Document:

EX-10.2

 

Exhibit 10.2

THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS COVERING

SECURITIES THAT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF

1933.

THE SCOTTS MIRACLE-GRO COMPANY

2006 LONG-TERM INCENTIVE PLAN

AWARD AGREEMENT FOR EMPLOYEES

RESTRICTED STOCK AWARD AWARDED TO CHRISTOPHER NAGEL ON

OCTOBER 1, 2006 (“Grant Date”)

The Scotts Miracle-Gro Company (“Company”) and its shareholders believe that their 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 and its shareholders approved The Scotts
Miracle-Gro Company 2006 Long-Term Incentive Plan (“Plan”) through which key employees, like you,
may acquire (or share in the appreciation of) common shares of the Company.

We cannot guarantee that the value of your Award (or the value of the common shares you acquire
through an Award) will increase. This is because the value of the Company’s common shares is
affected by many factors. However, the Company believes that your efforts contribute to the value
of the Company’s common shares 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 Award 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:

	 	•	 	Read the Plan and the Plan’s Prospectus carefully to ensure you understand how the Plan
works;
	 
	 	•	 	Read this Award Agreement carefully to ensure you understand the nature of your Award
and what you must do to earn it;
	 
	 	•	 	Consult your tax advisor regarding the federal income tax effect of receiving and
earning this Award, as well as the consequences if you are required to repay the value of
the Award to the Company; and
	 
	 	•	 	Contact Robert J. Hanley, Vice President, Total Global Rewards at (937) 578-5630 if you
have any questions about your Award. Or, you may send a written inquiry to the address
shown below:

The Scotts Miracle-Gro Company

Attention: Robert J. Hanley

Vice President, Total Global Rewards

14111 Scottslawn Road

Marysville, Ohio 43041

 

 

Also, no later than November 30, 2006 you must return a signed copy of the Award Agreement to:

Edward J. Yen & Associates c/o Marc Chapman

Merrill Lynch

8425 Pulsar Pl., Ste. 200

Columbus, OH 43240

(800) 285-0648

If you do not do this, your Award will be forfeited and you will not be entitled to receive
anything on account of this Award.

Section 409A of the Internal Revenue Code (“Section 409A”) imposes substantial penalties on persons
who receive some forms of deferred compensation (see the Plan’s Prospectus for more information
about these penalties). Your Award has been designed to avoid these penalties. However, because
the Internal Revenue Service (“IRS”) has not yet issued final rules fully defining the effect of
Section 409A, it is possible that your Award Agreement must be revised after the IRS issues these
rules if you are to avoid these penalties. As a condition of accepting this Award, you must agree
to accept those revisions, without any further consideration, even if those revisions change the
terms of your Award and reduce its value or potential value.

2

 

Description of Your Restricted Stock

You have been awarded 38,000 shares of Restricted Stock. If you satisfy the conditions described
in this Award Agreement, the Plan and the Prospectus, the restrictions imposed on your Restricted
Stock will be removed and you will own the underlying common shares. You also must arrange to pay
any taxes due on settlement.

When Your Restricted Stock Will Be Settled

Normally, on October 1, 2007, 19,000 shares of your Restricted Stock Award will vest if you are
actively employed by the Company or any Affiliate or Subsidiary at that time. If you are not, your
Restricted Stock will be forfeited. If you are, as soon as administratively practicable after
October 1, 2007, these common shares will be distributed to you, free of any restrictions.

Then, on October 1, 2009, the remaining 19,000 shares of your Restricted Stock Award will vest if
you are actively employed by the Company or any Affiliate or Subsidiary at that time. If you are
not, your Restricted Stock will be forfeited. If you are, as soon as administratively practicable
after October 1, 2009, these common shares will be distributed to you, free of any restrictions.

Your Restricted Stock will be held in escrow until it is settled or forfeited.

The restrictions imposed on your Restricted Stock normally will be met if you are actively employed
by the Company or any Affiliate or Subsidiary (as defined in the Plan) on the pertinent vesting
dates of October 1, 2007 and October 1, 2009 and all other conditions described in this Award
Agreement, the Plan and the Prospectus are met.

