Exhibit 10.8
THE SCOTTS COMPANY
2003 STOCK OPTION AND INCENTIVE EQUITY PLAN
AWARD AGREEMENT FOR NONDIRECTORS
The Scotts Company ("Company") believes that its business interests are best
served by ensuring that you have an opportunity to share in the Company's
business success. To this end, the Company adopted the 2003 Stock Option and
Equity Incentive Plan ("Plan") through which key employees, like you, may
acquire (or share in the appreciation of) shares of the Company's common stock.
We cannot guarantee that the value of your Award (or the value of the stock you
acquire through an Award) will increase. This is because the value of the
Company's stock is affected by many factors. However, the Company believes that
your efforts contribute to the value of the Company's stock and that the Plan
(and the Awards made through the Plan) is an appropriate means of sharing with
you the value of your contribution to the Company's business success.
This Agreement describes the type of Award that you have been granted and the
conditions that must be met before you may receive the value associated with
your Award. To ensure you fully understand these terms and conditions, you
should:
- Carefully read this Award Agreement and the attached copies of
the Plan and Prospectus; and
- Call us at _________________ if you have any questions about
your Award. Or, you may send a written inquiry to:
[Insert Address]
DESCRIPTION OF YOUR INCENTIVE STOCK OPTIONS
YOU HAVE BEEN AWARDED INCENTIVE STOCK OPTIONS (or "ISOs") TO PURCHASE ______
SHARES OF COMPANY STOCK. You may purchase one share of the Company's common
stock for each ISO, but only if you pay $_________ ("Exercise Price") for each
share you purchase and meet the terms and conditions described in this Agreement
and in the Plan and the Prospectus.
Special (and favorable) income tax rules apply to ISOs, but only if certain
conditions are met and the ISOs are exercised before _________ ("Expiration
Date"). These conditions and other terms affecting your ISOs are described in
this Agreement and in the Plan and Prospectus.
LIMITS ON EXERCISING YOUR ISOS
Your ISOs will vest (and be exercisable) on _______________.
This does not mean that you must exercise your ISOs on this date; this is merely
the first date that you may do so. However, your ISOs will expire unless they
are exercised on or before the Expiration Date.
There are some special situations in which your options may vest earlier. These
are described later in this Agreement.
At any one time you may not exercise ISOs to buy fewer than 100 shares of
Company stock (or, if smaller, the number of your outstanding vested ISOs).
Also, you may never exercise an ISO to purchase a fractional share of Company
stock; ISOs for fractional shares will always be redeemed for cash.
EXERCISING YOUR ISOS
After they vest, you may exercise your ISOs by completing a form. This form, and
other procedures that you must follow, are available from Merrill Lynch or by
contacting us at the number (or address) shown above.
DESCRIPTION OF YOUR NONQUALIFIED STOCK OPTIONS
YOU HAVE BEEN AWARDED NONQUALIFIED STOCK OPTIONS (or "NSOs") TO PURCHASE
________ SHARES OF COMPANY STOCK. You may purchase one share of the Company's
common stock for each NSO, but only if you pay $__________ ("Exercise Price")
for each share purchased, you exercise the NSOs on or before ____________
("Expiration Date") and meet the terms and conditions described in this
Agreement and in the Plan and in the Prospectus.
LIMITS ON EXERCISING YOUR NSOS
Your NSOs will vest (and be exercisable) on ______________.
This does not mean that you must exercise your NSOs on this date; this is merely
the first date that you may do so. However, your NSOs will expire unless they
are exercised on or before the Expiration Date.
There also are some special situations in which your options may vest earlier.
These are described later in this Agreement.
At any one time you may not exercise NSOs to buy fewer than 100 shares of
Company stock (or, if smaller, the number of your outstanding vested NSOs).
Also, you may never exercise an NSO to purchase a fractional share of Company
stock; NSOs for fractional shares will always be redeemed for cash.
EXERCISING YOUR NSOS
After they vest, you may exercise your NSOs by completing a form. This form, and
other procedures that you must follow, are available from Merrill Lynch or by
contacting us at the number (or address) shown above.
DESCRIPTION OF YOUR AFFILIATED STOCK APPRECIATION RIGHTS
YOU HAVE BEEN AWARDED ____________AFFILIATED STOCK APPRECIATION RIGHTS (or
"ASARs"). ASARs are associated with stock options that also were issued on the
date of this Agreement.
ASARs will automatically be exercised when you exercise the affiliated option.
When this happens, the difference between the value of one share of Company
stock on the date of this Agreement and the date the ASAR is exercised will be
applied against the price you must pay to exercise the affiliated option.
However, if you do not exercise the affiliated option on or before ________, the
ASARs will expire and may not be exercised at a later date.
LIMITS ON EXERCISING YOUR ASARS
Your ASARs will vest on __________________.
