THE SCOTTS COMPANY LLC
EXECUTIVE RETIREMENT PLAN
As Amended and Restated as of
January 1, 2005
THE SCOTTS COMPANY LLC
EXECUTIVE RETIREMENT PLAN
As Amended and Restated as of January 1, 2005
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I.
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1
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II.
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1
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III.
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6
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IV.
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7
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V.
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METHOD OF DISTRIBUTION OF DEFERRED
COMPENSATION
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12
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VI.
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ACCRUALS UNDER OTHER BENEFIT
PLANS
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15
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VII.
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15
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VIII.
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NON-ALIENABILITY AND
NONTRANSFERABILITY
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15
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IX.
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ADMINISTRATION AND STANDARD OF
REVIEW
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16
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X.
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16
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XI.
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AMENDMENT AND TERMINATION
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18
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XII.
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18
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XIII.
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UNFUNDED STATUS OF THE PLAN
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i
THE SCOTTS COMPANY LLC
EXECUTIVE RETIREMENT PLAN
As Amended and Restated as of January 1, 2005
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I.
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Name and Purpose
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The
Scotts Company LLC Executive Retirement Plan (formerly The Scotts
Company Executive Retirement Plan) provides Eligible Employees the
opportunity to defer salary and certain bonuses and supplements the
benefits Eligible Employees accrue under The Scotts Company LLC
Retirement Savings Plan (formerly The Scotts Company Retirement
Savings Plan). The Plan is unfunded. It is intended that the Plan
be exempt from the funding, participation, vesting and fiduciary
provisions of Title I of ERISA.
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The
Plan is subject to Code Section 409A. The provisions of the
Plan apply to: (a) any Participant who is receiving or
accruing benefits on the Effective Date; (b) any individual
who becomes a Participant on or after the Effective Date; and
(c) any Participant who retires, becomes Disabled, dies or
terminates employment in accordance with the Plan on or after the
Effective Date.
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Effective with respect to calendar
years beginning on or after January 1, 2009, and fiscal years
beginning on or after October 1, 2008, the Plan is revised to
eliminate provisions pertaining to bonuses earned under the
Executive Management Incentive Plan in favor of broader definitions
of bonuses and Performance Awards.
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II.
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Definitions
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The
following terms have the indicated meanings.
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“Account” or
“Accounts,” as applicable, means the separate Account
or a subaccount established for each Participant pursuant to
Section IV of the Plan. A Participant’s Account shall
consist of an Incentive Deferral Account (effective January 1,
2009; previously the Deferred Executive Management Incentive Pay
Account), a Deferred Compensation Account, a Matching Account, a
Retirement Account, a Transitional Contributions Account and a
Retention Award Account. Accounts are phantom accounts maintained
solely for bookkeeping purposes.
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“Adjustments” means the
credits to or debits from Accounts as provided in
Section IV.
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“Affiliate” means any
business organization or legal entity that, directly or indirectly,
controls, is controlled by, or is under common control with, the
Company. For purposes of this definition, control (including the
terms controlling, controlled by, and under common control with)
includes the possession, direct or indirect, of the power to vote
50% or more of the voting equity securities, membership interests
or other voting interests, or to direct or cause the direction of
the management and policies of, such
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business
organization or other legal entity, whether through the ownership
of equity securities, membership interests or other voting
interests, by contract or otherwise.
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“Beneficiary” means the
person or persons designated in writing as such and filed with the
recordkeeper at any time by a Participant. Any such designation may
be withdrawn or changed in writing (without the consent of the
Beneficiary), but only the last designation on file with the
recordkeeper shall be effective. Notwithstanding any contrary
provision, a change in the identity of the Beneficiary may not, and
shall not, change the form and time of payment previously elected
by the Participant for distribution of his or her Account or the
applicable portion thereof.
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“Benefits Administrative
Committee” means: (a) the administrative committee
appointed to administer the tax qualified retirement plans which
are sponsored by the Employer; or (b) any person or entity to which
the Benefits Administrative Committee delegates any of the
administrative or ministerial duties assigned to it under the
Plan.
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“Board” means the Board
of Directors of the Corporation.
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“Bonus Deferral
Election” means, with respect to calendar or fiscal years
beginning on or after January 1, 2009, as applicable, a
timely-made election to defer a bonus which does not constitute a
Performance Award pursuant to the Plan.
