EXHIBIT 10(l)
Employment Agreement, dated as of August 7, 1996, between The Scotts
Company and Xxxxxxx X. Xxxxxx
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT, dated as of August 7, 1996, between THE
SCOTTS COMPANY, an Ohio corporation (the "Company"), and XXXXXXX X. XXXXXX (the
"Employee");
W I T N E S S E T H :
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WHEREAS, the Company desires to enter into this Agreement with the
Employee; and
WHEREAS, the Employee desires to enter into this Agreement with the
Company and agrees to be bound by the covenants herein;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth hereinafter, the Company and the Employee agree as follows:
1. EMPLOYMENT. The Company shall employ the Employee for a period
of three (3) years commencing on the date hereof, unless this Agreement is
terminated earlier as provided herein.
2. DUTIES. During the period of his employment, the Employee will
be employed as the Chairman, President and Chief Executive Officer of the
Company and, in addition, in such other executive capacity or capacities (to
which he is suited on the basis of his education and experience and which do not
require time and attention in excess of that reasonably available after
performance of the foregoing duties) for the Company or any subsidiary of the
Company as may be determined from time to time by or under the authority of the
Company's Board of Directors, and he will devote all of his skill, knowledge and
full working time (reasonable vacation time, service as a member of any outside
Boards of Directors and absence for sickness or similar disability excepted)
solely and exclusively to the conscientious performance of such duties. The
Employee hereby represents that his employment hereunder and compliance by him
with the terms and conditions of this Agreement will not conflict with or result
in the breach of any agreement to which he is a party or by which he may be
bound.
3. COMPENSATION.
(a) BASE SALARY. As compensation for the duties to be performed by
him hereunder, the Company will pay the Employee a base salary at a rate of not
less than $400,000 per year during the period of his employment hereunder,
payable in equal monthly installments. It is contemplated that the Company will
review the Employee's base salary from time to time during the period of his
employment (the first such review to take place in October, 1997) and, at the
discretion of the Board of Directors, may increase his base salary from time to
time based upon his performance, the then generally prevailing industry salary
scales and other relevant factors.
(b) INCENTIVE COMPENSATION. The Employee shall be entitled to
participate in The Scotts Company Executive Management Incentive Plan, as the
same may be amended from time to time, or any substitute or successor plan, with
an initial target percentage of fifty-five percent (55%) of salary (the full
target percentage to be paid assuming 100% of the Employee's objectives are
met), in accordance with the terms of the said Plan. The Company shall pay the
Employee a bonus with respect to fiscal 1997 of at least $100,000, so long as
the Employee is a full-time employee of the Company at the end of such fiscal
year.
(c) STOCK AND OPTIONS. In consideration of and as an inducement to
the Employee to enter into this Agreement, and to provide an incentive for
successful management of the Company, the Employee shall have the right to
purchase up to 250,000 shares of Common Stock (the "Common Stock") of the
Company at the closing price of the Company's Common Stock on the New York
Stock Exchange on August 7, 1996, and otherwise on the terms and conditions
set forth in the Stock Option Agreement attached hereto as Exhibit A. The
Company makes no representation regarding the value of the Common Stock and
the Employee agrees that he shall be solely responsible for any tax
consequences to him of the purchase of such stock and the grant of such
options.
4. EXPENSES. The Company shall reimburse the Employee for
reasonable travel, lodging and meal expenses incurred by him in connection
with his performance of services hereunder in accordance with Company policy.
5. BENEFITS.
(a) GENERAL. The Company shall, at its expense, provide the
Employee life insurance, medical insurance, disability insurance and other
benefits comparable to those provided to the Company's other executive
officers. The Employee shall be compensated for the expense of any
relocation in accordance with the standard relocation policies of the Company.
(b) AUTOMOBILE. The Company shall provide Employee with a car
allowance of $7,000 per year.
(c) FINANCIAL SERVICES. The Company shall reimburse Employee for
the cost of financial services provided by AYCO.
6. TERMINATION PROVISIONS.
(a) AUTOMATIC TERMINATION; TERMINATION BY THE COMPANY. The
Employee's employment hereunder shall automatically terminate upon his death
or Disability (as hereinafter defined), and the Company may terminate the
Employee's employment for "Cause" (as hereinafter defined). For purposes of
this Agreement, "Disability" is defined to mean that, as a result of the
Employee's incapacity due to physical or mental illness, the Employee shall
have been absent from his duties as an officer of the Company on a
substantially full-time basis for six (6) consecutive months, and the
Employee shall not have returned to the performance of such duties on a
full-time
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basis within thirty (30) days after the Company notifies the Employee in
writing that it intends to replace him.