Tax Treatment of Your Restricted Stock

The federal income tax treatment of your Restricted Stock is discussed in the Plan’s Prospectus.
However, you may not make an election under Section 83(b) of the Internal Revenue Code with respect
to this award.

*****

General Terms and Conditions

You Will Forfeit Your Restricted Stock or Be Required to Repay the Value to the Company if Your
Employment Terminates

Normally, your Restricted Stock will be completely vested on October 1, 2009. However, the
unvested portion of your Restricted Stock will be forfeited if you terminate employment before
October 1, 2009. And, except as provided in the section titled “You May Forfeit Your Restricted
Stock if You Engage in Conduct That is Harmful to the Company (or any Affiliate or Subsidiary),” if
you terminate employment after October 1, 2007 but before October 1, 2009:

[a] If you terminate employment through a Voluntary Termination (as described in your
Employment Agreement, effective October 1, 2006, with The Scotts Miracle-Gro

3

 

Company (“Employment Agreement”)) or are Terminated for Cause (also as described in the
Employment Agreement):

[i] The unvested portion of your Restricted Stock will be forfeited;

[ii] You must pay to the Company cash equal to the product of the fair market value of a common share
of the Company on October 1, 2007 multiplied by 19,000; and

[iii] You must pay to the Company the amount of cash equal to the value of all dividends (including any
reinvested dividends) paid on your Restricted Stock from October 1, 2006 until your Effective
Date of Termination (as defined in the Employment Agreement).

[b] If your employment is terminated due to Termination by the Company without Cause (as defined in the Employment Agreement)
other than for death or Disability (as defined in the Employment Agreement):

[i] The unvested portion of your Restricted Stock will be forfeited; and

[ii] Subject to the vote and approval of the full Board of Directors (as defined in the Plan), you
must pay to the Company cash equal to the product of the fair market value of a common share of
the Company on October 1, 2007 multiplied by 19,000, as well as the amount of cash equal to the
value of all dividends (including any reinvested dividends) paid on your Restricted Stock from
October 1, 2006 until your Effective Date of Termination (as defined in the Employment
Agreement).

You May Forfeit Your Restricted Stock if You Engage in Conduct That is Harmful to the Company (or
any Affiliate or Subsidiary)

Regardless of parts [a] and [b] in the section titled “You Will Forfeit Your Restricted Stock or Be
Required to Repay the Value to the Company if Your Employment Terminates,” you also will forfeit
any outstanding Restricted Stock and must return to the Company all common shares and other amounts
you have received through the Plan if, without the Company’s consent, you do any of the following
within 180 days before and 730 days after terminating employment:

[a] You serve (or agree to serve) as an officer, director, consultant or employee of any
proprietorship, partnership, corporation or other entity or become the owner of a business
or a member of a partnership that competes with any portion of the Company’s (or any
Affiliate’s or Subsidiary’s) business with which you have been involved any time within five
years before termination of employment or render any service (including, without limitation,
advertising or business consulting) to entities that compete with any portion of the
Company’s (or any Affiliate’s or Subsidiary’s) business with which you have been involved
any time within five years before termination of employment;

[b] You refuse or fail to consult with, supply information to or otherwise cooperate with
the Company or any Affiliate or Subsidiary after having been requested to do so;

4

 

[c] You deliberately engage in any action that the Company concludes has caused substantial
harm to the interests of the Company or any Affiliate or Subsidiary;

[d] On your own behalf or on behalf of any other person, partnership, association,
corporation or other entity, you solicit or in any manner attempt to influence or induce any
employee of the Company or any Affiliate or Subsidiary to leave the Company’s or any
Affiliate’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 Affiliate or Subsidiary concerning the names and addresses of the Company’s
or any Affiliate’s or Subsidiary’s employees;

[e] You disclose confidential and proprietary information relating to the Company’s or any
Affiliate’s or Subsidiary’s 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 or any
Affiliate’s or Subsidiary’s products, promotions, development, financing, expansion plans,
business policies and practices, salaries and benefits and other forms of information
considered by the Company or any Affiliate or Subsidiary 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 Affiliate or Subsidiary; or

[g] You engaged in conduct that the Committee (as defined in the Plan) reasonably concludes
would have given rise to a termination for “cause” (as defined in the Employment Agreement)
had it been discovered before you terminated employment.

