EXHIBIT 10(o)
Letter Agreement, dated April 10, 1996, between
Xxxxxxxx X. Host and The Scotts Company
[Scotts logo]
The Scotts Company
and Subsidiaries
Xxxx X. Xxxxx
Chairman
April 10, 1996
Xxxxxxxx X. Host
00000 Xxxxxxxxxx Xxxx.
Xxxxxx, XX 00000
Dear Xxx:
The purpose of this letter is to set forth the understanding of The Scotts
Company (hereinafter "Scotts" or the "Company") regarding the termination of
your employment with Scotts and various of its subsidiaries and affiliates.
Under the terms of your Employment Agreement dated as of October 21, 1991, you
may terminate your employment for "Good Reason" if the Company removes you from
the position of President of the Company. While it may be subject to some
debate whether you were removed or whether you resigned, the Company is willing
to assume that you were removed from office, thus triggering your ability to
terminate your employment for Good Reason. A form of letter stating that you
are terminating your employment for Good Reason is attached to this letter as
Exhibit A. Also attached are letters of resignation from each position you held
with the Company, its subsidiaries and affiliates. I would appreciate it if you
would sign the letter attached as Exhibit A and each resignation letter and
return each to me..
Your Employment Agreement provides that if you terminate your employment
for Good Reason, you are entitled to the following benefits:
1. Your full base salary at the annual base rate in effect immediately
prior to the date of termination;
2. A pro rata share of any incentive compensation due you for the year in
which you terminated your employment; and
3. Reimbursement for reasonable outplacement expenses.
You have already received a check for 1/12 of your full base salary.
Checks, net of normal deductions, will continue through February, 1997, subject
to the provisions of paragraph 6(f) of your Employment Agreement. So long as
you are receiving monthly checks, you will continue to be covered under Scotts'
medical and dental plans (and will be entitled to continue any flexible spending
accounts under those plans). Prior to the end of the period for which you are
being compensated, you will receive notice of your ability to continue medical
and dental coverage at your expense under the provisions of COBRA.
14111 Scottslawn Road, Marysville, Ohio 00000 (000) 000-0000 Fax (000) 000-0000
Your pro rata share of any incentive compensation due you for fiscal 1996
will be figured using the restated net income of the Company for fiscal 1995 -
$22,356,000. You will be entitled to 5/12 of whatever award would have been
paid to you under the terms of the Company's 1996 Executive Annual Incentive
Plan.
We have agreed to reimburse you for up to $15,000 of outplacement expenses,
payable against invoices submitted by you to Xxxxxxxx Xxxxx.
In addition to the payments due you pursuant to the terms of your
Employment Agreement as outlined above, the Company has agreed with you, as
follows:
1. Within a reasonable time after you have executed a copy of this letter
agreeing to its terms, you will be paid for two years of accrued vacation. You
are not eligible for any payments for sick leave.
2. During the period you are receiving monthly payments for your full base
salary, you will not receive vesting credit under the Company's Profit Sharing
and Savings Plan, nor under its Associates' Pension Plan (including the
Company's Excess Benefit Plan).
3. Your coverage under the Company's base life/ad&d plan, its supplemental
life insurance plan, its business travel accident plan, its short and long term
disability plans (including supplemental long term disability) and its associate
assistance program, as well as your eligibility for a car allowance, terminated
as of February 29, 1996.
4. You will be entitled to use the financial planning services offered
through AYCO through the end of calendar 1996.
5. The Company will reimburse you for legal fees incurred in connection
with your termination of employment up to a maximum amount of $5,000, to be paid
against invoices actually received by you from your legal counsel for this work.
Please submit such invoices to Xxxxxxxx Xxxxx.
6. In connection with the execution of your Employment Agreement in 1991,
you received a grant of options for 136,364 shares of common stock of the
Company at $9.90 per share. These options, all of which are non-qualified, are
fully vested and may be exercised until January 8, 2002. The exercisability of
these options is not affected by the termination of your employment.
7. During your employment, you were the recipient of several other
option grants, a summary of which is provided in Exhibit B attached to this
letter. You agree that Exhibit B properly sets forth the vesting arrangements
with respect to said options and that no further vesting will occur during
the period you are receiving monthly payments or other benefits from the
Company.
