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SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
(Mark One)
( X ) ANNUAL REPORT PURSUANT TO SECTION 13 or 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended September 30, 1994
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from ______________ to ___________________
Commission file number 0-19768
The Scotts Company
(Exact name of registrant as specified in its charter)
Ohio
31-1199481
(State or other jurisdiction of incorporation or organization
(I.R.S. Employer
Identification No.)
14111 Scottslawn Road, Marysville, Ohio 43041
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
513-644-0011
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange
Where Registered
97/8% Senior Subordinated New York Stock Exchange
Notes due August 1, 2004
Securities registered pursuant to Section 12(g) of the Act:
Common Shares, Without Par Value
(18,667,064 Common Shares outstanding at November 30, 1994)
Title of class
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes x No
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of the Form 10-K or any amendment to this
Form 10-K. (X)
The aggregate market value of the voting stock held by non-
affiliates of the registrant at November 30, 1994 was
$275,339,194.
This report contains 258 pages of which this is Page 1. The
Index to Exhibits begins at page 71.
PART I
ITEM 1. BUSINESS.
The Scotts Company, through its wholly-owned subsidiaries,
Hyponex Corporation ("Hyponex"), Scotts-Sierra Horticultural
Products Company ("Sierra"), Republic Tool and Manufacturing
Corp. ("Republic") and their subsidiaries (collectively, the
"Company") is one of the oldest and most widely recognized
manufacturers of products used to grow and maintain landscapes:
lawns, gardens and golf courses. In both the consumer and
professional market segments, the Company's Scotts and Turf
Builder (for consumer lawn care), ProTurf (for professional turf
care) and Osmocote and Peters (for commercial horticulture)
brands command market-leading shares more than double those of
the next ranked competitors. The Company's long history of
technical innovation, its reputation for quality and service and
its effective marketing tailored to the needs of do-it-
yourselfers and professionals have enabled the Company to
maintain leadership in its markets while delivering consistent
growth in sales and operating income and stable operating
margins. On September 20, 1994, The Scotts Company, a Delaware
corporation ("Scotts Delaware") was merged with and into The
Scotts Company, an Ohio corporation ("Scotts Ohio") (hereafter,
the "Company Merger"). On September 30, 1994, Scotts Ohio's
major operating subsidiary, The O. M. Scott & Sons Company, a
Delaware Corporation ("O. M. Scott") was merged into Scotts Ohio
(the "O. M. Scott Merger"). Management believes these mergers
should decrease the Company's overall tax liability.
Do-it-yourselfers and professionals purchase through different
distribution channels and have different information and product
needs. Accordingly, the Company has two business groups,
Consumer and Professional, to serve these domestic markets, as
well as an International Group to serve its markets outside of
North America.
Consumer Business Group
Products
The Company's consumer products include lawn fertilizers,
fertilizer/control combination products, potting soils and other
organic products, grass seed, lawn spreaders, and indoor and
outdoor plant care products.
Lawn Fertilizers and Combination Products. The Company's
most important consumer products are lawn fertilizers, such as
Turf Builder, and combination fertilizer/control products, such
as Turf Builder Plus 2 and Turf Builder Plus Halts. Typically,
these are patented, homogeneous, controlled-release products
which provide complete controlled feeding for consumers' lawns
for up to two months without the risk of damage to the lawn
presented by less expensive non-controlled-release products. Many
of the Company's products are specially formulated for
geographical differences and some, such as Bonus S (to control
weeds in Southern grasses) are distributed to limited areas.
Most of the Company's fertilizer and combination products are
sold in dry, granular form, although the Company also sells a
small amount of liquid lawn care products. With the acquisition
of Sierra in December, 1993, the Company obtained new products
and technologies. Consumer products that utilize Sierra's
technology in this category include Once controlled-release lawn
fertilizer, which can provide up to three months of feeding from
one application.
Management estimates that in fiscal 1994, the Company's share
of the U.S. do-it-yourself consumer lawn chemicals products
market was approximately 46%, more than double that of the second
leading brand.
Page 2
Organic Products. The Company sells a broad line of organic
products under the Scotts, Hyponex, Peters Professional and other
labels, including retail potting soils, topsoil, peat, manures
and mulches. Management estimates that the Company's fiscal 1994
U.S. market share was approximately 50% in potting soils, and
approximately 39% in other consumer organic products.
Grass Seed. High quality grass seed was the Company's first
lawn product. Today, the Company sells numerous varieties and
blends of grass seed, many of them proprietary, designed for
different uses and geographies. Management estimates that the
Company's share of the U.S. consumer grass seed market was
approximately 28% in fiscal 1994.
Lawn Spreaders. Because the Company's granular lawn care
products perform best when applied evenly and accurately, the
Company sells a line of spreaders specifically manufactured and
developed for use with its products. This line includes the
SpeedyGreen and EasyGreen rotary spreaders, the PrecisionGreen
and AccuGreen drop spreaders, and the HandyGreen hand-held rotary
spreader.
Since the acquisition of Republic in November, 1992, the
Company has continued to market both its line of Scotts spreaders
and Republic's EZ line of spreaders and to integrate the
manufacture of its spreaders through Republic. Management
estimates that the Company's share of the U.S. market for lawn
spreaders was approximately 42% in fiscal 1994.
Garden Products, Tools and Indoor Products. The Company
produces and sells a line of boxed Scotts Plant Foods, garden and
landscape fertilizers and indoor plant care products and Peters
Professional water soluble fertilizers and Once controlled-
released garden fertilizers. In September 1994, the Company
entered into a licensing agreement with American Lawn Mower
Company ("American") under which American, in return for the
payment of royalties, is granted the right to produce and market
a line of push-type reel lawn mowers bearing the Scotts
trademark. The Company also has a licensing agreement in place
with Union Tools, Inc. ("Union") under which Union, in return for
the payment of royalties, is granted the right to produce and
market a line of garden tools bearing the Scotts trademark. In
management's estimation, the Company did not have a material
share of the markets for these products in fiscal 1994.
Consumer Business Strategy
The Company believes that it has achieved its leading position
in the do-it-yourself lawn care market on the basis of its
sophisticated technology, the superior quality and value of its
products and the service it provides its customers. The Company
plans to maintain and expand its market position by emphasizing
these qualities and taking advantage of the Scotts name and
reputation. Through its Hyponex label, the Company has also
focused on increasing sales of its higher margin organic items
such as potting soils. In 1994, the Company introduced a line of
Scotts potting soils.
The acquisition of Sierra in 1993 provides the Company with
numerous strategic opportunities. This includes the expansion of
sales of water-soluble fertilizers manufactured by Sierra in to
the consumer market and the future introduction into the consumer
market of certain bioinsecticides for which Sierra has licenses.
Drawing upon its strong research and development capabilities,
the Company intends to continue to develop and introduce new and
innovative lawn and garden products. The Company believes that
its ability to introduce successful new consumer products has
been a key element in Scotts' growth. New consumer products in
recent years include PatchMasterr (1992), a unique lawn repair
product containing seed, Scotts Starterr fertilizer and mulch; a
Poly-Sr lawn fertilizer line(1993), which utilizes Scotts
proprietary controlled-release technology to provide a lower
priced product offering versus the Premium Turf Builderr line;
new AccuGreenr and Speedy Greenr (1994) spreaders which are
shipped and sold
Page 3
fully assembled; and Scotts Planting Soils (1994), a line of
ready-to-use, value-added soils which help simplify the do-it-
yourself gardener's task and deliver superior growing
performance.
The Company also seeks to capitalize upon the competitive
advantages stemming from its position as the leading nationwide
supplier of a full line of consumer lawn and garden products.
The Company believes that this gives it an advantage in selling
to larger retailers, who value the efficiency of dealing with a
limited number of suppliers.
The Company has developed a program to take advantage of
Hyponex's composting expertise and the increasing concern about
landfill capacity by entering into agreements with municipalities
and waste haulers to compost yard waste. A pilot program was
started in 1991 on Company-owned land in Marysville when the
Company entered into a five-year contract with Franklin County,
Ohio, to compost a minimum of 50,000 tons of yard waste per year
for a fee of $20 per ton. The Company now has seventeen compost
facilities. In addition to service fees, the Company substitutes
the resulting compost for a portion of the raw materials in
Hyponex and other Company products. Revenues in fiscal 1994 and
1993 from composting services were $5.0 million and $2.1 million,
respectively.
Marketing and Promotion
The Company employs a 100 person direct sales force and
numerous distributors for its consumer products to cover
approximately 24,000 retail outlets and headquarters of national,
regional and local chains. Most salespeople have college degrees
and prior sales experience. In recent years, the percentage of
sales to mass merchandisers and large buying groups has
increased. The top ten accounts (which include three buying
groups of independent retailers) represented 59% of the Consumer
Business Group sales in fiscal 1993 and 66% in 1994.
At the same time, the Company continues to support its
independent retailers. Most importantly, the Company developed a
special line of products, marketed under the Lawn Pro name, which
are sold exclusively by independent retailers. These products
include the 4-Step program, introduced in 1984, which encourages
consumers to purchase four products at one time (fertilizer plus
crabgrass preventer, fertilizer plus weed control, fertilizer
plus insect control and a special fertilizer for Fall
application). The Company promotes the 4-Step program as
providing consumers with all their annual lawn care needs for
less than half of what a lawn care service would cost. The
Company believes that the Lawn Pro line has helped maintain the
loyalty of the independent retailers in the face of increasing
competition from mass merchandisers.
The Company supports its sales efforts with extensive
advertising and promotional programs. Because of the importance
of the Spring sales season in the marketing of consumer lawn and
garden products, the Company focuses its promotional efforts on
this period. Through advertising, consumer rebates, retailer
allowances and other promotional efforts, the Company seeks to
encourage customers to make the bulk of their lawn and garden
purchases in the early Spring. The Company believes that its
early season promotions substantially moderate the risk to its
consumer sales posed by bad weekend weather.
An important part of the Company's sales effort is its
national toll-free consumer hotline, on which its "lawn
consultants" answer questions about the Company's products and
give general lawn care advice to consumers. The Company's lawn
consultants responded to over 372,000 telephone and written
inquiries in fiscal 1994 and have handled over 2,500,000 calls
since the inception of the consumer hotline in 1972.
Backing up the Company's marketing effort is its well-known
"No Quibble" guarantee, instituted in 1958, which promises
consumers a full refund if for any reason they are not satisfied
with the results after using Scotts products. Refunds under this
guarantee have consistently amounted to less than 0.3% of net
sales on an annual basis.
Page 4
Competition
The consumer lawn and garden market is highly competitive.
The most significant competitors for the consumer lawn care
business are lawn care service companies. At least one of these,
Tru Green Company, which also owns the ChemLawn lawn care service
business, operates nationally and is significantly larger than
the Company. In the do-it-yourself segment, the Company's
products compete primarily against regional products and private
label products produced by various suppliers and sold by such
companies as Kmart. These products compete across the entire
range of the Company's product line. In addition, certain of the
Company's products compete against branded fertilizers,
pesticides and combination products marketed by such companies as
Monsanto Company (Ortho and Greensweep), Lebanon Chemical Corp.
(Greenview) and Stern's Miracle-Gro Products, Inc.
Most competitors, with the exception of lawn care service
companies, sell their products at prices lower than those of the
Company. The Company competes primarily on the basis of its
strong brand names, quality, value, service and technological
innovation. The Company's competitive position is also supported
by its national sales force, advertising campaigns and its
unconditional guarantee. There can be no assurance, however,
that additional competition from new or existing competitors will
not erode the Company's share of the consumer market or its
profit margins.
Backlog
The major portion of annual consumer product orders (other
than organic products which are normally ordered in season on an
"as needed" basis) are received from retailers during the months
of October through January and are filled during the months of
January through March. As of December 6, 1994, orders on hand
for retail customers (excluding orders for Sierra products)
totaled approximately $58,693,000 compared to approximately
$42,270,000 on the same date in 1993. All such orders are
expected to be filled in fiscal 1995.
Professional Business Group
The Market
The Company sells its professional products to golf courses,
commercial nurseries and greenhouses, schools and sportsfields,
multi-family housing complexes, business and industrial sites,
lawn and landscape services and specialty crop growers. In 1994,
the Professional Business Group served over 12,000 North American
customers, among them such high profile golf courses as Augusta
National (Georgia), Cypress Point, Spyglass and Pebble Beach
(California), Desert Mountain (Arizona), Muirfield (Ohio), The
Country Club (Massachusetts), Colonial Country Club (Texas) and
Butler National (Illinois). Sports complexes such as Fenway
Park, Camden Yard, Wrigley Field, Yankee Stadium and the Rose
Bowl are professional customers, as are major commercial
nursery/greenhouse operations such as Monrovia, Hines and
Imperial.
Golf courses accounted for approximately 43% of the Company's
professional sales in fiscal 1994. During 1994, the Company sold
products to approximately 55% of the over 14,500 golf courses in
North America, including 78 of Golf Digest's top 100 U.S.
courses. Management estimates, based on an independent bi-annual
market survey and other information available to the Company,
that the Company's leading share of the North American golf
course turf maintenance segment will be approximately 20% in
1994.
According to the National Golf Foundation, approximately 200
new golf courses have been constructed annually for the last
three years. Management believes that the increase in the number
of
Page 5
courses, the concentration of the growth in the West/South with a
longer growing/maintenance season, the increasing playing time
requiring more course maintenance and the trend toward more
highly maintained courses will contribute to an annual sales
growth rate in the golf course segment of 9%.
Horticulture sales accounted for approximately 38% of the
Company's professional sales in fiscal 1994. The Company sold
products to thousands of nursery, greenhouse and specialty crop
growers through a network of over 100 horticultural distributors.
On a full year basis, the Company estimates that its leading
share of the North American horticultural segment was
approximately 35% in 1994.
Management believes the increasing acceptance of controlled-
release fertilizers in horticultural/ agricultural applications
due to performance advantages and groundwater leaching concerns
will contribute to an increase in the annual sales growth rate in
the horticulture segment.
In January, 1994, a new business unit under the ProGrow name
was created to better serve the large, but highly fragmented,
lawn/landscape service market, in addition to
schools/sportsfields, multi-family housing complexes and
business/industrial sites. Many small service operators prefer
to purchase on an as-needed, "cash and carry" basis, so the
Company is establishing a network of distributors to extend local
availability of its professional products. By the end of fiscal
1994, over 60 distributors had been added, with plans to add
additional distributors in 1995 and beyond. Management believes
changing demographic factors such as increasing time pressures,
higher disposable income and an aging population will result in
an expanding service segment.
Products
The Company's professional products, marketed under such brand
names as ProTurf, ProGrow, Osmocote, Peters, Metro-Mix and Terra-
Lite, include a broad line of sophisticated controlled-release
fertilizers, water soluble fertilizers, control products
(herbicides, insecticides, fungicides and growth regulators),
wetting agents, organic products, grass seed and application
devices. The fertilizer lines utilize a range of proprietary
controlled-release fertilizer technologies, including Polyform,
Triaform, Poly-S, Osmocote and ScottKote, and proprietary water
soluble fertilizer technologies, including Peters and Peters
Excel. The Company applies these technologies to meet a wide
range of professional customer needs, ranging from quick release
greenhouse fertilizers to controlled-release fairway/greens
fertilizers to extended release nursery fertilizers that last up
to a year or more.
The Company works very closely with basic pesticide
manufacturers to secure exclusive positions on advanced control
chemistry which can be formulated on granular carriers, including
fertilizers or liquid application. In 1994, over 15 professional
products featured exclusive control technologies, including such
products as the TGR growth regulator line, Turplex bioinsecticide
and DMC weed control. Liquid-applied fertilizers and control
products numbered 37 in 1994. Application devices include both
rotary and drop action spreaders. Over 20 proprietary grass seed
varieties are part of the professional line. The Sierra
acquisition added an established line of soilless mixes in which
controlled and water soluble fertilizers, wetting agents and
control products can be incorporated to customize potting media
for nurseries and greenhouses.
During 1994, the Company introduced 24 new professional
products, including Poly-S and TGR line extensions, a line of
Peters water soluble fertilizers for golf course greens, an
Osmocote controlled-release potassium product and Merit
insecticide.
Page 6
Business Strategy
The Company's Professional Business Group focuses its sales
efforts on the middle and high end of the professional market and
generally does not compete for sales of commodity products.
Demand for the Company's professional products is primarily
driven by product quality, performance and technical support.
The Company seeks to meet these needs with a range of
sophisticated, specialized products that are sold by a
professional, agronomically-trained sales force.
A primary focus of the Professional Business Group's strategy
is to provide a continuing flow of innovative new products to its
professional customers. Products introduced since 1989 accounted
for over 60% of the Professional Business Group's net sales in
fiscal 1994.
The Company intends to use its strong position in the golf
course segment to increase sales of Sierra products to those
users, and, conversely, to expand the distribution of Scott
nursery products in the commercial horticultural segment in which
Sierra has a strong position.
The Professional Business Group also is working to increase
market coverage by focusing on various professional market
niches. In 1965, the Company established its first specialized
professional sales force, focusing on golf courses. Since 1985,
it has established separate sales forces and/or sales managers
for lawn and landscape services, sports fields, golf course
architects and construction companies, and international segments
of the professional market. In 1992, the Company introduced a
fairway application service for golf courses. This service has
been expanded and is now available in eight markets, with six new
markets planned for 1995. In 1994, the ProGrow business was
launched to better serve lawn/landscape services that purchase on
an as-needed basis.
Marketing and Promotion
The Professional Business Group's sales force consists of 125
territory managers who cover over 17,000 accounts. Many
territory managers are experienced former golf course
superintendents or nursery managers and most have degrees in
agronomy, horticulture or similar disciplines. Territory
managers work closely with golf course and sports field
superintendents, turf and nursery managers, and other landscape
professionals. In addition to marketing the Company's products,
Scott's territory managers provide consultation, testing
services, and advice regarding maintenance practices, including
individualized comprehensive programs incorporating various
products for use at specified times throughout the year. The
professional grower segment is served primarily through an
extensive network of distributors, most with substantial
experience in the horticulture market, with territory managers
spending the majority of their time with growers.
To reach potential purchasers, the Company uses trade
advertising and direct mail, publishes newsletters, and sponsors
seminars throughout the country. In addition, the Company
maintains a special toll-free hotline for its professional
customers. The professional customer service department
responded to over 40,000 telephone inquiries in fiscal 1994.
Competition
In the professional turf and nursery market, the Company faces
a broad range of competition from numerous companies ranging in
size from multi-national chemical and fertilizer companies such
as Monsanto and DowElanco Company, to smaller specialized
companies such as Lesco, Inc. and Lebanon Chemical Corp., to
local fertilizer manufacturers and blenders. Portions of this
market, such as fairway and rough fertilizers for golf courses,
are sometimes served by large agricultural fertilizer companies,
while other segments, such as fertilizers and pest controls for
golf course greens and high value nursery crops, are served by
specialized, research-oriented companies. In certain areas of
the country, particularly
Page 7
Florida, a number of companies have begun to offer turf care
services, including product application, to golf courses. In
addition, the higher margins available for sophisticated products
to treat high value crops continue to attract large and small
chemical producers and formulators, some of which have larger
research departments and budgets than the Company. While the
Company believes that its reputation, turf and ornamental market
focus, expertise in product development and professional sales
force will enable it to continue to maintain and build its share
of the professional market, there can be no assurance that the
Company's market share or margins will not be eroded in the
future by new or existing competitors.
Backlog
The major portion of professional product orders are received
during the months of August through November and are filled
during the months of September through November. As of September
30, 1994, orders on hand from professional customers (excluding
orders for Sierra products) totaled approximately $3.4 million
compared with $5.4 million on the same date in 1993. All such
orders are expected to be filled in fiscal 1995.
International
The Market
The Company produces and sells its products in over sixty-five
countries to both consumer and professional markets. Growth
potential exists in both markets, and the Company has positioned
itself to grow through both direct sales and distributor
arrangements.
Consumer lawn and garden products are sold under the Scotts
label mainly in Canada, the Far East and Europe. The Company's
United Kingdom subsidiary has continued to make inroads into the
lawn and garden market in Great Britain. The Company's long-term
relationship with Hyponex Japan Corporation, Ltd. has allowed it
to maintain its presence in Japan's consumer market under its
Hyponex label. International sales of consumer products in
fiscal 1994 totaled approximately $7.3 million.
Professional markets include both the turf and horticulture
industries. The Company currently distributes its professional
products in Canada, Latin America, Europe and Asia Pacific. Turf
products are mainly distributed under the Scotts name, while
horticultural products are distributed primarily under the Sierra
label. Professional horticultural products are also distributed
under the Hyponex label in Japan. International sales of Scotts'
professional products in fiscal 1994 totaled approximately $10
million. International sales of Sierra professional products
from December 17, 1993 through September 30, 1994 totaled
approximately $30.3 million.
Business Strategy
With the acquisition of Sierra, the Company now has
manufacturing facilities in Europe and an established
distribution network worldwide. The Company intends to
capitalize on these strengths to expand into new areas and market
segments. At the same time, the Company plans to increase
international awareness of the Scotts name and oval logo. By
positioning the Scotts' name worldwide, the Company believes it
can build awareness of its products' quality, reliability and
value.
The Company intends to continue to market its products
internationally through both direct sales and distributor
arrangements. In fiscal 1994, the Company entered into various
new distributor agreements. The Company also amicably terminated
its European distributor agreement with Wolf-Gerate AG, and
Sierra terminated several distributor arrangements with W. R.
Grace.
Page 8
Competition
The Company's international consumer business faces strong
competition in the garden center segment, particularly in Canada
and the United Kingdom. Competitors in the United Kingdom
include Fisons, ICI, PBI and various local companies.
Competitors in Canada include Nu-Gro, So-Green and Vigoro. The
Company intends to respond to this competition by increasing
brand awareness and loyalty through increased marketing and
improved customer service.
The international professional products market is very
competitive particularly in the controlled-release fertilizer
segment. Numerous United States and European companies are
pursuing this segment internationally, including Pursell
Industries, Lesco, Lebanon, Vigoro, Noram, BASF, Helena and
Coron. The Company will respond to this competition by educating
customers as to the quality and value of its products.
Management believes the Company is well-positioned to obtain
an increased share of the international market. However, there
can be no assurance that the Company's market share or margins
will not be eroded by new or existing competitors.
Matters Relating to the Company Generally
Patents, Trademarks and Licenses
The "Scotts" and "Hyponex" brand names and logos, as well as a
number of product trademarks, including "Turf Builder", "Lawn
Pro", "ProTurf", "ProGrow", "Osmocote" and "Peters" are federally
registered and are considered material to the Company's business.
In 1989, the Company assigned all its rights to certain Hyponex
trademarks in the Far East to a Japanese company.
As of September 30, 1994, the Company held over 100 patents on
processes, compositions, grasses, and mechanical spreaders and
has several additional patent applications pending. Over the
past two years, the Company has been granted a number of patents
covering key new process and product technologies. This new
patent protection will extend well into the next decade. The
Company also holds exclusive and nonexclusive patent licenses
from certain chemical suppliers permitting the use and sale of
patented pesticides.
Research and Development
The Company has a long history of innovation, and its research
and development successes can be measured in terms of sales of
new products and by the Company's patents. Virtually all of the
Company's fertilizer products, many of its grasses and many of
its mechanical devices are covered by one or more of over 100
U.S. and foreign patents owned by the Company.
The Company's research and development department is
headquartered in the Dwight G. Scott Research Center in
Marysville, Ohio. The Company also operates three research field
stations in Florida, Texas and Oregon. In addition, the Company
funds research at universities across the United States and
conducts cooperative projects with key professional customers.
Research to develop new and improved application devices is
conducted at Republic's manufacturing facility in Carlsbad,
California. Investment in research is directed toward developing
new technology and products to increase manufacturing efficiency,
reduce product cost, improve performance, solve specific
problems, improve packaging and simplify lawn, turf and
horticultural plant care.
Since its introduction of the first home lawn fertilizer in
1928, the Company has used its research and development strengths
to build the do-it-yourself market. Technology continues to be a
Company
Page 9
hallmark. The Company's introduction of the TGR line in 1987 to
control poa annua on golf courses is an example. In 1992, the
Company introduced Poly-S, a proprietary controlled-release
fertilizer technology. In 1993, ScottKote, another controlled-
release technology primarily for the nursery market, was
introduced. In addition, the Company has modified its Marysville
facility to utilize a new, patented production process which is
expected to reduce costs and improve product quality, while
increasing production capacity. (See "Production Facilities.")
Since the Hyponex acquisition in 1988, the Company's research and
development department has worked to improve the quality and
reduce the production cost of branded organic products, in
particular potting soils. One of the results of this effort is
the introduction, in 1994, of a line of value-added, premium
quality potting soils and planting mixes under the Scotts brand.
Research has also been focused on durability, precision, and
reduced production costs of the Republic-produced spreaders.
Recently, Republic completely redesigned the major products
within the Company's consumer spreader line so that they are now
completely preassembled and are distributed and displayed using
innovative packaging.
Sierra pioneered the use of controlled-release fertilizers for
the horticultural markets with the introduction of "Osmocote" in
the 1960's. This polymer-encapsulated technology has achieved a
large share of the horticultural markets due to its ability to
meet the strict performance requirements of professional growers.
The Company's and Sierra's research and development efforts have
been fully integrated and are focused on cost reduction and
product/process innovation. A new, multi-coated controlled-
release technology has been developed and a new production line
is nearing completion at the Company's Charleston, South Carolina
plant.
Research has resulted in improved Peters' water soluble
fertilizers. Reformulated potting soils and planting mixes have
been introduced into both the consumer and professional markets.
Combined Company and Sierra R&D expenses were approximately
$10.4 million (1.7% of net sales) for 1994, including
environmental and regulatory expenses. This compares to $6.2
million (1.5% of net sales) and $7.7 million (1.7% of net sales)
in fiscal 1992 and 1993, respectively.
Production Facilities
The manufacturing plants for consumer and professional
fertilizer-based products marketed under the Scotts label are
located in Marysville, Ohio. The Company's Taylor Seed Packaging
Plant is located on a separate site in Marysville. Hyponex
organic products are harvested and packaged in over 20 locations
throughout the United States. The Company's lawn spreaders are
produced at the Republic facility in Carlsbad, California. Some
granular and mechanical products and all liquid products,
constituting an aggregate of approximately 16% of the Company's
cost of sales in fiscal 1994, are produced for the Company by
other manufacturers. Sierra has manufacturing sites in the
United States and one located in The Netherlands. Sierra's
controlled-release fertilizers are produced in Charleston, South
Carolina, Milpitas, California, and at Heerlen, The Netherlands.
Water-soluble fertilizers are produced in Allentown,
Pennsylvania, and the potting soils are produced in Travelers
Rest, South Carolina and in Hope, Arkansas. Resin used for
producing Osmocote controlled-release fertilizer is manufactured
at Sierra Sunpol Resins, a joint venture company which is 97%
owned by Scotts. The Company operates seventeen composting
facilities where yard waste (grass clippings, leaves, and twigs)
is converted to raw materials for the Company's organic products.
Fourteen of the facilities are "stand-alone" facilities with the
remainder being located at existing organics products bagging
facilities. Recently opened facilities include Pittsburgh,
Pennsylvania; Cincinnati, Ohio; and Riverside, California.
Management believes that each of its facilities is well-
maintained and suitable for its purpose. Substantially all of
the Company's owned properties are mortgaged to secure the
Company's indebtedness under various bank agreements.
Page 10
The Company's fertilizer processing and packaging facilities
currently operate, on average, five days per week for three
shifts. Because of the seasonal nature of the demand for the
Company's products, certain of these facilities operate on a
seven day basis or three out of four weekends during periods of
peak demand. During 1994, initial steps were taken to integrate
some product manufacturing between the Scotts and Sierra
manufacturing locations.
The Company's Marysville facilities were substantially
modified during fiscal 1992 and 1993. The Company replaced one
of the existing fertilizer production lines with a line utilizing
a new, patented process which it developed. In addition, the
Company erected a new physical-blend facility and added equipment
to apply polymer coating to fertilizer materials.
During 1994, approximately $13 million was spent to erect a
new Poly-S fertilizer plant, an investment made necessary by very
strong forecasted demand. Additionally, approximately $4.0
million was spent on Sierra business needs including $1.5 million
for construction of a new processing line at the Charleston,
South Carolina facility to produce a technologically advanced
controlled-release fertilizer.
Capital Expenditures
Capital expenditures totaled $15.2 million and $33.4 million
for the fiscal years ended September 30, 1993 and 1994,
respectively. The Company expects that capital expenditures
during fiscal 1995 will total approximately $23 million.
Purchasing
The key ingredients in the Company's fertilizer and control
products are various commodity and specialty chemicals including
vermiculite, phosphates, urea, potash, herbicides, insecticides
and fungicides. The Company obtains its raw materials from
various sources, which the Company presently considers to be
adequate. No one source is considered to be essential to either
of the Company's Consumer or Professional Business Groups, or to
its business as a whole. The Company has never experienced a
significant interruption of supply.
Sierra purchases granular, homogeneous fertilizer substrates
to be coated, and the resins for coating. These resins are
primarily supplied domestically by Sierra SunPol Resins, a 97%-
owned subsidiary of Sierra.
Sphagnum peat, peat humus, vermiculite manure and bark
constitute Hyponex's most significant raw materials. At current
production levels, the Company estimates Hyponex's peat reserves
to be sufficient for its near-term needs in all locations except
the Northeast. Regulatory activities by the Army Corps of
Engineers have prevented production at one peat harvesting
facility located in Lafayette, New Jersey. See "Environmental
and Regulatory Considerations." To meet the demand previously
filled by this facility, the Company has been purchasing peat
from other nearby producers. Bark products are obtained from
sawmills and other wood residue producers and manure is obtained
from a variety of sources, such as feed lots, race tracks and
mushroom growers. The Company is currently substituting
composted yard waste for some organic raw materials and is
planning to expand this practice.
Raw materials for Republic include various engineered resins
and metals, all of which are available from a variety of vendors.
The Company considers its sources of supply for these materials
to be adequate.
Page 11
Distribution
The primary distribution centers for the Company's products
are located near the Company's headquarters in central Ohio. The
Company's products are shipped by rail and truck. While the
majority of truck shipments are made by contract carriers, a
portion is made by the Company's own fleet of leased trucks.
Inventories are also maintained in field warehouses located in
major markets.
Most of Hyponex's organic products have low sales value per
unit of weight, making freight costs significant to
profitability. Therefore, Hyponex has located approximately
twenty distribution locations near large metropolitan areas in
order to minimize shipping costs. Hyponex uses its own fleet of
approximately 70 trucks as well as contract haulers to transport
its products from distribution points to retail customers.
Sierra's products are produced at three fertilizer and two
organic manufacturing facilities located in the United States.
The majority of shipments are via common carriers to nearby
distributors' warehouses. A small private trucking fleet is
maintained at the organic facilities for direct shipment of
custom orders to customers. Inventories are also maintained in
field warehouses.
Republic-produced, Scotts branded spreaders are shipped via
common carrier to regional warehouses serving the Company's
retail network. Republic's E-Z spreader line and its private
label lines are sold free-on-board (FOB) Carlsbad with
transportation arranged by the customer.
Significant Customers
Kmart and Home Depot represented approximately 23.9% and
14.9%, respectively, of the Company's sales in fiscal 1994, which
reflects their significant position in the retail lawn and garden
market. The loss of either of these customers or a substantial
decrease in the amount of their purchases could have a material
adverse effect on the Company's business.
Employees
The Company's corporate culture emphasizes employee
participation in management, comprehensive employee benefits and
programs and profit sharing plans. As of September 30, 1994, the
Company employed approximately 2,300 full-time year-round workers
including 130 located outside the United States. Full-time
workers average approximately 10 years employment with the
Company or its predecessors. During peak production periods, the
Company engages as many as 750 temporary employees. The
Company's employees are not unionized, with the exception of
twenty-one of Sierra's employees at its Milpitas facility, who
are represented by the International Chemical Workers Union.
Environmental and Regulatory Considerations
Federal, state and local laws and regulations relating to
environmental matters affect the Company in several ways. All
products containing pesticides must be registered with the United
States Environmental Protection Agency ("United States EPA") (and
in many cases, similar state agencies) before they can be sold.
The inability to obtain or the cancellation of any such
registration could have an adverse effect on the Company's
business. The severity of the effect would depend on which
products were involved, whether another product could be
substituted and whether the Company's competitors were similarly
affected. The Company attempts to anticipate regulatory
developments and maintain registrations of, and access to,
substitute chemicals, but there can be no assurance that it will
continue to be able to avoid or minimize these risks. Fertilizer
and organic products (including manures) are also subject to
state labeling regulations.
Page 12
In addition, the use of certain pesticide and fertilizer
products is regulated by various local, state and federal
environmental and public health agencies. These regulations may
include requirements that only certified or professional users
apply the product or that certain products be used only on
certain types of locations (such as "not for use on sod farms or
golf courses"), may require users to post notices on properties
to which products have been or will be applied, may require
notification of individuals in the vicinity that products will be
applied in the future or may ban the use of certain ingredients.
The Company has been successful in complying with these
regulations.
Compliance with such regulations and the obtaining of
registrations does not assure, however, that the Company's
products will not cause injury to the environment or to people
under all circumstances.
