Document:

EX-10.1

 

EXHIBIT 10.1

July 25, 2005

Dr. Michael P. Kelty

Executive Vice President & Vice Chairman

The Scotts Company LLC

14111 Scottslawn Road.

Marysville, Ohio 43041

Dear Michael:

This letter sets forth our agreement regarding a consulting engagement between you and The Scotts
Company LLC (“Scotts”).

I. Scope of Services

You agree to make yourself reasonably available to consult with and provide advice to Scotts and
its affiliates at such places and times as Scotts may reasonably request with respect to a variety
of matters to be determined by us, including but not limited to: assisting with the hiring of a new
Senior Vice President; managing the key elements of the Biotech program; working with North America
management to develop an innovation plan; transition Environmental Stewardship to the newly hired
SVP; and assist in lobbying efforts at the CEO’s request. You agree to provide the consulting
services contemplated herein in a manner acceptable to Scotts in the exercise of its reasonable
discretion.

In providing consulting services to Scotts, you will be an independent contractor and will not be
an employee, servant, agent, partner, or joint venturer of Scotts or of any of Scotts’ affiliates,
or of any of its or their respective officers, directors or employees. You will not participate in
or receive benefits under any of Scotts’ employee fringe benefit programs or receive any other
fringe benefits from Scotts, including, without limitation, health, disability, life insurance,
retirement, pension and profit sharing benefits, on account of the consulting services you provide
to Scotts.

II. Length of Consulting Agreement

The consulting arrangement will commence November 1st, 2005 and end September
30th, 2006 and then be renewed pursuant to the paragraph below.

 

 

	Dr. Michael P. Kelty 	 	Page 2 of 3

 

This engagement letter will automatically renew on a fiscal year basis at Scotts’ sole discretion.

III. Authority

You will have no authority at any time while providing the consulting services contemplated herein
to assume or create any obligation or liability, express or implied, on Scotts’ behalf or in
Scotts’ name or to bind Scotts in any manner whatsoever.

IV. Consulting Fees and Expenses

Scotts shall pay you a consulting fee of $350 per hour for the time your providing consulting
services as requested by Scotts hereunder. Scotts also will guarantee you a minimum payment of
$200,000 for the length of the consulting agreement as defined in Section II of this engagement
letter.

Scotts also will pay or reimburse you for all reasonable expenses incurred by you in connection
with providing consulting services to Scotts as contemplated herein, including, without limitation,
all reasonable (A) telephone and fax expenses, and (B) travel expenses, including, without
limitation, transportation, food and lodging, incurred in connection with attending Scotts approved
meetings. You must incur and account for expenses in accordance with the policies and procedures
established by Scotts as a precondition to Scotts’ obligation to pay or reimburse you for such
expenses pursuant to the terms of the preceding sentence.

You agree to provide, at your own expense, all equipment necessary to provide the consulting
services contemplated herein and to be responsible for your own overhead costs and expenses except
for those expenses that Scotts has expressly agreed to pay pursuant to the terms of the preceding
paragraph.

V. Termination

Either party may terminate the consulting services at any time and for any reason, or for no reason
by giving the other written notice of termination. Your consulting relationship with Scotts shall
automatically terminate upon your death or disability.

Should you die or become totally disabled following the Termination Date but before the payments
due you under Section IV 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.

The termination of your consulting relationship with Scotts shall not affect Scotts’ obligation to
pay you for the amounts you have earned, and for reimbursable expenses

 

 

	Dr. Michael P. Kelty 	 	Page 3 of 3

 

you have incurred, pursuant to the terms of this letter prior to the date of such termination.

VI. Confidential Information

In providing the consulting services contemplated herein, you will be privy to Confidential
Information about Scotts and its affiliates. Maintaining the confidential nature of this
information is very important to Scotts. As used in this letter, “Confidential Information” is any
information about Scotts, or its affiliates, to which you gain access in connection with your
provision of consulting services to Scotts. Confidential Information does not include information
you can show (A) was already in your possession prior to the time you received such information as
a consultant to Scotts, or (B) is publicly available or otherwise in the public domain by means
other than your violation of the terms of this letter.

You agree to not at any time hereafter, without the prior written consent of Scotts, disclose,
directly or indirectly, any Confidential Information or use any Confidential Information for any
purpose other than providing consulting services to Scotts as contemplated herein.

You agree to promptly return to Scotts, upon Scotts’ request, all electronic or tangible documents
that contain any Confidential Information and to retain no copies for yourself.

VII. Other

You understand and agree that this letter does not obligate Scotts to utilize your consulting
services, but it is intended to set forth the terms pursuant to which Scotts may utilize your
consulting services in its discretion.

You are not permitted to assign, sell or otherwise transfer any of your rights or obligations
hereunder.

	 	 	 	 	 	 
	 	 	THE SCOTTS COMPANY

	 

	 	By:	 	/s/ Denise Stump 
	 

	 	 	 	 
	 

	 	 	 	Denise Stump

Executive Vice President,

Human Resources Global
	ACKNOWLEDGED AND AGREED:

	 	 	 	 
	 	 	 	 
	/s/ Michael P. Kelty, Ph.D.
	 

	 	 	 	 
	Dr. Michael P. KeltyEX-10.2

 

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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