Exhibit 10(y)
XXXXX XXXXXXXX
PRESIDENT AND CHIEF EXECUTIVE OFFICER
December 20, 2001
Dear Xxx:
This letter is intended to memorialize the agreements we have reached
regarding your continued employment with The Scotts Company (the "Company"). We
have agreed as follows:
1. You agree to continue in your present position as Executive Vice
President - North America until the earlier of:
(a) September 30, 2002 (or such other date as you and the Company may
hereafter mutually agree);
(b) The date the Company terminates your employment without Cause (as
that term is defined in the Company's 1996 Stock Option Plan);
(c) The date of your death or total disability; or
(d) The effective date of a Change in Control (as that term is
defined in the Company's 1996 Stock Option Plan).
Each of the dates set forth above is hereinafter referred to as the
"Termination Date."
2. On or before September 30, 2002, the Company will, at its sole
discretion, offer you one of the following options:
(a) Continued employment in your current position beyond September
30, 2002 (defined as an "Offer of Continued Employment"); or
(b) Termination of your employment.
In the event the Company makes an Offer of Continued Employment, you
may elect to accept or decline such offer. If you accept such offer,
your eligibility to receive the termination benefits set forth herein
shall be extended to such date as you and the Company agree, or the
date upon which the Company terminates your employment without Cause.
In the event you decline the Offer of Continued Employment, you will
be expected to retire on September 30, 2002, and you will be entitled
to receive the termination benefits set forth herein. Assuming you
retire on September 30, 2002, you will be eligible for a pay out under
the 2002 Executive Annual Incentive Plan, but you will not be eligible
for any further stock option grants.
3. On the Termination Date, you will be entitled to receive the following
benefits:
(a) A severance payment (payable in 12 equal monthly installments,
beginning on the 25th day of the month following the Termination
Date) equal to your current annual salary plus your target bonus
in effect at the Termination Date (less required tax
withholding).
(b) Medical and dental coverage equal to that in effect at the
Termination Date will be provided by the Company at no charge to
you during the 12 months you are receiving the severance payments
set forth in paragraph 3(a) above. Thereafter, you will be
entitled to continue to participate in the Company's group
medical and dental plans under COBRA until your 65th birthday.
The Company shall make a lump sum payment to you on the date of
the last monthly severance payment equal to the amount necessary
to pay the premiums for group medical and dental coverage through
your 65th birthday, grossed up for taxes. An example of the
calculations used to determine the amount of this lump sum
payment is attached to this letter as Exhibit A.
After you reach your 65th birthday, you will be entitled to
participate in the Xxxxx'x Retiree (Medical) Plan, which
designates Medicare, as the primary medical program for post age
65.
(c) You presently have 82,000 options to purchase common shares of
the Company that have vested and 47,000 options that have not
vested. On the Termination Date, you shall be considered to have
retired from the Company. As a result, all of your then
outstanding options shall vest and may thereafter be exercised in
accordance with the terms and conditions of the Company's 1996
Stock Option Plan which states that you will have five years from
the Termination Date (September 30, 2002), or the end of the
Option term, which ever is the shorter period.
4. I am certain you understand that the agreements set forth in this
letter do not apply should you voluntarily terminate your employment
with the Company prior to September 30, 2002, or should the Company
terminate your employment for Cause.
5. Should you die or become totally disabled following the Termination
Date but before the payments due you under paragraphs 3(a) and 3(b)
above have been made to you, any remaining payments shall be made to
you (or your beneficiary, as applicable) within 90 days of your death
or total disability.
6. This agreement is subject to final approval by Xxxxxx' Board of
Directors. I expect to ask for the Board's approval at its next
meeting in January 2002.
Two copies of this letter are enclosed. Please indicate your agreement with
the terms set forth herein by executing one copy of this letter and returning it
to me. The second copy is for your records.
Bob, I am pleased that we could reach agreement on the matters set forth
above and I look forward to working with you for the balance of the fiscal year.
Very truly yours,
The Scotts Company
By: /s/ Xxxxx Xxxxxxxx
-----------------------------
Xxxxx Xxxxxxxx
President and Chief Executive Officer
Dear Xxx:
I agree that this letter sets forth the agreements you and I have reached
regarding my continued employment with the Company.
/s/ X. Xxxxxx Xxxxxxx
---------------------------------
Dated: December __, 2001 X. Xxxxxx Xxxxxxx
EXHIBIT A
CALCULATION OF LUMP SUM PAYMENT
1. Assume retirement from the Company on September 30, 2002 at age 59.
2. Assume the Company pays for medical and dental coverage through September
30, 2002.
3. Assume eligibility for Medicare at age 65 beginning November 1, 2007.
Calculation of 61 months of COBRA payments, grossed up for tax purposes and
payable to Xx. Xxxxxxx in a lump sum on September 25, 2003:
Xx. Xxxxxxx'x applicable COBRA rate today: $ 632.74
Times 61 months $38,597.14
Gross up for taxes (times 1.65) $25,088.14
Lump sum due $63,685.28
