Exhibit 10.1
EMPLOYMENT AGREEMENT
and
COVENANT NOT TO COMPETE
EMPLOYMENT AGREEMENT and COVENANT NOT TO COMPETE (the
"Employment Agreement"), by and between THE SCOTTS COMPANY (the "Company") and
ROBERT F. BERNSTOCK (the "Executive"), effective as of October 1, 2004.
WITNESSETH:
WHEREAS, the Executive desires to continue to utilize the
services of the Executive in the new capacities of its President North America,
and Executive Vice President, and the Executive is willing to render such
services; and
WHEREAS, the Company and the Executive desire to evidence in
this Employment Agreement the terms under which the Executive will perform such
services;
NOW THEREFORE, in consideration of the premises, respective
covenants and agreements of the parties contained in this Employment Agreement,
and intending to be legally bound, the Executive and the Company agree as
follows:
1. Title and Duties
(a) General. The Executive agrees to continue in the
employment of the Company on and after October 1, 2004, pursuant to the
terms of this Employment Agreement. The Executive's titles will be
President North America and Executive Vice President of the Company.
The Executive's duties and responsibilities will be as described in the
Company's Bylaws (as in effect as of the date of this Employment
Agreement) and the Executive shall at all times report directly to the
Chief Executive Officer of the Company, or as otherwise agreed by the
Executive. The Executive will exercise due diligence and reasonable
care in the performance of the Executive's duties under this Employment
Agreement. During the Term of this Employment Agreement, a change in
the Executive's assignments or duties shall not constitute
"Constructive Termination", as defined in Paragraph 2(c), if, in any
given fiscal year, the Executive does not lose supervision or reporting
relationships over business functions or segments that have generated
one hundred million dollars or more of revenue in the prior fiscal
year, or which constitute a core business function of the Company.
(b) Board Service. The Executive will be permitted to serve on
the boards of for-profit organizations so long as such activities do
not materially interfere with the performance of his duties hereunder.
The Company acknowledges that the board positions (3) on October 1,
2004, held by the Executive do not materially interfere with the
Executive's performance of duties under this Employment Agreement.
(c) Place of Performance. The Executive shall primarily
perform his duties and conduct his business at the offices of the
Company, located in Marysville, Ohio, except for required travel
reasonably required for the Company's business.
2. Term
(a) General Term. Unless earlier terminated as provided for
herein, the term of this Employment Agreement will be for three years,
beginning on October 1, 2004, and ending on September 30, 2007 (the
"Term"). The Term of this Employment Agreement shall automatically
extend for one additional year unless, at least thirty days prior to
the end of the Term, either of the Company or the Executive shall give
to the other written notice that the Term shall not extend for such one
year period. The parties may renew this Employment Agreement for
additional periods on mutually agreeable terms and conditions. Neither
the Company nor the Executive is under any obligation to agree to such
extensions and may refuse to extend or renew this Employment Agreement
for any or no reason; provided, however, that the Company's refusal to
offer the Executive a renewal on substantially comparable terms, as
determined at the time of refusal, shall constitute a termination by
the Company not for Cause, as if effected under Paragraph 2(c) below.
(b) Termination Due to Resignation Without Constructive
Termination or Termination For Cause. If the Executive's employment
with the Company is terminated by the Executive due to the Executive's
voluntary resignation (other than voluntary resignation following
"Constructive Termination", as defined below) or by the Company for
"Cause" (as defined below), this Employment Agreement shall terminate
immediately (except for the provisions of Paragraphs 4, 5, 6 and 7).
For purposes of this Employment Agreement, the Executive may be
terminated for "Cause" by majority vote of the Board of Directors of
the Company as a result of the (i) Executive's conviction or plea of
nolo contendere for the commission of an act or acts constituting a
felony under the laws of the United States or any state thereof; (ii)
upon the Executive's willful and continued failure to substantially
perform his duties hereunder (other than any such failure resulting
from the Executive's incapacity due to physical or mental illness);
(iii) misconduct that materially injures the Company or a subsidiary of
the Company or a subsidiary of the Company; or (iv) breach of any
written covenant or agreement with the Company or a subsidiary of the
Company. Any conduct or condition causing termination for Cause under
Clauses (ii) or (iv) of this Paragraph 2(b) may be cured by the
Executive within thirty days after written notice is delivered to the
Executive from the Company and no termination shall occur for such
reasons prior to the expiration of the cure period, if no cure occurs.
