
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(d)(xv)
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Employment Agreement for Christopher Nagel, entered into effective as of October 1, 2006,
by and between Christopher Nagel and The Scotts Miracle-Gro Company (incorporated herein by
reference to SMGs Current Report on Form 8-K filed December 7, 2006 (File No. 1-13292)
[Exhibit 10.1]). |
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(d)(xvi)
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The Scotts Miracle-Gro Company 2006 Long-Term Incentive Plan Award Agreement for
Employees, evidencing Restricted Stock Award of 38,000 Restricted Common Shares Awarded to
Christopher Nagel on October 1, 2006 by The Scotts Miracle-Gro Company (incorporated herein by
reference to SMGs Current Report on Form 8-K filed December 7, 2006 (File No. 1-13292)
[Exhibit 10.2]). |
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(d)(xvii)
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Form of 2003 Stock Option and Incentive Equity Plan Award Agreement for Nondirectors
(incorporated herein by reference to SMGs Annual Report on Form 10-K for the fiscal year
ended September 30, 2005 (File No. 1-13292) [Exhibit 10(u)]). |
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(d)(xviii)
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Form of 2003 Stock Option and Incentive Equity Plan Award Agreement for Directors
(incorporated herein by reference to SMGs Annual Report on Form 10-K for the fiscal year
ended September 30, 2005 (File No. 1-13292) [Exhibit 10(v)]). |
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(d)(xix)
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The Scotts Miracle-Gro Company 2006 Long-Term Incentive Plan (incorporated herein by
reference to SMGs Current Report on Form 8-K filed February 2, 2006 (File No. 1-13292)
[Exhibit 10.2]). |
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(d)(xx)
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Specimen form of Award Agreement used to evidence Time-Based Nonqualified Stock Options for
Non-Employee Directors under The Scotts Miracle-Gro Company 2006 Long-Term Incentive Plan
(incorporated herein by reference to SMGs Current Report on Form 8-K filed February 2, 2006
(File No. 1-13292) [Exhibit 10.3]). |
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(d)(xxi)
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Specimen form of Award Agreement to evidence Time-Based Nonqualified Stock Options for
Employees under The Scotts Miracle-Gro Company 2006 Long-Term Incentive Plan (incorporated
herein by reference to SMGs Quarterly Report on Form 10-Q for the quarterly period ended
December 31, 2005 (File No. 1-13292) [Exhibit 10(b)]). |
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(d)(xxii)
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Specimen form of Award Agreement for Third Party Service Providers to evidence awards
under The Scotts Miracle-Gro Company 2006 Long-Term Incentive Plan to third party service
providers (incorporated herein by reference to SMGs Quarterly Report on Form 10-Q for the
quarterly period ended July 1, 2006 (File No. 1-13292) [Exhibit 10.3]). |
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(d)(xxiii)
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The Scotts Miracle-Gro Company Discounted Stock Purchase Plan (As Amended and Restated
as of January 26, 2006; Reflects 2-for-1 Stock Split Distributed on November 9, 2005)
(incorporated herein by reference to SMGs Current Report on Form 8-K filed February 2, 2006
(File No. 1-13292) [Exhibit 10.1]). |
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(d)(xxiv)
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Summary of Compensation for Directors of The Scotts Miracle-Gro Company (incorporated
herein by reference to SMGs Annual Report on Form 10-K for the fiscal year ended September
30, 2006 (File No. 1-13292) [Exhibit 10(jj)]). |
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(g)
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Not applicable. |
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Item 13.
Information Required by Schedule 13E-3.
Not Applicable.
8
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that the information set
forth in this statement is true, complete and correct.
(Signature)
David
M. Aronowitz, Executive Vice President, General Counsel and Corporate
Secretary
(Name and title)
January 10, 2007
(Date)
9
EXHIBIT INDEX
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Exhibit No. |
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Description |
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(a)(1)(i)*
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Offer to Purchase, dated January 10, 2007. |
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(a)(1)(ii)*
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Letter of Transmittal. |
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(a)(1)(iii)*
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Notice of Guaranteed Delivery. |
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(a)(1)(iv)*
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Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9. |
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(a)(1)(v)*
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Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees, dated
January 10, 2007. |
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(a)(1)(vi)*
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Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and
Other Nominees. |
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(a)(1)(vii)*
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Letter to Participants in The Scotts Company LLC Retirement Savings Plan. |
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(a)(1)(viii)*
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Letter to Participants in the Smith & Hawken 401(k) Plan. |
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(a)(1)(ix)*
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Letter to Participants in The Scotts Miracle-Gro Company Discounted Stock Purchase
Plan. |
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(a)(1)(x)*
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Notice from Merrill Lynch to Holders of Vested Stock Options and Freestanding Stock
Appreciation Rights. |
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(a)(1)(xi)*
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E-mail from Merrill Lynch to SMG Option and Freestanding Stock Appreciation Rights
Holders. |
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(a)(1)(xii)
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Internal communication to associates of SMG and its subsidiaries posted on SMGs
intranet on December 12, 2006 (incorporated herein by reference to SMGs Tender Offer
Statement on Schedule TO filed December 12, 2006 (File No. 1-13292) [Exhibit 99.2]). |
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(a)(1)(xiii)*
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Internal communication to associates of SMG and its subsidiaries posted on SMGs
intranet on January 10, 2007. |
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(a)(2)
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None. |
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(a)(3)
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Not applicable. |
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(a)(4)
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Not applicable. |
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(a)(5)(i)
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Press release, dated December 12, 2006 (incorporated herein by reference to SMGs Tender
Offer Statement on Schedule TO filed December 12, 2006 (File No. 1-13292) [Exhibit 99.1]). |
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(a)(5)(ii)*
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Press Release, dated January 10, 2007. |
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Exhibit No. |
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Description |
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(a)(5)(iii)*
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Form of Summary Advertisement dated January 10, 2007. |
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(b)(i)*
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Commitment Letter, dated December 11, 2006, between SMG and JPMorgan Chase Bank, N.A.,
Bank of America, N.A. and Citigroup Global Markets Inc. and certain of their respective
affiliates. |
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(d)(i)
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Amended and Restated Agreement and Plan of Merger, dated as of May 19, 1995, among Sterns
Miracle-Gro Products, Inc., Sterns Nurseries, Inc., Miracle-Gro Lawn Products Inc.,
Miracle-Gro Products Limited, Hagedorn Partnership, L.P., the general partners of Hagedorn
Partnership, L.P., Horace Hagedorn, Community Funds, Inc., and John Kenlon, The Scotts Company
and ZYX Corporation (incorporated herein by reference to the Current Report on Form 8-K dated
May 31, 1995 and filed June 2, 1995, of The Scotts Company, an Ohio corporation (Scotts)
(File No. 0-19768) [Exhibit 2(b)]). |
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(d)(ii)
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First Amendment to Amended and Restated Agreement and Plan of Merger, made and entered into
as of October 1, 1999, among The Scotts Company, Scotts Miracle-Gro Products, Inc. (as
successor to ZYX Corporation and Sterns Miracle-Gro Products, Inc.), Miracle-Gro Lawn
Products Inc., Miracle-Gro Products Limited, Hagedorn Partnership, L.P., Community Funds,
Inc., Horace Hagedorn and John Kenlon, and James Hagedorn, Katherine Hagedorn Littlefield,
Paul Hagedorn, Peter Hagedorn, Robert Hagedorn and Susan Hagedorn (incorporated herein by
reference to Scotts Current Report on Form 8-K dated October 4, 1999 and filed October 5,
1999 (File No. 1-11593) [Exhibit 2]). |
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(d)(iii)(A)
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The O.M. Scott & Sons Company Excess Benefit Plan, effective October 1, 1993
(incorporated herein by reference to the Annual Report on Form 10-K for the fiscal year ended
September 30, 1993, of The Scotts Company, a Delaware corporation (File No. 0-19768) [Exhibit
10(h)]). |
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(d)(iii)(B)
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First Amendment to The O.M. Scott & Sons Company Excess Benefit Plan, effective as of
January 1, 1998 (incorporated herein by reference to Scotts Annual Report on Form 10-K for
the fiscal year ended September 30, 2001 (File No. 1-13292) [Exhibit 10(a)(2)]). |
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(d)(iii)(C)
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Second Amendment to The O.M. Scott & Sons Company Excess Benefit Plan, effective as of
January 1, 1999 (incorporated herein by reference to Scotts Annual Report on Form 10-K for
the fiscal year ended September 30, 2001 (File No. 1-13292) [Exhibit 10(a)(3)]). |
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(d)(iii)(D)
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Third Amendment to The O.M. Scott & Sons Company Excess Benefit Plan, effective as of
March 18, 2005 (amended title of plan to be The Scotts Company LLC Excess Benefit Plan)
(incorporated herein by reference to SMGs Quarterly Report on Form 10-Q for the quarterly
period ended April 2, 2005 (File No. 1-13292) [Exhibit 10(CC)]). |
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(d)(iv)
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The Scotts Company LLC Executive/Management Incentive Plan (incorporated herein by
reference to SMGs Current Report on Form 8-K filed February 2, 2006 (File No. 1-13292)
[Exhibit 10.4]). |
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(d)(v)
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Specimen form of Employee Confidentiality, Noncompetition, Nonsolicitation Agreement for
employees participating in The Scotts Company LLC Executive/Management Incentive Plan
(incorporated herein by reference to SMGs |
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Exhibit No. |
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Description |
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Quarterly Report on Form 10-Q for the quarterly period ended July 1, 2006 (File No.
1-13292) [Exhibit 10.1]). |
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(d)(vi)
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Executive Officers of The Scotts Miracle-Gro Company who are parties to form of Employee
Confidentiality, Noncompetition, Nonsolicitation Agreement for employees participating in The
Scotts Company LLC Executive/Management Incentive Plan (incorporated herein by reference to
SMGs Current Report on Form 8-K filed September 18, 2006 (File No. 1-13292) [Exhibit 10.2]). |
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(d)(vii)(A)
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The Scotts Company 1996 Stock Option Plan (as amended through May 15, 2000)
(incorporated herein by reference to Scotts Quarterly Report on Form 10-Q for the quarterly
period ended April 1, 2000 (File No. 1-13292) [Exhibit 10(d)]). |
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(d)(vii)(B)
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The Scotts Company 1996 Stock Option Plan (2002 Amendment) (incorporated herein by
reference to Scotts Quarterly Report on Form 10-Q for the quarterly period ended December 28,
2002 (File No. 1-13292) [Exhibit 10(d)(i)]). |
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(d)(vii)(C)
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Amendment to The Scotts Company 1996 Stock Option Plan 2005 Amendment, effective as
of March 18, 2005 (amended title of plan to be The Scotts Miracle-Gro Company 1996 Stock
Option Plan) (incorporated herein by reference to SMGs Quarterly Report on Form 10-Q for the
quarterly period ended April 2, 2005 (File No. 1-13292) [Exhibit 10(z)]). |
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(d)(viii)
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Form of 1996 Stock Option Plan Stock Option Agreement Non-Qualified Stock Option
(incorporated herein by reference to Scotts Current Report on Form 8-K filed November 19,
2004 (File No. 1-13292) [Exhibit 10.7]). |
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(d)(ix)
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Specimen form of Stock Option Agreement (as amended through October 23, 2001) for
Non-Qualified Stock Options granted to employees under The Scotts Company 1996 Stock Option
Plan, French specimen (incorporated herein by reference to Scotts Annual Report on Form 10-K
for the fiscal year ended September 30, 2001 (File No. 1-13292) [Exhibit 10(f)]). |
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(d)(x)(A)
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The Scotts Company Executive Retirement Plan (incorporated herein by reference to Scotts
Annual Report on Form 10-K for the fiscal year ended September 30, 1998 (File No. 1-11593)
[Exhibit 10(j)]). |
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(d)(x)(B)
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First Amendment to The Scotts Company Executive Retirement Plan, effective as of January
1, 1999 (incorporated herein by reference to Scotts Annual Report on Form 10-K for the fiscal
year ended September 30, 2001 (File No. 1-13292) [Exhibit 10(g)(2)]). |
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(d)(x)(C)
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Second Amendment to The Scotts Company Executive Retirement Plan, effective as of January
1, 2000 (incorporated herein by reference to Scotts Annual Report on Form 10-K for the fiscal
year ended September 30, 2001 (File No. 1-13292) [Exhibit 10(g)(3)]). |
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(d)(x)(D)
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Third Amendment to The Scotts Company Executive Retirement Plan, effective as of January
1, 2003 (incorporated herein by reference to Scotts Annual Report on Form 10-K for the fiscal
year ended September 30, 2003 (File No. 1-13292) [Exhibit 10(g)(4)]). |
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Exhibit No. |
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Description |
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(d)(x)(E)
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Fourth Amendment to The Scotts Company Executive Retirement Plan, effective as of January
1, 2004 (incorporated herein by reference to Scotts Annual Report on Form 10-K for the fiscal
year ended September 30, 2004 (File No. 1-13292) [Exhibit 10(g)(5)]). |
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(d)(x)(F)
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Fifth Amendment to The Scotts Company Executive Retirement Plan, effective as of March
18, 2005 (amended title of plan to be The Scotts Company LLC Executive Retirement Plan)
(incorporated herein by reference to SMGs Quarterly Report on Form 10-Q for the quarterly
period ended April 2, 2005 (File No. 1-13292) [Exhibit 10(DD)]). |
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(d)(xi)
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Employment Agreement, dated as of May 19, 1995, between The Scotts Company and James
Hagedorn (incorporated herein by reference to Scotts Annual Report on Form 10-K for the
fiscal year ended September 30, 1995 (File No. 1-11593) [Exhibit 10(p)]). |
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(d)(xii)(A)
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Letter agreement, dated June 8, 2000, between The Scotts Company and Patrick J. Norton
(incorporated herein by reference to Scotts Annual Report on Form 10-K for the fiscal year
ended September 30, 2000 (File No. 1-13292) [Exhibit 10(q)]). |
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(d)(xii)(B)
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Letter agreement, dated November 5, 2002, and accepted by Mr. Norton on November 22,
2002, pertaining to the terms of employment of Patrick J. Norton through December 31, 2005,
and superseding certain provisions of the letter agreement, dated June 8, 2000, between The
Scotts Company and Mr. Norton (incorporated herein by reference to Scotts Annual Report on
Form 10-K for the fiscal year ended September 30, 2002 (File No. 1-13292) [Exhibit 10(q)]). |
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(d)(xii)(C)
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Letter of Extension, dated October 25, 2005, between The Scotts Miracle-Gro Company and
Patrick J. Norton (incorporated herein by reference to SMGs Current Report on Form 8-K filed
December 14, 2005 (File No. 1-13292) [Exhibit 10.3]). |
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(d)(xiii)
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Written description of employment, severance and change in control terms between SMG and
David M. Aronowitz and Denise S. Stump (incorporated herein by reference to SMGs Annual
Report on Form 10-K for the fiscal year ended September 30, 2006 (File No. 1-13292) [Exhibit
10(k)]). |
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(d)(xiv)(A)
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The Scotts Company 2003 Stock Option and Incentive Equity Plan (incorporated herein by
reference to Scotts Quarterly Report on Form 10-Q for the quarterly period ended December 28,
2002 (File No. 1-13292) [Exhibit 10(w)]). |
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(d)(xiv)(B)
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First Amendment to The Scotts Company 2003 Stock Option and Incentive Equity Plan,
effective as of March 18, 2005 (amended title of plan to be The Scotts Miracle-Gro Company
2003 Stock Option and Incentive Equity Plan) (incorporated herein by reference to SMGs
Quarterly Report on Form 10-Q for the quarterly period ended April 2, 2005 (File No. 1-13292)
[Exhibit 10(AA)]). |
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(d)(xv)
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Employment Agreement for Christopher Nagel, entered into effective as of October 1, 2006,
by and between Christopher Nagel and The Scotts Miracle-Gro Company (incorporated herein by
reference to SMGs Current Report on Form 8-K filed December 7, 2006 (File No. 1-13292)
[Exhibit 10.1]). |
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(d)(xvi)
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The Scotts Miracle-Gro Company 2006 Long-Term Incentive Plan Award Agreement for
Employees, evidencing Restricted Stock Award of 38,000 Restricted Common Shares |
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Exhibit No. |
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Description |
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Awarded to Christopher Nagel on October 1, 2006 by The Scotts Miracle-Gro Company
(incorporated herein by reference to SMGs Current Report on Form 8-K filed December
7, 2006 (File No. 1-13292) [Exhibit 10.2]). |
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(d)(xvii)
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Form of 2003 Stock Option and Incentive Equity Plan Award Agreement for Nondirectors
(incorporated herein by reference to SMGs Annual Report on Form 10-K for the fiscal year
ended September 30, 2005 (File No. 1-13292) [Exhibit 10(u)]). |
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(d)(xviii)
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Form of 2003 Stock Option and Incentive Equity Plan Award Agreement for Directors
(incorporated herein by reference to SMGs Annual Report on Form 10-K for the fiscal year
ended September 30, 2005 (File No. 1-13292) [Exhibit 10(v)]). |
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(d)(xix)
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The Scotts Miracle-Gro Company 2006 Long-Term Incentive Plan (incorporated herein by
reference to SMGs Current Report on Form 8-K filed February 2, 2006 (File No. 1-13292)
[Exhibit 10.2]). |
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(d)(xx)
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Specimen form of Award Agreement used to evidence Time-Based Nonqualified Stock Options for
Non-Employee Directors under The Scotts Miracle-Gro Company 2006 Long-Term Incentive Plan
(incorporated herein by reference to SMGs Current Report on Form 8-K filed February 2, 2006
(File No. 1-13292) [Exhibit 10.3]). |
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(d)(xxi)
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Specimen form of Award Agreement to evidence Time-Based Nonqualified Stock Options for
Employees under The Scotts Miracle-Gro Company 2006 Long-Term Incentive Plan (incorporated
herein by reference to SMGs Quarterly Report on Form 10-Q for the quarterly period ended
December 31, 2005 (File No. 1-13292) [Exhibit 10(b)]). |
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(d)(xxii)
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Specimen form of Award Agreement for Third Party Service Providers to evidence awards
under The Scotts Miracle-Gro Company 2006 Long-Term Incentive Plan to third party service
providers (incorporated herein by reference to SMGs Quarterly Report on Form 10-Q for the
quarterly period ended July 1, 2006 (File No. 1-13292) [Exhibit 10.3]). |
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(d)(xxiii)
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The Scotts Miracle-Gro Company Discounted Stock Purchase Plan (As Amended and Restated
as of January 26, 2006; Reflects 2-for-1 Stock Split Distributed on November 9, 2005)
(incorporated herein by reference to SMGs Current Report on Form 8-K filed February 2, 2006
(File No. 1-13292) [Exhibit 10.1]). |
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(d)(xxiv)
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Summary of Compensation for Directors of The Scotts Miracle-Gro Company (incorporated
herein by reference to SMGs Annual Report on Form 10-K for the fiscal year ended September
30, 2006 (File No. 1-13292) [Exhibit 10(jj)]). |
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(g)
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Not applicable. |
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(h)
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Not applicable. |
EX-99.A.1.I
Exhibit (a)(1)(i)
OFFER TO PURCHASE FOR
CASH
by
THE SCOTTS MIRACLE-GRO
COMPANY
of
Up to 4,504,504 of its Common Shares at a Per Share Purchase
Price
Not Less Than $48.50 nor Greater Than $55.50
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE
AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON THURSDAY, FEBRUARY 8,
2007, UNLESS THE OFFER IS EXTENDED.
The Scotts Miracle-Gro Company, an Ohio corporation
(SMG, we or us), is offering
to purchase up to 4,504,504 of its common shares, without par
value (Common Shares), at a price of not less than
$48.50 nor greater than $55.50 per share (such per share
purchase price, the Purchase Price), net to the
seller in cash, without interest. The offer is subject to the
terms and conditions set forth in this Offer to Purchase and the
related Letter of Transmittal, which, together with any
amendments or supplements to either, collectively constitute the
Offer. We will select the lowest Purchase Price that
will enable us to purchase 4,504,504 shares or, if a lesser
number of shares are validly tendered, all shares that are
validly tendered and not validly withdrawn. All shares acquired
in the Offer will be acquired at the same Purchase Price
regardless of whether a shareholder tenders any shares at a
lower price. Unless the context requires otherwise, all
references in this Offer to Purchase to shares refer
to Common Shares.
Only shares validly tendered at prices at or below the Purchase
Price, and not validly withdrawn, will be purchased. However,
because of the odd lot priority, proration and
conditional tender offer provisions described in this Offer to
Purchase, all of the shares tendered may not be purchased if
more than the number of shares we seek are validly tendered.
Shares not purchased in the Offer will be returned at our
expense promptly following the expiration of the Offer.
Subject to certain limitations and legal requirements, we
reserve the right, in our sole discretion, to purchase more than
4,504,504 shares pursuant to the Offer.
The Offer is subject to important conditions including the
receipt by us of financing on terms and conditions satisfactory
to us in an amount sufficient to purchase shares pursuant to the
Offer. The Offer is not conditioned on any minimum number of
shares being tendered. See Section 7, Conditions
of the Offer.
The shares are listed on the New York Stock Exchange
(NYSE) under the symbol SMG. On
December 11, 2006, the last full trading day before we
first announced our intention to make the Offer, the closing
price of the Common Shares on the NYSE was $50.83 per
share. On January 9, 2007, the last full trading day before we
commenced the Offer, the closing price of the Common Shares on
the NYSE was $52.04 per share. You should obtain current
market quotations for the Common Shares before deciding whether
to participate in the Offer.
Questions and requests for assistance should be directed to D.F.
King & Co., Inc., the Information Agent for the Offer,
or to Banc of America Securities LLC, the Dealer Manager for the
Offer, at their respective addresses and telephone numbers set
forth on the back cover page of this Offer to Purchase. Requests
for additional copies of this Offer to Purchase, the related
Letter of Transmittal or the Notice of Guaranteed Delivery
should be directed to the Information Agent.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of this
transaction or passed upon the merits or fairness of such
transaction or passed upon the adequacy or accuracy of the
information contained in this document. Any representation to
the contrary is a criminal offense.
The Dealer Manager for the Offer is:
Banc
of America Securities LLC
Offer to Purchase dated January 10, 2007
IMPORTANT
Our Board of Directors (our Board) has approved
the Offer. However, neither we nor our Board nor the Dealer
Manager, the Information Agent nor the Depositary (as defined
below) makes any recommendation to you as to whether to tender
or refrain from tendering your shares or as to the price or
prices at which you may choose to tender them. You must make
your own decision as to whether to tender your shares and, if
so, how many shares to tender and the price or prices at which
you will tender them. In doing so, you should read carefully the
information in the Offer to Purchase and the Letter of
Transmittal and consider our reasons for making the Offer. Our
directors and executive officers and our largest shareholder,
Hagedorn Partnership, L.P., of which James Hagedorn, our
Chairman and Chief Executive Officer, and Katherine Hagedorn
Littlefield, one of our directors, are partners, have advised us
that they do not intend to tender any shares owned by them in
the Offer.
If you want to tender all or part of your shares, you must do
one of the following before the Offer expires:
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if your shares are registered in the name of a broker, dealer,
commercial bank, trust company or other nominee, contact the
nominee and have the nominee tender your shares for you;
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if you hold certificates in your own name, complete and sign a
Letter of Transmittal according to its instructions and deliver
it, together with any required signature guarantees, the
certificates for your shares and any other documents required by
the Letter of Transmittal, to National City Bank, the depositary
for the Offer (the Depositary), at one of its
addresses shown on the Letter of Transmittal;
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if you are an institution participating in The Depository Trust
Company, tender your shares according to the procedure for
book-entry transfer described in Section 3,
Procedures for Tendering Shares, of this
Offer to Purchase;
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if you are a participant in The Scotts Company LLC Retirement
Savings Plan or the Smith & Hawken 401(k) Plan (the
401(k) Plans) and you wish to tender any of the
shares held on your behalf thereunder, you must follow the
separate instructions and procedures described in
Section 3, Procedures for Tendering
Shares, of this Offer to Purchase and must review the
Letter to Participants in The Scotts Company LLC
Retirement Savings Plan or the Letter to
Participants in the Smith & Hawken 401(k) Plan,
as applicable, sent to affected participants in the 401(k) Plans;
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if you are a participant in The Scotts Miracle-Gro Company
Discounted Stock Purchase Plan (the DSPP) and you
wish to tender any of your transferable shares, you must follow
the separate instructions and procedures described in
Section 3, Procedures for Tendering
Shares, of this Offer to Purchase and must review the
Letter to Participants in The Scotts Miracle-Gro Company
Discounted Stock Purchase Plan sent to affected
participants in the DSPP; or
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if you are a holder of vested options to purchase shares or
freestanding stock appreciation rights under one of SMGs
equity compensation plans, you may exercise your vested options
and/or freestanding stock appreciation rights and tender any of
the shares issued upon exercise. The administrator of the
plans option program will notify eligible optionees and
holders of freestanding stock appreciation rights of their right
to exercise their options and/or freestanding stock appreciation
rights and participate in the Offer. In order to tender the
underlying shares, options or freestanding stock appreciation
rights may be exercised in any manner permitted under your
option or freestanding stock appreciation rights agreement(s)
and the applicable equity compensation plan, including, where
applicable, cashless exercise other than the Cashless
Sell method.
|
If you want to tender your shares, but (a) the certificates
for your shares are not immediately available or cannot be
delivered to the Depositary by the expiration of the Offer,
(b) you cannot comply with the procedure for book-entry
transfer by the expiration of the Offer, or (c) your other
required documents cannot be delivered to the Depositary by the
expiration of the Offer, you can still tender your shares if you
comply with the guaranteed delivery procedures described in
Section 3, Procedures for Tendering
Shares.
i
To validly tender shares, other than shares registered in the
name of a broker, dealer, commercial bank, trust company or
other nominee, or shares held under the 401(k) Plans or the
DSPP, you must validly complete the Letter of Transmittal,
including the section indicating the price at which you are
tendering shares. If you wish to maximize the chance that
your shares will be purchased, you should check the box in the
Letter of Transmittal indicating that you will accept the
Purchase Price we determine. You should understand, however,
that this election could result in your shares being purchased
at the minimum per share price of $48.50.
We are not making the Offer to, and will not accept any tendered
shares from, shareholders in any jurisdiction where it would be
illegal to do so. However, we may, at our discretion, take any
actions necessary for us to make this Offer to shareholders in
any such jurisdiction.
We have not authorized any person to make any recommendation
on our behalf as to whether you should tender or refrain from
tendering your shares or as to the price or prices at which you
may choose to tender your shares in the Offer. You should rely
only on the information contained in this Offer to Purchase, the
related Letter of Transmittal or to which we have referred you.
We have not authorized anyone to provide you with information or
to make any representation in connection with the Offer other
than those contained in this Offer to Purchase or the related
Letter of Transmittal. If anyone makes any recommendation or
representation, or gives you any information, you must not rely
upon that recommendation, representation or information as
having been authorized by us, the Dealer Manager, the
Information Agent or the Depositary.
ii
TABLE OF
CONTENTS
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Page
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iv
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v
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1
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3
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Number of Shares; Expiration Time;
Priority of Purchases; Proration; Odd Lot
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3
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Purpose of the Offer; Certain
Effects of the Offer; Other Plans
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5
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Procedures for Tendering
Shares
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8
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Withdrawal Rights
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14
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Purchase of Shares and Payment of
Purchase Price
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15
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Conditional Tender of
Shares
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16
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Conditions of the Offer
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17
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Price Range of the
Shares
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20
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Source and Amount of
Funds
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20
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Certain Information Concerning
SMG
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23
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Interests of Directors, Executive
Officers and Affiliates; Transactions and Arrangements
Concerning the Shares
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27
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Effects of the Offer on the Market
for the Shares; Registration Under the Exchange Act
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33
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Regulatory Approvals
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33
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U.S. Federal Income Tax
Consequences
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34
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Extension of the Offer;
Termination; Amendment
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38
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Fees and Expenses
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39
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Miscellaneous
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40
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iii
FORWARD-LOOKING
STATEMENTS
This Offer to Purchase (and documents incorporated by reference
into this Offer to Purchase, including our Annual Report on
Form 10-K
for the fiscal year ended September 30, 2006 (our
2006
Form 10-K))
contains certain forward-looking information relating to SMG
that is based on the beliefs of, and assumptions made by, our
management as well as information currently available to
management. When used in this Offer to Purchase (and documents
incorporated by reference into this Offer to Purchase, including
our 2006
Form 10-K),
the words anticipate, believe,
estimate, plan, project,
expect, may, will and
similar expressions are intended to identify forward-looking
information. Such information includes, for example, the
statements made under the caption Managements
Discussion and Analysis of Financial Condition and Results of
Operations under Item 7 of our 2006
Form 10-K.
This forward-looking information reflects our current views with
respect to future events and is subject to certain risks,
uncertainties and assumptions, some of which are described under
the caption Risk Factors in Part 1,
Item 1A of our 2006
Form 10-K
and elsewhere in our 2006
Form 10-K.
Should one or more of these risks or uncertainties occur, or
should our assumptions prove incorrect, actual results may vary
materially from those described in this Offer to Purchase (and
documents incorporated by reference into this Offer to Purchase,
including our 2006
Form 10-K)
as anticipated, believed, estimated or expected.
iv
SUMMARY
TERM SHEET
We are providing this summary term sheet for your
convenience. This summary term sheet highlights the material
terms of the Offer, but you should realize that it does not
describe all of the details of the Offer to the same extent
described elsewhere in this Offer to Purchase and the Letter of
Transmittal. We urge you to read the entire Offer to Purchase
and the related Letter of Transmittal because they contain the
full details of the Offer. Where helpful, we have included
references to the sections of this Offer to Purchase where you
will find a more complete discussion.
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Who is
offering to purchase my shares of The Scotts Miracle-Gro
Company?
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SMG is offering to purchase the shares.
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How many
shares will we purchase?
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Subject to the terms and conditions of the Offer, we will
purchase 4,504,504 shares or, if a lesser number of shares
is validly tendered, all shares that are validly tendered and
not validly withdrawn. The Offer is not conditioned on any
minimum number of shares being tendered. If more than
4,504,504 shares are tendered, all shares tendered at or
below the Purchase Price will be purchased on a pro rata basis,
except for odd lots (lots of less than
100 shares held by shareholders who tender all of their
shares), which will be purchased on a priority basis, and
conditional tenders whose condition was not met, which will not
be purchased. We also expressly reserve the right to purchase
additional shares constituting up to 2% of the outstanding
Common Shares, and could decide to purchase more shares, subject
to applicable legal requirements. See Section 1,
Number of Shares; Expiration Time; Priority of
Purchases; Proration; Odd Lot and Section 7,
Conditions of the Offer.
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What will
be the price for the shares and what will be the form of
payment?
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We are conducting the Offer for the shares through a procedure
commonly called a modified Dutch auction. This
procedure enables you to select the price (in increments of
$0.50), within a price range specified by us, at which you are
willing to sell your shares. The price range for the Offer is
$48.50 to $55.50 per share. We will select the lowest Purchase
Price that will enable us to purchase 4,504,504 shares or,
if a lesser number of shares are validly tendered, all shares
that are validly tendered and not validly withdrawn. The Offer
is not conditioned on any minimum number of shares being
tendered. All shares we purchase will be purchased at the same
Purchase Price, even if you have selected a lower price. If you
wish to maximize the chance that your shares will be purchased,
you should check the box in the Letter of Transmittal indicating
that you will accept the Purchase Price determined in the Offer.
You should understand, however, that this election could result
in your shares being purchased at the minimum Purchase Price of
$48.50 per share.
If your shares are purchased in the Offer, we will pay you the
Purchase Price, in cash, without interest, promptly after the
expiration of the Offer. If you are a participant in one of our
401(k) Plans, you should be aware that the plans are prohibited
from selling shares to us for less than adequate consideration.
Please refer to the Letter to Participants in The Scotts
Company LLC Retirement Savings Plan or the Letter to
Participants in the Smith & Hawken 401(k) Plan,
as applicable, for more information with respect to this
limitation. See Section 1, Number of Shares;
Expiration Time; Priority of Purchases; Proration; Odd
Lot and Section 5, Purchase of Shares
and Payment of Purchase Price.
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How will
we pay for the shares?
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Assuming that the maximum number of shares is tendered in the
Offer and the Purchase Price is an amount between $48.50 and
$55.50 per share, the aggregate purchase price for the shares
will be between $218.5 million and $250.0 million. We
anticipate that we will pay for the shares purchased in the
Offer and the related fees and expenses from available cash and
from bank borrowings under the new credit facilities referenced
in the Commitment Letter, dated December 11, 2006 (the
Commitment Letter), that we have received from
JPMorgan Chase Bank, N.A. (JPMorgan), Bank of
America, N.A. (BofA) and
v
Citigroup Global Markets Inc. (Citigroup) and
certain of their respective affiliates. Although we expect that
we will be able to finance the aggregate purchase price to
complete the Offer from bank financing and available cash, we
cannot provide any assurances thereof. See Section 7,
Conditions of the Offer.
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When does
the Offer expire? Can the Offer be extended?
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You may tender your shares until the Offer expires. The Offer
will expire on Thursday, February 8, 2007, at 12:00
midnight, New York City time, unless we extend it (the
Expiration Time). See Section 1,
Number of Shares; Expiration Time; Priority of
Purchases; Proration; Odd Lot. If a broker, dealer,
commercial bank, trust company or other nominee holds your
shares (including participants in one of our 401(k) Plans, whose
shares are held by the applicable plan trustee), it is likely
they have an earlier deadline for you to instruct them to accept
the Offer on your behalf. Specifically, for participants in our
401(k) Plans, the deadline for tendering their shares held in
one of the plans will be three business days prior to the
Expiration Time, as more fully described in the Letter to
Participants in The Scotts Company LLC Retirement Savings
Plan and the Letter to Participants in the
Smith & Hawken 401(k) Plan. We urge you to
contact the broker, dealer, commercial bank, trust company or
other nominee holding your shares to find out their deadline.
We may choose to extend the Offer for any reason, subject to
applicable laws. See Section 15, Extension of the
Offer; Termination; Amendment. We cannot assure you
that we will extend the Offer or indicate the length of any
extension that we may provide. If we extend the Offer, we will
delay the acceptance of any shares that have been validly
tendered and not validly withdrawn. We can also amend the Offer
in our sole discretion or terminate the Offer under certain
circumstances. See Section 7, Conditions of the
Offer and Section 15, Extension of the
Offer; Termination; Amendment.
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How will
I be notified if SMG extends the Offer or amends the terms of
the Offer?
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We will issue a press release by 9:00 a.m., New York City
time, on the business day after the previously scheduled
Expiration Time if we decide to extend the Offer. If we decide
to amend the Offer, we may do so at any time and from time to
time by public announcement. See Section 15,
Extension of the Offer; Termination;
Amendment. We cannot assure you that the Offer will be
extended or, if extended, for how long.
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What is
the purpose of the Offer?
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We believe that the repurchase of shares, together with the
special dividend that we have previously disclosed (which is
currently estimated to be $500 million), is consistent with
our long-term goal of maximizing shareholder value. In that
regard, on October 27, 2005, our Board implemented a
$500 million share repurchase program over five fiscal
years, and we have repurchased approximately $87.9 million
of our Common Shares pursuant to that program.
In considering the Offer, our management and Board reviewed,
with the assistance of outside advisors, a variety of
alternatives for using our available financial resources. They
have evaluated our capital structure, free cash flow, leverage
ratio, financial position and the anticipated cost and
availability of financing, as well as our strategy and
expectations for the future and other financial, industry and
operating metrics. Based on this review and evaluation, our
management and Board believe that the Offer is a prudent use of
our financial resources.
We believe that by accessing the debt markets under what we
consider are favorable conditions, we will be able to return
value to shareholders now, while, at the same time, increasing
the return on capital that remains invested in our business. We
also believe that the Offer, and the financing thereof, together
with the special dividend that we have previously disclosed
(which is currently estimated to be $500 million), creates
an appropriate capital structure for our current mix of
businesses.
The Offer represents a mechanism to provide shareholders, if
they so elect, with the opportunity to tender all or a portion
of their shares and, thereby, receive a return of capital
without the usual costs associated with open market
transactions. Alternatively, shareholders may elect not to
participate and thereby increase their
vi
percentage ownership of SMG following the completion of the
Offer. As a result, our management and Board believe that
investing in our own shares in this manner is an attractive use
of capital and an efficient means to provide value to our
shareholders. Shares that we acquire in the Offer will be held
in treasury, which is consistent with the treatment of shares
repurchased under the existing $500 million share
repurchase program. The Board may determine to retire some or
all of such shares in the future. See Section 2,
Purpose of the Offer; Certain Effects of the Offer;
Other Plans. In connection with the consummation of
the Offer, we will terminate our $500 million share
repurchase program.
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What are
the significant conditions of the Offer?
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Our obligation to accept and pay for tendered shares depends
upon a number of conditions that must be satisfied or waived
prior to the expiration of the Offer, including:
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we shall have obtained financing on terms and conditions
satisfactory to us, under the new credit facilities referenced
in the Commitment Letter, in an amount sufficient to purchase
shares pursuant to the Offer;
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there shall not be a decrease in excess of 10% in the market
price for our Common Shares or in the Dow Jones Industrial
Average, the NYSE Composite Index or the S&P 500 Composite
Index since January 9, 2007;
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our determination that there will not be a reasonable likelihood
that the consummation of the Offer and the purchase of shares
thereunder will cause our Common Shares to be held of record by
less than 300 persons or that the Common Shares will be delisted
from the NYSE or will be eligible for deregistration under the
Securities Exchange Act of 1934, as amended (the Exchange
Act);
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no legal action shall have been threatened, pending or taken,
that could reasonably be expected to adversely affect the Offer;
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no statute, injunction or order shall have been sought or
enacted that indicates that any approval of a court or other
authority may be required in connection with the Offer or is
reasonably likely to make the purchase of some or all of our
Common Shares illegal or prohibit, restrict or delay
consummation of the Offer;
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no one shall have proposed, announced or made a tender or
exchange offer (other than the Offer), material merger, business
combination or other similar transaction involving us;
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no general suspension of trading in, or limitation of prices
for, securities on any United States national securities
exchange or in the
over-the-counter
market shall have occurred;
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no declaration of a banking moratorium or suspension of payments
in respect of banks in the United States shall have occurred;
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no commencement or escalation of a war, armed hostilities or
other international or national calamity or disaster, including
an act of terrorism or disruptive weather condition, that could
be reasonably expected to, directly or indirectly, have a
material adverse effect on us, on the value or trading of our
Common Shares, on our ability to consummate the Offer or on the
benefits of the Offer to us; or
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no material adverse change in our business, condition (financial
or otherwise), assets, income, operations, prospects or stock
ownership shall have occurred.
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The Offer is subject to a number of other conditions described
in greater detail in Section 7, Conditions of the
Offer.
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Following
the Offer, will SMG continue as a public company?
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Yes. We expect that the completion of the Offer in accordance
with its conditions will not cause our Common Shares to be
delisted from the NYSE or to no longer be subject to the
periodic reporting requirements of the Exchange Act. It is a
condition of our obligation to purchase shares pursuant to the
Offer
vii
that there will not be a reasonable likelihood that such
purchase will cause the Common Shares either (1) to be held
of record by less than 300 persons or (2) to not continue
to be eligible to be listed on the NYSE or to not continue to be
required to be registered under the Exchange Act. See
Section 7, Conditions of the Offer.
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How do I
tender my shares?
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If you want to tender all or part of your shares, you must do
one of the following before 12:00 midnight, New York City time,
on Thursday, February 8, 2007, or any later time and date
to which the Offer may be extended, or earlier as described
below as required for participants in one of our 401(k) Plans or
the DSPP or as your broker, dealer, commercial bank, trust
company or other nominee may require:
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if your Common Shares are registered in the name of a broker,
dealer, commercial bank, trust company or other nominee, contact
the nominee and have the nominee tender your shares for you;
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if you hold certificates in your own name, complete and sign a
Letter of Transmittal according to its instructions and deliver
it, together with any required signature guarantees, the
certificates for your shares and any other documents required by
the Letter of Transmittal, to the Depositary at one of its
addresses shown on the Letter of Transmittal;
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if you are an institution participating in The Depository Trust
Company, tender your shares according to the procedure for
book-entry transfer described in Section 3,
Procedures for Tendering Shares of this Offer
to Purchase;
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if you are a participant in one of our 401(k) Plans and you wish
to tender any of the shares held on your behalf thereunder, you
must follow the separate instructions and procedures described
in Section 3, Procedures for Tendering
Shares of this Offer to Purchase and you must review
the Letter to Participants in The Scotts Company LLC
Retirement Savings Plan or the Letter to
Participants in the Smith & Hawken 401(k) Plan,
as applicable, sent to affected participants in our 401(k) Plans;
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if you are a participant in the DSPP and you wish to tender any
of your transferable shares held on your behalf pursuant to the
DSPP, you must follow the separate instructions and procedures
described in Section 3, Procedures for Tendering
Shares, of this Offer to Purchase and you must review
the Letter to Participants in The Scotts Miracle-Gro
Company Discounted Stock Purchase Plan, sent to affected
participants in the DSPP; or
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if you are a holder of vested options to purchase shares or
freestanding stock appreciation rights under one of our equity
compensation plans, you may exercise your vested options and/or
freestanding stock appreciation rights and tender any of the
shares issued upon exercise. The administrator of the
plans option program will notify eligible optionees of
their right to exercise their options and/or freestanding stock
appreciation rights and participate in the Offer. In order to
tender the underlying shares, options or freestanding stock
appreciation rights may be exercised in any manner permitted
under your option agreement(s) and the applicable equity
compensation plan, including, where applicable, cashless
exercise other than the Cashless Sell method.
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If you want to tender your shares, but:
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the certificates for your shares are not immediately available
or cannot be delivered to the Depositary by the expiration of
the Offer;
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you cannot comply with the procedures for book-entry transfer by
the expiration of the Offer; or
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your other required documents cannot be delivered to the
Depositary by the expiration of the Offer;
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you can still tender your shares if you comply with the
guaranteed delivery procedures described in Section 3,
Procedures for Tendering Shares.
viii
You may contact the Information Agent or the Dealer Manager for
assistance. The contact information for the Information Agent
and the Dealer Manager appears on the back cover of this Offer
to Purchase. See Section 3, Procedures for
Tendering Shares and the Instructions to the Letter of
Transmittal.
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How do
participants for whose benefit shares are held under our 401(k)
Plans participate in the Offer?
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Participants in our 401(k) Plans for whose benefit shares are
held by the plan trustee may not use the Letter of Transmittal
to direct the tender of shares held in the plan accounts but
instead must follow the separate instructions in the
Letter to Participants in The Scotts Company LLC
Retirement Savings Plan or the Letter to
Participants in the Smith & Hawken 401(k) Plan,
as applicable, sent to affected participants in the 401(k)
Plans. The instructions will include instructions to
participants on how to direct the tender of shares held for
their benefit and set forth the deadline for such direction. For
administrative reasons, the deadline will be three business days
prior to the Expiration Time. Affected participants in the
401(k) Plans should confirm their deadlines by reading the
materials provided to them by the trustee of the 401(k) Plan in
which they participate. See Section 3, Procedures
for Tendering Shares.
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Can I
participate in the Offer if I hold vested stock options to
purchase shares or freestanding stock appreciation
rights?
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If you hold vested but unexercised options to purchase shares or
freestanding stock appreciation rights, you may exercise such
options or freestanding stock appreciation rights in accordance
with the terms of the applicable agreement and stock option plan
and tender any shares received upon such exercise in accordance
with the Offer. An exercise of a stock option or freestanding
stock appreciation right cannot be revoked even if shares
received upon exercise thereof and tendered are not purchased in
the Offer for any reason. If you exercise your vested options or
freestanding stock appreciation rights and wish to participate
in the Offer, you should follow the above instructions
applicable to shares held in your own name or held by a broker
for your benefit. You should evaluate this Offer to Purchase
carefully to determine if participation would be advantageous to
you based on, among other things, your stock option or
freestanding stock appreciation right exercise or base prices
and the years left to exercise your options or freestanding
stock appreciation rights, the range of tender prices and the
provisions for pro rata purchases by SMG described in
Section 1, Number of Shares; Expiration Time;
Priority of Purchases; Proration; Odd Lot. We strongly
encourage you to discuss the Offer with your tax, financial or
other advisors.
It should be noted that the Offer does not affect your right to
exercise your stock options or freestanding stock appreciation
rights, or the terms and conditions of your grants. As a
participant in an SMG stock option plan, you have the right to
exercise options to buy Common Shares or freestanding stock
appreciation rights at the exercise or base price until your
grant expires subject to the terms of your award agreement.
Based on information from our stock option plan program
administrator, you may continue to utilize any of the three
methods to exercise options that are currently available to you.
If you choose to exercise your options using the Cashless
Sell method (where you exercise your options to buy and
simultaneously sell your shares for cash) you will not
become an owner of Common Shares. This means that you will
not be able to tender those shares into the Offer.
However, if you choose to exercise your options using the
Exercise and Hold or the Combination
Exercise (exercise and sell enough shares to cover the
cost of exercise and taxes, holding the remaining shares)
methods, you will become an owner of Common Shares, and,
therefore, you may choose to tender some of all of such shares.
Please be advised that it is the stock option holders
responsibility to tender shares in the Offer to the extent such
holder wants to participate, and it may be difficult to secure
delivery of Common Shares issued pursuant to vested stock
options or freestanding stock appreciation rights in a time
period sufficient to allow tender of those shares before
expiration of the Offer. Accordingly, if you choose to exercise
your vested options or freestanding stock appreciation rights,
we suggest that you exercise your vested options or freestanding
stock appreciation rights and, where applicable, pay the
purchase price for such shares in accordance with the terms of
the related stock option plan and option or freestanding stock
appreciation rights agreement at least six business days before
the Expiration Date (which, unless the Offer is extended, will
require you to exercise your vested stock options or
freestanding stock appreciation rights and pay the related
ix
purchase price no later than 4:00 p.m., New York City time,
on February 1, 2007. See Section 3,
Procedures for Tendering Shares.
Please note that shares tendered pursuant to the exercise of a
vested option or freestanding stock appreciation right will not
be eligible for the special dividend that is anticipated to be
declared and paid following the consummation of the Offer, and,
since such option will no longer be outstanding, the option or
freestanding stock appreciation right will not be adjusted to
reflect the special dividend as provided pursuant to the terms
of our stock option plans.
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Can I
participate in the Offer if I hold shares purchased through
SMGs DSPP?
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Shares held for at least 12 months under the DSPP may be
tendered in the Offer. Participants in our DSPP whose shares are
held by the plan administrator may not use the Letter of
Transmittal to direct the tender of shares held on their behalf
but instead must follow the instructions in the Letter to
Participants in The Scotts Miracle-Gro Company Discounted Stock
Purchase Plan sent to affected participants in the DSPP.
The instructions will include instructions to participants on
how to direct the tender of shares held in the applicable plan
account and set forth the deadline for such direction. For
administrative reasons, the deadline will be three business days
prior to the Expiration Time. DSPP participants should confirm
their deadlines by reading the materials provided to them by the
plan administrator. See Section 3, Procedures for
Tendering Shares.
For information regarding the applicable tax consequences,
please see Federal Income Tax Consequences in The
Scotts Miracle-Gro Company Discounted Stock Purchase Plan
Prospectus and related FAQ that were previously distributed to
you. We strongly recommend that you consult with your tax
advisor with respect to your particular situation.
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In what
order will you purchase the tendered shares?