This does not mean that you must exercise the affiliated option on this date to
realize the benefit of your ASAR; this is merely the first date that you may do
so. However, your ASARs (and the affiliated options) will expire unless they are
exercised on or before the Expiration Date.
There also are some special situations in which your ASARs may vest earlier.
These are described later in this Agreement.
TAX TREATMENT OF YOUR ASARS
This brief discussion of the federal tax rules that affect your ASARs is
provided as general information (not as personal tax advice) and is based on the
Company's understanding of federal tax laws and regulations in effect as of the
date of this Agreement.
You should consult with a tax or financial adviser to ensure you fully
understand the tax ramifications of your Award.
You are not required to pay ordinary income taxes on the value of an ASAR when
it is issued or when it vests (there are no tax consequences if your ASARs
expire without being exercised). However, you are required to pay income tax (at
ordinary income tax rates) when an ASAR is exercised. This tax is calculated by
applying ordinary income tax rates to the difference between the value of a
share of Company stock when the ASAR is exercised and the value of a share of
Company stock on the date of this Agreement.
DESCRIPTION OF YOUR FREESTANDING STOCK APPRECIATION RIGHTS
YOU HAVE BEEN AWARDED ______________ FREESTANDING STOCK APPRECIATION RIGHTS (or
"FSARs"). Each FSAR enables you to receive the difference between the value of
one share of Company stock when the FSAR is exercised and the value of one share
of Company stock on the date of this Agreement. And you may realize this
appreciation without making any cash investment. However, you must exercise your
FSARs no later than ______________ ("Expiration Date"). If you do not exercise
your FSARs on or before this date, they will expire and may not be exercised at
a later date.
LIMITS ON EXERCISING YOUR FSARS
Your FSARs will vest (and be exercisable) on _______________.
This does not mean that you must exercise your FSARs on this date; this is
merely the first date that you may do so. However, your FSARs will expire unless
they are exercised before the Expiration Date.
There also are some special situations in which your FSARs may vest earlier.
These are described later in this Agreement.
EXERCISING YOUR FSARS
After they vest, you may exercise your FSARs by delivering a signed exercise
notice to us at the address shown above. Contact us for a copy of this notice.
TAX TREATMENT OF YOUR FSARS
This brief discussion of the federal tax rules that affect your FSARs is
provided as general information (not as personal tax advice) and is based on the
Company's understanding of federal tax laws and regulations in effect as of the
date of this Agreement.
You should consult with a tax or financial adviser to ensure you fully
understand the tax ramifications of your Award.
You are not required to pay ordinary income taxes on the value of an FSAR when
it is issued or when it vests. However, you are required to pay income tax (at
ordinary income tax rates) when you exercise your FSAR (there are no tax
consequences if your FSAR expires without being exercised). If your FSAR is paid
in shares of Company stock, your taxes are calculated by applying ordinary
income tax rates to the value (on the date your FSAR is exercised) of the shares
of Company stock you receive. Any subsequent appreciation in the value of these
shares will be taxed at capital gains rates when the shares are sold. If your
FSAR is paid in cash, your taxes are calculated by applying ordinary income tax
rates to the amount of cash you receive.
DESCRIPTION OF YOUR TANDEM STOCK APPRECIATION RIGHTS
YOU HAVE BEEN AWARDED _______________ TANDEM STOCK APPRECIATION RIGHTS (or
"TSARs"). TSARs are associated with stock options and enable you to receive the
difference between the value of one share of Company stock when the TSAR is
exercised and the value of one share of Company stock on the date of this
Agreement.
You may realize the appreciated value of your TSAR without making any cash
investment but only if you exercise your TSARs on or before _________
("Expiration Date"). If you do not exercise your TSARs on or before this date,
they will expire and may not be exercised at a later date.
You have a choice to make when your TSARs (and the associated options) vest:
- You may exercise a TSAR without actually spending any money;
or
- You may exercise the option associated with your TSAR, in
which case you will receive one share of Company stock for
each option exercised, although you will be required to
actually pay the option's Exercise Price.
Also, if you decide to exercise a TSAR, the associated option will expire
automatically and, if you exercise the option, the associated TSAR will expire
automatically.
LIMITS ON EXERCISING YOUR TSARS
Your TSARs will vest (and be exercisable) on __________________.
This does not mean that you must exercise your TSARs on this date; this is
merely the first date that you may do so. However, your TSARs will expire unless
they are exercised before the Expiration Date.
There also are some special situations in which your TSARs may vest earlier.
These are described later in this Agreement.
EXERCISING YOUR TSARS
After they vest, you may exercise your TSARs by delivering a signed exercise
notice to us at the address shown above. Contact us for a copy of this notice.