For these purposes, no refusal to act or failure to adhere shall be
considered as grounds for Cause unless it is done, or omitted to be
done, in bad faith without reasonable belief that the action or
omission was in the best interest of the Company. In the event
corrective action is not satisfactorily taken by the Executive, a final
written notice of termination shall be provided to the Executive by the
Company. In such event the Executive shall receive the amounts
described in Paragraph 3(i) following termination of this Employment
Agreement. Any resignation by the Executive shall be communicated by at
least thirty days' advance written notice.
(c) Resignation Following Constructive Termination;
Termination Not for Cause. If the Executive's employment is terminated
during the Term of this Employment Agreement (i) due to resignation
following "Constructive Termination" (as defined below) or (ii) the
Executive is discharged by the Company for any reason other than for
Cause (as defined in Paragraph 2(b)), this Employment Agreement shall
terminate immediately (except for the confidentiality provisions of
Paragraph 4(a) and the provisions of Paragraphs 5, 6 and 7) and the
Executive shall receive the amounts described in Paragraph 3(j)
following termination of this Employment Agreement.
For purposes of this Employment Agreement, a "Constructive
Termination" shall be deemed to have occurred in the event that (i) the
Executive's Base Salary as defined in Paragraph 3(a) is reduced, (ii) a
significant diminution in the Executive's responsibilities, authority
or scope of duties is effected by the Board of Directors and/or Chief
Executive Officer and such diminution is made without the Executive's
written consent (without regard to whether or not any change is made to
the Executive's title); (iii) the Company materially breaches this
Employment Agreement; (iv) the failure by the Company to continue in
effect any compensation or benefit plan in which the Executive is
entitled to participate which is material to the Executive's total
compensation, unless an equitable arrangement has been made with
respect to such plan, or the failure by the Company to continue the
Executive's participation therein (or in such substitute or alternative
plan) on a basis not materially less favorable, both in terms of the
amount of benefits provided and the level of the Executive's
participation relative to other participants; (v) the Company fails to
obtain the assumption of this Employment Agreement as required by
Paragraph 7(b); or (vi) the Company terminates the Executive's
employment other than for Cause (as defined in Paragraph 3(b)) within
twenty four months after a Change in Control of the Company.
For purposes of this Employment Agreement, a "Change in
Control of the Company" means the occurrence of any of the following
events after October 1, 2004: (i) any "person" or "group" (as such
terms are used in Sections 13(d) and 14(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act")) other than the Company,
subsidiaries of the Company, an employee benefit plan sponsored by the
Company, or Hagedorn Partnership, L.P. or its successor or any party
related to Hagedorn Partnership, L.P. (as determined by the Board of
Directors) is or becomes the "beneficial owner" (as defined in Rule
l3d-3 under the Exchange Act), directly or indirectly, of more than
thirty percent of the combined voting stock of the Company; (ii) the
shareholders of the Company adopt or approve a definitive agreement or
series of related agreements for the merger or other business
consolidation with another person and, immediately after giving effect
to the merger or consolidation, (A) less than fifty percent of the
total voting power of the outstanding voting stock of the surviving or
resulting person is then "beneficially owned" (within the meaning of
Rule l3d-3 under the Exchange Act) in the aggregate by (x) the
stockholders of the Company immediately prior to such merger or
consolidation, or (y) if a record date has been set to determine the
stockholders of the Company entitled to vote with respect to such
merger or consolidation, the stockholders of the Company as of such
record date and (B) any "person" or "group" (as defined in Section
13(d)(3) or 14(d)(2) of the Exchange Act) has become the direct or
indirect "beneficial owner" (as defined in Rule l3d-3 under the
Exchange Act) of more than fifty percent of the voting power of the
voting stock of the surviving or resulting person; (iii) the Company,
either individually or in conjunction with one or more of its
subsidiaries, sells, assigns, conveys, transfers, leases or otherwise
disposes of, or the subsidiaries sell, assign, convey, transfer, lease
or otherwise dispose of, all or substantially all of the properties and
assets of the Company and the subsidiaries, taken as a whole (either in
one transaction or a series of related transactions), to any person
(other than the Company or a wholly owned subsidiary); (iv) for any
reason, Hagedorn Partnership, L.P. or its successor or any party
related to Hagedorn Partnership, L.P. (as determined by the Board of
Directors) becomes the beneficial owner, as defined above, directly or
indirectly, of securities of the Company representing more than
forty-nine percent of the combined voting power of the Company's
then-outstanding voting securities; or (v) the adoption or
authorization by the shareholders of the Company of a plan providing
for the liquidation or dissolution of the Company. Any resignation by
the Executive as a result of assertion of a Constructive Termination
shall be communicated by delivery to the Board of Directors of the
Company of thirty days' advance written notice of such Constructive
Termination and the grounds therefor, during which period the Company
shall be entitled to cure or remedy the matters set forth in such
notice to the Executive's reasonable satisfaction. Unless the Executive
shall withdraw such notice prior to the expiration of such thirty day
period, such resignation shall take effect upon the expiration of
thirty days from the date of the delivery of such notice.
