SEPARATION AGREEMENT AND RELEASE OF ALL CLAIMS
Exhibit 10.3
SEPARATION AGREEMENT |
NOTICE: READ BEFORE YOU SIGN!
This agreement contains a RELEASE. We advise that you consult an ATTORNEY.
This agreement contains a RELEASE. We advise that you consult an ATTORNEY.
THIS SEPARATION AGREEMENT AND RELEASE OF ALL CLAIMS (“Agreement”) is made and entered into by
and between Xxxxxx X. Xxxxxxxxx (“Employee”) and The Scotts Company LLC (“Company”), in its own
behalf and as successor to The Scotts Company;
WHEREAS, Employee’s last day of employment with Company was September 12, 2006 (the
“Termination Date”);
WHEREAS, Employee and Company wish to enter into an agreement providing for an orderly
separation of Employee’s employment with Company and providing for severance pay and additional
consideration for Employee to which Employee is not otherwise entitled;
WHEREAS, Employee and Company are parties to an Employment Agreement and Covenant Not to
Compete, effective October 1, 2004, as subsequently amended (the “Employment Agreement”), which
sets forth various forms of compensation payable by Company to Employee in the event Employee’s
employment with Company is terminated (the “Severance Compensation”);
WHEREAS, this Agreement incorporates and enhances the Severance Compensation payable to
Employee, in addition to providing additional consideration to both Employee and Company;
WHEREAS, Employee and Company have agreed, in the February 9, 2006 Third Amendment to the
Employment Agreement, to administer the Employment Agreement in a manner reasonably expected to
avoid any penalties under Section 409A of the Internal Revenue Code of 1986, as amended (“Section
409A”); and
WHEREAS, Employee and Company agree that the terms of this Agreement are reasonably expected
to avoid any penalties under Section 409A and further agree that the timing of payments made
pursuant to this Agreement is the timing requested by Employee upon advice of his counsel, with
full recognition of the provisions of Section 409A;
NOW THEREFORE, in exchange for and in consideration of the promises and covenants contained
herein, along with other good and valuable consideration, the receipt of which is expressly
acknowledged hereby, the parties agree as follows:
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1. Severance Benefits. Company agrees to provide Employee with the following
(collectively, the “Severance Benefits”):
(A) A payment in the gross amount of TWO MILLION ONE HUNDRED SEVENTY-EIGHT THOUSAND
and 00/100 Dollars ( $2,178,000.00 ), representing two times the sum of Employee’s
annual base salary and the Incentive Target Bonus under the Scotts Executive/Management
Incentive Plan (the “Incentive Plan”) for 2006 (the “Lump Sum Payment”). This Lump Sum
Payment shall be made on the first business day following the Effective Date, as defined
below, less applicable withholding and deductions required by federal, state, and local
taxing authorities.
(B) A payment of the amount of the Incentive Target Bonus which Employee would have
earned for 2006, under the terms of the Incentive Plan, pro-rated to the Termination Date
(the “2006 Incentive Payment”). The amount of the 2006 Incentive Payment will be
calculated consistent with the incentive metrics established at the beginning of 2006 for
the Employee. The payment shall be sent in a lump sum on the first business day following
the Effective Date, as defined below, less applicable withholding and deductions required
by federal, state, and local taxing authorities.
(C) Upon the Termination Date, all of Employee’s unvested equity grants (including
Nonqualified Stock Options, restricted stock and stock appreciation rights) vested
immediately. Employee will have the shorter of December 11, 2006, or the expiration of a
specific grant, to exercise Employee’s options and stock appreciation rights.
Notwithstanding the foregoing, in the event of a major corporate event, Employee’s options
shall be treated in the same manner as all other Scotts associates. Also, all shares of
restricted stock and any undistributed dividends (currently estimated to be $35,300)
associated with those shares will be distributed to Employee on the first business day
following the Effective Date, as defined below.
(D) A payment representing the balance of Employee’s Executive Retirement Plan account
(the “Executive Retirement Plan Payment”). The Executive Retirement Plan Payment shall be
made on or within three days after March 12, 2007, less applicable withholding and
deductions required by federal, state, and local taxing authorities.