State and federal authorities generally require Hyponex to
obtain permits (sometimes on an annual basis) in order to harvest
peat and to discharge water run-off or water pumped from peat
deposits. The state permits typically specify the condition in
which the property will be left after the peat is fully
harvested, with the residual use typically being natural wetland
habitats combined with open water areas. Hyponex is generally
required by these permits to limit its harvesting and to restore
the property consistent with the intended residual use. In some
locations, Hyponex has been required to create water retention
ponds to control the sediment content of discharged water.
In July 1990, the Philadelphia district of the Army Corps of
Engineers directed that peat harvesting operations be
discontinued at Hyponex's Lafayette, New Jersey facility, and the
Company complied. In May 1992, the Department of Justice filed
suit seeking a permanent injunction against such harvesting at
that facility and civil penalties. The Philadelphia District of
the Corps has taken the position that peat harvesting activities
there require a permit under Section 404 of the Clean Water Act.
If the Corps' position is upheld, it is possible that further
harvesting of peat from this facility would be prohibited. The
Company is defending this suit and is asserting a right to
recover its economic losses resulting from the government's
actions. Management does not believe that the outcome of this
case will have a material adverse effect on the Company's
operations or its financial condition.
State, federal and local agencies regulate the disposal,
handling and storage of waste and air and water discharges from
Company facilities. During fiscal 1994, the Company had
approximately $100,000 in environmental capital expenditures and
$300,000 in other environmental expenses, compared with
approximately $180,000 in environmental capital expenditures and
$260,000 in other environmental expenses in fiscal 1993. The
Company has budgeted $485,000 in environmental capital
expenditures and $350,000 in other environmental expenses for
fiscal 1995.
The Company has been identified by the Ohio Environmental
Protection Agency (the "Ohio EPA") as a Potentially Responsible
Party ("PRP") with respect to a site in Union County, Ohio (the
"Hershberger site") that has allegedly been contaminated by
hazardous substances whose transportation, treatment or disposal
the Company allegedly arranged. Pursuant to a consent order with
the Ohio EPA, the Company, together with four other PRP's
identified to date, is investigating the extent of contamination
in the Hershberger site and developing a remediation program.
Phase I of the investigation has been completed and the Company
is seeking resolution to this matter by being designated as a de
minimis contributor with minimal financial liability.
Sierra is a PRP in connection with the Lorentz Barrel and Drum
Superfund Site in California, as a result of its predecessor
having shipped barrels to Lorentz for reconditioning or sale
between 1967 and 1972. Many other companies are participating in
the remediation of this site, and issues relating to the
allocation of the costs have been resolved with the Company being
identified as a de minimis contributor. The Company has agreed
to settle this matter by means of a one-time total payment of
$1,000 to the United States EPA and the State of California. In
addition, Sierra is a defendant in a private cost-recovery action
relating to the Novak Sanitary Landfill, located near Allentown,
Pennsylvania. By agreement with
Page 13
W. R. Grace-Conn., Sierra's liability is limited to a maximum of
$200,000 with respect to this site. The Company's management
does not believe that the outcome of these proceedings will in
the aggregate have a material adverse effect on its financial
condition or results of operations.
ITEM 2. PROPERTIES.
The Company has fee or leasehold interests in approximately
sixty-seven (67) facilities. All of the owned properties are
mortgaged to secure the Company's indebtedness under the Third
Amended and Restated Credit Agreement, as amended ("Credit
Agreement") (see Item 7, Liquidity and Capital Resources).
The Company owns approximately 843 acres in two locations at
its Marysville, Ohio headquarters. It owns three research
facilities in Apopka, Florida; Cleveland, Texas and Gervais,
Oregon. The Company leases four fertilizer warehouses in
Illinois, California, Ohio and Pennsylvania. Republic leases its
twenty (20) acre spreader facility in Carlsbad, California.
The Company's twenty-four (24) organics facilities are
located nationwide in eighteen states. Twenty-two are owned,
while two are leased. Facilities at most include production
lines, warehouses and offices. Six sites also include composting
facilities.
The Company has fourteen stand-alone composting facilities.
Nine of these sites are leased and are located in Oregon,
California, Florida, Indiana, Ohio, Pennsylvania and Illinois.
Five sites are utilized through agreements with the
municipalities of Greensboro, NC; Shreveport, LA; Spokane, WA;
Independent Hill, VA and Balls Ford, VA.
The Company owns two Sierra manufacturing facilities in
Fairfield, CA and Heerlen, The Netherlands. It leases three
Sierra manufacturing facilities in Allentown, PA; Milpitas, CA
and North Charleston, SC.
It is the opinion of the Company's management that its
facilities are adequate to serve their intended purposes and that
its property leasing arrangements are stable.
ITEM 3. LEGAL PROCEEDINGS.
As noted in the discussion of "Environmental and Regulatory
Considerations" in Item 1, the Company is defending a suit filed
by the United States Department of Justice which seeks civil
penalties and a permanent injunction against peat harvesting at
Hyponex's Lafayette, New Jersey facility. The Company has
asserted a right to recover its economic losses resulting from
the government's actions. The Company also is involved in
several other environmental matters, as set forth above in
"Environmental and Regulatory Considerations". Management does
not believe the outcome of these matters will have a material
adverse effect on the Company's operations or its financial
condition.
The Company is involved in other lawsuits and claims which
arise in the normal course of its business. In the opinion of
management, these claims individually and in the aggregate are
not expected to result in an adverse effect on the Company's
financial position or operations.
Page 14
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
A Special Meeting of Stockholders ("Special Meeting") of
Scotts Delaware was held in Marysville, Ohio on September 20,
1994. The Special Meeting was held to consider and vote upon a
proposal (the "Reincorporation Proposal") which provided, among
other things, for the change of the Company's state of
incorporation from Delaware to Ohio through a merger of Scotts
Delaware into Scotts Ohio, a wholly owned subsidiary of Scotts
Delaware. The surviving corporation was Scotts Ohio, and the
stockholders of Scotts Delaware became owners of all of the
outstanding common shares of Scotts Ohio.
The Reincorporation Proposal was approved and the result of
the vote of the stockholders is as follows:
Votes For Votes Abstentions
Against
9,507,932 2,174,194 814,765
No proxies were solicited for the purpose of electing
directors. The Company's board of directors remains unchanged
from that identified in the Company's Report on Form 10-Q for the
quarter ended July 2, 1994 except that Karen Gordon Mills was
appointed to the board of directors on September 21, 1994 to fill
the vacancy created by the resignation of Alberto Cribiore.
Executive Officers of Registrant
The executive officers of the Company, their positions and,
as of November 30, 1994, their ages and years with Scotts Ohio
(and its predecessors) are set forth below.
Years
with
Name Age Position(s) Held Scotts
Ohio
(and its
Predecess
ors)
Tadd C. Seitz 53 Director, Chairman of 22
the Board
Chief Executive
Officer
Theodore J. Host 49 Director, President 3
Chief Operating
Officer
Paul D. Yeager 56 Executive Vice 20
President
Chief Financial
Officer
Richard B. Stahl 59 Senior Vice President 27
Professional
Business Group
J. Blaine 51 Senior Vice 2
McKinney President,
Consumer Business
Group
Bernard R. Ford 51 Vice President, 16
Strategy
and Business
Development
Michael P. Kelty 44 Senior Vice 15
President,
Technology and
Operations
Lawrence M. 54 Vice President, 20
McCartney Information
Systems
Lisle J. Smith 38 Vice President, 1
Administration
and Planning
Robert A. Stern 52 Vice President, 12
Human Resources
Craig D. Walley 51 Vice President, 9
General Counsel,
and Secretary
Robert M. Webb 52 Vice President, 14
Manufacturing &
Logistics
Page 15
Executive officers serve at the discretion of the Board of
Directors (and in the case of Mr. Host, pursuant to employment
agreements).
The business experience of each of the persons listed above
during the past five years is as follows:
Mr. Seitz has been the Chief Executive Officer since 1983.
He was also President from 1983 until 1991. Previously, Mr.
Seitz served as Director of Marketing and as General Manager of
Burpee.
Mr. Host has been President and Chief Operating Officer and
a director of the Company since October 1991. From May 1990 to
October 1991, he was Senior Vice President, Marketing for Coca-
Cola USA. He previously was President of the Boyle-Midway
Household Products Division of American Home Products, Inc.
Mr. Yeager has been an Executive Vice President since 1991
and a Vice President and the Chief Financial Officer since 1980.
He was first Assistant Comptroller and then Comptroller from 1974
to 1980.
Mr. Stahl has been Senior Vice President since January,
1994. From December 1987 to 1994, he was Vice President and
General Manager of the Professional Business Group. Mr. Stahl
joined the Company in 1967 as a technical representative in the
golf course division.
Mr. McKinney was named Senior Vice President, Consumer
Business Group, in June, 1992. From January, 1990 to June, 1992
he was Vice President of Marketing and Sales of Salov, N.A., a
manufacturer of consumer products. From July, 1989 to January,
1990 he was Director of Sales of Rickett & Colman, Ltd., a
consumer products company.
Mr. Ford has been Vice President, Strategy and Business
Development since December 1987. Other positions that Mr. Ford
has held include Director of Market Development, Director of
Export Marketing Services and Director of Marketing.
Dr. Kelty was named Senior Vice President, Technology and
Operations in March, 1994. From 1988 to 1994, he served first as
Director, then as Vice President of Research and Development.
Prior to that, Dr. Kelty was the Director of Advanced Technology
Research, and from 1983 to 1987 he was Director, Chemical
Technology Development.
Mr. McCartney has been Vice President, Information Systems
since 1989. He joined the Company in 1974 as Systems and
Programming Manager, and was Director, Information Systems from
1976 until 1989.
Mr. Stern has been Vice President, Human Resources since
1984.
Mr. Walley has been Vice President, General Counsel and
Secretary since 1985.
Mr. Webb has been a Vice President since 1988. He was Vice
President - Operations of Hyponex Corporation from 1980 until
1988.
Page 16
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS.
Scotts Delaware made an initial public offering of its Class
A Common Stock on January 31, 1992. As a result of the merger of
Scotts Delaware into Scotts Ohio on September 20, 1994, each
share of outstanding Class A Common Stock of Scotts Delaware was
converted into one Common Share of Scotts Ohio. The shares of
Class A Common Stock of Scotts Delaware were, and the Common
Shares of Scotts Ohio are traded in the NASDAQ National Market
System, under the symbol "SCTT".
Sales Prices
High Low
Fiscal 1993
1st quarter 18 - 1/2 14 - 1/2
2nd quarter 20 - 1/2 17 - 1/8
3rd quarter 18 - 3/4 15 - 1/4
4th quarter 18 - 3/8 15 - 1/4
Fiscal 1994
1st quarter 20 - 1/8 16
2nd quarter 20 18
3rd quarter 19 - 7/8 16 - 1/4
4th quarter 17 15 - 1/4
The Company has not paid dividends in the past and does not
presently plan to pay dividends. It is presently anticipated
that earnings will be retained and reinvested to support the
growth of the Company's business. The payment of any future
dividends will be determined by the Board of Directors of the
Company in light of conditions then existing, including the
Company's earnings, financial condition and capital requirements,
restrictions in financing agreements, business conditions and
other factors. Under a covenant in the Company's Credit
Agreement, the Company is restricted in its payment of cash
dividends, to an amount not to exceed 33 1/3% of the consolidated
net income of the Company and its consolidated subsidiaries
during the immediately preceding fiscal year.
As of December 1, 1994, Scotts Ohio estimates there were
approximately 6,400 shareholders including holders of record and
Scotts Ohio's estimate of beneficial holders.
Page 17
Exhibit 3(a)
Amended Articles of Incorporation
of Registrant
AMENDED
ARTICLES OF INCORPORATION
OF
THE SCOTTS COMPANY
The undersigned, desiring to form a corporation for
profit under Chapter 1701 of the Ohio Revised Code, does hereby
certify:
FIRST: The name of the corporation shall be The Scotts
Company.
SECOND: The place in Ohio where the principal office
of the corporation is to be located is in the City of Marysville,
County of Union.
THIRD: The purpose for which the corporation is formed
is to engage in any lawful act or activity for which corporations
may be formed under Sections 1701.01 to 1701.98 of the Ohio Revised
Code.
FOURTH: The authorized number of shares of the
corporation shall be Thirty-Five Million (35,000,000), all of which
shall be common shares, each without par value.
FIFTH: The directors of the corporation shall have
the power to cause the corporation from time to time and at any
time to purchase, hold, sell, transfer or otherwise deal with (A)
shares of any class or series issued by it, (B) any security or
other obligation of the corporation which may confer upon the
holder thereof the right to convert the same into shares of any
class or series authorized by the articles of the corporation, and
(C) any security or other obligation which may confer upon the
holder thereof the right to purchase shares of any class or series
authorized by the articles of the corporation. The corporation
shall have the right to repurchase, if and when any shareholder
desires to sell, or on the happening of any event is required to
sell, shares of any class or series issued by the corporation. The
authority granted in this Article FIFTH of these Articles shall not
limit the plenary authority of the directors to purchase, hold,
sell, transfer or otherwise deal with shares of any class or
series, securities or other obligations issued by the corporation
or authorized by its articles.
SIXTH: No shareholder of the corporation shall have,
as a matter of right, the pre-emptive right to purchase or
subscribe for shares of any class, now or hereafter authorized, or
to purchase or subscribe for securities or other obligations
convertible into or exchangeable for such shares or which by
warrants or otherwise entitle the holders thereof to subscribe for
or purchase any such share.
SEVENTH: Shareholders of the corporation shall not have
the right to vote cumulatively in the election of directors.
EIGHTH: These Amended Articles of Incorporation take
the place of and supersede the existing Articles of Incorporation
of The Scotts Company.
Exhibit 21
Subsidiaries of Registrant
The following are the significant subsidiaries of The
Scotts Company, an Ohio corporation (the "Registrant"), each of
which is wholly-owned by the Registrant:
State of
Name of Subsidiary Incorporation
Hyponex Corporation Delaware
Republic Tool & Manufacturing Corp. California
Scotts-Sierra Horticultural Products Company California
The subsidiaries of the Registrant which are not named
above would not, when considered in the aggregate as a single
subsidiary, constitute a significant subsidiary of the Registrant
as of September 30, 1994 for purposes of Rule 1-02(v) of Regulation
S-X and Item 601(b)(21) of Regulation S-K.
Exhibit 4(e)
Fourth Amendment and Consent, dated as of
July 5, 1994, among Scotts Delaware, OMS,
the banks listed therein and Chemical
Bank, as agent
FOURTH AMENDMENT AND CONSENT, dated as of July 5, 1994
(this "Amendment"), to the Third Amended and Restated Credit
Agreement dated as of April 7, 1992, as amended by a First
Amendment dated as of November 19, 1992, a Second Amendment dated
as of February 23, 1993, and a Third Amendment dated as of
December 15, 1993 (as so amended and as the same may be further
amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"; capitalized terms used herein which are
defined in the Credit Agreement, as amended hereby, are used
herein as so defined), among The Scotts Company, a Delaware
corporation ("Holdings"), The O.M. Scott & Sons Company, a
Delaware corporation (the "Company"), the lenders from time to
time parties thereto (collectively, the "Banks"; individually, a
"Bank") and CHEMICAL BANK, a New York banking corporation, as
successor by merger to Manufacturers Hanover Trust Company
("Chemical"), as agent for the Banks (in such capacity, the
("Agent").
W I T N E S S E T H :
WHEREAS, the Company and Holdings have requested that
the Required Banks (i) consent, subject to the terms and
conditions of this Amendment, to issuance of Subordinated Notes by
the Company and (ii) amend and modify the terms of the Credit
Agreement on the terms and subject to the conditions set forth
herein;
WHEREIN, the Required Banks have agreed to (i) consent,
subject to the terms and conditions of this Amendment, to issuance
of Subordinated Notes by the Company and (ii) amend and modify the
terms of the Credit Agreement on the terms and subject to the
conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and
mutual agreements herein contained, the parties hereto hereby
agree as follows:
ARTICLE 1. AMENDMENTS TO CREDIT AGREEMENT
1.1 Amendment to Subsection 1.1 (Definitions).
(a) Addition of Certain Definitions. Subsection 1.1 of
the Credit Agreement is hereby amended by adding thereto the
following new definition in its appropriate alphabetical order:
"Subordinated Note Indenture": the Indenture
dated as of June 1, 1994 between the Company,
Holdings and Chemical Bank as trustee, as
supplemented by the First Supplemental Indenture
dated as of July 1994, in each case as the same may
be amended, supplemented, waived or otherwise
modified from time to time in accordance with the
terms of subsection 7.1(h).
(b) Substitution of Certain Definitions. Subsection
1.1 of the Credit Agreement is hereby amended by deleting the
definition set forth below in its entirety, and substituting
therefor, the corresponding new definition set forth below:
"Subordinated Notes" shall mean
subordinated indebtedness issued by Holdings
and the Company on or prior to the one-year
anniversary of the Third Amendment Effective
Date in an aggregate principal amount of not
less than $100,000,000; provided that (i) such
indebtedness is subordinated and junior in
right of payment and all other respects to the
Obligations and all obligations of the
Company, Holdings and their respective
Subsidiaries to any Hedging Bank under any
Hedging Agreement provided by such Hedging
Bank, (ii) such indebtedness is unsecured and
(iii) all terms and conditions of such
indebtedness are satisfactory to the Required
Banks.
1.2 Amendment to Section 9 (Events of Default).
Subsection 9(i) of the Credit Agreement is hereby amended by
deleting such subsection in its entirety and substituting therefor
the following new subsection 9(i);
(i) Change in Control. The occurrence
of any of the following events: (i) any
Person shall at any time own more than 30% of
the issued and outstanding capital stock of
Holdings, (ii) Holdings shall cease at any
time to own 100% of the capital stock of the
Company or to have the power to elect a
majority of the Board of Directors of the
Company (or otherwise have effective voting
control of the Company) or (iii) a "Change in
Control" as defined in the Section 1008 of the
Subordinated Note Indenture shall occur; or
ARTICLE 2. CONSENT TO THE ISSUANCE OF THE SUBORDINATED
NOTES; REPRESENTATIONS AND WARRANTIES; NO
DEFAULT.
2.1 Consent of the Required Banks. Each of the
undersigned hereby consents to the issuance by the Company of
$100,000,000 aggregate principal amount of Subordinated Notes on
the terms and conditions set forth in the Prospectus dated June 21,
1994 and Prospectus Supplement dated June 23, 1994 relating to such
Subordinated Notes attached hereto as Exhibit A; provided that such
consent shall not be effective unless (i) Holdings and the Company
shall have prepaid the Term Loans in accordance with subsection 2.9
of the Credit Agreement no later than the third Business Day
following such issuance of Subordinated Notes in an amount equal
to the Net Cash Proceeds from such issuance of Subordinated Notes,
together with all accrued and unpaid interest on the amount prepaid
to the date of prepayment and any amounts owing pursuant to
subsection 2.18 of the Credit Agreement, (ii) the Agent shall have
received counterparts of this Amendment executed by Holdings, the
Company and the Required Banks and acknowledged and consented to
by each of the Subsidiaries parties hereto and (iii) all corporate
and other proceedings and all other documents and legal matters in
connection with the transactions contemplated by this Amendment
shall be satisfactory in form and substance to the Agent and its
counsel.
2.2 Representations and Warranties; No Default. On and
as of the date hereof and after giving effect to this Amendment and
the transactions contemplated hereby, each of Holdings and the
Company hereby (a) confirms, reaffirms and restates the
representations and warranties set forth in Section 4 of the Credit
Agreement, except to the extent that such representations and
warranties relate solely to an earlier date in which case each of
Holdings and the Company hereby confirms, reaffirms and restates
such representations and warranties for such earlier date, provided
that the references to the Credit Agreement therein shall be deemed
to be to the Credit Agreement as amended by this Amendment; and (b)
represents that no Default or Event of Default has occurred and is
continuing.
ARTICLE 3. MISCELLANEOUS.
3.1 Limited Effect. Except as expressly amended hereby,
all of the provisions, covenants, terms and conditions of the
Credit Agreement and the other Basic Agreements shall continue to
be, and shall remain, in full force and effect in accordance with
their respective terms.
3.2 Expenses. Holdings and the Company shall be
obligated to reimburse the Agent for all its reasonable costs and
expenses (including, without limitation, reasonable legal expenses)
incurred in connection with the preparation, execution and delivery
of this Amendment.
3.3 GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED
BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF
THE STATE OF NEW YORK.
3.4 Counterparts. This Amendment may be executed by
one or more parties to this Amendment on any number of separate
counterparts, and all of said counterparts taken together shall be
deemed to constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed and delivered by their proper and duly
authorized officers as of the date first above written.
THE SCOTTS COMPANY
By: /s/ Craig D. Walley
Title: Vice President
THE O.M. SCOTT & SONS COMPANY
By: /s/ Craig D. Walley
Title: Vice President
CHEMICAL BANK, as Agent and as
a Bank
By:________________________________
Title:_____________________________
BANK ONE, COLUMBUS, N.A.
By:________________________________
Title: V.P.
COMERICA BANK
By:________________________________
Title: Vice President
NBD BANK, N.A.
By: /s/ Victoria L. Becker
Title: Vice President
PNC BANK, OHIO NATIONAL ASSOCIATION
By:________________________________
Title:_____________________________
NATIONAL CITY BANK, COLUMBUS,
F.K.A. BANKOHIO NATIONAL BANK
By:________________________________
Title:_____________________________
THE BANK OF TOKYO TRUST COMPANY
By:________________________________
Title:_____________________________
THE FIRST NATIONAL BANK OF CHICAGO
By:________________________________
Title: Vice President
THE BANK OF NOVA SCOTIA
By: /s/ A.S. Norsworthy
Title: A.S. Norsworthy,
Assistant Agent
THE TORONTO-DOMINION BANK
By: /s/ Debbie A. Greene
Title: Debbie A. Greene,
Mgr. Cr. Admin.
UNION BANK
By:________________________________
Title: Vice President &
District Manager
CREDIT LYONNAIS CAYMAN
ISLAND
BRANCH
By:________________________________
Title: Authorized Signature
SOCIETE GENERALE
By:________________________________
Title: Vice President
SOCIETY NATIONAL BANK
By:________________________________
Title: Vice President
Each of the undersigned
hereby consent to the foregoing
Amendment and hereby confirms, reaffirms and restates that its
obligations under each Loan Document to which it is a party will
remain in full force and effect after giving effect to such
Amendment and the amendments to the Credit Agreement and the other
Loan Documents effected thereby.
BUNYON ENTERPRISES, INC.
BUNYON TRUCKING COMPANY, INC.
HYPER-HUMUS COMPANY, INC.
HYPONEX COMPANY, INC.
HYPONEX CORPORATION-MISSOURI
HYPONEX CORPORATION-CALIFORNIA
HYPONEX CORPORATION-COLORADO
HYPONEX CORPORATION-FLORIDA
HYPONEX CORPORATION-TEXAS
OLD FORT FINANCIAL CORP.
SCOTTS GRASS CO.
SCOTTS SOD CO.
SCOTTS ENERGY CO.
SCOTTS PESTICIDE CO.
SCOTTS GREEN LAWNS CO.
SCOTTS SERVICE CO.
SCOTTS PRODUCTS CO.
SCOTTS PLANT CO.
SCOTTS TREE CO.
SCOTTS PARK CO.
SCOTTS PRO TURF CO.
SCOTTS FERTILIZER CO.
SCOTTS PROFESSIONAL PRODUCTS CO.
SCOTTS TURF CO.
SCOTTS BEST LAWNS CO.
SCOTTS WEED CONTROL CO.
SCOTTS DESIGN CO.
SCOTTS TECH REP CO.
SCOTTS BROAD LEAF CO.
SCOTTS INSECTICIDE CO.
SCOTTS SPREADER CO.
SCOTTS IMPROVEMENT CO.
SCOTTS GOLF CO.
SCOTTS GARDEN CO.
SCOTTS CONTROL CO.
REPUBLIC TOOL & MANUFACTURING
CORP.
By: /s/ Craig D. Walley
Title: Vice President
SCOTTS-SIERRA HORTICULTURAL
PRODUCTS COMPANY (formerly
known as Grace-Sierra
Horticultural Products
Company)
By: /s/ Lisle J. Smith
Title: Vice President
SCOTTS-SIERRA CROP PROTECTION
COMPANY (formerly known as
Grace-Sierra Crop Protection
Company)
By: /s/ Lisle J. Smith
Title: Vice President
GRACE-SIERRA INTERNATIONAL, BV
GRACE-SIERRA UNITED KINGDOM
GRACE-SIERRA ESPANA, S.A.
GRACE-SIERRA BELGIUM B.V.B.A.
GRACE-SIERRA DEUTSCHLAND
GARDENBAUPRODUKBE GmbH
By: /s/ Lisle J. Smith
Title: Director
GRACE-SIERRA FRANCE, SARL
By: /s/ Lisle J. Smith
Title: Director
By:________________________________
Title:_____________________________
GRACE-SIERRA AUSTRALIA PTY
By: /s/ Lisle J. Smith
Title: Director
Exhibit 10(a)
The Scotts Company Employees' Pension Plan
THE SCOTTS COMPANY
EMPLOYEES' PENSION PLAN
Amended Effective January 1, 1989
THE SCOTTS COMPANY
EMPLOYEES' PENSION PLAN
TABLE OF CONTENTS
Page
Foreword
ARTICLE 1 DEFINITIONS 1
ARTICLE 2 SERVICE 7
2.01 Eligibility Service for Regular or
Part-Time Employees 7
2.02 Eligibility Service for Temporary or
Part-Time Employees 7
2.03 Vesting Service and Benefit Service
for All Employees 8
2.04 Effect of Breaks in Eligibility Service 9
2.05 Effect of Breaks in Vesting Service 9
2.06 Questions Relating to Service Under
the Plan 10
ARTICLE 3 MEMBERSHIP 10
3.01 Members of the Plan on December 31, 1984 10
3.02 All other Employees 10
3.03 Leased Employees 11
3.04 Reemployment 11
3.05 Termination of Membership 11
3.06 Questions Relating to Membership in
the Plan 11
ARTICLE 4 BENEFITS 11
4.01 Normal Retirement Allowance 11
4.02 Early Retirement Allowance 13
4.03 Vested Benefit 15
4.04 Optional Forms of Benefit after Retirement 16
(a) Automatic Joint and Survivor Option
applicable to Future Service Benefit 16
(b) Spouse's Contingent Annuity Option 18
(c) Standard Contingent Annuity Option 20
(d) Other Settlement Options 21
4.05 Optional Forms of Benefit Before
Retirement 22
4.06 Maximum Benefits 31
4.07 No Duplication 34
4.08 Payment of Benefits 34
4.09 Reemployment of Former Member or Retired
Member 36
4.10 Top-heavy Provisions 39
4.11 Elective Rollovers 41
TABLE OF CONTENTS (Cont'd)
Page
ARTICLE 5 ADMINISTRATION OF PLAN 42
ARTICLE 6 CONTRIBUTIONS 44
ARTICLE 7 MANAGEMENT OF FUNDS 45
ARTICLE 8 CERTAIN RIGHTS AND LIMITATIONS 46
ARTICLE 9 NONALIENATION OF BENEFITS 51
ARTICLE 10 AMENDMENTS 52
10.01 Company's Right to Amend Plan 52
10.02 Amendments to Vesting Schedule 52
APPENDIX A FACTORS USED FOR DETERMINING VARIOUS
APPENDIX B SUPPLEMENTAL BENEFITS
THE SCOTTS COMPANY
EMPLOYEES' PENSION PLAN
WHEREAS, The O.M. Scott & Sons Company established The O.M.
Scott & Sons Company Employees' Pension Plan (the "Plan") effective
January 1, 1954, in recognition of the contribution made to its
successful operation by its employees and for the exclusive benefit
of its eligible employees and their beneficiaries; and
WHEREAS, the Plan was previously amended and restated
effective January 1, 1976, January 1, 1985 and December 31, 1986;
and
WHEREAS, The O.M. Scott & Sons Company has been merged into
The Scotts Company, an Ohio corporation (the "Company"), which
assumes sponsorship of the Plan; and
WHEREAS, under the terms of the Plan, the Company has the
power to amend the Plan, provided the Trustee consents to such
amendment if the provisions of the Plan affecting the Trustee are
amended; and
WHEREAS, the Company wishes to amend, restate and rename the
Plan to reflect the change in sponsorship and comply with changes
in the law;
NOW, THEREFORE, the Company hereby amends the Plan in its
entirety and restates the Plan as of the Effective Amendment Date
to provide as follows:
ARTICLE 1 - DEFINITIONS
"Administrative Committee" shall mean the committee
established for the purposes of administering the Plan as provided
in Article 5.
"Affiliate" shall mean the Company and any entity which, with
the Company, constitutes: (a) a controlled group of corporations
(within the meaning of Section 414(b) of the Code); (b) a group of
trades or businesses under common control (within the meaning of
Section 414(c) of the Code); (c) an affiliated service group
(within the meaning of Section 414(m) of the Code); or (d) a group
of entities required to be aggregated pursuant to Section 414(o)
of the Code and the regulations thereunder.
"Appendix A" shall mean the tables of factors, attached to
the Plan as exhibits, which are used in determining the amount of
the various forms of benefits payable under the Plan.
"Appendix B" shall mean an attachment to the Plan containing
the names of those Members, surviving spouses, contingent
annuitants and beneficiaries for whom supplemental benefits are
provided, and the amount thereof.
"Average Final Compensation" shall mean the average annual
Compensation of a Member for the 60 consecutive calendar months
included in his Years of Vesting Service during the last 120
consecutive calendar months of his Years of Vesting Service
affording the highest such average, or for all the calendar months
of his Years of Vesting Service if he has less than 60 calendar
months included in his Years of Vesting Service. For purposes of
determining a Member's Average Final Compensation in Plan Years
starting after December 31, 1988, Compensation in excess of
$200,000 (as adjusted under Sections 401(a)(17) and 415(d) of the
Internal Revenue Code) shall not be taken into account. For
purposes of determining a Member's Average Final Compensation in
Plan Years starting after December 31, 1993, Compensation in excess
of $150,000 (as adjusted under Section 401(a)(17) and 415(d) of the
Internal Revenue Code) shall not be taken into account.
Notwithstanding the foregoing, the accrued benefit of a Section
401(a)(17) Employee (as that term is defined in Section
1.401(a)(17)-1(e)(2) of the regulations under the Internal Revenue
Code) shall be determined under the extended wear-away method of
Section 1.401(a)(4)-13(c)(4)(iii) of the regulations under the
Internal Revenue Code.
"Board of Directors" shall mean the Board of Directors of the
Company.
"Code" shall mean the Internal Revenue Code of 1986, as may
be amended from time to time.
"Company" shall mean: (a) The O. M. Scott & Sons Company, a
Delaware corporation, until the merger of The O.M. Scott & Sons
Company into The Scotts Company, an Ohio corporation; and (b)
thereafter, The Scotts Company or any successor by merger, purchase
or otherwise.
"Compensation" shall mean total earnings for the Plan Year
paid to the Member by an Affiliate. Compensation shall include:
(a) commissions but only up to the salary band maximum; (b) salary
reduction contributions to The Scotts Company Profit Sharing and
Savings Plan and any other Section 401(k) plans sponsored by an
Affiliate; and (c) salary reduction contributions for welfare
benefits. Compensation shall exclude: (a) commissions in excess
of the salary band maximum; and (ii) foreign service, automobile,
separation and other special allowances. Compensation taken into
account under the Plan with respect to any Employee for a Plan Year
shall not exceed: (a) effective January 1, 1989, $200,000 (as
automatically adjusted for increases in the cost of living as
prescribed by the Secretary of the Treasury); and (b) effective
January 1, 1994, $150,000 (as adjusted under Section 401(a)(17) of
the Code). Notwithstanding the foregoing, the accrued benefit of
a Section 401(a)(17) Employee (as that term is defined in Section
1.401(a)(17)-1(e)(2) of the regulations under the Code) shall be
determined under the extended wear-away method of Section
1.401(a)(4)-13(c)(4)(iii) of the regulations under the Code. In
determining the Compensation of a Member for purposes of this
limitation, the rules of Section 414(q)(6) of the Code shall apply,
except in applying such rules, the term "family" shall include only
the spouse of the Member and any lineal descendants of the Member
who have not attained age 19 before the close of the Plan Year.
If, as a result of the application of such rules, Compensation
would exceed the adjusted $200,000 or $150,000 limitation, then the
limitation shall be prorated among the affected persons in
proportion to each such person's Compensation as determined under
this paragraph prior to the application of this limitation.
"Deferred Retirement Date" shall mean, with respect to
Employees who do not retire at Normal Retirement Date but who
continue without interruption to work beyond such date, the first
day of the calendar month coincident with or next following the
date on which such Employee retires from active service. No
retirement allowance shall be paid to the Employee until his
Deferred Retirement Date, except as otherwise provided in Article
4.