(d) Death; Disability. If the Executive shall die, or become
disabled and cannot perform the Executive's duties for a period of more
than six months, this Employment Agreement shall terminate immediately.
For purposes of this Employment Agreement, the Executive shall be
disabled as of the earlier of (i) the first date on which the Executive
shall become eligible to receive disability benefits under the
Company's long-term disability plan (or Social Security disability
benefits at a time when the Company does not maintain a long-term
disability plan or such plan is not available to the Executive); or
(ii) if, as a result of the Executive's incapacity due to physical or
mental illness, the Executive shall have been absent from his duties
hereunder for the entire period of six consecutive months, and within
thirty days after written notice in accordance with the provisions of
Paragraphs 2(b) and 7(e) is given, shall not have returned to the
performance of his duties. In such events, the Executive or his estate
or beneficiary shall receive the amounts described in Paragraph 3(h).
3. Compensation
(a) Base Salary. Each year during the Term hereof, the
Executive will be paid a base salary of $540,000 per annum ("Base
Salary"), payable in accordance with the Company's payroll guidelines,
subject to applicable tax and benefit plan withholding. Increases may
be made to the Executive's Base Salary (in accordance with the standard
performance review procedures for senior executive officers of the
Company) at the discretion of the Compensation and Organization
Committee and approved by the Board of Directors based upon the
Executive's individual performance. Notwithstanding the foregoing, if
the Executive's Base Salary is increased, it shall not thereafter be
decreased during the Term of this Employment Agreement.
(b) Incentive Target. The Executive shall be a participant in
The Scotts Company Executive/Management Incentive Plan, with a Target
Payment Percentage (as defined in such plan) of sixty-five percent, and
in any successor to such plan. The goals for the Executive under such
plan shall be consistent with those established for other senior
executives in general, taking into consideration the Executive's
position and duties with the Company.
(c) Stock-Based Compensation. As of October 1, 2004, the
Executive shall receive a restricted stock grant of twenty-five
thousand shares of stock of the Company. The terms of grant shall
specify that any forfeiture restrictions shall lapse on September 30,
2009, if the Executive is then employed by the Company, or on September
30, 2007, if the Executive is then employed by the Company and is not
then serving as Chief Operating Officer of the Company, or in a more
senior position with the Company. The Executive shall be eligible for
additional grants and awards under The Scotts Company 2003 Stock Option
and Incentive Equity Plan or any successor plan (the "Equity Plan") on
a basis no less favorable to the Executive than other senior management
executives, commensurate with his position and title, targeted at least
at the 50th percentile of peer companies for the chief operating
officer position.