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If the terms and conditions of the Offer have been satisfied or
waived and more than 4,504,504 shares have been validly
tendered and not validly withdrawn on or prior to the expiration
of the Offer, we will purchase shares in the following order of
priority:
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first, all odd lot shares that have been validly tendered
at or below the Purchase Price, however the odd lot preference
will not be available to shares tendered under our 401(k) Plans;
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second, after purchase of all of the foregoing shares,
all other shares tendered at or below the Purchase Price on a
pro rata basis, if necessary (except for shareholders who
tendered their shares conditionally and for which the condition
was not satisfied); and
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third, if necessary to permit us to purchase
4,504,504 shares (or such greater number of shares as we
may elect to purchase), shares conditionally tendered at or
below the Purchase Price for which the condition was not
initially satisfied, to the extent feasible, by random lot (to
be eligible for purchase by random lot, shareholders whose
shares are conditionally tendered must have tendered all of
their shares).
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See Section 1, Number of Shares; Expiration Time;
Priority of Purchases; Proration; Odd Lot.
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If I own
fewer than 100 shares and I tender all of my shares, will I
be subject to proration?
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If you validly tender, and do not validly withdraw, your shares
at or below the Purchase Price according to the procedures
specified for holders of odd lot shares, we will
purchase all of your shares without subjecting them to the
proration procedure. Notwithstanding the foregoing, you will not
be entitled to the odd lot preference with respect to shares
tendered under our 401(k) Plans. See Section 1,
Number of Shares; Expiration Time; Priority of
Purchases; Proration; Odd Lot.
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Once I
have tendered shares in the Offer, can I withdraw my
tender?
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You may withdraw any shares you have tendered at any time before
12:00 midnight, New York City time, on the date the Offer
expires. The Offer will expire on Thursday, February 8,
2007, unless we extend it. If we have not accepted for payment
the shares you have tendered to us, you may also withdraw your
shares after 12:00 midnight, New York City time, on Friday,
March 9, 2007. See Section 4, Withdrawal
Rights. Participants in the DSPP and our 401(k) Plans
will not be able to withdraw after their applicable tender
cut-off date, as described in the Letter to Participants
in The Scotts Company LLC Retirement Savings Plan, the
Letter to Participants in the Smith & Hawken
401(k) Plan or the Letter to Participants in The
Scotts Miracle-Gro Company Discounted Stock Purchase Plan,
as the case may be.
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How do I
withdraw shares I previously tendered?
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To withdraw shares, you must deliver a written notice of
withdrawal with the required information to the Depositary while
you still have the right to withdraw the shares. If you have
tendered your shares by giving instructions to a broker, dealer,
commercial bank, trust company or other nominee, you must
instruct that person to arrange for the withdrawal of your
shares. Some additional requirements apply if the share
certificates to be withdrawn have been delivered to the
Depositary or if your shares have been tendered under the
procedure for book-entry transfer set forth in Section 3,
Procedures for Tendering Shares. See
Section 4, Withdrawal Rights. Affected
participants in our 401(k) Plans whose shares are held by the
plan trustee and affected participants in our DSPP will receive
separate instructions detailing how to withdraw tendered plan
shares. These instructions likely will set an earlier deadline
for withdrawing plan shares for administrative reasons. Please
refer to the Letter to Participants in The Scotts Company
LLC Retirement Savings Plan, the Letter to
Participants in the Smith & Hawken 401(k) Plan or
the Letter to Participants in The Scotts Miracle-Gro
Company Discounted Stock Purchase Plan, as applicable.
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Has SMG
or its Board adopted a position on the Offer?
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Our Board has approved the Offer. However, neither we nor our
Board nor the Dealer Manager, the Information Agent nor the
Depositary makes any recommendation to you as to whether to
tender or refrain from tendering your shares or as to the price
or prices at which you may choose to tender them. You must make
your own decision as to whether to tender your shares and, if
so, how many shares to tender and the price or prices at which
you will tender them. In doing so, you should consider our
reasons for making the Offer. See Section 2,
Purpose of the Offer; Certain Effects of the Offer;
Other Plans.
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Do the
directors, executive officers or affiliates of SMG intend to
tender their shares in the Offer?
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Each of our directors and executive officers has advised us that
he or she does not intend to tender any shares in the Offer. In
addition, our largest shareholder, Hagedorn Partnership, L.P.,
of which James Hagedorn, our Chairman and Chief Executive
Officer, and Katherine Hagedorn Littlefield, one of our
directors, are partners, has advised us that it does not intend
to tender any shares in the Offer. As a result, the Offer will
increase the proportional holdings of our directors, executive
officers and the Hagedorn Partnership, L.P. For example, the
beneficial ownership of the Hagedorn Partnership, L.P. will
increase from 30.8% before the Offer to 33.0% after the
consummation of the Offer if all 4,504,504 shares are
repurchased. After the expiration of the Offer, our directors,
executive officers
and/or the
Hagedorn Partnership, L.P. may, subject to applicable law and
SMGs applicable policies and practices, sell shares from
time to time in open market transactions at prices that may be
more or less favorable than the Purchase Price to be paid to our
shareholders in the Offer.
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When will
SMG pay for the shares I tender?
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We will pay the Purchase Price, net in cash, without interest,
for the shares we purchase promptly after the expiration of the
Offer and the acceptance of the shares for payment. If we are
required to prorate shares purchased in the Offer, however, we
do not expect that we will be able to announce the results of
that proration and begin paying for tendered shares up to seven
business days after the expiration of the Offer. See
Section 5, Purchase of Shares and Payment of
Purchase Price.
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Will I
have to pay brokerage commissions if I tender my
shares?
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If you are the record owner of your shares and you tender your
shares to us in the Offer, you will not have to pay brokerage
fees or similar expenses. If you own your shares through a
broker, dealer, commercial bank, trust company or other nominee
and that person tenders your shares on your behalf, that person
may charge you a fee for doing so. You should consult with your
broker, dealer, commercial bank, trust company or other nominee
to determine whether any charges will apply. Participants in our
401(k) Plans whose shares are held by the plan trustee and
participants in our DSPP whose shares are held by the plan
administrator will not incur any additional brokerage
commissions. See Section 3, Procedures for
Tendering Shares.
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What are
the U.S. federal income tax consequences if I tender my
shares?
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Generally, you will be subject to U.S. federal income
taxation and applicable withholding when you receive cash from
us in exchange for the shares you tender in the Offer. The
receipt of cash for your tendered shares generally will be
treated for U.S. federal income tax purposes either as
(1) a sale or exchange or (2) a distribution in
respect of stock from SMG. Any gain on shares tendered through
our 401(k) Plans will not be taxed at the time of tender, but
special tax consequences may apply with respect to such shares.
We recommend that you consult with your tax advisor with
respect to your particular situation. See Section 14,
U.S. Federal Income Tax Consequences.
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Will I
have to pay stock transfer tax if I tender my shares?
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Generally, we will pay all stock transfer taxes unless payment
is made to, or if shares not tendered or accepted for payment
are to be registered in the name of, someone other than the
registered holder, or tendered certificates are registered in
the name of someone other than the person signing the Letter of
Transmittal. See Section 5, Purchase of Shares and
Payment of Purchase Price.
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If I
decide not to tender, how will the Offer affect my
shares?
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If you choose not to tender your shares in the Offer, you will
own a greater percentage interest in our outstanding Common
Shares following the consummation of the Offer. As we have
previously disclosed, we intend to pay a significant cash
dividend, currently anticipated to be $500 million in the
aggregate, to shareholders of record as of a record date to be
determined after the consummation of the Offer. If you choose
not to tender your shares in the Offer and retain your shares as
of such record date, you will be entitled to receive your pro
rata share of any such dividend when and if it is declared by
the Board.
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What is
the recent market price of my shares?
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On December 11, 2006, the last full trading day before we
first announced our intention to make the Offer, the closing
price of the Common Shares on the NYSE was $50.83 per
share. On January 9, 2007, the last full trading day before we
commenced the Offer, the closing price of the Common Shares on
the NYSE was $52.04 per share. You are urged to obtain
current market quotations for the Common Shares before deciding
whether and, if so, at what price or prices, to tender your
shares. See Section 8, Price Range of the
Shares.
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Who can
answer questions I may have?
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If you have any questions regarding the Offer, please contact
the Information Agent for the Offer, D.F. King & Co.,
Inc. by calling
(800) 714-3312
(Toll free) or
(212) 269-5550
(Banks & Brokers call collect), or the Dealer Manager
for the Offer, Banc of America Securities LLC. Additional
contact information for the Information Agent and the Dealer
Manager is set forth on the back cover page of this Offer to
Purchase. In addition to this Offer to Purchase, a related
Letter of Transmittal will be sent to participants in our 401(k)
Plans and the DSPP for information purposes only. If a plan
participant has any questions relating to the Offer or the
number of shares held in his or her plan account, the
participant should contact the party set forth in the
Letter to Participants in The Scotts Company LLC
Retirement Savings Plan, the Letter to Participants
in the Smith & Hawken 401(k) Plan or the
Letter to Participants in The Scotts Miracle-Gro Company
Discounted Stock Purchase Plan, as applicable.
xii
To the Holders of the Common Shares
of The Scotts Miracle-Gro Company:
INTRODUCTION
The Scotts Miracle-Gro Company (SMG, we
or us) invites its shareholders to tender its common
shares, without par value (the Common Shares), for
purchase by SMG. We are offering to purchase
4,504,504 shares or, if a lesser number of shares is
validly tendered, all shares that are validly tendered and not
validly withdrawn in the Offer. The Offer is not conditioned on
any minimum number of shares being tendered, but is subject to
financing and other conditions as set forth below. Shares
purchased in the Offer will be purchased at a price not less
than $48.50 nor greater than $55.50 per share (such per share
purchase price, the Purchase Price), net to the
seller in cash, without interest, upon the terms and subject to
the conditions set forth in this Offer to Purchase and the
related Letter of Transmittal (which, together with any
amendments or supplements to either, collectively constitute the
Offer). Unless the context requires otherwise, all
references to shares refer to our Common Shares.
The Offer will expire at 12:00 midnight, New York City time, on
Thursday, February 8, 2007, unless extended (such date and
time, as the same may be extended, the Expiration
Time).
We will select the lowest Purchase Price that will enable us to
purchase 4,504,504 shares or, if a lesser number of shares
is validly tendered, all shares that are validly tendered and
not validly withdrawn, subject to the terms and conditions of
the Offer. All shares acquired in the Offer will be acquired at
the Purchase Price regardless of whether a shareholder tendered
any shares at a lower price.
We will purchase only those shares validly tendered at prices at
or below the Purchase Price, and not validly withdrawn. However,
because of the odd lot priority, proration and
conditional tender provisions described in this Offer to
Purchase, we will not purchase all of the shares tendered at or
below the Purchase Price if more than the number of shares we
seek are tendered. We will return shares tendered at prices in
excess of the Purchase Price and shares we do not purchase
because of the odd lot priority, proration or
conditional tenders promptly following the Expiration Time.
We reserve the right to purchase more than 4,504,504 shares
pursuant to the Offer, subject to certain legal requirements.
See Section 1, Number of Shares; Expiration Time;
Priority of Purchases; Proration; Odd Lot and
Section 15, Extension of the Offer; Termination;
Amendment.
Tendering shareholders whose shares are registered in their own
names and who validly tender their shares directly to the
Depositary for the Offer will not be obligated to pay brokerage
fees or commissions or, except as set forth in Section 5,
stock transfer taxes on the purchase of shares by us in the
Offer. If you own your shares through a broker, dealer,
commercial bank, trust company or other nominee and that person
tenders your shares on your behalf, that person may charge you a
fee for doing so. You should consult your broker, dealer,
commercial bank, trust company or other nominee to determine
whether any charges will apply. Participants in one of our
401(k) Plans whose shares are held by the plan trustee will not
incur any additional brokerage commissions.
Participants in our 401(k) Plans or our DSPP may not use the
Letter of Transmittal to direct the tender of their shares held
in one of the plans, but instead must follow the separate
instructions related to those shares. Participants in one of our
401(k) Plans or our DSPP may instruct the trustee or
administrator of the plan in which they participate as set forth
in the Letter to Participants in The Scotts Company LLC
Retirement Savings Plan, Letter to Participants in
the Smith & Hawken 401(k) Plan or the
Letter to Participants in The Scotts Miracle-Gro Company
Discounted Stock Purchase Plan, as applicable, to tender
some or all of the shares allocated to the participants
account. If a participants instructions are not received
three business days prior to the Expiration Time, the trustee or
custodian will not tender shares allocated to the
participants account. See Section 3,
Procedures for Tendering Shares.
1
In addition, holders of vested but unexercised options to
purchase shares outstanding under our equity incentive plans may
exercise those options and tender some or all of the shares
issued upon such exercise. Holders of stock awards and other
restricted equity interests may not tender shares or shares
represented by such interests unless they are fully vested and
transferable.
The Offer is subject to important conditions, including the
receipt by us of financing on terms and conditions satisfactory
to us in an amount sufficient to purchase shares pursuant to the
Offer. See Section 7, Conditions of the
Offer.
Our Board has approved the Offer. However, neither we nor our
Board nor the Dealer Manager, the Information Agent nor the
Depositary makes any recommendation to you as to whether to
tender or refrain from tendering your shares or as to the price
or prices at which you may choose to tender them. You must make
your own decision as to whether to tender your shares and, if
so, how many shares to tender and the price or prices at which
you will tender them. In doing so, you should consider our
reasons for making the Offer. See Section 2,
Purpose of the Offer; Certain Effects of the Offer;
Other Plans.
Each of our directors and executive officers has advised us
that he or she does not intend to tender any shares in the
Offer. In addition, our largest shareholder, Hagedorn
Partnership, L.P., of which James Hagedorn, our Chairman and
Chief Executive Officer, and Katherine Hagedorn Littlefield, one
of our directors, are partners, has advised us that it does not
intend to tender any shares in the Offer. As a result, the Offer
will increase the proportional holdings of our directors,
executive officers and the Hagedorn Partnership, L.P. For
example, the beneficial ownership of the Hagedorn Partnership,
L.P. will increase from 30.8% before the Offer to 33.0% after
the consummation of the Offer if all 4,504,504 shares are
repurchased. After the expiration of the Offer, our directors,
executive officers
and/or the
Hagedorn Partnership, L.P. may, subject to applicable law and
SMGs applicable policies and practices, sell shares from
time to time in open market transactions at prices that may be
more or less favorable than the Purchase Price to be paid to our
shareholders in the Offer.
We will pay the fees of and expenses incurred in connection with
the Offer by Banc of America Securities LLC, the Dealer Manager
for the Offer, National City Bank, the Depositary for the Offer,
and D.F. King & Co., Inc., the Information Agent
for the Offer. See Section 16, Fees and
Expenses.
As of December 29, 2006, there were approximately
67,668,683 Common Shares issued and outstanding. The
4,504,504 shares that we are offering to purchase hereunder
represent approximately 6.7% of the total number of outstanding
Common Shares. The Common Shares are listed and traded on the
NYSE under the symbol SMG. On December 11,
2006, the last full trading day before we first announced our
intention to make the Offer, the closing price of the Common
Shares as reported on the NYSE was $50.83 per share. On
January 9, 2007, the last full trading day before we commenced
the Offer, the closing price of the Common Shares on the NYSE
was $52.04 per share. You are urged to obtain current market
quotations for the Common Shares before deciding whether and, if
so, at what price or prices, to tender your shares. See
Section 8, Price Range of the Shares.
This Offer to Purchase and the related Letter of Transmittal
contain important information that you should read carefully
before you make any decision regarding the Offer.
2
THE
TENDER OFFER
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1.
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Number of
Shares; Expiration Time; Priority of Purchases; Proration; Odd
Lot
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General. Subject to the terms and conditions
of the Offer, we will purchase 4,504,504 shares or, if a
lesser number of shares is validly tendered, all shares that are
validly tendered and not validly withdrawn, at the Purchase
Price, net to the seller in cash, without interest.
We will purchase all shares validly tendered and not validly
withdrawn, upon the terms and subject to the conditions of the
Offer, including the odd lot priority, proration and
conditional tender provisions described in this Offer to
Purchase. In accordance with the rules of the Securities and
Exchange Commission (the SEC), we may, and we
expressly reserve the right to, purchase in the Offer an
additional amount of shares not to exceed 2% of the outstanding
Common Shares (approximately 1,353,373 shares) without
amending or extending the Offer. In addition, we could decide to
purchase shares beyond a 2% increase, subject to applicable
legal requirements. See Section 2, Purpose of the
Offer; Certain Effects of the Offer; Other Plans and
Section 15, Extension of the Offer; Termination;
Amendment. All shares not purchased because of the odd
lot priority, proration or conditional tender provisions will be
returned to the tendering shareholders or, in the case of shares
delivered by book-entry transfer, credited to the account at the
book-entry transfer facility from which the transfer had
previously been made, at our expense promptly following the
Expiration Time (as defined below).
As described in Section 14, U.S. Federal
Income Tax Consequences, the number of shares that we
will purchase from a shareholder in the Offer may affect the
U.S. federal income tax consequences to that shareholder
and, therefore, may be relevant to a shareholders decision
whether or not to tender shares in the Offer.
This Offer to Purchase and the related Letter of Transmittal
will be mailed to record holders of shares and will be furnished
to brokers, dealers, commercial banks and trust companies whose
names, or the names of whose nominees, appear on our shareholder
list or, if applicable, who are listed as participants in a
clearing agencys security position listing for subsequent
transmittal to beneficial owners of shares.
Expiration Time. The term Expiration
Time means 12:00 midnight, New York City time, on
Thursday, February 8, 2007, unless and until we, in our
reasonable discretion, have extended the period of time during
which the Offer will remain open, in which event the term
Expiration Time shall refer to the latest time and
date at which the Offer, as so extended by us, shall expire. See
Section 15, Extension of the Offer; Termination;
Amendment, for a description of our right to extend,
delay, terminate or amend the Offer.
Subject to applicable SEC regulations, we reserve the right, in
our sole discretion, to change the terms of the Offer,
including, but not limited to, purchasing more or less than
4,504,504 shares in the Offer. If:
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we increase the maximum Purchase Price above $55.50 per share or
decrease the minimum Purchase Price below $48.50 per share,
increase the number of shares being sought in the Offer (and
such increase exceeds 2% of the outstanding Common Shares), or
decrease the number of shares being sought; and
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the Expiration Time is less than ten business days from, and
including, the date that notice of any such increase or decrease
is first published, sent or given in the manner specified in
Section 15,
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then the Offer will be extended as necessary so that there
are ten business days from the date of such notice until the
Expiration Time. For the purposes of the Offer, a business
day means any day other than a Saturday, Sunday or United
States federal holiday and consists of the time period from
12:01 a.m. through 12:00 midnight, New York City time.
If you are a participant in one of our 401(k) Plans, you should
be aware that the plans are prohibited from selling shares to us
for less than adequate consideration. Please refer to the
Letter to Participants in The Scotts Company LLC
Retirement Savings Plan or Letter to Participants in
the Smith & Hawken 401(k) Plan, as applicable,
for more information with respect to this limitation.
3
We also expressly reserve the right, in our sole discretion, at
any time and from time to time, and regardless of whether or not
any of the events set forth in Section 7,
Conditions of the Offer, shall have occurred
or shall be deemed by us to have occurred, to extend the period
of time during which the Offer is open and thereby delay
acceptance for payment of, and payment for, any shares by giving
oral or written notice of such extension to the Depositary and
making a public announcement of such extension. See
Section 15, Extension of the Offer; Termination;
Amendment.
Priority of Purchases. If any of the
conditions described in Section 7, Conditions of
the Offer are not satisfied or waived prior to the
Expiration Time, we will not complete the Offer and we will
promptly return all tendered shares. If all such conditions
described in Section 7 have been satisfied or waived and,
if 4,504,504 shares or fewer have been validly tendered and
not validly withdrawn at or prior to the Expiration Time, we
will purchase all such shares. If the conditions described in
Section 7 have been satisfied or waived and more than
4,504,504 shares have been validly tendered and not validly
withdrawn at or prior to the Expiration Time, we will purchase
shares in the following order of priority:
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first, all such shares owned beneficially or of record by
an Odd Lot Holder (as defined below) who validly tenders all of
such shares (partial tenders will not qualify for this
preference) at or below the Purchase Price and completes, or
whose broker, dealer, commercial bank, trust company or other
nominee completes, the section captioned Odd Lot in
the Letter of Transmittal and, if applicable, in the Notice of
Guaranteed Delivery, however, the Odd Lot preference will not be
available to shares tendered under one of our 401(k) Plans;
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second, after purchase of all of the foregoing shares,
all other shares tendered at or below the Purchase Price on a
pro rata basis, if necessary (except for shareholders who
tendered their shares conditionally and for which the condition
was not satisfied); and
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third, if necessary to permit us to purchase
4,504,504 shares (or such greater number of shares as we
may elect to purchase), shares conditionally tendered at or
below the Purchase Price for which the condition was not
initially satisfied, to the extent feasible, by random lot (to
be eligible for purchase by random lot, shareholders whose
shares are conditionally tendered must have tendered all of
their shares).
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In accordance with Instruction 5 of the Letter of
Transmittal, shareholders desiring to tender shares must specify
the price or prices, not less than $48.50 nor greater than
$55.50 per share, at which they are willing to sell their shares
to us in the Offer. Alternatively, shareholders desiring to
tender shares can choose not to specify a price and, instead,
elect to tender their shares at the Purchase Price ultimately
paid for shares validly tendered and not validly withdrawn in
the Offer, which could result in the tendering shareholder
receiving a price per share as low as $48.50. For purposes of
calculating the Purchase Price, shares tendered at the Purchase
Price determined in the Offer will be deemed tendered at $48.50.
As promptly as practicable following the Expiration Time, we
will, in our sole discretion, determine the Purchase Price that
we will pay for shares validly tendered and not validly
withdrawn, taking into account the number of shares tendered and
the prices specified by tendering shareholders. We will select
the lowest Purchase Price that will enable us to purchase
4,504,504 shares or, if a lesser number of shares is
validly tendered, all shares that are validly tendered and not
validly withdrawn. By following the instructions in the Letter
of Transmittal, shareholders can specify one minimum price for a
specified portion of their shares and a different minimum price
for other specified shares, but a separate Letter of Transmittal
must be submitted for shares tendered at each price. Once the
Purchase Price has been selected, we will promptly disclose it
in a manner calculated to inform shareholders of this
information.
Proration. In the event of an
over-subscription by shareholders in the Offer, shares tendered
will be subject to proration, except for Odd Lot
shares (as defined below). Therefore, all of the shares that a
shareholder tenders in the Offer may not be purchased (even if
they are tendered at prices at or below the Purchase Price) or,
if a tender is conditioned upon the purchase of a specified
number of shares, it is possible that none of those shares will
be purchased (even though they were tendered at prices at or
below the Purchase Price).
4
If proration of tendered shares is required, we will determine
the proration factor promptly following the Expiration Time,
subject to adjustment to avoid the purchase of fractional shares
and subject to the provisions governing conditional tenders.
Proration for each shareholder tendering shares, other than Odd
Lot Holders, will be based on the ratio of the number of shares
tendered by the shareholder to the total number of shares
tendered by all shareholders at or below the Purchase Price
(excluding shares held by Odd Lot Holders). Because of the
difficulty in determining the number of shares validly tendered
and not validly withdrawn, and because of the Odd Lot preference
described below and the conditional tender procedure described
in Section 6, we expect that we will not be able to
announce the final proration factor or commence payment for any
shares purchased pursuant to the Offer for up to seven business
days after the Expiration Time. The preliminary results of any
proration will be announced by press release promptly after the
Expiration Time. After the Expiration Time, shareholders may
obtain preliminary proration information from the Information
Agent and also may be able to obtain the information from their
brokers.
If, as a result of the number of shares tendered, the number of
shares to be purchased from a shareholder making a conditional
tender is reduced below the minimum number specified by that
shareholder, that tender will automatically be regarded as
withdrawn, except as described in Section 6, and all shares
tendered by the shareholder will be returned promptly after the
Expiration Time at our expense.
Odd Lot. The term Odd Lot shares
means all shares tendered at prices at or below the Purchase
Price by a shareholder who owns beneficially or of record a
total of fewer than 100 shares (such shareholder, an
Odd Lot Holder) and so certified in the appropriate
place on the Letter of Transmittal and, if applicable, on the
Notice of Guaranteed Delivery. To qualify for the priority
preference for Odd Lot shares, an Odd Lot Holder must tender all
shares owned in accordance with the procedures described in
Section 3, Procedures for Tendering
Shares. Odd Lot shares will be accepted for payment
before any proration of the purchase of other tendered shares.
This preference is not available to partial tenders or to
beneficial or record holders of an aggregate of 100 or more
shares, even if these holders have separate accounts or
certificates representing fewer than 100 shares. This
preference is also not available to participants for whose
benefit the applicable trustee holds fewer than 100 shares
in our 401(k) Plans. By validly tendering shares in the Offer,
an Odd Lot Holder who holds shares in its name and tenders its
shares directly to the Depositary would not only avoid the
payment of brokerage commissions, but also would avoid any
applicable Odd Lot discounts in a sale of the holders
shares. Any Odd Lot Holder wishing to tender all shares held
pursuant to the Offer should complete the section entitled
Odd Lot in the Letter of Transmittal and, if
applicable, in the Notice of Guaranteed Delivery.
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2.
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Purpose
of the Offer; Certain Effects of the Offer; Other
Plans
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Purpose of the Offer. On December 12,
2006, we announced that our Board had authorized the Offer to
repurchase up to $250 million of our outstanding Common
Shares, and we announced that we intend to pay a significant
cash dividend, currently anticipated to be $500 million in
the aggregate, to shareholders of record as of a record date to
be determined after the consummation of the Offer.
We believe that the repurchase of shares and the proposed
dividend is consistent with our long-term goal of maximizing
shareholder value. We had previously implemented a
$500 million share repurchase program and repurchased
approximately $87.9 million of our Common Shares pursuant
to that program.
In considering the Offer, our management and Board reviewed,
with the assistance of outside advisors, a variety of
alternatives for using our available financial resources. They
have evaluated our capital structure, free cash flow, leverage
ratio, financial position and the anticipated cost and
availability of financing, as well as our strategy and
expectations for the future and other financial, industry and
operating metrics. We note, however, that actual results may
differ from our expectations. See Forward-Looking
Statements. Based on this review and evaluation, our
management and Board believe that the Offer is a prudent use of
our financial resources.
We believe that by accessing the debt markets under what we
consider are favorable conditions, we will be able to return
value to shareholders now, while, at the same time, increasing
the return on capital that
5
remains invested in our business. We also believe that the
Offer, and the financing thereof, together with the special
dividend, creates an appropriate capital structure for our
current mix of businesses.
We believe that the Offer represents a mechanism to provide
shareholders, if they so elect, with the opportunity to tender
all or a portion of their shares and, thereby, receive a return
of capital. The Offer also provides shareholders (particularly
those who, because of the size of their holdings, might not
otherwise be able to sell their shares without potential
disruption to the market price) with an opportunity to obtain
liquidity with respect to all or a portion of their holdings,
without potential disruption to the market price and the usual
costs associated with open market transactions. Alternatively,
shareholders may elect not to participate and thereby increase
their percentage ownership of SMG following the completion of
the Offer. As a result, our management and Board believe that
investing in our own shares in this manner is an attractive use
of capital and an efficient means to provide value to our
shareholders. In connection with the consummation of the Offer,
we will terminate the balance of our five-year $500 million
share repurchase program.
Our Board determined to conduct a modified Dutch
auction tender offer and delegated authority to our Chief
Executive Officer, Chief Financial Officer, Treasurer and each
of our Executive Vice Presidents, in consultation with the
Finance Committee of our Board, to authorize a price range for
the shares after considering, among other matters, recent stock
trading ranges and volumes for the Common Shares, various self
tender offers affected by other companies, liquidity
opportunities available to our shareholders, and our results of
operations, current financial condition and expected future cash
needs.
After the Offer is completed, we believe that our anticipated
cash flow from operations, our access to credit facilities and
capital markets and our financial condition will be adequate for
our needs. However, actual experience may differ significantly
from our expectations. See Forward-Looking
Statements. In considering the Offer, our management
and our Board took into account the expected financial impact of
the Offer, including our increased indebtedness as described in
Section 9, Source and Amount of Funds.
Our Board has approved the Offer. However, neither we nor our
Board nor the Dealer Manager, the Information Agent nor the
Depositary makes any recommendation to you as to whether to
tender or refrain from tendering your shares or as to the price
or prices at which you may choose to tender them. You must make
your own decision as to whether to tender your shares and, if
so, how many shares to tender and the price or prices at which
you will tender them. In doing so, you should consider our
reasons for making the Offer. Our directors and executive
officers have advised us that they do not intend to tender any
shares owned by them in the Offer. See Section 11,
Interests of Directors, Executive Officers and
Affiliates; Transactions and Arrangements Concerning the
Shares.
Certain Effects of the Offer. Shareholders who
do not tender their shares pursuant to the Offer and
shareholders who otherwise retain an equity interest in the
Company as a result of a partial tender of shares or a proration
will continue to be owners of the Company. As a result, those
shareholders will realize a proportionate increase in their
relative equity interest in the Company and, thus, in our future
earnings and assets, if any, and will bear the attendant risks
associated with owning our equity securities, including risks
resulting from our purchase of shares. We can give no assurance,
however, that we will not issue additional shares or equity
interests in the future. Shareholders may be able to sell
non-tendered shares in the future on the NYSE or otherwise, at a
net price which may be significantly higher or lower than the
Purchase Price. We can give no assurance, however, as to the
price at which a shareholder may be able to sell his or her
shares in the future, which may be higher or lower than the
Purchase Price paid by us in the Offer.
Each of our directors and executive officers has advised us
that he or she does not intend to tender any shares in the
Offer. In addition, our largest shareholder, Hagedorn
Partnership, L.P., of which James Hagedorn, our Chairman and
Chief Executive Officer, and Katherine Hagedorn Littlefield, one
of our directors, are partners, has advised us that it does not
intend to tender any shares in the Offer. As a result, the Offer
will increase the proportional holdings of our directors,
executive officers and the Hagedorn Partnership, L.P. For
example, the beneficial ownership of the Hagedorn Partnership,
L.P. will increase from 30.8% before the Offer to 33.0% after
the consummation of the Offer if all 4,504,504 shares are
repurchased. After the expiration of the Offer, our directors,
executive officers
6
and/or
the Hagedorn Partnership, L.P. may, subject to applicable law
and SMGs applicable policies and practices, sell shares
from time to time in open market transactions at prices that may
be more or less favorable than the Purchase Price to be paid to
our shareholders in the Offer.
Shares we acquire pursuant to the Offer will be held in
treasury, which is consistent with the treatment of shares
repurchased under the existing $500 million share
repurchase program. The Board may determine to retire some or
all of such shares in the future.
The Offer will reduce our public float (the number
of shares owned by non-affiliate shareholders and available for
trading in the securities markets). Such reduction in our public
float may reduce the volume of trading in our Common Shares and
may result in lower stock prices or reduced liquidity in the
trading market for our Common Shares following completion of the
Offer.
The Offer also provides certain shareholders with an efficient
way to sell their shares without incurring brokers fees or
commissions. Where shares are tendered by the registered owner
of those shares directly to the Depositary, the sale of those
shares in the Offer will permit the seller to avoid the usual
transaction costs associated with open market transactions.
Furthermore, Odd Lot Holders who hold shares registered in their
names and tender their shares directly to the Depositary and
whose shares are purchased in the Offer will avoid not only the
payment of brokerage commissions but also any applicable odd-lot
discounts that might be payable on sales of their shares in
transactions on the NYSE.
In connection with the consummation of the Offer, we expect to
incur additional debt under our new credit facilities, as
described in Section 9, Source and Amount of
Funds. At September 30, 2006, on a pro forma
basis after giving effect to the Offer, assuming the purchase by
us of 4,504,504 shares at the Purchase Price of $55.50 per
share (the maximum price in the modified Dutch auction range)
and the incurrence of $774 million of additional debt in
connection with the Offer, the proposed special dividend and
costs associated with the repurchase of our 6.625% senior
subordinated notes, we would have had approximately
$1.2 billion of long-term debt outstanding and
shareholders equity of approximately $320.0 million.
Our substantial indebtedness could have important consequences
to our shareholders, such as requiring us to dedicate a
substantial portion of our cash flow from operations to payments
on our indebtedness, thereby reducing the availability of our
cash flow to fund working capital, capital expenditures and
other general corporate purposes; limiting our flexibility in
planning for, or reacting to, changes in our business and the
industry in which we operate; or placing us at a competitive
disadvantage compared to our competitors that have less debt.
See Section 10, Certain Information Concerning
SMG.
The Offer is consistent with our recent history of repurchasing
shares from time to time as a means of increasing shareholder
value. On October 27, 2005, our Board authorized the
repurchase from time to time during fiscal years 2006 through
2010 of up to $100 million of our Common Shares per fiscal
year or $500 million in the aggregate. We have repurchased
1,964,200 shares, or approximately $87.9 million in
aggregate value, of our Common Shares since approval of the
repurchase plan. In connection with the consummation of the
Offer, we will terminate the outstanding share repurchase plan.
Other Plans. With the exception of
acquisitions of businesses that we do not believe to be material
or any other event or plan disclosed in this Offer to Purchase,
we currently have no plans, proposals or negotiations underway
that relate to or would result in:
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any extraordinary transaction, such as a merger, reorganization
or liquidation, involving us or any of our subsidiaries;
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any purchase, sale or transfer of a material amount of our
assets or any of our subsidiaries;
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any material change in our present dividend rate or policy or
indebtedness or capitalization;
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any change in our present Board or management, including any
plans or proposals to change the number or the term of directors
(although we may fill vacancies arising on our Board) or to
change any material term of the employment contract of any
executive officer;
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any other material change in our corporate structure or business;
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any class of our equity securities being delisted from or
ceasing to be authorized to be quoted on the NYSE;
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any class of our equity securities becoming eligible for
termination of registration under Section 12(g)(4) of the
Exchange Act;
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the suspension of our obligation to file reports under
Section 15(d) of the Exchange Act;
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the acquisition or disposition by any person of our
securities; or
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any changes in our articles of incorporation, code of
regulations or other governing instruments or other actions that
could impede the acquisition of control of us.
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3.
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Procedures
for Tendering Shares
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Valid Tender. For you to make a valid tender
of shares in the Offer, either:
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the Depositary must receive, at one of the addresses set forth
on the back cover of this Offer to Purchase and prior to the
Expiration Time:
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a Letter of Transmittal, or a facsimile thereof, validly
completed and duly executed, together with any required
signature guarantees, or, in the case of a book-entry transfer,
an agents message (as defined below), and any other
required documents; and
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either certificates representing the tendered shares or, in the
case of tendered shares delivered in accordance with the
procedures for book-entry transfer we describe below, a
book-entry confirmation (as defined below) of that
delivery; or
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you must, before the Expiration Time, comply with the guaranteed
delivery procedures described below.
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If a broker, dealer, commercial bank, trust company or other
nominee holds your shares, it is likely they have an earlier
deadline for you to act to instruct them to accept the Offer on
your behalf. We urge you to contact your broker, dealer,
commercial bank, trust company or other nominee to find out
their applicable deadline.
Participants in our 401(k) Plans whose shares are held by the
plan trustee and participants in our DSPP may not use the Letter
of Transmittal to direct the tender of shares held in the
applicable plan account. Instead, to tender plan shares, plan
participants must follow the separate instructions in the
Letter to Participants in The Scotts Company LLC
Retirement Savings Plan, the Letter to Participants
in the Smith & Hawken 401(k) Plan or the
Letter to Participants in The Scotts Miracle-Gro Company
Discounted Stock Purchase Plan, as applicable, sent to
affected participants in such plans. These instructions will
include instructions to participants on how to direct the tender
of shares held in the applicable plan account and set forth the
deadline for such direction. The deadline likely will be earlier
than the Expiration Time.
The valid tender of shares by you by one of the procedures
described in this Section 3 will constitute a binding
agreement between you and us on the terms of, and subject to the
conditions to, the Offer.
In accordance with Instruction 5 of the Letter of
Transmittal, each shareholder desiring to tender shares pursuant
to the Offer must either (1) check one of the boxes
corresponding to the price at which shares are being tendered in
the section of the Letter of Transmittal captioned
Shares Tendered at Price Determined by
Shareholder, or (2) check the box in the section of
the Letter of Transmittal captioned Shares Tendered
at Price Determined in the Tender Offer, in which case you
will be deemed to have tendered your shares at the minimum price
of $48.50 (YOU SHOULD UNDERSTAND THAT THIS ELECTION MAY CAUSE
THE PURCHASE PRICE TO BE LOWER AND COULD RESULT IN THE TENDERED
SHARES BEING PURCHASED AT THE MINIMUM PRICE OF $48.50 PER
SHARE). A tender of shares will be valid if, and only if, one of
these boxes is checked on the Letter of Transmittal.
8
If you wish to indicate a specific price (in increments of
$0.50) at which your shares are being tendered, you must check
the appropriate box in the section of the Letter of Transmittal
captioned Shares Tendered at Price Determined by
Shareholder. You should be aware that this election could
mean that none of your shares will be purchased in the Offer if
you check a box other than the box representing the lowest
Purchase Price.
If you wish to maximize the chance that your shares will be
purchased in the Offer, you should check the box in the section
of the Letter of Transmittal captioned
Shares Tendered at Price Determined in the Tender
Offer. For purposes of calculating the Purchase Price,
shares tendered at the Purchase Price determined in the Offer
will be deemed tendered at $48.50. Note that this election could
result in the tendered shares being purchased at the minimum
Purchase Price of $48.50.
If you wish to tender shares at more than one price, you must
complete separate Letters of Transmittal for each price at which
shares are being tendered. You cannot tender the same shares
(unless previously validly withdrawn in accordance with the
terms of the Offer) at more than one price.
Odd Lot Holders who tender all their shares must also complete
the section captioned Odd Lot in the Letter of
Transmittal and, if applicable, in the Notice of Guaranteed
Delivery, to qualify for the preferential treatment available to
Odd Lot Holders as set forth in Section 1, Number
of Shares; Expiration Time; Priority of Purchases; Proration;
Odd Lot.
We urge shareholders who hold shares through brokers, dealers,
commercial banks, trust companies or other nominees to consult
such persons to determine whether transaction costs are
applicable if they tender shares through such persons and not
directly to the Depositary.
Book-Entry Transfer. For purposes of the
Offer, the Depositary will establish an account for the shares
at The Depository Trust Company (the book-entry transfer
facility) within two business days after the date of this
Offer to Purchase. Any financial institution that is a
participant in the book-entry transfer facilitys system
may make book-entry delivery of shares by causing the book-entry
transfer facility to transfer those shares into the
Depositarys account in accordance with the book-entry
transfer facilitys procedures for that transfer. Although
delivery of shares may be effected through book-entry transfer
into the Depositarys account at the book-entry transfer
facility, the Letter of Transmittal, or a facsimile thereof,
validly completed and duly executed, with any required signature
guarantees, or an agents message, and any other required
documents must, in any case, be transmitted to, and received by,
the Depositary at one of the addresses set forth on the back
cover of this Offer to Purchase prior to the Expiration Time, or
the tendering shareholder must comply with the guaranteed
delivery procedures we describe below.
The confirmation of a book-entry transfer of shares into the
Depositarys account at the book-entry transfer facility as
we describe above is referred to in this Offer to Purchase as a
book-entry confirmation. Delivery of documents to
the book-entry transfer facility in accordance with the
book-entry transfer facilitys procedures will not
constitute delivery to the Depositary.
The term agents message means a message
transmitted by the book-entry transfer facility to, and received
by, the Depositary and forming a part of a book-entry
confirmation, stating that the book-entry transfer facility has
received an express acknowledgment from the participant
tendering shares through the book-entry transfer facility that
the participant has received and agrees to be bound by the terms
of the Letter of Transmittal and that we may enforce that
agreement against that participant.
The method of delivery of shares, the Letter of Transmittal
and all other required documents, including delivery through the
book-entry transfer facility, is at the election and risk of the
tendering shareholder. Shares will be deemed delivered only when
actually received by the Depositary (including, in the case of a
book-entry transfer, by book-entry confirmation). If you plan to
make delivery by mail, we recommend that you deliver by
registered mail with return receipt requested and obtain proper
insurance. In all cases, sufficient time should be allowed to
ensure timely delivery.
9
Signature Guarantees. No signature guarantee
will be required on a Letter of Transmittal for shares tendered
thereby if:
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the registered holder (as defined below) of those
shares signs the Letter of Transmittal and has not completed
either the box entitled Special Delivery
Instructions or the box entitled Special Payment
Instructions on the Letter of Transmittal; or
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those shares are tendered for the account of an eligible
institution (as defined below).
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A registered holder of tendered shares will include
any participant in the book-entry transfer facilitys
system whose name appears on a security position listing as the
owner of those shares, and an eligible institution
is a financial institution, which term includes most
commercial banks, savings and loan associations and brokerage
houses, that is a participant in any of the following:
(1) the Securities Transfer Agents Medallion Program;
(2) the New York Stock Exchange, Inc. Medallion Signature
Program; or (3) the Stock Exchange Medallion Program.
Except as described above, all signatures on any Letter of
Transmittal for shares tendered thereby must be guaranteed by an
eligible institution. See Instruction 12 of the Letter of
Transmittal. If the certificates for shares are registered in
the name of a person other than the signer of the Letter of
Transmittal, or if payment is to be made or certificates for
shares not tendered or not accepted for payment are to be
returned to a person other than the registered holder of the
certificates surrendered, then the tendered certificates must be
endorsed or accompanied by appropriate stock powers, in either
case signed exactly as the name or names of the registered
holders or owners appear on the certificates, with the
signatures on the certificates or stock powers guaranteed as
described above. See Instruction 12 of the Letter of
Transmittal.
Guaranteed Delivery. If you wish to tender
shares in the Offer and your certificates for shares are not
immediately available or the procedures for book-entry transfer
cannot be completed on a timely basis or time will not permit
all required documents to reach the Depositary prior to the
Expiration Time, you may still validly tender your shares if all
the following conditions are met:
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your tender is made by or through an eligible institution;
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a validly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form we provide, is received by
the Depositary, as provided below, prior to the Expiration
Time; and
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the Depositary receives, at one of the addresses set forth on
the back cover of this Offer to Purchase and within the period
of three NYSE trading days after the date of execution of that
Notice of Guaranteed Delivery, either: (1) the certificates
representing the shares being tendered together with (a) a
Letter of Transmittal, or a facsimile thereof, relating thereto
that has been validly completed and duly executed and includes
all signature guarantees required thereon and (b) all other
required documents; or (2) in the case of any book-entry
transfer of the shares being tendered that is effected in
accordance with the book-entry transfer procedures we describe
above under Book-Entry Transfer within the
same three NYSE trading day period: (a) a Letter of
Transmittal or a facsimile thereof, relating thereto that has
been validly completed and duly executed and includes all
signature guarantees required thereon, or an agents
message, (b) a book-entry confirmation relating to that
transfer, and (c) all other required documents.
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For these purposes, a NYSE trading day is any day on
which the New York Stock Exchange is open for business.
A Notice of Guaranteed Delivery must be delivered to the
Depositary by hand, facsimile transmission or mail and must
include a guarantee by an eligible institution in the form set
forth in the Notice of Guaranteed Delivery that is to be
delivered to the Depositary.
401(k) Plans. Participants in our 401(k) Plans
who wish to have the trustee tender shares credited to their
plan account must complete, execute and return to the plan
trustee the tender direction form included in the Letter
to Participants in The Scotts Company LLC Retirement Savings
Plan or the Letter to Participants in the
Smith & Hawken 401(k) Plan, as applicable, sent
to affected participants in the plans. Participants in
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our 401(k) Plans may not use the Letter of Transmittal to direct
the tender of their shares held in those plans, but instead must
follow the separate instruction form sent to them. Although the
Offer will remain open to all shareholders until the Expiration
Time, if the trustee does not receive a participants
instructions by 4:00 p.m., New York City time, on
February 5, 2007, the trustee will not tender shares
attributable to the participants account. Participants are
urged to read the Letter to Participants in The Scotts
Company LLC Retirement Savings Plan or the Letter to
Participants in the Smith & Hawken 401(k) Plan,
as applicable, and the separate direction form carefully. Please
note that the Employee Retirement Income Security Act of 1974,
as amended (ERISA) and our trust agreements with the
trustee of the 401(k) Plans prohibit the sale of shares to us
for less than adequate consideration (which is
defined by ERISA for a publicly traded security as the
prevailing market price on a national securities exchange).
Accordingly, if you elect to tender shares held in your account
under a 401(k) Plan at a price that is lower than the closing
price of our Common Shares on the date that the trustee of such
401(k) Plan tenders the shares, the tender price you elect will
be deemed to have been increased to the closest tender price
that is not less than the closing price of our Common Shares on
the NYSE on the date that the trustee of such 401(k) Plan
tenders the shares. This could result in the selected percentage
of your shares not being accepted for purchase by us. Similarly,
if you elect to maximize the chance of having us purchase shares
held in your account under a 401(k) Plan by checking the box
captioned Shares Tendered at Price Determined in the
Tender Offer, meaning it will be equal to the Purchase
Price, on the applicable direction form and the closing price of
our Common Shares on the NYSE on the Expiration Date is within
the range of prices set forth on such form, the tender price you
elect will be deemed to have been increased to the closest
tender price that is not less than the closing price of our
Common Shares on the NYSE on the Expiration Date. If the closing
price of our shares on the Expiration Date is greater than the
maximum price available in the Offer, none of your shares will
be tendered and your tender instructions will be deemed to have
been withdrawn.
The proceeds received by a 401(k) Plan from any purchase of
shares in the Offer from a participants plan account will
be deposited in the participants account and invested in
the Fidelity Managed Income Portfolio for participants in The
Scotts Company LLC Retirement Savings Plan and the Fidelity
Advisor Stable Value Portfolio II for participants in the
Smith & Hawken 401(k) Plan and will remain in the applicable
401(k) Plan; provided, however, that, subject to the terms of
our 401(k) Plans, including applicable transfer restrictions
imposed by the plan administrator, you may elect to redirect the
proceeds to any other available investments under our 401(k)
Plans once the proceeds have been allocated to your account.
Stock Purchase Plan. Participants in the DSPP
who wish to have the administrator tender shares attributable to
their plan account that have been held for at least
12 months must complete, execute and return to the
administrator the tender instruction form included with the
Letter to Participants in The Scotts Miracle-Gro Company
Discounted Stock Purchase Plan sent to affected
participant in the DSPP. Participants in our DSPP may not use
the Letter of Transmittal to direct the tender of their shares
held in the DSPP, but instead must follow the separate tender
instruction form provided by the administrator. If the
administrator does not receive a participants instructions
by 4:00 p.m., New York City time, on February 5, 2007,
the administrator will not tender shares attributable to such
participants DSPP account. Participants are urged to read
the Letter to Participants in The Scotts Miracle-Gro
Company Discounted Stock Purchase Plan and the separate
tender instruction form carefully.
Cash received by the administrator for any shares tendered and
accepted for payment by SMG, less any applicable withholding,
will be distributed to participants in the DSPP by check. Any
shares tendered but not accepted for payment by us will remain
in the participants account under the plan.