For purposes of this Agreement, the Company shall have "Cause" to
terminate the Employee's employment hereunder upon (i) the failure by the
Employee to substantially perform his duties pursuant to Section 2 hereof
(other than such failure due to physical or mental illness) and continuance
of such failure for more than twenty (20) days (or, if not reasonably
correctable within 20 days, such additional time as may reasonably be
required) after the Company notifies the Employee in writing that he is
failing to substantially perform his duties; (ii) the engaging by the
Employee in willful misconduct which is materially injurious to the Company
or any subsidiary of the Company; or (iii) the conviction of the Employee of,
or the entering by the Employee of a plea of NOLO CONTENDERE to, a crime
which constitutes a felony involving moral turpitude. Notwithstanding the
foregoing, the Employee shall not be deemed to have been terminated for Cause
unless and until there should be delivered to him a copy of a resolution,
duly adopted by the Board of Directors of the Company, finding that the
Company has "Cause" to terminate the Employee as contemplated in this Section
6(a).
(b) NOTICE OF TERMINATION. Any termination by the Company pursuant
to Section 6(a) hereof shall be communicated by a written Notice of
Termination (as hereinafter defined) to the other party to this Agreement.
For purposes of this Agreement, a "Notice of Termination" shall mean a notice
which shall indicate the specific termination provisions in this Agreement
relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of employment.
(c) PAYMENTS UPON TERMINATION. If the Employee's employment is
terminated by the Company without Cause, as a result of the Employee's death
or Disability, as a result of Employee's Cause (as hereinafter defined) or as
a result of a Change of Control (as hereinafter defined), the Company shall
pay the Employee (i) his full base salary at the annual base rate in effect
immediately prior to the Date of Termination (as hereinafter defined) for a
period of twenty-four (24) months after the Date of Termination and (ii)
incentive compensation for a period of twenty-four (24) months after the Date
of Termination equal to the lesser of Employee's target percentage in effect
at the Date of Termination (the Employee being deemed to have earned his
target percentage for such year) or the amount of the Employee's last actual
bonus. If the Employee's employment is terminated during the Company's 1997
fiscal year for any reason which would entitle the Employee to receive the
payments provided for in the immediately preceding sentence, the amount of
incentive compensation which the Employee shall be deemed to have earned in
fiscal 1997 for the purpose of calculating the payments owed to the Employee
upon termination shall be the sum of $100,000. The parties acknowledge that
the 24-month period in the first sentence of this Section 6(c) may extend
beyond the term hereof. If the Employee voluntarily terminates his
employment, or if the Employee's employment with the Company is terminated
for any other reason (including for Cause as set forth in Section 6(a)), the
Company shall pay the Employee his full base salary through the Date of
Termination at the annual base rate in effect immediately prior to the Date
of Termination and shall have no other obligation to the Employee except to
honor his stock options according to their terms.
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(d) DATE OF TERMINATION. As used in this Agreement, the term "Date
of Termination" shall mean (i) if the Employee's employment is terminated for
Cause, the date on which the Company delivers a written Notice of Termination as
contemplated by Section 6(b), (ii) if the Employee's employment is terminated by
his death, the date of his death, (iii) if the Employee's employment is
terminated upon his Disability, the date thirty (30) days after the Company
notifies the Employee in writing that it intends to replace him as contemplated
by Section 6(a) hereof and (iv) if the Employee's employment is terminated for
any other reason, the date on which Notice of Termination is given.