"Earnings" shall mean all compensation received by a Member
including bonuses paid by the Company in accordance with its bonus
policy. Earnings shall be recognized only for the purpose of
determining an annual Current Service Benefit as provided pursuant
to the last sentence of Section 4.01(b)(i). Earnings taken into
account under the Plan with respect to any Employee for a Plan Year
shall not exceed: (a) effective January 1, 1989, $200,000 (as
automatically adjusted for increases in the cost of living as
prescribed by the Secretary of the Treasury); and (b) effective
January 1, 1994, $150,000 (as adjusted under Section 401(a)(17) of
the Code). Notwithstanding the foregoing, the accrued benefit of
a Section 401(a)(17) Employee (as that term is defined in Section
1.401(a)(17)-1(e)(2) of the regulations under the Code) shall be
determined under the extended wear-away method of Section
1.401(a)(4)-13(c)(4)(iii) of the regulations under the Code. In
determining the Earnings of a Member for purposes of this
limitation, the rules of Section 414(q)(6) of the Code shall apply,
except in applying such rules, the term "family" shall include only
the spouse of the Member and any lineal descendants of the Member
who have not attained age 19 before the close of the Plan Year.
If, as a result of the application of such rules, Earnings would
exceed the adjusted $200,000 or $150,000 limitation, then the
limitation shall be prorated among the affected persons in
proportion to each such person's Earnings as determined under this
paragraph prior to the application of this limitation.
"Effective Amendment Date" of this amendment and restatement
of the Plan shall be January 1, 1989.
"Effective Date" of the Plan shall mean January 1, 1976.
"Eligible Employee" shall mean an Employee working either with
The Scotts product line or in corporate management or
administration of The Scotts Company, other than a person: (a)
whose terms and conditions of employment are determined by
collective bargaining with a third party, with respect to whom
inclusion in this Plan has not been provided for in the collective
bargaining agreement setting forth those terms and conditions of
employment; (b) who is nonresident alien described in Section
410(b)(3)(C) of the Code; and (c) who is a leased employee within
the meaning of Section 414(n)(2) of the Code.
"Employee" shall mean a person employed by an Affiliate.
"Hour of Service" means (a) each hour for which an Employee
is paid or entitled to payment for the performance of duties for
an Affiliate during the applicable computation period, (b) each
hour for which an Employee is paid or entitled to payment by an
Affiliate on account of a period of time during which no duties are
performed (irrespective of whether the employment relationship has
terminated) due to vacation, holiday, illness, incapacity
(including disability), layoff, jury or military duty, or leave of
absence, and (c) each hour for which back pay, irrespective of
mitigation of damages, is either awarded or agreed to by an
Affiliate. In computing Hours of Service on a weekly or monthly
basis when a record of hours of employment is not available, the
Employee shall be assumed to have worked 40 hours for each full
week of employment and eight hours for each day in less than a full
week of employment, regardless of whether the Employee has actually
worked fewer hours. Notwithstanding the foregoing, (i) not more
than 501 Hours of Service shall be credited to an Employee on
account of any single continuous period during which the Employee
performs no duties, (ii) no credit shall be granted for any period
with respect to which an Employee receives payment or is entitled
to payment under a plan maintained solely for the purpose of
complying with applicable workers' compensation or disability
insurance laws, and (iii) no credit shall be granted for a payment
which solely reimburses an Employee for medical or medically
related expenses incurred by the Employee. In the case of a person
who was a Leased Employee and who subsequently becomes an Employee,
hours of service as a Leased Employee shall count as Hours of
Service as an Employee. Determination and crediting of Hours of
Service shall be made under Department of Labor Regulations
Sections 2530.200b-2 and 3.
"Investment Committee" shall mean the committee established
by the Company for the purposes of managing the assets of the Plan
as provided in Article 5.
"Leased Employee" shall mean any person (other than an
employee of the recipient) who, pursuant to an agreement between
the recipient and any other person (leasing organization), has
performed services for the recipient (or for the recipient and
related persons determined in accordance with Sections 414(n)and
414(o) of the Code) on a substantially full-time basis for a period
of at least one year and such services are of a type historically
performed by employees in the business field of the recipient
employer. Contributions or benefits provided a Leased Employee by
the leasing organization which are attributable to services
performed for the recipient employer shall be treated as provided
by the recipient employer. A Leased Employee shall not be
considered an employee of the recipient (and thus not otherwise an
Employee) if (a) such employee is covered by a money purchase
pension plan providing (i) a nonintegrated employer contribution
rate of at least 10% of compensation, as defined in Code Section
415(c)(3), but including amounts contributed by the employer
pursuant to a salary reduction agreement which are excludable from
the employee's gross income under Code Section 125, Section
402(a)(8), Section 402(h) or Section 403(b); (ii) immediate
participation; and (iii) full and immediate vesting; and (b) Leased
Employees do not constitute more than 20% of the recipient's non-
highly-compensated work force.
"Member" shall mean any person included in the membership of
the Plan as provided in Article 3. The pronoun he, his or him is
used in this document solely for convenience and does not in any
way connote a limit or restriction to persons of the masculine
gender. In all cases, when he, his or him is used it means with
equal effect persons of the feminine gender, and vice versa.
"Normal Retirement Date" shall mean the first day of the
calendar month coincident with or next following the 65th
anniversary of an Employee's birth. The Member's right to a normal
retirement allowance shall be non-forfeitable upon the attainment
of age 65 whether or not the Employee retires on such date.
"Parental Leave" shall mean a period in which a person is
absent from work on or after January 1, 1985 because of the
person's pregnancy, the birth of a person's child, the adoption by
a person of a child, or, for purposes of caring for that child for
a period beginning immediately following such birth or adoption.
"Plan" shall mean The Scotts Company Employees' Pension Plan
as set forth herein or as hereafter amended.
"Plan Year" shall mean the 12 month period ending each
December 31.
"Social Security Benefit" shall mean the amount of old-age
insurance benefit under Title II of the Federal Social Security Act
as determined by the Administrative Committee under reasonable
rules uniformly applied, on the basis of such Act as in effect at
the time of retirement or termination to which a Member or former
Member is or would upon application be entitled, even though the
Member does not receive such benefit because of his failure to
apply therefor or he is ineligible therefor by reason of earnings
he may be receiving in excess of any limit on earnings for full
entitlement to such benefit; provided, however, if a Member remains
in employment on or after his Normal Retirement Date, the Social
Security Benefit hereunder shall be calculated as of his Normal
Retirement Date on the basis of the Federal Social Security Act in
effect as of such Normal Retirement Date. For all years prior to
retirement or other termination of employment with the Company
where actual earnings are not available, the Member's Social
Security Benefit shall be determined on the basis of the Member's
actual earnings in conjunction with a salary increased assumption
based on the actual yearly change in national average wages as
determined by the Social Security Administration. If, within a
reasonable time after the later of (i) the date of retirement or
other termination of employment or (ii) the date on which a Member
is notified of the retirement allowance or vested benefit to which
he is entitled, the Member provides documentation from the Social
Security Administration as to his actual earnings history with
respect to those prior years, his Social Security Benefit shall be
redetermined using the actual earnings history. If this
recalculation results in a different Social Security Benefit, his
retirement allowance or vested benefit shall be adjusted to reflect
this change. Any adjustment to his retirement allowance or vested
benefit shall be made retroactive to the date his payments
commenced. The Administrative Committee shall resolve any
questions arising under this Section 1.18 on a basis uniformly
applicable to all Employees similarly situated.
"Trustee" shall mean the trustee or trustees by which the
funds of the Plan are held as provided in Article 7.
"Year of Benefit Service" shall mean employment recognized as
such for the purposes of computing a benefit under the Plan with
respect to service on or after January 1, 1976, as provided under
Article 2.
"Year of Eligibility Service" shall mean any employment
recognized for purposes of meeting the eligibility requirements for
membership in the Plan, as provided in Article 2.
"Year of Vesting Service" shall mean any employment recognized
for purposes of meeting the requirements for vesting in benefits,
as provided in Article 2.
ARTICLE 2 - SERVICE
2.01 Eligibility Service for Regular or Full-Time Employees
For an Employee who is classified as a regular full-time
Employee according to the Employer's policies and practices,
"Year of Eligibility Service" and "Break in Eligibility
Service" shall have the same meaning as "Year of Vesting
Service" and "Break in Vesting Service."
2.02 Eligibility Service for Temporary or Part-Time Employees
For an Employee who is classified as a temporary Employee or
a part-time Employee according to the Employer's policies and
practices:
(a) "Break in Eligibility Service" shall mean failure by an
Employee to complete more than 500 Hours of Service
during any Computation Period. Any Break in Service
shall be deemed to have commenced on the first day of
the Computation Period in which it occurs. In the case
of an absence from work beginning after December 31,
1984, if an Employee is absent from work for any period
by reason of pregnancy, the birth or placement for
adoption of a child, or for caring for a child for a
period immediately following the birth or placement, then
for purposes of determining whether a Break in Service
has occurred (and not for purposes of determining Years
of Eligibility Service) such Employee shall be credited
with the Hours of Service which otherwise normally would
have been credited to such Employee, or, if the
Administrator is unable to determine the number of such
Hours of Service, eight Hours of Service for each day of
absence, in any case not to exceed 501 Hours of Service.
The Hours of Service credited to an Employee under this
definition shall be treated as Hours of Service in the
Computation Period in which the absence from work begins,
if the Employee would be prevented from incurring a Break
in Service in such year solely because of such Hours of
Service or, in any other case, in the immediately
following year. The Administrator may require that the
Employee certify and/or supply documentation that his or
her absence is for one of the permitted reasons and the
number of days for which there as such an absence.
(b) "Computation Period" shall mean a 12 month period
starting on an Employee's most recent date of employment
commencement or any anniversary of that date.
(c) "Year of Eligibility Service" shall mean a Computation
Period during which an Employee has 1,000 or more Hours
of Service for an Affiliate.
2.03 Vesting Service and Benefit Service for All Employees
For all Employees:
(a) "Break in Vesting Service" shall mean each 12 consecutive
months in the period: (i) commencing on an Employee's
Severance from Service Date; and (ii) ending on the date
the Employee is again credited with an Hour of Service
for the performance of duties for an Affiliate. If an
Employee is absent from work for any period by reason of
a pregnancy, the birth or placement for adoption of a
child, or caring for a child for a period immediately
following the birth or placement, and the absence
continues beyond the first anniversary of the absence,
the Employee's Break in Vesting Service will commence no
earlier than the second anniversary of the absence. The
period between the first and second anniversaries of the
first date of the absence is not part of either a Period
of Service or a Break in Vesting Service. The
Administrative Committee may require the Employee to
certify and/or supply documentation that his or her
absence is for one of the permitted reasons and the
number of days for which there was such an absence.
(b) "Period of Service" shall mean the period:
(i) commencing on the date an Employee is first credited
with an Hour of Service for the performance of duties for
an Affiliate; and (ii) ending on the Employee's Severance
from Service Date. A Period of Service will include any
period after an Employee's Severance from Service Date
if within 12 months of the Employee's Severance from
Service Date, the Employee has an Hour of Service for an
Affiliate.
(c) "Severance from Service Date" is the earlier of: (i) the
date on which an Employee quits, is discharged, retires
or dies; or (ii) the first anniversary of the first date
of any other absence.
(d) "Year of Benefit Service" shall mean a full 365 days in
an Employee's Period of Service, excluding: (i) the
period before the Employee became a Member; (ii) any
period during which the Employee is not an Eligible
Employee; and (iii) service before January 1, 1976. A
Member shall not receive credit for more than 40 Years
of Benefit Service.
(e) "Year of Vesting Service" shall mean a full 365 days in
an Employee's Period of Service.
2.04 Effect of Breaks in Eligibility Service
(a) If an Employee has a Break in Eligibility Service, Years
of Eligibility Service before such break will not be
taken into account until the Employee has completed a
Year of Eligibility Service after such Break in
Eligibility Service.
(b) If an Employee who does not have a vested benefit under
the Plan incurs five consecutive Breaks in Eligibility
Service (and the number of consecutive Breaks in
Eligibility Service exceeds the number of Years of
Eligibility Service completed before such break), Years
of Eligibility Service before such break will not be
taken into account.
(c) If an Employee's Years of Eligibility Service may not be
disregarded pursuant to this Section, such Years of
Eligibility Service shall be taken into account.
2.05 Effect of Breaks in Vesting Service
(a) If an Employee has a Break in Vesting Service, Years of
Vesting Service before such break will not be taken into
account until the Member has completed a Year of Vesting
Service after such Break in Vesting Service.
(b) If an Employee who does not have a vested benefit under
the Plan incurs a Break in Vesting Service (and the
number of consecutive Breaks in Vesting Service exceed
the number of Years of Vesting Service completed before
such break), Years of Vesting Service and Years of
Benefit Service before such break will not be taken into
account.
(c) If an Employee's Years of Vesting Service and Years of
Benefit Service may not be disregarded pursuant to this
Section, such Years of Vesting Service and Years of
Benefit Service shall be taken into account.
2.06 Questions Relating to Service under the Plan
If any question shall arise hereunder as to an Employee's
Years of Benefit Service, Years of Eligibility Service or
Years of Vesting Service, such question shall be resolved by
the Administrative Committee on a basis uniformly applicable
to all Employee(s) similarly situated.
ARTICLE 3 - MEMBERSHIP
3.01 Members of the Plan on December 31, 1984
Every Employee who was a Member of the Plan on December 31,
1984 shall continue to be a Member of the Plan on and after
January 1, 1985.
3.02 All Other Employees
An Employee shall become a Member of the Plan as of the first
day of the calendar month, commencing with January 1, 1985,
coincident with or next following the later of:
(a) the date on which he attains the 21st anniversary of his
birth,
(b) the date on which he completes one Year of Eligibility
Service, or
(c) the date on which he becomes an Eligible Employee.
3.03 Leased Employees
Any person who is a Leased Employee shall not be eligible to
participate in the Plan. However, if such a person
subsequently becomes an Employee, or if an Employee
subsequently becomes employed as a Leased Employee,
uninterrupted employment with Affiliates as a Leased Employee,
subject to the provisions of Section 414(n)(4) of said Code,
shall be counted for the sole purpose of determining Years of
Eligibility Service but not for the purpose of determining
Years of Benefit Service.
3.04Reemployment
The membership of any person reemployed by an Affiliate as an
Eligible Employee shall be immediately resumed if such
Employee was previously a Member of the Plan.
If a retired Member or a former Member is reemployed by an
Affiliate, his membership in the Plan shall be immediately
resumed and any payment of a retirement allowance with respect
to his original retirement or any payment of a vested benefit
with respect to his original employment shall cease in
accordance with the provisions of Section 4.09.
3.05 Termination of Membership
Unless otherwise determined by the Administrative Committee
under rules uniformly applicable to all person(s) or
Employee(s) similarly situated, an Employee's membership in
the Plan shall terminate if he ceases to be an Eligible
Employee otherwise than by reason of retirement under the
Plan, except that an Employee's membership shall continue (a)
during any period while on leave of absence approved by an
Affiliate, or (b) while absent by reason of temporary
disability for a period of not more than six months, or (c)
while he is not an Eligible Employee herein defined but is in
the employ of an Affiliate. Employees covered by the Plan may
not waive such coverage.
3.06 Questions Relating to Membership in the Plan
If any question shall arise hereunder as to the commencement,
duration or termination of the membership of any person(s) or
Employee(s) employed by an Affiliate, such question shall be
resolved by the Administrative Committee under rules uniformly
applicable to all person(s) or Employee(s) similarly situated.
ARTICLE 4 - BENEFITS
4.01 Normal Retirement Allowance
(a) Retirement Date - A Member may retire from active service
on a normal retirement allowance upon reaching his Normal
Retirement Date or, if he continues in active service
after his Normal Retirement Date, upon reaching his
Deferred Retirement Date. A Member shall be retired from
active service on a normal retirement allowance upon
reaching his Deferred Retirement Date. However, in
accordance with the procedure established by the
Administrative Committee, on a basis uniformly applicable
to all Employees similarly situated, the monthly benefit
payments commencing on his Deferred Retirement Date shall
be adjusted, if necessary, in compliance with Title 29
of the Code of Federal Regulations, Section 2530.203-3,
to reflect the amount of any monthly benefits that would
have been payable, had he retired on his Normal
Retirement Date, with respect to each month during the
deferral period in which he was not credited with eight
days of service.
(b) Benefit - Prior to adjustment in accordance with Section
4.04(a), the annual normal retirement allowance payable
on a lifetime basis upon retirement at a Member's Normal
Retirement Date or at his Deferred Retirement Date shall
be equal to the sum of the Member's Current Service
Benefit and Past Service Benefit, if any, as follows, and
as further provided in Appendix B:
(i) Current Service Benefit - One and one-half percent
(1-1/2%) of the Member's Average Final Compensation
multiplied by his Years of Benefit Service on and
after January 1, 1976, not in excess of 40 years,
reduced by one-half of his Social Security Benefit;
except, however, that if the Member has less than
40 Years of Benefit Service on and after January 1,
1976, the Social Security Benefit reduction shall
not exceed one and one-quarter percent (1-1/4%) of
the Social Security Benefit multiplied by his Years
of Benefit Service. However, the annual Current
Service Benefit payable to any Member who was a
participant of the Plan on December 31, 1975, and
who had attained age 51 on or before December 31,
1975, shall not be less than 1.3% of the Member's
Earnings in each calendar year during his Years of
Benefit Service up to $7,800 plus 2% of such
Earnings in excess of $7,800.
(ii) Past Service Benefit - With respect to any Member
who was a participant of the Plan on December 31,
1975, an amount equal to the annual normal
retirement benefit accrued up to and including
December 31, 1975, to such Member under the Plan in
respect of service prior to January 1, 1976, with
such retirement benefit being computed in accordance
with the provisions of the Plan as in effect on
December 31, 1975.
The annual normal retirement allowance determined prior
to any Social Security Benefit offset shall be an amount
not less than the greatest annual early retirement
allowance which would have been payable to a Member had
he retired under Section 4.02 at any time before his
Normal Retirement Date, and as such early retirement
allowance would have been reduced to commence at such
earlier date, but prior to any Social Security Benefit
offset; provided, however, that such offset shall in any
event be based on the Federal Social Security Act in
effect at the earlier of the Member's actual retirement
or Normal Retirement Date.
Except as adjusted in accordance with the election of any
optional form of pension under Sections 4.04 and/or 4.05
and unless the Company determines otherwise, the
retirement allowance payable to a Member who retires on
his Deferred Retirement Date shall be determined in
accordance with the provisions of the Plan in effect on
his Normal Retirement Date and as if he had retired from
active service on his Normal Retirement Date.
4.02 Early Retirement Allowance
(a) Eligibility - A Member who has not reached his Normal
Retirement Date but who has reached the 55th anniversary
of his birth and completed ten Years of Vesting Service
is eligible to retire on an early retirement allowance
on the first day of the calendar month next following
termination of employment, which date shall be his Early
Retirement Date.
(b) Special Eligibility - A Member who retires on or after
January 1, 1987, who has not reached his Normal
Retirement Date but who has reached the 55th anniversary
of his birth and completed fifteen Years of Vesting
Service, is eligible to retire on a special early
retirement allowance on the first day of the calendar
month next following termination of employment, which
date shall be his Special Early Retirement Date.
(c) Benefit if Retiring under Section 4.02(a) - Except as
hereinafter provided and prior to adjustment in
accordance with Section 4.04(a), the early retirement
allowance payable upon retirement in accordance with
Section 4.02(a) shall be a deferred allowance commencing
on the Member's Normal Retirement Date and shall be equal
to the normal retirement allowance computed in accordance
with Section 4.01(b) on the basis of his Average Final
Compensation (or Earnings, if applicable) and Years of
Benefit Service prior to the time of early retirement.
The Member may, however, elect to receive an early
retirement allowance commencing with his Early Retirement
Date or the date specified in his later request therefor
in a reduced amount which shall be equal to such deferred
allowance prior to the reduction to be made to the
Current Service Benefit on account of the Social Security
Benefit, if applicable, reduced by 1/4 of 1 percent per
month for each month by which the commencement date of
his retirement allowance precedes his Normal Retirement
Date.
The reduction to be made on account of the Social
Security Benefit shall be determined on the assumption
that the Member had no earnings after his Early
Retirement Date and, if retirement allowance payments
commence prior to the Member's Normal Retirement Date,
shall not be made until such time as the Member is or
would upon proper application first be entitled to
receive said Social Security Benefit.
(d) Benefit if Retiring under Section 4.02(b) - Except as
hereinafter provided and prior to adjustment in
accordance with Section 4.04(a), the special early
retirement allowance shall be an immediate allowance
commencing on the Member's Special Early Retirement Date
and shall be equal to the following:
(i) In the case of a Member whose Special Early
Retirement Date occurs at or after age 60 with
fifteen Years of Vesting Service, the immediate
allowance shall be equal to the normal retirement
allowance under Section 4.01(b) earned up to the
Member's Special Early Retirement Date (prior to the
reduction to be made to the Current Service Benefit
on account of the Social Security Benefit, if
applicable), computed on the basis of his Average
Final Compensation (or Earnings, if applicable) and
Years of Benefit Service at Special Early Retirement
Date; or
(ii) In the case of a Member whose Special Early
Retirement Date occurs at or after age 55 but prior
to age 60 with fifteen Years of Vesting Service, the
special early retirement allowance shall be a
deferred allowance commencing on the first day of
the calendar month coincident with or next the 60th
anniversary of his birth and shall be following
equal to the normal retirement allowance under
Section 4.01(b) earned up to the Member's Special
Early Retirement Date (prior to the reduction to be
made to the Current Service Benefit on account of
the Social Security Benefit, if applicable),
computed on the basis of his Average Final
Compensation (or Earnings, if applicable) and Years
of Benefit Service at Special Early Retirement Date.
The Member, may, however, elect to receive a special
early retirement allowance commencing with his
Special Early Retirement Date or the date specified
in his later request therefore in a reduced amount
which shall be equal to such deferred allowance
reduced by 5/12 of 1 percent for each month by which
the commencement date of his retirement allowance
precedes the first day of the calendar month
coincident with or next following the 60th
anniversary of his birth.
A Member may elect to defer commencement of his special
early retirement allowance to any date after the first
day of the calendar month coincident with or next
following the 60th anniversary of his birth, up to an
including his Normal Retirement Date. If the Member
elects to defer commencement of his special early
retirement allowance, the amount of such retirement
allowance shall not be increased to reflect such later
commencement date.
The reduction to be made on account of the Social
Security Benefit, if applicable, shall be determined on
the assumption that the Member has no earnings after his
Special Early Retirement Date and, if retirement
allowance payments commence prior to the Member's Normal
Retirement Date, shall not be made until such time as the
Member is or would upon proper application first be
entitled to receive said Social Security benefit.
4.03 Vested Benefit
(a) Eligibility - On or after December 31, 1986, a Member
who has not reached his Normal Retirement Date shall be
entitled to a vested benefit if his services are
terminated for reasons other than death or early
retirement after he has completed five Years of Vesting
Service.
(b) Benefit - Prior to adjustment in accordance with Section
4.04(a), the vested benefit payable to a Member who
terminates employment shall be a deferred benefit
commencing on the former Member's Normal Retirement Date
and shall be equal to the normal retirement allowance
computed in accordance with section 4.01(b) on the basis
of his Average Final Compensation (or Earnings, if
applicable) and Years of Benefit Service at date of
termination, with the Social Security Benefit determined
on the assumption that he continued in service to his
Normal Retirement Date at his rate of Compensation in
effect as of his date of termination. If a former Member
had completed at least 10 Years of Vesting Service on the
date he terminated service, he may elect to receive a
benefit commencing on the first day of the calendar month
next following the 55th anniversary of his birth or a
later date specified in his request therefor, after
receipt by the Administrative Committee of written
application therefor made by the former Member and filed
with the Administrative Committee. Upon such earlier
payment, the vested benefit will be reduced by 1/180th
for each month up to 60 by which the commencement date
of such payments precedes the former Member's Normal
Retirement Date and further reduced by 1/360th for each
such month in excess of 60.
4.04 Optional Forms of Benefit after Retirement
(a) (i) Automatic Joint and Survivor Option applicable to
Current Service Benefit - Unless the Member or the
former Member elects otherwise, the retirement
allowance attributable to Section 4.01(b)(i) payable
to a Member who retires under Section 4.01 or
Section 4.02, or the vested benefit attributable to
Section 4.01(b)(i) payable to a former Member whose
service is terminated under Section 4.03, shall be
equal to the retirement allowance or vested benefit
attributable to Section 4.01(b)(i), computed in
accordance with Section 4.01, 4.02, or 4.03, as the
case may be, and multiplied by the appropriate
factor contained in Table 1 of Appendix A; such
retirement allowance or vested benefit shall be
payable during the retired Member's or former
Member's life with the provision that after his
death a benefit at one-half the rate of the reduced
retirement allowance or vested benefit payable to
the retired Member or former Member shall
automatically be paid during the life of, and to,
his spouse, if any; provided, however, in the case
of a Member who retires on his Deferred Retirement
Date, the appropriate factor shall be determined as
of his Normal Retirement Date. It shall also be
provided hereunder that the spouse shall have been
married to the Member on his retirement date or
married to the former Member on the date on which
benefit payments to the former Member commence; and
provided further that the spouse of a former Member
shall not be entitled to receive a benefit (other
than provided in Section 4.05) unless the Member or
former Member's death occurs after the first day of
the month in which his first benefit payment is due
or, in the case of a former Member whose vested
benefit has not commenced, unless his death occurs
after his Normal Retirement Date. In the case of
a Member who retires on his Normal Retirement Date
or Deferred Retirement Date and who dies before his
retirement allowance commences, his spouse shall be
entitled to receive a benefit after his death as
provided in Section 4.05(d).
If the former Member who is entitled to a vested
benefit under Section 4.03 does not wish to provide
a benefit to his spouse after his death as provided
above, he shall make an election, in accordance with
the provisions of Section 4.04(e), to provide that
the vested benefit attributable to Section
4.01(b)(i) payable to him under Section 4.03 shall
be in the form of a lifetime benefit payable during
his own lifetime with no further benefit payable
after his death. If a retired Member who is
entitled to a retirement allowance under Section
4.01 or Section 4.02 does not wish to provide a
benefit to his spouse after his death as provided
above, he shall make an election, in accordance with
the provisions of Section 4.04(e), to provide that
the retirement allowance payable to him attributable
to Section 4.01(b)(i) under Section 4.01 or Section
4.02 shall be in the form of a lifetime benefit
payable during his own lifetime with no further
benefit payable after his death unless he makes an
election in accordance with Section 4.04(b), Section
4.04(c) or Section 4.04(d) of the Plan.
(ii) Automatic joint and survivor benefit applicable to
Past Service Benefit - Unless the Member or the
former Member elects otherwise in accordance with
the provisions of Section 4.04(e), the retirement
allowance attributable to Section 4.01(b)(ii)
payable to a Member who retires under Section 4.01
or Section 4.02, or the vested benefit attributable
to Section 4.01(b) (ii) payable to a former Member
under Section 4.03, shall be computed in accordance
with Section 4.01, 4.02 or 4.03, as the case may be,
and shall be payable during the retired Member's or
former Member's life with the provision that after
his death a benefit at one-half the rate of such
retirement allowance or vested benefit payable to
the retired Member or former Member shall
automatically be paid during the life of, and to,
his spouse; provided, however, that the spouse shall
have been married to the Member or former Member on
the date on which benefit payments to the retired
Member or former Member commence; and provided
further that the spouse shall not be entitled to
receive a benefit unless the former Member's death
occurs after the first day of the month in which his
first benefit payment is due or, in the case of a
former Member whose vested benefit has not
commenced, unless his death occurs after his Normal
Retirement Date.
Not more than 90 days before the date of
commencement of his benefit, the Administrative
Committee shall notify each married Member or
married former Member of the general terms and
conditions of the Automatic Joint & Survivor Option
as described above and the financial effect of an
election to receive, in place thereof, a lifetime
benefit payable to him during his own lifetime with
no further benefit payable after his death. If,
prior to the date of commencement of his benefit,
a married Member or married former Member exercises
his right to file a written request with the
Administrative Committee for detailed information
as to (i) the amount of his retirement allowance or
vested benefit payable on an Automatic Joint &
Survivor Option basis and (ii) the amount payable
on a lifetime basis, then the period during which
he may elect to receive his retirement allowance or
vested benefit on a lifetime basis shall be
extended, if necessary, to include the 60 days
following receipt by the Member or former Member of
such information.
A married Member entitled to, but not in receipt
of, a vested benefit as of August 23, 1984 who
terminated service prior to January 1, 1976 shall
have his vested benefit payable in the form of the
Automatic Joint and Survivor Option as described in
Section 4.04(a)(ii) above, unless he elects
otherwise in accordance with the provisions of
Section 4.04(e) prior to the date as of which his
vested benefit commences.
If a Member is not married on the date his benefit
payments commence, his retirement allowance or vested
benefit shall be in the form of a lifetime benefit
payable during his own lifetime with no further benefit
payable after his death unless the Member is eligible for
and makes an election in accordance with Section 4.04(c)
or Section 4.04(d) of the Plan.
(b) Spouse's Contingent Annuitant Option - Any Member who
retires from active service under Section 4.01 or Section
4.02 and who elects not to receive the optional form of
benefit under Section 4.04(a)(i) may elect to convert the
retirement allowance attributable to Section 4.01(b)(i),
prior to any optional modification under said Section
4.04(a)(i), into one of the following alternative
benefits payable to him and his surviving spouse,
provided the Member and his spouse are married at the
time such election is made. It is provided that:
(i) the retirement allowance attributable to Section
4.01(b)(i) payable to the Member and his spouse
under Option I below shall not be less than the
retirement allowance that would have been payable
without optional modification at retirement under
Section 4.01 or Section 4.02 multiplied by the
appropriate factor contained in Table 3 of Appendix
A, and
(ii) the retirement allowance attributable to Section
4.01(b)(i) payable to the Member and his spouse
under Option II below shall not be less than the
retirement allowance that would have been payable
if the Member had elected Option 1 under Section
4.04(c).
Option I - In order to provide a lifetime benefit
to his surviving spouse equal to 50% of the
retirement allowance attributable to Section
4.01(b)(i) without optional modification otherwise
payable to the Member at retirement under Section
4.01 or Section 4.02, the Member shall elect to
receive a reduced retirement allowance payable
during his own lifetime equal to 90% of the
retirement allowance attributable to Section
4.01(b)(i), without optional modification, otherwise
payable to him under said Section.
If the spouse is more than five years older than
the Member, the reduced retirement allowance payable
to the Member shall be increased for each such
additional year in excess of five years, but for not
more than 20 years, by one-half of 1%. of the
retirement allowance payable to the Member prior to
optional modification. If the spouse is more than
five years younger than the Member, the reduced
retirement allowance payable to the Member shall be
further reduced for each such additional year in
excess of five years by one-half of 1% of the
retirement allowance payable to the Member prior to
optional modification.
Option II - In order to provide a lifetime benefit
to his surviving spouse equal to the Member's
retirement allowance as herein reduced, the Member
shall elect to receive a reduced retirement
allowance payable during his own lifetime equal to
80% of the retirement allowance attributable to
Section 4.01(b)(i) and payable to him at retirement
under Section 4.01 or Section 4.02.
If the spouse is more than five years older than
the Member, the reduced retirement allowance payable
to the Member shall be increased for each such
additional year in excess of five years, but for not
more than 20 years, by 1% of the retirement
allowance payable to the Member prior to optional
modification. If the spouse is more than five years
younger than the Member, the reduced retirement
allowance payable to the Member shall be further
reduced for each such additional year in excess of
five years by 1% of the retirement allowance payable
to the Member prior to optional modification.
(c) Standard Contingent Annuity Option - Any Member who
retires from active service under Section 4.01 or Section
4.02 and who was not eligible for or elected not to
receive the optional form of benefit under Section
4.04(a) may elect, in accordance with the provisions of
Section 4.04(e), to convert the retirement allowance
attributable to Section 4.01(b)(i) and/or Section
4.01(b)(ii) otherwise payable to him under Section 4.01
or Section 4.02 into one of the following alternative
options. If the contingent annuitant selected is other
than the Member's spouse, the reduced retirement
allowance payable to the Member shall in no event be less
than 50% of the retirement allowance which would
otherwise be payable to the Member prior to optional
modification. The optional benefit elected shall be the
retirement allowance without optional modification
otherwise payable to the Member under Section 4.01 or
Section 4.02, multiplied by the appropriate factor
contained in Appendix A.
Option 1 - A reduced retirement allowance payable during
the 4 Member's life, with the provision that after his
death it shall be paid during the life of, and to, the
contingent annuitant designated by him; or
Option 2 - A reduced retirement allowance payable during
the Member's life with the provision that after his death
an allowance at one-half (or any other percentage
approved by the Administrative Committee) of the rate of
his reduced allowance shall be paid during the life of,
and to, the contingent annuitant designated by him.
Option 3 - A reduced retirement allowance payable during
the member's life with the provision that if he should
die prior to receiving 120 monthly benefit payments, the
balance of such payments shall be paid to the beneficiary
designated by him, or to his legal representative if
there is no surviving designated beneficiary. Option 3
may not be elected if the payment period would extend
beyond the combined life expectancy of the Member and his
beneficiary.
(d) Any election made under Section 4.04(a), Section 4.04(b),
Section 4.04(c), or Section 4.04(d) shall be made on a
form approved by the Administrative Committee. Any such
election shall become effective 30 days before the due
date of the first payment of the retirement allowance or
vested benefit provided the appropriate form is filed
with and received by the Administrative Committee not
less than 30 days before said due date. In the case of
a Member retired early under Section 4.02 of the Plan
with the payment of the early retirement allowance
deferred to commence at a date later than his Early
Retirement Date, the survivor's benefits applicable
before retirement under Section 4.05 of the Plan shall
apply for the period between his Early Retirement Date
and the effective date of any election of an optional
form of benefit under Section 4.04. The provisions of
this Section 4.04(e) shall be administered to accommodate
such an early retired Member under rules uniformly
applicable to all Members similarly situated.