Stock Option Plans; Freestanding Stock Appreciation
Rights. Holders of vested but unexercised options
to purchase shares or freestanding stock appreciation rights may
exercise such options or freestanding stock appreciation rights
in accordance with the terms of the equity plan under which they
were granted and tender the shares received upon such exercise
in accordance with the Offer. Holders of vested but unexercised
options or freestanding stock appreciation rights should
evaluate this Offer to Purchase carefully to determine if
participation would be advantageous to them, based on, among
other things, their stock option or freestanding stock
appreciation right exercise or base prices, the date of their
grants and the years left to exercise their options or
freestanding stock appreciation rights, the range of tender
prices and the provisions for pro rata
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purchases by the Company described in Section 1. Please
note that shares tendered pursuant to the exercise of a vested
option or freestanding stock appreciation right will not be
eligible for the special dividend that is anticipated to be
declared and paid following the consummation of the Offer, and,
since such option or freestanding stock appreciation right will
no longer be outstanding, the option or freestanding stock
appreciation right will not be adjusted to reflect the special
dividend as provided pursuant to the terms of our stock option
plans. We strongly encourage those holders to discuss the
Offer with their tax, financial or other advisors. Holders
of stock awards and other restricted equity interests may not
tender shares or shares represented by such interests unless
they are fully vested. Holders of vested options or freestanding
stock appreciation rights will have to exercise them by
February 1, 2007, to be in a position to tender.
Other Requirements. Notwithstanding any other
provision hereof, payment for shares accepted for payment in the
Offer will in all cases be made only after timely receipt by the
Depositary of:
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certificates representing, or a book-entry confirmation
respecting, those shares;
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a Letter of Transmittal, or a facsimile thereof, validly
completed and duly executed, with any required signature
guarantees thereon, or, in the case of a book-entry transfer, an
agents message in lieu of a Letter of Transmittal; and
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any other documents the Letter of Transmittal requires.
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Accordingly, tendering shareholders may be paid at different
times depending on when certificates representing, or book-entry
confirmations respecting, their shares are actually received by
the Depositary.
Under no circumstances will we pay interest on the Purchase
Price for the shares we purchase in the Offer, regardless of any
extension of or amendment to the Offer or any delay in making
payment for shares accepted for payment in the Offer.
Return of Unpurchased Shares. If any tendered
shares are not purchased, or if less than all shares evidenced
by a shareholders certificates are tendered, certificates
for unpurchased shares will be returned promptly after the
expiration or termination of the Offer or the proper withdrawal
of the shares, or, in the case of shares tendered by book-entry
transfer at the book-entry transfer facility, the shares will be
credited to the appropriate account maintained by the tendering
shareholder at the book-entry transfer facility, in each case
without expense to the shareholder.
Tendering Shareholders Representation and Warranty; Our
Acceptance Constitutes an Agreement. It is a
violation of
Rule 14e-4
under the Exchange Act for a person acting alone or in concert
with others, directly or indirectly, to tender shares for such
persons own account unless at the time of tender and at
the Expiration Time such person has a net long
position in (1) the shares that is equal to or
greater than the amount tendered and will deliver or cause to be
delivered such shares for the purpose of tendering to us within
the period specified in the Offer or (2) other securities
immediately convertible into, exercisable for or exchangeable
into shares (Equivalent Securities) that is equal to
or greater than the amount tendered and, upon the acceptance of
such tender, will acquire such shares by conversion, exchange or
exercise of such Equivalent Securities to the extent required by
the terms of the Offer and will deliver or cause to be delivered
such shares so acquired for the purpose of tendering to us
within the period specified in the Offer.
Rule 14e-4
also provides a similar restriction applicable to the tender or
guarantee of a tender on behalf of another person. A tender of
shares made pursuant to any method of delivery set forth in this
Offer to Purchase will constitute the tendering
shareholders representation and warranty to us that
(a) such shareholder has a net long position in
shares or Equivalent Securities being tendered within the
meaning of
Rule 14e-4,
and (b) such tender of shares complies with
Rule 14e-4.
Our acceptance for payment of shares tendered pursuant to the
Offer will constitute a binding agreement between the tendering
shareholder and us upon the terms and subject to the conditions
of the Offer.
Determination of Validity. All questions as to
the number of shares to be accepted, the price to be paid for
shares to be accepted and the validity, form, eligibility
(including time of receipt) and acceptance for payment of any
tender of shares will be determined by us, in our sole
discretion, and our determination will be final and binding on
all parties. We reserve the absolute right to reject any or all
tenders we determine not
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to be in proper form or the acceptance for payment of, or
payment for, shares that may be unlawful. We also reserve the
absolute right to waive any conditions of the Offer with respect
to all shareholders or any defect or irregularity in any tender
with respect to any particular shares or any particular
shareholder whether or not we waive similar defects or
irregularities in the case of other shares or shareholders. No
tender of shares will be deemed to have been validly made until
all defects or irregularities relating thereto have been cured
or waived. None of us, the Dealer Manager, the Depositary, the
Information Agent or any other person will be under any duty to
give notification of any defects or irregularities in tenders or
incur any liability for failure to give any such notification.
Our interpretation of the terms of and conditions to the Offer,
including the Letter of Transmittal and the instructions
thereto, will be final and binding. By tendering shares to us,
you agree to accept all decisions we make concerning these
matters and waive any right you might otherwise have to
challenge those decisions.
Backup U.S. Federal Income Tax
Withholding. Under U.S. federal income tax
laws, payments in connection with the Offer may be subject to
backup withholding meaning that 28% of the gross
proceeds payable to a shareholder or other payee pursuant to the
Offer must be withheld and remitted to the United States
Treasury (the Treasury), unless the shareholder or
other payee:
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provides a correct taxpayer identification number (i.e., the
shareholders employer identification number or, for an
individual shareholder, the shareholders social security
number) and certifies, under penalties of perjury, that he, she
or it is not subject to backup withholding, and otherwise
complies with applicable requirements of the backup withholding
rules; or
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establishes that it is exempt from backup withholding (i.e., a
corporation or certain foreign individuals) and, when required,
demonstrates this fact and otherwise complies with applicable
requirements of the backup withholding rules.
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Any amount withheld under these rules will be creditable against
the shareholders U.S. federal income tax liability or
refundable to the extent that it exceeds such liability if the
shareholder provides the required information to the Internal
Revenue Service (the IRS). A shareholder that does
not provide a correct taxpayer identification number may be
subject to penalties imposed by the IRS. Each tendering
shareholder other than a foreign shareholder should complete and
sign the Substitute
Form W-9
included as part of the Letter of Transmittal so as to provide
the information and certification necessary to avoid backup
withholding. Each foreign shareholder should complete and sign
the appropriate IRS
Form W-8
in order to provide the information and certification necessary
to avoid backup withholding. Such statements may be obtained
from the Depositary. See Instruction 2 of the Letter of
Transmittal.
Any tendering shareholder or other payee that fails to comply
fully and sign the Substitute
Form W-9
included in the Letter of Transmittal (or such other IRS form as
may be applicable) may be subject to required U.S. backup
withholding at a rate equal to 28% of the gross proceeds paid to
such shareholder or other payee pursuant to the Offer.
In addition, gross proceeds payable pursuant to the Offer to a
foreign shareholder or its agent will be subject to withholding
of U.S. federal income tax at a rate of 30%, unless SMG
determines that a reduced rate of withholding is applicable
pursuant to a tax treaty or that an exemption from withholding
is applicable because such gross proceeds are effectively
connected with the conduct of a trade or business within the
United States and, in either case, the foreign shareholder
provides the appropriate certification, as described below. For
this purpose, a foreign shareholder is any shareholder that is
not for U.S. federal income tax purposes: (a) a
citizen or resident of the United States, (b) a
corporation, partnership, or other entity created or organized
in or under the laws of the United States or of any political
subdivision thereof, (c) an estate the income of which is
subject to U.S. federal income tax regardless of its source
or (d) a trust (1) the administration of which is
subject to the primary supervision of a court within the United
States and for which one or more U.S. persons have the
authority to control all substantial decisions or (2) for
which a valid election has been made to be treated as a
U.S. person for U.S. federal income tax purposes under
applicable Treasury regulations.
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A foreign shareholder may be eligible to file for a refund of
such amounts withheld or a portion of such amounts withheld if
such shareholder satisfies the complete termination,
substantially disproportionate, or not
essentially equivalent to a dividend tests described in
Section 14 or if such shareholder is entitled to a reduced
rate of withholding pursuant to a tax treaty and we withheld at
a higher rate. In order to obtain a reduced rate of withholding
under a tax treaty, a foreign shareholder must deliver to the
Depositary before payment a properly completed and executed IRS
Form W-8BEN
claiming such an exemption or reduction. Such forms may be
obtained from the Depositary. In order to claim an exemption
from withholding on the grounds that gross proceeds paid
pursuant to the Offer are effectively connected with the conduct
of a trade or business within the United States, a foreign
shareholder must deliver to the Depositary a properly completed
and executed IRS
Form W-8ECI
claiming such exemption. Such forms may be obtained from the
Depositary. See Instruction 2 of the Letter of Transmittal.
Backup withholding generally will not apply to amounts subject
to the 30% rate or a treaty-reduced rate of withholding. Foreign
shareholders should consult their own tax advisors regarding the
application of U.S. federal income tax withholding,
including eligibility for a withholding tax reduction or
exemption and the refund procedure.
For a more complete discussion of U.S. federal income tax
consequences to tendering shareholders, see Section 14,
U.S. Federal Income Tax Consequences.
Lost Certificates. If the share certificates
that you want to surrender have been lost, destroyed or stolen,
you should promptly notify the Depositary at
(800) 622-6757.
The Depositary will instruct you as to the steps that must be
taken in order to replace the certificates.
We will decide, in our sole discretion, all questions as to
the number of shares to be accepted, the price to be paid for
shares to be accepted and the validity, form, eligibility
(including time of receipt) and acceptance for payment of any
tender of shares, and each such decision will be final and
binding on all parties.
Except as this Section 4 otherwise provides, tenders of
shares are irrevocable. You may withdraw any shares that you
have previously tendered in the Offer according to the
procedures we describe below at any time prior to the Expiration
Time. Thereafter, such tenders are irrevocable, except that they
may be withdrawn after 12:00 midnight, New York City time, on
Friday, March 9, 2007 if they have not previously been
accepted.
For a withdrawal to be proper, a written notice of withdrawal
must:
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be received in a timely manner by the Depositary at one of its
addresses set forth on the back cover of this Offer to
Purchase; and
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specify the name of the person having tendered the shares to be
withdrawn, the number of shares to be withdrawn and the name of
the registered holder of the shares to be withdrawn, if
different from the name of the person who tendered the shares.
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If certificates for shares have been delivered or otherwise
identified to the Depositary, then, prior to the physical
release of those certificates, you must submit the serial
numbers shown on those certificates to the Depositary and,
unless an eligible institution has tendered those shares, an
eligible institution must guarantee the signatures on the notice
of withdrawal.
If shares have been delivered in accordance with the procedures
for book-entry transfer described in Section 3, any notice
of withdrawal must also specify the name and number of the
account at the book-entry transfer facility to be credited with
the withdrawn shares and otherwise comply with the book-entry
transfer facilitys procedures.
Withdrawals of tenders of shares may not be rescinded, and any
shares validly withdrawn will thereafter be deemed not validly
tendered for purposes of the Offer. Withdrawn shares may be
re-tendered at any time prior to the Expiration Time by again
following one of the procedures described in Section 3.
14
We will decide, in our sole discretion, all questions as to the
form and validity, including time of receipt, of notices of
withdrawal, and each such decision will be final and binding. We
also reserve the absolute right to waive any defect or
irregularity in the withdrawal of shares by any shareholder,
whether or not we waive similar defects or irregularities in the
case of any other withdrawal. None of us, the Dealer Manager,
the Depositary, the Information Agent or any other person will
be under any duty to give notification of any defects or
irregularities in any notice of withdrawal or incur any
liability for failure to give any such notification.
Under no circumstances will we pay interest on the Purchase
Price for shares accepted for purchase in the Offer. If we have
not accepted tendered shares for payment as provided in this
Offer to purchase by 12:00 midnight, New York City time, on
Friday, March 9, 2007, you may withdraw any or all of your
tendered shares.
For shares being held under our 401(k) Plans, please refer to
the special instructions in the Letter to Participants in
The Scotts Company LLC Retirement Savings Plan or the
Letter to Participants in the Smith & Hawken
401(k) Plan, as applicable, sent to affected participants
for information about withdrawal rights and the deadline to
submit withdrawal instructions. Please note that, in order to
timely withdraw their shares, participants in a 401(k) Plan must
submit a withdrawal request in accordance with the procedures
set forth in the Letter to Participants in The Scotts
Company LLC Retirement Savings Plan or the Letter to
Participants in the Smith & Hawken 401(k) Plan,
as applicable, no later than 4:00 p.m., New York City time,
on February 5, 2007, unless we extend the Offer, in which
case such withdrawal request must be received no later than
4:00 p.m., New York City time, on the third business day
prior to the expiration of the Offer as extended.
Participants in the DSPP who wish to have the administrator
withdraw previously tendered shares attributable to their
account must follow the procedures set forth in the Letter
to Participants in the The Scotts Miracle-Gro Company Discounted
Stock Purchase Plan no later than 4:00 p.m., New York
City time, on February 5, 2007, unless we extend the Offer,
in which case such withdrawal request must be received no later
than 4:00 p.m., New York City time, on the third business
day prior to the expiration of the Offer as extended.
If SMG extends the Offer, is delayed in its purchase of shares
or is unable to purchase shares pursuant to the Offer for any
reason, then, without prejudice to our rights under the Offer,
the Depositary may, subject to applicable law, retain tendered
shares on behalf of SMG, and such shares may not be withdrawn,
except to the extent the tendering shareholders are entitled to
withdrawal rights as described in this Section 4.
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5.
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Purchase
of Shares and Payment of Purchase Price
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Upon the terms and subject to the conditions of the Offer, as
promptly as practicable following the Expiration Time, we will
(1) determine a single per share Purchase Price we will pay
for the shares validly tendered and not validly withdrawn,
taking into account the number of shares tendered and the prices
specified by tendering shareholders, and (2) accept for
payment and pay the relevant price for (and thereby purchase) up
to 4,504,504 shares validly tendered at prices at or below
the Purchase Price and not validly withdrawn.
Subject to applicable rules of the SEC, we expressly reserve the
right to delay acceptance for payment of, or payment for, shares
in anticipation of governmental regulatory approvals. We remain,
however, obligated to pay the Purchase Price for the shares
accepted for payment promptly after the Expiration Time.
For purposes of the Offer, we will be deemed to have accepted
for payment (and therefore purchased), subject to the Odd Lot
priority, proration and conditional tender provisions of the
Offer, shares that are validly tendered at or below the Purchase
Price selected by us and not validly withdrawn only when, as and
if we give oral or written notice to the Depositary of our
acceptance of such shares for payment pursuant to the Offer.
Upon the terms and subject to the conditions of the Offer, we
will accept for payment and pay the Purchase Price for the
shares accepted for payment pursuant to the Offer promptly after
the Expiration Time.
15
In all cases, payment for shares tendered and accepted for
payment pursuant to the Offer will be made promptly, subject to
possible delay in the event of proration, but only after timely
receipt by the Depositary of:
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certificates for shares, or of a timely book-entry confirmation
of shares into the Depositarys account at the book-entry
transfer facility;
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a validly completed and duly executed Letter of Transmittal (or
manually signed facsimile of the Letter of Transmittal) or, in
the case of a book-entry transfer, an agents message; and
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any other required documents.
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We will pay for shares purchased pursuant to the Offer by
depositing the aggregate purchase price for the shares with the
Depositary, which will act as agent for tendering shareholders
for the purpose of receiving payment from us and transmitting
payment to the tendering shareholders.
In the event of proration, we will determine the proration
factor and pay for those tendered shares accepted for payment as
soon as practicable after the Expiration Time. However, we
expect that we will not be able to announce the final results of
any proration or commence payment for any shares purchased
pursuant to the Offer until approximately seven business days
after the Expiration Time. Certificates for all shares tendered
and not purchased, including all shares tendered at prices in
excess of the Purchase Price and shares not purchased due to
proration, will be returned or, in the case of shares tendered
by book-entry transfer, will be credited to the account
maintained with the book-entry transfer facility by the
participant who delivered the shares, to the tendering
shareholder at our expense promptly after the Expiration Time or
termination of the Offer.
Under no circumstances, including, but not limited to, by
reason of any delay in making payment, will we pay interest on
the Purchase Price. In addition, if certain events occur, we may
not be obligated to purchase any shares pursuant to the Offer.
See Section 7, Conditions of the
Offer.
Except as this Section 5 otherwise provides, we will pay
all stock transfer taxes, if any, payable on the transfer to us
of shares purchased pursuant to the Offer. If, however, payment
of the Purchase Price is to be made to, or (in the circumstances
permitted by the Offer) if unpurchased shares are to be
registered in the name of, any person other than the registered
holder, or if tendered certificates are registered in the name
of any person other than the person signing the Letter of
Transmittal, the amount of all stock transfer taxes, if any
(whether imposed on the registered holder or the other person),
payable on account of the transfer will be deducted from the
Purchase Price unless satisfactory evidence of the payment of
the stock transfer taxes, or exemption from payment of the stock
transfer taxes, is submitted.
If you are a participant in our 401(k) Plans, you should be
aware that the 401(k) Plans are prohibited from selling shares
to us for less than adequate consideration. Please refer to the
Letter to Participants in The Scotts Company LLC
Retirement Savings Plan or the Letter to
Participants in the Smith & Hawken 401(k) Plan,
as applicable, for more information with respect to this
limitation.
Any tendering shareholder or other payee who fails to
complete fully, sign and return to the Depositary the Substitute
Form W-9
included with the Letter of Transmittal or other applicable form
may be subject to backup U.S. federal income tax
withholding of 28% of the gross proceeds paid to the shareholder
or other payee pursuant to the Offer. See Section 3,
Procedures for Tendering Shares. Also see
Section 14, U.S. Federal Income Tax
Consequences.
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6.
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Conditional
Tender of Shares
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Under certain circumstances and subject to the exceptions set
forth in Section 1, we may prorate the number of shares
purchased pursuant to the Offer. As discussed in
Section 14, the number of shares to be purchased from a
particular shareholder might affect the tax treatment of such
purchase to such shareholder and such shareholders
decision whether to tender. Each shareholder is urged to
consult with his, her or its own tax advisor with respect to
his, her or its particular situation. Accordingly, a
shareholder may tender shares subject to the condition that a
specified minimum number of such holders shares tendered
pursuant to a Letter of Transmittal or Notice of Guaranteed
Delivery must be purchased if any such shares so tendered are
16
purchased. Any shareholder desiring to make such a conditional
tender must so indicate in the box captioned Conditional
Tender in such Letter of Transmittal or, if applicable, in
the Notice of Guaranteed Delivery, and have tendered all of such
shareholders shares.
If you wish to make a conditional tender you must calculate and
appropriately indicate such minimum number of shares. If the
effect of accepting tenders on a pro rata basis as described in
Section 1 would be to reduce the number of shares to be
purchased from any shareholder (tendered pursuant to a Letter of
Transmittal, Notice of Guaranteed Delivery or agents
message) below the minimum number so specified, that tender will
automatically be regarded as validly withdrawn (except as
provided in the next paragraph) and all shares tendered by the
shareholder pursuant to the Letter of Transmittal, Notice of
Guaranteed Delivery or agents message will be returned
promptly thereafter at our expense.
After giving effect to these withdrawals, we will accept the
remaining shares validly tendered, conditionally or
unconditionally, and not validly withdrawn on a pro rata basis,
if necessary. If conditional tenders would otherwise be regarded
as withdrawn and would cause the total number of shares to be
purchased to fall below 4,504,504 shares (or such greater
number of shares as we may elect to purchase) then, to the
extent feasible, we will select enough of the conditional
tenders that would otherwise have been withdrawn to permit us to
purchase 4,504,504 shares (or such lesser number of shares
as is validly tendered and not validly withdrawn). In selecting
among the conditional tenders, we will select by random lot,
treating all tenders by a particular taxpayer as a single lot,
and will limit our purchase in each case to the designated
minimum number of shares to be purchased. To be eligible for
purchase by random lot, shareholders whose shares are
conditionally tendered must have tendered all of their shares.
Notwithstanding the general discussion contained in this
Section 6, conditional tenders are not permissible with
respect to the tender of shares under our 401(k) Plans.
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7.
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Conditions
of the Offer
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Notwithstanding any other provision of the Offer, we will not be
required to accept for payment, purchase or pay for any shares
tendered, and may terminate or amend the Offer or may postpone
the acceptance for payment of, or the purchase of and the
payment for shares tendered, subject to
Rule 13e-4(f)
under the Exchange Act, if at any time on or after the date of
commencement of the Offer and prior to the Expiration Time and,
in the case of any required governmental approval, prior to the
time of payment for any shares (whether any shares have
theretofore been accepted for payment), any of the following
events occur or are determined by us to have occurred:
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we are unable by the Expiration Time to borrow on terms and
conditions satisfactory to us, under the new credit facilities
referenced in the Commitment Letter, an amount sufficient to
purchase shares pursuant to the Offer;
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any general suspension of, or general limitation on prices for,
or trading in, securities on any national securities exchange in
the United States or in the
over-the-counter
market;
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a declaration of a banking moratorium or any suspension of
payments in respect of banks in the United States or any
limitation (whether or not mandatory) by any governmental agency
or authority on, or any other event that, in our reasonable
judgment, could reasonably be expected to adversely affect, the
extension of credit by banks or other financial institutions;
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a material change in U.S. or any other currency exchange
rates or a suspension of or limitation on the markets for such
currencies;
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the commencement or escalation of a war, armed hostilities or
other similar national or international calamity directly or
indirectly involving the United States;
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a decrease in excess of 10% in the market price for our Common
Shares or in the Dow Jones Industrial Average, the NYSE
Composite Index or the S&P 500 Composite Index since January
9, 2007;
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in the case of any of the foregoing existing at the time of the
commencement of the Offer, in our reasonable judgment, a
material acceleration or worsening thereof;
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any change (or condition, event or development involving a
prospective change) has occurred or been threatened in the
business, properties, assets, liabilities, capitalization,
shareholders equity, financial condition, operations,
results of operations or prospects of us or any of our
subsidiaries or affiliates that, in our reasonable judgment,
does or could reasonably be expected to have a materially
adverse effect on us or any of our subsidiaries or affiliates,
or we have become aware of any fact that, in our reasonable
judgment, does or could reasonably be expected to have a
material adverse effect on the value of our shares;
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legislation amending the Internal Revenue Code of 1986, as
amended (the Code), has been passed by either the
U.S. House of Representatives or the U.S. Senate or
becomes pending before the U.S. House of Representatives or
the U.S. Senate or any committee thereof, the effect of
which, in our reasonable judgment, would be to change the tax
consequences of the transaction contemplated by the Offer in any
manner that would adversely affect us or any of our subsidiaries
or affiliates;
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there has been threatened, instituted, or pending any action,
proceeding, application or counterclaim by or before any court
or governmental, administrative or regulatory agency or
authority, domestic or foreign, or any other person or tribunal,
domestic or foreign, that:
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challenges or seeks to challenge, restrain, prohibit or delay
the making of the Offer or any other matter relating to the
Offer, or seeks to obtain any material damages relating to the
transactions contemplated by the Offer;
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seeks to make the purchase of, or payment for, some or all of
the shares pursuant to the Offer illegal or results in a delay
in our ability to accept for payment or pay for some or all of
such shares;
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seeks to impose limitations on our affiliates ability to
acquire or hold or to exercise full rights of ownership,
including, but not limited to, the right to vote their shares on
all matters validly presented to our shareholders;
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otherwise could reasonably be expected to materially adversely
affect the business, properties, assets, liabilities,
capitalization, shareholders equity, financial condition,
operations, results of operations or prospects of us or any of
our subsidiaries or affiliates; or
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otherwise relates to the Offer or that otherwise, in our
reasonable judgment, could reasonably be expected to adversely
affect us or any of our subsidiaries or affiliates or the value
of our shares;
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any action has been taken or any statute, rule, regulation,
judgment, decree, injunction or order (preliminary, permanent or
otherwise) has been proposed, sought, enacted, entered,
promulgated, enforced or deemed to be applicable to the Offer or
us or any of our subsidiaries or affiliates by any court,
government or governmental agency or other regulatory or
administrative authority, domestic or foreign, that, in our
reasonable judgment:
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indicates that any approval or other action of any such court,
agency or authority may be required in connection with the Offer
or the purchase of shares in the Offer;
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could reasonably be expected to prohibit, restrict or delay
consummation of the Offer; or
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otherwise could reasonably be expected to materially adversely
affect the business, properties, assets, liabilities,
capitalization, shareholders equity, financial condition,
operations, results of operations or prospects of us or any of
our subsidiaries or affiliates;
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a tender or exchange offer for any or all of our outstanding
shares (other than this Offer), or any material merger,
acquisition, business combination or other similar transaction
with or involving us or
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any subsidiary, has been proposed, announced or made by any
person or entity or has been publicly disclosed;
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any entity, group (as that term is used in
Section 13(d)(3) of the Exchange Act) or person has
acquired or proposes to acquire beneficial ownership of more
than 5% of the outstanding Common Shares, whether through the
acquisition of shares, the formation of a group, the grant of
any option or right, or otherwise (other than as and to the
extent disclosed in a Schedule 13D or Schedule 13G
filed with the SEC on or before January 9, 2007); or
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any entity, group or person who has filed a Schedule 13D or
Schedule 13G with the SEC on or before January 9, 2007 has
acquired or proposes to acquire, whether through the acquisition
of shares, the formation of a group, the grant of any option or
right, or otherwise, beneficial ownership of an additional 1% or
more of the outstanding Common Shares;
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any person, entity or group has filed a Notification and Report
Form under the
Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, reflecting
an intent to acquire us or any shares, or has made a public
announcement reflecting an intent to acquire us or any of our
subsidiaries or any of our respective assets or
securities; or
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we determine that there will be a reasonable likelihood that the
consummation of the Offer and the purchase of shares will cause
the Common Shares to be:
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held of record by less than 300 persons; or
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delisted from the NYSE or result in them no longer being
required to be registered under the Exchange Act.
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The conditions referred to above are for our sole benefit and
may be asserted by us regardless of the circumstances giving
rise to any such condition, and may be waived by us, in whole or
in part, at any time and from time to time in our sole
discretion before the Expiration Time. Our failure at any time
to exercise any of the foregoing rights will not be deemed a
waiver of any other right, and each such right will be deemed an
ongoing right that may be asserted at any time and from time to
time prior to the Expiration Time. In certain circumstances, if
we waive any of the conditions described above, we may be
required to extend the Expiration Time. Any determination by us
concerning the events described above will be final and binding
on all parties.
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8.
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Price
Range of the Shares
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Our Common Shares are traded on the NYSE under the symbol
SMG. The following table sets forth, for each of the
periods indicated, the high and low sales prices per share as
reported by the NYSE based on published financial sources and
the dividends paid per share by us. The quarterly share prices
have been adjusted to reflect the
2-for-1
stock split on November 9, 2005.
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Fiscal Year Ending September 30,
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High
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Low
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Dividends
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2005
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First Quarter
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$
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36.83
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$
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30.95
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Second Quarter
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$
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36.19
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$
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33.29
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Third Quarter
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$
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36.56
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$
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33.55
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Fourth Quarter
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$
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43.97
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$
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36.19
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$
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0.125
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2006
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First Quarter
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$
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48.11
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$
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41.37
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$
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0.125
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Second Quarter
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$
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50.47
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$
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44.94
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$
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0.125
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Third Quarter
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$
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47.50
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$
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39.40
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$
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0.125
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Fourth Quarter
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$
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44.98
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$
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36.19
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$
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0.125
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2007
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First Quarter
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$
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54.72
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$
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44.02
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$
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0.125
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Second Quarter (through January 9,
2007)
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$
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52.56
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$
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51.85
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On December 11, 2006, the last full trading day before we
first announced our intention to make the Offer, the closing
price of our Common Shares on the NYSE was $50.83 per
share. On January 9, 2007, the last full trading day before the
commencement of the Offer, the closing price of our Common
Shares on the NYSE was $52.04 per share. You should obtain
current market quotations for the Common Shares before deciding
whether to tender your shares in the Offer.
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9.
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Source
and Amount of Funds
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Assuming that the maximum number of shares is tendered in the
Offer and the Purchase Price is an amount between $48.50 and
$55.50 per share, the aggregate purchase price for the shares
will be between $218.5 million and $250.0 million. We
anticipate that we will obtain the funds necessary to pay for
the shares purchased in the Offer, the special dividend and the
related fees and expenses from available cash and borrowings
under the new credit facilities referenced in the Commitment
Letter that we have received from JPMorgan, BofA and Citigroup
and certain of their respective affiliates (the
Agents).
Commitment Letter. The following summary of
certain material terms of the Commitment Letter (including the
Summary of Terms and Conditions attached thereto as
Exhibit A) is qualified in its entirety by the terms
of the Commitment Letter, which is filed as an exhibit to our
Issuer Tender Offer Statement on Schedule TO (the
Schedule TO) and which is incorporated herein
by reference. The following summary may not contain all of the
information about the Commitment Letter that is important to
you. We encourage you to read the Commitment Letter carefully
and in its entirety.
The Agents have committed, subject to the terms and conditions
set forth in the Commitment Letter, to provide SMG and certain
of its subsidiaries the following loan facilities totaling in
the aggregate up to $2.1 billion: (a) a senior secured
five-year term loan in the principal amount of
$550.0 million (the Term Loan) and (b) a
senior secured five-year revolving loan facility in the
aggregate principal amount of up to $1.55 billion (the
Revolving Credit Facility which may be referred to
with the Term Loan as the New Credit Facilities).
Prior to the closing date of the New Credit Facilities, SMG may
request the Agents to seek additional commitments to the New
Credit Facilities in an aggregate amount of up to
$200 million, which would be allocated ratably between the
Term Loan and the Revolving Credit Facility. After the closing
of the New Credit Facilities, SMG shall also have the right to
seek to increase the Term Loan or the Revolving Credit Facility
in an aggregate amount of up to $200 million, subject to
certain specified conditions. The New
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Credit Facilities will replace our existing credit facility,
which was entered into, as amended, on July 21, 2005. We
will also use proceeds from our New Credit Facilities to
repurchase our 6.625% senior subordinated notes due 2013 in
an aggregate principal amount of $200 million and to seek
the consent of the holders thereof to amend the indenture
governing such notes to eliminate substantially all of the
restrictive covenants pertaining to such notes.
The Commitment Letter will terminate on February 28, 2007.
Term Loan. The proceeds of the Term Loan may
be used to finance the purchase of shares pursuant to the Offer
and to pay related fees and expenses. The Term Loan will be made
in a single drawing on the Closing Date (as that term is defined
in the Commitment Letter). The Term Loan will be repayable in
quarterly installments equal to approximately 1% of the original
principal amount in the first year, 5% of the original principal
amount in the second year, 25% of the original principal amount
in the third year, 30% of the original principal amount in the
fourth year and 39% of the original principal amount in the
fifth year, with any balance to be payable on the final maturity
date. We believe that cash flow generated from operations will
be sufficient to repay the Term Loan in accordance with its
terms.
Revolving Credit Facility. The proceeds of the
Revolving Credit Facility may be used to finance our working
capital requirements and for other general purposes. We may use
a portion of the Revolving Credit Facility to fund the special
dividend (currently anticipated to be approximately
$500 million) that we intend to pay to shareholders of
record as of a record date to be determined after the
consummation of the Offer. The Revolving Credit Facility will
also be available for issuance of up to $65 million of
letters of credit and for borrowings of swingline loans of up to
$100 million. We believe that cash flow generated from
operations will be sufficient to repay the Revolving Credit
Facility in accordance with its terms.
Interest. Interest on the outstanding balances
under the New Credit Facilities is payable, at our option, at a
rate equal to the Applicable Margin (as defined in the
Commitment Letter) plus the ABR (as defined in the Commitment
Letter) or at the Applicable Margin plus the LIBOR Rate (as
defined in the Commitment Letter). Based on our anticipated
Leverage Ratio (as defined in the Commitment Letter), we expect
the Applicable Margin as of the Closing Date to be 1.25% in the
case of LIBOR Rate loans and 0.25% in the case of ABR loans. We
believe that cash flow generated from operations will be
sufficient to make the required interest payments on the New
Credit Facilities in accordance with their terms.
Optional Prepayments. We may make optional
prepayments of loans under the New Credit Facilities, in whole
or in part, without premium or penalty (other than applicable
LIBOR breakage costs), in minimum amounts to be agreed.
Mandatory Prepayments. Subject to certain
exceptions and conditions described in greater detail in the
Commitment Letter, we will be obligated to use net cash proceeds
of the following to prepay the Term Loan:
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any incurrence of non-permitted indebtedness; and
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sales or other dispositions of assets or property (subject to
customary exceptions and thresholds), including as a result of
casualty or condemnation.
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Mandatory prepayments will be applied to the installments of the
Term Loan ratably.
Guarantors. The New Credit Facilities will be
guaranteed by each of our domestic subsidiaries that are
guarantors under our existing credit facility and by each future
direct or indirect domestic subsidiary, subject to materiality
thresholds that will be no more restrictive than our existing
credit facility.
Security for the New Credit Facilities. The
New Credit Facilities will be secured by (1) a perfected
first priority security interest in all of our and our direct
and indirect domestic subsidiaries accounts receivable,
inventory and equipment and (2) the pledge of all of the
capital stock of our domestic subsidiaries and 65% of the
capital stock of our first-tier foreign subsidiaries (provided
that obligations of our foreign subsidiary borrowers shall be
secured by 100% of such foreign subsidiaries capital stock
and 100% of the capital stock of their first-tier subsidiaries),
in each case, subject to exceptions to be agreed to with the
Agents. The collateral shall not include any of our or our
subsidiaries intellectual property.
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Conditions Precedent to the New Credit
Facilities. The commitments of JPMorgan, BofA,
Citigroup and their respective affiliates, and the availability
of each of the New Credit Facilities, are and will be subject to
customary conditions precedent, including:
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the preparation, execution and delivery of satisfactory loan
documentation with respect to the New Credit Facilities, which
documentation is expected to be substantially similar to our
existing credit facility agreement; and
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|
|
receipt by the Agents and other lenders of a pro forma
consolidated balance sheet of SMG and its consolidated
subsidiaries as of September 30, 2006, adjusted to give
effect to the consummation of the New Credit Facilities on such
date, which shall not be inconsistent in any material respect
with the information previously provided to the Agents.
|
In addition, our future ability to borrow under the New Credit
Facilities will be subject to customary on-going conditions,
including the absence of a default under any of the loan
documents and our representations and warranties being true and
correct in all material respects immediately prior to, and after
giving effect to, such extension of credit.
Representations and Warranties; Covenants; Events of
Default. The terms of the New Credit Facilities
will include customary representations and warranties, customary
affirmative and negative covenants, customary financial
covenants and customary events of default, in each case, which,
in general, will not be more restrictive than those contained in
our existing credit facility agreement.
Syndication. The Agents may syndicate the New
Credit Facilities to a group of lenders arranged by the Agents
in consultation with us.
General. There is a possibility that we will
not be able to borrow funds under the anticipated New Credit
Facilities if any of the conditions in the Commitment Letter are
not met. Absent an amendment or waiver, we would not be
permitted to consummate the purchase of shares pursuant to the
Offer and make the special dividend under the terms of our
existing credit facility and our 6.625% senior subordinated
notes due 2013. Obtaining sufficient financing to pay for the
purchase of shares in the Offer on terms and conditions
reasonably satisfactory to us is a condition to the consummation
of the Offer. See Section 7, Conditions of the
Offer.
We will incur significant indebtedness pursuant to the New
Credit Facilities in connection with the Offer and the intended
payment of the special dividend and, as a result, will be
significantly leveraged. This leverage could have certain
material adverse effects on us, including, but not limited to,
the following:
|
|
|
|
|
our ability to obtain additional financing in the future for
working capital, capital expenditures, acquisitions and general
corporate or other purposes could be impaired, or any such
financing may not be available, on terms we consider to be
favorable to us;
|
|
|
|
a substantial portion of our cash flow will be required for
interest payments and, as a result, will not be available for
our operations or other purposes;
|
|
|
|
any substantial decrease in net operating cash flows or any
substantial increase in expenses could make it difficult for us
to meet our debt service requirements or force us to modify our
operations or sell assets;
|
|
|
|
our ability to withstand competitive pressures or business
downturns may be decreased; and
|
|
|
|
our level of indebtedness may make us more vulnerable to
economic downturns and reduce our flexibility in responding to
changing business, regulatory and economic conditions.
|
Our ability to repay expected borrowings under the New Credit
Facilities and to meet our other debt, lease or contractual
obligations (including continued compliance with applicable
financial covenants) will depend upon one or more of the
following: our future performance, our cash flow from operations
and our ability to execute our business plan, each of which is
subject to prevailing economic conditions and financial,
business and other known and unknown risks and uncertainties,
certain of which are beyond our control. These
22
factors include, without limitation, those described in this
Offer to Purchase under Forward-Looking
Statements or incorporated herein by reference. After
the Offer and the intended special dividend are completed, we
believe that our expected cash flow from operations, anticipated
access to the unused portion of the New Credit Facilities and
continued access to capital markets will be adequate for our
expected liquidity needs, including capital expenditures, and to
meet the cash requirements of our contractual obligations.
|
|
10.
|
Certain
Information Concerning SMG
|
General. The Scotts Miracle-Gro Company, an
Ohio corporation, traces its roots to two businesses launched by
entrepreneurs. In 1868, Civil War veteran O.M. Scott launched a
seed business in Marysville, Ohio, based on the conviction that
farmers shall have clean, weed-free fields.
Beginning in 1907, we expanded our reach by selling grass seed
to consumers and eventually exited the agricultural market. By
1988 both through innovation and
acquisition we had become a leading marketer of lawn
fertilizer, grass seed and growing media products within the
United States.
Separately, Horace Hagedorn and his partner Otto Stern launched
Sterns Miracle-Gro Products, Inc. in 1951 in New York.
Their
easy-to-use
plant food quickly revolutionized the gardening category.
Through aggressive and innovative marketing,
Miracle-Gro®
eventually became the leading plant food product in the
gardening industry. In 1995, The Scotts Company merged with
Miracle-Gro through a series of merger transactions, marking the
start of a significant evolution for SMG.
In the late 1990s, we launched a geographic and category
expansion. We acquired companies with industry-leading brands in
France, Germany and the United Kingdom. In fiscal 1999, we
acquired the
Ortho®
brand in the United States and exclusive worldwide consumer
marketing rights for the marketing and distribution of consumer
Roundup®*
products within the United States and other specified countries,
thereby adding industry-leading controls to our portfolio. We
have rapidly expanded into the lawn care service industry with
the launch of Scotts
LawnService®
in 1998. Since fiscal 2002, SMG has invested nearly
$100 million in the acquisitions of local and regional lawn
care businesses to provide a platform for our rapid expansion
throughout the U.S. In October 2004, we entered the fast
growing outdoor living category with the acquisition of
Smith & Hawken, Ltd. SMG entered the wild bird food
category in fiscal 2006 with the acquisition of
Gutwein & Co., Inc. and its Morning
Song®
brand of bird food.
As SMG celebrates its 100th Anniversary in selling products
to consumers, we own the leading brands in nearly every category
of the lawn and garden industry. A list of some of our North
America leading brands is as follows:
|
|
|
Category
|
|
Brands
|
|
Lawns
|
|
Scotts®;
Turf
Builder®
|
Gardens
|
|
Miracle-Gro®;
Osmocote®
|
Growing Media
|
|
Miracle-Gro®;
Scotts®;
Hyponex®;
Earthgro®;
SuperSoil®
(acquired October 3, 2005)
|
Grass Seed
|
|
Scotts®;
Turf
Builder®
|
Controls
|
|
Ortho®;
Bug-B-Gon®;
Weed-B-Gon®;
Roundup®*
|
Outdoor Living
|
|
Smith &
Hawken®
(acquired October 2, 2004)
|
Wild Bird Food
|
|
Morning
Song®
(acquired November 18, 2005)
|
|
|
|
* |
|
Roundup®
is a registered trademark of Monsanto Technology LLC, a company
affiliated with Monsanto Company. |
In addition, we have the following significant brands in Europe:
Miracle-Gro®
plant fertilizers,
Weedol®
and
Pathclear®
herbicides,
EverGreen®
lawn fertilizers and
Levington®
growing media in the United Kingdom;
KB®
and
Fertiligène®
in France;
Celaflor®,
Nexa-Lotte®
and
Substral®
in Germany and Austria; and
ASEF®,
KB®
and
Substral®
in Belgium, the Netherlands and Luxembourg (the Benelux
countries).
Roundup®
is also a significant brand in the United Kingdom, France,
Germany and other European markets.
23
Our world headquarters are located at 14111 Scottslawn Road,
Marysville, Ohio 43041, and our telephone number is
(937) 644-0011.
Where You Can Find More Information. We are
subject to the informational filing requirements of the Exchange
Act and, accordingly, are obligated to file reports, statements
and other information with the SEC relating to our business,
financial condition and other matters. Information as of
particular dates, concerning our directors and officers, their
remuneration, options granted to them, the principal holders of
our securities and any material interest of these persons in
transactions with us is required to be disclosed in proxy
statements distributed to our shareholders and filed with the
SEC. We also have filed an Issuer Tender Offer Statement on
Schedule TO with the SEC that includes additional
information relating to the Offer.
These reports, statements and other information can be inspected
and copied at the public reference facilities maintained by the
SEC at 100 F Street, N.E., Washington, D.C. 20549. Copies
of material filed with the SEC may also be obtained by mail,
upon payment of the SECs customary charges, from the
Public Reference Section of the SEC at 100 F Street, N.E.,
Washington, D.C. 20549. The SEC also maintains a web site
on the Internet at www.sec.gov that contains reports,
proxy and information statements and other information regarding
registrants like SMG that file electronically with the SEC.
Incorporation by Reference. The rules of the
SEC allow us to incorporate by reference information
into this document, which means that we can disclose important
information to you by referring you to another document filed
separately with the SEC. The Offer incorporates by reference the
documents listed below, including the financial statements and
the notes related thereto contained in those documents, that
have been previously filed with the SEC (excluding information
furnished rather than filed). These documents contain important
information about us:
|
|
|
|
|
Annual Report on
Form 10-K
for the fiscal year ended September 30, 2006, as filed on
December 14, 2006;
|
|
|
|
Definitive Proxy Statement on Schedule 14A, as filed on
December 20, 2006;
|
|
|
|
Current Reports on
Form 8-K,
as filed on November 8, 2006, November 13, 2006,
December 7, 2006 and January 5, 2007; and
|
|
|
|
All documents filed by us under Section 13(a), 13(c), 14 or
15(d) of the Exchange Act on or after the date hereof and prior
to the Expiration Date.
|
You can obtain any of the documents incorporated by reference in
this Offer to Purchase from us or from the SECs web site
at the address described above. Documents incorporated by
reference are available from us without charge, excluding any
exhibits to those documents. You may request a copy of these
documents by writing to us at: Investor Relations, The Scotts
Miracle-Gro Company, 14111 Scottslawn Road, Marysville, Ohio
43041, or telephoning us at
(937) 644-0011.
Please be sure to include your complete name and address in your
request. If you request any incorporated documents, we will mail
them to you by first class mail, or another equally prompt
means, within one business day after we receive your request.
You can find additional information by visiting our web site at
www.scotts.com.
Selected Historical and Pro Forma Financial
Information. The following tables show
(1) selected historical financial information about SMG as
of September 30, 2006 and for the fiscal year then ended
and (2) selected pro forma financial information as of and
for the same period, assuming (a) the purchase of
4,504,504 shares in the Offer, at the Purchase Price of
$55.50 per share (the maximum price in the modified Dutch
auction range) for an aggregate purchase price of
$250.0 million, (b) the special cash dividend of
$500.0 million intended to be payable to shareholders of
record as of a record date to be determined after the
consummation of the Offer, (c) the repurchase of our
6.625% senior subordinated notes due 2013 in an aggregate
principal amount of $200.0 million and the solicitation of
the consent of the holders thereof to amend the indenture
governing such notes to eliminate substantially all of the
restrictive covenants pertaining to such notes, (d) the
incurrence of up to $2.1 billion of indebtedness pursuant
to the New Credit Facilities described in the Commitment Letter
and the replacement of our existing credit facility and
(e) the payment of the fees and expenses related to (a),
(b), (c) and (d) above of approximately
$24.0 million, as if each were
24
completed at the beginning of our 2006 fiscal year for statement
of operations data and at September 30, 2006 for balance
sheet information. The Offer is conditioned upon the receipt by
us of financing on terms and conditions satisfactory to us. See
Section 7, Conditions of the Offer.
The selected unaudited pro forma financial information is
intended for informational purposes only and does not purport to
be indicative of the results that would actually have been
obtained if the Offer and the other transactions described above
had been completed at the dates indicated or that may be
obtained at any date in the future. The following selected
unaudited pro forma consolidated financial data is based on
available information and various estimates and assumptions. We
believe that these assumptions provide a reasonable basis for
presenting all of the significant effects of the Offer and the
special dividend and the financing therefor and that the pro
forma adjustments give appropriate effect to those assumptions
and are properly applied in the unaudited pro forma financial
information. We have included the following unaudited pro forma
financial information solely for the purpose of providing
shareholders with information that may be useful for purposes of
considering and evaluating the Offer. Our future results are
subject to prevailing economic and industry specific conditions
and financial, business and other known and unknown risks and
uncertainties, certain of which are beyond our control. These
factors include, without limitation, those described in this
Offer to Purchase under Forward-Looking
Statements and incorporated by reference herein. The
pro forma amounts have been calculated assuming (1) that we
complete the Offer for 4,504,504 shares at the price of
$55.50 per share, (2) that we pay a special cash dividend
of $500.0 million, (3) that we repurchase all
$200.0 million aggregate principal amount of our
outstanding 6.625% senior subordinated notes due 2013,
(4) the incurrence of $2.1 billion in indebtedness
under the New Credit Facilities described in the Commitment
Letter, (5) the replacement of our existing credit facility
and (6) the payment of $24.0 million in fees and
expenses related to the foregoing. The pro forma earnings per
share and pro forma book value per share may change materially
if significantly fewer shares are purchased pursuant to the
Offer.
