EXHIBIT 10.2
SEPARATION AGREEMENT AND
RELEASE OF ALL CLAIMS
THIS SEPARATION AGREEMENT AND RELEASE OF ALL CLAIMS (“Agreement”) is made and
entered into by and between Michael P. Kelty (“Employee”), and The Scotts
Company LLC (“Company”);
WHEREAS, Employee has elected to voluntarily retire from his employment with
Company effective November 1, 2005 (the “Retirement 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 pay
and additional consideration for Employee to which Employee is not or may not be
otherwise entitled;
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:
     1. Retirement Benefits. Company agrees to pay Employee retirement pay and
benefits as set forth on the attached Exhibit A (the “Retirement Benefits”),
incorporated herein by reference. The Retirement Benefits described herein shall
be the only amounts paid by or on behalf of Company, and no interest on this
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 Retirement Date.
     2. Release of Claims. 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,

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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.
Notwithstanding the foregoing release, Employee does not hereby waive or release
any right to indemnification as an officer of The Scotts Miracle-Gro Company,
and/or its subsidiaries or affiliates, pursuant to The Scotts Miracle-Gro code
of regulations, articles of incorporation, and/or director and officer insurance
policies. The release contained herein also does not apply to any rights or
claims first arising after the Effective Date of this Agreement or to any vested
or accrued rights you have in the Scotts Company Retirement Savings Plan and the
Scotts Executive Retirement Plan.
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 value of the
Special Payment described in the description of Retirement Benefits 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 such claim or proceeding; provided, however, that the
terms of this paragraph shall not permit the setting aside of this Agreement by
repayment of such pay without adjudication by a court that this Agreement is
otherwise invalid.
     3. 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 Pay and 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.

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     4. Compliance with Older Workers Benefit Protection Act. 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 days in which to consider this Agreement and will have 7 days in which to
revoke Employee’s acceptance after signing this Agreement. To revoke, Employee
must deliver written notice of revocation to Denise Stump, Company’s Executive
Vice President, Human Resources. This Agreement will not be effective or
enforceable until the revocation period has expired, provided that during such
time Employee does not revoke Employee’s acceptance (the “Effective Date”).
Employee is cautioned and encouraged to seek the advice of counsel of Employee’s
own choosing before signing this Agreement.
     5. Non-disparagement. Employee agrees that Employee will not make any
statement to any third party that Employee could reasonably foresee would cause
harm to the personal or professional reputation of the Released Parties.
     6. 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.
     7. 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 Retirement Date.
     8. Confidentiality. This Agreement is and shall remain confidential.
Employee agrees not to, at any time, disclose the terms of this Agreement, in
whole or in part, including the existence and amount of the Pay and Benefits, to
any individual or entity without the prior written consent of Company or unless
required by law. Employee may, however, disclose the terms of this Agreement to
Employee’s attorney, tax advisor, and immediate family, provided that any such
persons agree in advance to be bound by this confidentiality provision. Employee
further acknowledges and agrees that the Employee Confidentiality,
Noncompetition, Nonsolicitation Agreement (“ECNN”) between Employee and Company
dated April 27, 2005 remains in full force and effect, except that Employee
specifically agrees that the restrictions imposed by paragraphs 4 and 5 of the
ECNN are hereby extended to November 1, 2010. Employee acknowledges and agrees
that Company may advise any entity hereafter employing Employee or evidencing an
interest in employing Employee of the existence and provisions of the ECNN and
this paragraph. Employee further acknowledges and agrees that Employee’s
acceptance of the Terms and Conditions of The Scotts Company Fiscal Year 2005
Executive/Management Incentive Plan also survives this Agreement and remains in
full force and effect. Employee expressly agrees to keep and maintain Company
confidential information confidential, and not to use or disclose such
information, directly or indirectly, without the