(E) Payment of any benefit to which Employee is entitled under any other non-qualified
Scotts plan shall be paid out in accordance with Employee’s previous elections. Any such
payments shall be made on or within three days after March 12, 2007, less applicable
withholding and deductions required by federal, state, and local taxing authorities, or in
accordance with the terms of any such plans, whichever is later.
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(F) For so long as Employee is eligible, but for no longer than 24 months after the
Termination Date, Employee shall be entitled to elect and receive COBRA coverage at his own
expense. For the first 18 months of said COBRA coverage, Employee’s cost shall be at
regular COBRA rates. For the
final six months of said COBRA coverage, Employee’s cost shall be 150% of the regular
COBRA rates. On the first business day following the Effective Date, as defined below,
Company will pay to the Employee a gross amount equal to $19,312.13, net of applicable
withholding and deductions required by federal, state and local taxing authorities, in
mitigation of these costs; Employee will be solely responsible for paying the balance of
the COBRA costs.
(G) Company shall maintain, through September 12, 2011, Directors and Officers
Liability Insurance covering the Employee (or the Employee’s estate, if the Employee is
deceased or incompetent), which provides coverage at least as favorable to the Employee (or
the Employee’s estate, if the Employee is deceased or incompetent), as coverage under
Company’s policy in effect on the Termination Date, and which coverage shall be increased
from time to time in such amounts as Company may determine to be appropriate in light of
Company’s operations.
(H) On or about November 7, 2006, Company issued and Employee accepted 5,000 shares
of Company’s common stock in full satisfaction of the Performance Shares award granted
pursuant to (and subject to the terms of) an award agreement between Company and Employee
dated December 9, 2005 and as consideration for this Agreement. If Employee signs this
Agreement (and does not exercise his right of revocation under section 5), Company will not
seek the return of those shares
(I) The Severance Benefits described herein shall be the only amounts paid to Employee
by or on behalf of Company, and no interest on any amount shall be paid. Employee
otherwise acknowledges hereby the receipt of all wages and other compensation or benefits
to which Employee is entitled as a result of Employee’s employment with Company through the
Termination Date.
(M) Employee will be allowed to continue to use Company’s membership at Tartan Fields
through December 31, 2006 (after which period he will relinquish usage of that membership)
on the condition that he has paid all dues and fees associated with that usage through
December 31, 2006. Company will reimburse Employee for any dues that he has paid for any
usage of that facility for any period after December 31, 2006.
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2. Release of Claims by Employee. Employee, on behalf of Employee and Employee’s
spouse, personal representatives, administrators, minor children, heirs, assigns, wards, agents,
and all other persons claiming by or through Employee, does hereby forever release and discharge
Company and its respective officers, directors, shareholders, agents, employees, affiliates,
subsidiaries, divisions, predecessors, successors, and assigns (the “Released Parties”) from any
and all charges, claims, demands, judgments, causes of action, damages, expenses, costs, and
liabilities of any kind whatsoever. Employee expressly acknowledges that the claims released by
this paragraph include all rights and claims relating to Employee’s employment with Company and the
termination thereof, including without limitation any claims Employee may have under the Age
Discrimination in Employment Act, as amended by the Older Worker Benefit Protection Act, Title VII
of the Civil Rights Act of 1964, as amended, the Equal Pay Act, the Americans with Disabilities
Act, the Employee Retirement Income Security Act, the Worker Adjustment Retraining and Notification
(WARN) Act, Ohio Revised Code Chapter 4112, and any other federal, state, or local laws or
regulations governing employment relationships. This release specifically and without limitation
includes a release and waiver of any claims for employment discrimination, wrongful discharge,
breach of contract, or promissory estoppel, and extends to all claims of every nature and kind,
whether known or unknown, suspected or unsuspected, presently existing or resulting from or
attributable to any act or omission of the Released Parties occurring prior to the execution of
this Agreement. The release contained herein does not apply to any claim or right to benefits
Employee is entitled to receive as of the Termination Date under the terms of any Company sponsored
tax-qualified deferred compensation program, to Employee’s right to indemnification as described in
section 5 of the Employment Agreement or to any claim or to rights or claims first arising after
the Effective Date of this Agreement, nor does it apply to any claims for unemployment compensation
or workers compensation benefits and does not apply to any right or claim to enforce this
Agreement.