Options which have vested would normally have to be exercised, if at all,
within 30 days of the termination of your employment. For a variety of reasons,
you and we have agreed that this 30 day exercise period shall be extended until
the earlier of (1) 30 days after the first day after the date of this letter on
which Company "insiders" are permitted to buy or sell shares of the Company in
the open market (i.e., 30 days after the next "window period" commences) or (2)
the date on which the window period, once having commenced, is halted. (The
Company agrees to give you written notice, with a copy to Xxxxxx Xxxx, your
counsel, of the opening and closing of the next window period.) Provided,
however, that you shall be free to exercise any options and sell any underlying
shares at any time after you have delivered to the Company a legal opinion
reasonably acceptable to the Company opining that you are no longer an "insider"
of the Company and that you have met any other requirements (such as those
contained in Rule 144 of the Securities Act of 1933) in connection with your
proposed exercise and sale. Any options not exercised within the period set
forth in this paragraph shall expire.
We have further agreed to consider the purchase from you, in a privately
negotiated transaction, of shares of the Company owned by you as the result
of your exercise of options at a price equal to the closing price of the
Company's shares on the New York Stock Exchange on the date you offer such
shares to the Company (except that this agreement to consider purchasing
shares does not extend to shares subject to the option granted pursuant to
your Employment Agreement). If the Company elects to purchase any shares
from you, the Company will also consider making such purchase on a net basis
(i.e., you will be paid the net amount between your exercise price for such
shares and the closing price for such shares on the date of purchase). Let
me emphasize (1) that the Company is not making any commitment to purchase
any shares from you and (2) that so long as you are an "insider," any such
purchase would only be made during an open "window period".
Finally, the Company has agreed to consider the purchase from you, in a
privately negotiated transaction, of up to 45,454 shares of common stock of the
Company currently owned
by you. Should the Company elect to make such a purchase, it would be at a
purchase price equal to the closing price of the Company's shares on the New
York Stock Exchange on the date of purchase, and, so long as you remained an
"insider" of the Company, would be effected only during an open "window
period."
8. We have agreed on a form of reference letter to be used should one be
requested. A copy of the form of letter agreed upon is attached as Exhibit C.
9. You resigned as an officer and director of Scotts and certain of its
subsidiaries and affiliates effective February 22, 1996. Any actions which you
undertook while an officer and director of Scotts, its subsidiaries or
affiliates, will be covered by the indemnity provisions in the By-Laws or Code
of Regulations of Scotts (or of its subsidiaries and affiliates, as the case may
be) according to the terms thereof and you will continue to be covered after
that date by the directors' and officers' insurance policy which Scotts
maintains according to its terms.
10. You agree, except for the obligations set forth in this Agreement,
that all of Scotts' other obligations and any claims by you against Scotts and
the officers, directors and employees of Scotts, are released by your acceptance
of this Agreement, including but not limited to claims of age discrimination in
employment under the Federal Age Discrimination in Employment Act and the Older
Workers Benefit Protection Act. Except as specifically stated herein and except
as provided in any benefit plans maintained by Scotts in which you are
participating, you have no claim for and will not be entitled to any other
benefits, bonus, compensation, perquisites, vacation or sick pay allowance or
any kind of other remuneration arising out of your employment or the termination
thereof, provided, however, that this release shall not be construed to prevent
you from pursuing any rights you have to COBRA benefits or any rights you have
to enforce the terms of this letter.
11. You agree to keep the terms of this Agreement confidential and that
you will not disclose any information concerning these matters to anyone,
including but not limited to past, present or future employees of Scotts or its
affiliates (but excepting your legal and financial advisors and your spouse).
You agree to indemnify Scotts from any loss or costs arising from any breach by
you of this Agreement.
12. You understand that you are entering into this Agreement (and the
release contained herein) voluntarily in order to be the recipient of certain of
the agreements described herein that were not required pursuant to the terms of
your Employment Agreement. You understand that Scotts would not enter into
these agreements to which you would not otherwise be entitled without your
voluntary consent to this Agreement.
13. In making your decision whether or not to accept this Agreement, you
recognize that you have the right to seek advice and counsel from others,
including that of an attorney if you so choose. You acknowledge that you have
21 days within which to consider this offer.
14. You have seven calendar days from the date you sign this Agreement to
cancel it in writing. No payments (other than those to which you are entitled
pursuant to your Employment
Agreement) will be made under this Agreement until the expiration of the
seven day revocation period. You may cancel this Agreement by signing the
cancellation notice below (or by any other written signed notice) and
delivering it to Scotts (to my attention) within seven days of the date you
signed this Agreement.
You are reminded that certain provisions of your Employment Agreement
survive the termination of your employment with Scotts. Nothing in this letter
is intended to constitute a waiver by Scotts of the provisions of such
Agreement.