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prior written consent of Company or unless required by law. Employee agrees that
the provisions of this paragraph are material terms of this Agreement.
     9. 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. 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.
     10. Resignation of Offices. You hereby resign all officer and director
positions with The Scotts Miracle-Gro Company, and its subsidiaries and
affiliates, effective on the Retirement Date.
     11. Choice of Law. The validity, construction and interpretation of this
Agreement shall be governed by the laws of the State of Ohio.
     12. 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.
     13. 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.
     14. 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.
     15. Assignment. Company may assign, in whole or in part, its rights and
obligations 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.
     16. Survivorship. Should you die or become totally disabled following the
Termination Date but before the payments due you under paragraph 1 above have
been made to you, any remaining payments shall be made to you (or your
designated beneficiary, as applicable) within 90 days of your death or total
disability.

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     17. Entire Agreement. 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.
     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.

            July 26, 2005   /s/ Michael P. Kelty       Date   Michael P. Kelty

 
  THE SCOTTS COMPANY LLC

7/26/05     Date   By   /s/ Denise Stump
 
       
 
  Title   EVP, Human Resources Global
 
       

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EXHIBIT A
BENEFITS AND SPECIAL PAYMENT
Equity
Upon Employee’s Retirement Date, Employee’s unvested options will vest
immediately, subject to the approval of the Compensation & Organization
Committee of the Board of Directors on or before the November 3, 2005 committee
meeting. Following the approval of the committee, Employee will have the shorter
of 5 years, or the expiration of a specific grant, to exercise Employee’s
options. As of May 16, 2005 Employee was holding $3,192,512 (SMG stock price @
$70.89) in equity (Stock Options, SARs, and Restricted Stock). An equity grant
summary is attached for Employee’s information.
Pension
The two tables below show the pension benefit monthly payment options for
Employee and Employee’s surviving spouse.
Pension Benefit (Non-Excess) as of November 1, 2005

                                      Your Monthly Benefit     Monthly Benefit
Payable to   Payment Options   Payable on November 1, 2005     Your Surviving
Spouse       To Age 62     From Age 62     To Age 62     From Age 62  
50% Joint and Survivor Annuity
  $ 2,414.22     $ 2,212.25     $ 1,207.11     $ 1,106.13    
Spouse’s Contingent Annuity
  $ 2,402.07     $ 2,201.12     $ 1,292.41     $ 1,184.29    
100% Joint and Survivor Annuity
  $ 2,264.30     $ 2,074.88     $ 2,264.30     $ 2,074.88    
10-year Certain & Continuous Annuity
  $ 2,506.76     $ 2,297.05     $ 2,506.76     $ 2,297.05    
20-year Certain & Continuous Annuity
  $ 2,340.04     $ 2,144.28     $ 2,340.04     $ 2,144.28    
Single Life Annuity
  $ 2,584.82     $ 2,368.58       N/A       N/A    

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Pension Benefit (Excess) as of November 1, 2005

                                      Your Monthly Benefit     Monthly Benefit
Payable to   Payment Options   Payable on November 1, 2005     Your Surviving
Spouse       To Age 62     From Age 62     To Age 62     From Age 62  
50% Joint and Survivor Annuity
  $ 1,080.40     $ 1,069.68     $ 540.20     $ 534.84    
Spouse’s Contingent Annuity
  $ 1,074.97     $ 1,064.30     $ 578.38     $ 572.64    
100% Joint and Survivor Annuity
  $ 1,013.31     $ 1,003.26     $ 1,013.31     $ 1,003.26    
10-year Certain & Continuous Annuity
  $ 1,121.82     $ 1,110.68     $ 1,121.82     $ 1,110.68    
20-year Certain & Continuous Annuity
  $ 1,047.21     $ 1,036.81     $ 1,047.21     $ 1,036.81    
Single Life Annuity
  $ 1,156.75     $ 1,145.27       N/A       N/A    

Retiree Medical Benefits
Employee’s options for retiree medical benefits starting November 1, 2005 are
shown below. Once Employee is contacted by Fidelity Investments, Employee will
need to select one of the four options in order to begin coverage. Please note
that these rates assume Employee’s spouse is under age 65.