(d) Benefit Plan Participation. The Executive shall be
entitled to participate in all of the Company's benefit programs for
senior management executives. The Executive shall participate in, and
be eligible to receive benefits under, any "employee welfare benefit
plans" and "employee pension benefit plans" (as such terms are defined
in the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) and business travel insurance plans and programs as shall
apply to general and/or executive employees of the Company; and shall
be provided benefits under such plans and agreements substantially
equivalent (in the aggregate) to the benefits provided to other senior
executive officers of the Company and on substantially similar terms
and conditions as such benefits are provided to other senior executive
officers of the Company. Notwithstanding the foregoing, the Executive
is not eligible for participation in the Company's pension plan. The
Executive will participate, or be eligible to participate where
participation is voluntary, in any non-qualified pension, supplemental
executive retirement programs, deferred compensation, and excess
benefit plans sponsored by the Company and available to any of the
Company's senior management executives. During the Term, the Company
shall provide to the Executive all of the fringe benefits and
perquisites that are provided to other senior executive officers of the
Company, and the Executive shall be entitled to receive any other
fringe benefits or perquisites that become available to other senior
executive officers of the Company subsequent to the date of execution
of this Employment Agreement. Without limiting the generality of the
foregoing, the Company shall provide the Executive with the following
benefits during the Term: (i) paid vacation, paid holidays and sick
leave in accordance with the Company's standard policies for its senior
executive officers, which policies shall provide the Executive with
benefits no less favorable (in the aggregate) than those provided to
any other senior executive officers of the Company; (ii) an automobile
allowance of at least $12,000 annually and no less than any such
allowance provided to any other senior executive officer of the
Company; (iii) the Executive and, in some circumstances, members of his
immediate family shall receive use of one or more Company-owned or
leased and Company operated aircraft in accordance with the Company's
standard executive flight and travel policies. The Executive
acknowledges that part of any such travel may constitute additional
taxable compensation of the Executive, but the Company makes no tax
representation relating thereto. In the event that the Executive shall
attain the age of fifty-five years while in the active employment of
the Company, and completes at least six years of full-time continuous
employment with the Company, the Company will extend active employee
health care benefits required to be available to the Executive for a
limited period ("COBRA Coverage") under Part Six of Title One of ERISA,
until the Executive attains the age of sixty-five years (or, in the
event of the Executive's death, would have attained the age of
sixty-five years) or becomes entitled to benefits under the Federal
"Medicare Part A" program, whichever shall first occur. The Executive
will pay a premium for such extended health care coverage. During the
period in which COBRA Coverage is statutorily required under ERISA, the
Executive (or his spouse or dependents in the event of his death) shall
pay the COBRA premium then in effect for those who elect COBRA Coverage
under the Company's health plan or plans. Thereafter, during the
extended coverage period described in this Paragraph 3(d), the
Executive shall pay one hundred fifty percent of such COBRA premium in
effect from time to time for such coverage.
(e) Personal Financial Planning. The Company will provide the
Executive with either a $4,000 amount to be used in lieu of the
provision of personal financial planning, or will provide personal
financial planning up to a cost or value of such amount. The value of
such services or such amount will be added to the Executive's taxable
income. Some or all of such value or amount may be tax deductible by
the Executive, but the Company makes no tax representation relating
thereto.
(f) Executive Physical. The Executive shall receive a
comprehensive physical examination annually at Company expense through
a physician or physicians of the Executive's choice under the Cleveland
Clinic or OSU Executive Medical Services facilities, provided that part
of such expense may be reimbursed through one or more Company welfare
benefit plans.
(g) Repayment of Sign-On Bonus. In the event that the
Executive shall separate from employment with the Company prior to
April 24, 2005, for any reason, the Executive shall repay to the
Company a pro-rated portion of the $300,000 sign-on bonus he received
pursuant to his agreement entered into with the Company on April 23,
2003. Such pro-ration shall be based on the non-expired part of the
twenty-four month period which commenced April 23, 2003. Such repayment
shall be paid by the Executive in a single lump sum payable within
thirty days of the Executive's separation from the Company.
(h) Compensation on Death or Disability. During any period
that the Executive fails to perform his duties hereunder as a result of
incapacity due to physical or mental illness, the Executive shall
continue to receive his full Base Salary, as well as other applicable
employee benefits provided to other senior executives of the Company,
less any amounts paid under the Company's long-term or short-term
disability plans before termination of the Executive's employment,
until his employment is terminated pursuant to Paragraph 2(d) hereof.
In the event of the death of the Executive, the Executive's estate or
designated beneficiary shall receive the Executive's accrued and unpaid
Base Salary to date of death. Bonuses, benefits and perquisites and
reimbursements shall be payable in accordance with the terms of the
governing plan documents or Company policies. Upon termination of this
Employment Agreement under Paragraph 2(d), the Executive, or the
Executive's estate or designated beneficiary in the event of the
Executive's death, shall also receive within thirty days of the date of
death or disability termination, a lump sum amount equal to two times
the sum of Executive's annual Base Salary and incentive target bonus
(in each case as in effect in the year of disability or death), plus
the payments and benefits set forth in Paragraphs 3(j)(iii), (j)(v),
(k) and (l), at the times indicated therein. The Executive, in the
manner designated by the Company, may designate a beneficiary or
beneficiaries other than his estate to receive such amount. No other
severance amount shall be payable under the Employment Agreement on
account of the Executive's death or disability.