Your Restricted Stock May Vest Earlier Than Described Above: Normally, your Restricted Stock will
vest only in the circumstances described above. However, and regardless of parts [a] and [b] in
the section titled “You Will Forfeit Your Restricted Stock or Be Required to Repay the Value to the
Company if Your Employment Terminates,” if there is a “Change in Control” (as defined in the Plan),
your Restricted Stock may vest earlier. You should read the Plan and the Prospectus carefully to
ensure that you understand how this may happen.

Rights Before Your Restricted Stock Vests: Even though your Restricted Stock is held in escrow
until it is settled or forfeited, you may exercise any voting rights associated with the common
shares underlying your Restricted Stock while it is held in escrow. You also will be entitled to
receive any dividends paid on these common shares during this period, although these dividends will
be held in escrow until the Restricted Stock is settled, reinvested in common shares of the Company
(also held in escrow), and distributed to you (or forfeited) depending on whether or not you have
met the conditions described in this Award Agreement and in the Plan and the Prospectus.

5

 

Beneficiary Designation: You may name a beneficiary or beneficiaries to receive any Restricted
Stock that is settled after you die. This may be done only on the attached Beneficiary Designation
Form and by following the rules described in that Form. The Beneficiary Designation Form need not
be completed now and is not required as a condition of receiving your Award. If you die without
completing a Beneficiary Designation Form or if you do not complete that Form correctly, your
beneficiary will be your surviving spouse or, if you do not have a surviving spouse, your estate.

Transferring Your Restricted Stock: Normally your Restricted Stock may not be transferred to
another person. However, you may complete a Beneficiary Designation Form to name the person to
receive any Restricted Stock that is settled after you die. Also, the Committee may allow you to
place your Restricted Stock into a trust established for your benefit or the benefit of your
family. Contact Merrill Lynch/Edward J. Yen & Associates at (800) 285-0648 or the address given
below if you are interested in doing this.

Governing Law: This Award Agreement will be construed in accordance with and governed by the laws
of the United States and of the State of Ohio (other than laws governing conflicts of laws).

Other Agreements: Also, your Restricted Stock will be subject to the terms of any other written
agreements between you and the Company or any Affiliate or Subsidiary to the extent that those
other agreements do not directly conflict with the terms of the Plan or this Award Agreement.

Adjustments to Your Restricted Stock: Your Restricted Stock will be adjusted, if appropriate, to
reflect any change to the Company’s capital structure (e.g., the number of common shares underlying
your Restricted Stock will be adjusted to reflect a stock split).

Other Rules: Your Restricted Stock also is subject to more rules described in the Plan and in the
Plan’s Prospectus. You should read both of these documents carefully to ensure you fully
understand all the terms and conditions of the grant of Restricted Stock under this Award
Agreement.

*****

You may contact Merrill Lynch/Edward J. Yen & Associates at (800) 285-0648 or at the address given
below if you have any questions about your Award or this Award Agreement.

Your Acknowledgment of Award Conditions

Note: You must sign and return a copy of this Award Agreement to Merrill Lynch/Edward J. Yen &
Associates at the address given below no later than November 30, 2006.

By signing below, I acknowledge and agree that:

	 	•	 	A copy of the Plan has been made available to me;
	 
	 	•	 	I have received a copy of the Plan’s Prospectus;

6

 

	 	•	 	I understand and accept the conditions placed on my Award and understand what I must
do to earn my Award;
	 
	 	•	 	I understand that if after October 1, 2007 but before October 1, 2009 my employment
is terminated by a Voluntary Termination, a Termination for Cause, or (subject to the
vote and approval of the full Board of Directors) a Termination by the Company without
Cause other than for death or Disability (all as described or defined in the Employment
Agreement), I must pay to the Company cash equal to the product of the fair market
value of a common share of the Company on October 1, 2007 multiplied by 19,000, as well
as the amount of cash equal to the value of all dividends (including any reinvested
dividends) paid on my Restricted Stock from October 1, 2006 until my Effective Date of
Termination (as defined in the Employment Agreement).
	 