                                      Monthly Cost to Michael Kelty  
AETNA HMO
                                Participant   $119.98 Spouse   $119.98  
AETNA PPO MEDIUM
                                Participant   $131.08 Spouse   $131.08  
AETNA PPO LOW
                                Participant   $124.44 Spouse   $124.44  
AETNA TRADITIONAL
                               
Participant
  $ 244.42   (under 65)   $ 91.43     (over 65)
Spouse
  $ 244.42   (under 65)   $ 91.43     (over 65)  

     Note: Rates are updated on a calendar year basis.
Dental and Vision are not offered under retiree medical. These benefits,
however, may be elected under COBRA. COBRA election information will be mailed
to Employee after Employee’s last day worked. The 2005 monthly COBRA dental and
vision rates are:

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                            Plan   Single     Associate &
Spouse     Associate &
Family  
Dental
  $ 27.25     $ 47.56     $ 85.25    
Vision
  $ 8.80     $ 13.77     $ 22.65    

     Note: Rates are updated on a calendar year basis.
Other Benefits
Retirement Savings Plan (401k)
Employee’s Retirement Savings Plan (401k) account balance as of May 18, 2005 was
$461,178.38. As long as the money remains in the Retirement Savings Plan (401k),
Employee may change Employee’s investment fund allocations. Under current law,
regulations and plan terms, Employee may keep this money in the Retirement
Savings Plan (401k) until age 65.
Executive Retirement Savings Plan (non-qualified plan):
Employee’s Executive Retirement Savings Plan (non-qualified plan) account
balance as of May 18, 2005 was $332,410.70. Distributions will be paid
automatically in accordance with the elections Employee previously made during
the years of Employee’s participation.
Life Insurance
Company Life insurance may be converted to an individual policy.
Financial Planning (AYCO)
Employee may continue to participate in the Company’s Executive Financial
Planning Program through the end of the Company’s fiscal year 2006 (i.e.
September 30, 2006), at which time services to Employee under this program will
cease. If Employee desires not to participate in this program, Employee will
receive a cash payment of $4,000, which will be added to the Special Payment
described below.
Automobile Allowance
Employee’s automobile allowance will cease on October 25, 2005.
Outplacement
In lieu of Employee participating in the outplacement program from Lee Hecht
Harrison, Employee will receive the equivalent value in a cash payment of
$4,600, which will be added to the Special Payment described below.
Executive Physical
Employee and Employee’s spouse are eligible to participate in the Company’s
Executive Physical Program through the end of the Company’s fiscal year 2006
(i.e. September 30, 2006), at which time services to Employee and Employee’s
spouse under this program will cease.

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Special Payment
In recognition of Employee’s distinguished service to the Company, Company will,
upon Employee’s execution and delivery of this Agreement, provide Employee with
a special lump sum payment in the amount of $550,000, less all applicable
payroll deductions for federal, state and local taxes, social security
deductions, and elected deductions. This payment will be made on the later of
November 1, 2005 or 30 days after the Effective Date of this Agreement.
Special Payment

          Component   Value  
Pay Notice (4 weeks)
  $ 29,710  
Service Recognition (2 weeks/year of service)(1)
  $ 386,150  
Auto Allowance (1 Year)
  $ 12,000  
Medical Coverage (1 Year)
  $ 3,325  
Band Adjustment (16 weeks)
  $ 118,815  
 
     
Total
  $ 550,000  

(1) 26 years service
Employee may contact Bob Hanley at (937) 578-5630 in the event Employee has
questions about, or needs assistance with, any of the benefits described above.
Once Employee has signed this Agreement, Company will initiate contact with
Fidelity Investments on Employee’s behalf so that Employee may begin receiving
Employee’s pension and retiree medical benefits. Employee may also contact Bob
Hanley (within 31 days of your last day worked) in the event Employee’s wishes
to convert Employee’s life insurance policy to an individual policy.

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