(i) Compensation in the Event of Resignation Other Than on
Account of Constrictive Termination or in the Event of Discharge for
Cause. If the Executive's employment is terminated by the Company for
Cause (as defined in Paragraph 2(b)) or the Executive resigns for any
reason other than pursuant to Constructive Termination (as defined in
Paragraph 2(c)) the Executive will receive payment of his unpaid
accrued Base Salary to the date of termination of employment, and shall
be entitled to any amounts provided under the terms of the Company's
benefit plans and employment policies, and the Company shall have no
further obligations to the Executive under this Employment Agreement.
(j) Compensation in the Event of Resignation Following
Constructive Termination or Discharge by the Company Other than for
Cause. In the event that the Executive shall be entitled to
compensation pursuant to Paragraph 2(c), the Executive shall receive
within fifteen days of termination of employment, except as required by
Paragraphs 3(j)(iii) and (iv) below, the following:
(i) The Executive's accrued and unpaid Executive's
Base Salary as described in Paragraph 3(a) through the date of
termination;
(ii) except as provided in Paragraph 3(j)(iii), in
lieu of further cash compensation payments to the Executive
pursuant to Paragraph 3, the Company shall pay the Executive,
within thirty days of the date of the Executive's termination,
a lump sum amount equal to two times the sum of the
Executive's annual Base Salary and incentive target bonus (for
such year);
(iii) in addition to the compensation described in
Paragraph 3(j)(ii), the Executive shall receive the amount of
incentive the Executive would have earned for such year
pro-rated to the date of termination, and payable at the time
incentive
payments are regularly payable to recipients of such payments
for such year;
(iv) the amounts payable under the Company's benefit
plans, perquisites and policies shall be payable under the
terms of the respective plan documents and personnel policies;
provided, however that if health benefits are not otherwise
due to the Executive, his spouse or dependents under Paragraph
3(d), medical coverage shall be provided for a twenty-four
month period following the date of termination at the same
coverage level as is made available to active senior
management employees of the Company, subject to the charges
for such coverage described in Paragraph 3(d); and
(v) additionally, the provisions of Paragraph 7(i)
and 7(j) shall remain in effect as though this Employment
Agreement expired at the end of its regular Term described in
Paragraph 2(a), irrespective of its earlier termination.
(k) Vesting. The Executive has received prior to October 1,
2004, stock-based awards relating to fifty thousand shares of Company
stock on June 2, 2003, and twenty-five thousand shares of Company stock
on November 19, 2003. The Executive has also received a stock award
pursuant to Paragraph 3(c) of this Employment Agreement, and may
receive additional stock-based compensation in the future.
Notwithstanding anything in the award documents under which such awards
were made to the contrary, all such awards shall vest, become
exercisable, or mature, as applicable, in the event of termination of
the Executive's employment by the Company for any reason other than for
Cause, or in the event of the Executive's resignation following
Constructive Termination, provided, however, that this provision shall
apply to the stock award pursuant to this Employment Agreement of
twenty-five thousand shares of Company stock and any additional stock
based compensation in the future only if the Executive's termination of
employment or resignation following Constructive Termination occurs on
or after the attainment of the age of fifty-five years. The Company
agrees to make, and represents that the Board has authorized as of the
date of this Employment Agreement, an amendment to any of the relevant
award instruments as shall be necessary to be consistent with this
Paragraph 3(k), as well as adding a provision prohibiting cancellation
of the award without the consent of the Executive. The time and manner
of payment or transfer will be determined in accordance with the terms
and provisions of the Equity Plan.
(l) Supplemental Retirement Benefit. During any period in
which the Executive or his spouse or dependents receives regular and
extended health care continuation coverage pursuant to Paragraph 3(d),
the Executive or his spouse or dependents shall receive a supplemental
retirement income payment equal to one hundred fifty percent of the
then-effective annual COBRA coverage premium. Such amount shall be paid
in a single sum, payable in the first month of each applicable calendar
year in which such amount is payable, and shall be subject to all
applicable tax withholding. Such amount shall be deemed to be payable
under a plan described in sections 201(2), 301(a)(3) and 401(a)(2) of
ERISA and subject to Department of Labor Regulation 2520.104-23 (or any
similar successor regulation).