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“Change of Control”
means the occurrence of any of the following:
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(a)
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Board Composition
. Individuals who, as of
July 1, 2008, constitute the Board (the “Incumbent
Board”) cease, within a 12-month period, for any reason
(other than death) to constitute at least a majority of the Board;
provided , however , that any individual becoming a
director subsequent to such date whose appointment, election, or
nomination for election by the Corporation’s shareholders,
was endorsed by at least a majority of the directors then
comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board; or
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(b)
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Stock Acquisition
. (A) One or more
acquisitions, by any individual, entity or group (within the
meanings of Treasury Regulation Sections 1.409A-3(i)(5)(v)(B)
and (vi)(D)) (a “Person”), of 30% or more of the then
outstanding voting securities of the Corporation (the
“Outstanding Voting Securities”), during any 12-month
period ending on the date of the most recent acquisition by that
Person; or (B) an acquisition that results in ownership by a
Person of either ( y ) shares representing more than 50% of
the total fair market value of the Corporation’s then
outstanding stock (the “Outstanding Stock”) or (
z ) shares representing more than 50% of the then
Outstanding Voting Securities; provided , however ,
that for purposes of this paragraph (b), the following acquisitions
of shares of the Corporation shall not be taken into account in the
determination of whether a Change of Control has occurred:
(1) any acquisition directly from the Corporation;
(2) any cash acquisition by the Corporation or an Affiliate;
(3) any
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acquisition by any employee benefit
plan (or related trust) sponsored or maintained by the Corporation
or an Affiliate; (4) an acquisition by a Person that prior to
the acquisition had already acquired more shares than necessary to
satisfy the applicable 30% or 50% threshold; or (5) any
acquisition by the Hagedorn Partnership, L.P. or any party related
to the Hagedorn Partnership, L.P., as determined by the Committee;
or
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(c)
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Business Combination
. Consummation of a
reorganization, merger or consolidation of the Corporation (a
“Business Combination”), in each case, that results in
either a change in ownership contemplated in subparagraph
(B) of paragraph (b) above or a change in the Incumbent
Board contemplated by paragraph (a) above; or
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(d)
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Sale or Disposition of
Assets . One
or more Persons acquires (or has acquired during the 12-month
period ending on the date of the most recent acquisition by such
Persons) assets from the Corporation that have a total gross fair
market value equal to more than 40% of the total gross fair market
value of all of the assets of the Corporation (without regard to
liabilities of the Corporation or associated with such assets)
immediately before such acquisition or acquisitions; provided that
such sale or disposition is not to:
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(i)
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a
shareholder of the Corporation (immediately before the asset
transfer) in exchange for or with respect to the
Corporation’s Outstanding Stock;
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(ii)
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an
entity, 50% or more of the total value or voting power of which is
owned, directly or indirectly, by the Corporation;
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(iii)
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a
Person that owns, directly or indirectly, 50% or more of the total
value or voting power of the Corporation’s Outstanding Stock;
or
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(iv)
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an
entity, at least 50% of the total value or voting power of which is
owned, directly or indirectly, by a Person described in paragraph
(d)(iii) above.
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Except as otherwise specifically
provided in paragraph (d)(i) above, a Person’s status is
determined immediately after the transfer.
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“Code” or
“IRC” means the Internal Revenue Code of 1986, as
amended from time to time.
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“Committee” means the
Compensation and Organization Committee of the Board.
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“Company” means The
Scotts Company, and, effective on and after March 18, 2005,
Company means The Scotts Company LLC.
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“Company Stock Fund”
means a fund similar to the Company stock fund existing under the
Qualified Plan which holds common stock of the Corporation and
which shall be used as a benchmark hereunder so long as a Company
stock fund exists as an investment option under the Qualified Plan.
The Investment Committee shall have no responsibility for or
discretion over the use of such fund as a benchmark
hereunder.
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“Compensation” means
salary and amounts received in lieu of salary (including, but not
limited to, paid time off, vacation pay, salary continuation and
short term disability benefits).
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“Compensation Deferral
Election” means an Eligible Employee’s election, in a
manner prescribed by the Benefits Administrative Committee, to
defer Compensation pursuant to the Plan.
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“Corporation” means The
Scotts Miracle-Gro Company.
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“Disabled” or
“Disability” means that the Participant is, by reason
of any medically determinable physical or mental impairment that
can be expected to result in death or can be expected to last for a
continuous period of not less than 12 months, receiving income
replacement benefits for a period of at least three months under an
accident and health plan covering employees of the Company or its
Affiliates.
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“ERISA” means the
Employee Retirement Income Security Act of 1974, as amended from
time to time.
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“Effective Date” means
January 1, 2005, unless otherwise specifically provided herein
or required by law.
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“Eligible Employee” has
the meaning specified in Section III.
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“Employee” means an
individual employed as a common law employee of the
Employer.
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“Employer” means the
Company and its Affiliates.
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“Executive Management
Incentive Pay” means any bonus earned under the Executive
Management Incentive Plan with respect to calendar years beginning
before January 1, 2009, or fiscal years beginning before
October 1, 2008, as applicable.
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“Executive Management
Incentive Pay Deferral Election” means, with respect to
calendar years beginning before January 1, 2009, or fiscal
years beginning before October 1, 2008, as applicable, an
Eligible Employee’s election, in a manner prescribed by the
Benefits Administrative Committee, to defer Executive Management
Incentive Pay pursuant to the Plan.