	 	•	 	I understand that I should consult with my tax advisor to discuss the federal income
tax effect of earning my Restricted Stock, as well as the consequences if I am required
to repay the value of the Award to the Company.
	 
	 	•	 	I will consent (on my own behalf and on behalf of my beneficiaries and without any
further consideration) to any necessary change to my Award or this Award Agreement to
comply with any law and to avoid paying penalties under Section 409A of the Internal
Revenue Code, even if those changes affect the terms of my Award and reduce their value
or potential value; and
	 
	 	•	 	If I do not return a signed copy of this Award Agreement to the address shown below
on or before November 30, 2006 my Award will be forfeited and I will not be entitled to
receive anything on account of this Award.

	 	 	 	 	 	 	 	 	 	 	 
	Christopher Nagel	 	 	 	THE SCOTTS MIRACLE-GRO COMPANY	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ Christopher Nagel
 

	 	 
	 	By:
	 	/s/ David M. Aronowitz
 

	 	 
	(Signature)	 	 	 	David M. Aronowitz	 	 
	 	 	 	 	 	 	Executive Vice President, General Counsel	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Date signed: 11/9/06	 	 	 	Date signed: 10/30/06	 	 

A signed copy of this Award Agreement must be sent to the following address no later than November
30, 2006:

Edward J. Yen & Associates c/o Marc Chapman

Merrill Lynch

8425 Pulsar Pl., Ste. 200

Columbus, OH 43240

(800) 285-0648

After it is received, The Scotts Miracle-Gro Company 2006 Long-Term Incentive Plan

Committee will acknowledge receipt of your signed Award Agreement.

7

 

*****

Committee’s Acknowledgment of Receipt

A signed copy of this Award Agreement was received on November 13, 2006.

	 	 	 	 	 
	By:

	 	/s/ Marc Chapman
 

	 	 

Christopher Nagel

þ Has complied with the conditions imposed on the grant and the Award Agreement
remains in effect; or

o Has not complied with the conditions imposed on the grant and the Restricted Stock
Award awarded to Christopher Nagel on October 1, 2006 is forfeited because                                                                                                      .

describe deficiency

The Scotts Miracle-Gro Company 2006 Long-Term Incentive Plan Committee

	 	 	 	 	 
	By:

	 	/s/ ML
 

	 	 

Date: 11/13/06

Note: Send a copy of this completed Award Agreement to Christopher Nagel and keep a copy as part
of the Plan’s permanent records.

8

 

THE SCOTTS MIRACLE-GRO COMPANY

2006 LONG-TERM INCENTIVE PLAN

BENEFICIARY DESIGNATION FORM

RELATING TO RESTRICTED STOCK AWARD GRANTED TO

CHRISTOPHER NAGEL ON OCTOBER 1, 2006

1.00 Instructions for Completing This Beneficiary Designation Form

You may use this Beneficiary Designation Form to [1] name the person you want to receive any amount
due under The Scotts Miracle-Gro Company 2006 Long-Term Incentive Plan after your death or [2]
change the person who will receive these benefits.

There are several things you should know before you complete this Beneficiary Designation Form:

First, if you do not elect another beneficiary, any amount due to you under the Plan when you die
will be paid to your surviving spouse or, if you have no surviving spouse, to your estate.

Second, your election will not be effective (and will not be implemented) unless you complete all
applicable portions of this Beneficiary Designation Form and return it to Merrill Lynch/Edward J.
Yen & Associates at the address given below.

Third, all elections will remain in effect until they are changed (or until all death benefits are
paid).