4. Confidentiality and Non-Competition
(a) Nondisclosure. The Executive recognizes and acknowledges
that the Executive will have access to certain information concerning
the Company that is confidential and proprietary and constitutes
valuable and unique property of the Company. The Executive agrees that
the Executive will not at any time, either during or after the
Executive's employment, disclose to others, use, copy or permit to be
copied, except pursuant to the Executive's duties on behalf of the
Company or its successors, subsidiaries, assigns or nominees, and
except pursuant to requirements of law or any lawful judicial or
administrative proceeding, any secret, proprietary or confidential
information of the Company (whether or not developed by the Executive)
including, without limitation technical information, product
information and formulae, process, business and marketing strategies,
customer information and other information concerning the Company's and
subsidiaries' products, promotions, development, financing, expansion
plans, business policies and practices, salaries and benefits and other
forms of information considered by the Company to be proprietary and
confidential and in the nature of Trade Secrets, without the prior
written consent of the Chief Executive Officer or Board of Directors of
the Company. The Executive will return upon request all property (other
than personal property), including keys, notes, memoranda, writings,
lists, files, reports, customer lists, correspondence, tapes, disks,
cards, surveys, maps, logs, machines, technical data, formulae or any
other tangible property or document and any and all copies, duplicates
or reproductions that have been produced by, received by or otherwise
been submitted to the Executive in the course of his service with the
Company or a subsidiary of the Company.
(b) Need for Covenant. The Executive and the Company agree
that the Executive, by virtue of his position with the Company, is in
possession of highly sensitive information regarding the Company's
investors, contracts, plans and operations, and those of its corporate
affiliates, that the Executive is the Company's representative to
current and potential clients, that other entities each compete
vigorously with the Company throughout various portions of the
Company's area of operations, and the Executive's use of such knowledge
for the benefit of a competitor of the Company would provide a
competitive advantage to a competitor that would be highly detrimental
to the Company. The Executive's skills, knowledge and services are
unique, and the success or failure of the Company is dependent upon the
Executive's services. The Executive agrees that the Company has a
legitimate business interest in protecting this information and
preventing competitors from utilizing such information. Therefore, the
Executive agrees that, during the Term of this Employment Agreement and
for a period of thirty-six months (except as provided in Paragraph
4(c)(3), below) following the termination of this Employment Agreement
(i) due to expiration or the Term or, (ii) by the Executive other than
due to Constructive Termination or (iii) by the Company due to
discharge without Cause, the Executive will not engage in any
Prohibited Competitive Activities, as provided in Paragraph 4(c).
(c) Competitive Activities. During the time period specified
in Paragraph 4(b), the Executive shall not:
(1) engage in, or have any interest in any person,
firm, corporation, business or other entity (as an officer,
director, employee, agent, stockholder or other security
holder, creditor, consultant or otherwise) that engages in or
renders any service (including, without limitation,
advertising or business consulting) which is the same, similar
or competitive to the Company's principal business activities,
as the same may be conducted from time to time;
(2) interfere with any contractual relationship that
may exist from time to time of the business of the Company,
including, but not limited to, any contractual relationship
with any director, officer, employee, or sales agent, or
supplier of the Company;
(3) for an eighteen month period following
termination of this Employment Agreement, without the Chief
Executive Officer's or Board of Directors' consent, which may
be withheld for any or no reason, solicit, induce or
influence, or seek to induce or influence, any person who
currently is, or from time to time may be, engaged in or
employed by the Company (as an officer, director, employee,
agent or independent contractor) in any managerial or
executive or technical position to terminate his or her
employment or engagement by the Company; or
(4) deliberately engage in any action that the
Company advises the Executive has or will cause substantial
harm to the Company.
Such activities are defined as "Prohibited Competitive Activities".
Notwithstanding anything to the contrary contained herein, the
Executive, directly or indirectly, may own publicly traded stock
constituting not more than three percent of the outstanding shares of
such class of stock of any corporation if, and as long as, the
Executive is not an officer, director, employee or agent of, or
consultant or advisor to, or has any other relationship or agreement
with such corporation; except as provided in Paragraph 1(b).