A married Member's or a married former Member's election
made on or after January 1, 1985 of a life only form of
payment under Section 4.04(a), or any form of payment
under Section 4.04(c) or Section 4.04(d) which does not
provide for monthly payments to his spouse for life after
the Member's or former Member's death in an amount equal
to at least 50% but not more than 100% of the monthly
amount payable under that form of payment to the Member
or former Member, shall be effective only if (i) it is
made within 90 days of benefit commencement, and (ii) his
spouse's consent to the election has been received by the
Administrative Committee. The spouse's consent shall be
witnessed by a notary public or in accordance with
uniform rules of the Administrative Committee, by a Plan
representative and shall acknowledge the effect on the
spouse of the Member's or former Member's election of
such form of payment.
The requirement for spouse's consent may be waived by
the Administrative Committee in accordance with
applicable law.
Any election made under Section 4.04(a), Section 4.04(b),
Section 4.04(c) or Section 4.04(d), after having been
filed, may be revoked or changed by the Member only by
written notice received by the Administrative Committee
before the election becomes effective; provided, however,
that a married Member may revoke or make n election under
Section 4.04(a) any time prior to the date his retirement
allowance or vested benefit commences. If, however, the
Member or the spouse or the contingent annuitant or the
beneficiary designated in the election dies before the
election has become effective, the election shall thereby
be revoked.
The benefit payable in accordance with Section 4.04(a),
Section 4.04(b), Section 4.04(c) or Section 4.04(d) to
the designated spouse or contingent annuitant or
beneficiary of a Member or former Member in receipt of
a retirement allowance whose death occurs prior to the
age at which the Member or former Member is, upon-proper
application, first entitled to receive his Social
Security Benefit, if applicable, shall be based upon the
appropriately reduced retirement allowance which is or
would be payable to the Member or former Member after he
attained such age.
4.05 Optional Forms of Benefit Before Retirement
The term Beneficiary for purposes of this Section 4.05 shall
mean any person designated by the Member to receive benefits
payable under this Section; provided, however, that, for any
married Member who is first eligible for or continues to be
eligible for the coverage provided under this Section 4.05 on
and after August 23, 1984, the term "Beneficiary" shall
automatically mean the Member's spouse and any prior
designation to the contrary will be cancelled, unless the
Member designates otherwise. An election on or after January
1, 1985 of a non-spouse Beneficiary by a married Member shall
be effective only if the Member's spouse consents to such
designation and such consent has been received by the
Administrative Committee. The spouse's written consent shall
be witnessed by a notary public or, in accordance with uniform
rules of the Administrative Committee, by a Plan
representative and shall acknowledge the effect on the spouse
of the Member's Beneficiary designation. This requirement
for spouse's consent may be waived by the Administrative
Committee in accordance with applicable law. If the Member
dies without an effective designation of Beneficiary, the
Member's Beneficiary for purposes of this Section 4.05 shall
automatically be the Member's spouse, if any. The
Administrative Committee shall resolve any questions arising
hereunder as to the meaning of Beneficiary on a basis
uniformly applicable to all Members similarly situated.
(a) Death in Service Benefit applicable to Past Service
Benefit - In the event of the death prior to the date
payments commence of a Member who was a participant of
the Plan on December 31, 1975, his spouse to whom he was
married not less than one year prior to his date of death
shall be entitled to receive a benefit equal to one-half
of the Member's retirement allowance attributable to
Section 4.01(b)(ii), commencing on what would have been
the Member's Normal Retirement Date, or commencing on the
first day of the month following the death of the Member,
if later, and continuing during the life of such spouse;
provided, however, that if a Member dies prior to his
Normal Retirement Date, his spouse can elect, by written
application filed with the Administrative Committee, to
have such payments begin as of the first day of any month
following the Member's date of death and prior to what
would have been the Member's Normal Retirement Date.
(b) Death in Service Option applicable to Current Service
Benefit for Members eligible for Vested Benefits - On and
after December 31 1986, the spouse of a Member shall be
eligible for a benefit payable to, and for the lifetime
of, such spouse if the Member should die:
(i) while in active service after completing five Years
of Vesting Service but prior to becoming eligible
for early retirement in accordance with Section
4.02(a), provided that the Member had not, by timely
written notice to the Pension Administrative
Committee and with his spouse's written consent,
elected to waive such benefit, or
(ii) after termination of employment on or after August
23, 1984 with entitlement to a vested benefit
attributable to Section 4.01(b)(i), but prior to the
earlier of the date such benefit commences or his
Normal Retirement Date, provided that the Member had
not, by timely written notice to Pension
Administrative Committee and with his spouse's
written consent, elected to waive such benefit.
The benefit payable to the spouse under this paragraph
(b) shall begin as of the month in which the Member's
Normal Retirement Date would have occurred. However, in
the case of the death of any eligible Member,who had
completed 10 Years of Vesting Service prior to attaining
his Normal Retirement Date, the spouse may elect to begin
receiving payments as of any month following the month
in which the Member's 55th birthday would have occurred
(or following the month in which his date of death
occurred, if later) and prior to what would have been his
Normal Retirement Date.
Prior to its reduction set forth below, if applicable,
the benefit payable to the spouse covered under this
Section 4.05(b) shall be equal to the amount of benefit
the spouse would have received if the vested benefit
attributable to Section 4.01 (b)(i) to which the Member
was entitled at his date of death had commenced as of
the month in which his Normal Retirement Date would have
occurred in accordance with Section 4.04(a)(i), and the
Member had died immediately thereafter. However, if the
spouse elects early commencement, the amount of benefit
payable to the spouse shall be based on the amount of
vested benefit to which the Member would have been
entitled if he had requested benefit commencement at that
earlier date, reduced in accordance with Section 4.03(b).
The retirement allowance attributable to Section
4.01(b)(i) payable to a Member whose spouse is covered
under Section 4.05(b)(ii) or, if applicable, the benefit
payable under Section 4.05(b)(ii) to his spouse upon his
death, shall be equal to the vested benefit to which he
would otherwise be entitled, reduced by the applicable
percentages shown below for the period, or periods, that
coverage under Section 4.05(b)(ii) was in effect:
Annual Reduction for Spouse's Coverage
After Termination of
Employment Other Than Retirement
Age Reduction
60 and over 1% per year
55 - 59 5/10 of 1% per year
50 - 54 3/10 of 1% per year
40 - 49 2/10 of 1% per year
Prior to 40 1/10 of 1% per year
Such annual reduction shall be prorated to include months
in which coverage was in effect for at least one day.
Under rules uniformly applicable to all Employees
similarly situated, the reduction will be waived until
the Employee is given a reasonable period of time to
waive such coverage and thereby avoid the charge.
Coverage under Section 4.05(b)(i) shall become effective
on the later of the date a Member completes the
eligibility requirement for a vested benefit or the date
the Member marries. Coverage under Section 4.05(b)(ii)
shall become effective on the later of the date a Member
terminates employment on or after August 23, 1984 under
Section 4.03(a) or the date the Member marries. Except
in the event of a waiver or revocation as described in
paragraph (f) of this Section 4.05, coverage under this
Section 4.05(b) shall cease on the earlier of (i) the
date the Member meets the eligibility requirements of
Section 4.05(c), (ii) the date such Member's marriage is
legally dissolved by a divorce decree, or (iii) the date
such Member's spouse dies. If the Member or his spouse
dies prior to the time such coverage becomes effective,
no benefit shall be payable.
(c) Death in Service Option applicable to Current Service
Benefit for Members Eligible for Early Retirement -
(i) The Beneficiary of a Member who has reached the 55th
anniversary of his birth and completed 10 Years of
Vesting Service shall automatically receive a
retirement allowance in the event said Member should
die after the effective date of coverage hereunder
and before his Early, Special Early or Normal
Retirement Date. In the case of a Member retired
early under Section 4.02 of the Plan with the
payment of the early or special early retirement
allowance deferred to commence at a date later than
his Early or Special Early Retirement Date, the
provisions of this Section 4.05(c) shall also apply
to the period between his Early or Special Early
Retirement Date and the effective date of any
election of an optional form of benefit under
Section 4.04 of the Plan, provided the Member does
not waive coverage under this Section 4.05(c).
The benefit payable to the Beneficiary shall be
equal to one-half of the amount of the Member's
retirement allowance under Section 4.01(b)(i)
accrued to the date of his death which would have
been payable if the Member had retired on his Normal
Retirement Date, computed pursuant to and effective
election of Option 1 under Section 4.04(c) with his
Beneficiary nominated as his contingent annuitant,
reduced by one-half of 1% per year for each year
between the date on which coverage hereunder became
effective and the date of his death.
Notwithstanding anything to the contrary herein
contained, if the Beneficiary is the Member's
Spouse, the benefit payable to such spouse under
this Section 4.05(c)(i) shall not be less than the
benefit said spouse would have received under
Section 4.04(a) had the Member been retired on the
first day of the month following the month in which
he dies. Coverage hereunder shall be effective on
the earlier of (1) the date the Member elected
coverage under the provisions of the Plan as in
effect prior to August 23, 1984, or (2) August 23,
1984 or, if later, the date the Member first meets
the eligibility requirements described in this
Section 4.05(c). In the case of a married Member,
coverage under Section 4.05(b) shall cease on the
date coverage under this Section 4.05(c) is
effective, as set forth in the preceding sentence.
(ii) 1% Election - In lieu of the benefit described in
subparagraph (i) above, an eligible Member may elect
to reduce the retirement allowance attributable to
Section 4.01(b)(i), otherwise payable to him under
Section 4.01 or Section 4.02, by 1% per year to
provide a benefit payable to his Beneficiary upon
his death (1) in active service, or (2) during the
period between his Early Retirement Date and the
effective date of any election of an optional form
of benefit under Section 4.04. This benefit shall
be equal to the amount of the Member's retirement
allowance under Section 4.01(b)(i) accrued to the
date of his death which would have been payable if
the Member had retired on his Normal Retirement
Date, computed pursuant to an effective election of
Option 1 under Section 4.04(c) with his Beneficiary
nominated as his contingent annuitant, reduced by
1% per year for each year between the date on which
the election became effective and the date of his
death. If the Member does not make this election
until after he is first eligible to do so, it shall
become effective one year after the first day of the
calendar month coincident with or next following the
date the notice is received by the Administrative
Committee or on the date specified on such notice,
if later. In the case of a married Member, coverage
under Section 4.05(b) shall cease on the date
coverage under this Section 4.05(c) is effective,
as set forth in the preceding sentence.
The benefit payable under this Section 4.05(c)(i)
or (ii) shall be payable for the life of the
Beneficiary commencing on what would have been the
Member's Normal Retirement Date; provided, however,
that the Beneficiary of the Member may elect, by
written application filed with the Administrative
Committee, to have such payments begin as of the
first day of any month following the Member's date
of death and prior to what would have been the
Member's Normal Retirement Date. If the Beneficiary
elects to commence payment of the death benefit
prior to what would have been the Member's Normal
Retirement Date. If the Beneficiary elects to
commence payment of the death benefit prior to what
would have been the Member's Normal Retirement Date,
the amount of such benefit shall be reduced to
reflect such early commencement in accordance with
the provisions of Section 4.02(c) or (d), whichever
is applicable.
(d) Death in service option after Normal Retirement Date -
(i) Automatic Spouse's Benefit - If a married Member
reaches his Normal Retirement Date and does not
retire from active service and if he should die
after his Normal Retirement Date and before his
Deferred Retirement Date, a benefit shall
automatically be paid during the life of, and to,
his spouse, if any.
The benefit payable to the spouse shall be equal to
one-half of the amount of the Member's normal
retirement allowance accrued to his Normal
Retirement Date, adjusted with respect to the
benefit determined under Section 4.01(b)(i) as if
the Member had elected Option 1 under Section
4.04(c) with his spouse as the contingent annuitant
thereunder and as if the spouse had been the age she
would have been on the 65th anniversary of the
Member's birth. Notwithstanding anything to the
contrary herein contained, the benefit payable to
such spouse shall not be less than the benefit said
spouse would have received under Section 4.04(a) had
the Member been retired on his Normal Retirement
Date.
If a married Member does not wish to provide a
benefit under this Section 4.05(d)(i) with respect
to the benefit determined under Section 4.01(b)(i)
payable to his spouse in the event of his death in
active service before his Deferred Retirement Date,
he shall make an election to waive such coverage.
For such an election by a married Member to be
effective, the Administrative Committee must have
received a written consent to such election by the
Member's spouse. This spouse's written consent
shall be witnessed by a notary public or, in
accordance with uniform rules of the Administrative
Committee, by a Plan representative and shall
acknowledge the effect on the spouse of such
election. This requirement for spouse's consent may
be waived by the Administrative Committee in
accordance with applicable law.
(ii) Other Options Available - If a Member reaches his
Normal Retirement Date and does not retire from
active service, such Member shall make an election
indicating whether or not he wishes to provide that,
if he should die after his Normal Retirement Date
and before his Deferred Retirement Date, a benefit
shall be paid during the life of, and to, any person
designated by him. No married Member shall make an
election under one of the following optional forms
of benefits unless he has elected not to receive
the benefit under Section 4.05(d)(i).
No Death Protection - If a Member does not wish to
provide a benefit payable to anyone with respect to
the benefit determined under Section 4.01(b)(i) in
the event of his death before Deferred Retirement
Date, he shall so elect. In such event, no further
benefit shall be payable to anyone after his death
prior to his Deferred Retirement Date with respect
to the benefit determined under Section 4.01(b)(i).
100% Election - The Member may elect to reduce the normal
retirement allowance to which he would otherwise be
entitled at his Deferred Retirement Date under Section
4.01(b)(i) by one-half of 1% per year for each year
between his Normal Retirement Date and the earliest of
the Member's Deferred Retirement Date, the date the
designated person dies, the date the Member dies, or the
date the election is revoked as provided in Section
4.05(d). The benefit payable to the designated
Beneficiary shall be equal to (1) the amount of the
Member's normal retirement allowance accrued to his
Normal Retirement Date, (2) reduced by one-half of 1% per
year for each year between his Normal Retirement Date and
the date of his death, and (3) further adjusted as if the
Member had elected Option 1 under Section 4.04(c) at
Normal Retirement Date with the designated person
nominated as his contingent annuitant thereunder and as
if the designated person had been the age he would have
been on the 65th anniversary of the Member's birth.
Post-65 Standard Contingent Annuity Option Election -
The Member may elect to provide that, if he should die
after his Normal Retirement Date and before his Deferred
Retirement Date, a benefit shall be payable during the
life of, and to, the Beneficiary designated by him. The
benefit payable to the designated Beneficiary shall be
equal to (1) one-half of the amount of the Member's
normal retirement allowance accrued to his Normal
Retirement Date, but adjusted as if the Member had
elected Option 1 under Section 4.04(c) with the
designated person nominated as his contingent annuitant
thereunder and as if the designated person had been the
age he would have been on the 65th anniversary of the
Member's birth. Notwithstanding anything to the contrary
herein contained, if the designated Beneficiary is the
member's spouse, the benefit payable to such spouse under
this election shall not be less than the benefit said
spouse would have received under Section 4.04(a) had the
Member been retired on his Normal Retirement Date.
If a retired Member or a former Member is re-employed at
or after his Normal Retirement Date, his rights with
respect to the election of an optional form of benefit
under the Plan shall be determined in accordance with
Section 4.09(b).
(e) Election of coverage by former Members who terminated
employment on or after January 1, 1976 and prior to
August 23, 1984. Notwithstanding the provisions of
Section 4.05(b), a former Member whose employment
terminated on or after January 1, 1976 and prior to
August 23, 1984, who is married and entitled to a vested
benefit pursuant to the provisions of Section 4.03 but
who is not yet in receipt thereof, may elect, prior to
the commencement of such vested benefit, to have the
provisions of Section 4.05(b) apply to him. Such
coverage shall become effective on the first of the month
coincident with or following the date the completed
election form is received by the Administrative
Committee.
(f) Election Procedure - Any election made under Section 4.05
shall be made on a form approved by the Administrative
Committee. The Administrative Committee shall furnish
to each married Member a written explanation in
nontechnical language which describes (i) the terms and
conditions of the benefit payable to a Member's spouse
under Section 4.05(b), (c) or (d), (ii) the Member's
right to make, and the effect of, an election to waive
the such benefit, (ii) the rights of the Member's spouse,
and (iv) the right to make, and the effect of, a
revocation of such a waiver. Such written explanation
shall be furnished (i) in the case of a Member in active
service, within the three-year period immediately
preceding the first day of the Plan Year in which the
Member would first complete the eligibility requirements
for an early or normal retirement allowance, and (ii) in
the case of a Member who terminates employment with
entitlement to a vested benefit prior to age 35, as soon
as practicable within the 12-month period beginning on
his date of termination.
An election to waive the spouse's benefit payable under
Section 4.05(b), (c) or (d), or any revocation of that
election, may be made at any time during the period which
begins on the first day of the Plan Year in which the
Member would first complete the eligibility requirements
for an early or normal retirement allowance, and ends on
the date payment of the Member's retirement allowance or
vested benefit commences. However, in the case of a
Member who has terminated employment, the period during
which he may make an election to waive this spouse's
benefit coverage with respect to his benefit accrued
before his termination of employment shall begin not
later than the date his employment terminates. An
election to waive this spouse's benefit coverage or any
revocation of that election shall be made on a form
provided by the Pension Administrative Committee, and any
such waiver of coverage shall require the written consent
of the spouse, duly witnessed by a notary public, unless
the spouse's consent is waived by the Pension
Administrative Committee in accordance with applicable
law. The election or revocation shall be effective when
the completed form is filed with the Pension
Administrative Committee.
Any other election made under Section 4.05(c) or (d) may
be changed or revoked either before or after it becomes
effective. If the designated Beneficiary dies after the
effective date of the election, the election is thereby
cancelled and there shall be no further reduction to the
Member's retirement allowance for the period between the
date of the designated Beneficiary's death and the
Member's retirement date unless the Member makes a new
election in accordance with this Section. Such Member
is entitled to make a new election within 60 days
following the designated Beneficiary's death or a
subsequent marriage. Such new election will become
effective on the first day of the calendar month
coincident with or next following the date the notice is
received by the Administrative Committee. If the Member
does not make a new election within said 60 days, any
subsequent election shall become effective one year after
the first day of the calendar month coincident with or
next following the date the notice is received by the
Administrative Committee or on the date specified in such
notice, if later.
If the person designated in an election under Section
4.05(c) or (d) is the Member's spouse and if the Member's
marriage to said spouse is legally dissolved by a divorce
decree, the election shall be automatically revoked as
of the effective date of the divorce decree. Such Member
is entitled to make a new election within 60 days
following the effective date of the divorce decree or a
subsequent marriage. Such new election shall become
effective on the first day of the calendar month
coincident with or next following the date the notice is
received by the Administrative Committee. If the Member
does not make a new election within said 60 days, any
subsequent election shall become effective one year after
the first day of the calendar month coincident with or
next following the date the notice is received by the
Administrative Committee or on the date specified in such
notice, if later.
If the Member dies prior to the time the election becomes
effective, the election shall be revoked.
4.06 Maximum Benefits
(a) The maximum annual normal, early retirement allowance,
death in service benefit, or vested benefit attributable
to Company contributions, payable after adjustment for
any optional elections under Section 4.05(b), or Options
1 or 2 of Section 4.05(c), provided the Member's spouse
is the designated contingent annuitant, when added to any
retirement allowance attributable to contributions of the
Company or an Affiliate provided to a Member under any
other qualified defined benefit plan, shall be equal to
the lesser of:
(i) $90,000 adjusted in accordance with regulations
issued under Section 415 of the Internal Revenue
Code by the Secretary of the Treasury or his
delegate; provided, however, that each year in which
such an adjustment is made, it shall not become
effective prior to January 1 of such year, or
(ii) the Member's average annual remuneration during the
three consecutive Years of Benefit Service
affording the highest such average, or during all
of Years of Benefit Service if less than three
years; provided that if the Member has not completed
10 Years of Benefit Service, such maximum annual
retirement allowance or vested benefit shall be
reduced by the ratio which the number of Years of
Benefit Service bears to 10.
(b) If the benefit begins before the Member's social security
retirement age (as defined in Section 415(b) of the
Code), the $90,000 limitation set forth in this Section
shall be reduced:
(i) for the period between the Member's attainment of
age 62 and the Member's social security retirement
age, in a manner that is consistent with the
reduction for old-age social security benefits
commencing before such Member's social security
retirement age;
(ii) for the period before the month in which the Member
attains age 62, actuarially in accordance with the
an interest rate assumption which is the greater of
5% or the interest rate used in Appendix A and the
mortality assumption used in Appendix A.
In the case of a Member whose benefits hereunder commence
after his attainment of social security retirement age,
the $90,000 limitation in this Section shall be increased
so that it is equivalent of such a benefit commencing at
the Member's social security retirement age, using the
interest rate assumption of the lesser of 5% or the
interest rate used in Appendix A and the mortality
assumption used in Appendix A.
(c) In the case of a Member who is participating in The
Scotts Company Profit Sharing and Savings Plan or any
other defined contribution plan of an Affiliate, the
maximum benefit limitation shall not exceed the adjusted
limitation computed as follows:
(i) Determine the "defined contribution fraction" as
set forth in sub-paragraph (i) of the following
paragraph (d).
(ii) Subtract the result of (i) from one (1.0) with the
result not to be less than zero.
(iii) Multiply the dollar amount in Section 4.06(a)(i)
by 1.25.
(iv) Multiply the amount described in Section
4.06(a)(ii) by 1.4.
(v) Multiply the lesser of the result of (iii) or the
result of (iv) by the result of (ii) to determine
the adjusted maximum benefit limitation applicable
to the Member.
(d) For purposes of this Section 4.06(d)
(i) The "defined contribution fraction" for a Member
who is participating in The Scotts Company Profit
Sharing and Savings Plan or any other defined
contribution plans of an Affiliate shall be a
fraction the numerator of which is the sum of the
following:
(A) Affiliates' contributions credited to the
Member's accounts under any defined
contribution plan or plans, including the
amount of any contribution made on a Member's
behalf on a salary reduction basis under any
such plan qualified under Section 401(k) of
the Code.
(B) the Member's contributions to such plan or
plans, and
(C) any forfeitures allocated to his accounts
under such plan or plans, but reduced by any
amount permitted by regulations promulgated
by the Commissioner of Internal Revenue; and
the denominator of which is the lesser of the
following amounts determined for each of the
Member's Years of Vesting Service:
(D) 1.25 multiplied by the maximum dollar amount
allowed by law for that year; or
(E) 1.4 multiplied by 25% of the Member's
remuneration for that year. At the direction
of the Administrative Committee, the portion
of the denominator of that fraction with
respect to calendar years before 1983 shall
be computed as the denominator for 1982, as
determined under the law as then in effect,
multiplied by a fraction the numerator of
which is the lesser of:
(F) $51,875, or
(G) 1.4 multiplied by 25% of the Member's
remuneration for 1981, and the denominator
of which is the lesser of:
(H) $41,500, or
(I) 25% of the Member's remuneration for 1981;
(ii) a "defined contribution plan" means a qualified
pension plan which provides for an individual
account for each participant and for benefits
based solely upon the amount contributed to the
participant's account, and any income, expenses,
gains and losses, and any forfeitures of accounts
of other participants which may be allocated to
that participant's accounts, subject to (iii)
below;
(iii) a "defined benefit plan" means any qualified
pension plan which is not a defined contribution
plan; however in the case of a defined benefit
plan which provides a benefit which is based
partly on the balance of the separate account of
a participant, that plan shall be treated as a
defined contribution plan to the extent benefits
are based on the separate account of a participant
and as a defined benefit plan with respect to the
remaining portion of the benefits under the plan;
and
(iv) the term "remuneration" for purposes of this
Section 4.06 with respect to any Member shall mean
the wages, salaries and other amounts paid to such
Member by the Company for personal services
actually rendered, determined after any reduction
for contributions made on his behalf on a salary
reduction basis under any plan qualified under
Section 401(k) of the Internal Revenue Code, and
shall include, without being limited to, bonuses,
overtime payments and commissions; and shall
exclude deferred compensation, stock options and
other distributions which receive special tax
benefits under the Internal Revenue Code.
(e) Notwithstanding the preceding paragraphs of this Section,
in no event shall a Member's annual retirement allowance
or vested benefit payable under this Plan be less than
the allowance or benefit which the Member had accrued
under the Plan as of the end of the plan year beginning
in 1982; provided, however, that in determining that
benefit no changes in the terms and conditions of the
Plan on or after July 1, 1982 shall be taken into
account.
4.07 No Duplication
There shall be deducted from any retirement allowance or
vested benefit payable under this Plan the part of any pension
or comparable benefit, including any lump sum payment,
provided by employer contributions which the Company, or an
Affiliate is obligated to pay or has paid to or under any
pension plan or other agreement (except for any pension plan
or other agreement which provides for the payment of that
portion of any benefits accrued under the Plan but not payable
from the Plan on account of Section 4.06) with respect to any
service which is included in Years of Benefit Service for
purposes of computation of benefits under this Plan.
4.08 Payment of Benefits
Unless otherwise provided under an optional benefit elected
pursuant to Section 4.04 or under the survivor's benefits
available under Section 4.05, all retirement allowances,
vested benefits or other benefits payable under the Plan viII
be paid in monthly installments as of the beginning of each
month beginning with (i) the month in which a Member has
reached his Normal Retirement Date and has retired from active
service or (ii) the month in which a Member has reached his
Deferred Retirement Date and has retired from active service
or (iii) the month in which a Member upon proper application
has requested commencement of his vested benefit or early
retirement allowance or (iv) the month in which benefits under
an optional benefit under Section 4.04 or the survivor's
benefits under Section 4.05 become payable; and such monthly
installments shall cease with the payment for the month in
which the recipient dies. In no event shall a retirement
allowance or vested benefit be payable to a Member who
continues in or resumes active service with the Company or an
Affiliate for any period between his Normal Retirement Date
and Deferred Retirement Date, except as provided in Section
4.09(c)(i).
In any case, upon direction of the Administrative Committee,
a lump sum payment equal to the retirement allowance
multiplied by the appropriate factor contained in Table 6 or
7 of Appendix A shall be made in lieu of any retirement
allowance payable to a Member or his spouse or contingent
annuitant, or any vested benefit payable to a former Member
or his spouse, if the present value of such allowance or
benefit amounts to $3,500 or less. In no event, however,
shall that adjustment factor produce a lump sum that is less
than the amount determined by using the interest rate
assumption for immediate annuities used by the Pension Benefit
Guaranty Corporation for valuing benefits for single employer
plans that terminate on January 1 of the plan year in which
the date of distribution occurs. The lump sum payment may be
made at any time on or after the date the Member has termi-
nated employment and prior to benefit commencement. Any lump
sum distribution shall be paid in accordance with Section
4.11.
In the event that the Administrative Committee shall find that
a person to whom benefits are payable is unable to care for
his affairs because of illness or accident or is a minor or
has died, then, unless claim shall have been made therefor by
a legal representative, duly appointed by a court of competent
jurisdiction, the Administrative Committee may direct that any
benefit payment due him be paid to his spouse, a child, a
parent or other blood relative, or to a person with whom he
resides, and any such payment made shall be a complete
discharge of the liabilities of the Plan therefor.
Before any benefit shall be payable to a Member, a former
Member, or other person who is or may become entitled to a
benefit hereunder, such Member, former Member, or other person
shall file with the Administrative Committee such information
as it shall require to establish his rights and benefits under
the Plan.
Notwithstanding anything contained in the Plan to the
contrary, the Plan retirement allowance or vested benefit of
a Member shall commence not later than the April 1 following
the calendar year in which he attains age 70-1/2 even if he
continues to be a Member after such date.
4.09 Reemployment of Former Member or Retired Member
(a) Cessation of benefit payments. If a former Member or a
retired Member entitled to or in receipt of a vested
benefit or retirement allowance is reemployed by the
Company or an Affiliate as an Employee, any benefit
payments he is receiving shall cease. Notwithstanding
the preceding sentence, if a retired Member is reemployed
on a part-time basis, his benefit payments shall not be
discontinued until he has completed a Year of Eligibility
Service, measured from his date of reemployment.
(b) Optional forms of retirement allowances
(i) If the Member is reemployed after his Normal
Retirement Date and his benefit payments are
discontinued, any previous election of an optional
benefit in effect shall continue in effect and,
in the event of the Member's death during
reemployment, any payments under such effective
optional benefit election shall commence.
(ii) If the Member is reemployed prior to his Normal
Retirement Date and his benefit payments are
discontinued, any previous election of an optional
benefit under Section 4.04 or the survivor's
benefits under Section 4.05 shall be revoked and
the terms and conditions of subparagraph (iii) of
this Section 4.09(b) shall apply.
(iii) Any Member described in subparagraph (ii) above
who is at least age 55 with 10 or more Years of
Vesting Service when he is reemployed prior to
Normal Retirement Date shall, with respect to the
vested benefit or retirement allowance earned
prior to his reemployment and with respect to any
additional benefits earned during reemployment,
be covered by the provisions of Section 4.05(c).
Coverage under Section 4.05(c) shall be effective
on the first day of the calendar month coincident
with or next following the date of his reemploy-
ment and any previous election shall remain in
effect until such date. If, within 30 days after
reemployment, the Member elects coverage under
Section 4.05(c)(ii), in lieu of coverage under
Section 4.05(c)(i), such coverage shall be
effective as of the first day of the calendar
month coincident with or next following the date
of his reemployment. If the Member does not make
an election under Section 4.05(c)(ii) within 30
days after his reemployment prior to Normal
Retirement Date or he waives such coverage, any
later election shall become effective one year
after the first day of the calendar month
coincident with or next following the date notice
is received by the Administrative Committee or on
the date specified in such notice, if later.
Any former Member described in subparagraph (ii)
above who is less than age 55, but who has
completed 10 or more Years of Vesting Service at
such reemployment, shall be covered by the
provisions of Section 4.05(b) until he attains
age 55, and such coverage shall be effective on
the first day of the calendar month coincident
with or next following the date of his reemploy-
ment; any previous election shall remain in effect
until such date. Such former Member shall be
covered by the provisions of Section 4.05(b) and
shall be eligible for coverage under Sec-
tion 4.05(c) upon attaining age 55, and such
coverage shall be in accordance with the provi-
sions of such Sections and shall apply with
respect to his vested benefit earned prior to his
reemployment, as well as any additional benefits
earned during reemployment.
(c) Benefit payments at subsequent termination or retirement
(i) If the Member is reemployed after his Normal
Retirement Date and his benefit payments are
discontinued pursuant to Section 4.09(a), payment
of the same vested benefit or retirement allowance
he was receiving or to which he was entitled at
reemployment shall be resumed or shall begin at
his subsequent termination of employment or
retirement occurring not later than his Deferred
Retirement Date. However, in accordance with the
procedure established by the Administrative
Committee on a basis uniformly applicable to all
Employees similarly situated, his monthly benefit
payments shall be adjusted, if necessary, in
compliance with Title 29 of the Code of Federal
Regulations Section 2530.203-3, to reflect the
amount of the monthly benefits that would have
been payable, had he not returned to service, with
respect to each month during the reemployment
period in which he is not credited with at least
eight days of service.
(ii) If the Member is reemployed prior to his Normal
Retirement Date and his benefit payments are
discontinued, either immediately or upon comple-
tion of one Year of Eligibility Service, the
Administrative Committee shall, in accordance with
rules uniformly applicable to all persons
similarly situated, determine the amount of vested
benefit or retirement allowance which shall be
payable to such Member upon his subsequent
termination of employment or retirement. Such
vested benefit or retirement allowance shall not
be less than the original amount of vested benefit
or retirement allowance previously earned by such
Member in accordance with the terms of the Plan
in effect during such previous employment plus any
additional vested benefit or retirement allowance
earned during his period of reemployment, adjusted
in accordance with the provisions of
Section 4.05(b)(ii), Section 4.05(c) or
Section 4.05(d), if applicable. Notwithstanding
anything to the contrary contained in this Plan,
the vested benefit or retirement allowance for
Years of Benefit Service credited prior to the
date of reemployment shall not be re-calculated
or increased unless and until the Member has
completed a Year of Eligibility Service and, in
such event, the re-calculated vested benefit or
retirement allowance shall be reduced by an amount
determined by dividing the sum of any payments
previously received by the former Member or
retired Member by the appropriate factor contained
in Table 6 of Appendix A.
(d) Questions relating to reemployment of former Members or
retired Members. If, at subsequent termination of
employment or retirement, any question shall arise under
this Section 4.09 as to the calculation or re-calculation
of a reemployed former Member's or retired Member's
vested benefit or retirement allowance or election of an
optional form of benefit under the Plan, such question
shall be resolved by the Administrative Committee on a
basis uniformly applicable to all Members similarly
situated.