25
The following actual financial data as of and for the fiscal
year ended September 30, 2006, has been derived from our
historical financial statements included in our 2006
Form 10-K,
which has been filed with the SEC, and should be read in
conjunction with those financial statements. The pro forma
statement of operations reflects the assumed increase in
interest expense and related income tax benefit assuming the
refinancing and increase in borrowings to finance the repurchase
of our Common Shares, as well as the anticipated one-time
special dividend, occurred as of the beginning of the 2006
fiscal year. The pro forma balance sheet reflects the effect of
the same transactions assuming the transactions occurred as of
the last day of the fiscal year.
|
|
|
|
|
|
|
|
|
|
|
Year Ended September 30,
|
|
|
|
2006
|
|
Statement of Operations Data
|
|
Actual
|
|
|
Pro Forma
|
|
|
|
(in millions, except per share data)
|
|
|
Net sales
|
|
$
|
2,697.1
|
|
|
$
|
2,697.1
|
|
Cost of sales
|
|
|
1,741.1
|
|
|
|
1,741.1
|
|
Restructuring and other charges
|
|
|
0.1
|
|
|
|
0.1
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
955.9
|
|
|
|
955.9
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
Selling, general and administrative
|
|
|
636.9
|
|
|
|
636.9
|
|
Impairment, restructuring and
other charges
|
|
|
75.7
|
(a)
|
|
|
75.7
|
(a)
|
Other income, net
|
|
|
(9.2
|
)
|
|
|
(9.2
|
)
|
|
|
|
|
|
|
|
|
|
Income from operations
|
|
|
252.5
|
|
|
|
252.5
|
|
Interest expense
|
|
|
39.6
|
|
|
|
96.6
|
(b)
|
|
|
|
|
|
|
|
|
|
Income before income taxes
|
|
|
212.9
|
|
|
|
155.9
|
|
|
|
|
|
|
|
|
|
|
Income taxes
|
|
|
80.2
|
|
|
|
59.6
|
(c)
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
132.7
|
|
|
$
|
96.3
|
(d)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per common share:
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
1.97
|
|
|
$
|
1.53
|
|
Number of shares used
|
|
|
67.5
|
|
|
|
63.0
|
(e)
|
|
|
|
|
|
|
|
|
|
Diluted earnings per common share:
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
1.91
|
|
|
$
|
1.48
|
|
Number of shares used
|
|
|
69.4
|
|
|
|
64.9
|
(e)
|
|
|
|
|
|
|
|
|
|
Ratio of earnings to fixed charges
|
|
|
4.48
|
x
|
|
|
2.32
|
x
|
26
|
|
|
|
|
|
|
|
|
|
|
As of September 30,
|
|
|
|
2006
|
|
Balance Sheet Data
|
|
Actual
|
|
|
Pro Forma
|
|
|
|
(in millions, except per share data)
|
|
|
Cash and cash equivalents
|
|
$
|
48.1
|
|
|
$
|
48.1
|
|
Total current assets
|
|
|
942.0
|
|
|
|
942.0
|
|
Total assets
|
|
|
2,217.6
|
|
|
|
2,222.8
|
(f)
|
Long-term debt, net of current
position
|
|
|
475.2
|
|
|
|
1,249.2
|
(g)
|
Total liabilities
|
|
|
1,135.9
|
|
|
|
1,902.8
|
(h)
|
Shareholders equity
|
|
|
1,081.7
|
|
|
|
320.0
|
(i)
|
Total liabilities and
shareholders equity
|
|
|
2,217.6
|
|
|
|
2,222.8
|
|
Shares outstanding
|
|
|
66.6
|
|
|
|
62.1
|
(e)
|
Net book value per share
|
|
$
|
16.24
|
|
|
$
|
5.15
|
|
|
|
|
|
|
|
|
|
|
Notes
|
|
|
(a) |
|
Includes $66.4 million of impairment charges primarily related
to our European consumer business. |
|
(b) |
|
Reflects the adjustment of interest expense for an assumed
increase in average borrowings to $1.5 billion from
$732 million in actual average borrowings for fiscal 2006
at the assumed blended rate of 6.44% versus the actual fiscal
2006 blended rate of 5.41%. A
1/8%
variance in interest rates would have an approximate
$2.0 million effect on interest expense. |
|
(c) |
|
Reflects the adjustment of income taxes for the assumed
reduction of income before taxes from $212.9 million to
$155.9 million at a pro forma effective tax rate of 38.2%
versus the actual rate of 37.7% for fiscal 2006. |
|
(d) |
|
Excludes the following charges in connection with the
refinancing: (i) approximately $8.8 million of
write-offs of deferred debt issuance costs and
(ii) approximately $10.0 million of costs in
connection with the repurchase of $200 million aggregate
principal amount of our 6.625% senior subordinated notes
due 2013, net of $7.1 million in related tax benefits. |
|
(e) |
|
Assumes the repurchase of a maximum of 4.5 million Common
Shares pursuant to the Offer. |
|
(f) |
|
Reflects $14.0 million in debt issuance costs to be
capitalized and amortized over future periods and the write-off
of $8.8 million of deferred debt issuance costs relating to
borrowings retired pursuant to the recapitalization. |
|
(g) |
|
Reflects an increase in long-term borrowings to finance
$250.0 million of share repurchases pursuant to the Offer,
the anticipated $500.0 million special dividend and
$24.0 million in tender and debt issuance costs. |
|
(h) |
|
Reflects the adjustments described in note (g) above and a
$7.1 million reduction in accrued taxes for the income tax
expense benefit associated with the write-off of deferred
financing costs and the costs associated with the repurchase of
our 6.625% senior subordinated notes due 2013. |
|
(i) |
|
Reflects a reduction of $761.7 million in
shareholders equity consisting of
(i) $250.0 million for the repurchase of Common Shares
pursuant to the Offer, (ii) $500 million for the
anticipated special cash dividend and (iii) charges of
$11.7 million relating to the write-off of deferred debt
issuance costs and costs in connection with the repurchase of
our 6.625% senior subordinated notes due 2013, net of related
tax benefits. |
|
|
11.
|
Interests
of Directors, Executive Officers and Affiliates; Transactions
and Arrangements
|
Concerning the Shares
As of December 29, 2006, there were 67,668,683 Common
Shares issued and outstanding. Holders of Common Shares are
entitled to one vote per share. The 4,504,504 shares we are
offering to purchase in the
27
Offer represent approximately 6.7% of the total number of
outstanding Common Shares as of December 29, 2006.
Beneficial
Ownership of Directors and Executive Officers and the Hagedorn
Partnership, L.P.
As of November 28, 2006, our directors and executive
officers as a group (16 persons) beneficially owned an aggregate
of 23,508,164 Common Shares, representing
approximate 33.7% of the total outstanding Common Shares,
including, in the case of Mr. Hagedorn and
Ms. Littlefield, Common Shares held through the Hagedorn
Partnership, L.P. See Notes (5), (6) and (13) below.
Though they are entitled to participate in the Offer on the same
basis as all other shareholders, our directors and executive
officers, together with the Hagedorn Partnership, L.P., have
advised us that they do not intend to tender any shares owned by
them in the Offer.
The aggregate number and percentage of shares that were
beneficially owned by each of our directors and executive
officers, all of our current executive officers and directors as
a group and the Hagedorn Partnership, L.P., as of
November 28, 2006 appears in the table below. Also shown is
the percentage of outstanding Common Shares that will be
beneficially owned by each of our directors and executive
officers, all of our current executive officers and directors as
a group and the Hagedorn Partnership, L.P., assuming we purchase
4,504,504 shares in the Offer and that no director or
executive officer or the Hagedorn Partnership, L.P., tenders any
shares owned by him, her or it in the Offer. After consummation
of the Offer, our directors and executive officers, as well as
the Hagedorn Partnership, L.P., may, subject to applicable law
and our applicable policies and procedures, sell their shares
from time to time in open market transactions at prices that may
be more or less favorable than the Purchase Price to be paid to
our shareholders in the Offer.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Percentage
|
|
|
Percentage
|
|
Name of Beneficial Owner(1)
|
|
Shares(2)(3)(4)
|
|
|
(Before Offer)
|
|
|
(After Offer)
|
|
|
Directors:
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark R. Baker
|
|
|
22,220
|
|
|
|
|
*
|
|
|
*
|
|
Gordon F. Brunner
|
|
|
54,784
|
|
|
|
|
*
|
|
|
*
|
|
Arnold W. Donald
|
|
|
82,394
|
|
|
|
|
*
|
|
|
*
|
|
Joseph P. Flannery
|
|
|
94,000
|
|
|
|
|
*
|
|
|
*
|
|
James Hagedorn
|
|
|
22,134,813
|
(5)
|
|
|
32.27
|
%
|
|
|
35.19
|
%
|
Thomas N. Kelly Jr.
|
|
|
6,000
|
|
|
|
|
*
|
|
|
*
|
|
Katherine Hagedorn Littlefield
|
|
|
20,914,851
|
(6)
|
|
|
30.99
|
%
|
|
|
33.25
|
%
|
Karen G. Mills
|
|
|
144,836
|
|
|
|
|
*
|
|
|
*
|
|
Patrick J. Norton
|
|
|
272,200
|
(7)
|
|
|
|
*
|
|
|
*
|
|
Stephanie M. Shern
|
|
|
50,000
|
|
|
|
|
*
|
|
|
*
|
|
John M. Sullivan
|
|
|
116,000
|
|
|
|
|
*
|
|
|
*
|
|
John Walker, Ph.D.
|
|
|
26,200
|
|
|
|
|
*
|
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive Officers
(Non-Directors):
|
|
|
|
|
|
|
|
|
|
|
|
|
David M. Aronowitz
|
|
|
220,475
|
(8)
|
|
|
|
*
|
|
|
*
|
|
David C. Evans
|
|
|
32,600
|
(9)
|
|
|
|
*
|
|
|
*
|
|
Christopher L. Nagel
|
|
|
147,088
|
(10)
|
|
|
|
*
|
|
|
*
|
|
Denise S. Stump
|
|
|
33,554
|
(11)
|
|
|
|
*
|
|
|
*
|
|
All current directors and
executive officers as a group (16 individuals)
|
|
|
23,508,164
|
(12)
|
|
|
33.66
|
%
|
|
|
37.37
|
%
|
Hagedorn Partnership, L.P.
|
|
|
20,843,851
|
(13)
|
|
|
30.92
|
%
|
|
|
33.13
|
%
|
800 Port Washington Blvd
Port Washington, NY 11050
|
|
|
|
|
|
|
|
|
|
|
|
|
28
|
|
|
* |
|
Indicates less than 1% |
|
(1) |
|
Unless otherwise indicated, the beneficial owner has sole voting
and dispositive power as to all Common Shares reflected in the
table. All fractional Common Shares have been rounded to the
nearest whole Common Share. The mailing address of each of our
current executive officers and directors is 14111 Scottslawn
Road, Marysville, Ohio 43041. |
|
(2) |
|
All Common Share amounts have been adjusted to reflect the
2-for-1
stock split on November 9, 2005. |
|
(3) |
|
Includes common share equivalents attributable to
the named executive officers account relating to common
share units under The Scotts Company LLC Executive Retirement
Plan (the Executive Retirement Plan), and to the
named directors account holding stock units received, in
lieu of the directors annual cash retainer and any other
fees paid for service as a director, under The Scotts
Miracle-Gro Company 1996 Stock Option Plan (the 1996
Plan) and The Scotts Miracle-Gro Company 2003 Stock Option
and Incentive Equity Plan (the 2003 Plan), although
under the terms of each of the Executive Retirement Plan, the
1996 Plan and the 2003 Plan, the named individual has no voting
or dispositive power with respect to the portion of his or her
account attributed to Common Shares. For this reason, these
common share equivalents are not included in the
computation of the Percentage figures in the table.
As of November 28, 2006, our directors and executive
officers had the following number of common share
equivalents: Mr. Baker 1,220; Dr. Brunner 3,934;
Mr. Donald 1,394; Mr. Hagedorn 10,876; Ms. Mills
2,836; Mr. Aronowitz 12,966; Mr. Nagel 3,188 and
Ms. Stump 236. |
|
(4) |
|
The Percentage computation is based upon the sum of
(i) 67,413,056 Common Shares outstanding on
November 28, 2006 and (ii) the number of Common
Shares, if any, as to which the named person or group has the
right to acquire beneficial ownership upon the exercise of
options and stock appreciation rights which are currently
exercisable or which will first become exercisable within
60 days after November 28, 2006. As of
November 28, 2006, our directors and executive officers had
the following number of options and stock appreciation rights
that are currently exercisable or that will first become
exercisable within 60 days after November 28, 2006:
Mr. Baker 14,000; Dr. Brunner 47,500; Mr. Donald
79,000; Mr. Flannery 90,000; Mr. Hagedorn 1,140,000;
Mr. Kelly 6,000; Ms. Littlefield 71,000;
Ms. Mills 132,000; Mr. Norton 232,000; Ms. Shern
48,000; Mr. Sullivan 115,000; Dr. Walker 24,000;
Mr. Aronowitz 172,000; Mr. Evans 24,000;
Mr. Nagel 92,000; and Ms. Stump 23,000. |
|
(5) |
|
Mr. Hagedorn is a general partner of Hagedorn Partnership,
L.P., a Delaware limited partnership (the Hagedorn
Partnership), and has shared voting and dispositive power
with respect to the Common Shares held by the Hagedorn
Partnership and those subject to the right to vote and right of
first refusal in favor of the Hagedorn Partnership. See note
(13) below. Includes, in addition to those Common Shares
described in note (13) below, 30,000 Common Shares held
directly, 26,600 Common Shares that are the subject of a
restricted stock grant made to Mr. Hagedorn on
December 1, 2004 as to which the restriction period will
lapse on December 1, 2007, 28,600 Common Shares that are
the subject of a restricted stock grant made to him on
October 12, 2005 as to which the restriction period will
lapse on October 12, 2008, 33,100 Common Shares that are
the subject of a restricted stock grant made to him on
October 11, 2006 as to which the restriction period will
lapse on October 11, 2009, 20,978 common share units that
are allocated to his account and held by the trustee under a
401(k) Plan and 808 Common Shares held in a custodial account
under the DSPP. |
|
|
|
Mr. Hagedorn also owns 4.975 shares, or 0.05% of the
outstanding shares, of Scotts Italia S.r.l., an indirect
subsidiary of SMG. Mr. Hagedorn is a nominee shareholder to
satisfy the two shareholder requirement for an Italian
corporation. The remaining 94.525 shares of Scotts Italia
S.r.l. are held by OM Scott International Investments, Inc., an
indirect subsidiary of SMG. |
|
(6) |
|
Ms. Littlefield is a general partner and the Chair of the
Hagedorn Partnership and has shared voting and dispositive power
with respect to the Common Shares held by the Hagedorn
Partnership and those subject to the right to vote and right of
first refusal in favor of the Hagedorn Partnership. See note
(13) below. |
|
(7) |
|
Represents 40,000 Common Shares held directly and 200 Common
Shares owned by Mr. Nortons spouse. |
29
|
|
|
(8) |
|
Represents 700 Common Shares held directly, 1,400 Common Shares
that are the subject of a restricted stock grant made to
Mr. Aronowitz on December 1, 2004 as to which the
restriction period will lapse on December 1, 2007, 24,200
Common Shares that are the subject of a restricted stock grant
made to him on October 12, 2005 as to which the restriction
period will lapse for 4,200 Common Shares on October 12,
2008 and for 20,000 Common Shares on October 12, 2009,
5,600 Common Shares that are the subject of a restricted stock
grant made to him on October 11, 2006 as to which the
restriction period will lapse on October 11, 2009, four
Common Shares held in an open-market Associate Stock Purchase
Plan and 3,605 common share units that are allocated to his
account and held by the trustee under a 401(k) Plan. |
|
(9) |
|
Represents 3,000 Common Shares that are the subject of a
restricted stock grant made to Mr. Evans on
October 12, 2005 as to which the restriction period will
lapse on October 12, 2008 and 5,600 Common Shares that are
the subject of a restricted stock grant made to him on
October 11, 2006 as to which the restriction period will
lapse on October 11, 2009. |
|
(10) |
|
Represents 1,400 Common Shares that are the subject of a
restricted stock grant made to Mr. Nagel on
December 1, 2004 as to which the restriction period will
lapse on December 1, 2007, 5,200 Common Shares that are the
subject of a restricted stock grant made to him on
October 12, 2005 as to which the restriction period will
lapse on October 12, 2008, 38,000 Common Shares that are
the subject of a restricted stock grant made to him on
October 1, 2006 as to which the restriction period will
lapse for 19,000 Common Shares on October 1, 2007 and for
19,000 Common Shares on October 1, 2009 and 7,300 Common
Shares that are the subject of a restricted stock grant made to
him on October 11, 2006 as to which the restriction period
will lapse on October 11, 2009. |
|
(11) |
|
Represents 1,000 Common Shares that are the subject of a
restricted stock grant made to Ms. Stump on
December 1, 2004 as to which the restriction period will
lapse on December 1, 2007, 4,200 Common Shares that are the
subject of a restricted stock grant made to her on
October 12, 2005 as to which the restriction period will
lapse on October 12, 2008, 4,900 Common Shares that are the
subject of a restricted stock grant made to her on
October 11, 2006 as to which the restriction period will
lapse on October 11, 2009 and 218 Common Shares held in a
custodial account under the DSPP. |
|
(12) |
|
See notes (5) through (11) above and note
(13) below. |
|
(13) |
|
The Hagedorn Partnership owns 20,622,027 Common Shares of
record. The Hagedorn Partnership has the right to vote, and a
right of first refusal with respect to, 221,824 Common Shares
held by John Kenlon, a former shareholder of Sterns
Miracle-Gro Products, Inc., and his children. Mr. James
Hagedorn, Ms. Katherine Hagedorn Littlefield, Mr. Paul
Hagedorn, Mr. Peter Hagedorn, Mr. Robert Hagedorn and
Ms. Susan Hagedorn are siblings, general partners of the
Hagedorn Partnership and former shareholders of Sterns
Miracle-Gro Products, Inc. The general partners share voting and
dispositive power with respect to the securities held by the
Hagedorn Partnership and those subject to the right to vote and
right of first refusal in favor of the Hagedorn Partnership.
Mr. James Hagedorn and Ms. Katherine Hagedorn
Littlefield are directors of SMG. Community Funds, Inc., a New
York
not-for-profit
corporation, is a limited partner of the Hagedorn Partnership. |
Transactions
and Arrangements Concerning the Shares
Share Repurchase Plans. On October 27,
2005, our Board authorized the repurchase from time to time of
up to $100 million of our Common Shares each fiscal year
through September 30, 2010, or $500 million in the
aggregate. We have repurchased 1,964,200 shares, or
$87.9 million in aggregate value, of our Common Shares
since approval of the share repurchase plan. In connection with
the consummation of the Offer, we will terminate the outstanding
share repurchase plan.
Recent Securities Transactions. Based on our
records and on information provided to us by our directors,
executive officers, affiliates and subsidiaries, neither we nor
any of our directors, executive officers,
30
affiliates or subsidiaries have effected any transactions
involving our Common Shares during the 60 days prior to
January 10, 2007, except as follows:
|
|
|
|
|
Executive officers and directors made the following sales of
shares during the 60 days prior to January 10, 2007,
in each case pursuant to the exercise of vested stock options:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Price
|
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Name
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|
Date
|
|
Number Sold
|
|
|
per Share
|
|
|
Method of Sale
|
|
David M. Aronowitz
|
|
January 3, 2007
|
|
|
3,000
|
|
|
$
|
52.00
|
|
|
Open market
|
James Hagedorn
|
|
November 13, 2006
|
|
|
23,000
|
|
|
|
49.41
|
|
|
Open market
|
|
|
November 14, 2006
|
|
|
19,000
|
|
|
|
49.54
|
|
|
Open market
|
|
|
November 15, 2006
|
|
|
17,600
|
|
|
|
49.58
|
|
|
Open market
|
|
|
November 16, 2006
|
|
|
33,900
|
|
|
|
49.58
|
|
|
Open market
|
|
|
November 17, 2006
|
|
|
10,000
|
|
|
|
49.58
|
|
|
Open market
|
|
|
November 20, 2006
|
|
|
18,200
|
|
|
|
49.61
|
|
|
Open market
|
|
|
November 21, 2006
|
|
|
30,300
|
|
|
|
49.91
|
|
|
Open market
|
|
|
November 22, 2006
|
|
|
26,000
|
|
|
|
50.07
|
|
|
Open market
|
|
|
November 24, 2006
|
|
|
10,100
|
|
|
|
50.12
|
|
|
Open market
|
|
|
November 27, 2006
|
|
|
7,600
|
|
|
|
50.11
|
|
|
Open market
|
|
|
November 29, 2006
|
|
|
12,300
|
|
|
|
49.69
|
|
|
Open market
|
John M. Sullivan
|
|
December 18, 2006
|
|
|
10,000
|
|
|
|
51.15
|
|
|
Open market
|
|
|
|
|
|
On November 30, 2006, participants in our DSPP purchased
Common Shares (including pursuant to the reinvestment of
dividends) for the November 2006 period. The following executive
officers purchased shares under the DSPP on November 30,
2006: Mr. Hagedorn (44.9236 shares purchased pursuant
to the DSPP and 1.4834 shares purchased pursuant to the
reinvestment of dividends); and Ms. Stump
(11.2309 shares purchased pursuant to the DSPP and
0.3998 shares purchased pursuant to the reinvestment of
dividends). The price per share for such purchases was $44.52,
and the price per share for the reinvestment of dividends was
$49.02.
|
|
|
|
On January 3, 2007, participants in our DSPP purchased
Common Shares for the December 2006 period. The following
executive officers purchased shares under the DSPP on
January 3, 2007: Mr. Hagedorn (42.6167 shares);
and Ms. Stump (10.6542 shares). The price per share
for such purchases was $46.93.
|
401(k) Plans. We maintain The Scotts Company
LLC Retirement Savings Plan and the Smith & Hawken
401(k) Plan, each of which is a qualified defined contribution
retirement plan under section 401(a) of the Code.
Participants in the 401(k) Plans may elect to contribute a
percentage of their base compensation on a pre-tax basis. The
matching contributions to the 401(k) Plans totaled approximately
$6.0 million, $5.4 million and $4.9 million for
the fiscal years ended September 30, 2006, 2005 and 2004,
respectively. Under the 401(k) Plans, the participating
employers make matching contributions in cash or SMG shares of
100% of the first 3% and 50% of the next 2% of
participants pre-tax contributions of their eligible
compensation. The 401(k) Plans also provide for other
discretionary employer contributions. Participants in the 401(k)
Plans control the investment of their and our contributions
allocated to their accounts, including allocations to the SMG
Stock Fund.
Share-Based Compensation Plans. SMG grants
share-based awards annually to officers and other key employees
and non-employee directors pursuant to our 1996 Stock Option
Plan, our 2003 Stock Option Plan and our 2006 Long-Term
Incentive Plan. Historically, these awards primarily included
options with exercise prices equal to the market price of the
underlying shares on the date of grant with a term of
10 years. SMG also has awarded freestanding stock
appreciation rights with a stated base price determined by the
closing price of the Common Shares on the date of grant. In
recent years, SMG also has begun to grant awards of restricted
stock and performance shares. These share-based awards have been
made under the plans noted above, all of which have been
approved by our shareholders. Generally, in respect of grants to
employees, a
31
three-year cliff vesting schedule is used for all share-based
awards unless decided otherwise by the Compensation and
Organization Committee of the Board of Directors. SMG uses newly
issued Common Shares or treasury shares, if available, in
conjunction with our share-based compensation awards. Grants to
non-employee directors typically vest in one year or less. A
maximum of 18 million Common Shares may be delivered for
issuance under these plans. At December 31, 2006,
approximately 4.1 million Common Shares remain available
under these plans to be used to make new share-based awards. As
of January 3, 2007, there were options with respect to
approximately 2.9 million Common Shares that are vested or
will be vested by February 1, 2007, and freestanding stock
appreciation rights with respect to approximately
925,000 Common Shares that are vested or will be vested by
February 1, 2007, under these plans.
Executive Retirement Plan. The Executive
Retirement Plan is an unfunded non-qualified, deferred
compensation plan that allows certain members of our executive
management team, including all of our executive officers, and
other highly compensated employees to defer compensation and to
earn benefits funded by The Scotts Company LLC that they could
have deferred to and earned under our 401(k) Plans but for Code
limits imposed on such plans. The Executive Retirement Plan also
provides participants with the opportunity to defer all or any
part of the amount awarded under our Executive Incentive Plan or
any incentive compensation paid pursuant to an employment
agreement. Subject to certain restrictions, participants may
direct that amounts credited to them under the Executive
Retirement Plan be adjusted by reference to our stock fund or to
one or more outside investment funds made available by the
Executive Retirement Plans administrative committee.
Outside investment funds do not include our Common Shares. The
amount credited to a participant in our stock fund is recorded
as common share units, the number of which is determined by
dividing the amount credited for the participant in the SMG
stock fund by the fair market value of Common Shares when the
determination is made. The amount credited to a participant in
an outside investment fund is recorded as outside investment
fund units, the number of which is determined by dividing the
amount credited for the participant to each outside investment
fund by the market value of the outside investment fund when the
determination is made. Distributions from the Executive
Retirement Plan generally begin when the participant terminates
employment (although the participant may specify a different
date) and normally are paid in either a lump sum or in annual
installments over no more than ten years, whichever the
participant has elected. Distributions from our stock fund
always are made in the form of whole Common Shares equal to the
number of whole common share units then credited to the
participant and the value of fractional common share units is
distributed in cash. Distributions from outside investment funds
always are made in cash equal to the value of each outside
investment then credited to the participant multiplied by the
market value of those units. Executive Retirement Plan
participants are general unsecured creditors of The Scotts
Company LLC with respect to their interests in the Executive
Retirement Plan. We expect that the Executive Retirement Plan
will remain in effect indefinitely. However, the Executive
Retirement Plans administrative committee may amend or
terminate the Executive Retirement Plan at any time. As of
December 31, 2006, approximately 49,232 shares were
held in a trust to discharge SMGs obligations under our
Executive Retirement Plan.
The Scotts Miracle-Gro Company Discounted Stock Purchase
Plan. We currently maintain The Scotts
Miracle-Gro Company Discounted Stock Purchase Plan, which has
been approved by our shareholders. The DSPP provides a means for
our employees designated for participation in the DSPP to
authorize payroll deductions on a voluntary basis to be used for
the periodic purchase of Common Shares. All employees
participating in the DSPP have equal rights and privileges.
Under the DSPP, eligible employees are able to purchase Common
Shares at a price equal to at least 90% of the fair market value
of the Common Shares at the end of the applicable offering
period. Dividends on the Common Shares that are not distributed
to plan participants in cash are reinvested in Common Shares at
the then current market price.
The maximum number of Common Shares that may be purchased under
the DSPP is 300,000 in the aggregate (as adjusted for the
2-for-1
stock split of our Common Shares on November 9, 2005),
subject to adjustment for changes in the capitalization of SMG.
Common Shares purchased under the DSPP may be either authorized
but unissued shares or treasury shares. As of December 31,
2006, approximately 95,100 Common Shares were held for the
account of participants in our DSPP of which approximately
73,000 were unrestricted and may participate in the Offer.
32
General. Except (1) as otherwise
described herein, (2) for the compensation of our directors
described in our Definitive Proxy Statement on
Schedule 14A, as filed on December 20, 2006,
(3) for the employment agreements, change in control
arrangements and policies and deferred compensation arrangements
described in our Definitive Proxy Statement on
Schedule 14A, as filed on December 20, 2006, and
(4) for the outstanding stock options, stock awards and
other equity interests granted to our directors, executive
officers and other employees pursuant to our various equity
incentive plans, which are described in our Definitive Proxy
Statement on Schedule 14A, as filed on December 20,
2006 and Note 10 to the financial statements contained in
our 2006
Form 10-K,
all of which descriptions are incorporated herein by reference,
neither we nor, to the best of our knowledge, any of our
affiliates, directors or executive officers, is a party to any
agreement, arrangement, understanding or relationship, whether
or not legally enforceable, with any other person, relating,
directly or indirectly, to the Offer or with respect to any of
our securities, including, but not limited to, any agreement,
arrangement, understanding or relationship concerning the
transfer or the voting of our securities, joint ventures, loan
or option arrangements, puts or calls, guarantees of loans,
guarantees against loss or the giving or withholding of proxies,
consents or authorizations.
|
|
12.
|
Effects
of the Offer on the Market for the Shares; Registration under
the Exchange Act
|
The purchase by us of shares in the Offer will reduce the number
of shares that might otherwise be traded publicly and is likely
to reduce the number of our shareholders. As a result, trading
of a relatively small volume of the shares after consummation of
the Offer may have a greater impact on trading prices than would
be the case prior to the consummation of the Offer.
Based upon the listing standards of the NYSE, we do not expect
that our purchase of shares in the Offer will cause the Common
Shares to be delisted from the NYSE. The Offer is conditioned
on, among other things, there not being any reasonable
likelihood, in our sole judgment, that the consummation of the
Offer and the purchase of shares will cause the Common Shares to
be delisted from the NYSE. See Section 7,
Conditions of the Offer.
The Common Shares are registered under the Exchange Act, which
requires, among other things, that we furnish certain
information to our shareholders and the SEC and comply with the
SECs proxy rules in connection with meetings of our
shareholders. We believe that our purchase of shares in the
Offer pursuant to the terms of the Offer will not result in the
Common Shares not continuing to be required to be registered
under the Exchange Act. The Offer is conditioned on, among other
things, there not being any reasonable likelihood, in our sole
judgment, that the consummation of the Offer and the purchase of
shares will result in the Common Shares not continuing to be
required to be registered under the Exchange Act. See
Section 7, Conditions of the Offer.
The shares are currently margin securities under the
rules of the Federal Reserve Board. This has the effect, among
other things, of allowing brokers to extend credit to their
customers using such shares as collateral. We believe that,
following the purchase of shares in the Offer, the shares will
continue to be margin securities for purposes of the
Federal Reserve Boards margin rules and regulations.
We are not aware of any license or regulatory permit that we
believe is material to our business that might be adversely
affected by our acquisition of shares as contemplated by the
Offer or of any approval or other action by any government,
administrative or regulatory authority or agency, domestic,
foreign or supranational, that would be required for the
acquisition or ownership of shares by us as contemplated by the
Offer. Should any such approval or other action be required, we
presently contemplate that we will seek that approval or other
action. We are unable to predict whether we will be required to
delay the acceptance for payment of or payment for shares
tendered in the Offer pending the outcome of any such matter.
There can be no assurance that any such approval or other
action, if needed, would be obtained or would be obtained
without substantial cost or conditions or that the failure to
obtain the approval or other action might not result in adverse
consequences to our business and financial condition. Our
obligations in the Offer to accept for payment and pay for
shares are subject to certain conditions. See Section 7,
Conditions of the Offer.
33
|
|
14.
|
U.S. Federal
Income Tax Consequences
|
The following summary describes the material U.S. federal
income tax consequences relating to the Offer to shareholders
whose shares are validly tendered and accepted for payment
pursuant to the Offer. This summary does not address the effect
of state, local, foreign or other tax laws of participating in
the Offer. Those shareholders that do not participate in the
Offer should not incur any U.S. federal income tax
liability as a result of the completion of the Offer. This
summary is based upon the Code, Treasury regulations promulgated
thereunder, administrative pronouncements and judicial
decisions, all as in effect as of the date hereof and all of
which are subject to change, possibly with retroactive effect.
This summary addresses only shares that are held as capital
assets within the meaning of Section 1221 of the Code and
does not address all of the tax consequences that may be
relevant to shareholders in light of their particular
circumstances or to certain types of shareholders subject to
special treatment under the Code, including, without limitation,
certain financial institutions, dealers in securities or
commodities, traders in securities who elect to apply a
mark-to-market
method of accounting, insurance companies, partnerships
(including entities treated as partnerships for
U.S. federal income tax purposes), tax-exempt
organizations, regulated investment companies, certain
expatriates, persons whose functional currency is other than the
U.S. dollar, persons subject to the alternative minimum
tax, persons that hold shares as a position in a
straddle or as a part of a hedging,
conversion, constructive sale or
integrated transaction for U.S. federal income tax purposes
or persons that received their shares through the exercise of
employee stock options or otherwise as compensation. In
addition, except as otherwise specifically noted, this
discussion applies only to shareholders that are
U.S. Holders (as defined below).
For purposes of this discussion, a U.S. Holder
means:
|
|
|
|
|
a citizen or resident of the United States;
|
|
|
|
a corporation (or other entity treated as a corporation for
U.S. federal income tax purposes) created or organized in
or under the laws of the United States or of any political
subdivision thereof;
|
|
|
|
an estate the income of which is includible in gross income for
U.S. federal income tax purposes regardless of its
source; or
|
|
|
|
a trust (1) the administration of which is subject to the
primary supervision of a court within the United States and
for which one or more U.S. persons have the authority to
control all substantial decisions or (2) for which a valid
election has been made to be treated as a U.S. person for
U.S. federal income tax purposes under applicable Treasury
regulations.
|
If a partnership (including any entity treated as a partnership
for U.S. federal income tax purposes) is a shareholder, the
tax treatment of a partner generally will depend upon the status
of the partner and upon the activities of the partnership. A
shareholder that is a partnership, and partners in such
partnership, should consult their tax advisors regarding the tax
consequences of participating in the Offer.
Shareholders are urged to consult their tax advisors to
determine the particular tax consequences to them of
participating or not participating in the Offer, including the
applicability and effect of state, local, foreign and other tax
laws and the possible effect of changes in U.S. federal or
other tax laws.
Characterization of the Purchase. The purchase
of shares by us in the Offer will be a taxable transaction for
U.S. federal income tax purposes. As a consequence of the
purchase, a U.S. Holder, depending upon the
U.S. Holders particular circumstances, will be
treated either as having sold the U.S. Holders shares
or as having received a distribution in respect of such shares
from us.
Under Section 302 of the Code, a U.S. Holder whose
shares are purchased by us in the Offer will be treated as
having sold its shares, and thus will recognize capital gain or
loss, if the purchase:
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results in a complete termination of the
U.S. Holders equity interest in us;
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results in a substantially disproportionate
redemption with respect to the U.S. Holder; or
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is not essentially equivalent to a dividend with
respect to the U.S. Holder.
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Each of these tests, referred to as the Section 302
Tests, is explained in more detail below.
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If a U.S. Holder satisfies any of the Section 302
Tests explained below, the U.S. Holder will be treated as
if it sold its shares to us and will recognize capital gain or
loss equal to the difference between the amount of cash received
in the Offer and the U.S. Holders adjusted tax basis
in the shares surrendered in exchange therefor. This gain or
loss will be long-term capital gain or loss if the
U.S. Holders holding period for the shares that were
sold exceeds one year as of the date of purchase by us in the
Offer. Long-term capital gain recognized by a non-corporate
U.S. Holder generally will be subject to U.S. federal
income tax at a maximum rate of 15%. Specified limitations apply
to the deductibility of capital losses by U.S. Holders.
Gain or loss must be determined separately for each block of
shares (i.e., shares acquired at the same cost in a single
transaction) that is purchased by us from a U.S. Holder in
the Offer. A U.S. Holder may be able to designate,
generally through its broker, which blocks of shares it wishes
to tender in the Offer if less than all of its shares are
tendered in the Offer, and the order in which different blocks
will be purchased by us in the event of proration in the Offer.
U.S. Holders should consult their tax advisors concerning
the mechanics and desirability of that designation.
If a U.S. Holder does not satisfy any of the
Section 302 Tests explained below, the purchase of a
U.S. Holders shares by us in the Offer will not be
treated as a sale or exchange under Section 302 of the Code
with respect to the U.S. Holder. Instead, the amount
received by the U.S. Holder with respect to the purchase of
its shares by us in the Offer will be treated as a dividend to
the U.S. Holder with respect to its shares under
Section 301 of the Code, to the extent of the portion of
our current and accumulated earnings and profits (within the
meaning of the Code) allocable to such shares. We believe that
we will have current and accumulated earnings and profits as of
September 30, 2007. Provided certain holding period
requirements are satisfied, non-corporate U.S. Holders
generally will be subject to U.S. federal income tax at a
maximum rate of 15% on dividends deemed received (i.e., the
entire amount of cash received without reduction for the
adjusted tax basis of the shares purchased). To the extent that
the amount received pursuant to the Offer exceeds the
U.S. Holders allocable share of our current and
accumulated earnings and profits, such excess amount first will
be treated as a tax-free return of capital to the extent of the
U.S. Holders adjusted tax basis in its shares, which
will reduce the U.S. Holders adjusted tax basis in
its shares (but not below zero), and any remainder will be
treated as capital gain (which may be long-term capital gain as
described above). To the extent that a purchase of a
U.S. Holders shares by us in the Offer is treated as
the receipt by the U.S. Holder of a dividend, the
U.S. Holders remaining adjusted tax basis in the
purchased shares (after such adjustment as described in the
previous sentence) will be added to any shares retained by the
U.S. Holder subject to, in the case of corporate
U.S. Holders, reduction of basis, but not below zero, under
Section 1059 of the Code to the extent of the non-taxed
portion of the dividend. To the extent that such non-taxed
portion of the dividend exceeds such basis, the corporate U.S.
Holder will recognize gain. A dividend received by a corporate
U.S. Holder, as explained below, may be eligible for the
dividends-received deduction and subject to the
extraordinary dividend provisions of
Section 1059 of the Code.
Constructive Ownership of Stock and Other
Issues. In applying each of the Section 302
Tests explained below, U.S. Holders must take into account
not only shares that they actually own but also shares they are
treated as owning under the constructive ownership rules of
Section 318 of the Code. Under the constructive ownership
rules, a U.S. Holder is treated as owning any shares that
are owned (actually and in some cases constructively) by certain
related individuals and entities as well as shares that the
U.S. Holder has the right to acquire by exercise of an
option or by conversion or exchange of a security. Due to the
factual nature of the Section 302 Tests, U.S. Holders
should consult their tax advisors to determine whether their
respective sales of shares in the Offer qualify for sale or
exchange treatment in their particular circumstances.
If a U.S. Holder sells shares to persons other than us at
or about the time the U.S. Holder also sells shares
pursuant to the Offer, and the various sales effected by the
U.S. Holder are part of an overall plan to reduce or
terminate such U.S. Holders proportionate interest in
us, then the sales to persons other than us may, for
U.S. federal income tax purposes, be integrated with the
U.S. Holders exchange of shares pursuant to the Offer
and, if integrated, should be taken into account in determining
whether the U.S. Holder satisfies any of the
Section 302 Tests with respect to shares sold to us.
We cannot predict whether or the extent to which the Offer will
be oversubscribed. If the Offer is oversubscribed, proration of
tenders in the Offer will cause us to accept fewer shares than
are tendered. This
35
in turn may affect the U.S. Holders U.S. federal
income tax consequences. In particular, this may affect the
U.S. Holders ability to satisfy one of the
Section 302 Tests described below. Accordingly, a tendering
U.S. Holder may choose to submit a conditional
tender under the procedures described in Section 6,
which allows the U.S. Holder to tender shares subject to
the condition that a specified minimum number of the
U.S. Holders shares must be purchased by us if any
such shares so tendered are purchased. In any event, no
assurance can be given that a U.S. Holder will be able to
determine in advance whether its disposition of shares pursuant
to the Offer will be treated as a sale or exchange or as a
dividend distribution in respect of stock from us.
Section 302 Tests. One of the following
tests must be satisfied in order for the purchase of shares by
us in the Offer to be treated as a sale or exchange for
U.S. federal income tax purposes:
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Complete Termination Test. The purchase of a
U.S. Holders shares by us in the Offer will result in
a complete termination of the
U.S. Holders equity interest in us if all of the
shares that are actually owned by the U.S. Holder are sold
in the Offer and all of the shares that are constructively owned
by the U.S. Holder, if any, are sold in the Offer or, with
respect to shares owned by certain related individuals, the
U.S. Holder effectively waives, in accordance with
Section 302(c) of the Code, the attribution of shares that
otherwise would be considered as constructively owned by the
U.S. Holder. U.S. Holders wishing to satisfy the
complete termination test through waiver of the
constructive ownership rules should consult their tax advisors.
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Substantially Disproportionate Test. The
purchase of a U.S. Holders shares by us in the Offer
will result in a substantially disproportionate
redemption with respect to the U.S. Holder if (i) the
percentage of the then outstanding voting stock actually and
constructively owned by the U.S. Holder immediately after
the purchase is less than 80% of the percentage of the voting
stock actually and constructively owned by the U.S. Holder
immediately before the purchase (treating as outstanding all
shares purchased in the Offer), (ii) the percentage of the
then outstanding common stock (whether voting or nonvoting)
actually and constructively owned by the U.S. Holder
immediately after the purchase is less than 80% of the
percentage of the common stock actually and constructively owned
by the U.S. Holder immediately before the purchase
(treating as outstanding all shares purchased in the Offer), and
(iii) immediately following the purchase the
U.S. Holder actually and constructively owns less than 50%
of our total voting power (consisting of all classes of
outstanding voting stock).
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Not Essentially Equivalent to a Dividend
Test. The purchase of a U.S. Holders
shares by us in the Offer will be treated as not
essentially equivalent to a dividend if the reduction in
the U.S. Holders proportionate interest in us as a
result of the purchase constitutes a meaningful
reduction given the U.S. Holders particular
circumstances. Whether the receipt of cash by a U.S. Holder
who sells shares in the Offer will be not essentially
equivalent to a dividend is independent of whether or not
we have current or accumulated earnings and profits and will
depend upon the U.S. Holders particular facts and
circumstances. The IRS has indicated in a published revenue
ruling that even a small reduction in the percentage interest of
a shareholder whose relative stock interest in a publicly held
corporation is minimal (for example, an interest of less than
1%) and who exercises no control over corporate affairs should
constitute a meaningful reduction. U.S. Holders
should consult their tax advisors as to the application of this
test because this test will be satisfied only if the reduction
in the U.S. Holders proportionate interest in us is
meaningful given the particular circumstances of the
U.S. Holder in the context of the Offer. In particular,
depending upon the total number of shares purchased by us in the
Offer, it is possible that a U.S. Holders percentage
interest in us (including any interest attributable to shares
constructively owned by the U.S. Holder as a result of the
ownership of options) may increase even though the total number
of shares held by the U.S. Holder decreases.
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Corporate Shareholder Dividend Treatment. If a
corporate U.S. Holder does not satisfy any of the
Section 302 Tests described above and we have current or
accumulated earnings and profits in respect of our current
taxable year, such corporate U.S. Holder may, to the extent
that any amounts received by it in the Offer are treated as a
dividend, be eligible for the dividends-received deduction. The
dividends-received deduction is subject to certain limitations.
In addition, any amount received by a corporate U.S. Holder
36
pursuant to the Offer that is treated as a dividend may
constitute an extraordinary dividend under
Section 1059 of the Code. Corporate U.S. Holders
should consult their tax advisors concerning the tax
consequences of dividend treatment and the application of
Section 1059 of the Code to the Offer in their particular
circumstances.
Foreign Shareholders. The following general
discussion applies to shareholders that are
Non-U.S. Holders.
A
Non-U.S. Holder
is a person or entity that, for U.S. federal income tax
purposes, is:
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a non-resident alien individual, other than certain former
citizens and residents of the United States subject to tax as
expatriates;
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a foreign corporation; or
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a foreign estate or trust.
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The U.S. federal income tax treatment of our purchase of
shares from a
Non-U.S. Holder
pursuant to the Offer will depend on whether such
Non-U.S. Holder
is treated, based upon the
Non-U.S. Holders
particular circumstances, as having sold the tendered shares or
as having received a distribution in respect of such
Non-U.S. Holders
shares. The appropriate treatment of our purchase of shares from
a
Non-U.S. Holder
will be determined in the manner described above. See
Section 302 Tests.
If the purchase of shares by us in the Offer is characterized as
a sale or exchange (as opposed to a dividend) with respect to a
Non-U.S. Holder,
the Non-U.S. Holder generally will not be subject to
U.S. federal income tax on gain realized on the disposition
of shares in the Offer unless:
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the gain is effectively connected with a trade or business of
the
Non-U.S. Holder
in the United States, subject to an applicable treaty providing
otherwise;
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the
Non-U.S. Holder
is an individual who holds shares as capital assets and is
present in the United States for 183 days or more in the
taxable year of disposition and certain other requirements are
met; or
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we are or have been a U.S. real property holding
corporation for U.S. federal income tax purposes and
certain other requirements are met.
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We do not believe that we currently are or have been a
U.S. real property holding corporation for
U.S. federal income tax purposes.
Non-U.S. Holders,
particularly those individuals who are present in the United
States for 183 days or more in the taxable year of
disposition, and who are not otherwise residents of the United
States for U.S. federal income tax purposes, should consult
their tax advisors regarding the tax consequences of
participating in the Offer.
If a
Non-U.S. Holder
does not satisfy any of the Section 302 Tests described
above, the full amount received by the
Non-U.S. Holder
with respect to our purchase of shares in the Offer will be
treated as a distribution to the
Non-U.S. Holder
with respect to the
Non-U.S. Holders
shares. The treatment, for U.S. federal income tax
purposes, of such distribution as a dividend, a tax-free return
of capital, or as capital gain from the sale of shares will be
determined in the manner described above. See
Characterization of the Purchase. To the
extent that amounts received by a
Non-U.S. Holder
with respect to our purchase of shares in the Offer are treated
as a dividend, we will be required to withhold U.S. federal
income tax at the rate of 30% or such lower rate as may be
specified by an applicable income tax treaty, provided we have
received proper certification of the application of such income
tax treaty.
Non-U.S. Holders
should consult their tax advisors regarding their entitlement to
benefits under an applicable income tax treaty and the manner of
claiming the benefits of such treaty. A
Non-U.S. Holder
that is eligible for a reduced rate of U.S. federal
withholding tax under an income tax treaty may obtain a refund
or credit of any excess amounts withheld by filing an
appropriate claim for a refund with the IRS. Amounts treated as
dividends that are effectively connected with a
Non-U.S. Holders
conduct of a trade or business in the U.S. are not subject
to the U.S. withholding tax, but are instead taxed in the
manner applicable to
37
U.S. Holders, as described above. In that case, we will not
be required to withhold U.S. federal withholding tax if the
Non-U.S. Holder
complies with applicable certification and disclosure
requirements. In addition, dividends received by a corporate
Non-U.S. Holder
that are effectively connected with the conduct of a trade or
business in the U.S. may be subject to a branch profits tax
at a 30% rate, or a lower rate specified in an applicable income
tax treaty.
United States Federal Income Tax Considerations for
Participants in Our 401(k) Plans, the DSPP and Optionees Who
Exercise Options or Freestanding Stock Appreciation Rights and
Tender Shares. Neither affected participants in the 401(k)
Plans nor the trustee of the 401(k) Plans will be taxed on any
gain attributable to shares purchased in the tender. Such
participants generally will be taxed at ordinary income rates on
distributions from the 401(k) Plans in other than Common Shares
and may be foregoing certain favorable tax treatment on Common
Shares distributed under the 401(k) Plans in a lump sum.
Generally, the tax rules applicable to individual shareholders
who sell their shares in the Offer will apply to DSPP
participants. Optionees and holders of freestanding stock
appreciation rights who exercise vested options or freestanding
stock appreciation rights will be taxed at ordinary income
rates, and will be subject to withholding on the difference
between their exercise price and the fair market value of the
Common Shares that they acquire. Optionees who sell such Common
Shares in the Offer generally will have (i) an adjusted tax
basis in such Common Shares equal to the fair market value of
such Common Shares at the time of exercise and (ii) a new
holding period for such Common Shares. You are strongly
encouraged to consult your tax advisor regarding the special
rules applicable to shares held or acquired pursuant to the
plans and the general tax discussions contained in the
plans prospectuses or summary plan descriptions and the
special tax notices available with respect to distributions from
the 401(k) Plans.
Backup Withholding. See Section 3,
Procedures for Tendering Shares, with respect
to the application of backup U.S. federal income tax
withholding.
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15.
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Extension
of the Offer; Termination; Amendment
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We expressly reserve the right, in our sole discretion, at any
time and from time to time, and regardless of whether or not any
of the events set forth in Section 7 shall have occurred or
shall be deemed by us to have occurred, to extend the period of
time during which the Offer is open and thereby delay acceptance
for payment of, and payment for, any shares by giving oral or
written notice of such extension to the Depositary and making a
public announcement of such extension. We also expressly reserve
the right, in our sole discretion, to terminate the Offer and
not accept for payment or pay for any shares not theretofore
accepted for payment or paid for, at which point, we may,
subject to applicable law, postpone payment for shares upon the
occurrence of any of the conditions specified in Section 7
hereof by giving oral or written notice of such termination or
postponement to the Depositary and making a public announcement
of such termination or postponement. Our reservation of the
right to delay payment for shares that we have accepted for
payment is limited by
Rule 13e-4(f)(5)
under the Exchange Act, which requires that we must pay the
consideration offered or return the shares tendered promptly
after termination or withdrawal of a tender offer. Subject to
compliance with applicable law, we further reserve the right, in
our sole discretion, regardless of whether any of the events set
forth in Section 7 shall have occurred or shall be deemed
by us to have occurred, to amend the Offer in any respect,
including, without limitation, by decreasing or increasing the
consideration offered in the Offer to holders of shares or by
decreasing or increasing the number of shares being sought in
the Offer. Amendments to the Offer may be made at any time and
from time to time effected by public announcement, such
announcement, in the case of an extension, to be issued no later
than 9:00 a.m., New York City time, on the next business
day after the last previously scheduled or announced Expiration
Time. Any public announcement made in the Offer will be
disseminated promptly to shareholders in a manner reasonably
designed to inform shareholders of such change. Without limiting
the manner in which we may choose to make a public announcement,
except as required by applicable law, we shall have no
obligation to publish, advertise or otherwise communicate any
such public announcement other than by making a release through
Business Wire or another comparable service.