This Agreement will be construed in accordance with the substantive laws of
the State of Ohio. The rights and duties of the parties shall not be
assignable. This Agreement may not be amended except in writing signed by the
party against whom an obligation is to be enforced. No representations, other
than those contained herein, have been made as an inducement.
If this letter satisfactorily sets forth the provisions relating to your
termination of employment with the Company, please execute the enclosed copy and
return it to me.
Very truly yours,
/s/ Xxxx X. Xxxxx
Xxxx X. Xxxxx
Dear Xxxx:
This letter satisfactorily set forth the terms of my termination of
employment with The Scotts Company.
Dated: April 10, 1996 /s/ Xxxxxxxx X. Host
----------------------------
Xxxxxxxx X. Host
CANCELLATION NOTICE
To cancel this Agreement, sign below and deliver this copy of the Agreement
to Xxxx Xxxxx within seven days of the date you signed the Agreement.
I hereby cancel this Agreement.
__________________________ _________________________
(Date) (Signature)
Exhibit A
XXXXXXXX X. HOST
00000 XXXXXXXXXX XXXX.
XXXXXX, XXXX 00000
February 22, 1996
Xxxx X. Xxxxx, Chairman
The Scotts Company
00000 Xxxxxxxxxx Xxxx
Xxxxxxxxxx, Xxxx 00000
Dear Xxxx:
It is with deep regret that I hereby submit my resignation, effective today, as
President, Chief Operating Officer and Directors of The Scotts Company
("Scotts").
I am terminating my employment and submitting my resignation for "Good Reason"
pursuant to the provisions of Paragraph 6(b) of my Employment Agreement with
Scotts dated October 21, 1991. In recent months, it has become apparent that
the Board and my philosophies regarding sales and profitability have taken
different directions. I understand that this philosophical difference may cause
the Board to diminish my duties or remove me from my present positions.
Accordingly, I have chosen to resign.
I have enjoyed my time at Scotts, and I look forward to finalizing my severance
arrangements.
Sincerely,
/s/ Xxxxxxxx X. Host
Xxxxxxxx X. Host
EXHIBIT B
Xxxxxxxx X. Host
00000 Xxxxxxxxxx Xxxx.
Xxxxxx, XX 00000
The Scotts Company LONG TERM INCENTIVE STATEMENT Run Date 2/23/96
Page No. 1
As of 02/23/96
Date of Type of Options Options Option Date of Available
Xxxxx Xxxxx Granted Outst. Price Expir. Options Vested for Excercise
------- ------- ------- ------- ------ ------- -------------- -------------
11/04/92 NON-QUAL 26,000 26,000 $16.2500 11/03/02 26,000 (CURRENT) 26,000
11/04/92 NON-QUAL 25,987 25,987 $16.2500 11/03/02 25,987 (CURRENT) 25,987
11/04/92 NON-QUAL 25,987 25,987 $16.2500 11/03/02 25,987 (CURRENT) 25,987
11/04/92 NON-QUAL 27,108 27,108 $16.2500 11/03/02 27,108 (CURRENT) 27,108
10/01/93 NON-QUAL 28,290 28,290 $17.2500 09/30/03 18,860 (CURRENT) 18,860
9,430 on 10/01/96
10/01/93 NON-QUAL 28,290 28,290 $17.2500 09/30/03 0 (CURRENT) 0
28,290 on 10/01/96
10/01/94 NON-QUAL 56,580 56,580 $15.5000 09/30/04 18,860 (CURRENT) 18,860
18,860 on 10/01/96
18,860 on 10/01/97
12/13/95 NON-QUAL 46,000 46,000 $20.1875 12/12/05 0 (CURRENT) 0
15,333 on 12/13/96
15,333 on 12/13/97
15,334 on 12/13/98
--------- -------- ---------
Shares 264,242 42,802
EXHIBIT C
To whom it may concern,
I am pleased to offer this letter of reference for Xxxxxxxx X. Host. He was
employed by The Scotts Company as President, C.O.O. and a member of the
company's Board of Directors on October 21, 1991. On April 19, 1995, he was
promoted to President, Chief Executive Officer.
During his tenure with the Company, significant progress was made. He was a
significant participant in the acquisitions of The Republic Tool Company in
1992, The Xxxxx Xxxxxx Division of X.X. Xxxxx Company in January of 1994, and
the merger with Miracle-Gro Products in May, 1995.
As a result of this effort, the Company during his time as President, grew in
sales from $388,000,000 to $733,000,000 in a four year period. In the same
period, net income grew from $1,735,000 to $22,400,000.
His contribution to the growth of The Scotts Company is appreciated.