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“Executive Management
Incentive Plan” means The Scotts Company LLC Amended and
Restated Executive/Management Incentive Plan (known from and after
November 5, 2008, as The Scotts Company LLC Amended and
Restated Executive Incentive Plan).
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“Investment Committee”
means: (a) the Scotts Miracle-Gro Investment Committee
appointed to monitor all investment and related activities
associated with the Outside Investment Funds; or (b) any
person or entity to which the Investment Committee delegates any of
the investment duties assigned to it under the Plan.
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“Investment Fund” means
the Company Stock Fund or one of the Outside Investment Funds used
as an earnings benchmark with respect to Participants’
Accounts.
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“Outside Investment
Fund” means an Investment Fund, other than the Company Stock
Fund, which has been designated by the Investment Committee as
available to use as an earnings benchmark with respect to
Participants’ Accounts.
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“Participant” has the
meaning specified in Section III.
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“Performance Award”
means an annual bonus payable pursuant to a plan or program
maintained by an Employer which constitutes performance-based
compensation under Treasury Regulation
Section 1.409A-1(e).
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“Performance Award Deferral
Election” means, with respect to calendar years beginning on
or after January 1, 2009, or fiscal years beginning on or
after October 1, 2008, as applicable, an Eligible
Employee’s election to defer, in a manner prescribed by the
Benefits Administrative Committee, a Performance Award pursuant to
the Plan.
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“Plan” means The Scotts
Company LLC Executive Retirement Plan, as reflected in this
document, as amended from time to time after the Effective
Date.
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“Plan Year” means the
calendar year.
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“Qualified Plan” means
The Scotts Company LLC Retirement Savings Plan, and any amendments
thereto.
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“Retention Award” means
an award, allocable to a Participant’s Retention Award
Account in accordance with Section IV.D.(5). The designation
of the Participants who receive a Retention Award and the amount of
each Retention Award shall be determined by the Committee in its
discretion. Each Retention Award shall be evidenced by a written
agreement between the Employer and the Participant. The written
agreement shall set forth the terms and conditions governing the
Retention Award and shall be consistent with the applicable
provisions of the Plan.
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“Separation from
Service” means a Participant’s termination of
employment with the Company and its Affiliates for any reason. A
termination of employment will occur when the Participant and the
Company and its Affiliates reasonably anticipate that
(i) no
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further
services will be performed by the Participant after a certain date
or (ii) the level of bona fide services which the Participant
is expected to perform for the Company and its Affiliates, as an
employee or otherwise, as of a certain date is expected to
permanently decrease to a level equal to 20% or less of the average
level of services performed by the Participant during the
immediately preceding 36-month period (or the Participant’s
entire period of service if less than 36 months). Further, for
purposes of the Plan, a termination of employment is deemed to
occur on the first date following six months after a Participant is
first on a military leave, sick leave or other bona fide leave of
absence. Such six-month period may be extended if the Participant
retains a right to reemployment with the Company or its Affiliates
under applicable statute or contract. Notwithstanding the
foregoing, where a leave of absence is due to a medically
determinable physical or mental impairment that can be expected to
result in death or can be expected to last for a continuous period
of not less than six months and where such impairment causes the
Participant to be unable to perform the duties of his or her
position of employment or any substantially similar position of
employment with the Company, a 29-month period of absence may be
substituted for such six-month period. Whether there has been a
termination of employment will be determined by the Benefits
Administrative Committee, taking into account all of the facts and
circumstances at the time of the termination of employment in
accordance with the guidelines described in Treasury
Regulation Section 1.409-1(h).
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“Statutory Limits” means
the following:
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(a)
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the
maximum recognizable annual compensation under Code
Section 401(a)(17) — the “Pay
Cap”;
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(b)
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the
maximum annual additions under Code Section 415(c) — the
“415 Limit”;
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(c)
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the
deferral limit under Code Section 402(g) — the
“Deferral Limit”; and
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(d)
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the
limits on contributions for highly compensated employees under Code
Sections 401(k)(3) — the “ADP Test” —
and 401(m)(2) — the “ACP Test.”
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III.
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Participants
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Each Employee in Band G or above is
an Eligible Employee and may elect to participate in the Plan. Each
Eligible Employee who elects to participate in the Plan or for whom
Employer contributions are credited in accordance with
Section IV shall be a Participant in the Plan. A Participant
shall continue to participate in the Plan until his or her status
as a Participant is terminated by: (a) a complete distribution
of his or her Accounts pursuant to the terms of the Plan;
(b) the termination of the Plan; or (c) a written
directive of the Benefits Administrative Committee. Furthermore,
each such Participant shall be deemed to be a “Specified
Employee,” as defined in Code Section 409A(a)(2)(B)(i)
and Treasury Regulation Section 1.409A-1(i).