If we materially change the terms of the Offer or the
information concerning the Offer, we will extend the Offer to
the extent required by
Rules 13e-4(d)(2)
and
13e-4(f)(1)
under the Exchange Act. These rules and
38
certain related releases and interpretations of the SEC provide
that the minimum period during which a tender offer must remain
open following material changes in the terms of the Offer or
information concerning the Offer (other than a change in price
or a change in percentage of securities sought) will depend on
the facts and circumstances, including the relative materiality
of such terms or information. If (1) we increase or
decrease the price to be paid for shares or increase or decrease
the number of shares being sought in the Offer and, in the case
of an increase in the number of shares being sought, such
increase exceeds 2% of the outstanding shares and (2) the
Offer is scheduled to expire at any time earlier than the
expiration of a period ending on the tenth business day from,
and including, the date that such notice of an increase or
decrease is first published, sent or given to security holders
in the manner specified in this Section 15, the Offer will
be extended until the expiration of such period of ten business
days.
We have retained Banc of America Securities LLC to act as the
Dealer Manager in connection with the Offer. In its role as
Dealer Manager, Banc of America Securities LLC may contact
brokers, dealers and similar entities and may provide
information regarding the Offer to those that it contacts or
persons that contact it. Banc of America Securities LLC will
receive reasonable and customary compensation for its services.
We also have agreed to reimburse Banc of America Securities LLC
for reasonable
out-of-pocket
expenses incurred in connection with the Offer, including
reasonable fees and expenses of counsel, and to indemnify it
against certain liabilities in connection with the Offer,
including certain liabilities under the federal securities laws.
Banc of America Securities LLC is also serving as the Dealer
Manager for us in connection with our repurchase of our
outstanding 6.625% senior subordinated notes due 2013 and the
consent solicitation in connection therewith for which it is
receiving customary compensation.
Affiliates of Banc of America Securities LLC have provided
investment banking services to us in the past for which they
have received customary compensation. Banc of America Securities
LLC and its affiliates may continue to provide various
investment banking services to us in the future, for which we
would expect they would receive customary compensation from us.
In the ordinary course of their respective business, including
in their trading and brokerage operations and in a fiduciary
capacity, the Dealer Manager and its affiliates may hold
positions, both long and short, for their own accounts and for
those of their customers, in our securities.
An affiliate of Banc of America Securities LLC is a lender under
our existing credit facility and is a lender and Agent under the
New Credit Facilities described in the Commitment Letter.
We have retained D.F. King & Co. to act as Information
Agent and National City Bank to act as Depositary in connection
with the Offer. The Information Agent may contact shareholders
by mail, facsimile and personal interviews and may request
brokers, dealers and other nominee shareholders to forward
materials relating to the Offer to beneficial owners. The
Information Agent and the Depositary will each receive
reasonable and customary compensation for their respective
services, will be reimbursed by us for reasonable
out-of-pocket
expenses and will be indemnified against certain liabilities in
connection with the Offer, including certain liabilities under
the federal securities laws.
We will not pay any fees or commissions to brokers, dealers,
commercial banks, trust companies or other nominees or persons
(other than fees to the Dealer Manager and the Information Agent
as described above) for soliciting tenders of shares pursuant to
the Offer. Shareholders holding shares through brokers, dealers,
commercial banks, trust companies or other nominees are urged to
consult such persons to determine whether transaction costs may
apply if shareholders tender shares through such persons and not
directly to the Depositary. We will, however, upon request,
reimburse brokers, dealers, commercial banks, trust companies or
other nominees for reasonable and customary mailing and handling
expenses incurred by them in forwarding the Offer and related
materials to the beneficial owners of shares held by them as a
nominee or in a fiduciary capacity. No broker, dealer,
commercial bank or trust company has been authorized to act as
our agent or the agent of the Dealer Manager, the Information
Agent or the Depositary for purposes of the Offer. We will pay
or cause to be paid all stock transfer taxes, if any, on our
purchase of shares except as otherwise provided in
Section 5, Purchase of Shares and Payment of
Purchase Price.
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We are not aware of any jurisdiction where the making of the
Offer is not in compliance with applicable law. If we become
aware of any jurisdiction where the making of the Offer or the
acceptance of shares pursuant thereto is not in compliance with
applicable law, we will make a good faith effort to comply with
the applicable law. If, after such good faith effort, we cannot
comply with the applicable law, the Offer will not be made to
(nor will tenders be accepted from or on behalf of) the holders
of shares in such jurisdiction. In any jurisdiction where the
securities, blue sky or other laws require the Offer to be made
by a licensed broker or dealer, the Offer shall be deemed to be
made on behalf of us by the Dealer Manager or one or more
registered brokers or dealers licensed under the laws of that
jurisdiction.
Pursuant to
Rule 13e-4(c)(2)
under the Exchange Act, we have filed with the SEC an Issuer
Tender Offer Statement on Schedule TO, which contains
additional information with respect to the Offer. The
Schedule TO, including the exhibits and any amendments and
supplements thereto, may be examined, and copies may be
obtained, at the same places and in the same manner as is set
forth in Section 10 with respect to information concerning
us.
You should only rely on the information contained in this
document or in other documents to which we have referred you. We
have not authorized any person to make any recommendation on
behalf of us as to whether you should tender or refrain from
tendering your shares in the Offer. We have not authorized any
person to give any information or to make any representation in
connection with the Offer other than those contained in this
Offer to Purchase or the related Letter of Transmittal. If given
or made, any recommendation or any such information or
representation must not be relied upon as having been authorized
by us, the Dealer Manager or the Information Agent or the
Depositary.
January 10, 2007
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January 10, 2007
Facsimile copies of the Letter of Transmittal, validly completed
and duly executed will be accepted. The Letter of Transmittal,
certificates for shares and any other required documents should
be sent or delivered by each shareholder of SMG or his or her
bank, broker, dealer, trust company or other nominee to the
Depositary as follows:
The Depositary for the Offer is:
National City Bank
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By Mail:
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By Overnight
Delivery:
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By Hand:
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National City Bank
Corporate Actions Processing Center
P.O. Box 859208
Braintree, MA 02185-9208
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National City Bank
Corporate Actions Processing Center
161 Bay State Drive
Braintree, MA 02184
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National City Bank
Corporate Trust Operations
3rd
Floor Annex
4100 West 150th Street
Cleveland, OH 44135
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Delivery of the Letter of Transmittal to an address other
than as set forth above will not constitute a valid delivery to
the Depositary.
Questions and requests for assistance should be directed to the
Information Agent or to the Dealer Manager for this Offer at
their respective addresses and telephone numbers set forth on
this page. Requests for additional copies of this Offer to
Purchase, the related Letter of Transmittal or the Notice of
Guaranteed Delivery should be directed to the Information Agent.
The Information Agent for the Offer is:
D.F. King & Co., Inc.
48 Wall Street
New York, New York 10005
Call Toll Free:
800-714-3312
Bankers & Brokers call collect:
212-269-5550
The Dealer Manager for the Offer is:
Banc of America
Securities LLC
9 West 57th Street
New York, New York 10019
(212) 583-8502
(888) 583-8900,
ext. 8502
(Call Toll Free)
EX-99.A.1.II
Exhibit (a)(1)(ii)
LETTER
OF TRANSMITTAL
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Please complete the back if you
would like to transfer ownership of unaccepted shares or request
special mailing.
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(2) SUBSTITUTE
FORM W-9
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THE OFFER TO PURCHASE AND THIS
LETTER OF TRANSMITTAL, INCLUDING THE ACCOMPANYING INSTRUCTIONS,
SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS
COMPLETED.
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PLEASE CERTIFY YOUR TAXPAYER
IDENTIFICATION OR SOCIAL SECURITY NUMBER BY SIGNING BELOW.
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The Scotts Miracle-Gro Company
(the Company) is offering to purchase up to
4,504,504 of its common shares, without par value, in a tender
offer, subject to the terms and conditions set forth in the
Offer to Purchase, dated January 10, 2007. The offer is being
made to all holders of the Companys common shares at a
price not less than $48.50 nor greater than $55.50 per share.
This Letter of Transmittal is to be completed only if:
(a) certificates for shares are being forwarded herewith or
(b) a tender of book-entry shares is being made to the
account maintained by National City Bank, as Depositary,
pursuant to Section 3 of the Offer to Purchase and a
related agents message is not being delivered.
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If the Taxpayer Identification
Number or
Social Security Number printed
above is INCORRECT OR if the
space is BLANK write in the
CORRECT number here.
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I/We,
the undersigned, hereby tender to the Company the share(s)
identified below. I/We certify that I/we have complied with all
requirements as stated in the instructions on the reverse side,
am/are the registered holder(s) of the shares of the Company
represented by the enclosed certificates, have full authority to
surrender these certificate(s), and give the instructions in
this Letter of Transmittal and warrant that the shares
represented by these certificates are free and clear of all
liens, restrictions, adverse claims and encumbrances. I/We make
the representation and warranties to the Company set forth in
Section 3 of the Offer to Purchase and understand that the
tender of shares made hereby constitutes an acceptance of the
terms and conditions of the offer (including if the offer is
extended or amended, the terms and conditions of such extension
or amendment).
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Under penalties of perjury, I
certify that:
1. The number shown on this form is my correct
taxpayer identification number (or I am waiting for a number to
be issued to me), and
2. I am not subject to backup withholding because:
(a) I am exempt from backup withholding, or
(b) I have not been notified by the Internal Revenue
Service (IRS) that I am subject to backup withholding as a
result of a failure to report all interest or dividends, or
(c) the IRS has notified me that I am no longer
subject to backup withholding, and
3. I am a U.S. person (including a
U.S. resident alien).
Certification instructions. You must cross out
item 2 above if you have been notified by the IRS that you
are currently subject to backup withholding because you have
failed to report all interest or dividends on your tax
return.
Signature: Date:
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(3) Number
of Shares you own:
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Certificate
Number(s)
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Book
Entry
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(1) Signature: This
form must be signed by the registered holder(s) exactly
as their name(s) appears above or by person(s) authorized to
sign on behalf of the registered holder(s) by documents
transmitted herewith.
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X
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(4) Number
of Shares you are Tendering:
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Signature of Shareholder
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Date
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Daytime Telephone #
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Certificate
Number(s)
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Book
Entry
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X
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Signature of Shareholder
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Date
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Daytime Telephone #
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I/We understand that the
tender of shares constitutes a representation and warranty to
the Company that the undersigned has a NET LONG POSITION in the
Companys common shares or other securities exercisable or
exchangeable therefor and that such tender complies with
Rule 14e-4
promulgated under the Securities Exchange Act of 1934, as
amended. I/We authorize the Company to withhold all applicable
taxes and tax-related items legally payable by the
undersigned.
Indicate below the
order (by certificate number) in which shares are to be
purchased in the event of proration. If you do not designate an
order, if less than all shares tendered are purchased due to
proration, shares will be selected for purchase by the
Depositary.
1st _
_ 2nd _
_ 3rd _
_ 4th _
_ 5th _
_
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í (5) Shares Tendered
at Price Determined by Shareholder (See Instruction 5):
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By checking one of the following
boxes below INSTEAD OF THE BOX UNDER Shares Tendered
at Price Determined in the Offer, the undersigned hereby
tenders shares at the price checked. This action could result in
none of the shares being purchased if the purchase price
determined in the Offer is less than the price checked below.
IF YOU DESIRE TO TENDER SHARES AT MORE THAN ONE PRICE
YOU MUST COMPLETE A SEPARATE LETTER OF TRANSMITTAL FOR EACH
PRICE AT WHICH SHARES ARE TENDERED.
PRICE (IN DOLLARS) PER SHARE AT WHICH SHARES ARE BEING
TENDERED
CHECK ONLY ONE BOX
The same shares cannot be tendered, unless previously validly
withdrawn as provided in Section 4 of the
Offer to Purchase.
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o $48.50
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o $50.50
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o $52.50
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o $54.50
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o $49.00
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o $51.00
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o $53.00
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o $55.00
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o $49.50
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o $51.50
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o $53.50
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o $55.50
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o $50.00
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o $52.00
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o $54.00
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OR
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ñ Shares Tendered
at Price Determined in the Offer (See Instruction 5):
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o By
checking this box INSTEAD OF ONE OF THE BOXES UNDER
Shares Tendered at Price Determined by
Shareholder, the undersigned hereby tenders shares at the
purchase price, as the same shall be determined in accordance
with the terms of the Offer. For purposes of determining the
purchase price, those shares that are tendered by the
undersigned agreeing to accept the purchase price determined in
the Offer will be deemed to be tendered at the minimum price.
The undersigned wants to maximize the chance of having the
Company purchase all of the shares the undersigned is tendering
(subject to the possibility of proration). Accordingly, by
checking this box instead of one of the price boxes above, the
undersigned hereby tenders shares at, and is willing to accept,
the purchase price determined in accordance with the terms of
the Offer. THIS ELECTION MAY LOWER THE PURCHASE PRICE AND COULD
RESULT IN THE TENDERED SHARES BEING PURCHASED AT THE
MINIMUM PRICE OF $48.50 PER SHARE.
CHECK ONLY ONE BOX ABOVE. IF MORE THAN ONE BOX IS CHECKED ABOVE,
OR IF NO BOX IS CHECKED, THERE IS NO VALID TENDER OF SHARES.
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(6) ODD LOT
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As described in Section 1 of
the Offer to Purchase, under certain conditions, holders holding
fewer than 100 shares may have their shares accepted for
payment before any proration of the purchase of other tendered
shares. This preference is not available to partial tenders,
beneficial or record holders of an aggregate of 100 or more
shares or shares tendered under our 401(k) Plans. Accordingly,
this section is to be completed only if shares are being
tendered by or on behalf of a person owning, beneficially or of
record, fewer than 100 shares in the aggregate which are
not tendered under our 401(k) Plans. The undersigned either
(check one box):
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o is
the beneficial or record owner of an aggregate of fewer than
100 shares, all of which are being tendered; or
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o is
a broker, dealer, commercial bank, trust company, or other
nominee that (a) is tendering for the beneficial owner(s),
shares with respect to which it is the record holder, and
(b) believes, based upon representations made to it by the
beneficial owner(s), that each such person is the beneficial
owner of an aggregate of fewer than 100 shares and is
tendering all of the shares.
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In addition, the undersigned is
tendering either (check one box):
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o at
the purchase price, as the same will be determined by the
Company in accordance with the terms of the Offer (persons
checking this box need not indicate the price per share
above); or
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o at
the price per share indicated above in the section captioned
Price (In Dollars) per Share at Which Shares Are
Being Tendered.
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CONDITIONAL TENDER
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A tendering shareholder may
condition such shareholders tender of shares upon the
Company purchasing a specified minimum number of the shares
tendered, as described in Section 6 of the Offer to
Purchase. Unless at least the minimum number of shares you
indicate below is purchased by the Company pursuant to the terms
of the Offer, none of the shares tendered by you will be
purchased. Unless this box has been checked and a minimum
specified, your tender will be deemed unconditional.
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o The
minimum number of shares that must be purchased from me, if any
are purchased from me, is:
shares.
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If, because of proration, the
minimum number of shares designated will not be purchased, the
Company may accept conditional tenders by random lot, if
necessary. However, to be eligible for purchase by random lot,
the tendering shareholder must have tendered all of such
shareholders shares and checked the box on the next line:
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o The
tendered shares represent all shares held by the undersigned.
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HOW TO CONTACT THE INFORMATION
AGENT FOR THE OFFER
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D.F. King & Co.,
Inc.
48 Wall Street
New York, New York 10005
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Banks and Brokerage Firms call
collect:
(212) 269-5550
All others call toll-free:
(800) 714-3312
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WHERE TO FORWARD YOUR
TRANSMITTAL MATERIALS
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By
Mail:
National City Bank
Corporate Actions Processing Center
P.O. Box 859208
Braintree, MA 02185-9208
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By Overnight Courier:
National City Bank
Corporate Actions Processing Center
161 Bay Street Drive
Braintree, MA 02184
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By Hand:
National City Bank
Corporate Trust Operations
3rd Floor Annex
4100 West
150th
Street
Cleveland, OH 44135
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Delivery of this Letter of
Transmittal to an address other than as set forth above will not
constitute a valid delivery.
The Offer, proration period and
withdrawal rights will expire at 12:00 midnight, New York City
time, on February 8, 2007, unless the Offer is
extended.
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(7) Special Payment
Instructions
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(8) Special Delivery
Instructions
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If you want your check for cash to
be issued in another name, fill in this section with the
information for the new account name.
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Signature Guarantee
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Fill in ONLY if mailing to
someone other than the undersigned or to the undersigned at an
address other than that shown on the front of this
card.
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Mail certificate(s) and check(s)
to:
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Name
(Please Print First, Middle & Last Name)
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(Title
of Officer Signing this Guarantee)
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Name
(Please Print First, Middle & Last Name)
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Address (Number
and Street)
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(Name
of Guarantor Firm Please Print)
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Address (Number
and Street)
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(City,
State & Zip Code)
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(Address
of Guarantor Firm)
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(Tax
Identification or Social Security Number)
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Authorized
Signature
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(City,
State & Zip Code)
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If you cannot produce some or all
of the Companys stock certificates, you must obtain a lost
instrument open penalty surety bond. Please refer to
Instruction 9 at the bottom of this Form.
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(9) AFFIDAVIT OF LOST,
MISSING OR DESTROYED CERTIFICATE(S) AND AGREEMENT OF
INDEMNITY
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THIS AFFIDAVIT IS INVALID IF NOT
SIGNED BELOW AND A CHECK IS NOT INCLUDED
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TOTAL SHARES LOST
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TOTAL SHARES LOST
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Please Fill In Certificate No(s).
if Known
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Number of Shares
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Please Fill In Certificate No(s).
if Known
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Number of Shares
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Attach separate schedule if needed
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Attach separate schedule if needed
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By signing this form I/we
swear, depose and state that: I/we am/are the lawful owner(s) of
the certificate(s) hereinafter referred to as the
securities described in the Letter of Transmittal.
The securities have not been endorsed, pledged, cashed,
negotiated, transferred, assigned, or otherwise disposed of.
I/We have made a diligent search for the securities and have
been unable to find it or them and make this Affidavit for the
purpose of inducing the sale, exchange, redemption, or
cancellation of the securities, as outlined in the Letter of
Transmittal, without the surrender of the original(s), and also
to request and induce St. Paul Travelers Insurance Company
to provide suretyship for me/us to cover the missing securities
under its Surety Policy #782664. I/We hereby agree to surrender
the securities for cancellation should I/we, at any time, find
the securities.
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I/We hereby agree for
myself/ourselves, my/our heirs, successors, assigns and personal
representatives, in consideration of the proceeds of the sale,
exchange, redemption or cancellation of the securities, and the
aforementioned suretyship, to indemnify, protect and hold
harmless St. Paul Travelers Insurance Company (the Surety),
National City Bank, The Scotts Miracle-Gro Company, all their
subsidiaries and any other party to the transaction, from and
against any and all loss, costs, and damages including court
costs and attorneys fees, which they may be subject to or
liable for in respect to the sale, exchange, redemption, or
cancellation of the securities without requiring surrender of
the original securities. The rights accruing to the parties
under the preceding sentence shall not be limited or abridged by
their negligence, inadvertence, accident, oversight, breach or
failure to inquire into, contest, or litigate any claim,
whenever such negligence, inadvertence, accident, oversight,
breach or failure may occur or may have occurred. I/we agree
that this Affidavit and Indemnity Agreement is to become part of
Surety Policy #782664 underwritten by St. Paul Travelers
Insurance Company.
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Any person who, knowingly and with
intent to defraud any insurance company or other person, files
an application or statement of claim, containing any materially
false information, or conceals for the purpose of misleading,
information concerning any fact material thereto, commits a
fraudulent insurance act, which is a crime, and shall also be
subject to civil penalties as prescribed by law.
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X
Signed by Affiant
(shareholder) _
_ on
this
(date) _
_
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(Deponent)
(Indemnitor) (Heirs
Individually) Month Day Year
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Social Security
# _
_ Date _
_ Notary
Public _
_
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Lost Securities Surety
Premium Calculation
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The following formula should be
used to calculate the surety premium that you must submit with
this form.
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1. Calculate the share
value of the lost shares by multiplying the number of shares
that are lost by the Cash Rate:
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Enter
number of share(s) lost
X $52.04 =
$
share value
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If
the share value exceeds $500,000, or if the shareholder is
foreign or deceased, do not complete this affidavit. Complete
only the Transmittal Form and contact National City Bank
regarding the lost certificate(s).
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2. Calculate a Surety
Premium as follows (provided that if such amount is less than
$10.00, insert $10.00 for the Surety Premium).
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The
surety premium equals 2% (.02) of the share value noted in line
1 above: $ X (2%) or (.02)
= $ Surety
Premium
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Please enclose a money order,
certified check or cashiers check for the amount of the
Surety Premium, made payable to St. Paul Travelers
Insurance Company.
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INSTRUCTIONS FOR
COMPLETING THE LETTER OF TRANSMITTAL
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1.
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Sign,
date and include your daytime telephone number in this Letter of
Transmittal in Box 1 and, after completing all other
applicable sections, return this form in the enclosed envelope.
If your shares are represented by physical stock certificates,
include them in the enclosed envelope as well.
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2.
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PLEASE
SIGN IN BOX 2 TO CERTIFY YOUR TAXPAYER IDENTIFICATION OR SOCIAL
SECURITY NUMBER
if
you are a U.S. Taxpayer. If the Taxpayer Identification or
Social Security Number is incorrect or blank, write the
corrected number in Box 2 and sign to certify. Please note
that National City Bank may withhold 28% of your proceeds as
required by the IRS if the Taxpayer Identification or Social
Security Number is not certified on our records. If you are a
non-U.S. Taxpayer,
please complete and return IRS
Form W-8BEN
or other IRS
Form W-8.
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3.
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Your
certificated share(s)
and/or
book-entry shares you hold are shown in Box 3.
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4.
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Please
indicate the total number of certificated share(s)
and/or
book-entry shares of the Company you are tendering in Box 4.
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5.
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Indication
of Price at which Shares are being
Tendered.
If you want to tender your shares at a specified price within
the $48.50 to $55.50 range, you must check one of the boxes
under Shares Tendered at Price Determined by
Shareholder. If you want to tender shares and are willing
to accept the purchase price selected by the Company in
accordance with the Terms of the Offer, you must check the box
under Shares Tendered at Price Determined in the
Tender Offer instead of one of the price boxes under
Shares Tendered at Price Determined by
Shareholder. This action will maximize the chance of
having the Company purchase your shares (subject to the
possibility of proration). Note that this action could result in
you receiving a price per share as low as $48.50. You must check
only one box in the pricing section. If more than one box is
checked, or no box is checked, your shares will not be properly
tendered. If you want to tender portions of your shares at
more than one price, you must complete a separate Letter of
Transmittal for each price at which you tender shares.
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6.
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Please
see the Offer to Purchase for additional information regarding
Box 6.
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7.
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If
you want your check for cash to be issued in another
name, fill in Box 7 with the information for the new
account name. If you complete Box 7, your signature(s) must
be guaranteed.
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8.
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Complete
Box 8 only if the proceeds of this transaction and any
unaccepted shares of the Company are to be transferred to a
person other than the registered holder or to a different
address.
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9.
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If
you do not hold your shares in book-entry form and you cannot
produce some or all of your Company stock certificates, you must
obtain a lost instrument open penalty surety bond and file it
with National City Bank. To do so through National City
Banks program with St. Paul Travelers Insurance
Company, complete Box 9 above, including the lost
securities premium and service fees calculations, and return the
form together with your payment as instructed. Please print
clearly. Alternatively, you may obtain a lost instrument
open penalty surety bond from an insurance company of your
choice that is rated A+XV or better by A. M. Best &
Company. In that instance, you would pay a surety premium
directly to the surety bond provider you select and you would
pay National City Bank its service fee only. Please see the
reverse side of this form on how to contact National City Bank
at the number provided for further instructions on obtaining
your own bond.
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10.
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Shareholders
who cannot deliver their certificates and all other required
documents to the Depositary or complete the procedures for
book-entry transfer prior to the Expiration Time (as defined in
Section 1 of the Offer to Purchase) may tender their shares
by properly completing and duly executing the Notice of
Guaranteed Delivery pursuant to the guaranteed delivery
procedures set forth in Section 3 of the Offer to Purchase.
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11.
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The
Company will determine in its sole discretion the number of
shares to accept, and the validity, eligibility and acceptance
for payment of any tender. Any such determination will be final
and binding on the parties. There is no obligation to give
notice of any defects or irregularities to shareholders.
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12.
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If
any of the shares tendered hereby are owned of record by two or
more joint owners, all such persons must sign this Letter of
Transmittal. If any shares tendered hereby are registered in
different names on several certificates, it will be necessary to
complete, sign and submit as many separate Letters of
Transmittal as there are different registrations of
certificates. If this Letter of Transmittal or any certificate
or stock power is signed by a trustee, executor, administrator,
guardian,
attorney-in-fact,
officer of a corporation or other person acting in a fiduciary
or representative capacity, he or she should so indicate when
signing, and proper evidence satisfactory to the Company of his
or her authority to so act must be submitted with this Letter of
Transmittal.
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If
this Letter of Transmittal is signed by the registered owner(s)
of the shares tendered hereby, no endorsements of certificates
or separate stock powers are required unless payment of the
purchase price is to be made, or certificates for shares not
tendered or accepted for payment are to be issued, to a person
other than the registered owner(s). Signatures on any such
certificates or stock powers must be guaranteed by an eligible
institution. If this Letter of Transmittal is signed by a person
other than the registered owner(s) of the shares tendered
hereby, or if payment is to be made or certificate(s) for shares
not tendered or not purchased are to be issued to a person other
than the registered owner(s), the certificate(s) representing
such shares must be properly endorsed for transfer or
accompanied by appropriate stock powers, in either case signed
exactly as the name(s) of the registered owner(s) appear(s) on
the certificates(s). The signature(s) on any such certificate(s)
or stock power(s) must be guaranteed by an eligible institution.
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13.
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If
the space provided in Boxes 3 and 4 above is inadequate, the
certificate numbers
and/or the
number of shares should be listed on a separate signed schedule
attached hereto.
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14.
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Partial
Tenders (Not Applicable to Shareholders Who Tender by Book-Entry
Transfer).
If fewer than all the shares represented by any certificate
submitted to the Depositary are to be tendered, fill in the
number of shares that are to be tendered in Box 4. In that
case, if any tendered shares are purchased, new certificate(s)
for the remainder of the shares that were evidenced by the old
certificate(s) will be sent to the registered holder(s), unless
otherwise provided in the appropriate box on this Letter of
Transmittal, as soon as practicable after the acceptance for
payment of, and payment for, the shares tendered herewith. All
shares represented by certificates delivered to the Depositary
will be deemed to have been tendered unless otherwise indicated.
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15.
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The
method of delivery of shares, this Letter of Transmittal and all
other required documents, including delivery through the
book-entry transfer facility, is at the sole election and risk
of the tendering shareholder. Shares will be deemed delivered
only when actually received by the Depositary (including, in the
case of book-entry transfer, by book-entry confirmation). If
delivery is by mail, registered mail with return receipt
requested, properly insured is recommended. In all cases,
sufficient time should be allowed to insure timely delivery.
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EX-99.A.1.III
Exhibit (a)(1)(iii)
NOTICE OF GUARANTEED
DELIVERY
To Tender Common Shares of The Scotts Miracle-Gro Company
Pursuant to its Offer to Purchase for Cash
Dated January 10, 2007
of
Up to 4,504,504 of its Common Shares
At a Per Share Purchase Price Not Less Than $48.50 Nor
Greater Than $55.50
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE
AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON THURSDAY, FEBRUARY 8,
2007, UNLESS THE OFFER IS EXTENDED.
As set forth in Section 3 of the Offer to Purchase (as
defined below), this form, or a form substantially equivalent to
this form, must be used to accept the Offer (as defined below)
if (1) certificates representing common shares, without par
value (the Common Shares), of The Scotts Miracle-Gro
Company, an Ohio corporation, are not immediately available,
(2) the procedures for book-entry transfer cannot be
completed on a timely basis or (3) time will not permit all
required documents to reach the Depositary prior to the
Expiration Time (as defined in the Offer to Purchase). This form
may be delivered by hand or transmitted by facsimile
transmission or mail to the Depositary. See Section 3 of
the Offer to Purchase. Unless the context requires otherwise,
all references in this Notice of Guaranteed Delivery to
shares refer to Common Shares.
The Depositary for the Offer is:
National City Bank
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By Mail:
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By Overnight
Delivery:
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By Hand:
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National City Bank
Corporate Actions Processing Center
P.O. Box 859208
Braintree, MA 02185-9208
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National City Bank
Corporate Actions Processing Center
161 Bay State Drive
Braintree, MA 02184
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National City Bank
Corporate Trust Operations
3rd Floor Annex
4100 West 150th Street
Cleveland, OH 44135
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Delivery of this Notice of Guaranteed Delivery to an address, or
transmission of instructions via a facsimile number, other than
as set forth above will not constitute a valid delivery.
This Notice of Guaranteed Delivery is not to be used to
guarantee signatures. If a signature on a Letter of Transmittal
is required to be guaranteed by an eligible institution under
the instructions in the Letter of Transmittal, the signature
guarantee must appear in the applicable space provided in the
signature box on the Letter of Transmittal.
Ladies and Gentlemen:
The undersigned hereby tenders to The Scotts Miracle-Gro
Company, an Ohio corporation (the Company), at the
price per share indicated in this Notice of Guaranteed Delivery,
on the terms and subject to the conditions set forth in the
Offer to Purchase, dated January 10, 2007 (the Offer
to Purchase) and the related Letter of Transmittal (which,
together with any amendments or supplements thereto,
collectively constitute the Offer), receipt of which
is hereby acknowledged, the number of shares set forth below,
all pursuant to the guaranteed delivery procedures set forth in
Section 3 of the Offer to Purchase.
Number of shares to be
tendered:
shares.
THE UNDERSIGNED IS TENDERING SHARES AS FOLLOWS (CHECK
ONLY ONE BOX):
(1) SHARES TENDERED AT PRICE DETERMINED BY
SHAREHOLDER (SEE INSTRUCTION 5 OF THE LETTER OF
TRANSMITTAL)
By checking ONE of the following boxes below INSTEAD OF THE BOX
UNDER Shares Tendered at Price Determined Pursuant to
the Offer, the undersigned hereby tenders shares at the
price checked. This action could result in none of the shares
being purchased if the Purchase Price (as defined in the Offer
to Purchase) for the shares is less than the price checked
below. A SHAREHOLDER WHO DESIRES TO TENDER SHARES AT
MORE THAN ONE PRICE MUST COMPLETE A SEPARATE NOTICE OF
GUARANTEED DELIVERY AND/ OR LETTER OF TRANSMITTAL FOR EACH PRICE
AT WHICH SHARES ARE TENDERED. The same shares cannot be
tendered, unless previously validly withdrawn as provided in
Section 4 of the Offer to Purchase, at more than one price.
PRICE (IN DOLLARS) PER SHARE AT WHICH SHARES
ARE BEING TENDERED
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o
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$
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48.50
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o
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$
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52.50
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o
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$
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49.00
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o
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$
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53.00
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o
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$
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49.50
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o
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$
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53.50
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o
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$
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50.00
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o
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$
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54.00
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o
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$
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50.50
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o
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$
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54.50
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o
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$
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51.00
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o
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$
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55.00
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o
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$
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51.50
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o
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$
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55.50
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o
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$
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52.00
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OR
(2) SHARES TENDERED AT PRICE DETERMINED PURSUANT TO
THE OFFER (SEE INSTRUCTION 5 OF THE LETTER OF
TRANSMITTAL)
By checking the box below INSTEAD OF ONE OF THE BOXES UNDER
Price (in Dollars) Per Share at which Shares are Being
Tendered, the undersigned hereby tenders shares at the
Purchase Price, as the same shall be determined in accordance
with the terms of the Offer.
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o
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The undersigned wants to maximize the chance of having the
Company purchase all of the shares the undersigned is tendering
(subject to the possibility of proration). Accordingly, by
checking this box instead of one of the price boxes above, the
undersigned hereby tenders shares and is willing to accept the
Purchase Price determined in accordance with the terms of the
Offer. This action could result in receiving a price per share
as low as $48.50.
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CHECK ONLY ONE BOX UNDER (1) OR (2) ABOVE. IF MORE
THAN ONE BOX IS CHECKED ABOVE, THERE IS NO VALID TENDER OF
SHARES.
2
ODD
LOT
(See
Box 6 of the Letter of Transmittal)
To be completed only if shares are being tendered by or on
behalf of a person owning, beneficially or of record, an
aggregate of fewer than 100 shares. The undersigned (check
one box):
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o
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Is the beneficial or record owner of an aggregate of fewer than
100 shares, all of which are being tendered; or
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o
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Is a broker, dealer, commercial bank, trust company, or other
nominee that (a) is tendering for the beneficial owner(s),
shares with respect to which it is the record holder, and
(b) believes, based upon representations made to it by the
beneficial owner(s), that each such person is the beneficial
owner of an aggregate of fewer than 100 shares and is
tendering all of such persons shares.
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In addition, the undersigned is tendering shares (check one box):
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o
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at the price per share indicated above in the section captioned
Price (in Dollars) Per Share at which Shares are Being
Tendered; or
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o
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at the Purchase Price, as the same will be determined in
accordance with the terms of the Offer (persons checking this
box need not indicate the price per share above).
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CONDITIONAL
TENDER
(See
Box 6 of the Letter of Transmittal)
A tendering shareholder may condition his or her tender of
shares upon the Company purchasing a specified minimum number of
the shares tendered, all as described in Section 6 of the
Offer to Purchase. Unless at least that minimum number of shares
the undersigned indicates below is purchased by the Company
pursuant to the terms of the Offer, none of the shares tendered
will be purchased. It is the tendering shareholders
responsibility to calculate that minimum number of shares that
must be purchased if any are purchased and each shareholder is
urged to consult his or her own tax advisor with respect to his
or her particular situation. Unless this box has been
checked and a minimum specified, your tender will be deemed
unconditional.
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o
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The minimum number of shares that must be purchased from the
undersigned, if any are purchased, is:
shares.
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If, because of proration, the minimum number of shares will not
be purchased, the Company may accept conditional tenders by
random lot, if necessary. However, to be eligible for purchase
by random lot, the tendering shareholder must have tendered all
of his or her shares and checked the box below:
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o
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The tendered shares represent all the Common Shares held by the
undersigned.
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3
Certificate Nos. (if available):
Name(s) of Record Holder(s):
(Please Type or Print)
Address(es):
Zip Code:
Daytime Area Code and Telephone Number:
Signature(s):
Dated: ,
If shares will be tendered by book-entry transfer, check this
box o and provide the following
information: Account Number at Book-Entry Transfer Facility:
4
THE
GUARANTEE SET FORTH BELOW MUST BE COMPLETED.
GUARANTEE
(Not To Be Used For Signature Guarantee)
The undersigned, a firm that is a member in good standing of a
recognized Medallion Program approved by the Securities Transfer
Association, Inc., including the Securities Transfer Agents
Medallion Program, the New York Stock Exchange, Inc. Medallion
Signature Program or the Stock Exchange Medallion Program, or is
otherwise an eligible guarantor institution, as that
term is defined in
Rule 17Ad-15
under the Securities Exchange Act of 1934, as amended (the
Exchange Act), hereby guarantees (1) that the
above named person(s) own(s) the shares
tendered hereby within the meaning of
Rule 14e-4
under the Exchange Act, (2) that such tender of shares
complies with
Rule 14e-4
under the Exchange Act and (3) to deliver to the Depositary
either the certificates representing the shares tendered hereby,
in proper form for transfer, or a book-entry confirmation (as
defined in the Offer to Purchase) with respect to such shares,
in any such case together with a properly completed and duly
executed Letter of Transmittal (or a facsimile thereof), with
any required signature guarantees, or an agents message
(as defined in the Offer to Purchase) in the case of a
book-entry delivery, and any other required documents, within
three NYSE trading days (as defined in the Offer to Purchase)
after the date hereof. The eligible institution that completes
this form must communicate the guarantee to the Depositary and
must deliver the Letter of Transmittal and certificates for
shares to the Depositary within the time period shown herein.
Failure to do so could result in financial loss to such eligible
institution.
Name of Firm:
Authorized Signature:
Name:
(Please Type or Print)
Title:
Address:
Zip Code:
Area Code and Telephone Number:
Dated: _
_
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Note:
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Do not send certificates for shares with this Notice of
Guaranteed Delivery.
Certificates for shares should be sent with your Letter of
Transmittal.
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5
EX-99.A.1.IV
Exhibit (a)(1)(iv)
GUIDELINES
FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE
FORM W-9
Guidelines for Determining the Proper Taxpayer Identification
Number to Guide the Payer.Social Security Numbers have
nine digits separated by two hyphens: i.e.,
000-00-0000.
Employer Identification Numbers have nine digits separated by
only one hyphen: i.e.,
00-0000000.
The table below will help determine the number to give the payer.
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Give the
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SOCIAL SECURITY
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For this type of account
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number of
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1.
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An individuals account
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The individual
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2.
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Two or more individuals (joint
account)
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The actual owner of the account or,
if combined funds, the first individual on the account(1)
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3.
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Custodian account of a minor
(Uniform Gift to Minors Act)
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The minor(2)
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4.
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a. The usual revocable savings
trust account (grantor is also trustee)
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The grantor-trustee(1)
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b. So-called trust account that is
not a legal or valid trust under State law
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The actual owner(1)
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5.
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Sole proprietorship or
single-member limited liability company (LLC) that
is disregarded as separate from its member
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The owner(3)
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Give the EMPLOYER
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IDENTIFICATION
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For this type of account:
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number of
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6.
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A valid trust, estate, or pension
trust
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The legal entity(4)
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7.
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Corporation or LLC that has elected
to be taxed as a corporation
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The corporation or LLC
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8.
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Religious, charitable or education
organization account
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The organization
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9.
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Partnership or multiple-member LLC
that has not elected to be taxed as a corporation
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The partnership or LLC
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10.
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Association, club or other
tax-exempt organization
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The organization
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11.
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A broker or registered nominee
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The broker or nominee
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12.
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Account with the Department of
Agriculture in the name of a public entity (such as a State or
local government, school district or prison) that receives
agricultural program payments
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The public entity
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(1)
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List first and circle the name of
the person whose number you furnish. If only one person on a
joint account has a Social Security Number, that persons
number must be furnished.
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(2)
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Circle the minors name and
furnish the minors Social Security Number.
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(3)
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Show the name of the owner. In
addition, you may enter your doing business as name.
You may use either your Social Security Number or Employer
Identification Number.
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(4)
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List first and circle the name of
the legal trust, estate, or pension trust. Do not furnish the
identifying number of the personal representative or trustee
unless the legal entity is not designated in the account title.
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NOTE: |
If no name is circled when there is more than one name, the
number will be considered to be that of the first name listed.
|
Obtaining
a Number
If you do not have a Taxpayer Identification Number, or if you
do not know your number, obtain
Form SS-5,
Application for a Social Security Number Card, or
Form SS-4,
Application for Employer Identification Number, at the local
office of the Social Security Administration or the Internal
Revenue Service (the IRS) and apply for a number.
Section references contained herein refer to sections of the
Internal Revenue Code of 1986, as amended.
Payees
Exempt from Backup Withholding
Payees specifically exempted from backup withholding include:
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An organization exempt from tax under Section 501(a), an
individual retirement plan, or a custodial account under
Section 403(b)(7), if the account satisfies the
requirements of Section 401(f)(2),
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The United States or any of its agencies or instrumentalities,
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A State, the District of Columbia, a possession of the United
States, or any of their political subdivisions or
instrumentalities,
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A foreign government or any of its political subdivision,
agencies, or instrumentalities, or
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An international organization or any of its agencies or
instrumentalities.
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Payees that may be exempt from backup withholding include:
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A corporation,
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A foreign central bank of issue,
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A dealer in securities or commodities required to register in
the United States, the District of Columbia, or a possession of
the United States,
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A futures commission merchant registered with the Commodity
Futures Trading Commission,
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A real estate investment trust,
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An entity registered at all times during the tax year under the
Investment Company Act of 1940,
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|
A common trust fund operated by a bank under Section 584(a),
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A financial institution,
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A middleman known in the investment community as a nominee or
custodian, or
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A trust exempt from tax under section 664 or a non-exempt
trust described in section 4947.
|
Payments of dividends and patronage dividends generally exempt
from backup withholding include:
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Payments to nonresident aliens subject to withholding under
Section 1441,
|
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|
Payments to partnerships not engaged in a trade or business in
the United States and that have at least one nonresident alien
partner,
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Payments of patronage dividends not paid in money,
|
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Payments made by certain foreign organizations, or
|
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|
Section 404(k) payments made by an ESOP.
|
Payments of interest generally exempt from backup withholding
include:
|
|
|
|
|
Payments of interest on obligations issued by individuals,
unless such payments equal $600 or more and are paid in the
course of the payers trade or business and the payee does
not provide its correct taxpayer identification number to the
payer,
|
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|
|
Payments of tax-exempt interest (including exempt-interest
dividends under Section 852),
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Payments described in Section 6049(b)(5) to nonresident
aliens,
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Payments on tax-free covenant bonds under Section 1451,
|
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Payments made by certain foreign organizations, or
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Mortgage or student loan interest paid to you.
|
Exempt payees described above should file Substitute
Form W-9
or applicable IRS
Form W-8
to avoid possible erroneous backup withholding. FILE THIS
FORM WITH THE PAYER, FURNISH YOUR TAXPAYER IDENTIFICATION
NUMBER, WRITE EXEMPT ON THE FACE OF THE FORM, SIGN
AND DATE THE FORM AND RETURN IT TO THE PAYER.
Certain payments, other than interest, dividends and patronage
dividends, that are not subject to information reporting are
also not subject to backup withholding. For details, see
Sections 6041, 6041A, 6042, 6044, 6045, 6049, 6050A and
6050N and the regulations thereunder.
Privacy Act NoticeSection 6109 requires most
recipients of dividends, interest, or other payments to give
Taxpayer Identification Numbers to payers who must report the
payments to the IRS. The IRS uses the numbers for identification
2
purposes. Payers must be given the numbers whether or not
recipients are required to file tax returns. Payers generally
must withhold 28% of taxable interest, dividends and certain
other payments to a payee who does not furnish a Taxpayer
Identification Number to a payer. Certain penalties also may
apply.
Penalties
(1) Penalty for Failure to Furnish Taxpayer
Identification NumberIf you fail to furnish your
Taxpayer Identification Number to a payer, you are subject to a
penalty of $50 for each such failure unless your failure is due
to reasonable cause and not to willful neglect.
(2) Civil Penalty for False Information with Respect to
WithholdingIf you make a false statement with no
reasonable basis which results in no imposition of backup
withholding, you are subject to a penalty of $500.
(3) Criminal Penalty for Falsifying
InformationWillfully falsifying certifications or
affirmations may subject you to criminal penalties including
fines and/or
imprisonment.
(4) Misuse of Taxpayer Identification NumberIf
the payer discloses or misuses a Taxpayer Identification Number
in violation of federal law, the payer may be subject to civil
and criminal penalties.
FOR
ADDITIONAL INFORMATION, CONTACT YOUR TAX CONSULTANT OR THE
IRS.
3
EX-99.A.1.V
Exhibit
(a)(1)(v)
OFFER TO
PURCHASE FOR CASH
by
THE SCOTTS MIRACLE-GRO COMPANY
of
Up to 4,504,504 of its Common Shares At a Per Share
Purchase Price Not Less
Than $48.50 nor Greater Than $55.50
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE
AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON THURSDAY,
FEBRUARY 8, 2007, UNLESS THE OFFER IS EXTENDED.
January 10,
2007
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been appointed by The Scotts Miracle-Gro Company, an
Ohio corporation (the Company), to act as Dealer
Manager in connection with its offer to purchase for cash up to
4,504,504 of its common shares, without par value (Common
Shares), at a price not less than $48.50 nor greater than
$55.50 per share, net to the seller in cash, without interest.
The offer is subject to the terms and conditions set forth in
the Offer to Purchase, dated January 10, 2007 (the Offer
to Purchase), and the related Letter of Transmittal,
which, together with any amendments or supplements to either,
collectively constitute the Offer. Please furnish
copies of the enclosed materials to those of your clients for
whom you hold shares registered in your name or in the name of
your nominee. Unless the context requires otherwise, all
references herein to shares refer to Common Shares.
Enclosed with this letter are copies of the following documents:
1. Offer to Purchase;
2. Letter of Transmittal for your use in accepting the
Offer and tendering shares and for the information of your
clients;
3. A form of letter that may be sent to your clients for
whose account you hold shares in your name or in the name of a
nominee, with space provided for obtaining such clients
instructions with regard to the Offer;
4. Notice of Guaranteed Delivery with respect to shares;
5. Guidelines for Certification of Taxpayer Identification
Number on Substitute
Form W-9; and
6. Return envelope addressed to National City Bank as the
Depositary.
Certain conditions of the Offer are described in
Section 7 of the Offer to Purchase.
We urge you to contact your clients as promptly as possible.
Please note that the Offer, proration period and withdrawal
rights will expire at 12:00 midnight, New York City time, on
Thursday, February 8, 2007, unless the Offer is
extended.
In all cases, payment for shares accepted for payment pursuant
to the Offer will be made only after timely receipt by the
Depositary of (1) the certificates for (or a timely
book-entry confirmation (as defined in the Offer to Purchase)
with respect to) such shares, (2) a Letter of Transmittal
(or a facsimile thereof), properly completed and duly executed,
with any required signature guarantees, or, in the case of a
book-entry transfer effected pursuant to the procedures set
forth in Section 3 of the Offer to Purchase, an
agents message (as defined in the Offer to Purchase), and
(3) any other documents required by the Letter of
Transmittal. Accordingly, tendering shareholders may be paid at
different times depending on when certificates for shares or
book-entry confirmations with respect to shares are actually
received by the Depositary. Under no circumstances will
interest be paid on the Purchase Price (as defined in the Offer
to Purchase) regardless of any extension of, or amendment to,
the Offer or any delay in paying for such shares.
The Company will not pay any fees or commissions to any broker,
dealer, commercial bank, trust company or other nominee or
person (other than the Dealer Manager, the Information Agent and
the Depositary, as described in the Offer to
Purchase) in connection with the solicitation of tenders of
shares pursuant to the Offer. However, the Company will, on
request, reimburse you for documented, reasonable and customary
mailing and handling expenses incurred by you in forwarding
copies of the enclosed Offer materials to your clients.
Questions and requests for additional copies of the enclosed
materials may be directed to the Information Agent at its
address and telephone numbers set forth on the back cover of the
Offer to Purchase.
Very truly yours,
Banc of America Securities LLC
Nothing contained in this letter or in the enclosed documents
shall render you or any other person the agent of the Company,
the Depositary, the Dealer Manager, the Information Agent or any
affiliate of any of them or authorize you or any other person to
give any information or use any document or make any statement
on behalf of any of them with respect to the Offer other than
the enclosed documents and the statements contained therein.