TAX TREATMENT OF YOUR TSARS
This brief discussion of the federal tax rules that affect your TSARs is
provided as general information (not as personal tax advice) and is based on the
Company's understanding of federal tax laws and regulations in effect as of the
date of this Agreement.
You should consult with a tax or financial adviser to ensure you fully
understand the tax ramifications of your Award.
You are not required to pay ordinary income taxes on the value of a TSAR when it
is issued or when it vests. However, you are required to pay income tax (at
ordinary income tax rates) when you exercise your TSAR. There are no tax
consequences if your TSAR expires without being exercised or if your TSAR is
cancelled because you exercised the related option, although there may be tax
consequences associated with the exercise of the related option. If your TSAR is
paid in shares of Company stock, your taxes are calculated by applying ordinary
income tax rates to the value (on the date your TSAR is exercised) of the
Company stock you receive. Any subsequent appreciation in the value of these
shares will be taxed at capital gains rates when the shares are sold. If your
TSAR is paid in cash, your taxes are calculated by applying ordinary income tax
rates to the amount of cash you receive.
DESCRIPTION OF YOUR RESTRICTED STOCK
YOU HAVE BEEN AWARDED ____________ SHARES OF RESTRICTED STOCK which will mature
into an equal number of shares of Company stock if you are actively employed on
_____________ ("Expiration Date") and have met all other Plan conditions.
YOUR RIGHTS IN RESTRICTED STOCK BEFORE THE EXPIRATION DATE
Until all restrictions and conditions have been met, your Restricted Stock
certificates will be held in escrow. Also, the Company will defer distribution
of any dividends that are declared on your Restricted Stock until the Expiration
Date. These dividends will be distributed as of the Expiration Date if all the
restrictions and conditions are met or will be forfeited if these restrictions
and conditions have not been met.
However, you may vote your Restricted Shares before all the terms and conditions
described in this Agreement are met. This is the case even though your
Restricted Stock will not be distributed to you until the Expiration Date.
TAX TREATMENT OF YOUR RESTRICTED STOCK
This brief discussion of the federal tax rules that affect your Restricted Stock
is provided as general information (not as personal tax advice) and is based on
the Company's understanding of federal tax laws and regulations in effect as of
the date of this Agreement.
You should consult with a tax or financial adviser to ensure you fully
understand the tax ramifications of your Award.
You are not required to pay income taxes on your Restricted Stock at this time.
However, you will be required to pay income taxes (at ordinary income tax rates)
when (and if) applicable restrictions and conditions are met. The amount of
ordinary income you will recognize is the value of your Restricted Stock when
the terms and conditions described in this Agreement lapse. Any subsequent
appreciation of the shares will be taxed at capital gains rates when you sell
the shares. If applicable restrictions and conditions are not met before the
Expiration Date, your Restricted Stock will expire and no taxes will be due.
You may increase the portion of your Award's value that is subject to capital
gains tax rates by making a special election [known as a Code ss.83(b) election]
within 30 days of the date of this Agreement. However, there are important tax
and investment issues that you must consider before making a Code ss.83(b)
election. These should be discussed with your personal tax and investment
adviser.
DESCRIPTION OF YOUR PERFORMANCE STOCK
YOU HAVE BEEN AWARDED _________ SHARES OF PERFORMANCE STOCK which will mature
into an equal number of shares of Company stock if the following goals are met
before _____________ ("Measurement Date") and you meet all other Plan
conditions:
Insert description of applicable performance goals - these should be specific to
the grantee and relate to one or more of the criteria listed in the Plan.
YOUR RIGHTS IN PERFORMANCE STOCK BEFORE THE MEASUREMENT DATE
Until all performance goals have been met, your Performance Stock certificates
will be held in escrow. Also, the Company will defer distribution of any
dividends that are declared on your Performance Stock until the Measurement
Date. These dividends will be distributed as of the Measurement Date if all the
restrictions and conditions are met or will be forfeited if these restrictions
and conditions have not been met.
However, you may vote your Performance Stock before all the terms and conditions
described in this Agreement are met. This is the case even though your
Performance Stock will not be distributed to you until the Measurement Date.
TAX TREATMENT OF YOUR PERFORMANCE STOCK
This brief discussion of the federal tax rules that affect your Performance
Stock is provided as general information (not as personal tax advice) and is
based on the Company's understanding of federal tax laws and regulations in
effect as of the date of this Agreement.
You should consult with a tax or financial adviser to ensure you fully
understand the tax ramifications of your Award.
You are not required to pay income taxes on your Performance Stock at this time.
However, you will be required to pay income taxes (at ordinary income tax rates)
when (and if) applicable restrictions and conditions are met. The amount of
ordinary income you will recognize is the value of your Performance Stock when
the terms and conditions described in this Agreement lapse. Any subsequent
appreciation of the shares will be taxed at capital gains rates when you sell
the shares. If applicable restrictions and conditions are not met before the
Measurement Date, your Performance Stock will expire and no taxes will be due.