(d) Injunctive Relief. The Company and the Executive agree
that money damages may not be adequate to compensate the Company for
the Executive's breach of any provision of this Paragraph 4 and that
the Company therefore will be entitled to a decree for specific
performance or other appropriate remedy, including injunctive relief,
to enforce the Executive's performance of any such provision. The
Executive expresses, agrees and acknowledges that this Covenant Not to
Compete is necessary for the protection of the Company because of the
nature and scope of its business and the Executive's position with, and
services for, the Company. The Executive acknowledges that any breach
of this Covenant Not to Compete would result in irreparable damage to
the Company.
(e) Reasonableness. The Executive expressly agrees and
acknowledges as follows:
(1) This Covenant Not to Compete is reasonable as to time and
geographical area and does not place any unreasonable burden upon the
Executive;
(2) The general public will not be harmed as a result of
enforcement of this Covenant Not to Compete;
(3) The Executive has requested or has had the opportunity to
request that his personal legal counsel review this Covenant Not to
Compete; and
(4) The Executive understands and hereby agrees to each and
every term and condition of this Covenant Not to Compete.
5. Indemnification
If, at any time during or after the Term of this Employment
Agreement, the Executive is made a party to, or is threatened to be made a party
in, any civil, criminal or administrative action, suit or proceeding by reason
of the fact that the Executive is or was a director, officer, employee, or agent
of the Company, or of any other corporation or any partnership, joint venture,
trust or other enterprise for which the Executive served as such at the request
of the Company, then the Executive shall be indemnified by the Company against
expenses actually and reasonably incurred (including the advancement of legal
fees and expenses) by the Executive or imposed on the Executive in connection
with, or resulting from, the defense of such action, suit or proceeding, or in
connection with, or resulting from, any appeal therein if the Executive acted in
good faith and in a manner the Executive reasonably believed to be in or not
opposed to the best interest of the Company, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe the Executive's conduct
was unlawful, except with respect to matters as to which it is adjudged that the
Executive is liable to the Company or to such other corporation, partnership,
joint venture, trust or other enterprise for gross negligence or willful
misconduct in the performance of the Executive's duties. As used herein, the
term "expenses" shall include all obligations actually and reasonably incurred
by the Executive for the payment of money, including, without limitation,
attorney's fees, judgments, awards, fines, penalties and amounts paid in
satisfaction of a judgment or in settlement of any such action, suit or
proceeding, except amounts paid to the Company or such other corporation,
partnership, joint venture, trust or other enterprise by the Executive.
6. Arbitration
Except as provided in Paragraph 4, any controversy or claim arising out of or
relating to this Employment Agreement, or any breach thereof, except as provided
in Paragraph 4, shall be adjudged only by arbitration in accordance with the
rules of the American Arbitration Association, and judgment upon such award
rendered by the arbitrator may be entered in any court having jurisdiction
thereof. The arbitration shall be held in the City of Columbus, Ohio, or such
other place as may be agreed upon at the time by the parties to the arbitration.
The arbitrator(s) shall, in their award, allocate between the parties the costs
of arbitration, which shall include reasonable attorneys' fees of the parties,
as well as the arbitrators' fees and expenses, in such proportions as the
arbitrator(s) deem just.
7. Other Provisions
(a) Governing Law. This Employment Agreement will be governed
by, and construed and enforced in accordance with, the laws of the
State of Ohio, excluding any conflicts of law, rule or principle that
might otherwise refer to the substantive law of another jurisdiction.
(b) Assignment. Except as otherwise indicated, this Employment
Agreement is not assignable without the written authorization of both
parties; provided that the Company may assign this Employment Agreement
to any entity to which the Company transfers substantially all of its
assets or to any entity which is a successor to the Company by
reorganization, incorporation, merger or similar business combination.
In the event of any such transfer or assignment by the Company, the
rights and privileges of the Board hereunder shall be vested in the
Board of Directors or other governing body of the transferee or
successor entity. However, notwithstanding anything to the contrary
contained herein, this Employment Agreement will be binding upon any
successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business
and/or assets of the Company, and the Company will require any such
successor by agreement, in form and substance satisfactory to the
Executive, to expressly assume and agree to perform this Employment
Agreement in the same manner and to the same extent that the Company
would be required to perform if no such succession had taken place. In
addition to the Executive's rights above, if a Change in Control of the
Company occurs as described in Paragraph 2(c) above, the failure of the
Company to obtain such agreement prior to the effectiveness of any such
succession shall be a breach of this Employment Agreement and shall
entitle the Executive to compensation from the Company in the same
amount and on the same terms as the Executive would be entitled to
hereunder if the Executive resigned from the Executive's employment due
to a Constructive Termination, as described in Paragraph 2(c), 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 Employment Agreement, "the Company" shall
mean the Company as hereinbefore defined and any successor to its
business and/or assets as aforesaid which executes and delivers the
agreement provided for in this Paragraph 7(b) or which otherwise
becomes bound by all the terms and provisions of this Employment
Agreement by operation of law. This Employment Agreement and all rights
of the parties hereto shall inure to the benefit of and be enforceable
by the parties hereto, their assigns, personal or legal
representatives, executors, administrators, successors, heirs,
distributees, devises and legatees.