2
EX-99.A.1.VI
Exhibit (a)(1)(vi)
OFFER TO
PURCHASE FOR CASH
by
THE SCOTTS MIRACLE-GRO COMPANY
of
Up to 4,504,504 of its Common Shares
At a Per Share Purchase Price Not Less Than $48.50 nor
Greater Than $55.50
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE
AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON THURSDAY,
FEBRUARY 8, 2007, UNLESS THE OFFER IS EXTENDED.
To Our Clients:
Enclosed for your consideration are the Offer to Purchase, dated
January 10, 2007 (the Offer to Purchase), and
the related Letter of Transmittal (which, together with any
amendments or supplements thereto, collectively constitute the
Offer), in connection with the offer by The Scotts
Miracle-Gro Company, an Ohio corporation (the
Company), to purchase up to 4,504,504 of its common
shares, without par value (Common Shares), at a
price not less than $48.50 nor greater than $55.50 per share,
net to the seller in cash, without interest. The Offer is
subject to the terms and conditions set forth in the Offer to
Purchase and the related Letter of Transmittal. Unless the
context requires otherwise, all references herein to
shares refer to Common Shares.
On the terms and subject to the conditions of the Offer, the
Company will select the lowest Purchase Price (as defined in the
Offer to Purchase) that will allow it to purchase
4,504,504 shares, or, if a lesser number of shares are
validly tendered, all shares that are validly tendered and not
validly withdrawn. All shares acquired in the Offer will be
acquired at the same Purchase Price regardless of whether a
shareholder tenders any shares at a lower price.
Only shares validly tendered at prices at or below the Purchase
Price, and not validly withdrawn, will be purchased. However,
because of the odd lot priority, proration and
conditional tender offer provisions described in the Offer to
Purchase, all of the shares tendered may not be purchased if
more than the number of shares sought by the Company are validly
tendered. Shares not purchased in the Offer will be returned at
the expense of the Company promptly following the expiration of
the Offer.
Subject to certain limitations and legal requirements, the
Company reserves the right, in its sole discretion, to purchase
more than 4,504,504 shares pursuant to the Offer.
The Offer is subject to important conditions, including the
receipt by the Company of financing on terms and conditions
satisfactory to the Company. See Section 7 of the Offer
to Purchase.
We are the owner of record of shares held for your account. As
such, we are the only ones who can tender your shares, and then
only pursuant to your instructions. We are sending you the
Letter of Transmittal for your information only; you cannot use
it to tender the shares we hold for your account.
Please instruct us as to whether you wish us to tender any or
all of the shares we hold for your account on the terms and
subject to the conditions of the Offer.
Please note the following:
1. You may tender your shares at prices not less than
$48.50 nor greater than $55.50 per share, as indicated in the
attached Instruction Form, net to you in cash, without interest.
2. You should consult with your broker or other financial
or tax advisor on the possibility of designating the priority in
which your shares will be purchased in the event of proration.
3. The Offer is subject to important conditions, including
the receipt by the Company of financing on terms and conditions
satisfactory to the Company. See Section 7 of the Offer to
Purchase.
4. The Offer, proration period and withdrawal rights will
expire at 12:00 midnight, New York City time, on Thursday,
February 8, 2007, unless the Company extends the Offer.
5. The Offer is for up to 4,504,504 shares,
constituting approximately 6.7% of the total number of
outstanding Common Shares as of January 10, 2007.
6. Tendering shareholders who are registered shareholders
or who tender their shares directly to National City Bank, the
Depositary for the Offer, will not be obligated to pay any
brokerage commissions or fees to the Company or the Dealer
Manager, solicitation fees, or, except as set forth in the Offer
to Purchase and the Letter of Transmittal, stock transfer taxes
on the Companys purchase of shares under the Offer.
7. If you wish to tender portions of your shares at
different prices, you must complete a separate
Instruction Form for each price at which you wish to tender
each such portion of your shares. We are the owner of record of
shares held in your account. As such, we must submit separate
Letters of Transmittal on your behalf for each price you will
accept for each portion tendered.
8. If you are a shareholder who owns beneficially or of
record a total of fewer than 100 shares (an Odd Lot
Holder) and you instruct us to tender on your behalf all
such shares at or below the Purchase Price before the expiration
of the Offer and complete the section captioned Odd
Lot on the attached Instruction Form, the Company, on
the terms and subject to the conditions of the Offer, will
accept all such shares for purchase before proration, if any, of
the purchase of other shares validly tendered at or below the
Purchase Price and not validly withdrawn.
9. If you wish to condition your tender upon the
Companys purchase of a specified minimum number of the
shares which you tender, you may elect to do so and thereby
avoid possible proration of your tender. The Companys
purchase of shares from all tenders that are so conditioned will
be determined by random lot. To elect such a condition, complete
the section captioned Conditional Tender in the
attached Instruction Form.
If you wish to have us tender any or all of your shares, please
so instruct us by completing, executing, detaching and returning
to us the attached instruction form. If you authorize us to
tender your shares, we will tender all of your shares unless you
specify otherwise on the attached Instruction Form.
Your prompt action is requested. Your Instruction Form
should be forwarded to us in ample time to permit us to submit a
tender on your behalf before the expiration of the Offer. Please
note that the Offer, proration period and withdrawal rights will
expire at 12:00 midnight, New York City time, on Thursday,
February 8, 2007 unless the Offer is extended.
The Offer is being made solely under the Offer to Purchase and
the related Letter of Transmittal and is being made to all
record holders of Common Shares. The Offer is not being made to,
nor will tenders be accepted from or on behalf of, holders of
shares residing in any jurisdiction in which the making of the
Offer or acceptance thereof would not be in compliance with the
securities, blue sky or other laws of such jurisdiction.
2
Instruction Form
With Respect to
Offer to Purchase for
Cash
by
The Scotts Miracle-Gro
Company
of
Up to 4,504,504 of its Common Shares
At a Per Share Purchase Price Not Less Than $48.50 nor
Greater Than $55.50
The undersigned acknowledge(s) receipt of your letter and the
enclosed Offer to Purchase, dated January 10, 2007 (the
Offer to Purchase), and the related Letter of
Transmittal (which, together with any amendments or supplements
thereto, collectively constitute the Offer), in
connection with the offer by The Scotts Miracle-Gro Company, an
Ohio corporation (the Company), to purchase up to
4,504,504 of its common shares, without par value (Common
Shares), at a price not less than $48.50 nor greater than
$55.50 per share, net to the seller in cash, without interest.
The Offer is subject to the terms and conditions set forth in
the Offer to Purchase and the related Letter of Transmittal.
Unless the context requires otherwise, all references herein to
shares refer to Common Shares.
The undersigned hereby instruct(s) you to tender to the Company
the number of shares indicated below or, if no number is
indicated, all shares you hold for the account of the
undersigned, at the price per share indicated below, on the
terms and subject to the conditions of the Offer.
3
Number of shares to be
tendered: shares.
THE UNDERSIGNED IS TENDERING SHARES AS FOLLOWS (CHECK
ONLY ONE BOX):
(1) SHARES TENDERED AT PRICE DETERMINED BY
SHAREHOLDER (SEE INSTRUCTION 5 OF THE LETTER OF
TRANSMITTAL)
By checking ONE of the following boxes below INSTEAD OF THE BOX
UNDER Shares Tendered at Price Determined Pursuant to
the Offer, the undersigned hereby tenders shares at the
price checked. This action could result in none of the shares
being purchased if the Purchase Price (as defined in the Offer
to Purchase) for the shares is less than the price checked
below. IF YOU DESIRE TO TENDER SHARES AT MORE THAN ONE
PRICE, YOU MUST INSTRUCT US, AS THE RECORD OWNER OF
SHARES HELD IN YOUR ACCOUNT, TO COMPLETE A SEPARATE NOTICE
OF GUARANTEED DELIVERY AND/OR LETTER OF TRANSMITTAL FOR EACH
PRICE AT WHICH SHARES ARE TO BE TENDERED. The same
shares cannot be tendered, unless previously validly withdrawn
as provided in Section 4 of the Offer to Purchase, at more
than one price.
PRICE (IN DOLLARS) PER SHARE AT WHICH SHARES
ARE BEING TENDERED
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o
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$
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48.50
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o
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$
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52.50
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o
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$
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49.00
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o
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$
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53.00
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o
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$
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49.50
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o
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$
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53.50
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o
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$
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50.00
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o
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$
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54.00
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o
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$
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50.50
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o
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$
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54.50
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o
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$
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51.00
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o
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$
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55.00
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o
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$
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51.50
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o
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$
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55.50
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o
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$
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52.00
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OR
(2) SHARES TENDERED AT PRICE DETERMINED PURSUANT TO
THE OFFER (SEE INSTRUCTION 5 OF THE LETTER OF
TRANSMITTAL)
By checking the box below INSTEAD OF ONE OF THE BOXES UNDER
Price (in Dollars) Per Share at which Shares are Being
Tendered, the undersigned hereby tenders shares at the
Purchase Price, as the same shall be determined in accordance
with the terms of the Offer.
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o
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The undersigned wants to maximize the chance of having the
Company purchase all of the shares the undersigned is tendering
(subject to the possibility of proration). Accordingly, by
checking this box instead of one of the price boxes above, the
undersigned hereby tenders shares and is willing to accept the
Purchase Price determined in accordance with the terms of the
Offer. This action could result in receiving a price per share
as low as $48.50.
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CHECK ONLY ONE BOX UNDER (1) OR (2) ABOVE. IF MORE
THAN ONE BOX IS CHECKED ABOVE, THERE IS NO VALID TENDER OF
SHARES.
4
ODD
LOT
(See Box 6 of the Letter of Transmittal)
To be completed only if shares are being tendered by or on
behalf of a person owning, beneficially or of record, an
aggregate of fewer than 100 shares. The undersigned either
(check one box):
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o
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Is the beneficial or record owner of an aggregate of fewer than
100 shares, all of which are being tendered; or
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o
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Is a broker, dealer, commercial bank, trust company, or other
nominee that (a) is tendering for the beneficial owner(s),
shares with respect to which it is the record holder, and
(b) believes, based upon representations made to it by the
beneficial owner(s), that each such person is the beneficial
owner of an aggregate of fewer than 100 shares and is
tendering all of such persons shares.
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In addition, the undersigned is tendering shares either (check
one box):
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o
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at the price per share indicated above in the section captioned
Price (in Dollars) Per Share at which Shares are Being
Tendered; or
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o
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at the Purchase Price, as the same will be determined in
accordance with the terms of the Offer (persons checking this
box need not indicate the price per share above).
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CONDITIONAL
TENDER
(See Box 6 of the Letter of Transmittal)
A tendering shareholder may condition his or her tender of
shares upon the Company purchasing a specified minimum number of
the shares tendered, all as described in Section 6 of the
Offer to Purchase. Unless at least that minimum number of shares
you indicate below is purchased by the Company pursuant to the
terms of the Offer, none of the shares tendered will be
purchased. It is the tendering shareholders
responsibility to calculate that minimum number of shares that
must be purchased if any are purchased and each shareholder is
urged to consult his or her own tax advisor with respect to his
or her particular situation. Unless this box has been
checked and a minimum specified, your tender will be deemed
unconditional.
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o
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The minimum number of shares that must be purchased from the
undersigned, if any are purchased, is:
shares.
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If, because of proration, the minimum number of shares will not
be purchased, the Company may accept conditional tenders by
random lot, if necessary. However, to be eligible for purchase
by random lot, the tendering shareholder must have tendered all
of his or her shares and checked the box below:
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The tendered shares represent all Common Shares held by the
undersigned.
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5
The method of delivery of this document is at the election
and risk of the tendering shareholder. If delivery is by mail,
then registered mail with return receipt requested, properly
insured, is recommended. In all cases, sufficient time should be
allowed to ensure timely delivery.
The Companys Board of Directors has approved the Offer.
However, neither the Company nor any member of its Board of
Directors, nor the Dealer Manager nor the Information Agent nor
the Depositary makes any recommendation to shareholders as to
whether they should tender or refrain from tendering their
shares or as to the purchase price or purchase prices at which
they may choose to tender their shares. Shareholders must make
their own decision as to whether to tender their shares and, if
so, how many shares to tender and the purchase price or purchase
prices at which their shares should be tendered. In doing so,
shareholders should read carefully the information in the Offer
to Purchase and in the related Letter of Transmittal, including
the Companys reasons for making the Offer. See
Section 2 of the Offer to Purchase. Shareholders should
discuss whether to tender their shares with their broker or
other financial or tax advisor. The Companys directors and
executive officers have advised the Company that they do not
intend to tender any shares owned by them in the Offer. See
Section 11 of the Offer to Purchase.
Signature(s):
Name(s):
(Please Print)
Taxpayer Identification or Social Security
Number: _
_
Address(es): _
_
(Including Zip Code)
Area Code/Phone
Number: _
_
Date: _
_
6
EX-99.A.1.VII
Exhibit (a)(1)(vii)
IMMEDIATE ATTENTION REQUIRED
January 10, 2007
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Re: |
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The Scotts Miracle-Gro Company Tender Offer |
Dear Participant in The Scotts Company LLC Retirement Savings Plan:
The enclosed tender offer materials and Direction Form require your immediate attention. Our
records reflect that, as a participant in The Scotts Company LLC Retirement Savings Plan (the
Plan), all or a portion of your individual account is invested in The Scotts Miracle-Gro Company
Stock Fund (the Stock Fund). The tender offer materials describe an offer by The Scotts
Miracle-Gro Company to purchase up to 4,504,504 of its common shares, without par value per share
(the Shares), at a price not greater than $55.50 nor less than $48.50 per share, net to the
seller in cash, without interest (the Offer). As described below, you have the right to instruct
Fidelity Management Trust Company (Fidelity), as trustee of the Plan, concerning whether to
tender Shares related to your individual account under the Plan. You will need to complete the
enclosed Direction Form and return it to Fidelitys tabulator in the enclosed return envelope so
that it is RECEIVED by 4:00 p.m., New York City time, on Monday, February 5, 2007, unless the Offer
is extended, in which case the deadline for receipt of instructions will, to the extent feasible,
be three business days prior to the expiration date of the Offer.
The remainder of this letter summarizes the transaction, your rights under the Plan and the
procedures for completing and submitting the Direction Form. You should also review the more
detailed explanation provided in the Offer to Purchase, dated January 10, 2007 (the Offer to
Purchase), enclosed with this letter.
BACKGROUND
The Scotts Miracle-Gro Company (SMG) has made an Offer to its shareholders to tender up to
4,504,504 of its common shares, for purchase by SMG at a price not greater than $55.50 nor less
than $48.50 per Share, net to the seller in cash, without interest, upon the terms and subject to
the conditions set forth in the enclosed Offer to Purchase. SMG will select the lowest purchase
price (in increments of $.50) that will allow it to purchase 4,504,504 Shares or, if a lesser
number of Shares are properly tendered, all Shares that are properly tendered and not withdrawn.
All Shares acquired in the Offer will be acquired at the same purchase price regardless of whether
the shareholder tendered at a lower price.
The enclosed Offer to Purchase sets forth the objectives, terms and conditions of the Offer
and is being provided to all of SMGs shareholders. To understand the Offer fully and for a more
complete description of the terms and conditions of the Offer, you should carefully read the entire
Offer to Purchase, including the portions thereof relating to the special dividend which SMG
contemplates declaring in February, 2007.
The Offer extends to the Shares held by the Plan. As of January 3, 2007, the Plan had
approximately 322,923 Shares allocated to participant accounts. Only Fidelity, as trustee of the
Plan, can tender these Shares in the Offer. Nonetheless, as a participant under the Plan, you have
the right to direct Fidelity whether or not to tender some or all of the Shares attributable to
your individual account under the Plan, and at what price or prices. Unless otherwise required by
applicable law, Fidelity will tender Shares attributable to participant accounts in accordance with
participant instructions and Fidelity will not tender Shares attributable to participant accounts
for which it does not receive timely instructions. If you do not complete the enclosed Direction
Form and return it to Fidelitys tabulator on a timely basis, you will be deemed to have elected
not to participate in the Offer and no Shares attributable to
your Plan account will be tendered. Fidelity will tender Shares within the Plan that have not been
allocated to an individual account in the same proportion and at the same prices as they tender
Shares for which they receive participant directions, unless otherwise required by applicable law.
LIMITATIONS ON FOLLOWING YOUR DIRECTION
The enclosed Direction Form allows you to specify the percentage of the Shares attributable to
your account that you wish to tender and the price or prices at which you want to tender Shares
attributable to your account. As detailed below, when Fidelity tenders Shares on behalf of the
Plan, it may be required to tender Shares on terms different than those set forth on your Direction
Form.
The Employee Retirement Income Security Act of 1974, as amended (ERISA), and the trust
agreement between SMG and Fidelity prohibit the sale of Shares to SMG for less than adequate
consideration which is defined by ERISA for a publicly traded security as the prevailing market
price on a national securities exchange. Fidelity will determine adequate consideration, based
on the prevailing or closing market price of the Shares on the New York Stock Exchange on or about
the date the Shares are tendered by Fidelity (the prevailing market price). Accordingly,
depending on the prevailing market price of the Shares on such date, Fidelity may be unable to
follow participant directions to tender Shares to SMG at certain prices within the offered range.
Fidelity will tender or not tender Shares as follows:
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If the prevailing market price is greater than the maximum tender
price offered by SMG ($55.50 per Share), notwithstanding your
direction to tender Shares in the Offer, the Shares will not be
tendered. |
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If the prevailing market price is lower than the price at which
you direct Shares be tendered, notwithstanding the lower closing
market price, Fidelity will follow your direction both as to
percentage of Shares to tender and as to the price at which such
Shares are tendered. |
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If the prevailing market price is greater than the price at which
you direct the Shares be tendered but within the range of $48.50
to $55.50, Fidelity will follow your direction regarding the
percentage of Shares to be tendered, but will increase the price
at which such Shares are to be tendered to the lowest tender price
that is not less than prevailing market price. |
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If the prevailing market price is within the range of $48.50 to
$55.50, for all shares directed to be tendered at the per Share
purchase price to be determined pursuant to the tender offer,
Fidelity will tender such Shares at the lowest tender price that
is not less than the prevailing market price. |
Unless otherwise required by applicable law, Fidelity will not tender Shares for which it has
received no direction, or for which it has received a direction not to tender. Fidelity makes no
recommendation as to whether to direct the tender of Shares or whether to refrain from directing
the tender of Shares. EACH PARTICIPANT OR BENEFICIARY MUST MAKE HIS OR HER OWN DECISIONS.
CONFIDENTIALITY
To assure the confidentiality of your decision, Fidelity and their affiliates or agents will
tabulate the Direction Forms. Neither Fidelity nor their affiliates or agents will make your
individual direction available to SMG.
PROCEDURE FOR DIRECTING TRUSTEE
-2-
Enclosed is a Direction Form which should be completed and returned to Fidelitys tabulator.
Please note that the Direction Form indicates the number of Shares attributable to your individual
account as of January 3, 2007. However, for purposes of the final tabulation, Fidelity will apply
your instructions to the number of Shares attributable to your account as of February 5, 2007, or
as of a later date if the Offer is extended.
If you do not properly complete the Direction Form or do not return it by the deadline
specified, such Shares will be considered NOT TENDERED.
To properly complete your Direction Form, you must do the following:
(1) On the face of the Direction Form, check Box 1 or 2. CHECK ONLY ONE BOX:
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CHECK BOX 1 if you do not want the Shares attributable to your individual
account tendered for sale in accordance with the terms of the Offer and simply want
the Plan to continue holding such Shares. |
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CHECK BOX 2 in all other cases and complete the table immediately below Box 2.
Specify the percentage (in whole numbers) of Shares attributable to your individual
account that you want to tender at each price indicated. |
You may direct the tender of Shares attributable to your account at different
prices. To do so, you must state the percentage (in whole numbers) of Shares to be
sold at each price by filling in the percentage of such Shares on the line
immediately before the price. Also, you may elect to accept the per Share purchase
price to be determined pursuant to the tender offer, which will result in receiving
a price per Share as low as $48.50 or as high as $55.50. Leave a given line blank
if you want no Shares tendered at that particular price. The total of the
percentages you provide on the Direction Form may not exceed 100%, but it may be
less than 100%. If this amount is less than 100%, you will be deemed to have
instructed Fidelity NOT to tender the balance of the Shares attributable to your
individual account.
(2) Date and sign the Direction Form in the space provided.
(3) Return the Direction Form in the enclosed return envelope so that it is
received by Fidelitys tabulator at the address on the return envelope (P.O. Box 9142,
Hingham, MA 02043) not later than 4:00 P.M., New York City time, on Monday, February 5,
2007, unless the Offer is extended, in which case, to the extent feasible, the
participant deadline shall be three business days prior to the expiration date of the
Offer. If you wish to return the form by overnight courier, please send it to
Fidelitys tabulator at Tabulator, 60 Research Road, Hingham, MA 02043. Directions via
facsimile will not be accepted.
Your direction will be deemed irrevocable unless withdrawn by 4:00 p.m., New York City time,
on Monday, February 5, 2007, unless the Offer is extended by SMG. In order to make an effective
withdrawal, you must submit a new Direction Form which may be obtained by calling Fidelity at (800)
835-5095. Upon receipt of a new, completed and signed Direction Form, your previous direction will
be deemed canceled. You may direct the re-tendering of any Shares attributable to your individual
account by obtaining an additional Direction Form from Fidelity and repeating the previous
instructions for directing tender as set forth in this letter.
After the deadline above for returning the Direction Form to Fidelitys tabulator, Fidelity
and their affiliates or agents will complete the tabulation of all directions. Fidelity will
tender the appropriate number of Shares on behalf of the Plan.
-3-
Subject to the satisfaction of the conditions described in the Offer to Purchase, SMG will buy
all Shares, up to 4,504,504, that are properly tendered through the Offer. If there is an excess
of Shares tendered over the exact number desired by SMG, Shares tendered pursuant to the Offer may
be subject to proration, as described in the Offer to Purchase. Any Shares attributable to your
account that are not purchased in the Offer will remain allocated to your individual account under
the Plan.
The preferential treatment of holders of fewer than 100 Shares, as described in the Offer to
Purchase, will not apply to participants in the Plan, regardless of the number of Shares held
within their individual accounts. Likewise, the conditional tender of Shares, as described in the
Offer to Purchase, will not apply to participants in the Plan.
EFFECT OF TENDER ON YOUR ACCOUNT
If you direct Fidelity to tender some or all of the Shares attributable to your Plan
account, as of 4:00 p.m., New York City time, on February 5, 2007, certain transactions involving
the Stock Fund attributable to your account, including all exchanges out, loans, withdrawals and
distributions, will be prohibited until all processing related to the Offer has been completed,
unless the Offer is terminated or the completion date is extended. This freeze on transactions
will apply to ALL Shares attributable to your Plan account, even if you elect to tender less than
100% of the Shares. (Balances in the Stock Fund will be utilized to calculate amounts eligible for
loans and withdrawals throughout this freeze on the Stock Fund.) In the event that the Offer is
extended, the freeze on transactions involving the Stock Fund will, if feasible, be temporarily
lifted until three days prior to the new completion date of the Offer, as extended, at which time a
new freeze on these transactions involving the Stock Fund will commence. You can call Fidelity at
(800) 835-5095 to obtain updated information on expiration dates, deadlines and Stock Fund freezes.
If you directed Fidelity NOT to tender any of the Shares attributable to your account or you
did not return your Trustee Direction Form in a timely manner, you will continue to have access to
all transactions normally available to the Stock Fund, subject to Plan rules.
While participants will not recognize any immediate tax gain or loss as a result of the Offer,
the tax treatment of future withdrawals or distributions of shares from the Plan may be adversely
impacted by a tender and sale of shares under the Plan. Specifically, under current federal income
tax rules, to the extent that you receive from the Plan a future lump sum distribution that
includes shares that have increased in value while they were held by the Plan, under certain
circumstances, you may have the option of deferring payment of taxes on this increase in value
until you later sell the shares after they are distributed to you, at which time the gain would be
taxed at long-term capital gains rates. Your sale of shares within the Plan prior to their
distribution to you (whether pursuant to the Offer or otherwise) eliminates this tax planning
opportunity for the shares disposed of in the pre-distribution sale. Please refer to the Summary
Plan Description and Prospectus for the Plan that has been provided to you for more information on
taxes.
INVESTMENT OF PROCEEDS
For any Shares in the Plan that are tendered and purchased by SMG, SMG will pay cash to the
Plan. INDIVIDUAL PARTICIPANTS IN THE PLAN WILL NOT, HOWEVER, RECEIVE ANY CASH TENDER PROCEEDS
DIRECTLY. ALL SUCH PROCEEDS WILL REMAIN IN THE PLAN AND MAY BE WITHDRAWN ONLY IN ACCORDANCE WITH
THE TERMS OF THE PLAN.
Fidelity will invest proceeds received with respect to Shares attributable to your account in
the Fidelity Managed Income Portfolio as soon as administratively possible after receipt of
proceeds. Fidelity
-4-
anticipates that the processing of participant accounts will be completed five to seven business
days after receipt of these proceeds. You may call Fidelity at (800) 835-5095 after the
reinvestment is complete to learn the effect of the tender on your account or to have the proceeds
from the sale of Shares which were invested in the Fidelity Managed Income Portfolio invested in
other investment options offered under the Plan.
SHARES OUTSIDE THE PLAN
If you hold Shares outside of the Plan, you will receive, under separate cover, Offer
materials to be used to tender those Shares. Those Offer materials may not be used to direct
Fidelity to tender or not tender the Shares attributable to your individual account under the Plan.
Likewise, the tender of Shares attributable to your individual account under the Plan will not be
effective with respect to Shares you hold outside of the Plan. The direction to tender or not
tender Shares attributable to your individual account under the Plan may only be made in accordance
with the procedures in this letter. Similarly, the enclosed Direction Form may not be used to
tender Shares held outside of the Plan.
FURTHER INFORMATION
If you require additional information concerning the procedure to tender Shares attributable
to your individual account under the Plan, please contact Fidelity at (800) 835-5095. If you
require additional information concerning the terms and conditions of the Offer, please call D.F.
King & Co., Inc., the Information Agent, toll free at (800) 714-3312.
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Sincerely,
Fidelity Management Trust Company
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-5-
DIRECTION FORM
THE SCOTTS MIRACLE-GRO TENDER OFFER
*BEFORE COMPLETING THIS FORM, PLEASE READ CAREFULLY
THE ACCOMPANYING OFFER TO PURCHASE AND ALL OTHER ENCLOSED MATERIALS*
PLEASE NOTE THAT IF YOU DO NOT SEND IN A PROPERLY COMPLETED, SIGNED DIRECTION FORM, OR IF SUCH
DIRECTION FORM IS NOT RECEIVED BY 4:00 P.M., NEW YORK CITY TIME ON MONDAY, FEBRUARY 5, 2007, UNLESS
THE TENDER OFFER IS EXTENDED, THE SHARES ATTRIBUTABLE TO YOUR PLAN ACCOUNT WILL NOT BE TENDERED IN
ACCORDANCE WITH THE TENDER OFFER, UNLESS OTHERWISE REQUIRED BY LAW.
Fidelity Management Trust Company (Fidelity) makes no recommendation to any participant in The
Scotts Company LLC Retirement Savings Plan (the Plan) as to whether to tender or not, or at which
prices. Your direction to Fidelity will be kept confidential.
This Direction Form, if properly signed, completed and received by Fidelitys tender offer
tabulator in a timely manner, will supersede any previous Direction Form.
As of January 3, 2007, the number of shares attributable to your account under the Plan is shown to
the right of your address.
In connection with the Offer to Purchase made by The Scotts Miracle-Gro Company, dated January 10,
2007, I hereby instruct Fidelity to tender the shares attributable to my Plan account as of
February 5, 2007, unless a later deadline is announced, as follows (check only one box and
complete):
(CHECK BOX #1 OR #2)
o1. |
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Please refrain from tendering and continue to HOLD all shares attributable to my individual account under the Plan. |
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o2. |
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Please TENDER shares attributable to my individual account under the Plan in the percentage indicated below for
each of the prices provided. A blank space before a given price will be taken to mean that no shares attributable
to my account are to be tendered at that price. I understand that certain transactions involving shares
attributable to my Plan account, including exchanges out, loans, withdrawals and distributions, will be prohibited
until all processing of the Offer has been completed, and that such freeze will apply to ALL such shares even if I
elect to tender less than 100%. FILL IN THE TABLE BELOW ONLY IF YOU HAVE CHECKED BOX #2. |
Percentage of Shares to be Tendered (The total of all percentages must be less than or equal to
100%. If the total is less than 100%, you will be deemed to have directed Fidelity NOT to tender
the remaining percentage.)
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% at $48.50
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% at $50.50
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% at TBD** |
** By entering a percentage on the % line at TBD, the undersigned is willing to accept the purchase
price resulting from the Offer for the percentage of shares elected. This could result in receiving
a price per share as low as $48.50 or as high as $55.50 per Share.
EX-99.A.1.VIII
Exhibit(a)(1)(viii)
IMMEDIATE ATTENTION REQUIRED
January 10, 2007
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Re: |
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The Scotts Miracle-Gro Company Tender Offer |
Dear Participant in the Smith & Hawken 401(k) Plan:
The enclosed tender offer materials and Direction Form require your immediate attention. Our
records reflect that, as a participant in the Smith & Hawken 401(k) Plan (the Plan), all or a
portion of your individual account is invested in The Scotts Miracle-Gro Company Stock Fund (the
Stock Fund). The tender offer materials describe an offer by The Scotts Miracle-Gro Company to
purchase up to 4,504,504 of its common shares, without par value per share (the Shares), at a
price not greater than $55.50 nor less than $48.50 per share, net to the seller in cash, without
interest (the Offer). As described below, you have the right to instruct Fidelity Management
Trust Company (Fidelity), as trustee of the Plan, concerning whether to tender Shares related to
your individual account under the Plan. You will need to complete the enclosed Direction Form and
return it to Fidelitys tabulator in the enclosed return envelope so that it is RECEIVED by 4:00
p.m., New York City time, on Monday, February 5, 2007, unless the Offer is extended, in which case
the deadline for receipt of instructions will, to the extent feasible, be three business days prior
to the expiration date of the Offer.
The remainder of this letter summarizes the transaction, your rights under the Plan and the
procedures for completing and submitting the Direction Form. You should also review the more
detailed explanation provided in the Offer to Purchase, dated January 10, 2007 (the Offer to
Purchase), enclosed with this letter.
BACKGROUND
The Scotts Miracle-Gro Company (SMG) has made an Offer to its shareholders to tender up to
4,504,504 of its common shares, for purchase by SMG at a price not greater than $55.50 nor less
than $48.50 per Share, net to the seller in cash, without interest, upon the terms and subject to
the conditions set forth in the enclosed Offer to Purchase. SMG will select the lowest purchase
price (in increments of $.50) that will allow it to purchase 4,504,504 Shares or, if a lesser
number of Shares are properly tendered, all Shares that are properly tendered and not withdrawn.
All Shares acquired in the Offer will be acquired at the same purchase price regardless of whether
the shareholder tendered at a lower price.
The enclosed Offer to Purchase sets forth the objectives, terms and conditions of the Offer
and is being provided to all of SMGs shareholders. To understand the Offer fully and for a more
complete description of the terms and conditions of the Offer, you should carefully read the entire
Offer to Purchase, including the portions thereof relating to the special dividend which SMG
contemplates declaring in February, 2007.
The Offer extends to the Shares held by the Plan. As of January 3, 2007, the Plan had
approximately 49 Shares allocated to participant accounts. Only Fidelity, as trustee of the Plan,
can tender these Shares in the Offer. Nonetheless, as a participant under the Plan, you have the
right to direct Fidelity whether or not to tender some or all of the Shares attributable to your
individual account under the Plan, and at what price or prices. Unless otherwise required by
applicable law, Fidelity will tender Shares attributable to participant accounts in accordance with
participant instructions and Fidelity will not tender Shares attributable to participant accounts
for which it does not receive timely instructions. If you do not complete the enclosed Direction
Form and return it to Fidelitys tabulator on a timely basis, you will be deemed to have elected
not to participate in the Offer and no Shares attributable to
your Plan account will be tendered. Fidelity will tender Shares within the Plan that have not been
allocated to an individual account in the same proportion and at the same prices as they tender
Shares for which they receive participant directions, unless otherwise required by applicable law.
LIMITATIONS ON FOLLOWING YOUR DIRECTION
The enclosed Direction Form allows you to specify the percentage of the Shares attributable to
your account that you wish to tender and the price or prices at which you want to tender Shares
attributable to your account. As detailed below, when Fidelity tenders Shares on behalf of the
Plan, it may be required to tender Shares on terms different than those set forth on your Direction
Form.
The Employee Retirement Income Security Act of 1974, as amended (ERISA), and the trust
agreement between Smith & Hawken, Ltd. and Fidelity prohibit the sale of Shares to SMG for less
than adequate consideration which is defined by ERISA for a publicly traded security as the
prevailing market price on a national securities exchange. Fidelity will determine adequate
consideration, based on the prevailing or closing market price of the Shares on the New York Stock
Exchange on or about the date the Shares are tendered by Fidelity (the prevailing market price).
Accordingly, depending on the prevailing market price of the Shares on such date, Fidelity may be
unable to follow participant directions to tender Shares to SMG at certain prices within the
offered range. Fidelity will tender or not tender Shares as follows:
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If the prevailing market price is greater than the maximum tender
price offered by SMG ($55.50 per Share), notwithstanding your
direction to tender Shares in the Offer, the Shares will not be
tendered. |
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If the prevailing market price is lower than the price at which
you direct Shares be tendered, notwithstanding the lower closing
market price, Fidelity will follow your direction both as to
percentage of Shares to tender and as to the price at which such
Shares are tendered. |
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If the prevailing market price is greater than the price at which
you direct the Shares be tendered but within the range of $48.50
to $55.50, Fidelity will follow your direction regarding the
percentage of Shares to be tendered, but will increase the price
at which such Shares are to be tendered to the lowest tender price
that is not less than prevailing market price. |
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If the prevailing market price is within the range of $48.50 to
$55.50, for all shares directed to be tendered at the per Share
purchase price to be determined pursuant to the tender offer,
Fidelity will tender such Shares at the lowest tender price that
is not less than the prevailing market price. |
Unless otherwise required by applicable law, Fidelity will not tender Shares for which it has
received no direction, or for which it has received a direction not to tender. Fidelity makes no
recommendation as to whether to direct the tender of Shares or whether to refrain from directing
the tender of Shares. EACH PARTICIPANT OR BENEFICIARY MUST MAKE HIS OR HER OWN DECISIONS.
CONFIDENTIALITY
To assure the confidentiality of your decision, Fidelity and their affiliates or agents will
tabulate the Direction Forms. Neither Fidelity nor their affiliates or agents will make your
individual direction available to Smith & Hawken, Ltd. or SMG.
PROCEDURE FOR DIRECTING TRUSTEE
-2-
Enclosed is a Direction Form which should be completed and returned to Fidelitys tabulator.
Please note that the Direction Form indicates the number of Shares attributable to your individual
account as of January 3, 2007. However, for purposes of the final tabulation, Fidelity will apply
your instructions to the number of Shares attributable to your account as of February 5, 2007, or
as of a later date if the Offer is extended.
If you do not properly complete the Direction Form or do not return it by the deadline
specified, such Shares will be considered NOT TENDERED.
To properly complete your Direction Form, you must do the following:
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On the face of the Direction Form, check Box 1 or 2. CHECK ONLY ONE BOX: |
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CHECK BOX 1 if you do not want the Shares attributable to your individual
account tendered for sale in accordance with the terms of the Offer and simply want
the Plan to continue holding such Shares. |
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CHECK BOX 2 in all other cases and complete the table immediately below Box 2.
Specify the percentage (in whole numbers) of Shares attributable to your individual
account that you want to tender at each price indicated. |
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You may direct the tender of Shares attributable to your account at different
prices. To do so, you must state the percentage (in whole numbers) of Shares to be
sold at each price by filling in the percentage of such Shares on the line
immediately before the price. Also, you may elect to accept the per Share purchase
price to be determined pursuant to the tender offer, which will result in receiving
a price per Share as low as $48.50 or as high as $55.50. Leave a given line blank
if you want no Shares tendered at that particular price. The total of the
percentages you provide on the Direction Form may not exceed 100%, but it may be
less than 100%. If this amount is less than 100%, you will be deemed to have
instructed Fidelity NOT to tender the balance of the Shares attributable to your
individual account. |
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Date and sign the Direction Form in the space provided. |
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(3) |
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Return the Direction Form in the enclosed return envelope so that it is
received by Fidelitys tabulator at the address on the return envelope (P.O. Box 9142,
Hingham, MA 02043) not later than 4:00 P.M., New York City time, on Monday, February 5,
2007, unless the Offer is extended, in which case, to the extent feasible, the
participant deadline shall be three business days prior to the expiration date of the
Offer. If you wish to return the form by overnight courier, please send it to
Fidelitys tabulator at Tabulator, 60 Research Road, Hingham, MA 02043. Directions via
facsimile will not be accepted. |
Your direction will be deemed irrevocable unless withdrawn by 4:00 p.m., New York City time,
on Monday, February 5, 2007, unless the Offer is extended by SMG. In order to make an effective
withdrawal, you must submit a new Direction Form which may be obtained by calling Fidelity at (800)
294-4015. Upon receipt of a new, completed and signed Direction Form, your previous direction will
be deemed canceled. You may direct the re-tendering of any Shares attributable to your individual
account by obtaining an additional Direction Form from Fidelity and repeating the previous
instructions for directing tender as set forth in this letter.
After the deadline above for returning the Direction Form to Fidelitys tabulator, Fidelity
and their affiliates or agents will complete the tabulation of all directions. Fidelity will
tender the appropriate number of Shares on behalf of the Plan.
-3-
Subject to the satisfaction of the conditions described in the Offer to Purchase, SMG will buy
all Shares, up to 4,504,504, that are properly tendered through the Offer. If there is an excess
of Shares tendered over the exact number desired by SMG, Shares tendered pursuant to the Offer may
be subject to proration, as described in the Offer to Purchase. Any Shares attributable to your
account that are not purchased in the Offer will remain allocated to your individual account under
the Plan.
The preferential treatment of holders of fewer than 100 Shares, as described in the Offer to
Purchase, will not apply to participants in the Plan, regardless of the number of Shares held
within their individual accounts. Likewise, the conditional tender of Shares, as described in the
Offer to Purchase, will not apply to participants in the Plan.
EFFECT OF TENDER ON YOUR ACCOUNT
If you direct Fidelity to tender some or all of the Shares attributable to your Plan
account, as of 4:00 p.m., New York City time, on February 5, 2007, certain transactions involving
the Stock Fund attributable to your account, including all exchanges out, loans, withdrawals and
distributions, will be prohibited until all processing related to the Offer has been completed,
unless the Offer is terminated or the completion date is extended. This freeze on transactions
will apply to ALL Shares attributable to your Plan account, even if you elect to tender less than
100% of the Shares. (Balances in the Stock Fund will be utilized to calculate amounts eligible for
loans and withdrawals throughout this freeze on the Stock Fund.) In the event that the Offer is
extended, the freeze on transactions involving the Stock Fund will, if feasible, be temporarily
lifted until three days prior to the new completion date of the Offer, as extended, at which time a
new freeze on these transactions involving the Stock Fund will commence. You can call Fidelity at
(800) 294-4015 to obtain updated information on expiration dates, deadlines and Stock Fund freezes.
If you directed Fidelity NOT to tender any of the Shares attributable to your account or you
did not return your Trustee Direction Form in a timely manner, you will continue to have access to
all transactions normally available to the Stock Fund, subject to Plan rules.
While participants will not recognize any immediate tax gain or loss as a result of the Offer,
the tax treatment of future withdrawals or distributions of shares from the Plan may be adversely
impacted by a tender and sale of shares under the Plan. Specifically, under current federal income
tax rules, to the extent that you receive from the Plan a future lump sum distribution that
includes shares that have increased in value while they were held by the Plan, under certain
circumstances, you may have the option of deferring payment of taxes on this increase in value
until you later sell the shares after they are distributed to you, at which time the gain would be
taxed at long-term capital gains rates. Your sale of shares within the Plan prior to their
distribution to you (whether pursuant to the Offer or otherwise) eliminates this tax planning
opportunity for the shares disposed of in the pre-distribution sale. Please refer to the Summary
Plan Description and Prospectus for the Plan that has been provided to you for more information on
taxes.
INVESTMENT OF PROCEEDS
For any Shares in the Plan that are tendered and purchased by SMG, SMG will pay cash to the
Plan. INDIVIDUAL PARTICIPANTS IN THE PLAN WILL NOT, HOWEVER, RECEIVE ANY CASH TENDER PROCEEDS
DIRECTLY. ALL SUCH PROCEEDS WILL REMAIN IN THE PLAN AND MAY BE WITHDRAWN ONLY IN ACCORDANCE WITH
THE TERMS OF THE PLAN.
Fidelity will invest proceeds received with respect to Shares attributable to your account in
the Fidelity Advisor Stable Value Portfolio II as soon as administratively possible after receipt
of proceeds.
-4-
Fidelity anticipates that the processing of participant accounts will be completed five to seven
business days after receipt of these proceeds. You may call Fidelity at (800) 294-4015 after the
reinvestment is complete to learn the effect of the tender on your account or to have the proceeds
from the sale of Shares which were invested in the Fidelity Advisor Stable Value Portfolio II
invested in other investment options offered under the Plan.
SHARES OUTSIDE THE PLAN
If you hold Shares outside of the Plan, you will receive, under separate cover, Offer
materials to be used to tender those Shares. Those Offer materials may not be used to direct
Fidelity to tender or not tender the Shares attributable to your individual account under the Plan.
Likewise, the tender of Shares attributable to your individual account under the Plan will not be
effective with respect to Shares you hold outside of the Plan. The direction to tender or not
tender Shares attributable to your individual account under the Plan may only be made in accordance
with the procedures in this letter. Similarly, the enclosed Direction Form may not be used to
tender Shares held outside of the Plan.
FURTHER INFORMATION
If you require additional information concerning the procedure to tender Shares attributable
to your individual account under the Plan, please contact Fidelity at (800) 294-4015. If you
require additional information concerning the terms and conditions of the Offer, please call D.F.
King & Co., Inc., the Information Agent, toll free at (800) 714-3312.
Sincerely,
Fidelity Management Trust Company
-5-
DIRECTION FORM
THE SCOTTS MIRACLE-GRO TENDER OFFER
*BEFORE COMPLETING THIS FORM, PLEASE READ CAREFULLY
THE ACCOMPANYING OFFER TO PURCHASE AND ALL OTHER ENCLOSED MATERIALS*
PLEASE NOTE THAT IF YOU DO NOT SEND IN A PROPERLY COMPLETED, SIGNED DIRECTION FORM, OR IF SUCH
DIRECTION FORM IS NOT RECEIVED BY 4:00 P.M., NEW YORK CITY TIME ON MONDAY, FEBRUARY 5, 2007, UNLESS
THE TENDER OFFER IS EXTENDED, THE SHARES ATTRIBUTABLE TO YOUR PLAN ACCOUNT WILL NOT BE TENDERED IN
ACCORDANCE WITH THE TENDER OFFER, UNLESS OTHERWISE REQUIRED BY LAW.
Fidelity Management Trust Company (Fidelity) makes no recommendation to any participant in the
Smith & Hawken 401(k) Plan (the Plan) as to whether to tender or not, or at which prices. Your
direction to Fidelity will be kept confidential.
This Direction Form, if properly signed, completed and received by Fidelitys tender offer
tabulator in a timely manner, will supersede any previous Direction Form.
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Date |
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Please Print Name |
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Signature |
As of January 3, 2007, the number of shares attributable to your account under the Plan is shown to
the right of your address.
In connection with the Offer to Purchase made by The Scotts Miracle-Gro Company, dated January 10,
2007, I hereby instruct Fidelity to tender the shares attributable to my Plan account as of
February 5, 2007, unless a later deadline is announced, as follows (check only one box and
complete):
(CHECK BOX #1 OR #2)
o 1. |
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Please refrain from tendering and continue to HOLD all shares attributable to my individual account under the Plan. |
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o 2. |
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Please TENDER shares attributable to my individual account under the Plan in the percentage indicated below for
each of the prices provided. A blank space before a given price will be taken to mean that no shares attributable
to my account are to be tendered at that price. I understand that certain transactions involving shares
attributable to my Plan account, including exchanges out, loans, withdrawals and distributions, will be prohibited
until all processing of the Offer has been completed, and that such freeze will apply to ALL such shares even if I
elect to tender less than 100%. FILL IN THE TABLE BELOW ONLY IF YOU HAVE CHECKED BOX #2. |
Percentage of Shares to be Tendered (The total of all percentages must be less than or equal to
100%. If the total is less than 100%, you will be deemed to have directed Fidelity NOT to tender
the remaining percentage.)
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% at $48.50
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% at $50.50
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% at $52.50
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% at $54.50 |
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% at $49.00
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% at $51.00
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% at $53.00
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% at $55.00 |
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% at $49.50
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% at $51.50
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% at $53.50
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% at $55.50 |
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% at $50.00
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% at $52.00
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% at $54.00
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% at TBD** |
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** By entering a percentage on the % line at TBD, the undersigned is willing to accept the purchase
price resulting from the Offer for the percentage of shares elected. This could result in receiving
a price per share as low as $48.50 or as high as $55.50 per Share.
EX-99.A.1.IX
Exhibit (a)(1)(ix)
Computershare Trust Company, N.A.
January 10, 2007
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RE: |
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The Scotts Miracle-Gro Company Discounted Stock Purchase Plan |
To Participants with transferable Shares in The Scotts Miracle-Gro Company Discounted Stock Purchase Plan:
As a participant in The Scotts Miracle-Gro Company Discounted Stock Purchase Plan (the
DSPP), you may be eligible to participate in The Scotts Miracle-Gro Companys tender offer.
Enclosed for your consideration are the Offer to Purchase, dated January 10, 2007 (the Offer to
Purchase), and the related Letter of Transmittal (which, together with any amendments or
supplements thereto, collectively constitute the Offer), in connection with the offer by The
Scotts Miracle-Gro Company, an Ohio corporation (the Company), to purchase up to 4,504,504 of its
common shares, without par value (the Shares), at a price not less than $48.50 nor greater than
$55.50 per share, net to the seller in cash, without interest. The Offer is subject to the terms
and conditions set forth in the Offer to Purchase and the related Letter of Transmittal.
On the terms and subject to the conditions of the Offer, the Company will select the lowest
Purchase Price (as defined in the Offer to Purchase) that will allow it to purchase 4,504,504
Shares, or, if a lesser number of Shares are validly tendered, all Shares that are validly tendered
and not validly withdrawn. All Shares acquired in the Offer will be acquired at the same Purchase
Price regardless of whether a shareholder tenders any Shares at a lower price.
Only Shares validly tendered at prices at or below the Purchase Price, and not validly
withdrawn, will be purchased. However, because of the odd lot priority, proration and
conditional tender offer provisions described in the Offer to Purchase, all of the Shares tendered
may not be purchased if more than the number of Shares sought by the Company are validly tendered.
Shares not purchased in the Offer will be returned at the expense of the Company promptly following
the expiration of the Offer.
Subject to certain limitations and legal requirements, the Company reserves the right, in its
sole discretion, to purchase more than 4,504,504 Shares pursuant to the Offer.
The Offer is subject to important conditions, including the receipt by the Company of
financing on terms and conditions satisfactory to the Company. See Section 7 of the Offer to
Purchase.