4.10Top-Heavy Provisions
(a) For purposes of this Section 4.10, the Plan shall be
"top-heavy" with respect to any plan year beginning on
or after January 1, 1984 if, as of the last day of the
preceding plan year, the present value of the cumulative
accrued benefits under the Plan for "key employees"
exceeds 60 per cent of the present value of the
cumulative accrued benefits under the Plan for all
Employees or former Employees, determined as of the
applicable "valuation date". For purposes of this
Section 4.10, "valuation date" shall mean the date as of
which annual plan costs are or would be computed for
minimum funding purposes with respect to such preceding
plan year. The determination as to whether an Employee
or former Employee will be considered a "key employee"
shall be made in accordance with the provisions of
Section 416(i)(1) and (5) of the Internal Revenue Code
and any regulations thereunder, and, where applicable,
on the basis of the Employee's or former Employee's
remuneration from the Company or Associated Company as
reported on Form W-2 for the applicable Plan Year. The
present value of accrued benefits shall be computed in
accordance with Section 416(g)(3) and (4)(B) of the
Internal Revenue Code on the basis of the same mortality
and interest rate assumptions used to value the Plan.
For purposes of determining whether the Plan is top-
heavy, the present value of accrued benefits under the
Plan will be combined with the present value of accrued
benefits or account balances under any other qualified
plan of the Company or an Associated Company in which
there are participants who are key employees or which
enables this Plan to meet the requirements of
Section 401(a)(4) or 410 of the Internal Revenue Code,
and, in the Company's discretion, may be combined with
the present value of accrued benefits or account balances
under any other qualified plan of the Company or an
Associated Company in which all participants in that plan
are non-key employees, provided that the resulting
aggregation group will continue to qualify under
Section 401(a)(4) or 410 of said Code.
(b) The following provisions shall be applicable to Members
for any plan year with respect to which the Plan is top-
heavy:
(i) In lieu of the vesting requirements specified in
Section 4.03, the following vesting schedule shall
apply:
Years of Vesting Service Percentage Vested
Less than 2 years 0%
2 years 20
3 years 40
4 years 60
5 or more years 100
(ii) The accrued benefit of a Member who is a non-key
employee shall not be less than two per cent of
his "average remuneration" multiplied by the
number of Years of Vesting Service, not in excess
of 10, during the plan years for which the Plan
is top heavy. Such minimum benefit shall be
payable at a Member's Normal Retirement Date. If
payments commence at a time other than the
Member's Normal Retirement Date, the minimum
accrued benefit shall be of equivalent actuarial
value to such minimum benefit, as determined on
the basis of the actuarial assumptions stated in
Section 4.10(a) above. For purposes of this
Section 4.10(b), "average remuneration" shall mean
the average annual remuneration of a Member, based
on amounts reported on Form W-2, for the five
consecutive Years of Vesting Service after
December 31, 1983 during which he received the
greatest aggregate remuneration from the Company
or an Associated Company, excluding any remunera-
tion for service after the last plan year with
respect to which the Plan is top-heavy.
(iii) The multiplier "1.25" in Subsections (c)(iii) and
(d)(i)(D) of Section 4.06 shall be reduced to
"1.0", and the dollar amount "$51,875" in Sub-
section (d)(i)(F) of Section 4.06 shall be reduced
to "$41, 500."
(c) If the Plan is top-heavy with respect to a plan year and
ceases to be top-heavy for a subsequent plan year, the
following provisions shall be applicable:
(i) The accrued benefit in any such subsequent plan
year shall not be less than the minimum accrued
benefit provided in Section 4.10(b)(ii) above,
computed as of the end of the most recent plan
year for which the Plan was top-heavy.
(ii) If a Member has completed less three Years of
Vesting Service on or before the last day of the
most recent plan year for which the Plan is top-
heavy, the vesting provisions of Section 4.03
shall again be applicable; provided, however, that
in no event shall the vested percentage of a
member's accrued benefit be less than the
percentage determined under Section 4.10(b)(i)
above as of the last day of the most recent plan
year for which the Plan was top-heavy. Any Member
with three or more Years of Vesting Service at the
time the Plan ceases to be top- heavy may elect
to have the vesting schedule contained in the
Section remain applicable.
4.11 Elective Rollovers
Notwithstanding any provision of the Plan to the contrary that
would otherwise limit a distributee's election under the Plan,
a distributee may elect, at the time and in the manner
prescribed by the Administrative Committee, to have all or
any portion of an lump sum distribution (except to the extent
such distribution is required under Section 401(a)(9) of the
Code) made on or after January 1, 1993 paid directly to an
eligible retirement plan specified by the distributee in a
direct rollover.
The following definitions will apply for purposes of this
section:
(a) Eligible retirement plan: An eligible retirement plan
is an individual retirement account described in Code
Section 408(a), an individual retirement annuity
described in Code Section 408(b), an annuity plan
described in Code Section 403(a) or a qualified trust
described in Code Section 401(a) that accepts the
distributee's eligible rollover distribution. However,
in the case of an eligible rollover distribution to the
Surviving Spouse, an eligible retirement plan is an
individual retirement account or individual retirement
annuity.
(b) Distributee: A distributee includes an Employee or
former Employee. In addition, the Spouse or Surviving
Spouse of an Employee or former Employee is a distributee
with regard to the interest of the Spouse or Surviving
Spouse.
(c) Direct rollover: A direct rollover is a payment by the
Plan to the eligible retirement plan specified by the
distributee.
ARTICLE 5 - ADMINISTRATION OF PLAN
5.01 The responsibility for carrying out all phases of the
administration of the Plan, except those phases connected with
the management of assets, shall be placed in a Administrative
Committee appointed from time to time by the Board of
Directors to serve at the pleasure of the Board of Directors.
The Board of Directors may also designate alternate members
to act in the absence of the regular members. The Board of
Directors shall designate a Chairman of the Administrative
Committee from among the regular members and a Secretary who
may be, but need not be, one of its members. Any member of
the Administrative Committee may resign by delivering his
written resignation to the Board of Directors and the
Secretary of the Administrative Committee.
5.02 The Administrative Committee is designated as a named
fiduciary within the meaning of Section 402(a) of the Employee
Retirement Income Security Act of 1974.
5.03 The Administrative Committee shall hold meetings upon such
notice, at such place or places, and at such time or times as
it may determine. The action of at least a majority of the
members, or alternate members, of such Committee expressed
from time to time by a vote at a meeting or in writing without
a meeting shall constitute the action of the Committee and
shall have the same effect for all purposes as if assented to
by all members of such Committee at the time in office. No
member of the Committee shall receive any compensation for his
service as such.
5.04 The Administrative Committee may authorize one or more of its
number or any agent to execute or deliver any instrument or
make any payment on its behalf; may retain counsel, employ
agents and such clerical, accounting and actuarial services
as it may require in carrying out the provisions of the Plan
for which it has responsibility; may allocate among its
members or to other persons all or such portion of its duties
hereunder as it, in its sole discretion, shall decide.
5.05 Subject to the limitations of the Plan, the Administrative
Committee from time to time shall establish rules or
regulations for the administration of the Plan and the
transaction of its business. The Administrative Committee
shall have the exclusive right, except as to matters which
the Board of Directors from time to time may reserve to
itself, to interpret the Plan and to decide any and all
matters arising hereunder, including the right to remedy
possible ambiguities, inequities, inconsistencies or
omissions. The Administrative Committee shall also have the
right to exercise powers otherwise exercisable by the Board
of Directors hereunder to the extent that the exercise of such
powers does not involve the management of Plan assets nor, in
the judgment of the Administrative Committee, a substantial
number of persons. In addition, where the number of persons
is deemed to be substantial, the Administrative Committee
shall have the further right to exercise such powers as may
be delegated to the Administrative Committee by the Board of
Directors.
Subject to applicable Federal and State Law, all inter-
pretations, determinations and decisions of the Administrative
Committee or the Board of Directors in respect of any matter
hereunder shall be final, conclusive and binding on all
parties affected thereby.
5.06 The Investment Committee appointed from time to time by the
Board of Directors shall be responsible for managing the
assets under the Plan. Said Committee is designated a named
fiduciary of the Plan within the meaning of Section 402(a) of
the Employee Retirement Income Security Act of 1974, and,
shall have the authority, powers and responsibilities
delegated and allocated to it by resolutions of Board of
Directors, including, but not by way of limitation, the
authority to establish one or more trust for the Plan pursuant
to trust instrument(s) approved or authorized by the
Committee -- subject to the provisions of such trust
instrument(s) -- to
(i) provide direction to the trustee(s) thereunder,
including, but not by way of limitation, the
direction of investment of all or part of the
Plan assets and the establishment of investment
criteria, and
(ii) appoint and provide for use of investment
advisors and investment managers.
In discharging its responsibility, the Committee shall
evaluate and monitor the investment performance of the
trustee(s) and investment manager, if any.
5.07 The members of the Committees shall use that degree of care,
skill, prudence and diligence in carrying out their duties
that a prudent man, acting in a like capacity and familiar
with such matters, would use in his conduct of a similar
situation. A member of either Committee shall not be liable
for the breach of fiduciary responsibility of another
fiduciary unless:
(i) he participates knowingly in, or knowingly
undertakes to conceal, an act or omission of
such other fiduciary, knowing such act or
omission is a breach; or
(ii) by his failure to discharge his duties solely
in the interest of the Members and other persons
entitled to benefits under the Plan, for the
exclusive purpose of providing benefits and
defraying reasonable expenses of administering
the Plan not met by the Company, he has enabled
such other fiduciary to commit a breach; or
(iii) he has knowledge of a breach by such other
fiduciary and does not make reasonable efforts
to remedy the breach; or
(iv) if the Committee of which he is a member
improperly allocates responsibilities among its
members or to others and he fails to review
prudently such allocation.
5.08 Actions by the Company
Any action which may be taken and any decision which may be
made by the Company under the Plan (including authorization
of Plan amendments or termination) may be made by: (a) the
Board of Directors; or (b) any committee to which the Board
of Directors delegates discretionary authority with respect
to the Plan.
ARTICLE 6 - CONTRIBUTIONS
6.01 It is the intention of the Company to continue the Plan and
make regular contributions to the Trustee each year in such
amounts as are necessary to maintain the Plan on a sound
actuarial basis and to meet minimum funding standards as
prescribed by any applicable law. However, subject to the
provisions of Article 8, the Company may reduce or suspend
its contributions for any reason at any time. Any
forfeitures shall be used to reduce the Company contributions
otherwise payable, and will not be applied to increase the
benefits any Member or other person would otherwise receive
under the Plan.
6.02 In the event that the Commissioner of Internal Revenue, on
timely application made after the Effective Date of the Plan
determines that the implementing trust does not constitute
an exempt trust, or refuses, in writing, to issue a
determination as to whether the trust is an exempt trust, the
Company's contributions made on or after the date for which
such determination or refusal is applicable shall be returned
to the Company without interest. In the event that all or
part of the Company's deductions under Section 404 of the
Internal Revenue for contributions to the Plan are disallowed
by the Internal Revenue Service, the portion of the
contributions to which such disallowance applies may be
returned to the Company without interest at its request.
Either such return shall be made within one year after either
the denial of qualification or disallowance of deductions,
as the case may be.
ARTICLE 7 - MANAGEMENT OF FUNDS
7.01 All the funds of the Plan shall be held by a Trustee or
Trustees including any member(s) of the Investment Committee,
appointed from time to time by said Committee in one or more
trusts under a trust instrument or instruments approved or
authorized by said Committee for use in providing the
benefits of the Plan and paying any expenses of the Plan not
paid directly by the Company; provided, however, that the
Investment Committee may, in its discretion, also enter into
any type of contract with any insurance company or companies
selected by it for providing benefits under the Plan.
7.02 Prior to the satisfaction of all liabilities with respect to
persons entitled to benefits, except for the payment of
expenses, no part of the corpus or income of the funds shall
be used for, or diverted to, purposes other than for the
exclusive benefit of Members and other persons who are or may
become entitled to benefits hereunder, or under any trust
instrument or under any insurance contract made pursuant to
this Plan.
7.03 Subject to applicable Federal and State law, no person shall
have any interest in or right to any part of the corpus or
income of the funds, except as and to the extent expressly
provided in the Plan and in any trust instrument or under any
insurance contract made pursuant to this Plan.
7.04 Subject to applicable Federal and State law, the Company
shall have no liability for the payment of benefits under the
Plan nor for the administration of the funds paid over to the
Trustee(s) or insurer(s) except as expressly provided under
this Plan.
7.05 Except to the extent permitted by applicable Federal law, no
part of the corpus or income of the trust shall be invested
in securities of the Company or of any Associated Company or
in real property and related personal property which is
leased to the Company or any Associated Company or in the
securities of the Trust or Trustees or their subsidiary
companies, if any.
7.06 Notwithstanding the foregoing, the Company may recover
without interest the amount of its contributions to the Plan
made on account of a mistake in fact, provided that such
recovery is made within one year after the date of such
contribution.
ARTICLE 8 - CERTAIN RIGHTS AND LIMITATIONS
The following provisions shall apply in all cases whenever a Member
or any other person is affected thereby.
8.01 The Company may terminate the Plan for any reason at any
time. Upon termination or partial termination of the Plan,
the rights of affected Members or other persons to benefits
accrued to date of such termination or partial termination,
to the extent then funded, shall be non-forfeitable. In the
event of termination or partial termination, the funds of the
Plan shall be used for the exclusive benefit of Members or
other persons who are or may become entitled to benefits
hereunder as of the date of such termination or partial
termination, except that any funds not required to satisfy
all liabilities of the Plan for benefits because of erroneous
actuarial calculations shall be returned to the Company only
upon termination of the trust. In the event of such
termination or partial termination, the funds of the Plan
shall be applied in the following manner:
First,
(i) each Member or other person in receipt of a
benefit on the date three years prior to the
date of Plan termination,
(ii) each Member who would have been in receipt of
a benefit on the date three years prior to such
date of Plan termination and if he had retired
prior to that date, and
(iii) each spouse, contingent annuitant or beneficiary
of a deceased Member who was in receipt of a
benefit on the date three years prior to the
date of Plan termination or would have been in
receipt of a benefit had he retired prior to
such date, shall be entitled to a share equal
to the reserve determined to be required for the
benefit accrued under the Plan to the date three
years prior to the date of such Plan
termination, or, if earlier, to the date of a
Member's retirement or termination of service,
and based on the provisions of the Plan as in
effect during the five year period ending on
such date of Plan termination when the said
benefit was or would have been the lowest, and
Second, each Member or other person in receipt of a benefit
and each Member who is eligible to retire on the date of Plan
termination shall be entitled to a share equal to the reserve
determined to be required for his "priority benefits", as
hereinafter defined, reduced by his shares under paragraph
First above; and
Third, each Member or former Member not eligible to retire
on the date of Plan termination but who has then met the
eligibility requirements for, or is then entitled to receive,
a vested benefit shall be entitled to 2 share equal to the
reserve determined to be required for his "priority
benefits", as hereinafter defined; and
Fourth, each Member or other person in receipt of a benefit
and each Member who is eligible to retire on the date of Plan
termination shall be entitled to a share equal to the reserve
determined to be required for his total retirement allowance,
reduced by his shares under paragraphs First and Second
above; and
Fifth, each Member or former Member not eligible to retire
on the date of Plan termination but who has then met the
eligibility requirements for, or is then entitled to receive,
a vested benefit shall be entitled to a share equal to the
reserve determined to be required for his total vested
benefit, reduced by his shares under paragraph Third above;
and
Sixth, each other Member not included in the above paragraphs
on the date of Plan termination shall be entitled to a share
equal to the reserve determined ;Lo be required for his
benefit accrued under the Plan.
Each spouse of a deceased Member, who is entitled to receive
a surviving spouse's benefit but who has not yet elected (or
who is not yet eligible to elect) to begin receiving it,
shall be entitled to a share equal to the reserve computed
to be required for such surviving spouse's benefit, and such
share shall be attributed to the appropriate priority
category described above in accordance with such rules and
regulations as the Pension Benefit Guaranty Corporation shall
prescribe.
If the funds are insufficient to provide in full for the
shares under paragraph First, Second or Third, each share
under each such paragraph First, Second or Third shall be
reduced pro rata.
If the funds are insufficient to provide in full for the
shares under paragraph Fourth, Fifth or Sixth after provision
for all shares under previous paragraphs, the funds available
for allocation under each such paragraph Fourth, Fifth or
Sixth shall be allocated first to provide the shares under
each such paragraph without regard to any benefits resulting
from any amendments to the Plan which became effective within
the 60 months preceding the date of Plan termination and, if
the funds are insufficient to provide such shares in full,
each such share shall be reduced pro rata. If the funds are
sufficient to provide such shares in full, any remaining
assets shall be allocated to provide the shares under such
paragraph based on the benefits resulting from each
successive amendment until the first such amendment as to
which the funds are insufficient, and the shares with respect
to such amendment shall be reduced pro rata.
The Administrative Committee may require that any such shares
be withdrawn in cash, or in immediate or deferred annuities
or other periodic payments as the Administrative Committee
may determine.
"Priority benefit" for purposes of paragraphs Second and
Third of this Section 8.01 shall mean
(a) the amount of a Member's retirement allowance or vested
benefit accrued under the Plan which has not resulted
from an amendment which was made, or became effective,
whichever is later, within the 60 month period ending
on the date of Plan termination, plus
(b) 20 per cent of the amount of his accrued retirement
allowance or vested benefit resulting from each
amendment made within the 60 month period prior to the
date of Plan termination, multiplied by the number of
full years that the Plan or such amendment has been in
effect, or, ii greater, an allowance of $20 per month
multiplied by such number of full years, but not in
excess of
(c) the total accrued retirement allowance or vested
benefit under the Plan as of the said date of Plan
termination, or
(d) the value of the monthly retirement allowance or vested
benefit payable to the Member for life equal to the
lesser of:
(i) his average monthly Compensation during the five
consecutive Years of Vesting Service affording
the highest such average, or
(ii) $750 multiplied by a fraction, the numerator of
which is the Social Security taxable wage base
in effect on the date of Plan termination had
the Social Security Act as in effect prior to
the Social Security Amendments of 1977 continued
in effect without amendment, and the denominator
of which is $13,200.
The Plan may not be merged or consolidated with, nor may its
assets or liabilities be transferred to, any other plan
unless each Member or other person entitled to a benefit
under the Plan would, if the resulting plan were then
terminated, receive a benefit immediately after the merger,
consolidation, or transfer which is equal to or greater than
the benefit he would have been entitled to receive
immediately before the merger, consolidation, or transfer,
if the Plan had then terminated.
8.02 (a) Subject to the provisions of Section 8.02(b),
notwithstanding any provision of the Plan which may be
to the contrary:
(i) in the event of Plan termination, the benefit
of any highly-compensated active employee or any
highly-compensated former employee (as those
terms are defined under Section 414(q) of the
Code) will be limited to one that is
nondiscriminatory under Section 401(a)(4) of the
Code; and
(ii) in any Plan Year beginning on or after
January 1, 1994, the payment of benefits to, or
on behalf of, a Restricted Employee shall not
exceed an amount equal to the payments that
would be made to, or on behalf of, the
Restricted Employee in that Plan Year under:
(A) a straight life annuity that is the
actuarial equivalent of the Accrued
Benefit and other benefits to which the
Restricted Employee is entitled under the
Plan (other than a Social Security
supplement); and
(B) the amount of the payments that the
Restricted Employee is entitled to receive
under a Social Security supplement, if
any.
(b) The restrictions contained in Section 8.02(a) will not
apply if any one of the following requirements is
satisfied:
(i) after payment to, or on behalf of, a Restricted
Employee of all benefits payable to, or on
behalf of, such Restricted Employee under the
Plan, the value of Plan assets equals or exceeds
110% of the value of current liabilities (as
defined in Section 412(l)(7) of the Code);
(ii) the value of the benefits payable to, or on
behalf of, the Restricted Employee is less than
1% of the value of current liabilities (as
defined in Section 412(l)(7) of the Code); or
(iii) the value of the benefits payable to, or on
behalf of, the Restricted Employee does not
exceed the amount described in
Section 411(a)(11)(A) of the Code.
(c) As used in this Section:
(i) "Restricted Employee" means any highly-
compensated active employee or highly-
compensated former employee; provided, however,
that a highly-compensated active employee or
highly-compensated former employee need not be
treated as a Restricted Employee in the current
Plan Year if he is not one of the 25
nonexcludable Employees or former Employees with
the largest amount of compensation in the
current or any prior Plan Year; and
(2) "benefit" includes, among other benefits, loans
in excess of amounts set forth in Code Section
72(p)(2)(A), any periodic income, any withdrawal
values payable to a living Employee or former
Employee and any death benefits not provided for
by insurance on the Employee's or former
Employee's life.
8.03 The establishment of the Plan shall not be construed as
conferring any legal rights upon any Employee or other person
for a continuation of employment, nor shall it interfere with
the rights of the Company to discharge any Employee or other
person and to treat him without regard to the effect which
such treatment might have upon him under the Plan.
Unless the Company otherwise provides under rules uniformly
applicable to all Employees similarly situated, the
Administrative Committee shall deduct from the amount of any
retirement allowance or vested benefit under the Plan, any
amount paid or payable to or on account of any Member under
the provisions of any present or future law, pension or
benefit scheme of any sovereign government, or any political
subdivision thereof or any fund or organization or government
agency or department on account of which contributions have
been made or premiums or taxes paid by the Company or
Affiliate with respect to any service which is included in
Years of Benefit Service for purposes of computation of
benefits under the Plan; provided, however, that pensions
payable for government service or benefits under Title II of
the Social Security Act are not to be used to reduce the
benefits otherwise provided under this Plan except as
specifically provided herein.
ARTICLE 9 - NONALIENATION OF BENEFITS
(a) Subject to any applicable Federal and State law, no
benefit under the Plan shall be subject in any manner
to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance or charge, and any
attempt so to do shall be void, except as specifically
provided in the Plan, nor shall any such benefit be in
any manner liable for or subject to garnishment,
attachment, execution or levy or liable for or subject
to the debts, contracts, liabilities, engagements or
torts of the person entitled to such benefit.
(b) Subject to applicable Federal and State law, in the
event that the Administrative Committee shall find that
any Member or other person who is or may become
entitled to benefits hereunder has become bankrupt or
that any attempt has been made to anticipate, alienate,
sell, transfer, assign, pledge, encumber or charge any
of his benefits under the Plan, except as specifically
provided in the Plan, or if any garnishment,
attachment, execution, levy or court order for payment
of money has been issued against any of his benefits
under the Plan, then such benefit shall cease and
terminate. In such event the Administrative Committee
shall hold or apply the payments to or for the benefit
of such Member or other person who is or may become
entitled to benefits hereunder, his spouse, children,
parents or other blood relatives, or any of them.
(c) Notwithstanding the foregoing provisions of this
Article 9, payment shall be made in accordance with the
provisions of any judgment, decree, or order which:
(i) creates for, or assigns to, a spouse, former
spouse, child or other dependent of a Member the
right to receive all or a portion of the
Member's benefits under the Plan for the purpose
of providing child support, alimony payments of
marital property rights to that spouse, child
or dependent,
(ii) is made pursuant to the domestic relations law
of any State (as such term is defined in Section
3(10) of the Employee Retirement Income Security
Act of 1974, (ERISA)),
(iii) does not require the Plan to provide any type
of benefit, or any option, not otherwise
provided under the Plan, and
(iv) otherwise meets the requirements of Section
206(d) of ERISA, as amended.
(d) The Administrative Committee shall resolve any
questions arising under this Article 9 on a basis
uniformly applicable to all Employees similarly
situated.
ARTICLE 10 - AMENDMENTS
10.01 Company's Right to Amend Plan
The Company reserves the right at any time and from time to
time and retroactively if deemed necessary or appropriate to
conform with governmental regulations or other policies, to
modify or amend in whole or in part any or all of the
provisions of the Plan or any Former Pension Plan or Prior
Plan; provided that no such modification or amendment shall
make it possible for any part of the funds of the Plan to be
used for, or diverted to, purposes other than for the
exclusive benefit of Members, spouses, or contingent
annuitants or other persons who are or may become entitled
to benefits hereunder prior to the satisfaction of all
liabilities with respect to them; and that no modification
or amendment shall be made which has the effect of decreasing
the accrued benefit of any Member or of reducing the
nonforfeitable percentage of the accrued benefit of a Member
attributable to Company contributions below that
nonforfeitable percentage thereof computed under the Plan as
in effect on the later of the date on which the amendment is
adopted or becomes effective.
10.02 Amendments to Vesting Schedule
If an amendment changes the vesting schedule provided in
Section 4.03, each Member with three or more Years of Vesting
Service may elect, during the period beginning when the
amendment is adopted and ending no earlier than the latest
of: (a) 60 days after the amendment's adoption; (b) 60 days
after the amendment's effective date; or (c) 60 days after
the Member is issued a written notice of the amendment, to
have his nonforfeitable rights computed without regard to the
amendment.
IN WITNESS WHEREOF, the Company has caused this Plan to be
executed as of the ____ day of December, 1994.
THE SCOTTS COMPANY
By: /s/ Robert A. Stern
Robert A. Stern, Vice President
- Human Resources
Exhibit 10(c)
Second Restatement of The Scotts Company
Profit Sharing and Savings Plan
SECOND RESTATEMENT OF
THE SCOTTS COMPANY
PROFIT SHARING AND SAVINGS PLAN
TABLE OF CONTENTS
Description Page No.
SECTION 1. DEFINITIONS 1
SECTION 2. PARTICIPATION 10
2.1. Eligibility 10
2.2. Breaks in Service 10
2.3. Change in Status 10
2.4. Erroneous Omission or Inclusion of Employee 11
2.5. Waiver of Participation 11
SECTION 3. CONTRIBUTIONS 11
3.1. Profit Sharing Contributions 11
3.2. Savings Contributions 12
3.3. Limits on Elective Profit Sharing and
Savings Contributions 13
3.4. Timing of Contributions 14
3.5. Rollover Contributions 14
3.6. Exclusive Benefit; Refund of Contributions 15
3.7. Annual Additions and Limitations 16
3.8. Fail-Safe Allocations of Profit Sharing
Contributions 17
SECTION 4. INVESTMENT 18
4.1. Investment Direction 18
4.2. Investment Funds 19
4.3. Investment in Employment Securities 19
4.4. Voting Employer Securities 19
4.5. Tender Offers 19
4.6. Investment Managers 20
4.7. Section 16 Persons 20
SECTION 5. VALUATIONS AND CREDITING 20
5.1. Valuations 20
5.2. Credits to and Charges Against Accounts 20
5.3. Expenses 21
SECTION 6. BENEFITS 21
6.1. Forms of Benefit Payments 21
6.2. Retirement Benefit 22
6.3. Death Benefit 23
6.4. In-Service Distributions 24
6.5. Advance Distribution for Hardship 24
6.6. Loans to Participants 25
6.7. Latest Commencement of Benefits 26
6.8. Post-Distribution Credits 26
6.9. Prevention of Escheat 27
SECTION 7. TOP-HEAVY PLAN PROVISIONS 27
7.1. Minimum Benefits 27
7.2. Adjustment in Benefit Limitations 27
SECTION 8. CLAIMS PROCEDURES 28
8.1. Application for Benefits 28
8.2. Appeal of Denial of Claim for Benefits 28
8.3. Effect of Administrator Decision 29
SECTION 9. ALLOCATION OF AUTHORITY AND RESPONSIBILITY 29
9.1. Authority and Responsibilities of the
Administrator 29
9.2. Authority and Responsibilities of the
Advisory Committee 29
9.3. Authority and Responsibilities of the
Investment Committee 30
9.4. Appointment and Tenure 30
9.5. Meetings; Majority Rule 30
9.6. Compensation 30
9.7. Indemnification 30
9.8. Authority and Responsibilities of the Company 31
9.9. Obligations of Named Fiduciaries 31
SECTION 10. AMENDMENT, TERMINATION, MERGERS AND
CONSOLIDATIONS OF THE PLAN 32
10.1. Amendment 32
10.2. Plan Termination 32
10.3. Permanent Discontinuance of Profit
Sharing Contributions 33
10.4. Suspension of Profit Sharing Contributions 33
10.5. Mergers and Consolidations of Plans 33
10.6. Transfers of Assets to or from this Plan 33
10.7. Effect of Amendment and Restatement 34
SECTION 11.PARTICIPATING EMPLOYERS34
11.1. Adoption by Affiliates 34
11.2. Employee Transfers 34
11.3. Discontinuance of Participation 34
SECTION 12. MISCELLANEOUS PROVISIONS 35
12.1. Nonalienation of Benefits 35
12.2. No Contract of Employment 36
12.3. Title to Assets 36
12.4. Effect of Admission 36
12.5. Payments to Minors, Etc. 36
12.6. Approval of Restatement by Internal
Revenue Service 36
12.7. Other Miscellaneous 37
SIGNATURES 37
FIRST RESTATEMENT OF
THE SCOTTS COMPANY
PROFIT SHARING AND SAVINGS PLAN
WHEREAS, The O.M. Scott & Sons Company established and
maintained The O.M. Scott & Sons Company Profit Sharing and Savings
Plan (the "Plan") in recognition of the contribution made to its
successful operation by its employees and for the exclusive benefit
of its eligible employees and their beneficiaries; and
WHEREAS, The O.M. Scott & Sons Company has been merged
into The Scotts Company, an Ohio corporation (the "Company"), which
assumes sponsorship of the Plan; and
WHEREAS, the Plan was previously amended and restated
effective January 1, 1987 and effective April 1, 1992; and
WHEREAS, under the terms of the Plan, the Company has
the power to amend the Plan, provided the Trustee consents to such
amendment if the provisions of the Plan affecting the Trustee are
amended; and
WHEREAS, the Company wishes to amend, restate and rename
the Plan to reflect the change in sponsorship and comply with
changes in the law;
NOW, THEREFORE, the Company hereby amends, restates and
renames the Plan as of the Effective Amendment Date to provide as
follows:
SECTION 1
DEFINITIONS
"Account" means the account maintained for a Participant,
which shall be the entire interest of the Participant in the Trust
Fund. Unless otherwise specified, the value of an Account shall
be determined as of the Valuation Date coincident with or next
following the occurrence of the event to which reference is made.
A Participant's Account shall consist of the Participant's
Non-Elective Profit Sharing Account, Elective Profit Sharing
Account, Savings Account and Rollover Account. A Participant shall
always be fully vested in his or her Account.
"Administrator" means the Company which is the
administrator of the Plan within the meaning of Section 3(16) of
ERISA. The Company may appoint Employees to perform ministerial
acts with respect to the administration of the Plan in their
capacity as Employees of the Company.
"Advisory Committee" means the person or committee
appointed as such by the Board of Directors under the provisions
of the Plan or, in the absence of such appointment, the Company.
"Affiliate" means any entity which, with the Employer,
constitutes either (a) a controlled group of corporations (within
the meaning of Section 414(b) of the Code), (b) a group of trades
or businesses under common control (within the meaning of Section
414(c) of the Code), (c) an affiliated service group (within the
meaning of Section 414(m) of the Code), or (d) a group of entities
required to be aggregated pursuant to Section 414(o) of the Code
and the regulations thereunder.
"Aggregation Group" means (a) the Plan, (b) any plan of
the Employer or any Affiliate in which a Key Employee or any of a
Key Employee's beneficiaries is a participant, (c) any plan which
enables any plan described in (a) or (b) to meet the requirements
of Sections 401(a)(4) or 410 of the Code, (d) any plan maintained
by the Employer or an Affiliate within the last five years ending
on the last day of the immediately preceding Plan Year and would,
but for the fact it was terminated, be part of the Aggregation
Group, and (e) any plan of the Employer or any Affiliate designated
by the Employer, the inclusion of which in the Aggregation Group
would not cause the Aggregation Group to fail to meet the
requirements of Sections 401(a)(4) and 410 of the Code.
"Beneficiary" means the beneficiary under the Plan of a
deceased Participant.
"Board of Directors" means the board of directors of the
Company.
"Break in Service" means failure by an Employee to
complete more than 500 Hours of Service during any Plan Year. Any
Break in Service shall be deemed to have commenced on the first day
of the Plan Year in which it occurs. In the case of an absence
from work which begins in any Plan Year beginning after December
31, 1984, if an Employee is absent from work for any period by
reason of pregnancy, the birth or placement for adoption of a
child, or for caring for a child for a period immediately following
the birth or placement, then for purposes of determining whether
a Break in Service has occurred (and not for purposes of
determining Years of Eligibility Service) such Employee shall be
credited with the Hours of Service which otherwise normally would
have been credited to such Employee, or, if the Administrator is
unable to determine the number of such Hours of Service, eight
Hours of Service for each day of absence, in any case not to exceed
501 Hours of Service. The Hours of Service credited to an Employee
under this definition shall be treated as Hours of Service in the
Plan Year in which the absence from work begins, if the Employee
would be prevented from incurring a Break in Service in such year
solely because of such Hours of Service or, in any other case, in
the immediately following year. The Administrator may require that
the Employee certify and/or supply documentation that his or her
absence is for one of the permitted reasons and the number of days
for which there was such an absence.
"Code" means the Internal Revenue Code of 1986, as now
or hereafter amended, construed, interpreted and applied by
regulations, rulings or cases.
"Company" means The O.M. Scott & Sons Company, a Delaware
corporation, until the merger of The O.M. Scott & Sons Company into
The Scotts Company, an Ohio corporation, and The Scotts Company
thereafter, and any successor thereto.
"Company Stock Fund" means the Investment Fund consisting
of Employer Securities and cash or cash equivalents needed to meet
the obligations of such fund or for the purchase of Employer
Securities.