(c) Survival of Certain Provisions. Except as otherwise
provided herein, the provisions of Paragraphs 4, 5 and 6 of this
Employment Agreement shall survive the termination of this Employment
Agreement.
(d) Prior Agreements Voided. Upon commencement of the Term of
this Employment Agreement, this Employment Agreement supersedes all
previous employment agreements, written or oral, between the Company
and the Executive, including, without limitation, the agreement of
April 23, 2003. This Employment Agreement may be amended only by
written amendment duly executed by both parties hereto or their legal
representatives and authorized by action of the Board. Except as
otherwise specifically provided in this Employment Agreement, no waiver
by either party hereto of any breach by the other party hereto of any
condition or provision of this Employment Agreement to be performed by
such other party shall be deemed a waiver of a subsequent breach of
such condition or provision or a waiver of a similar or dissimilar
provision or condition at the same or at any prior or subsequent time.
(e) Notices. Any notice or other communication required or
permitted pursuant to the terms of this Employment Agreement shall be
in writing and shall be deemed to have been duly given when delivered
or mailed by United States mail, first class, postage prepaid and
registered with return receipt requested, addressed to the intended
recipient at his or its address set forth below and, in the case of a
notice or other communication to the Company, directed to the attention
of the Chief Executive Officer with a copy to the General Counsel of
the Company, or to such other address as the intended recipient may
have theretofore furnished to the sender in writing in accordance
herewith, except that until any notice of change of address is
received, notices shall be sent to the following addresses:
If to the Executive: If to the Company:
The Scotts Company
Mr. Robert F. Bernstock Attn: Chief Executive Officer
[address] 14111 Scottslawn Road
Maryville, Ohio 43201
(f) Reformation. If any one or more of the provisions or parts
of a provision contained in this Employment Agreement including,
without limitation, the restrictions contained in Paragraph 4, shall
for any reason be held to be invalid, illegal or unenforceable in any
respect, such invalidity or unenforceability shall not affect any other
provision or part of a provision of this Employment Agreement, but this
Employment Agreement shall be reformed and construed as if such invalid
or illegal or unenforceable provision or part of a provision had never
been contained herein and such provisions or part thereof shall be
reformed so that it would be valid, legal and enforceable to the
maximum extent permitted by law.
(g) Mitigation. The Executive shall not be required to
mitigate damages (or the amount of any compensation provided under this
Employment Agreement to be paid) following the Executive's termination
of employment, by seeking employment or otherwise.
(h) Rights under Stock-Based Plans. In the event that any
Incentive Compensation Plan or the Option Plan are amended to reduce,
modify limit or restrict any of the Executive's accrued or vested
rights thereunder, the Company hereby agrees that no such amendment
shall apply to the Executive without the Executive's written consent.
(j) Amendments Related to Indemnification. The Company will
not amend the provisions of its governing documents which pertain to
the Executive's indemnification in the Executive's capacity as an
officer except to substitute therefor provisions which are more
favorable to the Executive, except as otherwise required by law or the
rules of any securities exchange or similar entity, or by applicable
law.
(k) Counterparts. This Employment 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
instruments.
(l) Due Authorization. The Company represents that its
execution of this Employment Agreement and covenants specified in this
Employment Agreement have been duly authorized by its Board and that
there are no impediments to it fulfilling its obligations hereunder.
The Scotts Company
By: /s/ Denise Stump
------------------------
Its: Executive Vice President
Global Human Resources
AGREED AND ACCEPTED this
16th day of September,
2004 and effective as of
October 1, 2004.
/s/ Robert F. Bernstock
-------------------------
Robert F. Bernstock
Signed in my presence on 9-16-04.
/s/ Ellen Richards
- -------------------------------
Ellen Richards
Notary Public, State of Ohio
My Commission Expires 08-16-05