Computershare Trust Co., N.A. (Computershare or Agent) is the holder of record of Shares
held for your account under the DSPP. As such, it is the only entity that can tender your Shares,
and then only pursuant to your instructions. Note that only vested Shares, i.e., Shares
you have held at least 12 months, may be tendered under the DSPP. Non-vested Shares may not be
tendered since they are not currently transferable. We are sending you the Letter of Transmittal
for your information only; you cannot use it to tender the Shares we hold for your account. Set
forth below are the instructions you must follow to tender vested Shares held for your benefit
under the DSPP.
Please instruct us as to whether you wish us to tender any or all of the vested Shares
Computershare holds for your account on the terms and subject to the conditions of the Offer by
mailing your completed tender Instruction Form to us using the enclosed pre-addressed reply
envelope or faxing the completed Instruction Form to us at (781) 380-3388. If you do not respond
to this notice, no Shares will be tendered on your behalf in the Offer. Any Shares tendered but not
accepted by the Company will remain in, or be returned to, your account.
Please note the following:
1. You may tender your vested Shares at prices (in increments of $0.50) not less than
$48.50 nor greater than $55.50 per Share, as indicated in the attached Instruction Form, net
to you in cash, without interest.
2. You should consult with your tax, financial, or other advisor on the possibility of
designating the priority in which your vested Shares will be purchased in the event of
proration.
3. The Offer is subject to important conditions, including the receipt by the Company
of financing on terms and conditions satisfactory to the Company. See Section 7 of the
Offer to Purchase.
4. The Offer, proration period and withdrawal rights will expire at 12:00 midnight, New
York City time, on Thursday, February 8, 2007, unless the Company extends the Offer.
5. The Offer is for up to 4,504,504 Shares, constituting approximately 6.7 % of the
total number of outstanding Shares as of December 29, 2006.
6. If you wish to tender portions of your vested Shares under the DSPP at different
prices, you must complete a separate Instruction Form for each price at which you wish to
tender each such portion of your Shares. Computershare is the owner of record of Shares
held in your account under the DSPP. As such, we must submit separate Letters of
Transmittal on your behalf for each price you will accept for each portion tendered.
7. If you are a shareholder who owns beneficially or of record a total of fewer than
100 Shares (an Odd Lot Holder) and you instruct us to tender on your behalf all such
Shares at or below the Purchase Price before the expiration of the Offer and complete the
section captioned Odd Lot on the attached Instruction Form, the Company, on the terms and
subject to the conditions of the Offer, will accept all such Shares for purchase before
proration, if any, of the purchase of other Shares validly tendered at or below the Purchase
Price and not validly withdrawn.
8. If you wish to condition your tender upon the Companys purchase of a specified
minimum number of the Shares which you tender, you may elect to do so and thereby avoid
possible proration of your tender. The Companys purchase of Shares from all tenders that
are so conditioned will be determined by random lot. To elect such a condition, complete
the section captioned Conditional Tender in the attached Instruction Form.
The quarterly statements you receive from Computershare reflect the total Shares we hold for
you pursuant to the DSPP. To find your vested or transferable Shares that may be tendered, you
will need to go to our website. Please follow the instructions below to access our website and
determine the number of Shares you may elect to tender.
Step 1: Connect to the Internet.
Step 2: Log on to www.us.computershare.com/employee
Step 3: Enter SMG under Company Code and click Submit
You will need your User ID and 5 digit Personal Identification Number (PIN). After you access your
account, choose Sell Shares from the left side menu. The Shares available for Sale are your
unrestricted Shares.
If you wish Computershare to tender any or all of your vested Shares under DSPP, please so
instruct us by completing, executing, detaching and returning to us the attached instruction form.
If you authorize us to tender your vested Shares, we will tender all of your Shares unless you
specify otherwise on the attached Instruction Form.
Cash received from any Shares tendered and accepted for payment by the Company will be
distributed to participants by check. Please refer to the Offer to Purchase for a general
discussion of the tax consequences of a tender. Generally, backup withholding of 28% will be
required unless you complete the enclosed Substitute Form W-9. We have enclosed instructions to
assist you with the preparation of this form. See Section 14, U.S. Federal Income Tax
ConsequencesBackup Withholding of the Offer to Purchase.
Participants in the DSPP who wish to tender all or a portion of their vested Shares must
deliver their completed tender Instruction Forms to Computershare for receipt by 4:00 p.m. New York
City time, on Monday, February 5, 2007, unless the tender offer is extended, in which case the
deadline for receipt of instructions will be 3 business days prior to the expiration date. The
mailing address and address for delivery by hand or overnight courier is Computershare Trust
Company, N.A., Attn: Corporate Actions, 161 Bay State Drive, Braintree, MA 02184. The address for
Registered, Certified or First Class Mail is P.O. Box 859208, Braintree, MA 02185-9208. You may
fax your completed tender Instruction Form to Computershare at (781) 380-3388. If you have any
questions about the tender process, please call the Information Agent, D.F. King & Co., Inc. at
(800) 714-3312. Your prompt action is requested.
The Offer is being made solely under the Offer to Purchase and the related Letter of
Transmittal and is being made to all record holders of Shares. The Offer is not being made to, nor
will tenders be accepted from or on behalf of, holders of Shares residing in any jurisdiction in
which the making of the Offer or acceptance thereof would not be in compliance with the securities,
blue sky or other laws of such jurisdiction.
You may only direct us, as Agent for the DSSP, to withdraw your vested DSPP Shares from the
tender by performing the following steps:
(a) You must send a signed written notice of withdrawal to Computershare as Agent for the
DSPP.
(b) You may fax your notice of withdrawal to Computershare as Agent for the DSPP at
(781)380-3388.
(c) The notice of withdrawal must state your name, social security number, the number of
vested DSPP Shares that you wish to withdraw from the Offer and that you are directing
Computershare to withdraw DSPP Shares that you previously directed us to tender on your behalf.
(d) The notice of withdrawal must be received by Computershare before 4:00 p.m., New York
City time, on Monday, February 5, 2007.
You may direct Computershare to re-tender your vested Plan Shares by completing another tender
Instruction Form and returning it to Computershare for receipt by 4:00 p.m., New York City time, on
Monday, February 5, 2007. You may obtain another copy of the tender Instruction Form by faxing
your request to 781-380-3388.
The Companys Board of Directors has approved the Offer. However, neither the Company nor any
member of its Board of Directors, nor the Dealer Manager, the Information Agent, the Depositary or
Computershare makes any recommendation to shareholders as to whether they should tender or refrain
from tendering their Shares or as to the purchase price or purchase prices at which they may choose
to tender their Shares. Shareholders must make their own decision as to whether to tender their
Shares and, if so, how many Shares to tender and the purchase price or purchase prices at which
their Shares should be tendered. In doing so, shareholders should read carefully the information
in the Offer to Purchase and in the related Letter of Transmittal, including the Companys reasons
for making the Offer. See Section 2 of the Offer to Purchase. Shareholders should discuss whether
to tender their Shares with their broker or other financial or tax advisor. The Companys
directors and executive officers and its largest shareholder, Hagedorn Partnership, L.P., of which
James Hagedorn, the Companys Chairman and Chief Executive Officer, and Katherine Hagedorn
Littlefield, one of its directors, are partners, have advised the Company that they do not intend
to tender any Shares owned by them in the Offer. See Section 11 of the Offer to Purchase.
YOUR INSTRUCTIONS TO US MUST BE FORWARDED TO US PROMPTLY IN ORDER TO PERMIT US TO SUBMIT A
TENDER ON YOUR BEHALF IN ACCORDANCE WITH THE PROVISIONS OF THE OFFER TO PURCHASE. ALTHOUGH THE
OFFER IS PRESENTLY SCHEDULED TO EXPIRE ON THURSDAY, FEBRUARY 8, 2007, AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, WE MUST RECEIVE YOUR INSTRUCTIONS BY NO LATER THAN 4:00 P.M., NEW YORK CITY TIME, ON
MONDAY, FEBRUARY 5, 2007 IN ORDER TO BE ABLE TO ACT ON YOUR INSTRUCTIONS IN A TIMELY FASHION
(UNLESS THE OFFER IS EXTENDED BY THE COMPANY).
Very
truly yours,
Computershare Trust Co., N.A.
Agent, The Scotts Miracle-Gro Company Discounted
Stock Purchase Plan
The Offer is not being made to, nor will tenders be accepted from or on behalf of, holders of
Shares in any jurisdiction in which the making or acceptance thereof would not be in compliance
with the laws of such jurisdiction. In those jurisdictions whose laws require that the Offer be
made by a licensed broker or dealer, the Offer shall be deemed to be made on behalf of the Company
by Banc of America Securities LLC, the Dealer Manager for the Offer, or one or more registered
brokers or dealers licensed under the laws of such jurisdictions.
Instruction Form
With Respect to
Offer to Purchase for Cash
by
The Scotts Miracle-Gro Company
of
Up to 4,504,504 of its Common Shares
At a Per Share Purchase Price Not Less Than $48.50 nor
Greater Than $55.50
The undersigned acknowledge(s) receipt of your letter and the enclosed Offer to Purchase,
dated January 10, 2007 (the Offer to Purchase), and the related Letter of Transmittal (which,
together with any amendments or supplements thereto, collectively constitute the Offer), in
connection with the offer by The Scotts Miracle-Gro Company, an Ohio corporation (the Company),
to purchase up to 4,504,504 of its common shares, without par value (the Shares), at a price not
less than $48.50 nor greater than $55.50 per Share, net to the seller in cash, without interest.
The Offer is subject to the terms and conditions set forth in the Offer to Purchase and the related
Letter of Transmittal.
The undersigned hereby instruct(s) you to tender to the Company the number of Shares indicated
below or, if no number is indicated, all vested Shares you hold for the account of the undersigned
under The Scotts Miracle-Gro Company Discounted Stock Purchase Plan, at the price per share
indicated below, on the terms and subject to the conditions of the Offer.
Number of Shares to be tendered: Shares.
THE UNDERSIGNED IS TENDERING SHARES AS FOLLOWS (CHECK ONLY ONE BOX):
(1) SHARES TENDERED AT PRICE DETERMINED BY SHAREHOLDER (SEE INSTRUCTION 5 OF THE
LETTER OF TRANSMITTAL)
By checking ONE of the following boxes below INSTEAD OF THE BOX UNDER Shares Tendered at
Price Determined Pursuant to the Offer, the undersigned hereby tender vested Shares at
the price checked. This action could result in none of the Shares being purchased if the
Purchase Price (as defined in the Offer to Purchase) for the Shares is less than the
price checked below. IF YOU DESIRE TO TENDER VESTED SHARES AT MORE THAN ONE PRICE, YOU
MUST INSTRUCT US, AS THE RECORD OWNER OF SHARES HELD IN YOUR ACCOUNT, TO COMPLETE A
SEPARATE NOTICE OF GUARANTEED DELIVERY AND/OR LETTER OF TRANSMITTAL FOR EACH PRICE AT
WHICH VESTED SHARES ARE TO BE TENDERED. The same vested Shares cannot be tendered, unless
previously validly withdrawn as provided in Section 4 of the Offer to Purchase, at more
than one price.
PRICE (IN DOLLARS) PER SHARE AT WHICH VESTED SHARES
ARE BEING TENDERED
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o $48.50 |
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o $52.50 |
o $49.00 |
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o $53.00 |
o $49.50 |
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o $53.50 |
o $50.00 |
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o $54.00 |
o $50.50 |
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o $54.50 |
o $51.00 |
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o $55.00 |
o $51.50 |
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o $55.50 |
o $52.00 |
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OR
(2) SHARES TENDERED AT PRICE DETERMINED PURSUANT TO THE OFFER (SEE INSTRUCTION 5 OF
THE LETTER OF TRANSMITTAL)
By checking the box below INSTEAD OF ONE OF THE BOXES UNDER Price (in Dollars) Per Share
at which vested Shares are Being Tendered, the undersigned hereby tenders Shares at the
Purchase Price, as the same shall be determined in accordance with the terms of the
Offer.
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The undersigned wants to maximize the chance of having the Company purchase all of the
vested Shares the undersigned is tendering (subject to the possibility of proration).
Accordingly, by checking this box instead of one of the price boxes above, the undersigned
hereby tenders vested Shares and is willing to accept the Purchase Price determined in
accordance with the terms of the Offer. This action could result in receiving a price per
share as low as $48.50. |
CHECK ONLY ONE BOX UNDER (1) OR (2) ABOVE. IF MORE THAN ONE BOX IS CHECKED
ABOVE, THERE IS NO VALID TENDER OF SHARES.
ODD LOT
(See Box 6 of the Letter of Transmittal)
To be completed only if Shares are being tendered by or on
behalf of a person owning, beneficially or of record, an
aggregate of fewer than 100 Shares. The undersigned either
(check one box):
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Is the beneficial or record owner of an aggregate of fewer than 100 vested Shares, all of which are being tendered; or |
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Is a broker, dealer, commercial bank, trust company, or other nominee that (a) is tendering
for the beneficial owner(s), shares with respect to which it is the record holder, and (b) believes,
based upon representations made to it by the beneficial owner(s), that such person is the beneficial owner of an
aggregate of fewer than 100 shares and is tendering all of such person's shares. |
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In addition, the undersigned is tendering Shares either (check one box): |
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at the price per share indicated above in the section captioned Price (in Dollars) Per Share at which Shares are Being Tendered; or |
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at the Purchase Price, as the same will be determined in accordance with the terms of the Offer (persons checking this box need not indicate the price per share above). |
CONDITIONAL TENDER
(See Box 6 of the Letter of Transmittal)
A tendering shareholder may condition his or her tender of
Shares upon the Company purchasing a specified minimum number
of the Shares tendered, all as described in Section 6 of the
Offer to Purchase. Unless at least that minimum number of
Shares you indicate below is purchased by the Company pursuant
to the terms of the Offer, none of the Shares tendered will be
purchased. It is the tendering shareholders responsibility to
calculate that minimum number of Shares that must be purchased
if any are purchased and each shareholder is urged to consult
his or her own tax advisor with respect to his or her
particular situation. Unless this box has been checked and a
minimum specified, your tender will be deemed unconditional.
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The minimum number of Shares that must be purchased from the undersigned,
if any are purchased, is: Shares. |
If, because of proration, the minimum number of Shares will not
be purchased, the Company may accept conditional tenders by
random lot, if necessary. However, to be eligible for purchase
by random lot, the tendering shareholder must have tendered all
of his or her Shares and checked the box below:
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The tendered Shares represent all Shares held by the undersigned. |
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The method of delivery of this document is at the election and risk of the tendering
shareholder. If delivery is by mail, then registered mail with return receipt requested, properly
insured, is recommended. In all cases, sufficient time should be allowed to ensure timely
delivery.
NOTE: THIS TENDER INSTRUCTION FORM MUST BE COMPLETED AND SIGNED IF SHARES HELD IN THE DSPP
ARE TO BE TENDERED. IF THE FORM IS NOT SIGNED, THE DIRECTIONS INDICATED WILL NOT BE ACCEPTED.
PLEASE RETURN THIS TENDER INSTRUCTION FORM TO THE AGENT FOR THE DSPP, USING THE PREADDRESSED REPLY
ENVELOPE PROVIDED OR VIA FAX TO (781) 380-3388 OR OVERNIGHT DELIVERY TO COMPUTERSHARE TRUST
COMPANY, N.A., ATTN: CORPORATE ACTIONS, 161 BAY STATE DRIVE, BRAINTREE, MA 02184. THE ADDRESS FOR
REGISTERED, CERTIFIED OR FIRST CLASS MAIL IS P.O. BOX 859208, BRAINTREE, MA 02185-9208. YOUR
INSTRUCTION FORM MUST BE RECEIVED BY 4:00 P.M., NEW YORK CITY TIME, MONDAY, FEBRUARY 5, 2007.
YOUR DECISION WHETHER OR NOT TO HAVE YOUR PLAN SHARES TENDERED WILL BE KEPT CONFIDENTIAL.
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Taxpayer Identification or Social Security Number: |
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Address(es): |
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(Including Zip Code) |
TO BE COMPLETED BY HOLDERS WHO ARE U.S. PERSONS
(See Instruction 13)
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SUBSTITUTE Form W-9
Department of the Treasury Internal Revenue Service |
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Request for Taxpayer Identification Number and Certification |
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Give form to the requester. Do not send to the IRS. |
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Print or type See Specific Instructions on page 16. |
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Name (as shown on your income tax return) |
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Business name, if different from above |
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Check appropriate box: |
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Individual/ Sole proprietor |
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Corporation |
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Partnership |
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Other 4 |
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Exempt from backup withholding |
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Address (number, street, and apt. or suite no.) |
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Requesters name and address (optional) |
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City, state, and ZIP code |
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List account number(s) here (optional) |
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Part I |
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Taxpayer Identification Number (TIN) |
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Enter your TIN in the appropriate
box. For individuals, this is your
social security number (SSN).
However, for a resident alien, sole
proprietor, or disregarded entity,
see the Part I instructions on page
17. For other entities, it is your
employer identification number (EIN).
If you do not have a number, see How
to get a TIN on page 17.
Note: If the account is in more than
one name, see the chart on page 18
for guidelines on whose number to
enter.
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Social security number ooooooooo
or
Employer Identification number ooooooooo |
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Under penalties of perjury, I certify that:
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The number shown on this form is my correct taxpayer identification number, and |
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I am not subject to backup withholding because: (a) I am exempt from backup withholding, or
(b) I have not been notified by the Internal Revenue Service (IRS) that I am subject to backup
withholding as a result of a failure to report all interest or dividends, or (c) the IRS has
notified me that I am no longer subject to backup withholding, and |
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I am a U.S. person (including a U.S. resident alien). |
Certification instructions. You must cross out item 2 above if you have been notified by the IRS
that you are currently subject to backup withholding because you have failed to report all
interest and dividends on your tax return. For real estate transactions, item 2 does not
apply. For mortgage interest paid, acquisition or abandonment of secured property,
cancellation of debt, contributions to an individual retirement arrangement (IRA), and
generally, payments other than interest and dividends, you are not required to sign the
Certification, but you must provide your correct TIN. (See the instructions on page 18.)
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Sign Here |
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Signature of U.S. person 4 |
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Date 4 |
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NOTE: FAILURE BY A HOLDER TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF
28% OF ALL PAYMENTS MADE TO YOU IN RESPECT OF THE SHARES SURRENDERED BY YOU. PLEASE REVIEW THE
ENCLOSED SUBSTITUTE FORM W-9 AND ACCOMPANYING INSTRUCTIONS FOR ADDITIONAL DETAILS.
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
Guidelines for Determining the Proper Identification Number to Guide the Payer.Social
Security Numbers have nine digits separated by two hyphens: i.e., 000-00-0000. Employer
Identification Numbers have nine digits separated by only one hyphen: i.e., 00-0000000. The table
below will help determine the number to give the payer.
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Give the |
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SOCIAL SECURITY |
For this type of account |
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number of |
1.
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An individuals account
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The individual |
2.
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Two or more individuals (joint account)
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The actual owner of
the account or, if
combined funds, the
first individual on
the account(1) |
3.
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Custodian account of a minor (Uniform
Gift to Minors Act)
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The minor(2) |
4.
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a. The usual revocable savings trust
account (grantor is also trustee)
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The grantor-trustee(1) |
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b. So-called trust account that is not
a legal or valid trust under State law
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The actual owner(1) |
5.
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Sole proprietorship account
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The owner(3) |
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Give the |
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EMPLOYER IDENTIFICATION |
For this type of account: |
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number of |
6.
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A valid trust, estate, or pension trust
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The legal entity (Do
not furnish the
identifying number of
the personal
representative or
trustee unless the
legal entity itself is
not designated in the
account title)(4) |
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Corporate account
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The corporation |
8.
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Religious, charitable or education
organization account
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The organization |
9.
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Partnership
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The partnership |
10.
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Association, club or other tax-exempt
organization
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The organization |
11.
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A broker or registered nominee
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The broker or nominee |
12.
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Account with the Department of
Agriculture in the name of a public
entity (such as a State or local
government, school district or prison)
that receives agricultural program
payments
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The public entity |
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List first and circle the name of the person whose number you furnish. If only one person on
a joint account has a Social Security Number, that persons number must be furnished. |
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Circle the minors name and furnish the minors Social Security Number. |
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Show the name of the owner. In addition, you may also enter your business name. You may use
your Social Security Number or Employer Identification Number. |
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List first and circle the name of the legal trust, estate, or pension trust. |
NOTE: If no name is circled when there is more than one name, the number will be considered to
be that of the first name listed.
Obtaining a Number
If you dont have a Taxpayer Identification Number, obtain Form SS-5, Application for a Social
Security Number Card, or Form SS-4, Application for Employer Identification Number, at the local
office of the Social Security Administration or the Internal Revenue Service (the IRS) and apply
for a number. Section references herein refer to sections of the Internal Revenue Code of 1986, as
amended.
Payees Exempt from Backup Withholding
Backup withholding is not required on any payments made to the following payees:
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An organization exempt from tax under Section 501(a), an individual retirement plan, or
a custodial account under Section 403(b)(7), if the account satisfies the requirements of
Section 401(f)(2), |
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The United States or any of its agencies or instrumentalities, |
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A State, the District of Columbia, a possession of the United States, or any of their
political subdivisions or instrumentalities, |
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A foreign government or any of its political subdivision, agencies, or instrumentalities, or |
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An international organization or any of its agencies or instrumentalities. |
Other payees that may be exempt from backup withholding include:
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A corporation, |
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A foreign central bank of issue, |
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A dealer in securities of commodities required to register in the United States, the
District of Columbia, or a possession of the United States, |
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A futures commissions merchant registered with the Commodity Futures Trading Commission, |
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A real estate investment trust, |
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An entity registered at all times during the tax year under the Investment Company Act of 1940, |
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A common trust fund operated by a bank under Section 584(a), |
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A financial institution, |
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A middleman known in the investment community as a nominee or custodian, or |
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A trust exempt from tax under section 664 or described in section 4947. |
Exempt payees described above should file Substitute Form W-9 or applicable IRS Form W-8 to
avoid possible erroneous backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE EXEMPT ON THE FACE OF THE FORM, SIGN AND DATE THE FORM AND RETURN IT
TO THE PAYER.
Privacy Act NoticeSection 6109 requires most recipients of dividends, interest, or other
payments to give Taxpayer Identification Numbers to payers who must report the payments to IRS. The
IRS uses the numbers for identification purposes. Payers must be given the numbers whether or not
recipients are required to file tax returns. Payers must generally withhold 28% of taxable
interest, dividends and certain other payments to a payee who does not furnish a Taxpayer
Identification Number to a payer. Certain penalties may also apply.
-2-
Penalties
(1) Penalty for Failure to Furnish Taxpayer Identification NumberIf you fail to furnish
your Taxpayer Identification Number to a payer, you are subject to a penalty of $50 for each such
failure unless your failure is due to reasonable cause and not to willful neglect.
(2) Civil Penalty for False Information with Respect to WithholdingIf you make a false
statement with no reasonable basis which results in no imposition of backup withholding, you are
subject to a penalty of $500.
(3) Criminal Penalty for Falsifying InformationWillfully falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or imprisonment.
FOR
ADDITIONAL INFORMATION, CONTACT YOUR TAX CONSULTANT.
-3-
EX-99.A.1.X
Exhibit (a)(1)(x)
Merrill Lynch Stationary
RE: Offer to Purchase Common Shares of The Scotts Miracle-Gro Company
Notice to Holders of Vested Stock Options and Freestanding Stock Appreciation Rights:
As you may already know, The Scotts Miracle-Gro Company (SMG or the Company) has recently
announced its offer to purchase up to 4,504,504 of the Companys common shares, without par value
(the Shares), at a price specified by such shareholders not less than $48.50 nor greater than
$55.50 per share, without interest, upon the terms and subject to the conditions set forth in the
Offer to Purchase dated January 10, 2007 and in the related Letter of Transmittal (such documents
and related materials, the Offer Documents), which together as may be amended or supplemented
from time to time constitute the tender offer (the Offer). You may obtain copies of the Offer
Documents by calling D.F. King & Co., Inc. at (800) 714-3312.
As a holder of vested stock options and/or vested freestanding stock appreciation rights under
one or more of the Companys 1996 Stock Option Plan, 2003 Stock Option and Incentive Equity Plan,
and 2006 Long-Term Incentive Plan, you may wish to exercise any or all of your options and/or
freestanding stock appreciation rights that are vested on or before Thursday, February 1, 2007, and
then tender the Shares so acquired to the Company pursuant to the terms of the Offer. Unless the
Offer is extended by the Company, Thursday, February 1, 2007, is the last day that you may exercise
your vested options and/or freestanding stock appreciation rights in order to tender the Shares
subject to such options and/or freestanding stock appreciation rights in the Offer. To obtain
information pertaining to your exercisable awards, including the grant and expiration dates,
exercise price, and the number of options and/or freestanding stock appreciation rights from each
grant that are exercisable as of Thursday, February 1, 2007, you will need to go to our website.
Please follow the instructions set forth below to access our website and determine the number of
vested options and/or freestanding stock appreciation rights that you may elect to exercise at this
time:
Step 1: Connect to the Internet
Step 2: Log on to www.bol.ml.com
Step 3: Enter
You will need your User ID and Password. If you need assistance with accessing the website or
resetting your Password, please call (866) 820-1492. Note that your vested options and/or
freestanding stock appreciation rights will be designated as vested quantity under your Grant
Summary Balance on the website.
It should be noted that the tender offer does not change your right to exercise your stock
options and/or freestanding stock appreciation rights, or the terms and conditions of your grants.
As a participant in the stock option program, you have the right to exercise your options to buy
Company stock or to exercise your freestanding stock appreciation rights at the grant or base price
until your grant(s) expire subject to the terms of your award agreement(s). You may continue to
utilize any of the exercise methods that are currently available to you. If you choose to exercise
options using the Cashless Sell method (where you exercise your options
to buy and simultaneously sell your Shares for cash) you will not become an owner of
Company Shares. This means that you will not be able to tender those Shares into the
tender offer. However, if you choose to exercise your options using the Exercise and Hold or the
Combination Exercise (exercise and sell enough Shares to cover the cost of exercise and taxes,
holding the remaining Shares) methods, you will become an owner of Company Shares, and therefore,
you may choose to tender some or all of your Shares.
You will need to carefully evaluate the Offer Documents, which you may obtain by calling D.F.
King & Co., Inc. at (800) 714-3312, to determine if participation would be advantageous to you,
based on, among other things, your vested stock option and/or freestanding stock appreciation
rights exercise or base prices, the dates your stock option and/or freestanding stock appreciation
rights awards were granted and the years you have left to exercise your grants, the range of tender
prices, and the provisions for pro rata purchases by the Company outlined in the Offer.
If you choose to exercise and are timely in doing so, you may tender your Shares pursuant to
the Offer. Note that the Company may not purchase all Shares tendered and that Shares purchased by
the Company will not participate in the anticipated special dividend discussed in the Offer
Documents. Alternatively, you may exercise your stock options and/or freestanding stock
appreciation rights and hold the resulting Shares for purposes of receiving the special dividend.
According to the Company, if you choose not to exercise your outstanding stock options and/or
freestanding stock appreciation rights, it is anticipated that they will be adjusted in a manner
that maintains essentially the same fair value for your award(s) pre- and post-dividend. The
contemplated adjustment methodology involves a decrease in the exercise or base price and an
increase in the number of Shares subject to the award to account for the effect that the special
dividend will have on the trading value of the Companys Shares on the ex-dividend date. These
adjustments will be made in accordance with Federal income tax regulations and will have no adverse
tax consequences on a grant holder. An example is enclosed to illustrate how the contemplated
adjustment works.
The Company will, upon the terms and subject to the conditions of the Offer, determine a
single per Share price (the Purchase Price), not less than $48.50 nor greater than $55.50 per
share, that it will pay for the Shares validly tendered pursuant to the Offer and not properly
withdrawn, taking into account the number of Shares so tendered and the prices specified by
tendering shareholders. The Company will select the lowest price that will allow it to purchase
4,504,504 Shares or, if a lesser number of Shares are validly tendered, such lesser number as are
validly tendered and not properly withdrawn. All shareholders whose Shares are purchased by the
Company will receive the Purchase Price for each Share purchased in the Offer.
If the Company is unable to purchase 4,504,504 Shares in the Offer, it will consider, in its
sole discretion, various other options, including, among other things, additional Share
repurchases. SMG expressly reserves the right, in its sole discretion, to purchase additional
Shares subject to applicable legal requirements.
2
Holders of vested Company stock options and/or freestanding stock appreciation rights who
exercise and tender the Shares underlying such options and/or freestanding stock appreciation
rights will have their Shares purchased by the Company on the same basis as other holders of
Shares. There can be no guarantee that all Shares acquired pursuant to an exercise of vested
options and/or freestanding stock appreciation rights, or any other method, will be purchased by
the Company. This should be considered in deciding to exercise an option or freestanding stock
appreciation rights.
We strongly encourage you to discuss the Offer with your tax, financial, or other advisors and
that you request and study the Offer Documents if you might wish to consider participating in the
tender. You may wish to refer to the general tax consequences of exercising an option or a stock
appreciation right which are described in the prospectuses relating to the Plans under which the
options were granted.
If you decide to exercise any of your vested stock options and/or freestanding stock
appreciation rights or have any questions, please contact Merrill Lynch/Edward J. Yen &
Associates at (800) 285-0648 or 614-848-3223. The Offer will expire at 12:00
midnight, New York City time, on Thursday, February 8, 2007 (the Expiration Date) unless extended
by the Company. If you intend to exercise stock options and/or freestanding stock appreciation
rights in order to tender Shares in the Offer, you must exercise your options and/or freestanding
stock appreciation rights no later than 4:00 p.m., New York City Time, Thursday, February 1, 2007,
in order to obtain Shares to tender by Thursday, February 8, 2007.
Upon the terms and subject to the conditions of the Offer, if more than 4,504,504 Shares, or
such greater number of Shares as the Company may elect to purchase subject to applicable law, have
been validly tendered and not properly withdrawn prior to the Expiration Date, at prices at or
below the purchase price, the Company will purchase Shares on the following basis:
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first, all Shares properly tendered before the Expiration Date from all holders
of an aggregate of fewer than 100 Shares (odd lots) who (1) tender all Shares owned
beneficially or of record at a price at or below the Purchase Price (partial tenders
will not qualify for this preference), and (2) complete the section entitled Odd Lots
in the Letter of Transmittal and, if applicable, in the Notice of Guaranteed Delivery; |
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second, subject to the conditional tender provisions described in the Offer to
Purchase, all other Shares properly tendered at or below the Purchase Price, on a pro
rata basis; and |
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third, only if necessary to permit the Company to purchase 4,504,504 Shares, or
such greater number of Shares as the Company may elect to purchase subject to
applicable law, Shares conditionally tendered (for which the condition was not
initially satisfied) before the Expiration Date, will, to the extent feasible, be
selected for purchase by random lot. To be eligible for purchase by random lot,
shareholders whose Shares are conditionally tendered must have properly tendered all of
their Shares. |
3
The Offer is not being made to, nor will tenders be accepted from, or on behalf of, holders of
Shares in any jurisdiction in which the making or acceptance thereof would not be in compliance
with the laws of such jurisdiction. In those jurisdictions whose laws require that the Offer be
made by a licensed broker or dealer, the Offer shall be deemed to be made on behalf of the Company
by Banc of America Securities LLC, the Dealer Manager for the Offer, or one or more registered
brokers or dealers licensed under the laws of such jurisdiction.
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Merrill Lynch
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By: |
Edward J. Yen /s/
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Enclosure
4
The Scotts Miracle-Gro Company
Special One-Time Dividend Adjustment Example*
As an illustration, assume SMG declares a $7 per share special dividend when its stock is
trading at $52 per share. On the ex-dividend date its stock then starts to trade for $45 per
share ($45 per share plus $7 in cash equals $52 per share in total value). Assume you hold
outstanding options or free standing stock appreciation rights (SARs) for 1,000 shares at an
exercise/base price of $30. The following example reflects how the contemplated adjustment would be
made to maintain essentially the same intrinsic value of options and SARs both before and after the
ex-dividend date.
Starting Assumptions:
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Stock price immediately prior to ex-dividend date |
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$52 |
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Special one-time dividend |
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$7 |
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Options or SARs outstanding |
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1,000 |
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Exercise/base price |
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$30 |
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Intrinsic value prior to dividend |
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$22,000 |
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($52 minus $30 times 1,000) |
Step 1: Adjust Exercise/Base Price:
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Initial ratio of exercise/base price to market value |
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57.69% |
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($30 divided by $52) |
Post dividend stock price |
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$45.00 |
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New exercise/base price |
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$25.96 |
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(57.69 % of $45) |
Intrinsic value based on adjustment [A] |
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$19,040 |
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($45 minus $25.96 times 1,000) |
Step 2: Increase In Shares Subject To Grant:
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Pre-/post-dividend market value ratio |
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1.155 |
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($52 is divided by $45) |
Grant adjustment increase |
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155 shares |
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(1,000 options times 15.5%) |
Intrinsic value of increased shares [B] |
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$2,960** |
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(155 times $19.04 [$45 minus $25.96]) |
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Intrinsic value post ex-dividend [A+B] |
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$22,000 |
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($19,040 plus $2,960) |
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* Note that the above example reflects the
methodology which has been approved by the Compensation and Organization
Committee (the COC) of the Board of Directors of The Scotts
Miracle-Gro Company (SMG). Any adjustment of unexercised options
or freestanding stock appreciation rights is subject to the declaration of the
special dividend by SMGs Board of Directors and the final approval of
the adjustment by the COC. |
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** Rounded. To assure tax and accounting
compliance, in making the actual adjustments, exercise and base prices are
generally rounded up to the next whole cent and share numbers are generally
rounded down to the next whole share. |
EX-99.A.1.XI
Exhibit (a)(1)(xi)
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TO:
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SMG Option and Freestanding Stock Appreciation Rights Holders |
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FROM:
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Merrill Lynch |
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RE:
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SMGs Dutch Auction Tender Offer- Immediate Attention Required |
On December 12th, The Scotts Miracle-Gro Company (SMG) announced plans to return $750
million to shareholders through a modified Dutch auction tender offer and a special cash
dividend. The Dutch auction tender offer was commenced on January 10th. The special
dividend is expected to be declared in February. To participate in the Dutch auction tender offer,
you will need to exercise your vested options and/or freestanding stock appreciation rights on or
before February 1, 2007. To receive the dividend, assuming it is declared and paid as anticipated,
you will have to exercise your vested options and/or freestanding stock appreciation rights at
least seven days prior to the announced record date. The actual date will depend on when and if
the contemplated dividend is declared. It is contemplated that there will be about 10 calendar
days from the declaration date to the record date. You should watch for SMGs announcement of
these dates.
Such action may or may not be beneficial to you. In the near future you should receive a letter
from us providing more information regarding the action you must take, if you wish to exercise
options and/or freestanding stock appreciation rights. Please call Merrill Lynch at (800) 285-0648
if you have questions regarding exercise procedures or D.F. King & Co., Inc. at (800) 714-3312 to
obtain copies of the materials pertaining to the tender offer.
This email is intended only to give you advance notice of the letter you should receive shortly and
the relatively short time frame within which you will have to act. It is not a recommendation to
either exercise your vested options and/or freestanding stock appreciation rights or participate in
the tender.
EX-99.A.1.XIII
Exhibit (a)(1)(xiii)
ScottsMiracle-Gro launches tender offer to purchase SMG shares;
Eligible associates will receive information on how to participate
This morning, ScottsMiracle-Gro announced the commencement of a modified Dutch auction tender
offer to repurchase up to $250 million of its common shares of stock. Until 12 midnight, New York
City time, on February 8, 2007, shareholders including those associates who own eligible shares
will be able to tender to sell their shares in a price range of $48.50 and $55.50.
Associates who own eligible shares in various benefit plans will receive a packet in the mail
called an Offer to Purchase from the administrator of the respective benefit plan (Fidelity for
the 401(k) and Computershare for the Discounted Stock Purchase Plan) instructing you on how to
participate in the tender, if you so choose. There is no requirement to tender your shares.
If you wish to continue owning your shares, there is no need to do anything when you receive the
mailing.
Please note that only associates who own eligible shares of ScottsMiracle-Gro in either their
401(k) or through the Discounted Stock Purchase Plan will be receiving the Offer to Purchase
packet with the exception of those associates who may own shares through a personal investment
account. Associates who have vested stock options will receive communications from Merrill Lynch
about how to participate in the tender offer if you choose to do so.
As you may recall, the Company also announced last month that it intends to pay a special one-time
cash dividend. Assuming the Board declares the dividend as anticipated, the dividend would most
likely occur in late February and the amount of the dividend would is likely be in the range
between $7 and $8 per share, depending on the results of the tender offer, the Boards
deliberations and other factors. Any shares tendered during the Dutch auction tender offer will be
purchased by the Company prior to the payment of any special dividend. Therefore they will not be
eligible for such special dividend.
It is important to note that the Company cannot provide advice on whether associates should
tender their shares. Managers should likewise refrain from providing counsel to their
associates. If you have questions about whether to participate in the tender offer, the Company
urges you to contact your financial, tax or other advisor. Associates with broad financial planning
questions unrelated to the tender offer can use the Ernst & Young Financial Planner Line by calling
888-839-2626.
ScottsMiracle-Gro has retained D.F. King & Co. as the information agent for the tender offer. If
associates have questions about how to participate in the tender offer, or do not receive
information about the offer in the mail, you should call 800-714-3312 Please do not call Human
Resources, Investor Relations or any other internal resource as these departments will be unable to
answer your questions.
In a separate communication from Chief Financial Officer Dave Evans, the Company has provided
associates with a brief update on its current business forecast and long-term financial goals. To
learn more about how the Company views its future results, associates also can access the Companys
Investor Relations website by visiting http://investor.scotts.com.
********
This e-mail correspondence is for informational purposes only and is not an offer to buy, or the
solicitation of an offer to sell, any shares. The full details of the tender offer, including
complete instructions on how to tender shares, are included in the Offer to Purchase, the Letter of
Transmittal and related materials (including the materials provided by Fidelity, Computershare
and/or Merrill Lynch), which are expected to be mailed to shareholders promptly. You should read
carefully the Offer to Purchase, the Letter of Transmittal and such other related materials when
they are available because they will contain important information. Associates who are shareholders
may obtain free copies of the Offer to Purchase and other related materials that has been or will
be filed by the company with the Securities and Exchange Commission at the Commissions website at
www.sec.gov. Associates who are shareholders also may obtain a copy of these documents, free of
charge, from D.F. King & Co. by calling 800-714-3312. All shareholders are urged to read carefully
those materials prior to making any decisions with respect to the tender offer.
EX-99.A.5.II
Exhibit(a)(5)(ii)
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The Scotts Miracle-Gro Company
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NEWS |
ScottsMiracle-Gro Commences Modified Dutch Auction Tender to Purchase
up to 4.5 million Shares in a Price Range of $48.50 to $55.50 per Share
MARYSVILLE, Ohio (January 10, 2007) The Scotts Miracle-Gro Company (NYSE: SMG), the worlds
leading marketer of branded consumer lawn and garden products, today announced it is commencing its
previously announced modified Dutch auction tender offer to purchase its outstanding common
shares. In the tender offer, the Company intends to purchase up to 4.5 million shares which
represents approximately 7 percent of the shares outstanding in a price range of $48.50 to
$55.50 per share.
The tender offer will expire, unless extended by ScottsMiracle-Gro, at 12:00 midnight, New York
City time, on February 8, 2007.
The high end of the per share price range represents a maximum aggregate repurchase of $250
million. It also reflects a premium of approximately 9 percent relative to the closing price of
$50.83 on December 11, 2006, the day immediately prior to the Companys announcement of its
intention to return $750 million of cash to shareholders through the combination of the tender
offer and a one-time special cash dividend. The balance of the Companys $750 million commitment is
expected to be paid to remaining shareholders as a dividend no later than March 31, 2007.
The tender offer and dividend will be funded through a new $2.1 billion credit facility that is
being underwritten by JP Morgan, Bank of America and Citigroup. Consummation of the tender offer is
conditioned upon the Companys ability to borrow sufficient funds under this new credit facility on
terms and conditions satisfactory to the Company. In a separate release issued today,
ScottsMiracle-Gro also announced a tender offer and consent solicitation related to the Companys
outstanding $200 million aggregate principal amount for its 6.625% senior subordinated notes due
2013.
The ongoing strength of our business and non-cyclical nature of our cash flow are allowing us to
adopt a new capital structure that gives us the flexibility to continue funding growth while also
returning significant cash to shareholders, said Jim Hagedorn, chairman and chief executive
officer. We believe this tender offer reflects a high level of confidence in our continued success
and an ongoing commitment to enhance shareholder value.
A modified Dutch auction tender offer will allow shareholders to indicate how many shares and at
what price within the Companys specified range they wish to tender. Based on the number of shares
tendered and the price specified by the tendering shareholders, the Company will determine the
lowest price per share within the range that will enable it to purchase up to 4.5 million shares,
or such lesser number of shares as are properly tendered. The Company also reserves the right in
the tender offer to purchase up to an additional 2 percent of its shares outstanding. Tender offer
materials will be distributed promptly to shareholders and filed with the Securities and Exchange
Commission.
1
Bank of America Securities LLC will serve as the dealer manager for the tender offer. D.F. King &
Co., Inc. will serve as information agent, and National City Bank will serve as the depositary in
the tender offer.
Tender offer statement
This press release is for informational purposes only and is not an offer to buy, or the
solicitation of an offer to sell, any shares. The full details of the tender offer, including
complete instructions on how to tender shares, will be included in the offer to purchase, the
letter of transmittal and related materials, which are expected to be mailed to shareholders
promptly. Shareholders should read carefully the offer to purchase, the letter of transmittal and
other related materials when they are available because they will contain important information.
Shareholders may obtain free copies, when available, of the offer to purchase and other related
materials that will be filed by the company with the Securities and Exchange Commission at the
Commissions website at www.sec.gov. When available, shareholders also may obtain a copy of these
documents, free of charge, from D.F. King & Co., Inc., the Companys information agent in
connection with the offer, by calling toll-free 800-714-3312 (bankers and brokers can call collect
at 212-269-5550). Shareholders are urged to read carefully those materials when they become
available prior to making any decisions with respect to the tender offer.
About ScottsMiracle-Gro
With $2.7 billion in worldwide sales and more than 6,000 associates, The Scotts Miracle-Gro
Company, through its wholly-owned subsidiary, The Scotts Company LLC, is the worlds largest
marketer of branded consumer products for lawn and garden care, with products for professional
horticulture as well. The Companys brands are the most recognized in the industry. In the U.S.,
the Companys Scotts®, Miracle-Gro® and Ortho® brands are market-leading in their categories, as is
the consumer Roundup® brand, which is marketed in North America and most of Europe exclusively by
Scotts and owned by Monsanto. The Company also owns Smith & Hawken, a leading brand of
garden-inspired products that includes pottery, watering equipment, gardening tools, outdoor
furniture and live goods. In Europe, the Companys brands include Weedol®, Pathclear®, Evergreen®,
Levington®, Miracle-Gro®, KB®, Fertiligene® and Substral®. For additional information, visit us at
www.scotts.com.
Statement under the Private Securities Litigation Act of 1995: Certain of the statements
contained in this press release, including, but not limited to, information regarding the future
economic performance and financial condition of the company, the plans and objectives of the
companys management, and the companys assumptions regarding such performance and plans are
forward looking in nature. Actual results could differ materially from the forward-looking
information in this release, due to a variety of factors, including, but not limited to:
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Adverse weather conditions could adversely affect our sales and financial results; |
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Our historical seasonality could impair our ability to pay obligations as they come due
and operating expenses; |
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Our substantial indebtedness could adversely affect our financial health; |
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Public perceptions regarding the safety of our products could adversely affect us; |
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The loss of one or more of our top customers could adversely affect our financial
results because of the concentration of our sales to a small number of retail customers; |
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The expiration of certain patents could substantially increase our competition in the
United States; |
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Compliance with environmental and other public health regulations could increase our
cost of doing business; and |
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Our significant international operations make us more susceptible to fluctuations in
currency exchange rates and to the costs of international regulation. |
Additional detailed information concerning a number of the important factors that could cause
actual results to differ materially from the forward looking information contained in this release
is readily available in the Companys publicly filed quarterly, annual and other reports.
Contact:
Jim King
Vice President
Investor Relations & Corporate Communications
937-578-5622
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EX-99.A.5.III
Exhibit(a)(5)(iii)
This announcement is neither an offer to purchase nor a solicitation of an offer to sell shares of The Scotts Miracle-Gro Company.
The tender offer as defined below is made solely by the Offer to Purchase dated January 10, 2007 and the related Letter of Transmittal,
and any amendments or supplements thereto. The tender offer is not being made to, nor will tenders be accepted from or on behalf
of, holders of shares in any jurisdiction in which the making or acceptance of offers would not be in compliance with the laws
of that jurisdiction. In any jurisdictions where the laws require that the tender offer be made by a licensed broker or dealer,
the tender offer shall be deemed to be made on behalf of SMG by Banc of America Securities LLC, the Dealer Manager
for this tender offer, or one or more registered broker dealers licensed under the laws of that jurisdiction.
Notice of Offer to Purchase for Cash
by
Up to 4,504,504 of its Common Shares
At a Per Share Purchase Price of Not Less Than $48.50
Nor Greater Than $55.50 Per Share
The Scotts Miracle-Gro Company, an Ohio corporation (SMG), invites its shareholders to
tender up to 4,504,504 of its common shares, without par value, for purchase by SMG at a price of
not less than $48.50 nor greater than $55.50 per share (in increments of $0.50), net to the seller
in cash, less any applicable withholding taxes and without interest. The offer is subject to the
terms and conditions set forth in the Offer to Purchase dated January 10, 2007 and in the related
Letter of Transmittal (which together, as they may be amended or supplemented from time to time,
constitute the tender offer).
The tender offer is not conditioned on any minimum number of shares being tendered. The tender
offer is, however, subject to other important conditions, including the receipt of financing, as
described in the Offer to Purchase.
THE TENDER OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON THURSDAY, FEBRUARY 8, 2007, UNLESS THE TENDER OFFER IS EXTENDED.
The Board of Directors of SMG has approved the tender offer. However, neither SMG nor its
Board nor the Dealer Manager, the Information Agent nor the Depositary makes any recommendation to
shareholders as to whether to tender or refrain from tendering their shares or as to the purchase
price or purchase prices at which they may choose to tender them. SMG has not authorized any person
to make any recommendation with respect to the tender offer. Shareholders must make their own
decisions as to whether to tender their shares and, if so, how many shares to tender and the price
or prices at which they will tender them. In doing so, shareholders should consider SMGs reasons
for making the tender offer.
SMGs directors and executive officers, and SMGs largest shareholder, Hagedorn Partnership,
L.P., of which James Hagedorn, SMGs Chairman and Chief Executive Officer, and Katherine Hagedorn
Littlefield, one of SMGs directors, are partners, have advised SMG that they do not intend to
tender any shares owned by them in the tender offer.
Upon the terms and subject to the conditions of the tender offer, SMG will select the lowest
price that will enable it to buy 4,504,504 shares or, if a lesser number of shares are validly
tendered, all shares that are validly tendered and not validly withdrawn. All shares acquired in
the tender offer will be acquired at the same purchase price regardless of whether a shareholder
tenders any shares at a lower price. SMG will purchase all shares validly tendered and not validly
withdrawn prior to the Expiration Time (as defined below) at the purchase price, upon the terms and
subject to the conditions of the tender offer, including the odd lot, proration and conditional
tender provisions, as described in the Offer to Purchase.