"Compensation" means an Employee's wages, salaries, fees
for professional service and other amounts received for personal
services actually rendered in the course of employment with the
Employer (including, but not limited to, commissions paid salesmen,
compensation for services on the basis of a percentage of profits,
commissions on insurance premiums, tips and bonuses), but shall not
include distributions from a plan of deferred compensation (other
than an unfunded non-qualified plan), amounts realized from the
exercise of a non-qualified stock option or from the sale, exchange
or other disposition of stock acquired under a qualified stock
option plan, and other amounts which receive special tax benefits.
For purposes of identifying Highly Compensated Employees and
computing the Compensation Deferral Limit only, a Participant's
Compensation includes amounts which would have been includable in
the Participant's income but for the Participant's election to make
Savings Contributions, Elective Profit Sharing Contributions, and
contributions to a cafeteria plan maintained by the Employer,
determined in accordance with Section 414(s) of the Code.
Notwithstanding the foregoing, (i) effective for Plan Years
beginning after December 31, 1988, Compensation paid by the
Employer during any Plan Year in excess of $200,000 as adjusted at
the same time and in the same manner as under Section 415(d) of the
Code shall be excluded; and (ii) effective for Plan Years beginning
after December 31, 1993, Compensation paid by the Employer during
any Plan Year in excess of $150,000, adjusted under Section
401(a)(17) of the Code shall be excluded. In determining the
Compensation of a Participant for purposes of the $200,000 or
$150,000 limit, the family aggregation rules of Section 414(q)(6)
of the Code shall apply, except in applying such rules, the term
"family" shall include only the spouse of the Participant and any
lineal descendants of the Participant who have not attained age 19
before the close of the year. If, as a result of the application
of such rules, Compensation would exceed the adjusted $200,000 or
$150,000 limitation, then the limitation shall be prorated among
the affected persons in proportion to each such person's
Compensation as determined under this paragraph prior to the
application of this limitation.
"Compensation Deferral Limit" means the greater of (a)
the average actual contribution deferral percentage of Non-Highly
Compensated Employees multiplied by 1.25, or (b) the lesser of (i)
the average actual contribution deferral percentage of Non-Highly
Compensated Employees multiplied by two, or (ii) the average actual
contribution deferral percentage of Non-Highly Compensated
Employees plus 2%, as determined under Section 401(k)(3) of the
Code and the regulations thereunder. A Participant's actual
contribution deferral percentage is the Savings Contributions and
Elective Profit Sharing Contributions made for the Participant
which may be taken into account for the Plan Year for purposes of
Section 401(k)(3) of the Code, divided by the Participant's
Compensation while a Participant during the Plan Year. All or any
portion of the Non-Elective Profit Sharing Contributions for the
Plan Year may be included in the calculation of the Compensation
Deferral Limit for the Plan Year at the option of the Employer.
"Effective Amendment Date" means: (a) in the case of any
change in the Plan required by a change in the Code or ERISA, the
date on which such change in the Plan is required to be effective;
(b) in the case of any change in the Plan for which an effective
date is specifically stated elsewhere in the Plan, such date; and
(c) in the case of any other change in the Plan, April 1, 1992.
"Elective Profit Sharing Account" means the portion of
the Account of a Participant consisting of Elective Profit Sharing
Contributions, as adjusted under the Plan.
"Elective Profit Sharing Contribution" means the portion
of the Profit Sharing Pool which is allocated to the Participant
and which is contributed to the Plan under Section 3.1 on behalf
of the Participant, as a result of an absence of an election by the
Participant to receive such amount in cash.
"Eligible Compensation" means, for the period during a
Plan Year that an Employee is a Participant, amounts paid by the
Employer plus amounts which would have been includable in a
Participant's income but for a Participant's election to make
Savings Contributions and contributions to a cafeteria plan
maintained by the Employer, which are or would have been (a) wages,
(b) salaries and executive, management and sales incentives, not
in excess of the maximum of an Employee's salary band, (c)
overtime, and (d) commissions. Notwithstanding the foregoing, a
Participant's Eligible Compensation shall not include amounts paid
in lieu of Elective Profit Sharing Contributions and shall not
exceed the lesser of (i) the maximum of Zone 2 in Band F as defined
in The Scotts Company Salaried, Exempt and Office Technical
Salaried Non-Exempt Compensation Policy and The Scotts Company Job
Evaluation Plan, or (ii) effective for Plan Years starting before
January 1, 1994 $200,000 as adjusted at the same time and in the
same manner as under Section 415(d) of the Code and effective for
Plan Years starting on or after January 1, 1994, $150,000 as
adjusted under Section 401(a)(17) of the Code. In determining the
Eligible Compensation of a Participant for purposes of this
limitation, the family aggregation rules of Section 414(q)(6) of
the Code shall apply, except in applying such rules, the term
"family" shall include only the spouse of the Participant and any
lineal descendants of the Participant who have not attained age 19
before the close of the year. If, as a result of the application
of such rules, Compensation would exceed the adjusted $200,000 or
$150,000 limitation, then the limitation shall be prorated among
the affected persons in proportion to each such person's Eligible
Compensation as determined under this paragraph prior to the
application of this limitation.
"Eligibility Computation Period" means (a) the initial
Eligibility Computation Period of 12 consecutive months commencing
on an Employee's most recent date of employment commencement, and
(b) each and every full Plan Year, commencing with the Plan Year
in which falls the last day of an Employee's initial Eligibility
Computation Period, during which the Employee is in the service of
the Employer.
"Eligible Rollover Distribution" means any distribution
of all or any portion of the balance to the credit of the
distributee, except that an eligible rollover distribution does
not include: (a) any distribution that is one of a series of
substantially equal periodic payments (not less frequently than
annually) made for the life (or life expectancy) of the distributee
or the joint lives (or joint life expectancies) of the distributee
and the distributee's designated beneficiary, or for a specified
period of ten years or more; (b) any distribution to the extent
such distribution is required under section 401(a)(9) of the Code;
and (c) the portion of any distribution that is not includible in
gross income (determined without regard to the exclusion for net
unrealized appreciation with respect to employer securities).
"Employee" means any person employed by the Employer or
an Affiliate working with the Scotts product line or with corporate
management and administration, other than persons (a) whose terms
and conditions of employment are determined by collective
bargaining with a third party, with respect to whom inclusion in
this Plan has not been provided for in the collective bargaining
agreement setting forth those terms and conditions of employment,
(b) who are nonresident aliens described in Section 410(b)(3)(C)
of the Code, and (c) who are Leased Employees.
"Employer" means the Company and any Affiliate which,
with the consent of the Board of Directors, adopts this Plan and
joins in the corresponding Trust Agreement.
"Employer Securities" means stock or other securities of
the Employer or an Affiliate permitted to be held by the Plan under
ERISA and the Code.
"Employer Securities Contribution Fund" means a fund
consisting of Employer Securities contributed by the Employer and
held by the Trustee in accordance with the Plan.
"Enrollment Date" means the date on which an Employee
first becomes a Participant and the first day of each quarter of
the Plan Year and any additional dates designated by the
Administrator as dates on which Participants may enter into or
modify elections to make Savings Contributions and/or change their
investment directions.
"ERISA" means the Employee Retirement Income Security
Act of 1974 (P.L. No. 93-406), as now existing or hereafter
amended, and as now or hereafter construed, interpreted and applied
by regulations, rulings or cases.
"Highly Compensated Employee" means any Employee who
performs service for the Employer during the Plan Year of
determination and who, during the prior Plan Year (a) received
Compensation in excess of $75,000 (as adjusted pursuant to Section
415(d) of the Code), (b) received Compensation in excess of $50,000
(as adjusted pursuant to Section 415(d) of the Code) and was a
member of the top-paid group of the Employer and its Affiliates for
such year, or (c) was an officer of the Employer and received
Compensation during such year that is greater than 50 percent of
the dollar limitation in effect under Section 415(b)(1)(A) of the
Code (not to exceed 50 officers). The term Highly Compensated
Employee also includes (i) an Employee who would have been a Highly
Compensated Employee under the preceding sentence if the
determination was made based on the current Plan Year and if he or
she is one of the 100 people who received the most Compensation
from the Employer and its Affiliates during the current Plan Year,
and (ii) an Employee who is a 5% owner at any time during the
current Plan Year or the prior Plan Year. The number and
identities of Employees in the top-paid group will be determined
without regard to minimum service requirements. If an Employee is,
during the current Plan Year or prior Plan Year, a family member
of either a 5% owner or a Highly Compensated Employee who is one
of the 10 most Highly Compensated Employees ranked on the basis of
Compensation paid by the Employer and its Affiliates during such
year, then the family member and the 5% owner or top-ten Highly
Compensated Employee shall be aggregated. In such case, the family
member and 5% owner or top-ten Highly Compensated Employee shall
be treated as a single Employee receiving Compensation and Plan
contributions equal to the sum of such Compensation and
contributions of the family member and 5% owner or top-ten Highly
Compensated Employee. For purposes of this definition, family
member includes the spouse, lineal ascendants and descendants of
the Employee and the spouses of such lineal ascendants and
descendants. The determination of who is a Highly Compensated
Employee shall be made in accordance with Section 414(q) of the
Code and the regulations thereunder.
"Hour of Service" means (a) each hour for which an
Employee is paid or entitled to payment for the performance of
duties for the Employer or an Affiliate during the applicable
computation period, (b) each hour for which an Employee is paid or
entitled to payment by the Employer or an Affiliate on account of
a period of time during which no duties are performed (irrespective
of whether the employment relationship has terminated) due to
vacation, holiday, illness, incapacity (including disability),
layoff, jury or military duty, or leave of absence, and (c) each
hour for which back pay, irrespective of mitigation of damages, is
either awarded or agreed to by the Employer or an Affiliate. In
computing Hours of Service on a weekly or monthly basis when a
record of hours of employment is not available, the Employee shall
be assumed to have worked 40 hours for each full week of employment
and eight hours for each day in less than a full week of
employment, regardless of whether the Employee has actually worked
fewer hours. Notwithstanding the foregoing, (i) not more than 501
Hours of Service shall be credited to an Employee on account of any
single continuous period during which the Employee performs no
duties, (ii) no credit shall be granted for any period with respect
to which an Employee receives payment or is entitled to payment
under a plan maintained solely for the purpose of complying with
applicable workers' compensation or disability insurance laws, and
(iii) no credit shall be granted for a payment which solely
reimburses an Employee for medical or medically related expenses
incurred by the Employee. In the case of a person who was a Leased
Employee and who subsequently becomes an Employee, hours of service
as a Leased Employee shall count as Hours of Service as an
Employee. Determination and crediting of Hours of Service shall be
made under Department of Labor Regulations Sections 2530.200b-2 and
3.
"Investment Committee" means the person or committee
appointed as such by the Board of Directors under the provisions
of the Plan or, in the absence of such appointment, the Company.
"Investment Funds" means the funds described in Section
4.2.
"Key Employee" has the meaning set forth in
Section 416(i) of the Code and the regulations thereunder.
"Leased Employee" means any person (other than an
Employee) who pursuant to an agreement between the Employer and
any other person ("leasing organization") has performed services
for the Employer (or for the Employer and related persons
determined in accordance with Section 414(n)(6) of the Code) on a
substantially full time basis for a period of at least one year,
and such services are of a type historically performed by Employees
in the business field of the Employer. Contributions or benefits
provided a Leased Employee by the leasing organization which are
attributable to services performed for the Employer shall be
treated as provided by the Employer. A person who would otherwise
be considered a Leased Employee shall not be considered a Leased
Employee if (a) such person is covered by a money purchase pension
plan providing (i) a nonintegrated employer contribution rate of
at least 10% of compensation, as defined in Section 415(c)(3) of
the Code, but including amounts contributed pursuant to a salary
reduction agreement which are excludable from the person's gross
income under Section 125, Section 402(a)(8), Section 402(h) or
Section 403(b) of the Code, (ii) immediate participation, and (iii)
full and immediate vesting; and (b) Leased Employees do not
constitute more than 20 percent of the Employer's Non-Highly
Compensated Employees.
"Non-Elective Profit Sharing Account" means the portion
of the Account of a Participant consisting of Non-Elective Profit
Sharing Contributions plus the amount in the Account of the
Participant prior to January 1, 1987 (excluding any portion as to
which the Participant had a distribution election in effect on
January 1, 1987), as adjusted under the Plan.
"Non-Elective Profit Sharing Contribution" means the
portion of the Profit Sharing Pool which the Participant does not
have the opportunity to elect to receive in cash and which is
automatically contributed to the Plan on behalf of the Participant.
"Non-Highly Compensated Employee" means any Employee
other than a Highly Compensated Employee.
"Non-Key Employee" means any Employee other than a Key
Employee.
"Participant" means any person who has been admitted to
participation in the Plan and has not ceased participation in the
Plan.
"Plan" means the Second Restatement of The Scotts Company
Profit Sharing and Savings Plan as set forth herein and as from
time to time amended. The Plan is a profit sharing and stock bonus
plan.
"Plan Year" means the calendar year.
"Profit Sharing Contribution" means a Non-Elective Profit
Sharing Contribution or an Elective Profit Sharing Contribution.
"Profit Sharing Pool" means for a Plan Year the dollar
amount which the Company determines is available for Non-Elective
Profit Sharing Contributions and, at the option of Participants,
Elective Profit Sharing Contributions or cash compensation.
"Rollover Account" means the portion of the Account of
a Participant consisting of Rollover Contributions, as adjusted
under the Plan.
"Rollover Contribution" means the amount contributed by
an Employee as a rollover contribution in accordance with Section
402 of the Code.
"Savings Contribution" means an Employer contribution to
the Plan in an amount equal to the reduction in the Participant's
Compensation pursuant to the Participant's election under the Plan.
"Savings Account" means the portion of the Account of a
Participant consisting of Savings Contributions, as adjusted under
the Plan.
"Section 16 Person" means (a) any member of the board of
directors of The Scotts Company, (b) The Scotts Company's
president, principal financial officer, principal accounting
officer (or, if there is no such accounting officer, the
controller), any vice-president in charge of a principal business
unit, division or function, or any other officer or other person
who performs a significant policy making function, or (c) any
person who is the beneficial owner of more than 10% of the
outstanding common stock of The Scotts Company. The principal
financial officer of The Scotts Company shall designate those
persons who are Section 16 Persons and deliver a list of the
Section 16 Persons eligible to participate in the Plan to the
Administrator from time to time or at the request of the
Administrator. Such list of Section 16 Persons will be conclusive
on the Administrator and the sole source for determining who is a
Section 16 Person, and the Administrator shall not be required to
further investigate whether a person is a Section 16 Person.
"Termination Date" means the date on which an Employee
quits, is discharged, retires, dies or otherwise terminates
employment. For purposes of this Plan, a Participant who has
ceased to perform services for the Employer shall be deemed to
incur a Termination Date on the date he or she is found by the
Company to be permanently and totally disabled under The Scotts
Company Long Term Disability Plan.
"Top-Heavy Plan" has the meaning set forth in Section
416 of the Code and the regulations thereunder. For purposes of
determining whether the Plan is a Top-Heavy Plan, the determination
date is, for the first Plan Year, the last day of the Plan Year and
for each succeeding Plan Year, the last day of the preceding Plan
Year.
"Trust" means the trust created by the Trust Agreement.
"Trust Agreement" means The O.M. Scott & Sons Company
Profit Sharing Plan Trust Agreement as the same presently exists
and as it may from time to time hereafter be amended.
"Trust Fund" means all of the assets of the Plan held by
the Trustee under the Trust Agreement.
"Trustee" means the party or parties acting as such under
the Trust Agreement.
"Valuation Date" means the last day of each quarter of
the Plan Year and each interim date as of which the Administrator
directs the allocation of distributions, contributions and earnings
of the Trust Fund.
"Year of Eligibility Service" means an Eligibility
Computation Period in which a person has 1,000 or more Hours of
Service.
SECTION 2
PARTICIPATION
2.1. Eligibility. An Employee shall become a
Participant on the first day of the month coincident with or next
following the date on which the Employee completes one Year of
Eligibility Service; provided, that no person shall become a
Participant if such person is no longer an Employee on the date as
of which such person's admission to participation would otherwise
have become effective. Each Employee who becomes eligible for
admission to participation in this Plan shall complete such forms
and provide such data as are reasonably required by the
Administrator. Participation shall cease on a Participant's
Termination Date.
2.2. Breaks in Service. If an Employee had no Account
attributable to Profit Sharing Contributions before any period of
consecutive Breaks in Service, and if the number of consecutive
Breaks in Service within such period equals or exceeds five, the
Employee shall upon reemployment be required to satisfy the
requirements for participation in the Plan as though such Employee
had not previously been an Employee. If any Years of Eligibility
Service are not required to be taken into account because of a
period of Breaks in Service to which this Section applies, such
Years of Eligibility Service shall not be taken into account in
applying this Section to any subsequent Breaks in Service.
2.3. Change in Status. If a person who has been in the
employ of the Employer or an Affiliate in a category of employment
not eligible for participation in this Plan subsequently becomes
an Employee by reason of a change in status to a category of
employment eligible for participation, such person shall become a
Participant as of the date on which the change in status occurs,
if, on such date, such person has otherwise satisfied the
requirements for participation in the Plan.
2.4. Erroneous Omission or Inclusion of Employee. If,
in any Plan Year, any Employee who should have been included as a
Participant in the Plan is erroneously omitted and discovery of
such omission is not made until after a Profit Sharing Contribution
for the Plan Year has been made and allocated, the Employer shall
make a contribution with respect to the omitted Employee equal to
the amount which the Employee would have received as an allocation
had the Participant not been omitted. If, in any Plan Year, any
person who should not have been included as a Participant in the
Plan is erroneously included and discovery of such incorrect
inclusion is not made until after a contribution for the Plan Year
has been made and allocated, the Employer shall not be entitled to
recover the contribution made with respect to the ineligible
person, and any earnings thereon, unless no deduction is allowable
with respect to such contribution. The amount contributed with
respect to the ineligible person, together with any earnings
thereon, shall be applied to reduce Profit Sharing Contributions
for the Plan Year in which the discovery is made.
2.5. Waiver of Participation. The Administrator shall
have the right to permit an Employee to waive participation in the
Plan on a year-to-year, nondiscriminatory basis.
SECTION 3
CONTRIBUTIONS
3.1. Profit Sharing Contributions.
3.1.1. The Employer intends to create a Profit
Sharing Pool for each Plan Year during which the Plan is in effect
in such amount as the Employer in its absolute discretion shall
timely determine. This provision shall not be construed as
requiring the Employer to create a Profit Sharing Pool for any
specific Plan Year. The Profit Sharing Pool shall be allocated as
of the last day of the Plan Year among all Participants who are
Employees on the last day of the Plan Year, in proportion to the
Eligible Compensation of each such Participant to the Eligible
Compensation of all such Participants for the Plan Year. In the
Plan Year of his or her Termination Date, a Participant who retires
under The Scotts Company Employees' Pension Plan, dies or incurs
a permanent and total disability under The Scotts Long Term
Disability Plan shall share in the Profit Sharing Pool as if he or
she were an Employee on the last day of the Plan Year.
3.1.2. One-half of the amount of the Profit Sharing
Pool allocated to a Participant shall be contributed by the
Employer to the Plan as a Non-Elective Profit Sharing Contribution
and allocated to the Participant's Non-Elective Profit Sharing
Account. The remainder of the Profit Sharing Pool allocated to the
Participant shall be paid to the Participant as a bonus or
contributed by the Employer to the Plan as an Elective Profit
Sharing contribution and allocated to the Participant's Elective
Profit Sharing Account, in accordance with the Participant's profit
sharing election.
3.1.3. Each Participant shall have the opportunity
to make a profit sharing election to have one-half of his or her
share in the Profit Sharing Pool, if any, (a) if the Participant
so elects, paid to the Participant as a bonus, or (b) if the
Participant so elects or fails to make an election, contributed to
the Plan and allocated to the Participant's Elective Profit Sharing
Account. A Participant may enter into or modify his or her profit
sharing election effective as to the current Plan Year by
submitting a new profit sharing election to the Administrator at
least 30 days prior to the last day of the Plan Year (or such other
date as the Administrator may establish for purposes of
administrative convenience). A profit sharing election for a prior
Plan Year may not be modified and a profit sharing election for the
current Plan Year shall not be effective for future Plan Years.
The Administrator may limit the Elective Profit Sharing
Contributions of some or all Highly Compensated Employees, in such
manner as the Administrator determines, so as to comply with a
projected Compensation Deferral Limit as provided in Section 401(k)
of the Code and the regulations thereunder.
3.2. Savings Contributions. Each Participant shall be
entitled to make a Savings Contribution enrollment election, which
shall be in the form prescribed by the Administrator. The
enrollment election shall provide for a reduction of the
Participant's Compensation, in whole percentage points up to 15%
of Compensation, and a corresponding contribution to the
Participant's Savings Account as a Savings Contribution. A
Participant may enter into or modify his or her enrollment election
as of any Enrollment Date by submitting a new enrollment election
to the Administrator at least 30 days prior to the Enrollment Date
(or such greater or lesser period prior to the Enrollment Date as
the Administrator may establish for purposes of administrative
convenience). A Participant may terminate his or her enrollment
election at any time upon 30 days prior written notice (or such
greater or lesser period as the Administrator may establish for
purposes of administrative convenience).
3.3. Limits on Elective Profit Sharing and Savings
Contributions.
3.3.1. A Participant's Savings Contributions for
a calendar year, plus the Elective Profit Sharing Contributions
actually made for the Participant during the calendar year, shall
not exceed the limit in Section 402(g) of the Code. Any Savings
Contribution which, when combined with the Participant's Elective
Profit Sharing Contribution and deferrals under any other plans
sponsored by an Affiliate, exceeds the limit in Section 402(g) of
the Code shall be returned together with earnings for the Plan Year
to the Participant not later than the April 15 following the close
of the calendar year for which the contribution was made. If a
Participant's Savings Contribution, Elective Profit Sharing
Contribution and deferrals under plans not sponsored by Affiliates
exceed the limit in Section 402(g) of the Code, the Participant
may assign to the Plan any portion of the excess by notifying the
Administrator in writing of such excess by March 31 of the
following year. Any excess and income allocatable to such excess
for the Plan Year shall be distributed to the Participant no later
than the April 15 of the following year.
3.3.2. In the case of a Highly Compensated
Employee, the Savings Contributions, Elective Profit Sharing
Contributions and, to the extent they are taken into account in
calculating the Compensation Deferral Limit, Non-Elective Profit
Sharing Contributions made for the Participant which may be taken
into account for the Plan Year for purposes of Section 401(k)(3)
of the Code, shall not exceed the Compensation Deferral Limit.
The Administrator may limit the Savings Contributions of some or
all Highly Compensated Employees, in such manner as the
Administrator determines, so as to comply with a projected
Compensation Deferral Limit as provided in Section 401(k) of the
Code and the regulations thereunder. Any Savings Contribution
and/or Elective Profit Sharing Contribution which exceeds the
Compensation Deferral Limit shall be returned together with
earnings for the Plan Year to the Participant within two and
one-half (2-1/2) months after the close of the Plan Year for which
the contribution was made.
3.3.3. The amount of excess contributions for a
Highly Compensated Employee shall be determined in the following
manner: first, the actual deferral ratio of the Highly Compensated
Employee(s) with the highest actual deferral ratio is reduced to
the extent necessary to meet the Compensation Deferral Limit or
cause such ratio to be equal to the actual deferral ratio of the
Highly Compensated Employee with the next highest ratio. Second,
the process is repeated until the Compensation Deferral Limit is
met. The amount of excess contributions for a Highly Compensated
Employee is then equal to the total of elective and other
contributions taken into account in computing the Compensation
Deferral Limit, minus the product of the Highly Compensated
Employee's contribution ratio as determined above and the Highly
Compensated Employee's Compensation.
3.3.4. If the Highly Compensated Employee's actual
deferral ratio is determined by combining the contributions and
compensation of all family members, then the actual deferral ratio
is reduced in accordance with the "leveling" method described in
Section 1.401(k)-1(f)(2) of the regulations under the Code and the
excess contributions for the family unit are allocated among the
family members in proportion to the contributions of each family
member that have been combined. If the Highly Compensated
Employee's actual deferral ratio is determined by combining the
contributions and compensation of only those family members who are
Highly Compensated Employees without regard to family aggregation,
then the actual deferral ratio is reduced in accordance with the
leveling method but not below the actual deferral ratio of eligible
family members who are Non-Highly Compensated Employees. Excess
contributions are determined by taking into account the
contributions of the eligible family members who are Highly
Compensated Employees without regard to family aggregation and are
allocated among such family members in proportion to their
contributions. If further reduction of the actual deferral ratio
is required, excess contributions resulting from this reduction
are determined by taking into account the contributions of all
eligible family members and are allocated among such family members
in proportion to their contributions.
3.3.5. The amount of excess contributions to be
distributed shall be reduced by excess deferrals previously
distributed for the taxable year ending in the same Plan Year and
excess deferrals to be distributed for a taxable year will be
reduced by excess contributions previously distributed for the Plan
Year beginning in such taxable year.
3.4. Timing of Contributions. All Savings Contributions
shall be made no later than the earlier of (a) the earliest date
after the reduction of Participants' Compensation on which the
Savings Contributions can reasonably be segregated from the
Employer's general assets, or (b) 90 days after the reduction of
Participants' Compensation. Non-Elective Profit Sharing
Contributions and Elective Profit Sharing Contributions shall be
made no later than the due date (including extensions) of the
income tax return of the Company for the fiscal year of the Company
including the last day of the Plan Year for which such contribution
is made. All contributions shall be paid over to the Trustee and
shall be invested by the Trustee in accordance with the Plan and
the Trust Agreement.
3.5. Rollover Contributions.
3.5.1. An Employee may roll over a cash
distribution from a qualified plan or conduit individual retirement
account to this Plan, provided that (a) the distribution is (i)
received from a qualified plan as an Eligible Rollover
Distribution, and (ii) rolled over directly from the qualified plan
or within the 60 days following the date the Employee received the
distribution, or (b) the distribution is (i) received from a
conduit individual retirement account which has no assets other
than assets attributable to an Eligible Rollover Distribution or
a "qualified total distribution" within the meaning of Section 402
of the Code as in effect prior to January 1, 1993, which was
deposited in the conduit individual retirement account within 60
days of the date the Employee received the distribution, plus
earnings, (ii) eligible for tax free rollover to a qualified plan,
and (iii) rolled over within the 60 days following the date the
Employee received the distribution. The Employee shall present a
written certification to the foregoing requirements to the
Administrative Committee. The Administrative Committee may also
require the Employee to provide an opinion of counsel that the
amount rolled over meets the requirements of this Section.
3.5.2. The foregoing contributions, which shall be
Rollover Contributions, shall be accounted for separately and shall
be credited to an Employee's Rollover Account. An Employee shall
not be permitted to withdraw any portion of his or her Rollover
Account until the earlier of the date the Employee attains age
59-1/2 or such time as the Employee is otherwise eligible to make
a withdrawal from or receive a distribution of his or her Account.
An Employee who has made a Rollover Contribution shall be deemed
to be a Participant with respect to his or her Rollover Account
even if he or she is not otherwise a Participant.
3.6. Exclusive Benefit; Refund of Contributions.
3.6.1. All contributions made by the Employer are made
for the exclusive benefit of the Participants and their
Beneficiaries, and such contributions shall not be used for or
diverted to purposes other than for the exclusive benefit of the
Participants and their Beneficiaries, including the costs of
maintaining and administering the Plan and Trust.
3.6.2. Notwithstanding any other provision of this
Section, amounts contributed to the Trust by the Employer may be
refunded to the Employer, to the extent that such refunds do not,
in themselves, deprive the Plan of its qualified status, under the
following circumstances and subject to the following limitations:
(a) to the extent that a federal income tax deduction is disallowed
for any contribution made by the Employer, the Trustee shall refund
to the Employer the amount so disallowed within one year of the
date of such disallowance; (b) if a contribution is made, in whole
or in part, by reason of a mistake of fact, there shall be returned
to the Employer so much of such contribution as is attributable to
the mistake of fact within one year after the payment of the
contribution to which the mistake applies; and (c) except as
provided in the event of an erroneous allocation to an ineligible
person, if the Plan initially or as a result of an amendment fails
to satisfy the qualification requirements of Section 401(a) of the
Code, and if the Employer declines to amend the Plan to satisfy
such qualification requirements, contributions made prior to the
determination that the Plan has failed to qualify shall be returned
to the Employer within one year of denial of qualification.
3.6.3. Notwithstanding any other provision of this
Section, no refund shall be made to the Employer which is
specifically chargeable to the Account of any Participant in excess
of 100% of the amount in such Account nor shall a refund be made
by the Trustee of any funds, otherwise subject to refund hereunder,
which have been distributed to any Participant or Beneficiary. If
any such distributions become refundable, the Employer shall have
a claim directly against the distributees to the extent of the
refund to which it is entitled.
3.6.4. All refunds under this Section shall be limited
in amount, circumstance and timing by the provisions of Section
403 of ERISA, and no such refund shall be made if, solely because
of such refund, the Plan would cease to be a qualified plan under
Section 401(a) of the Code.
3.7. Annual Additions and Limitations.
3.7.1. Notwithstanding any other provisions of this Plan,
in no event shall the annual addition to a Participant's Account
for any Plan Year exceed the lesser of $30,000 (or such other limit
as may be the maximum permitted under Section 415 of the Code and
regulations issued thereunder) or 25% of such Participant's
Compensation. All amounts contributed to any defined contribution
plan maintained by the Employer or any Affiliate shall be
aggregated with contributions under this Plan in computing any
Employee's annual additions limitation. In no event shall the
amount allocated to the Account of any Participant be greater than
the maximum amount allowed under Section 415 of the Code with
respect to any combination of plans without disqualification of any
such plan. Any adjustment to the dollar limitation set forth in
this Section shall be effective only for the Plan Years ending on
or after January 1 of the year for which the adjustment is made.
For purposes of this Section, the term "annual addition" shall mean
the sum of Non-Elective Profit Sharing Contributions, Elective
Profit Sharing Contributions and Savings Contributions allocable
to the Participant's Account for the Plan Year.
3.7.2. In the event a Participant is a participant in
any other defined contribution plan and/or defined benefit plan
sponsored by the Employer or any Affiliate, and the sum of the
"defined benefit plan fraction" and the "defined contribution plan
fraction" would exceed 1.0 but for the operation of this Section,
the "defined contribution fraction" shall be reduced so that the
sum of the fractions shall not exceed 1.0. For purposes of this
subsection, the "defined benefit plan fraction" is the ratio that
(a) the Participant's projected annual retirement benefit as of the
end of the Plan Year under the defined benefit plans bears to (b)
the lesser of (i) the product of 1.25 multiplied by the dollar
limitation in effect under Section 415(b)(1)(A) of the Code for
such Plan Year, or (ii) the product of 1.4 multiplied by the
maximum amount permitted under Section 415(b)(1)(B) of the Code for
such Plan Year. The "defined contribution plan fraction" is the
ratio of (a) the Participant's annual additions for the Plan Year
to the defined contribution plans bears to (b) the lesser of the
following amounts determined for such Plan Year and for each prior
Year of Service with the Employer: (i) the product of 1.25
multiplied by the dollar limitation in effect under Section
415(c)(1)(A) of the Code for such year, or (ii) the product of 1.4
multiplied by the maximum amount permitted under Section
415(c)(1)(B) of the Code for such year.
3.7.3. If the annual addition to a Participant's Account
exceeds the amount permitted under this Section due to a reasonable
error in estimating a Participant's Compensation or in determining
the amount of Savings Contributions and Elective Profit Sharing
Contributions which may be made under the limits of Section 415 of
the Code, such excess shall be disposed of as follows:
(a) At the discretion of the Administrator, Savings
Contributions and Elective Profit Sharing Contributions will be
returned to the Participant;
(b) If the Participant is a Participant on the last
day of the Plan Year, such excess shall be applied to reduce
Non-Elective Profit Sharing Contributions for such Participant in
subsequent Plan Years, and no Profit Sharing Contribution shall be
made to such Participant's Account until such excess annual
addition is eliminated;
(c) If at any time while an excess annual addition
is being applied or would be applied to reduce future Non-Elective
Profit Sharing Contributions for a Participant, such Participant
ceases to be a Participant, then such excess annual addition shall
be held unallocated in a suspense account for the Plan Year and
shall be allocated in the next Plan Year as an Employer
contribution, and no contribution which would constitute an annual
addition shall be made until any such suspense account is
completely allocated; and
(d) No suspense account maintained under this Section
shall participate in allocations of gains and losses of the
Investment Funds unless otherwise directed by the Administrator.
3.8. Fail-Safe Allocations of Profit Sharing Contributions.
Notwithstanding anything in the Plan to the contrary, for Plan
Years beginning after December 31, 1989, if the Plan would
otherwise fail to meet the requirements of Section 401(a)(4) or
Section 410(b) of the Code and the regulations thereunder because
Non-Elective Profit Sharing Contributions have not been allocated
to a sufficient number or percentage of Participants for a Plan
Year, then the group of Participants eligible to share in the
Non-Elective Profit Sharing Contribution for the Plan Year shall
be expanded to include the minimum number of former Participants
(who are not employed on the last day of the Plan Year and so would
not otherwise be eligible to share in the Non-Elective Profit
Sharing Contribution) as are necessary to satisfy the applicable
test. The specific former Participants who shall become eligible
under the terms of this paragraph shall be those former
Participants who are Non-Highly Compensated Employees who, when
compared to similarly situated former Participants, have completed
the greatest number of Hours of Service in the Plan Year before
terminating employment. Nothing in this Section shall permit the
reduction of a Participant's benefit. Therefore any amounts that
have previously been allocated to Participants may not be
reallocated to satisfy these requirements. In the event additional
allocations are required, the Employer shall make an additional
contribution equal to the additional allocations, even if it
exceeds the amount which would be deductible under Section 404 of
the Code. Any adjustment to the allocations pursuant to this
Section shall be made by the October 15 after the Plan Year and
shall be considered to be made as of the last day of the Plan Year.