(e) CHANGE OF CONTROL. If the employment of the Employee is
terminated as a result of a Change of Control, he shall be entitled to the
payments set forth in the first sentence of Section 6(c) above. As used in this
Agreement, "Change of Control" means the occurrence of any of the following
events:
(i) the members of the Board at the beginning of any consecutive
twenty-four (24) calendar month period (the "Incumbent Directors") cease for any
reason other than due to death to constitute at least a majority of the members
of the Board, provided that any director whose election, or nomination for
election by the Company's shareholders, was approved by a vote of at least a
majority of the members of the Board then still in office who were members of
the Board at the beginning of such twenty-four (24) calendar month period, shall
be treated as an Incumbent Director; or
(ii) any "person," including a "group" (as such terms are used in
Section 13(d) and 14(d)(2) of the Securities Exchange Act of 1934 (the "Act"),
but excluding the Company, any of its Subsidiaries, or any employee benefit plan
of the Company or of any of its Subsidiaries) is or becomes the "beneficial
owner" (as defined in Rule 13(d)(3) under the Act), directly or indirectly, of
securities of the Company representing more than forty-nine percent (49%) of the
combined voting power of the Company's then outstanding securities; or
(iii) the shareholders of the Company shall approve a
definitive agreement (1) for the merger or other business combination of the
Company with or into another corporation, a majority of the directors of which
were not directors of the Company immediately prior to the merger and in which
the shareholders of the Company immediately prior to the effective date of such
merger own less than fifty percent (50%) of the voting power in such
corporation; or (2) for the sale or other disposition of all or substantially
all of the assets of the Company; or
(iv) the purchase of Stock pursuant to any tender or exchange
offer made by any "person," including a "group" (as such terms are used in
Sections 13(d) and 14(d)(2) of the Act), other than the Company, any of its
Subsidiaries, or an employee benefit plan of the Company or of any of its
Subsidiaries, for more than forty-nine percent (49%) of the Stock of the
Company.
(f) MITIGATION METHOD OF PAYMENT: LUMP SUM. Any compensation or
benefits to which the Employee may be entitled for termination without Cause or
as a result of a
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Change of Control pursuant to Section 6(c) shall be reduced or canceled to
the extent that the Employee receives compensation or benefits of like nature
by reason of his securing other employment. Employee agrees to make a good
faith effort to obtain other employment subject to the limitations imposed
upon the Employee pursuant to Section 8. Compensation payable pursuant to
Section 6(c) shall be paid monthly in 24 equal monthly consecutive
installments. Notwithstanding anything else contained in this Section 6, the
Company may pay to the Employee at any time after the Date of Termination, in
a lump sum, an amount equal to the Company's good faith determination of the
present value of the compensation remaining to be paid to the Employee as of
the date of such lump sum payment, calculated using a discount factor based
on the prime rate of any major New York bank plus one percent (1%), whereupon
the Company's obligations under this Section 6 shall be discharged in full
and it shall have no further obligation to the Employee except to honor his
stock options according to their terms.
(g) LIMITATION. Anything in this Agreement or the Stock Option Plan
and Agreement to the contrary notwithstanding, the Employee's entitlement to
payments under this Section 6 or under any other plan or agreement and the
acceleration of the exercisability of stock options under the terms of any
applicable stock option plan shall be limited to the extent necessary so that no
payment to be made to the Employee on account of termination of his employment
with the Company (or the value of such acceleration on account thereof) will be
subject to the excise tax imposed by Section 4999 of the Internal Revenue Code
of 1986, as amended (the "Code"), as then in effect, but only if, by reason of
such limitation, the Employee's net after tax benefit shall exceed the net after
tax benefit if such reduction were not made. "Net after tax benefit" shall mean
(i) the sum of all payments and benefits (including the value of acceleration of
stock options) that the Employee is then entitled to receive under this Section
6 or under any other plan or agreement that would constitute a "parachute
payment" within the meaning of Section 280G of the Code, less (ii) the amount of
federal income tax payable with respect to the payments and benefits described
in clause (i) above calculated at the maximum marginal income tax rate for each
year in which such payments and benefits shall be paid to the Employee (based
upon the rate in effect for such year as set forth in the Code at the time of
the first payment of the foregoing), less (iii) the amount of excise tax imposed
with respect to the payments and benefits described in clause (i) above by
Section 4999 of the Code. Any limitation under this subsection 6(g) of the
Employee's entitlement to payments or upon the acceleration of exercisability of
stock options shall be made in the manner and in the order directed by the
Employee.
(h) EMPLOYEE'S CAUSE. The Employee shall have the right to terminate
his employment at any time, without cause, on at least 30 days' advance written
notice to the Company.
In addition, the Employee may terminate his employment, effectively
immediately upon notice (or, effective as otherwise provided in subparagraphs
(i) and (iii), below) in the event of the following ("Employee's Cause"):
(i) the failure of the Company to substantially perform its
duties pursuant to this Agreement or the Stock Option Agreement attached hereto
as Exhibit A and the continuance of such failure for more than 20 days (or, if
not reasonably correctable within 20
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days, such additional time as may reasonably be required) after the Employee
notifies the Company in writing that it is failing to substantially perform
its duties;
(ii) the Company's filing a voluntary petition in bankruptcy or
insolvency;
(iii) the filing against the Company of an involuntary petition
in bankruptcy or insolvency which is not dismissed within 30 days after its
filing;
(iv) the Company's being convicted of a criminal act relating to
any activity occurring prior to the date hereof, the effect of which has a
material adverse effect on the business operations of the Company; or
(v) the breach or inaccuracy in any material respect of the
Company's representations and warranties contained herein.