Under no circumstances will SMG pay interest on the purchase price, including but not limited
to, by reason of any delay in making payment. The term Expiration Time means 12:00 midnight, New
York City time, on Thursday, February 8, 2007, unless and until SMG has extended the period of time
during which the tender offer will remain open, in which event the term Expiration Time shall
refer to the latest time and date at which the tender offer, as so extended by SMG, shall expire.
Subject to applicable SEC regulations, SMG reserves the right, in its sole discretion, to change
the terms of the tender offer, including, but not limited to, purchasing more or less than
4,504,504 shares in the tender offer.
For purposes of the tender offer, SMG will be deemed to have accepted for payment (and
therefore purchased), subject to the odd lot priority, proration and conditional tender
provisions of the tender offer, shares that are validly tendered at or below the purchase price and
not validly withdrawn only when, as and if SMG gives oral or written notice to National City Bank,
the Depositary for the tender offer, of its acceptance of such shares for payment pursuant to the
tender offer. SMG will pay for shares tendered and accepted for payment in the tender offer only
after timely receipt by the Depositary of certificates for such shares or of timely confirmation of
a book-entry transfer of such shares into the Depositarys account at the book-entry transfer
facility (as defined in the Offer to Purchase), a properly completed and duly executed Letter of
Transmittal or a manually signed facsimile thereof or in the case of a book-entry transfer, an
agents message (as defined in the Offer to Purchase), and any other documents required by the
Letter of Transmittal.
Upon the terms and subject to the conditions of the tender offer, if more than 4,504,504
shares have been validly tendered and not validly withdrawn at or prior to the Expiration Time, SMG
will purchase shares in the following order of priority:
first, all such shares owned beneficially or of record by an Odd Lot Holder (as
defined in the Offer to Purchase) who validly tenders all of such shares at or below the purchase
price (partial tenders will not qualify for this preference) and completes, or whose broker,
dealer, commercial bank, trust company or other nominee completes, the box captioned Odd Lots in
the Letter of Transmittal and, if applicable, in the Notice of Guaranteed Delivery;
second, after purchase of all of the foregoing shares, all other shares tendered at or
below the purchase price on a pro rata basis, if necessary (except for shareholders who tendered
their shares conditionally and for which the condition was not satisfied); and
third, if necessary to permit SMG to purchase 4,504,504 shares (or such greater number
of shares as SMG may elect to purchase), shares conditionally tendered at or below the purchase
price for which the condition was not initially satisfied, to the extent feasible, by random lot.
SMG will return all tendered shares that it has not purchased promptly after the Expiration
Time.
SMG expressly reserves the right, in its sole discretion, at any time and from time to time,
to extend the period of time during which the tender offer is open and thereby delay acceptance for
payment of, and payment for, any shares by giving oral or written notice of such extension to the
Depositary and making a public announcement of such extension. SMG also expressly reserves the
right, in its sole discretion, to terminate the tender offer and not accept for payment or pay for
any shares not theretofore accepted for payment or paid for, or, subject to applicable law, to
postpone payment for shares upon the occurrence of any of the conditions specified in the Offer to
Purchase by giving oral or written notice of such termination or postponement to the Depositary and
making a public announcement of such termination or postponement.
SMG believes that the repurchase of shares, together with the special dividend that SMG has
previously disclosed (which is currently estimated to be $500 million), is consistent with its
long-term goal of maximizing shareholder value. In considering the tender offer, SMGs management
and Board reviewed, with the assistance of outside advisors, a variety of alternatives for using
its available financial resources. Based on this review and evaluation, SMGs management and Board
believe that the tender offer is a prudent use of SMGs financial resources.
Generally, shareholders will be subject to U.S. federal income taxation and applicable
withholding when they receive cash from SMG in exchange for the shares they tender in the tender
offer. SMG recommends that shareholders consult with their tax advisors with respect to their
particular situation.
Tenders of shares are irrevocable, except that shareholders may withdraw any shares they have
tendered at any time before the Expiration Time. If SMG has not accepted for payment the shares
that have been tendered to it, shareholders may also withdraw their shares after 12:00 midnight,
New York City time, on Friday, March 9, 2007. To withdraw shares, shareholders must deliver a
written notice of withdrawal with the required information to the Depositary while shareholders
still have the right to withdraw their shares.
If certificates for shares have been delivered or otherwise identified to the Depositary,
then, prior to the physical release of those certificates, the serial numbers shown on those
certificates must be submitted to the Depositary and, unless an eligible institution (as defined
in the Offer to Purchase) has tendered those shares, an eligible institution must guarantee the
signatures on the notice of withdrawal. If shares have been delivered in accordance with the
procedures for book-entry transfer described in the Offer to Purchase, any notice of withdrawal
must also specify the name and number of the account at the book-entry transfer facility to be
credited with the withdrawn shares and otherwise comply with the book-entry transfer facilitys
procedures.
SMG will decide, in its sole discretion, all questions as to the form and validity of notices
of withdrawal, and each such decision will be final and binding. None of SMG, the Dealer Manager,
the Depositary, the Information Agent or any other person will be under any duty to give
notification of any defects or irregularities in any notice of withdrawal or incur any liability
for failure to give any such notification.
The information required to be disclosed by Rule 13e-4(d)(1) under the Securities Exchange Act
of 1934, as amended, is contained in the Offer to Purchase and is incorporated herein by reference.
The Offer to Purchase and the Letter of Transmittal contain important information that shareholders
should read carefully before they make any decision with respect to the tender offer.
The Offer to Purchase and the related Letter of Transmittal will be mailed to record holders
of shares and will be furnished to brokers, dealers, commercial banks and trust companies
(including the trustee or administrator of The Scotts Company LLC Retirement Savings Plan, the
Smith & Hawken 401(k) Plan and The Scotts Miracle-Gro Company Discounted Stock Purchase Plan) and
similar persons whose names, or the names of whose nominees, appear on SMGs shareholder list or,
if applicable, who are listed as participants in a clearing agencys security position listing for
subsequent transmittal to beneficial owners of shares.
The Offer to Purchase and the related Letter of Transmittal contain important information that
shareholders should read carefully before they make any decision with respect to the tender offer.
Shareholders may obtain additional copies of the Offer to Purchase, Letter of
Transmittal and Notice of Guaranteed Delivery from the Information Agent at the address and
telephone number set forth below. The Information Agent will promptly furnish to shareholders
additional copies of these materials at SMGs expense.
Please direct any questions or requests for assistance to the Information Agent or the Dealer
Manager at their respective telephone numbers and addresses set forth below. Shareholders may also
contact their broker, dealer, commercial bank, trust company or nominee for assistance concerning
the tender offer. To confirm delivery of shares, please contact the Depositary.
The Information Agent for the tender offer is:
D.F. King & Co., Inc.
48 Wall Street
New York, New York 10005
Bankers & Brokers Call Collect: 212-269-5550
All Others Call Toll-Free: 800-714-3312
The Dealer Manager for the tender offer is:
Banc of America Securities LLC
9 West 57th Street
New York, New York 10019
(212) 583-8502 (Call Collect)
(888) 583-8900, ext. 8502 (Call Toll Free)
January 10, 2007
EX-99.B.I
Exhibit (b)(1)
EXECUTION COPY
December 11, 2006
The Scotts Miracle-Gro Company
Senior Secured Credit Facilities
Commitment Letter
The Scotts Miracle-Gro Company
14111 Scottslawn Road
Marysville, Ohio 43041
Attention: David C. Evans
Chief Financial Officer
Ladies and Gentlemen:
You (the Borrower) have advised JPMorgan Chase Bank, N.A. (JPMorgan Chase
Bank), J.P. Morgan Securities Inc. (JPMorgan), Bank of America, N.A.
(BANA), Banc of America Securities LLC (BAS), Citigroup Global Markets Inc.
(CGMI) and Citigroup (as defined below and together with JPMorgan Chase Bank, JPMorgan,
BANA, BAS and CGMI, the Commitment Parties) that you wish to enter into the transactions
described in the introductory paragraph of the Summary of Terms and Conditions attached hereto as
Exhibit A (the Term Sheet). Capitalized terms used but not defined herein are used with
the meanings assigned to them in said paragraph. For the purposes of this commitment letter (the
Commitment Letter), Citigroup shall mean CGMI, Citibank, N.A., Citicorp USA, Inc.,
Citicorp North America, Inc. and/or any of their affiliates as may be appropriate to consummate the
transactions contemplated herein.
Each of JPMorgan and BAS are pleased to advise you that it is willing to act as a joint lead
arranger for the Credit Facilities and each of JPMorgan, BAS and CGMI are pleased to advise you
that it is willing to act as a joint bookrunner for the Credit Facilities.
Furthermore, (i) JPMorgan Chase Bank is pleased to advise you of its commitment to provide
$945,000,000 of the Credit Facilities, (ii) BANA is pleased to advise you of its commitment to
provide $840,000,000 of the Credit Facilities and (iii) CGMI, on behalf of
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Citigroup, is pleased to advise you of its commitment to provide $315,000,000 of the Credit
Facilities.
It is agreed that JPMorgan Chase Bank will act as the sole and exclusive administrative agent
under the Credit Facilities, that BANA will act as the sole and exclusive syndication agent under
the Credit Facilities, that JPMorgan and BAS will act as joint lead arrangers (in such capacity,
the (Lead Arrangers) for the Credit Facilities, that CGMI will act as a co-arranger for
the Credit Facilities (in such capacity, the Co-Arranger; and together with the Lead
Arrangers, the Arrangers) and JPMorgan, BAS and CGMI will act as joint bookrunners for
the Credit Facilities, and each will, in such capacities, perform the duties and exercise the
authority customarily performed and exercised by it in such roles. You agree that no other agents,
co-agents or arrangers will be appointed, no other titles will be awarded and no compensation
(other than expressly contemplated by the Term Sheet and the Fee Letters referred to below) will be
paid in connection with the Credit Facilities unless you and we shall so agree.
We intend to syndicate the Credit Facilities to a group of financial institutions which may
include lenders under the Existing Credit Agreement (the Existing Lenders) as well as
entities that are not now parties to the Existing Credit Agreement (the New Lenders; the
New Lenders and the Existing Lenders, collectively, the Lenders) identified by us in
consultation with you. The Arrangers intend to commence syndication efforts promptly, and you
agree actively to assist us in completing a syndication satisfactory to you and the Arrangers.
Such assistance shall include (a) your using commercially reasonable efforts to ensure that the
syndication efforts benefit materially from your existing lending relationships, (b) direct contact
between senior management and advisors of the Borrower and the proposed Lenders, (c) as set forth
in the next paragraph, your assistance in the preparation of materials to be used in connection
with the syndication (collectively, with the Term Sheet, the Information Materials) and
(d) the hosting, with JPMorgan, of one or more meetings of prospective Lenders.
You will assist us in preparing Information Materials, including Confidential Information
Memoranda, for distribution, after approval by you, to prospective Lenders. If requested, you also
will assist us in preparing an additional version of the Information Materials (the
Public-Side Version) to be used, after approval by you, by prospective Lenders
public-side employees and representatives (Public-Siders) who do not wish to receive
material non-public information (within the meaning of United States federal securities laws) with
respect to the Borrower, its affiliates and any of their respective securities (MNPI) and
who may be engaged in investment and other market related activities with respect to any such
entitys securities or loans. Before distribution of any Information Materials, you agree to
execute and deliver to us, in form satisfactory to you, (i) a letter in which you authorize
distribution of the Information Materials to a prospective Lenders employees willing to receive
MNPI (Private-Siders) and (ii) a separate letter in which you authorize distribution of
the Public-Side Version to Public-Siders and represent that no MNPI is contained therein.
The Borrower agrees that the following documents may be distributed to both Private-Siders and
Public-Siders, unless the Borrower advises the Arrangers in writing (including by email) within a
reasonable time prior to their intended distribution that such materials should only be distributed
to Private-Siders: (a) administrative materials prepared by the Commitment Parties for prospective
Lenders (such as a lender meeting invitation, lender allocation, if any, and
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funding and closing memoranda), (b) notification of changes in the terms of the Credit
Facilities which have been approved by you and (c) other materials approved by you intended for
prospective Lenders after the initial distribution of Information Materials. If you advise us that
any of the foregoing should be distributed only to Private-Siders, then Public-Siders will not
receive such materials without your consent.
The Borrower hereby authorizes the Commitment Parties to distribute, after your review and
approval, drafts of definitive documentation with respect to the Credit Facilities to
Private-Siders and Public-Siders.
The Arrangers will, in consultation with you, manage all aspects of the syndication, including
decisions as to the selection of institutions to be approached to be New Lenders and when they will
be approached, when their commitments will be accepted, which institutions will participate, the
allocations of the commitments among the Lenders and the amount and distribution of fees among the
Lenders. In acting in their capacity as such, the Arrangers will have no responsibility other than
to arrange the syndication and consent process and to perform the other duties typically performed
by arrangers in similar transactions. To assist the Arrangers in their syndication efforts, you
agree promptly to prepare and provide to the Commitment Parties all information with respect to the
Borrower and the transactions contemplated hereby, including all financial information and
projections (the Projections), as we may reasonably request in connection with the
arrangement and syndication of the Credit Facilities. You hereby represent and covenant that, to
the best of your knowledge or belief, (a) all information other than the Projections (the
Information) that has been or will be made available to the Commitment Parties by you or
any of your representatives, taken as a whole, is or will be, when furnished, complete and correct
in all material respects and does not or will not, when furnished, contain any untrue statement of
a material fact or omit to state a material fact necessary in order to make the statements
contained therein not materially misleading in light of the circumstances under which such
statements are made and (b) the Projections that have been or will be made available to the
Commitment Parties by you or any of your representatives have been or will be prepared in good
faith based upon reasonable assumptions, provided however, it is understood that the Projections
are not guarantees of future performance and involve risks, uncertainties, and assumptions and that
the actual results of the future events described in the Projections could differ materially from
those stated in the Projections. You understand that in arranging and syndicating the Credit
Facilities we may use and rely on the Information and Projections without independent verification
thereof.
The commitments hereunder and the agreements to perform the services described herein are
subject to (a) there not occurring or becoming known to us any material adverse condition or
material adverse change in or affecting the business, operations, property, or condition (financial
or otherwise) of the Borrower and its subsidiaries, taken as a whole as determined in our
commercially reasonable judgment since July 1, 2006, (b) our not becoming aware after the date
hereof of any information or other matter (including any matter relating to financial models and
underlying assumptions relating to the Projections) affecting the Borrower or the transactions
contemplated hereby that in our commercially reasonable judgment is inconsistent in a material and
adverse manner, taken as a whole, with any such information or other matter disclosed to us by you
or any of your representatives prior to the date hereof in connection with this commitment, (c) our
satisfaction that prior to and during the syndication of
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the Credit Facilities there shall be no competing offering, placement or arrangement of any
debt securities or bank financing by or on behalf of the Borrower or any affiliate thereof with
respect to the transactions described in the Term Sheet, (d) the negotiation, execution and
delivery on or before February 28, 2007 of a definitive credit agreement and related documentation
with respect to the Credit Facilities consistent with the terms hereof and in the Term Sheet, and
(e) the other conditions set forth in the Term Sheet. The terms of the definitive credit agreement
and related documentation (including any matters that are not specifically covered by the
provisions hereof and the Term Sheet) shall be such that they do not impair the availability of the
Credit Facilities on the Closing Date if the conditions hereof and in the Term Sheet are satisfied.
As consideration for the commitments hereunder and the agreements to perform the services
described herein, you agree to pay to the Commitment Parties the nonrefundable fees set forth in
the fee letters dated as of the date hereof and delivered herewith (the Fee Letters).
You agree (a) to indemnify and hold harmless the Commitment Parties, their affiliates and
their respective officers, directors, employees, advisors, and agents (each, an indemnified
person) from and against any and all losses, claims, damages and liabilities to which any such
indemnified person may become subject arising out of or in connection with this Commitment Letter,
the Credit Facilities, the use of the proceeds thereof, the Transaction or any related transaction
or any claim, litigation, investigation or proceeding relating to any of the foregoing, regardless
of whether any indemnified person is a party thereto, and to reimburse each indemnified person
upon demand for any reasonable legal or other expenses incurred in connection with investigating or
defending any of the foregoing, provided that the foregoing indemnity will not, as to any
indemnified person, apply to losses, claims, damages, liabilities or related expenses to the extent
they arise from the willful misconduct or gross negligence of such indemnified person or the
failure of a Commitment Party to honor its commitment to fund hereunder, and (b) to reimburse the
Commitment Parties and their affiliates on demand for all reasonable out-of-pocket expenses
(including due diligence expenses, syndication expenses, travel expenses, and reasonable fees,
charges and disbursements of one counsel for all such Commitment Parties) incurred in connection
with the Credit Facilities and any related documentation (including this Commitment Letter, the
Term Sheet, the Fee Letters and the definitive financing documentation) or the administration,
amendment, modification or waiver thereof, all to the extent evidenced by written supporting
documentation. No indemnified person shall be liable for any damages arising from the use by
unauthorized persons of Information or other materials sent through electronic, telecommunications
or other information transmission systems that are intercepted by such persons, except to the
extent arising from the willful misconduct or gross negligence of such indemnified person, or for
any special, indirect, consequential or punitive damages in connection with the Credit Facilities.
You acknowledge that the Commitment Parties and their respective affiliates (the term
Commitment Parties as used below in this paragraph being understood to include such affiliates)
may be providing debt financing, equity capital or other services (including financial advisory
services) to other companies in respect of which you may have conflicting interests regarding the
transactions described herein and otherwise. The Commitment Parties will not use confidential
information obtained from you, your agents or representatives by virtue of the transactions
contemplated by this Commitment Letter or its other relationships with you in
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connection with the performance by the Commitment Parties of services for other companies, and
the Commitment Parties will not furnish any such information to other companies. You also
acknowledge that the Commitment Parties have no obligation to use in connection with the
transactions contemplated by this Commitment Letter, or to furnish to you, confidential information
obtained from other companies.
This Commitment Letter shall not be assignable by any of the parties hereto without the prior
written consent of the other parties hereto (and any purported assignment without such consent
shall be null and void), is intended to be solely for the benefit of the parties hereto and is not
intended to confer any benefits upon, or create any rights in favor of, any person other than the
parties hereto and the indemnified persons. This Commitment Letter may not be amended or waived
except by an instrument in writing signed by you and each of the Commitment Parties. This
Commitment Letter may be executed in any number of counterparts, each of which shall be an
original, and all of which, when taken together, shall constitute one agreement. Delivery of an
executed signature page of this Commitment Letter by facsimile transmission shall be effective as
delivery of a manually executed counterpart hereof. This Commitment Letter and the Fee Letters are
the only agreements that have been entered into among us with respect to the Credit Facilities and
set forth the entire understanding of the parties with respect thereto. This Commitment Letter
shall be governed by, and construed in accordance with, the laws of the State of New York.
This Commitment Letter is delivered to you on the understanding that neither this Commitment
Letter, the Term Sheet or the Fee Letters nor any of their terms or substance shall be disclosed,
directly or indirectly, to any other person except (a) to your officers, directors, agents and
advisors and other parties (including ratings agencies) who are directly involved in the
consideration of the Refinancing, (b) as may be compelled in a judicial or administrative
proceeding or as otherwise required by law (in which case you agree to inform us promptly thereof)
and (c) after acceptance of this Commitment Letter by you, to any other person (including by filing
a public record) (except that the Fee Letters and the terms and substance thereof shall not be
disclosed except as required by law and then only after discussion with us).
Each of the Commitment Parties hereby notifies you that, pursuant to the requirements of the
USA Patriot Act, Title III of Pub. L. 107-56 (signed into law on October 26, 2001) (the
Patriot Act), it is required to obtain, verify and record information that identifies the
Borrower and each Guarantor (as defined in the Term Sheet), which information includes names and
addresses and other information that will allow such Lender to identify the Borrower and each
Guarantor in accordance with the Patriot Act.
The reimbursement, indemnification and confidentiality provisions contained herein and in the
Fee Letters shall remain in full force and effect regardless of whether definitive financing
documentation shall be executed and delivered and notwithstanding the termination of this
Commitment Letter or the commitments hereunder.
If the foregoing correctly sets forth our agreement, please indicate your acceptance of the
terms hereof and of the Term Sheet and the Fee Letters by returning to us executed counterparts
hereof and thereof not later than 5:00 p.m., New York City time, on December 12, 2006. The
commitments hereunder and the agreements contained herein will
expire at such time in the event we shall not have received such executed counterparts in
accordance with the immediately preceding sentence.
[remainder of page intentionally left blank]
We are pleased to have been given the opportunity to assist you in connection with this
important financing.
Very truly yours,
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JPMORGAN CHASE BANK, N.A.
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By: |
/s/
Randolph Cates |
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Name: |
Randolph Cates |
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Title: |
Vice President |
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J.P. MORGAN SECURITIES INC.
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By: |
/s/
Graham Conran |
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Name: |
Graham Conran |
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Title: |
Vice President |
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BANK OF AMERICA, N.A.
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By: |
/s/
Sharon Burks Horos |
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Name: |
Sharon Burks Horos |
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Title: |
Vice President |
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BANC OF AMERICA SECURITIES LLC
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By: |
/s/
Wyatt L. Smith |
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Name: |
Wyatt L. Smith |
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Title: |
Principal |
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CITIGROUP GLOBAL MARKETS INC.
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By: |
/s/
Julie Persily |
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Name: |
Julie Persily |
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Title: |
Managing Director |
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Accepted and agreed to
as of the date first
written above by:
THE SCOTTS MIRACLE-GRO COMPANY
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By: |
/s/ David C. Evans |
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Name: David C. Evans
Title: Executive VP and CFO
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Exhibit A
$2,100,000,000
SENIOR SECURED CREDIT FACILITIES
THE SCOTTS MIRACLE-GRO COMPANY
Summary of Terms and Conditions
December 11, 2006
The Scotts Miracle-Gro Company intends to (a) declare a special dividend and repurchase shares
of its common stock in an aggregate amount of up to $800,000,000 (collectively, the Repurchase)
and (b) refinance (the Refinancing) (i) its 6.625% senior subordinated notes due 2013 in
an aggregate principal amount of $200,000,000 and (ii) amounts outstanding under its existing
senior credit agreement (as amended, the Existing Credit Agreement) entered into on July
21, 2005, with new senior secured credit facilities (the Credit Facilities) consisting of
(x) a five-year term loan facility in an aggregate amount of $550,000,000 and (y) a five-year
revolving credit facility in an aggregate amount of $1,550,000,000. The Repurchase, the
Refinancing and the financing described herein, together with any related transactions are
collectively referred to herein as the Transaction.
Set forth below is a summary of the terms and conditions of the Credit Facilities. Such terms
and conditions may be documented in an amendment and restatement of the Existing Credit Agreement
in its entirety.
I. Parties
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Borrower:
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The Scotts Miracle-Gro Company (the
Borrower) and
certain of its subsidiaries (all such subsidiaries,
collectively, the Subsidiary Borrowers). |
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Guarantors:
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The subsidiaries of the Borrower that are Guarantors
under the Existing Credit Agreement, the Borrower,
in respect of the Subsidiary Borrowers, and each of
the Borrowers direct and indirect future domestic
subsidiaries, subject to materiality thresholds
which are no more restrictive than those in the
Existing Credit Agreement (all such non-excluded
subsidiaries, collectively, the Subsidiary
Guarantors; the Borrower, the Subsidiary Borrowers
and the Subsidiary Guarantors, collectively, the
Credit Parties). |
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Joint Lead Arrangers:
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J.P. Morgan Securities Inc.
(JPMorgan) and Banc of
America Securities LLC (BAS and together in such
capacity, the Lead Arrangers). |
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Co-Arranger
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Citigroup Global Markets Inc. (CGMI and together
in such capacity with the Lead Arrangers, the
Arrangers). |
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Joint Bookrunners:
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JPMorgan, BAS and CGMI. |
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Administrative Agent:
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JPMorgan Chase Bank, N.A. (JPMorgan Chase Bank and
in such capacity, the Administrative Agent). |
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Syndication Agent:
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Bank of America, N.A. (Bank of America) |
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Lenders:
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A syndicate of banks, financial institutions and
other entities, including JPMorgan Chase Bank, Bank
of America and one or more affiliates of CGMI, to be
arranged by the Arrangers in consultation with the
Borrower (collectively, the Lenders). |
II. Credit Facilities
A. Term Facility
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Type and Amount:
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Five-year term loan facility (the Term Loan) in the
principal amount of $550,000,000. |
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Availability:
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The Term Loan shall be made in a single drawing on the
Closing Date (as defined below). |
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Amortization:
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The Term Loan shall be repayable in quarterly installments in an aggregate percentage amount for each 12-month period following the Closing Date as set forth below: |
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Loan Year |
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Repayment Percentage |
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1 |
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1 |
% |
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2 |
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5 |
% |
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3 |
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25 |
% |
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4 |
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30 |
% |
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5 |
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39 |
% |
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Purpose:
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The proceeds of the Term Loan shall be used to finance
a portion of the Transaction and to pay related fees
and expenses. |
B. Revolving Facility
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Amount:
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Five-year revolving credit facility (the
Revolving Facility; the commitments thereunder,
the Revolving Commitments) in the aggregate
principal amount of $1,550,000,000 (the loans
thereunder, the Revolving Loans and together
the Term Loan, the Loans). |
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Availability:
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The Revolving Facility shall be available on a
revolving basis during the period commencing on
the Closing Date and ending on the five-year
anniversary thereof (the Revolving Termination
Date). |
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Letters of Credit:
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A portion of the Revolving Facility not in excess
of $65,000,000 shall be available for the
issuance of letters of credit (the Letters of
Credit) by JPMorgan Chase Bank, N.A. (in such
capacity, the Issuing Lender). No Letter of
Credit shall have an expiration date after the
earlier of (a) one year after the date of
issuance and (b) five business days prior to the
Revolving Termination Date, provided that any
Letter of Credit with a one-year tenor may
provide for the renewal thereof for additional
one-year periods (which shall in no event extend
beyond the date referred to in clause (b) above). |
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Drawings under any Letter of Credit shall be
reimbursed by the Borrower (either with its own
funds or with the proceeds of Revolving Loans) on
the same business day (or on the next business
day if notice of such drawing is received after
10:00 a.m.). To the extent that the Borrower
does not so reimburse the Issuing Lender, the
Lenders under the Revolving Facility shall be
irrevocably and unconditionally obligated to fund
participations in the reimbursement obligation on
a pro rata basis. |
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Swingline Loans:
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A portion of the Revolving Facility not in excess
of $100,000,000 shall be available for swingline
loans (the Swingline Loans) in the following
amounts and currencies: US dollars and euros in
an aggregate amount not to exceed $75,000,000,
Pounds Sterling in an amount not to exceed
$20,000,000, Canadian dollars in an amount not to
exceed $15,000,000 and Australian dollars in an
amount not to exceed $15,000,000 from JPMorgan
Chase Bank on same-day notice. Any Swingline
Loans will reduce availability under the
Revolving Facility on a dollar-for-dollar basis.
Each Lender under the Revolving Facility shall be
unconditionally and irrevocably required to
purchase, under certain circumstances, a pro rata
participation in each Swingline Loan. |
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Purpose:
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The proceeds of the Revolving Loans shall be
used (a) to finance a portion of the Transaction
and to pay related fees and expenses and (b) for
working capital needs and general corporate
purposes of the Borrower and its subsidiaries in
the ordinary course of business and for permitted
acquisitions subject to certain restrictions and
in amounts to be agreed upon, but no more
restrictive than the terms of the Existing Credit
Agreement. |
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Foreign Currencies:
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The Revolving Facility will be made available in
US dollars, euros and certain other freely
tradeable currencies available in the
international banking market and on a local basis
as follows: (a) in Pounds Sterling, up to
$300,000,000; (b) in Australian dollars, up to
$25,000,000 and (c) in Canadian dollars, up to
$35,000,000. |
C. Increased Credit Facilities
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Additional Commitments:
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Prior to the Closing Date, the Borrower may
request the Arrangers to seek additional
commitments (the Additional Commitments) to
the Credit Facilities in an aggregate amount
of up to $200,000,000. Any Additional
Commitments shall be allocated ratably
between the Term Loan and the Revolving
Facility according to the existing
commitments thereunder. |
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Incremental Facilities:
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After the Closing Date, the Borrower may, at
any time and in such respective incremental
amounts as determined by the Borrower, seek
to add one or more term loan facilities or
increase the Revolving Commitments (each, an
Incremental Facility) in an aggregate
amount of up to $200,000,000, so long as (i)
no default or event of default is in
existence, (ii) the Borrower is in pro forma
compliance with the financial covenants after
giving effect thereto and (iii) the loans
under any such term loan facility will have a
final maturity date the same as, and will be
amortized in a manner consistent with the
then-remaining weighted average life to
maturity of, the Term Loan; provided that (x)
no Lender will be required to participate in
any such Incremental Facility, (y) the
Borrower shall have the right to select the
entities which are to provide all or a
portion of any such Incremental Facility
(which may or may not be Lenders), subject to
the approval of the Administrative Agent
(which shall not be unreasonably withheld)
for any entity other than a Lender, an
affiliate of a Lender or an approved fund (as
that term is defined in the Existing Credit
Agreement). |
III. General Payment Provisions
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Fees and Interest Rates:
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As set forth on Annex I hereto. |
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Optional Prepayments and Commitment
Reductions:
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Loans may be prepaid and the
Revolving Commitments may be reduced
without payment of any reduction or
other similar fee (other than LIBOR
breakage costs) by the Borrower in
minimum amounts to be agreed.
Optional prepayments of the Term Loan
shall be applied to the installments
thereof ratably. Optional
prepayments of the Term Loan may not
be reborrowed. |
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Mandatory Prepayments:
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The following amounts shall be applied
to prepay the Term Loan: |
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100% of the net proceeds of any
incurrence of non-permitted
indebtedness after the Closing Date by
the Borrower or any of its
subsidiaries. |
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100% of the net proceeds of any sale or
other disposition (including as a
result of casualty or condemnation) by
the Borrower or any of its subsidiaries
of any assets except for the sale of
inventory or obsolete or worn-out
property in the ordinary course of
business and subject to certain other
customary thresholds and exceptions
(including, without limitation,
capacity for reinvestment) and
exceptions consistent with those
included in the Existing Credit
Agreement, including those for
sale/leaseback transactions and an
accounts receivable securitization
facility of up to $300 million;
provided, that the foregoing prepayment
requirement related to asset sales
shall terminate upon achievement of the
Trigger Ratings (as defined below). |
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Mandatory prepayments of the Term Loan
shall be applied to the installments
thereof ratably. Mandatory prepayments
of the Term Loan may not be reborrowed. |
IV. Collateral
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Collateral:
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The obligations of the Credit Parties in respect of the Credit
Facilities, and any interest rate, commodity, foreign exchange
or other swap or hedge agreements or arrangements by or with
any Lender (or any affiliate of a Lender), and/or cash
management services provided by any Lender (or any affiliate
of a Lender), shall be secured by a perfected first priority
security interest in all of the Borrowers and its direct and
indirect domestic subsidiaries accounts receivable, inventory
and equipment and all of the capital stock of each of the
Borrowers direct and indirect subsidiaries. Collateral shall
not include any intellectual property of the Borrower or any
of its subsidiaries. The pledge of the capital stock of
foreign subsidiaries will be limited to 65% of the capital
stock of first-tier foreign subsidiaries |
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to the extent a
pledge of a greater percentage would reasonably be expected to
result in material adverse tax consequences for the Borrower
or such subsidiary or would be deemed an unlawful act of such
subsidiary or of any of its officers or directors under the
laws of an applicable foreign jurisdiction, except that the
obligations of foreign Subsidiary Borrowers shall be secured
by 100% of the capital stock of such foreign Subsidiary
Borrowers and 100% of the capital stock of the first-tier
subsidiaries of such foreign Subsidiary Borrowers, but no
other assets of foreign subsidiaries of the Borrower shall be
pledged as collateral security. In no event shall the
requirements for the pledge of the capital stock of foreign
subsidiaries be more burdensome on the Borrower or any
subsidiary than the terms of the Existing Credit Agreement. |
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If, at any time, the Leverage Ratio (as defined below) has
been 2.50 to 1.00 or less for each of the most recent four
consecutive fiscal quarters for which financial statements are
available, then the Borrower shall have the right, by written
notice to the Administrative Agent, to require that all
collateral (other than the capital stock of each of the
Borrowers direct and indirect subsidiaries) be released from
the security interests created by the definitive financing
documentation at such time; provided that if for any
subsequent fiscal quarter the Leverage Ratio is more than 2.50
to 1.00, the Required Lenders shall have the right, by written
notice by the Administrative Agent, to the Borrower to require
that such collateral be reinstated within 60 days of such
notice. |
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If, at any time, the Borrowers senior unsecured non-credit
enhanced long term indebtedness shall be (i) at least BB+
(with a stable outlook) by Standard & Poors Ratings Services
(S&P) and at least Ba1 (with a stable outlook) by Moodys
Investors Service, Inc. (Moodys) or (ii) at least BBB-
(with a stable outlook) by S&P or at least Baa3 (with a stable
outlook) by Moodys (in either case, the Trigger Ratings),
then the Borrower shall have the right, by written notice to
the Administrative Agent, to require that all collateral then
in effect be released from the security interest created by
the definitive financing documentation at such time; provided
that upon the |
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occurrence of a ratings downgrade by either S&P
or Moodys to a level below (i) BB+ or Ba1, respectively (so
long as the Borrower would not then remain entitled to the
release of the collateral under clause (ii) above), or (ii)
BBB- by S&P or Baa3 by Moodys (so long as the Borrower would
not then remain entitled to the release of the collateral
under clause (i) above), then the collateral shall be required
to be reinstated within 60 days of the occurrence of such
downgrade event (except that, with respect to collateral which
is not in the form of the capital stock of each of the
Borrowers direct and indirect subsidiaries, such collateral
shall not be required to be so reinstated if such collateral
would be entitled to be released under the preceding
paragraph). |
V. Certain Conditions
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Initial Conditions:
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The availability of the Credit Facilities shall be
conditioned upon satisfaction of the following
conditions precedent (the date upon which all such
conditions shall be satisfied, the Closing Date)
on or before February 28: |
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(a) Each Credit Party, the Administrative Agent,
and all Lenders providing commitments under the
Revolving Facility shall have executed and
delivered satisfactory definitive financing
documentation with respect to the Credit Facilities
on terms consistent with this Term Sheet (the
Credit Documentation). It is expected that the
credit agreement for the Revolving Facility will be
substantially similar to the Existing Credit
Agreement, as applicable, except as otherwise set
forth herein or otherwise agreed to by the Borrower
and the Lenders. |
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(b) The Borrower shall have taken actions
reasonably necessary to have then been taken to be
able to, and shall intend to, consummate the
Refinancing within 21 days of the Closing Date and
shall have provided a reasonably detailed statement
of its plans to, and shall intend to, consummate
the Repurchase within three months of the Closing
Date. |
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(c) The Lenders, the Administrative Agent and the
Arrangers shall have received all fees and expenses
required to be paid on the Closing Date. |
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(d) All governmental and third party approvals
necessary in connection with the financing
contemplated hereby and the continuing operations
of the Borrower and its subsidiaries shall have
been obtained and be in full force and effect and
all applicable waiting periods shall have expired
without any action being taken or threatened in
writing by any competent authority which would
restrain, prevent or otherwise impose material,
adverse conditions on the financing contemplated
hereby. |
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(e) The Lenders shall have received (i) audited
annual consolidated financial statements of the
Borrower for its three most recent fiscal years and
(ii) unaudited interim consolidated financial
statements of the Borrower for each quarterly
period ended after the latest fiscal year referred
to in clause (i) above as to which such financial
statements are available. |
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(f) The Lenders shall have received a pro forma
consolidated balance sheet of the Borrower and its
subsidiaries as at the date of the most recent
consolidated balance sheet delivered pursuant to
the preceding paragraph, adjusted to give effect to
the consummation of the Revolving Facility as if
the Closing Date had occurred on such date, which
shall not be inconsistent in any material and
adverse matter, taken as a whole, with the
forecasts previously provided to the Lenders. |
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(g) The Lenders shall have received an executed
legal opinion of Vorys, Sater, Seymour and Pease
LLP, special counsel to the Borrower and its
domestic subsidiaries and such documents and other
instruments as are customary for transactions of
this type or as they may reasonably request. |
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Additional Conditions:
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The making of each extension of credit shall be
conditioned upon (a) the accuracy in all material
respects of all representations and warranties in
the definitive credit documentation (including,
without limitation, the material adverse change and
litigation representations) and (b) there being no
default or event of default in existence at the
time of, or after giving effect to the making of
the extension of credit. |
10
VI. Certain Documentation Matters
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Representations and Warranties:
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Customary terms for transactions
of this type, but no more
restrictive than the terms of the
Existing Credit Agreement, and
including, without limitation: financial condition; corporate
existence; corporate power; no
legal bar; no material
litigation; no burdensome
restrictions; no default; taxes;
subsidiaries; accuracy of
disclosure; Federal Reserve
regulations; labor matters;
ERISA; Investment Company and
other regulations; environmental
matters; creation and perfection
of security interests; and
solvency. The Borrower shall
also covenant to consummate the
Repurchase within 21 days of the
Closing Date and the Refinancing
within three months of the
Closing Date. |
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Affirmative Covenants:
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Customary terms for transactions
of this type, but no more
restrictive than the terms of the
Existing Credit Agreement, and
including, without limitation: delivery of financial statements,
reports, accountants reports
delivered with financial
statements, officers
certificates, annual budgets;
payment of obligations;
compliance with laws; conduct of
business and maintenance of
existence; maintenance of
property and insurance;
maintenance of books and records;
right of the Lenders to inspect
property and books and records;
notices of defaults, litigation
and other material events. |
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Financial Covenants:
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Financial covenants consisting of
a maximum net leverage ratio (the
Leverage Ratio, which will be
defined, for covenant purposes
(as in the Existing Credit
Agreement) as total debt to
EBITDA, with total debt being the
average of total debt at the end
of the four most recently
completed fiscal quarters and
with excess cash balances to be
deducted from actual total debt
in determining total debt) as
follows: 4.75 to 1.00 (with
stepdowns to be agreed) and a
minimum interest coverage ratio
(with all non-cash items excluded
from the calculation of interest
expense) as follows: 2.75 to
1.00 (with stepups to be agreed). |
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Other Negative Covenants:
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Customary terms for transactions
of this type, but no more
restrictive than the terms of the
Existing Credit Agreement, and
including: limitation on liens,
limitation on contingent
obligations, limitation on
fundamental changes, limitation
on acquisitions (up to
$350,000,000 permitted in 2007,
with $100,000,000 permitted
annually thereafter (with up to
$100,000,000 of any unused
portion thereof in any year
permitted to be carried over to
the following year), investments
(other than investments by the
Borrower or any subsidiaries in
joint ventures and minority
interests), loans and advances,
limitations on indebtedness (with
(i) up to $75,000,000 of
capitalized leases at any time
being permitted and (ii) subject
to pro forma compliance with the
financial covenants, subordinated
and senior unsecured notes and
bonds issued on market terms and
with no scheduled amortization
prior to six months after the
Maturity Dates of the Loans being
permitted, provided that the
proceeds of any such senior
unsecured notes or bonds
(exclusive of any such senior
unsecured notes or bonds in an
aggregate principal amount of up
to $200,000,000) are used to fund
permitted acquisitions),
limitations on restrictions on
subsidiary distributions,
transactions with affiliates and
officers, limitation on sales of
domestic assets (provided that
sales of domestic assets with
aggregate proceeds of up to 20%
of consolidated total assets
shall be permitted over the life
of the Credit Facilities),
sale/leasebacks, changes in
fiscal year, modification of
certain debt instruments,
negative pledge clauses, lines of
business and restricted payments
(with dividends permitted as in
the Existing Credit Agreement and
capital stock repurchases after
the Repurchase being limited to
$10,000,000 in fiscal year 2007,
$25,000,000 in fiscal year 2008
and $75,000,000 in fiscal year
2009 and respective amounts to be
agreed for subsequent fiscal
years, with a carryforward to the
next fiscal year). |
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Events of Default:
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Customary terms for transactions
of this type, but no more
restrictive than the terms of the
Existing Credit Agreement, and
including cross-default to debt
of $75 million or greater and
judgments of $75 million or
greater. |
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VII. Certain Other Terms
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Voting:
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Amendments and waivers with respect
to the Credit Documentation shall
require the approval of Lenders
holding more than 50% of the
aggregate amount of the Term Loan
and the Revolving Commitments,
except that (a) the consent of each
Lender directly affected (the
Required Lenders) thereby shall be
required with respect to (i)
reductions in the amount or
extensions of the scheduled date of
any amortization or final maturity
of any Loan, (ii) reductions in the
rate of interest or any fee or
extensions of any due date thereof
and (iii) increases in the amount or
extensions of the expiry date of any
Lenders commitment and (b) the
consent of 100% of the Lenders shall
be required with respect to (i)
reductions of any of the voting
percentages and (ii) releases of all
or substantially all the collateral
and releases of all or substantially
all of the Guarantors (except as
provided). |
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Assignments and Participations:
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The Lenders shall be permitted to
assign all or a portion of their
Loans and Revolving Commitments with
the consent, not to be unreasonably
withheld, of (a) the Borrower,
unless (i) the assignee is a Lender,
an affiliate of a Lender or an
approved fund or (ii) an event of
default has occurred and is
continuing, (b) the Administrative
Agent, unless a portion of the Term
Loan is being assigned to a Lender,
an affiliate of a Lender or an
approved fund, and (c) the Issuing
Lender, unless a portion of the Term
Loan is being assigned; provided
that no assignment shall be
permitted which will result in any
increased costs, taxes, charges or
expenses to Borrower as a result of
such assignment. Non-pro rata
assignments shall be. In the case
of partial assignments (other than
to another Lender, an affiliate of a
Lender or an approved fund), the
minimum assignment amount shall be
$5,000,000 (in the case of a portion
of the Term Loan), $5,000,000 (in
the case of the Revolving Facility)
and $5,000,000 (in the case of a
combination of a portion of the Term
Loan and the Revolving Facility to
the same assignee), in each case
unless otherwise agreed by the
Borrower and the Administrative
Agent. The Administrative Agent
shall receive a processing and
recordation fee of $3,500 from |
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the
assignment parties in connection
with all assignments. The Lenders
shall also be permitted to sell
participations in their Loans.
Participants shall have the same
benefits as the Lenders with respect
to yield protection and increased
cost provisions subject to customary
limitations. Voting rights of
participants shall be limited to
those matters set forth in clause
(a) under Voting with respect to
which the affirmative vote of the
Lender from which it purchased its
participation would be required.
Pledges of Loans in accordance with
applicable law shall be permitted
without restriction. |
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Yield Protection:
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Customary terms for transactions of
this type, but no more restrictive
than the terms of the Existing
Credit Agreement. |
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Expenses and Indemnification:
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The Borrower shall pay (a) all
reasonable out-of-pocket expenses of
(i) the Administrative Agent and the
Lead Arrangers which are evidenced
by appropriate supporting written
documentation and associated with
the syndication of the Revolving
Facility and limited to one counsel,
and (ii) the Administrative Agent
which are evidenced by appropriate
supporting written documentation and
associated with the preparation,
execution, delivery and
administration of the definitive
credit documentation and any
amendment or waiver with respect
thereto (including the reasonable
fees and disbursements and other
charges of the Administrative
Agents counsel) and (b) all other
expenses provided for in the
Existing Credit Agreement. |
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The Arrangers and the Lenders (and
their affiliates and their
respective officers, directors,
employees, advisors and agents) will
have no liability for, and will be
indemnified and held harmless
against, any losses, claims,
damages, liabilities or expenses
incurred in respect of the financing
contemplated hereby or the use or
the proposed use of proceeds
thereof, except to the extent they
are found by a final, non-appealable
judgment of a court to arise from
the gross negligence or willful
misconduct of the indemnified party.
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Governing Law and Forum:
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State of New York. |
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Counsel to the Arrangers and the
Administrative Agent:
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Simpson Thacher & Bartlett LLP. |
Annex I
to Term Sheet
INTEREST AND CERTAIN FEES
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Interest Rate Options:
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The Borrower may elect that Loans comprising each borrowing bear interest at
a rate per annum equal to: |
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the ABR plus the Applicable Margin; or |
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the LIBOR Rate plus the Applicable Margin; |
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provided that Swingline Loans shall bear interest at
a rate per annum at a money market rate to be agreed.. |
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As used herein: |
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ABR means the higher of (i) the rate of interest
publicly announced by JPMorgan Chase Bank as its prime rate
in effect at its principal office in York City (the
Prime Rate) and (ii) the federal funds effective
rate from time to time plus 0.50%. |
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Applicable Margin means the applicable margin set
forth in a pricing grid attached hereto as Annex I-A. As of
the Closing Date, the Applicable Margin is expected to be (i)
1.25% in the case of LIBOR Loans and (ii) 0.25% in the case
of ABR Loans. |
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LIBOR Rate has the same meaning as in the Existing
Credit Agreement. |
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Interest Payment Dates:
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In the case of Loans bearing interest based upon the ABR (ABR
Loans), quarterly in arrears. |
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In the case of Loans bearing interest based upon the LIBOR
Rate (LIBOR Loans), on the last day of each
relevant interest period and, in the case of any interest
period longer than three months, on each successive date
three months after the first day of such interest period. |
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Commitment Fee:
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The Borrower shall pay a commitment fee calculated at a rate per annum determined
in accordance with the pricing grid attached hereto as Annex I-A on the average daily |
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unused portion of the Revolving Facility, payable quarterly
in arrears. Swingline Loans shall, for purposes of the
commitment fee calculations only, not be deemed to be a
utilization of the Revolving Facility. As of the Closing
Date, the commitment fee is expected to be an amount equal to
0.25% of the total amount of the Revolving Facility. |
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Letter of Credit Fees:
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The Borrower shall pay a fee on all outstanding
Letters of Credit at a per annum rate equal to the
Applicable Margin then in effect with respect to
LIBOR Loans under the Revolving Facility on the
face amount of each such Letter of Credit. Such
fee shall be shared ratably among the Lenders
participating in the Revolving Facility and shall
be payable quarterly in arrears.
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A fronting fee equal to 0.125% per annum on the
face amount of each Letter of Credit shall be
payable quarterly in arrears to the Issuing Lender
for its own account. In addition, customary
administrative, issuance, amendment, payment and
negotiation charges shall be payable to the Issuing
Lender for its own account. |
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Default Rate:
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At any time when the Borrower is in default in the
payment of any amount of principal due under the
Credit Facilities, all outstanding Loans shall bear
interest at 2% above the rate otherwise applicable
thereto. Overdue interest, fees and other amounts
shall bear interest at 2% above the rate applicable to
ABR Loans. |
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Rate and Fee Basis:
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All per annum rates shall be calculated on the basis
of a year of 360 days (or 365/366 days, in the case of
ABR Loans the interest rate payable on which is then
based on the Prime Rate) for actual days elapsed. |
ANNEX I-A
Pricing Grid
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Applicable |
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Leverage |
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Margin |
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Commitment |
Ratio |
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LIBOR |
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ABR |
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Fee |
³ 4.00 to 1.00 |
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1.500 |
% |
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0.500 |
% |
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0.350 |
% |
³ 3.00 to 1.00 |
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1.250 |
% |
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0.250 |
% |
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0.250 |
% |
³ 2.25 to 1.00 |
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1.000 |
% |
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0.000 |
% |
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0.250 |
% |
³ 1.75 to 1.00 |
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0.875 |
% |
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0.000 |
% |
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0.200 |
% |
³ 1.25 to 1.00 |
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0.750 |
% |
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0.000 |
% |
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0.200 |
% |
< 1.25 to 1.00 |
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0.625 |
% |
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0.000 |
% |
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0.175 |
% |