SECTION 4
INVESTMENT
4.1. Investment Direction.
4.1.1. Each Participant shall have the right to direct,
in multiples of five percentage points, that (a) future
contributions to and the existing balance in the Participant's
Non-Elective and Elective Profit Sharing Accounts be invested in
one or more of the Investment Funds, (b) future contributions to
and the existing balance in the Participant's Savings Account be
invested in one or more Investment Funds, and (c) future
contributions to and the existing balance in the Participant's
Rollover Account be invested in one or more Investment Funds.
4.1.2. A Participant may change his or her investment
direction as of any Enrollment Date by submitting a form prescribed
by the Administrator to the Administrator at least 30 days prior
to the Enrollment Date (or such greater or lesser period prior to
the Enrollment Date as the Administrator may establish for purposes
of administrative convenience) along with payment of a reasonable
charge established by the Administrator to defray the
administrative expense of processing the investment direction.
4.2. Investment Funds. One of the Investment Funds shall
be the Company Stock Fund, consisting of Employer Securities and
cash or cash equivalents needed to meet obligations of such fund
or for the purchase of Employer Securities. The Investment
Committee shall direct the Trustee to create and maintain three or
more additional Investment Funds according to investment criteria
established by the Investment Committee. The Investment Committee
shall have the right to direct the Trustee to merge or modify any
existing Investment Funds, other than the Company Stock Fund.
4.3. Investment in Employer Securities. One of the purposes
of the Plan is to provide Participants with ownership interests in
the Employer, and to the extent practicable, all available assets
of the Company Stock Fund shall be used to purchase Employer
Securities, which shall be held by the Trustee until distribution
or sale for distribution of cash to Participants or Beneficiaries
or until disposition is required to implement changes in investment
designations. In addition, all or any portion of any other
Investment Fund may consist of Employer Securities. Such
percentage of the Trust Fund, up to 100%, shall be invested in
Employer Securities as results from the operation of this Section.
4.4. Voting Employer Securities. The Investment Committee
shall have the power to direct the Trustee in the voting of all
Employer Securities held by the Trustee. All voting of Employer
Securities shall be in compliance with all applicable rules and
regulations of the Securities and Exchange Commission and all
applicable rules of or any agreement with any stock exchange on
which the Employer Securities being voted are traded. The Trustee
shall vote all Employer Securities as directed by the Investment
Committee and in the absence of such directions shall vote or not
vote Employer Securities in such manner as the Trustee shall, in
its sole discretion, determine. Notwithstanding the foregoing,
the Investment Committee may, in its sole discretion and at any
time or from time to time, permit Participants and Beneficiaries
to direct the manner in which any Employer Securities allocated to
their Accounts shall be voted on such matter as the Investment
Committee permits.
4.5. Tender Offers. Each Participant and Beneficiary shall
have the sole right to direct the Trustee as to the manner in which
to respond to a tender or exchange offer for Employer Securities
allocated to such person's Account. The Investment Committee shall
use its best efforts to notify or cause to be notified each
Participant and Beneficiary of any tender or exchange offer and to
distribute or cause to be distributed to each Participant and
Beneficiary such information as is distributed in connection with
any tender or exchange offer to holders generally of Employer
Securities, together with the appropriate forms for directing the
Trustee as to the manner in which to respond to such tender or
exchange offer. Upon timely receipt of directions under this
Section from the Participant or Beneficiary, the Trustee shall
respond to the tender or exchange offer in accordance with, and
only in accordance with, such directions. If the Trustee does not
receive timely directions from a Participant or Beneficiary under
this Section, the Trustee shall not tender, sell, convey or
transfer any Employer Securities allocated to such person's Account
in response to any tender or exchange offer.
4.6. Investment Managers. The Investment Committee may
appoint one or more investment managers to manage all or any
portion of all or any of the Investment Funds, and one or more
custodians for all or any portion of any Investment Fund. The
Investment Committee may also establish investment guidelines for
the Trustee or any one or more investment managers and may direct
that all or any portion of the assets in an Investment Fund be
invested in one or more guaranteed investment contracts having such
terms and conditions as the Investment Committee deems appropriate.
The Investment Committee or the Trustee, at the direction of the
Investment Committee, may enter into such agreements as the
Investment Committee deems advisable to carry out the purposes of
this Section.
4.7. Section 16 Persons. Notwithstanding anything in the
Plan to the contrary, Section 16 Persons may not direct the
investment of their Accounts into the Company Stock Fund unless
the Investment Committee determines otherwise.
SECTION 5
VALUATIONS AND CREDITING
5.1. Valuations. The Trust Fund shall be valued by the
Trustee at fair market value as of the close of business on each
Valuation Date. In determining the fair market value of assets
other than securities for which trading or bid prices can be
obtained, the Trustee shall rely on valuations provided by the
Investment Committee, which may appraise such assets itself or
employ one or more appraisers, including the Trustee or an
affiliate of the Trustee, for that purpose. The portions of all
Accounts held in the Company Stock Fund shall be maintained on a
share basis.
5.2. Credits to and Charges Against Accounts. All crediting
to and charging against Accounts shall be made as follows:
5.2.1. First, there shall be determined the net adjusted
Account by (a) charging all distributions and withdrawals made
during the period from the prior Valuation Date to the current
Valuation Date, and (b) crediting Savings Contributions and
Rollover Contributions on such time weighted basis as the
Administrator determines.
5.2.2. Second, all earnings of the Trust Fund shall then
be allocated to and among the Participants' Accounts according to
their net adjusted Accounts and the relative investment results of
the Investment Funds in which their Accounts were invested.
5.2.3. Third, at the option of the Administrator, all
administrative expenses relating to the maintenance of Accounts of
former Participants shall be charged against such Accounts.
5.2.4. Last, there shall be credited to each
Participant's Account, (a) Non-Elective Profit Sharing
Contributions and Elective Profit Sharing Contributions allocated
to such Account, and (b) Savings Contributions and Rollover
Contributions to such Account not previously credited under this
Section.
5.3. Expenses. All brokerage fees, transfer taxes, and other
expenses incurred in connection with the investment of the Trust
Fund shall be added to the cost of such investments or deducted
from the proceeds thereof, as the case may be. All other costs and
expenses of administering the Plan shall be paid from the Trust
Fund unless the Employer elects to pay such costs and expenses.
SECTION 6
BENEFITS
6.1. Forms of Benefit Payments. A Participant or Beneficiary
shall receive any benefit to which he or she is entitled in the
form of:
6.1.1. A lump sum distribution to the Participant or
Beneficiary consisting of cash for amounts not invested in the
Company Stock Fund and, for amounts invested in the Company Stock
Fund, (i) the greatest number of whole shares of Employer
Securities which can be distributed on the basis of the portion of
his or her Account balance invested in the Company Stock Fund plus
cash for any fractional share, if the number of whole shares is 20
or more and the Participant or Beneficiary elects to receive
shares, or (ii) cash if the number of whole shares is less than 20
or if the Participant or Beneficiary elects to receive cash; or
6.1.2. Effective for distributions made after December
31, 1993, at the election of the Participant or Beneficiary who is
the Participant's surviving or former spouse, if the benefit is an
Eligible Rollover Distribution, a lump sum payment of the benefit
directly to an Eligible Retirement Plan specified by the
Participant or Beneficiary in the form of cash for amounts not
invested in the Company Stock Fund and, for amounts invested in the
Company Stock Fund, (i) the greatest number of whole shares of
Employer Securities which can be distributed on the basis of the
portion of his or her Account balance invested in the Company Stock
Fund plus cash for any fractional share, if the number of whole
shares is 20 or more and the Participant or Beneficiary elects to
receive shares, or (ii) cash if the number of whole shares is less
than 20 or if the Participant or Beneficiary elects to receive
cash; or
6.1.3. Effective for distributions made after December
31, 1993, at the election of the Participant or Beneficiary who is
the Participant's surviving or former spouse, if the benefit is an
Eligible Rollover Distribution, distribution to both the
Participant or Beneficiary and an Eligible Retirement Plan as
follows:
(a) for amounts not invested in the Company Stock Fund,
a lump sum cash payment to:
(i) the Participant or Beneficiary; or
(ii) an Eligible Retirement Plan specified by
the Participant or Beneficiary; or
(iii) the Participant or Beneficiary of a portion
of the benefit specified by the Participant or
Beneficiary, with the remainder paid to an Eligible
Retirement Plan, and
(b) for amounts invested in the Company Stock Fund:
(i) a lump sum cash payment to the Participant
or Beneficiary; or
(ii) a distribution to the Participant or
Beneficiary of the greatest number of whole shares of
Employer Securities which can be distributed on the basis
of the portion of his or her Account balance invested in
the Company Stock Fund plus cash for any fractional share,
if the number of whole shares is 20 or more: or
(iii) a lump sum cash payment to an Eligible
Retirement Plan specified by the Participant or
Beneficiary; or
(iv) a distribution to an Eligible Retirement
Plan of the greatest number of whole shares of Employer
Securities which can be distributed on the basis of the
portion of the Participant's Account balance invested in
the Company Stock Fund plus cash for any fractional share,
if the number of whole shares is 20 or more.
6.2. Retirement Benefit. Effective January 1, 1993, any
Participant who has incurred a Termination Date shall receive his
or her retirement benefit as soon as administratively practicable
after:
(a) if the Participant's benefit is $3,500 or less, the
Valuation Date coincident with or following the Participant's
Termination Date; or
(b) if the Participant's benefit is more than $3,500:
(i) the Valuation Date coincident with or
following the later of the Participant's Termination Date
and the date the Participant attains age 62, or
(ii) at the election of the Participant (made
during the time period, before and after the applicable
Valuation Date, that the Administrative Committee
establishes for purposes of administrative convenience),
the Valuation Date following the Participant's Separation
Date; or
(iii) at the election of the Participant (made
in the time period, before the applicable Valuation Date,
that the Administrative Committee establishes for the
purposes of administrative convenience), any Valuation
Date, starting with the third Valuation Date after the
Participant's Separation Date and ending with the
Valuation Date in (i).
The amount of the retirement benefit shall be equal to the
undistributed balance in the Participant's Account determined as
of the applicable Valuation Date. Such distribution shall be made
as soon as practicable after the applicable Valuation Date.
6.3. Death Benefit.
6.3.1. If a Participant dies before receiving a
distribution of his or her retirement benefit, the Participant's
Beneficiary shall receive a death benefit, in lieu of the
retirement benefit, as soon as administratively practicable after
the Valuation Date coincident with or next following the
Participant's death. The amount of the death benefit shall be
equal to the undistributed balance in the Participant's Account
determined as of the applicable Valuation Date.
6.3.2. A married Participant may, with the consent of
his or her spouse, designate and from time to time change the
designation of one or more Beneficiaries or contingent
Beneficiaries to receive any death benefit. The designation and
consent shall be on a form supplied by the Administrator, which
form shall describe the effect of the designation on the
Participant's spouse, and shall be signed by the Participant and
the Participant's spouse. The spouse's signature shall be
witnessed by a Plan representative or a notary public.
Notwithstanding the foregoing, a Beneficiary designation made by
a married Participant who has no Hours of Service and no paid leave
of absence on or after August 23, 1984, shall be effective without
the consent of such Participant's spouse. An unmarried Participant
or a married Participant whose spouse has abandoned him or her or
cannot be located may designate a Beneficiary or Beneficiaries
without the consent of any other person, after having first
established to the satisfaction of the Administrator either that
he or she has no spouse or that his or her spouse cannot be
located. All records of Beneficiary designations shall be
maintained by the Administrator.
6.3.3. In the event that the Participant fails to
designate a Beneficiary to receive a benefit that becomes payable
under the provisions of this Section, or in the event that the
Participant is predeceased by all designated primary and contingent
Beneficiaries, (a) if the Participant is survived by a spouse, the
death benefit shall be payable to the Participant's surviving
spouse who shall be deemed to be the Participant's designated
Beneficiary for all purposes under this Plan, or (b) if the
Participant is not survived by a spouse, the death benefit shall
be payable to the Participant's estate.
6.4. In-Service Distributions. Any Participant who has
completed more than five years of participation in the Plan and
who has attained age 59-1/2 may withdraw from the Trust as of any
Valuation Date all of his or her Savings Account, or any portion
of his or her Savings Account which would not reduce the amount in
his or her Savings Account to less than $500. Upon receipt of a
request for withdrawal of a portion of a Participant's Savings
Account which would reduce it to less than $500, the Trustee shall
distribute the entire amount of the Participant's Savings Account.
6.5. Advance Distribution for Hardship.
6.5.1. If a Participant has an immediate and heavy
financial need and has obtained all distributions, other than
hardship distributions, currently available under the Plan and any
other plans maintained by the Employer or an Affiliate, he or she
may obtain a hardship distribution of his or her Savings
Contributions. The amount of the hardship distribution shall be
the lesser of the Participant's Savings Contributions or the amount
necessary to satisfy the immediate and heavy financial need
(including amounts necessary to pay reasonably anticipated taxes
and penalties on the hardship distribution). Hardship
distributions of other amounts shall not be allowed.
6.5.2. An amount shall not be treated as necessary to
satisfy the immediate and heavy financial need if the need can be
reasonably relieved by (a) reimbursement or compensation from
insurance or otherwise, (b) reasonable liquidation of the
Participant's assets, to the extent such liquidation would not
itself cause an immediate and heavy financial need, (c) cessation
of Savings Contributions and Elective Profit Sharing Contributions,
(d) other distributions from the Plan or any other plan, (e) loans
from the Plan or any other plans, or (f) loans from commercial
sources on reasonable terms. A need cannot reasonably be relieved
by one of the listed actions if the effect would be to increase the
amount of the need. The Administrator shall be entitled to rely
on the Participant's certification of the foregoing except that the
Administrator may require further documentation as to the amount
necessary to satisfy the immediate and heavy financial need, or
deny the hardship distribution, if under the circumstances the
Administrator's reliance on the certification is not reasonable.
6.5.3. For purposes of this Plan, an immediate and heavy
financial need is the need for money for:
(a) expenses for or necessary to obtain medical care
described in Section 213(d) of the Code for the Participant or the
Participant's spouse or dependents;
(b) costs directly related to the purchase (excluding
mortgage payments) of a principal residence of the Participant;
(c) the payment of tuition and related educational
fees for the next 12 months of post-secondary education for the
Participant or the Participant's spouse, children or dependents;
(d) the prevention of the eviction of the Participant
from his or her principal residence or the foreclosure on the
mortgage of the Participant's principal residence; or
(e) any other reason added to the list of deemed
immediate and heavy financial needs by the Commissioner of the
Internal Revenue Service.
6.5.4. A Participant who has obtained a hardship
distribution shall not be eligible to make any Savings
Contributions or Elective Profit Sharing Contributions for the 12
months after the hardship distribution.
6.6. Loans to Participants.
6.6.1. Loans to a Participant from his or her Savings
Account and, effective July 1, 1994, from his or her Rollover
Account shall be allowed, subject to such uniform and
nondiscriminatory rules as may from time to time be adopted by the
Administrator. Loans from other Accounts shall not be allowed.
The Trustee may make a loan to a Participant who has applied for
a loan, in accordance with rules adopted by the Administrator, on
forms provided by the Administrator.
6.6.2. A Participant shall be permitted to borrow no
more than the lesser of (a) $50,000 reduced by the excess (if any)
of (i) the highest outstanding balance of Plan loans during the
previous 12 months over (ii) the current outstanding balance of
Plan loans, or (b) 50% of the value of the Participant's Account
as of the Valuation Date coincident with or next preceding the date
on which the loan is made.
6.6.3. Loans shall be available to all Participants on
a reasonably equivalent basis; provided, however, that the Trustee
may make reasonable distinctions among prospective borrowers on the
basis of creditworthiness and available security. Any amount
withdrawn by or payable to a Participant from his or her Account
while a loan is outstanding shall be immediately applied to reduce
such loan.
6.6.4. (a) All loans to Participants made by the Trustee
shall be secured by the pledge of the Participant's Account.
(b) Interest shall be charged at an interest rate
which the Administrator finds to be reasonable on the date of the
loan.
(c) Loans shall be for a term of five years or for
such lesser term as the Administrator and the Trustee agree is
appropriate, with substantially level amortization over the term
of the loan.
(d) If not paid as and when due, any such outstanding
loan or loans may be deducted from any benefit which is or becomes
payable to such Participant or the Participant's Beneficiary. The
Participant shall remain liable for any deficiency, and any surplus
remaining shall be paid to the Participant.
(e) Any loan made to a Participant shall be (i)
treated as an investment of the Participant's Account with interest
payments credited and expenses deducted from the Participant's
Account, and (ii) excluded from the Participant's Account for
purposes of implementing the Participant's investment directions
and allocation of the investment results of the Investment Funds.
6.7. Latest Commencement of Benefits. Payment of benefits
shall commence in accordance with this Section, provided, however,
in no event shall payment of benefits commence later than the
April 1 of the calendar year following the calendar year in which
the Participant attains age 70-1/2.
6.8. Post-Distribution Credits. If, after the distribution
of retirement or death benefits under this Plan, there remain in
a Participant's Account any funds, or any funds shall be
subsequently credited thereto, such funds shall be distributed to
the Participant or his or her Beneficiary as promptly as
practicable.
6.9. Prevention of Escheat. If the Administrator cannot
ascertain the whereabouts of any person to whom a payment is due
under the Plan, the Administrator may place the amount of the
payment in a segregated account. If a segregated account is an
interest bearing account, the interest, which may be net of
expenses, shall be credited to the segregated account. If a
segregated account holds Employer Securities, any dividends may be
treated as earnings of the Trust Fund or of the segregated account,
at the option of the Administrator. After two years from the date
such payment is due, the Administrator may mail a notice of the
payment to the last known address of such person as shown on the
records of the Plan, the Employer and all Affiliates. If such
person has not made claim for the payment within three months after
the date of the mailing of the notice or if the notice is returned
as undeliverable, then the payment and all remaining payments which
would otherwise be due to such person shall be cancelled and the
amount thereof shall be applied to reduce Profit Sharing
Contributions. If any person subsequently has a claim allowed for
such benefits, such person shall be treated as an omitted eligible
Employee.
SECTION 7
TOP-HEAVY PLAN PROVISIONS
7.1. Minimum Benefits. For any Plan Year that this Plan is
a Top-Heavy Plan, the Employer shall contribute, for and on behalf
of each Non-Key Employee who is a Participant on the last day of
the Plan Year, an amount which is not less than the lesser of (a)
3% of such Participant's Compensation, or (b) such Participant's
Compensation multiplied by a fraction, determined with respect to
the Key Employee for whom the fraction is greatest, the numerator
of which is the contributions allocated to such Key Employee's
Account for the Plan Year and the denominator of which is the Key
Employee's Compensation for the Plan Year. In determining the
minimum benefit, all contributions, including Savings
Contributions, for any Participant to any plan included in the
Aggregation Group shall be taken into account. If a Participant
participates in this Plan and a defined benefit plan in the
Aggregation Group, the Participant shall receive minimum benefits
under such defined benefit plan.
7.2. Adjustment in Benefit Limitations. In applying the
limits of Section 415 of the Code where a Participant participates
in both one or more defined benefit plans and one or more defined
contribution plans of the Employer, paragraphs (2)(B) and (3)(B)
of Section 415(e) of the Code shall be applied by substituting
"1.0" for "1.25", unless (a) the sum of the account balances and
the present value of the accrued benefits of Key Employees do not
exceed 90% of the account balances and the present value of the
accrued benefits of all participants and their beneficiaries, as
determined under Section 416(h) of the Code, and (b) the Employer
elects to have the minimum benefit under Section 416 of the Code
applied by substituting "4%" for "3%" therein.
SECTION 8
CLAIMS PROCEDURES
8.1. Application for Benefits. Each Participant or
Beneficiary believing himself or herself eligible for benefits
under this Plan may apply for such benefits by completing and
filing with the Administrator an application for benefits on a form
supplied by the Administrator. Before the date on which benefit
payments commence, each such application must be supported by such
information and data as the Administrator deems relevant and
appropriate. Evidence of age, marital status (and, in the
appropriate instances, death), and location of residence shall be
required of all applicants for benefits.
8.2. Appeal of Denial of Claim for Benefits. In the event
that any claim for benefits is denied in whole or in part, the
Participant or Beneficiary whose claim has been so denied shall be
notified of such denial in writing by the Administrator within 90
days after the Administrator receives the claim. The notice
advising of the denial shall specify the reasons for denial, make
specific reference to pertinent Plan provisions, describe any
additional material or information necessary for the claimant to
perfect the claim (explaining why such material or information is
needed), and shall advise the Participant or Beneficiary, as the
case may be, of the procedure for the appeal of such denial. If
a claimant wishes to appeal the denial of the claim, the claimant
shall submit a written appeal to the Advisory Committee within 60
days after the Administrator notifies the claimant of the denial.
The appeal shall set forth all of the facts upon which the appeal
is based. Appeals which are not timely filed shall be barred.
The Advisory Committee shall consider the merits of the claimant's
appeal, the merits of any facts or evidence in support of the
denial of benefits, and such other facts and circumstances as the
Advisory Committee deems relevant. The Advisory Committee shall
give the Administrator a written statement as to its recommendation
on the appeal within 30 days after the Advisory Committee receives
the appeal, unless special circumstances or the need to hold a
hearing require an extension of up to 30 additional days. The
Administrator shall then consider the recommendation of the
Advisory Committee and give the claimant a written statement as to
the Administrator's determination on the appeal within 60 days
after the Advisory Committee receives the appeal, unless special
circumstances or the need to hold a hearing require an extension
of up to 60 additional days.
8.3. Effect of Administrator Decision. Any decision or
action of the Administrator on appeal shall be final and binding
on all persons absent fraud or arbitrary abuse of the wide
discretion granted to the Administrator. No appeal or contest of
any decision or action may be brought other than after following
the procedures for claims and appeals as set forth herein by a
legal proceeding in a court of competent jurisdiction brought
within one year after such decision or action.
SECTION 9
ALLOCATION OF AUTHORITY AND RESPONSIBILITY
9.1. Authority and Responsibilities of the Administrator.
The Administrator shall have the following duties and
responsibilities: (a) to maintain and retain records relating to
the Participants and Beneficiaries; (b) to prepare and furnish to
Participants all information required under federal law or
provisions of this Plan to be furnished to them; (c) to prepare
and furnish to the Trustee sufficient Employee data and the amount
of contributions received from all sources so that the Trustee may
maintain separate Accounts for Participants and make required
payments of benefits; (d) to provide directions to the Trustee with
respect to payments of benefits and all other matters where called
for in the Plan or requested by the Trustee; (e) to prepare and
file or publish with the Secretary of Labor, the Secretary of the
Treasury, their delegates and all other appropriate governmental
officials, all reports and other information required under law to
be so filed or published; (f) to arrange for bonding; (g) to
consult with the Advisory Committee and the Investment Committee
with respect to matters determined under Sections 9.2 and 9.3,
respectively; (h) to recommend and facilitate approval of Plan
changes; and (i) to coordinate implementation of changes to and
administration of the Plan. The Administrator shall have the right
to hire such professional assistants and consultants as it deems
necessary or advisable, including, but not limited to: (i)
accountants; (ii) actuaries; (iii) attorneys; (iv) consultants; and
(v) clerical and office personnel. The costs for such assistants
and advisers shall be paid from the Trust Fund as an expense of the
Trust Fund unless the Employer elects to pay such costs.
9.2. Authority and Responsibilities of the Advisory
Committee. The Advisory Committee shall have the following duties
and responsibilities: (a) to provide assistance and consultation
to the Administrator with respect to Plan changes and
administrative procedures; (b) to develop recommendations for Plan
changes, as deemed appropriate by the Advisory Committee; (c) to
consult with the Administrator with respect to other matters at the
discretion of the Administrator; and (d) to review appeals of
denial of claims and make recommendations for action to the
Administrator.
9.3. Authority and Responsibilities of the Investment
Committee. The Investment Committee shall have the following
duties and responsibilities: (a) to appoint the Trustee, to
monitor the performance of the Trustee, and to terminate such
appointment; (b) to provide direction to the Trustee including
direction of investment of all or part of the Trust Fund and the
establishment of investment criteria and Investment Funds; and (c)
to appoint investment advisors and investment managers, to monitor
their performances, and to terminate such appointments.
9.4. Appointment and Tenure. The Advisory Committee and the
Investment Committee shall each consist of a committee of one or
more members who shall serve at the pleasure of the Board of
Directors. Any committee member may be dismissed at any time, with
or without cause, upon notice from the Board of Directors. Any
committee member may resign by delivering his or her written
resignation to the Board of Directors. Vacancies arising by the
death, resignation or removal of a committee member shall be filled
by the Board of Directors. If the Board of Directors fails to act,
and in any event, until the Board of Directors so acts, the
remaining members of a committee may appoint an interim member to
fill any vacancy occurring on the committee. If no person has been
appointed to the Advisory Committee or the Investment Committee,
or if no person remains on one of the committees, the Company shall
be deemed to be such committee.
9.5. Meetings; Majority Rule. Any and all acts of the
Advisory Committee or the Investment Committee taken at a meeting
shall be by a majority of all members of such committee. A
committee may act by vote taken in a meeting (at which a majority
of members shall constitute a quorum) if all members of the
committee have received at least 10 days' written notice of such
meeting or have waived notice. A committee may also act by
majority consent in writing without the formality of convening a
meeting. Each committee shall elect one of its members to serve
as chairman. The chairman shall preside at all meetings of the
committee or shall delegate such responsibility to another
committee member.
9.6. Compensation. The Advisory Committee, the Investment
Committee and the Administrator shall serve without compensation
for services as such, but all expenses of such persons shall be
paid or reimbursed by the Employer, and if not so paid or
reimbursed, shall be paid from the Trust Fund.
9.7. Indemnification. Each member of the Advisory Committee,
each member of the Investment Committee, and Employees carrying out
the duties of the Administrator shall be indemnified by the
Employer against costs, expenses and liabilities (other than
amounts paid in settlement to which the Employer does not consent)
reasonably incurred by the person in connection with any action to
which the person may be a party by reason of his or her service as
a member of the committee or for the Administrator, except in
relation to matters as to which he or she shall be adjudged in such
action to be personally guilty of negligence or willful misconduct
in the performance of his or her duties. The foregoing right to
indemnification shall be in addition to such other rights as the
person may enjoy as a matter of law or by reason of insurance
coverage of any kind, but shall not extend to costs, expenses
and/or liabilities otherwise covered by insurance or that would be
so covered by any insurance then in force if such insurance
contained a waiver of subrogation. Rights granted hereunder shall
be in addition to and not in lieu of any rights to indemnification
to which the person may be entitled under the bylaws of the
Company. Service on the Advisory Committee or the Investment
Committee or for the Administrator shall be deemed in partial
fulfillment of the person's function as an Employee, officer and/or
director of the Employer, if the person serves in such capacity as
well.
9.8. Authority and Responsibilities of the Company. The
Company, as Plan sponsor, shall have the following (and only the
following) authority and responsibilities: (a) to act as
Administrator, (b) to appoint the Advisory Committee and the
Investment Committee and to monitor each of their performances;
(c) to communicate such information to the Advisory Committee, the
Investment Committee, and the Trustee as each needs for the proper
performance of its duties; (d) to provide channels and mechanisms
through which the Advisory Committee, the Investment Committee,
the Administrator and/or the Trustee can communicate with
Participants and Beneficiaries; and (e) to perform such duties as
are imposed by law or by regulation and to serve as Advisory
Committee or the Investment Committee in the absence of an
appointed committee or person. Any action which may be taken and
any decision which may be made by the Company under the Plan
(including authorization of Plan amendments or termination) may be
made by: (a) the Board of Directors; or (b) any committee to which
the Board of Directors delegates discretionary authority with
respect to the Plan.
9.9. Obligations of Named Fiduciaries. The Investment
Committee, the Administrator and the Trustee are named fiduciaries
within the meaning of Section 402(a) of ERISA. A named fiduciary
shall have only those particular powers, duties, responsibilities
and obligations specifically given to it under this Plan or the
Trust Agreement. No named fiduciary shall have authority or
responsibility to deal with matters other than as delegated to it
under this Plan, under the Trust Agreement or by operation of law.
Notwithstanding the foregoing, named fiduciaries may perform in
more than one fiduciary capacity if so appointed and may reallocate
duties between themselves by mutual agreement. A named fiduciary
shall not in any event be liable for breach of fiduciary
responsibility or obligation by another fiduciary (including named
fiduciaries) if the responsibility or authority of the act or
omission deemed to be a breach was not within the scope of such
named fiduciary's authority or responsibility.
SECTION 10
AMENDMENT, TERMINATION, MERGERS AND CONSOLIDATIONS OF THE PLAN
10.1. Amendment. The Company (by its Board of Directors,
an executive committee of its Board of Directors or other committee
to which the Board of Directors delegates discretionary authority
with respect to the Plan) may amend the provisions of this Plan at
any time and from time to time, after consultation with the
Advisory Committee; provided, however, that:
10.1.1. No amendment shall increase the duties or
liabilities of the Trustee without the consent of such party.
10.1.2. No amendment shall deprive any Participant or
Beneficiary of a deceased Participant of any of the benefits to
which such person is entitled under the Plan with respect to
contributions previously made or decrease the balance in any
Participant's Account, except as permitted by Section 412(c)(8) of
the Code and Section 302(c)(8) of ERISA.
10.1.3. No amendment changing the vesting schedule shall
decrease the vested percentage of any Participant.
10.1.4. No amendment shall eliminate an optional form
of benefit in violation of Section 411(d)(6).
10.1.5. No amendment shall provide for the use of funds
or assets held to provide benefits under the Plan other than for
the benefit of Employees and Beneficiaries, except as may be
specifically authorized by statute or regulation.
10.1.6. Any amendment necessary to maintain the
qualification of the Plan under Section 401(a) of the Code may be
made without the further approval of the Board of Directors or any
committee if signed by an officer of the Company.
10.2. Plan Termination. The Company reserves the right to
terminate the Plan in whole or in part, after consultation with the
Advisory Committee. Plan termination shall be effective as of the
date specified by resolution of the Board of Directors. The
Company shall instruct the Trustee to either (a) continue to manage
and administer the assets of the Trust for the benefit of
Participants and Beneficiaries under the terms and provisions of
the Trust Agreement, or (b) pay over to each Participant the value
of his or her interest, and thereupon dissolve the Trust.
10.3. Permanent Discontinuance of Profit Sharing
Contributions. While it is the Company's intention to make
substantial and recurring contributions to the Trust Fund under
the provisions of the Plan, the right is, nevertheless, reserved
to permanently discontinue Profit Sharing Contributions at any
time. Such permanent discontinuance shall have the effect of a
termination of the Plan, except that the Trustee shall not have
the authority to dissolve the Trust Fund except upon adoption of
a further resolution by the Board of Directors to the effect that
the Plan is terminated and upon receipt from the Company of
instructions to dissolve the Trust Fund. Failure to make a
contribution solely because of a lack of net income shall not be
deemed to be a permanent discontinuance of Profit Sharing
Contributions.
10.4. Suspension of Profit Sharing Contributions. The
Company shall have the right, at any time and from time to time,
to suspend Profit Sharing Contributions to the Trust Fund under
the Plan. Such suspension shall have no effect on the operation
of the Plan except as set forth below:
10.4.1. If the Board of Directors determines by
resolution that such suspension shall be permanent, a permanent
discontinuance of contributions shall be deemed to have occurred
as of the date of such resolution or such earlier date as is
therein specified.
10.4.2. If a temporary suspension becomes a permanent
discontinuance or a Plan termination, the discontinuance or
termination shall be deemed to have occurred on the earlier of:
(a) the date specified by resolution of the Board of Directors, or
(b) the last day of the Plan Year next following the first Plan
Year during the period of suspension in which there occurred a
failure of the Employer to make contributions in a year in which
there was net income out of which such contributions could have
been made.
10.5. Mergers and Consolidations of Plans. In the event of
any merger or consolidation of the Plan with, or transfer of assets
or liabilities to, any other plan, each Participant and Beneficiary
shall have a benefit in the surviving or transferee plan
(determined as if such plan were then terminated immediately after
such merger, etc.) that is equal to or greater than the benefit he
or she would have been entitled to receive immediately before such
merger, etc., in this Plan (had this Plan been terminated at that
time).
10.6. Transfers of Assets to or from this Plan. A transfer
of all or any portion of the assets or liabilities of the Plan to
any other plan, or the transfer of all or any portion of the assets
or liabilities of another plan to this Plan, shall be in accordance
with directions of the Company. The Plan shall not accept a direct
or indirect transfer of assets which would make the Plan subject
to Sections 401(a)(11) and 417 of the Code with respect to any
Participant.