In the event of his termination as a result of Employee Cause,
notwithstanding any provision of this Agreement to the contrary, the Employee
shall be entitled to all compensation and benefits provided for in the first
sentence of Section 6(c) hereof.
7. UNAUTHORIZED DISCLOSURE.
(a) During the period of his employment hereunder and thereafter, the
Employee shall not, without the written consent of the Board of the Company or a
person authorized thereby, disclose to any person, information, knowledge or
data which is not theretofore publicly known and in the public domain obtained
by him while in the employ of the Company with respect to the Company or any of
its subsidiaries or of any products, improvements, formulas, designs of styles,
processes, customers, methods of distribution or methods of manufacture, sales,
prices, profits, costs, contracts, suppliers, business prospects, business
methods, techniques, research, trade secrets, or know-how of the Company or any
of its subsidiaries, regardless of whether such information is confidential,
except as the Employee, in good faith, reasonably believes to be for the
Company's benefit. For a period of five (5) years following the termination of
employment hereunder, the Employee shall not disclose any information, knowledge
or data of the type described above except as may be required in connection with
any judicial or administrative proceedings or inquiry, or otherwise required by
law. The covenant contained in this Section 7 shall survive the termination of
the Employee's employment pursuant to this Agreement.
(b) The foregoing provision of this Section 7 shall be binding upon
the Employee's heirs, successors and legal representatives.
(c) The foregoing does not apply to disclosure of the terms of this
Agreement and any other aspects of the Employee's compensation and benefits to
the Employee's accountants, financial planners, insurance agents and advisors.
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8. COVENANT NOT TO COMPETE. In consideration of his employment
hereunder and in view of the key position in which he will serve the Company,
the Employee agrees that during the period of his employment by the Company
hereunder and (unless the Company terminates his employment for Cause as
provided in Section 6(a) hereof) for two (2) years after the date of termination
of such employment he will not directly or indirectly own, manage, operate,
control, be employed by, participate in or be connected in any manner with the
ownership, management, operation or control of any business involving lawn,
garden, horticultural or turf care products or services in any area where the
Company's business is being conducted at the time of such termination. The
covenant contained in this Section 8 shall survive the termination of the
Agreement. The foregoing shall (i) be ineffective in the event of the
Employee's termination of his employment on the basis of Employee Cause, and
(ii) not apply in the event of a reorganization of the Company which results in
any of its divisions or subsidiaries becoming separate enterprises of which the
Employee becomes an employee.
9. ARBITRATION. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration in
Columbus, Ohio, in accordance with the rules of the American Arbitration
Association then in effect.
10. SUCCESSORS; BINDING AGREEMENT. The Company will require any
successor (by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company, by agreement in
form and substance satisfactory to the Employee, to expressly assume and agree
to perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken place.
Failure of the Company to obtain such agreement prior to the effectiveness of
any such succession shall be a breach of this Agreement and shall entitle the
Employee to compensation from the Company in the same amount and on the same
terms as the Employee would be entitled hereunder according to the provisions of
the first sentence of Section 6(c) hereof, except that for purposes of
implementing the foregoing, the date on which any such succession becomes
effective shall be deemed the Date of Termination. As used in this Agreement,
"Company" shall mean the Company as hereinbefore defined and any successor to
its business and/or assets as aforesaid which executed and delivers the
agreement provided for in this Section 10 or which otherwise becomes bound by
all the terms and provisions of this Agreement by operation of law. This
Agreement shall inure to the benefit of and be enforceable by the Employee's
personal or legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. Any amounts payable to the Employee
hereunder after his death shall be paid in accordance with the terms of this
Agreement to the Employee's devisee, legatee, or other designee or, if there be
no such designee, to his estate, unless otherwise provided herein.
11. INDEMNIFICATION. The Company agrees that it shall indemnify the
Employee to the fullest extent permitted by Ohio law.