Fourth, if you designate your spouse as your beneficiary but are subsequently divorced from that
person (or your marriage is annulled), your beneficiary designation will be revoked automatically.

Fifth, if you have any questions about this Beneficiary Designation Form or if you need additional
copies of this form, please contact Merrill Lynch/Edward J. Yen & Associates at (800) 285-0648 or
at the address or number given below.

1.00 Designation of Beneficiary

1.01 Primary Beneficiary:

I designate the following person(s) as my Primary Beneficiary or Beneficiaries to receive any
amount due after my death under the terms of the Award Agreement described at the top of this
Beneficiary Designation Form. This benefit will be paid, in the proportion specified, to:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	100	 	% to
	 	 	 	[spouse]	 	 	 	 
	 	 	 	 	 	 
	 	 
	 

	 	 	 	 	 	 	 	 	 	(Name)
	 	(Relationship)	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	Address:
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 

9

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	% to	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	(Name)
	 	(Relationship)	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	Address:
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	% to	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	(Name)
	 	(Relationship)	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	Address:
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	% to	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	(Name)
	 	(Relationship)	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	Address:
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 

1.02 Contingent Beneficiary

If one or more of my Primary Beneficiaries die before I die, I direct that any amount due after my
death under the terms of the Award described at the top of this Beneficiary Designation Form:

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	_____ Be paid to my other named Primary Beneficiaries in proportion to the allocation given
above (ignoring the interest allocated to the deceased Primary Beneficiary); or
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	_____ Be distributed among the following Contingent Beneficiaries:
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	% to	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	(Name)
	 	(Relationship)	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	Address:	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	% to	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	(Name)
	 	(Relationship)	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	Address:	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	% to	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	(Name)
	 	(Relationship)	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	Address:	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	% to	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	(Name)
	 	(Relationship)	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	Address:	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 

Elections made on this Beneficiary Designation Form will be effective only after this Form is
received by Merrill Lynch/Edward J. Yen & Associates and only if it is fully and properly completed
and signed.

2

 

Chrisopher Nagel

	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	Date of Birth:	 	 	 	 
	 

	 	 	 	 

	 	 
	Address:
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 

Sign and return this Beneficiary Designation Form to Merrill Lynch/Edward J. Yen & Associates at
the address given below.

	 	 	 	 	 
	 

	 	 	 	 
	          

	 	/s/ Christopher Nagel	 	 
	 

	 	 	 	 
	Date 11/9/06

	 	Signature	 	 

Return this signed Beneficiary Designation Form to Merrill Lynch/Edward J. Yen & Associates at the
following address:

Edward J. Yen & Associates c/o Marc Chapman

Merrill Lynch

8425 Pulsar Pl., Ste. 200

Columbus, OH 43240

(800) 285-0648

Received on: 11/13/06

	 	 	 	 	 
	 

	 	 	 	 
	By:

	 	/s/ MS	 	 
	 

	 	 	 	 

3EX-10.3

 

Exhibit 10.3

	 	 	 
	SEPARATION AGREEMENT

 

AND RELEASE OF ALL CLAIMS
	 	 

NOTICE: READ BEFORE YOU SIGN!

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 Robert F. Bernstock (“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:

	 	 	 
	 

	 	 
	 

	 	Initials

1

 

     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.

	 	 	 
	 

	 	 
	 

	 	Initials

2

 

     (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 14111 Scottslawn Rd; Marysville,
Ohio 43041. 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 Tasha Potts in Company’s Human Resources Department, 14111 Scottslawn Road, Marysville,
Ohio 43041. 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 Merrill Lynch 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/ Robert F. Bernstock	 	 
	 	 	 	 	 
	Date	 	Robert F. Bernstock	 	 
	 
	 	 	 	 	 	 
	December 1, 2006	 	THE SCOTTS COMPANY LLC	 	 
	 	 	 	 	 
	Date
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	
 

	 	 
	 
	 	 	 	 	 	 
	 

	 	Its:
	 	Executive Vice President, Global HR	 	 

	 	 	 
	 

	 	 
	 

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