In addition to the general nature of the release set forth in the preceding paragraph, Employee
specifically acknowledges that he is releasing and waiving any claims which might arise as a result
of the application of Section 409A of the Internal Revenue Code of 1986, as amended, to the
payments made pursuant to this Agreement, and expressly acknowledges herein that the payments and
timing of payments made to him hereunder have been administered in a manner compliant with any
previous agreement he has with Company and in a good faith, mutually agreed manner reasonably
expected to avoid any penalties under Section 409A of the Internal Revenue Code of 1986, as
amended. Employee agrees to indemnify Company for any penalties associated with any reporting
obligation under Section 409A with regard to any payments made pursuant to this Agreement and with
regard to any interest and penalties associated with a withholding obligation under Section 409A
and for any costs and fees incurred by Company in respect of any claim made or government
proceeding initiated relative to the foregoing.
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Employee agrees not to file any claim or initiate any proceeding, in law or in equity, released by
this Agreement. In the event that Employee files any legal action asserting any claim released by
this Agreement other than a claim under the Age Discrimination in Employment Act, as amended by the
Older Worker Benefit Protection Act, Employee must immediately repay to Company the Separation Pay
set forth herein as a condition precedent to the maintenance of such a lawsuit, and Employee shall
reimburse Company for all costs, including attorney fees, incurred in defense of any such claim or
proceeding; provided, however, that the terms of this paragraph shall not permit the setting aside
of this Agreement by payment of such amounts without adjudication by a court that this Agreement is
otherwise invalid.
3. Release of Claims by Scotts. Company, on behalf of itself and its affiliated
entities, does hereby forever release and discharge Employee from any and all charges, claims,
demands, judgments, causes of action, damages, expenses, costs, and liabilities of any kind
whatsoever. Company expressly acknowledges and agrees that the claims released by this paragraph
include all rights and claims relating to Employee’s employment with Company and the termination
thereof. The release contained herein does not apply to any claim or rights first arising after
the Effective Date of this Agreement.
4. Knowing and Voluntary Act. Employee acknowledges and agrees that the release set
forth above is a general release. Employee, having been encouraged to and having had the
opportunity to be advised by counsel, expressly waives all claims for damages which exist as of
this date, but of which Employee does not now know or suspect to exist, whether through ignorance,
oversight, error, negligence, or otherwise, and which, if known would materially affect Employee’s
decision to enter into this Agreement. Employee further agrees that Employee accepts the Severance
Benefits as a complete compromise of matters involving disputed issues of law and fact and assumes
the risk that the facts and law may be other than Employee believes. Employee further acknowledges
and agrees that all the terms of this Agreement shall be in all respects effective and not subject
to termination or rescission by reason of any such differences in the facts or law, and that
Employee provides this release voluntarily and with full knowledge and understanding of the terms
hereof.
5. Revocation Period. Employee specifically acknowledges and understands that this
Agreement is intended to release and discharge any claims of Employee under the Age Discrimination
in Employment Act, as amended by the Older Worker Benefit Protection Act. Employee has 21 calendar
days in which to consider this Agreement and will have 7 calendar days in which to revoke
Employee’s acceptance after signing this Agreement. To revoke, Employee must deliver written
notice of revocation to Company’s Human Resources Department at 00000 Xxxxxxxxxx Xx; Xxxxxxxxxx,
Xxxx 00000. This Agreement will be effective on the eighth day after it is signed by Employee,
assuming that Employee does not exercise the right of revocation described in this section (the
“Effective Date”).
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6. Non-disparagement. Company and the Employee agree not to make any statement to any
third party that the statement maker could reasonably foresee would cause harm to the personal or
professional reputation of the Employee or Released Parties and Company will instruct its officers
and directors to adhere to the provisions of this Section.
7. No Admission of Liability. Neither this Agreement, nor any term contained herein,
may be construed as, or may be used as, an admission on the part of either party of any fault,
wrongdoing, or liability whatsoever.
8. Survivorship. Should Employee die or become totally disabled following the
Termination Date but before the payments due Employee under paragraph 1 above have been made, any
remaining payments shall be made to Employee (or Employee’s designated beneficiary, as applicable).
9. Return of Property. Employee agrees to return all Company property remaining in
Employee’s possession or control, including without limitation any and all equipment, documents,
credit cards, hardware, software, source code, data, keys or access cards, files, or records on or
before the Termination Date.