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A.
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Establishment of Accounts
. The recordkeeper will
establish an Account for each Participant. A Participant’s
Account shall consist of an Incentive Deferral Account (effective
January 1, 2009; previously a Deferred Executive Management
Incentive Pay Account), a Deferred Compensation Account, a Matching
Account, a Retirement Account, a Transitional Contributions Account
and a Retention Award Account.
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B.
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Election of Participant to Defer
Incentive Pay .
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(1)
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An
Eligible Employee may, at the discretion of the Committee, elect to
have a percentage of any Performance Award that may be awarded to
him or her by the Employer for, as applicable, (i) the Plan
Year or (ii) the fiscal year ending in the following Plan
Year, allocated to his or her Incentive Deferral Account and paid
on a deferred basis pursuant to the terms of the Plan. To make an
election with respect to a Performance Award, an Eligible Employee
must advise the Employer of his or her election in writing or by
filing an election electronically, using procedures prescribed by
the Benefits Administrative Committee. Such elections must be made
on or before the date prescribed by the Benefits Administrative
Committee, which shall be no later than December 31 of the
calendar year preceding, as applicable, (i) the Plan Year to
which the Performance Award relates or (ii) the Plan Year in
which the fiscal year to which the Performance Award relates ends.
In no event may a deferral election be made with respect to any
portion of a Performance Award that is “readily
ascertainable,” i.e. , both calculable and
substantially certain to be paid at the time of the election.
Further, for such election to be effective, an Eligible Employee
must have provided services for the Employer continuously from the
beginning of the applicable performance period. Finally, deferral
elections made with respect to Performance Awards that become
payable as a result of death or Disability, or in the event of a
Change of Control, without regard to the satisfaction of the
applicable performance criteria, do not constitute
performance-based compensation and shall not be effective unless
made by December 31 of the calendar year preceding the
beginning of the calendar or fiscal year to which such award
relates.
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(2)
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An
Eligible Employee may, at the discretion of the Committee, elect to
have a percentage of any bonus (other than a Performance Award)
allocated to his or her Incentive Deferral Account and paid on a
deferred basis pursuant to the terms of the Plan. The Eligible
Employee must advise the Employer of his or her election, in
writing or by filing an election electronically using procedures
prescribed by the Benefits Administrative Committee, on or before
the date prescribed by the
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Benefits Administrative Committee,
which shall be no later than the date described in (a), (b) or
(c) below:
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(a)
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Except as provided in (b) and
(c) below, the last date for filing a Bonus Deferral Election
shall be December 31 of the calendar year prior to the
beginning of the Plan Year or fiscal year in which any services
related to the bonus will be performed.
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(b)
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This clause (b) applies to a
bonus that would be exempt from Code Section 409A as a
“short term deferral” (absent an election to defer the
bonus). The last date for filing a Bonus Deferral Election with
respect to a bonus described in the preceding sentence shall be the
date that is 12 months before the date that the Eligible
Employee’s right to receive the bonus becomes nonforfeitable
(the “Vesting Date”), but only if the Bonus Deferral
Election provides for a distribution of the bonus and related
Adjustments (i) on a specified date that is at least five
years after the Vesting Date or (ii) on the later of the date
on which Separation from Service occurs or a specified date that is
at least five years after the Vesting Date. The preceding sentence
notwithstanding, a bonus deferred under this clause (b) and
the related Adjustments shall be payable upon a Change of Control
if the Eligible Employee is an “affected Participant”
(as described in Section V.G. of the Plan).
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(c)
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This clause (c) applies to a
bonus if the right to receive the bonus payment is forfeitable
unless the Eligible Employee continues to provide services to an
Employer for a period of at least 12 months after the date
that the bonus opportunity is awarded to the Eligible Employee (the
“Award Date”). The last date for filing a Bonus
Deferral Election with respect to a bonus described in the
preceding sentence shall be the date that is both (i) not more
than 29 days after the Award Date and (ii) at least
12 months before the Vesting Date. Notwithstanding the two
preceding sentences, if the bonus becomes payable as a result of
death or Disability or a Change of Control, the Bonus Deferral
Election shall not be effective unless it was filed on or before
the date prescribed in clause (a) above.
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(3)
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Notwithstanding the preceding
paragraph, prior to calendar years beginning on or after
January 1, 2009, or fiscal years beginning on or after
October 1, 2008, as applicable, for the Plan Year in which an
Employee first becomes a Participant in the Plan, an Eligible
Employee may complete an Executive Management Incentive Pay
Deferral Election at any time within 30 days following the
date on which he or she first became a Participant in the Plan or
any plan which is required to be aggregated with the Plan under
Treasury Regulation Section 409A-1(c)(2). Such
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