You may increase the portion of your Award's value that is subject to capital
gains tax rates by making a special election [known as a Code ss.83(b) election]
within 30 days of the date of this Agreement. However, there are important tax
and investment issues that you must consider before making a Code ss.83(b)
election. These should be discussed with your personal tax and investment
adviser.
GENERAL TERMS AND CONDITIONS
----------------------------
THESE TERMS AND CONDITIONS APPLY TO ALL AWARDS ISSUED UNDER THIS AWARD
AGREEMENT. THIS IS MERELY A SUMMARY OF THESE IMPORTANT TERMS AND CONDITIONS; YOU
ARE URGED TO READ THE ENTIRE PLAN AND PROSPECTUS (COPIES OF WHICH ARE ATTACHED),
ALL OF THE TERMS OF WHICH ARE INCORPORATED BY REFERENCE INTO THIS AWARD
AGREEMENT.
1.00 LOSS OF AN AWARD. There are ways in which you may forfeit an Award.
[1] IF YOU TERMINATE EMPLOYMENT . . .
Normally, your Awards will expire on the date specified earlier in this
Agreement. However, these Awards may expire earlier than their Expiration Date
if you terminate employment (as defined in the Plan).
[a] If your employment is terminated by the Company for cause (as
defined in the Plan), the Awards will expire on the date your
employment ends; or
[b] If you terminate employment because you [i] die or [ii] become
disabled (as defined in the Plan), the Awards will expire no later than
60 months after you terminate (12 months in the case of any ISOs); or
[c] If you terminate after reaching either [i] age 55 and completing at
least 10 years of employment or [ii] age 62 regardless of your years of
service, the Awards will expire no later than 60 months after you
terminate (three months in the case of ISOs); or
[d] If you terminate employment for any other reason, your Awards will
expire no later than 90 days after you terminate.
Note, it is your responsibility to keep track of when your Awards expire.
[2] IF YOU ENGAGE IN CONDUCT THAT IS HARMFUL TO THE COMPANY
(OR SUBSIDIARY) . . .
You also will forfeit any outstanding Awards and must return to the Company all
shares and other amounts you have received through the Plan if, without our
consent, you do any of the following within 180 days before and 730 days after
terminating employment with the Company:
[a] You serve (or agree to serve) as an officer, director, consultant
or employee of any proprietorship, partnership or corporation or become
the owner of a business or a member of a partnership that competes with
any portion of the Company's (or a Subsidiary's) business with which
you have been involved anytime within five years before termination of
employment or render any service (including, advertising business
consulting) to entities that compete with any portion of the Company's
(or a Subsidiary's) business with which you have been involved anytime
within five years before termination of employment;
[b] You refuse or fail to consult with, supply information to or
otherwise cooperate with the Company after having been requested to do
so;
[c] You deliberately engage in any action that we conclude has caused
substantial harm to the interests of the Company or any Subsidiary;
[d] On your own behalf or on behalf of any other person, partnership,
association, corporation or other entity, solicit or in any manner
attempt to influence or induce any employee of the Company or a
Subsidiary to leave the Company's or Subsidiary's employment or use or
disclose to any person, partnership, association, corporation or other
entity any information obtained while an employee of the Company or any
Subsidiary concerning the names and addresses of the Company's and any
Subsidiary's employees;
[e] You disclose confidential and proprietary information relating to
the Company's and its Subsidiaries' business affairs ("Trade Secrets"),
including technical information, product information and formulae,
processes, business and marketing plans, 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;
[f] You fail to return 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
you have produced or received or have otherwise been submitted to you
in the course of your employment with the Company or any Subsidiary; or
[g] You engaged in conduct that the Committee reasonably concludes
would have given rise to a termination for cause (as defined in the
Plan) had it been discovered before you terminated.
2.00 BUY OUT/CANCELLATION OF AWARDS BY COMPANY. We may decide at any time to buy
out your Award. This may happen without your consent and at any time. If we
decide to buy out your Awards, we will pay you the difference between the value
of Awards that are exercisable (or vested) at that time and that are being
bought out and the Exercise Price associated with that Award. However, no
payment will be made for any cancelled Awards that are not vested (and not
exercisable) on the cancellation date.
3.00 AMENDMENT/TERMINATION. We may amend or terminate the Plan at any time.
# # #
You must sign this Agreement; if you do not, your Award will be cancelled. By
signing this Agreement you acknowledge that this Award is granted under and is
subject to the terms and conditions described in this Agreement and in the Plan.
OPTIONEE/GRANTEE THE SCOTTS COMPANY
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(date signed) (date signed)
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DATE OF THIS AGREEMENT:
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