10. Confidentiality. Employee further acknowledges and agrees that any
confidentiality, nondisclosure, noncompetition, and nonsolicitation obligations to Company under
any prior agreement, are not being released hereby and will specifically survive the termination of
Employee’s employment and this Agreement. Employee expressly agrees to keep and maintain Company
confidential information confidential, and not to use or disclose such information, directly or
indirectly, without the prior written consent of Company or unless required by law or legal
process. Employee agrees that the provisions of this paragraph are material terms of this
Agreement.
11. Cooperation with Litigation. Employee will cooperate fully with Company in its
defense of any lawsuit filed over matters that occurred during the tenure of Employee’s employment
with Company, and Employee agrees to provide full and accurate information with respect to same;
Company will compensate Employee for any such service at the rate of $300.00 per hour (but no more
than $1,500 per day plus reasonable costs and expenses. Employee further agrees not to assist any
party in maintaining any lawsuit against any of the Released Parties, and will not provide any
information to anyone concerning any of the Released Parties, unless compelled to do so by valid
subpoena or other court order, and in such case only after first notifying Company sufficiently in
advance of such subpoena or court order to reasonably allow Company an opportunity to object to
same. Nothing in this paragraph shall be construed to mean that Employee may not file a charge
with, or from participating in any investigation of a charge conducted by, any governmental agency.
Employee nevertheless understands and agrees that because of the waiver and release, he/she freely
provides by signing this Agreement, he/she cannot obtain any monetary relief or recovery from
Company or any Releasee in any proceeding.
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12. Choice of Law. The validity, construction and interpretation of this Agreement
shall be governed by the laws of the State of Ohio.
13. Execution in Parts. This Agreement may be executed in multiple counterparts, each
of which shall constitute an original, and all of which shall constitute a single Agreement.
14. No Waiver of Terms. Failure to insist upon strict compliance with any of the
terms, covenants, or conditions of this Agreement shall not be deemed a waiver of any such term,
covenant, or condition, nor shall any failure at any one time or more times be deemed a waiver or
relinquishment at any other time or times of any right under this Agreement.
15. Modifications. No modification or amendment of this Agreement shall be effective
unless the same is in a writing duly executed by all the parties hereto.
16. Assignment. Company may assign, in whole or in part, its rights under this
Agreement, and the rights of Company hereunder shall inure to the benefit of, and the obligations
of Company hereunder shall be binding upon, its successors and assigns. Employee’s rights and
obligations hereunder may not be assigned.
17. Entire Agreement. Except as otherwise set forth herein, this Agreement sets forth
the entire Agreement between Company and Employee and supersedes and replaces any and all prior or
contemporaneous representations or agreements, whether oral or written, relating to the subject
matter hereof, including but not limited to the Employment Agreement, except that Paragraphs 4, 5
and 6, 7(i) and 7(j) of said Employment Agreement shall survive and remain in full force and
effect.
18. Method of Acceptance. To accept, Employee must deliver a signed and dated copy
hereof to Xxxxx Xxxxx in Company’s Human Resources Department, 00000 Xxxxxxxxxx Xxxx, Xxxxxxxxxx,
Xxxx 00000. This Agreement will not be effective or enforceable until such signed copy is received
by Company as set forth herein.
19. Method of Distribution. The amounts described in Paragraph 1(A) will be sent by
wire transfer pursuant to instructions provided by Employee. The other cash payments due under
this Agreement will be distributed through the U.S. Postal service and sent by first class mail,
postage paid, to Employee’s residence. Any shares of stock due to Employee under this Agreement
will be transferred through Xxxxxxx Xxxxx in the
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manner similar transfers are effected under the terms of the Company’s equity plans through
which those shares are being distributed.
IN WITNESS WHEREOF, EACH OF THE UNDERSIGNED, HAVING RECEIVED ALL THE ADVICE DEEMED
NECESSARY, AND HAVING CAREFULLY READ AND UNDERSTOOD THIS AGREEMENT, DOES HEREBY
SIGN AND ACCEPT THIS AGREEMENT AS OF THE DATE SET FORTH BELOW.
12/01/06 | /s/ Xxxxxx X. Xxxxxxxxx | |||||
Date | Xxxxxx X. Xxxxxxxxx | |||||
December 1, 2006 | THE SCOTTS COMPANY LLC | |||||
Date |
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By: |
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Its: | Executive Vice President, Global HR |
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