12. NOTICES. All notices and other communications required or
permitted to be given under this Agreement shall be in writing and shall be
deemed to have been given if delivered personally or sent by certified express
mail, return receipt requested, postage prepaid, to the
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parties to this Agreement at the following addresses or to such other address
as either party to this Agreement shall specify by notice to the other:
If to the Company, to it at:
The Scotts Company
00000 Xxxxxxxxxx Xxxx
Xxxxxxxxxx, Xxxx 00000
Attn: General Counsel
If to the Employee:
Xxxxxxx X. Xxxxxx
00 Xxxx Xxxx
Xxxxx Xxxxx, Xxx Xxxx 00000
With a Copy to:
Xxxxxxx X. Xxxxxx
Xxxxx Xxxxxxx Xxxxxx & Xxxxxx LLP
00000 Xxxxx Xxxxxx Xxxx., 0xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
All notices and communications shall be deemed to have been received on the date
of delivery or on the third business day after the mailing thereof.
13. MISCELLANEOUS. No provisions of this Agreement may be modified,
waived or discharged unless such modification, waiver or discharge is approved
by the Board of Directors of the Company or a person authorized thereby and is
agreed to in a writing signed by the Employee and such officer as may be
specifically designated by the Board. No waiver by either party hereto at any
time of any breach by the other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time. No agreements or representations,
oral or otherwise, express or implied, with respect to the subject matter hereof
have been made by either party which are not set forth expressly in this
Agreement. The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the State of Ohio.
14. VALIDITY. The invalidity or unenforceability of any one or more
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
15. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
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16. AUTHORITY. The individual signing this Agreement on behalf of
the Company hereby represents and warrants that he, acting alone, is fully
authorized and empowered to do so, that he does so to the fullest extent of his
authority, and that this Agreement is binding upon and enforceable against the
Company.
17. REPRESENTATIONS AND WARRANTIES. The Company represents and
warrants to the Employee that:
(a) The Company and each of its subsidiaries have been duly organized
and are validly existing under the laws of their respective states of
organization, and each is qualified or licensed as a foreign corporation in each
jurisdiction where the character of the property owned or leased by it or the
nature of its activities makes such qualification or licensing necessary, except
for those jurisdictions where the failure to be so qualified or licensed would
not, individually or in the aggregate, have a material adverse effect on the
business operation of the Company or its subsidiaries.
(b) The Company has the full right, power, and authority to execute
and deliver this Employment Agreement and the Stock Option Agreement with the
Employee, and to perform all of the Company's obligations under each and to
carry out all of the transactions contemplated by each Agreement. Except as
otherwise disclosed in writing to the Employee, neither the execution and
delivery of the Employment Agreement or the Stock Option Agreement, nor the
consummation of the transactions contemplated therein, will, to the best of the
Company's knowledge, (i) violate any statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which the Company is subject or any provision
of the Company's articles of incorporation or code of regulations, or
(ii) conflict with, result in a breach of, constitute a default under, result in
acceleration of, or create in any party the right to terminate, modify, or
cancel, any material contract to which the Company or any of its subsidiaries is
a party or to which any of their assets is subject.
(c) The business of the Company and its subsidiaries has been and is
being conducted in all material respects in compliance with all applicable
statutes, laws, rules, ordinances, codes and regulations of foreign, federal,
state, and local governmental authorities (collectively, "Laws"), and the
Company and each of its subsidiaries holds, and is in all material respects in
compliance with, all licenses, permits, and authorizations necessary for the
conduct of the Company's and each subsidiary's business pursuant to all Laws to
which the Company, any subsidiary, and/or any of their businesses or assets may
be subject.
(d) There are no actions, suits, or proceedings pending, or, to the
best of the Company's knowledge, threatened or anticipated, before a court or
governmental or administrative body or agency which are materially affecting, or
could materially affect, the Company, any of its subsidiaries, or any of their
businesses or assets, except as set forth in Schedule 1 hereto. Neither the
Company nor any of its subsidiaries is presently subject to any injunction,
order, or other decree of any court of competent jurisdiction which materially
affects
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the business or assets of the Company or any subsidiary, nor to the best
of the Company's knowledge, is the Company, any of its subsidiaries, or any of
their officers or directors subject to any private investigation or audit being
conducted by any governmental or administrative body or agency, except as set
forth in Schedule 1 hereto.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date and year first above written.
THE SCOTTS COMPANY
By: /S/ X. X. XXXXXX
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/S/ XXXXXXX X. XXXXXX
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Xxxxxxx X. Xxxxxx
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