10.7. Effect of Amendment and Restatement. Notwithstanding
anything herein to the contrary, the identities, Account balances,
Hours of Service, and Years of Eligibility Service of Participants
and Employees as of the Effective Amendment Date, and the rights
of persons terminating their employment with the Employer and all
Affiliates prior to the Effective Amendment Date, shall be
determined under the Plan as in effect prior to the Effective
Amendment Date.
SECTION 11
PARTICIPATING EMPLOYERS
11.1. Adoption by Affiliates. With the consent of the
Company, any Affiliate may adopt the Plan as a participating
Employer. Each participating Employer shall be required to use
the same Trustee and Trust Agreement as provided in this Plan, and
the Trustee shall commingle, hold and invest as one Trust Fund all
contributions made by participating Employers, as well as all
increments thereof. With respect to all relations with the
Trustee, the Advisory Committee, the Administrator and the
Investment Committee, each participating Employer shall be deemed
to have irrevocably designated the Company as its agent. The
Company shall have authority to make any and all necessary rules
or regulations, binding upon all participating Employers and all
Participants, to effectuate the purposes of the Plan.
11.2. Employee Transfers. If an Employee is transferred
between Employers, the Employee involved shall carry with him or
her the Employee's accumulated service and eligibility, no such
transfer shall effect a termination of employment hereunder, and
the participating Employer to which the Employee is transferred
shall thereupon become obligated with respect to such Employee in
the same manner as was the participating Employer from whom the
Employee was transferred.
11.3. Discontinuance of Participation. Any participating
Employer may discontinue or revoke its participation in the Plan.
At the time of any such discontinuance or revocation, satisfactory
evidence thereof and of any applicable conditions imposed shall be
delivered to the Trustee. The Trustee shall retain assets for the
Employees of the participating Employer under the Plan.
SECTION 12
MISCELLANEOUS PROVISIONS
12.1. Nonalienation of Benefits.
12.1.1. None of the payments, benefits or rights of any
Participant or Beneficiary shall be subject to any claim of any
creditor, and, in particular, to the fullest extent permitted by
law, all such payments, benefits and rights shall be free from
attachment, garnishment, trustee's process or any other legal or
equitable process available to any creditor of such Participant or
Beneficiary. No Participant or Beneficiary shall have the right
to alienate, anticipate, commute, pledge, encumber, or assign any
of the benefits or payments which he or she may expect to receive,
contingently or otherwise, under this Plan, except the right to
designate a Beneficiary or Beneficiaries as hereinbefore provided.
Notwithstanding the foregoing, assignments permitted under the Code
shall be permitted under the Plan, including (a) assignments
pursuant to a qualified domestic relations order, and (b) any loans
made by the Trustee to a Participant that are secured by a pledge
of the borrower's Account, which shall give the Trustee a first
lien on such interest to the extent of the entire outstanding
amount of such loan, unpaid interest thereon, and all costs of
collection.
12.1.2. If a domestic relations order is received by the
Administrator, the Administrator shall make a determination as to
whether the domestic relations order is a qualified domestic
relations order as defined in Section 414(p) of the Code, treating
the domestic relations order as a claim for benefits under the Plan
and all alternate payees and the Participant as claimants. Within
30 days after the Administrator's receipt of the domestic relations
order and at least 30 days prior to its determination, the
Administrator shall notify the Participant and any alternate payees
other than the one who is the subject of the domestic relations
order of the receipt of the domestic relations order and the
procedures that the Administrator will follow in determining the
qualified status of the domestic relations order. During any
period in which the issue of whether the domestic relations order
is a qualified domestic relations order is pending, the
Administrator shall segregate in a separate account under the Plan
the amounts which would have been payable to the alternate payee
during such period if the domestic relations order had been
determined to be a qualified domestic relations order. If, within
18 months, it is finally determined that the domestic relations
order is a qualified domestic relations order, the Administrator
shall direct the Trustee to pay the segregated amount to the person
entitled thereto. If, within 18 months, it is finally determined
that the domestic relations order is not a qualified domestic
relations order, or the issue has not yet been resolved, the
Administrator shall direct the Trustee to pay the segregated amount
without regard to the terms of the domestic relations order. Any
determination that a domestic relations order is a qualified
domestic relations order which is made after the close of the 18
month period shall be applied prospectively only.
12.1.3. The Trustee may make a lump sum distribution to
an alternate payee pursuant to a qualified domestic relations order
as soon as administratively practical after the Valuation Date
following the earlier of the date a Participant attains age 50 or
the date a Participant terminates employment. The Trustee may make
a lump sum distribution pursuant to a qualified domestic relations
order before such date provided no more than one distribution is
made to each alternate payee.
12.2. No Contract of Employment. Neither the establishment
of the Plan, nor any modification thereof, nor the creation of any
fund, trust or Account, nor the payment of any benefits, shall be
construed as giving any Participant or Employee, or any person
whomsoever, the right to be retained in the service of the
Employer, and all Participants and other Employees shall remain
subject to discharge to the same extent as if the Plan had never
been adopted.
12.3. Title to Assets. No Participant or Beneficiary shall
have any right to, or interest in, any assets of the Trust Fund
upon termination of his or her employment or otherwise, except to
the extent of the benefits payable under the Plan to such
Participant or Beneficiary out of the assets of the Trust Fund.
All payments of benefits as provided for in this Plan shall be made
from the assets of the Trust Fund, and neither the Employer nor any
other person shall be liable therefor in any manner.
12.4. Effect of Admission. By becoming a Participant, each
Employee shall be conclusively deemed to have assented to the
provisions of the Plan and the corresponding Trust Agreement and
to all amendments to such instruments.
12.5. Payments to Minors, Etc. Any benefit payable to or
for the benefit of a minor, an incompetent person or other person
incapable of receipting therefor shall be deemed paid when paid to
such person's guardian or to the party providing, or reasonably
appearing to provide, for the care of such person, and such payment
shall fully discharge the Trustee, the Administrator, the Employer
and all other parties with respect thereto.
12.6. Approval of Restatement by Internal Revenue Service.
Notwithstanding anything herein to the contrary, if the
Commissioner of the Internal Revenue Service or his delegate should
determine that the Plan, as amended and restated, does not qualify
as a tax-exempt plan and trust under Sections 401 and 501 of the
Code, and such determination is not contested, or if contested, is
finally upheld, then the Plan shall operate as if it had not been
amended and restated.
12.7. Other Miscellaneous. If any provision of this Plan
is held invalid or unenforceable, such holding will not affect any
other provisions hereof, and the Plan shall be construed and
enforced as if such provisions were not been included. The Plan
shall be binding upon the heirs, executors, administrators,
personal representatives, successors, and assigns of the parties,
including each Participant and Beneficiary, present and future.
The headings and captions herein are provided for convenience only,
shall not be considered a part of the Plan, and shall not be
employed in the construction of the Plan. Except where otherwise
clearly indicated by context, the masculine and the neuter shall
include the feminine and the neuter, the singular shall include the
plural, and vice-versa. The Plan shall be construed and enforced
according to the laws of the State of Ohio to the extent not
preempted by federal law, which shall otherwise control.
IN WITNESS WHEREOF, the Company has caused this Plan to be
executed as of the _______ day of December, 1994.
THE SCOTTS COMPANY
By: /s/ Robert A. Stern
Robert A. Stern, Vice President
- Human Resources
Exhibit 10(i)
O.M. Scott & Sons Company
1994 Executive Annual Incentive Plan
O.M. SCOTT & SONS COMPANY
1994 Executive Annual Incentive Plan
1.Objectives
Provide strong financial incentive for achievement of business
results.
Contribute toward a competitively attractive compensation program
for executives.
Provide a mechanism to relate compensation to contribution and
results.
Encourage team effort toward achievement of corporate goals.
2.Participation
Eligibility and level of participation is based on Executive
Team membership.
Participants must be actively employed in an eligible position
for at least 13 consecutive weeks during the plan year.
Participants must be employed on the last day of the fiscal year
to be eligible for a payout. Participants who terminate their
employment during the Plan Year, except in cases of retirement,
will not be eligible for an incentive payment, prorated or
otherwise.
Participants in this Plan will also be considered for inclusion
in the Executive Long Term Incentive Plan and The O.M. Scott &
Sons Company Profit Sharing Plans. The Executives covered by
the aforementioned Plan will not be eligible for any other cash
incentive of the company.
Participants shall not have any right with respect to any award
until an award shall, in fact, be paid to them.
The Plan confers no rights upon any associate to participate in
the Plan or remain in the employ of the company. Neither the
adoption of the Plan nor its operation shall in any way affect
the right of the associate or the company to terminate the
employment relationship at any time.
3.Payouts
The Executive Annual (EAIP) Incentive Plan is designed to
recognize and reward the achievement of both corporate goals,
business group goals and individual participant objectives.
If corporate performance is below 80% of budget, any bonus
paid will be at the discretion of the Incentive Review
Committee and Board of Directors.
A target bonus percentage will be determined for each group
of participants. Payouts will be based on the applicable
percentage of each participant's year end salary. See Exhibit
A for target bonus.
Bonus at a corporate performance level between 80% of budget
and target shall be calculated on a straight line basis.
Similarly, bonus at a corporate performance between budget
and 122.5% of budget will also be calculated on a straight
line basis.
Executive may elect to be paid in part or in whole in company
stock at FMV on day bonuses are paid.
EAIP Payout Distribution Formula
Company Performance (75% - 100%) Individual Performance (0-25%)
Corporate Goal Performance
Corporate goal performance will be measured by performance
against goals for Earnings Before Interest, Taxes and
Amortization (EBITA) at 60% and Average Working Capital plus
Capital Expenditures (AWC + CE) at 40% as recorded in
corporate financials.
Individual Performance
When established, each individual goal will be assigned a
relative weighting (total weighting of all goals must be
100%). Full accomplishment of an individual goal will be
recognized by 100% achievement multiplied by the goal
weighting factor. Credit may be judgmentally provided for
partial achievement of a goal.
The goal achievement multiplied by the weighting factor will
be additive for all goals resulting in a total achievement
factor which will be utilized as the individual performance
measure for bonus calculation.
The weighting of individual goals may not exceed 25% of the
total of Corporate, Division and Individual performance. Each
year individual goals will be reviewed to determine their
weighting to total. In the event that an individual's goals
are weighted less than 25%, the weighting of corporate goals
will be correspondingly raised.
Special Pool
A pool for special awards will be generated to provide
recognition to managers whose individual performance was
exceptional but did not qualify for a bonus under the EAIP or
Management Team Incentive Plan. At budget, this pool would not
exceed $50,000. Its size at any given EBITA and AWC + CE level
will be determined by where EBITA and AWC + CE fall within the
established EAIP or MIP bonus range, using the same approach as
for calculating other bonuses. The number of participants will
vary from year to year.
4.Administration
The plan is to be administered by the Vice President, Human
Resources, who will be responsible for:
Recommending changes in the payout targets and ranges;
Recommending additions or deletions to the lists of
eligible associates;
Providing a consistent format for measuring goal
achievement;
Recommending changes in the plan concept as appropriate.
The Incentive Review Committee, comprised of the Chief
Executive Officer, Chief Operating Officer, Vice President,
Human Resources and Chief Financial Officer, is responsible
for:
Adjudicating changes and adjustments.
Ensuring the sum of all individual quantifiable goals is
equal to or greater than the corporate budget.
Recommending plan payouts, including adjustments up to +/-
10%.
The Compensation Committee of the Board approves the
administrative changes in the Plan, to include:
Changes in the payout targets and ranges;
Additions or deletions of eligible associates;
Approval of plan payouts.
Determination of the relevant earnings measure and the
incentive Payout Range used to determine the Chairman's
and President's bonuses.
Evaluation of performance of the Chief Executive Officer
and Chief Operating Officer.
The Compensation Committee shall review the operation of the
Plan and, if at any time the continuation of the Plan, or any of
its provisions becomes inappropriate or inadvisable, the
Compensation Committee shall revise or modify Plan provisions or
recommended to the Board that the Plan be suspended or withdrawn.
In addition, the Compensation Committee reserves the right to
modify incentive formulas to reflect unusual circumstances.
The Board of Directors reserves to itself the right to suspend
the Plan, and to make substantial alterations in Plan concept.
Exhibit 10(f)
Stock Option Plan and Agreement, dated as of January
9, 1992, between Scotts Delaware and Theodore J.
Host
STOCK OPTION PLAN AND AGREEMENT
STOCK OPTION PLAN AND AGREEMENT, dated as of January 9, 1992,
among The Scotts Company, a Delaware corporation (the "Company"),
and Theodore J. Host (the "Grantee").
W I T N E S S E T H:
WHEREAS, the Board of Directors of The O.M. Scott & Sons
Company, a wholly-owed subsidiary of the Company ("Scott"), has
appointed the Grantee to be the President and Chief Operating
Officer of Scott;
WHEREAS, Scott and the Grantee have entered into an
Employment Agreement, dated as of October 21, 1991 (the "Employment
Agreement"), governing the terms and conditions of the Grantee's
employment with Scott;
WHEREAS, the Employment Agreement provides that Grantee shall
be granted an option to purchase 300,000 shares (the "Shares") of
Class A Common Stock, par value $.01 per share (the "Common
Stock"), of the Company at an option price of $4.50 per Share;
WHEREAS, the Board of Directors of the Company (the "Board")
has approved the adoption of this Stock Option Plan granting of
such stock option to the Grantee;
NOW, THEREFORE, to evidence the adoption of such Plan and
stock option so granted, and to set forth its terms and conditions,
the Company and the Grantee hereby agree as follows:
1. Confirmation of Grant; Option Price; Incentive Stock
Option. The Company hereby evidences and confirms its grant to the
Grantee, effective as of the date hereof, of an option (the
"Option") to purchase 300,000 Shares at an option price of $4.50
per Share (the "Option Price"). The portion of such Option with
respect to 66,666 Shares is intended to be an incentive stock
option (the "Incentive Stock Option") under Section 422 of the
Internal Revenue Code of 1986, as amended. The portion of such
Option with respect to the remaining 233,334 Shares is not intended
to be an Incentive Stock Option.
2. Exercisability. Except as otherwise provided in this
Agreement, the Option (including the Incentive Stock Option) shall
become available for exercise, subject to the provisions hereof,
in 33 1/3% installments, with the first installment becoming
exercisable on the date of this Agreement and with an additional
33 1/3% becoming exercisable on each of October 21, 1992 and
October 21, 1993; provided that 100% of the Option shall become
available for exercise in the event (a) that there is a Change of
Control (as defined in Section 4(d)) of the Company or (b) that the
Grantee's employment with each of the Company and its direct and
indirect subsidiaries that employ the Grantee terminates by reason
of the Grantee's death, Permanent Disability (as defined in
Section 4(d)) or Retirement at Normal Retirement Age (as defined
in Section 4(d)), or (c) that Grantee's employment with Scott is
terminated by Scott without "Cause" as defined in the Employment
Agreement. Shares eligible for purchase may thereafter be
purchased, subject to the provisions hereof, and pursuant to and
subject to the provisions contained in the Management Stock
Subscription Agreement (as defined in Section 5) related to such
Shares, at any time and from time to time on or after such
anniversary until the date one day prior to the date on which the
Option terminates.
3. Termination of Option.
(a) Normal Termination Date. Unless an earlier termination
date is specified in Section 3(b), the Option shall terminate on
the tenth anniversary of the date hereof (the "Normal Termination
Date").
(b) Early Termination. If the Grantee's active employment
with the Company and its direct and indirect subsidiaries that
employ the Grantee is voluntarily or involuntarily terminated for
any reason whatsoever prior to the Normal Termination Date, (i) any
portion of the Option that has not become exercisable on or before
the effective date of such termination of employment and is not
accelerated pursuant to Section 2 shall terminate on such effective
date and (ii) if the Grantee's active employment is terminated by
the Company for Cause, the Option (including any portion of the
Option that shall have become exercisable prior to such
termination) shall no longer be exercisable on or after the
effective date of such termination of employment. Nothing in this
Agreement shall be deemed to confer on the Grantee any right to
continue in the employ of the Company or any of its direct or
indirect subsidiaries, or to interfere with or limit in any way the
right of the Company or any of its direct or indirect subsidiaries
to terminate such employment at any time.
4. Restrictions on Exercise; Non-Transferability of Option;
Repurchase of Option.
(a) Restrictions on Exercise. The Option may be exercised
only with respect to full shares of Common Stock. No fractional
shares of Common Stock shall be issued. Notwithstanding any other
provision of this Agreement, the Option may not be exercised in
whole or in part, and no certificates representing Shares shall be
delivered, (i) unless all requisite approvals and consents of any
governmental authority of any kind having jurisdiction over the
exercise of options shall have been secured, (ii) unless the
purchase of the Shares upon the exercise of the Option shall be
exempt from registration under applicable U.S. federal and state
securities laws, and applicable non-U.S. securities laws, or the
Shares shall have been registered under such laws, (iii) unless all
applicable U.S. federal, state and local and non-U.S. tax
withholding requirements shall have been satisfied and (iv) if such
exercise would result in a material violation of the terms or
provisions of or a default or an event of default under any of the
Financing Agreements (as such term is defined in Section 8). The
Company shall use commercially reasonable efforts to obtain the
consents and approvals referred to in clause (i) of the preceding
sentence, to satisfy the withholding requirements referred to in
clause (iii) of the preceding sentence and to obtain any required
consent of the parties to the Financing Agreements referred to in
clause (iv) of the preceding sentence so as to permit the Option
to be exercised.
(b) Non-Transferability of Option. The Option may be
exercised only by the Grantee or by his estate. The Option is not
assignable or transferable, in whole or in part, and it may not,
directly or indirectly, be offered, transferred, sold, pledged,
assigned, alienated, hypothecated or otherwise disposed of or
encumbered (including without limitation by gift, operation of law
or otherwise) other than by will or by the laws of descent and
distribution to the estate of the Grantee upon his death, provided
that the deceased Grantee's beneficiary or the representative of
his estate shall acknowledge and agree in writing, in a form
reasonably acceptable to the Company, to be bound by the provisions
of this Agreement as if such beneficiary or the estate were the
Grantee.
(c) Repurchase of Option on Termination of Employment. If
the Grantee's active employment with the Company and any direct and
indirect subsidiaries of the Company that employ the Grantee is
terminated for any reason whatsoever, the Company shall have an
option to purchase all (but not less than all) of the portion of
the Option that is exercisable on the effective date of termination
of employment (the "Covered Option"), and shall have 30 days from
the date of the Grantee's termination (the "First Purchase Period")
during which to give notice in writing to the Grantee (or if his
employment was terminated by his death, his estate) of its election
to exercise or not to exercise such right to purchase the Covered
Option. If the Company does not give notice that it intends to
exercise its right to purchase the Covered Option within the First
Purchase Period, The Clayton & Dubilier Private Equity Fund II
Limited Partnership ("Fund II") shall have the right to purchase
the Covered Option and shall have 30 days following the end of the
First Purchase Period, or 30 days from the date of receipt by
Fund II of written notice that the Company does not intend to
exercise such right, whichever is earlier (the "Second Purchase
Period"), to give notice in writing to the Grantee (or his estate)
of the Fund II's exercise of its right to purchase the Covered
Option. If the rights to purchase the Covered Option of the
Company and Fund II granted in this subsection are not exercised
as provided herein, the Grantee (or his estate) shall be entitled
to retain the Covered Option, subject to all of the provisions of
this Agreement. If the Company and Fund II have failed to exercise
their respective rights to purchase the Covered Option pursuant to
this Section 4(c) within the time periods specified herein, and if
the Grantee's active employment with each of the Company and any
direct and indirect subsidiaries of the Company that employ the
Grantee is terminated (A) by such employer or employers without
Cause or (B) by the Grantee by Retirement at Normal Retirement Age
or (C) by reason of Permanent Disability or death, on notice from
the Grantee (or his estate) in writing and delivered to the Company
within 30 days following the end of the Second Purchase Period, the
Company shall purchase the Covered Option.
All purchases pursuant to this Section 4(c) by the Company or
Fund II shall be for a purchase price and in the manner prescribed
by Sections 4(g), (h) and (i).
(d) Certain Definitions. As used in this Agreement the
following terms shall have the following meanings:
(i) "Cause" shall mean (A) the willful failure by the
Grantee to perform substantially his employment duties (other
than any such failure due to physical or mental illness) and
continuance of such failure for more than 20 days after
written notice of such failure by the Company, (B) the
engaging by the Grantee in serious misconduct that is
injurious to the Company or any subsidiary of the Company,
(C) the conviction of the Grantee of, or the entering by the
Grantee of a plea of nolo contendere to, a crime that
constitutes a felony or (D) the willful and material breach
by the Grantee of any covenant not to disclose any information
pertaining to the Company or any of its subsidiaries or not
to compete or interfere with the Company or any of its
subsidiaries.
(ii) "Change of Control" shall mean any transaction the
result of which is that (A) any person (including a "group"
as such term is used in Section 13(d)(3) of the Securities
Exchange Act of 1934, as amended), other than Fund II and/or
partners of Fund II as a group, shall, directly or indirectly,
own or control 50% or more of the voting common equity of the
Company or Scott or any successor thereto or (B) all or
substantially all of the assets of the Company or Scott shall
be transferred or leased to any person or group of persons.
(iii) "Permanent Disability" shall mean a physical or
mental disability or infirmity that prevents the performance
of such Grantee's employment-related duties lasting (or likely
to last, based on competent medical evidence presented to the
Board) for a continuous period of six months or longer. The
Board's reasoned and good faith judgment of Permanent
Disability shall be final and shall be based on such competent
medical evidence as shall be presented to it by the Grantee
or by any physician or group of physicians or other competent
medical expert employed by the Grantee or the Company to
advise the Board.
(iv) "Retirement at Normal Retirement Age" shall mean
retirement at or after normal retirement age according to the
Company's or its subsidiaries' normal company policies.
(e) Notice of Termination. The Company shall give written
notice of any termination of the Grantee's active employment with
each of the Company and any direct or indirect subsidiaries of the
Company that employ the Grantee to Fund II, except that if such
termination (if other than as a result of death) is by the Grantee,
the Grantee shall give written notice of such termination to the
Company and the Company shall give written notice of such
termination to Fund II.
(f) Public Offering. In the event that an underwritten
public offering in the United States of the Common Stock by an
underwriter of nationally recognized standing (a "Public Offering")
has been consummated, none of the Company, Fund II or the Grantee
shall have any rights to purchase or sell the Covered Option, as
the case may be, pursuant to this Section 4, and this Section 4
shall not apply to a sale as part of a Public Offering.
(g) Purchase Price. Subject to Section 8(c), the purchase
price to be paid to the Grantee (or his estate) for the Covered
Option (the "Purchase Price") shall be equal to the difference
between (A) the fair market value of the Shares which may be
purchased upon exercise of the Covered Option (the "Fair Market
Value") and (B) the aggregate exercise price of the Covered Option.
Whenever a determination of Fair Market Value is required by this
Agreement, such Fair Market Value shall be determined as of the
effective date of the termination of employment that gives rise to
the repurchase and shall be an amount determined in good faith by
the Board. In making a determination of Fair Market Value, due
consideration shall be given to such factors as the earnings and
certain other financial and operating information of the Company
in recent periods, the potential value of the Company as a whole,
the future prospects of the Company and the industries in which it
competes, the history and management of the Company, the general
condition of the securities markets and the fair market value of
securities of companies engaged in businesses similar to those of
the Company. The Fair Market Value as determined in good faith by
the Board shall, in the absence of fraud, be binding and conclusive
upon all parties hereto. If the Company at any time subdivides (by
any stock split, stock dividend or otherwise) the Common Stock into
a greater number of shares, or combines (by reverse stock split or
otherwise) the Common Stock into a smaller number of shares, the
Purchase Price shall be appropriately adjusted to reflect such
subdivision or combination.
(h) Payment. Subject to Section 8, the completion of a
purchase pursuant to this Section 4 shall take place at the
principal office of the Company on the tenth business day following
(i) the receipt by the Grantee (or his estate) of Fund II's or the
Company's notice of its exercise of the right to purchase the
Covered Option pursuant to Section 4(c) or (ii) the Company's
receipt of notice by the Grantee (or his estate) to sell the
Covered Option pursuant to Section 4(c). The Purchase Price shall
be paid by delivery to the Grantee (or his estate) of a certified
or bank check for the Purchase Price payable to the order of the
Grantee (or his estate), against delivery of such instruments as
the Company may reasonably request signed by the Grantee (or his
estate).
(i) Application of the Purchase Price to Certain Loans. The
Grantee agrees that the Company and Fund II shall be entitled to
apply any amounts to be paid by the Company or Fund II, as the case
may be, to repurchase the Covered Option pursuant to this Section 4
to discharge any indebtedness of the Grantee to the Company or any
of its direct or indirect subsidiaries, or indebtedness that is
guaranteed by the Company or any of its subsidiaries, including,
but not limited to, any indebtedness of the Grantee incurred to
purchase any shares of Common Stock.
(j) Withholding. Whenever Shares are to be issued pursuant
to the Option, the Company may require the recipient of the Shares
to remit to the Company an amount sufficient to satisfy any
applicable U.S. federal, state and local and non-U.S. tax
withholding requirements. In the event any cash is paid to the
Grantee or his estate or beneficiary pursuant to this Section 4,
the Company shall have the right to withhold an amount from such
payment sufficient to satisfy any applicable U.S. federal, state
and local and non-U.S. tax withholding requirements. If shares of
Common Stock are traded on a national securities exchange or bid
and ask prices for shares of Common Stock are quoted on the "NASDAQ
National Market System" operated by the National Association of
Securities Dealers, Inc., the Company may, if requested by the
Grantee, withhold shares to satisfy applicable withholding
requirements, subject to any rules adopted by the Board regarding
compliance with applicable law, including, but not limited to,
Section 16(b) of the U.S. Securities Exchange Act of 1934, as
amended (the "Exchange Act").
5. Manner of Exercise. To the extent that the Option shall
have become and remains exercisable as provided in Section 2 and
subject to such reasonable administrative regulations as the Board
or the Committee may have adopted, the Option may be exercised, in
whole or in part, by notice to the Secretary of the Company in
writing given 15 business days prior to the date on which the
Grantee will so exercise the Option (the "Exercise Date"),
specifying the number of Shares with respect to which the Option
is being exercised (the "Exercise Shares") and the Exercise Date,
provided that if shares of Common Stock are traded on a U.S.
national securities exchange or bid and ask prices for shares of
Common Stock are quoted over the "NASDAQ National Market System"
operated by the National Association of Securities Dealers, Inc.,
notice may be given five business days before the Exercise Date.
On or before the Exercise Date, the Company and the Grantee shall
enter into a Management Stock Subscription Agreement (the
"Management Stock Subscription Agreement") substantially in the
form attached hereto as Exhibit A, or in such other form as may be
agreed upon by the Company and the Grantee. In accordance with the
Management Stock Subscription Agreement, (a) on or before the
Exercise Date, the Grantee shall deliver to the Company full
payment for the Exercise Shares in United States dollars in cash,
or cash equivalent satisfactory to the Company, and in an amount
equal to the aggregate purchase price for the Exercise Shares and
(b) on the Exercise Date, the Company shall deliver to the Grantee
a certificate or certificates representing the Exercise Shares,
registered in the name of the Grantee. If shares of Common Stock
are listed for trading on a national securities exchange or bid
and ask prices for shares of Common Stock are quoted over the
"NASDAQ National Market System" operated by the National
Association of Securities Dealers, Inc., the Grantee may, in lieu
of cash, tender shares of Common Stock having a Fair Market Value
on the Exercise Date equal to the purchase price of the Exercise
Shares or may deliver a combination of cash and shares of Common
Stock having a Fair Market Value equal to the difference between
the exercise price and the amount of such cash as payment for the
purchase price of the Exercise Shares, subject to such rules and
regulations as may be adopted by the Board or the Committee to
provide for the compliance of such payment procedure with
applicable law, including Section 16(b) of the Exchange Act. The
Company may require the Grantee to furnish or execute such other
documents as the Company shall reasonably deem necessary (i) to
evidence such exercise, (ii) to determine whether registration is
then required under the U.S. Securities Act of 1933, as amended
(the "Securities Act"), and (iii) to comply with or satisfy the
requirements of the Securities Act, applicable state or non-U.S.
securities laws or any other law.
6. Grantee's Representations, Warranties and Covenants.
(a) Investment Intention. The Grantee represents and
warrants that the Option has been, and any Exercise Shares will
be, acquired by him solely for his own account for investment and
not with a view to or for sale in connection with any distribution
thereof. The Grantee agrees that he will not, directly or
indirectly, offer, transfer, sell, pledge, hypothecate or otherwise
dispose of all or any portion of the Option or any of the Exercise
Shares (or solicit any offers to buy, purchase or otherwise acquire
or take a pledge of all or any portion of the Option or any of the
Exercise Shares), except in compliance with the Securities Act and
the rules and regulations of the U.S. Securities and Exchange
Commission (the "Commission") thereunder, and in compliance with
applicable state securities or "blue sky" laws and any applicable
non-U.S. securities laws. The Grantee further understands,
acknowledges and agrees that none of the Shares may be transferred,
sold, pledged, hypothecated or otherwise disposed of (i) unless the
provisions of the related Management Stock Subscription Agreement
shall have been complied with or have expired, (ii) unless (A) such
disposition is pursuant to an effective registration statement
under the Securities Act, (B) the Grantee shall have delivered to
the Company an opinion of counsel, which opinion and counsel shall
be reasonably satisfactory to the Company, to the effect that such
disposition is exempt from the provisions of Section 5 of the
Securities Act or (C) a no-action letter from the Commission,
reasonably satisfactory to the Company, shall have been obtained
with respect to such disposition and (iii) unless such disposition
is pursuant to registration under any applicable state securities
laws or an exemption therefrom. If the Grantee is a citizen or
resident of any country other than the United States, or the
Grantee desires to effect any transfer in any such country, in
addition to the foregoing counsel for the Grantee (which counsel
shall be reasonably satisfactory to the Company) shall have
furnished the Company with an opinion or other advice reasonably
satisfactory to the Company to the effect that such transfer will
comply with the securities laws of such jurisdiction.
Notwithstanding the foregoing, the Company acknowledges and agrees
that no opinion of counsel shall be required in connection with a
transfer to the Company or Fund II.
(b) Legend. The Grantee acknowledges that any certificate
representing the Exercise Shares shall bear the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED, OR QUALIFIED UNDER ANY STATE SECURITIES LAWS,
AND MAY NOT BE TRANSFERRED, SOLD, PLEDGED, HYPOTHECATED
OR OTHERWISE DISPOSED OF UNLESS (A) SUCH DISPOSITION IS
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
SUCH ACT, (B) THE HOLDER HEREOF SHALL HAVE DELIVERED TO
AND IN COMPLIANCE WITH ANY APPLICABLE STATE SECURITIES
LAWS THE COMPANY AN OPINION OF COUNSEL, WHICH OPINION
AND COUNSEL SHALL BE SATISFACTORY TO THE COMPANY, TO THE
EFFECT THAT SUCH DISPOSITION IS EXEMPT FROM THE
PROVISIONS OF SECTION 5 OF SUCH ACT AND FROM ANY
APPLICABLE STATE SECURITIES LAWS OR (C) A NO-ACTION
LETTER FROM THE U.S. SECURITIES AND EXCHANGE COMMISSION,
AND A SIMILAR LETTER OR OPINION FROM ANY APPLICABLE
STATE SECURITIES AUTHORITIES CONCERNED, IN EACH CASE
SATISFACTORY TO COUNSEL FOR THE COMPANY, SHALL HAVE BEEN
OBTAINED WITH RESPECT TO SUCH DISPOSITION.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT
TO THE PROVISIONS OF A MANAGEMENT STOCK SUBSCRIPTION
AGREEMENT, DATED AS OF ___________, 199_, AND NEITHER
THIS CERTIFICATE NOR THE SHARES REPRESENTED BY IT ARE
ASSIGNABLE OR OTHERWISE TRANSFERABLE EXCEPT IN
ACCORDANCE WITH THE PROVISIONS OF SUCH MANAGEMENT STOCK
SUBSCRIPTION AGREEMENT, A COPY OF WHICH IS ON FILE WITH
THE SECRETARY OF THE COMPANY. THE SHARES REPRESENTED
BY THIS CERTIFICATE ARE ENTITLED TO THE BENEFITS OF AND
ARE BOUND BY THE OBLIGATIONS SET FORTH IN A REGISTRATION
AND PARTICIPATION AGREEMENT, DATED AS OF DECEMBER 30,
1986, AMONG THE COMPANY AND CERTAIN STOCKHOLDERS OF THE
COMPANY, A COPY OF WHICH IS ON FILE WITH THE SECRETARY
OF THE COMPANY.
(c) Securities Law Matters. The Grantee acknowledges receipt
of advice from the Company that the Option has not been registered
under the Securities Act or qualified under any state or non-U.S.
securities laws and, upon exercise of the Option, (i) the Exercise
Shares will not be registered under the Securities Act or qualified
under any state or non-U.S. securities laws, (ii) the Exercise
Shares must be held indefinitely and the Grantee must continue to
bear the economic risk of the investment in the Exercise Shares
unless such Exercise Shares are subsequently registered under the
Securities Act and any applicable state securities laws, or under
any applicable non-U.S. securities laws, or an exemption from such
registration is available, (iii) it is not anticipated there will
be any public market for the Exercise Shares, (iv) when and if the
Exercise Shares may be disposed of without registration in reliance
upon Rule 144 promulgated under the Securities Act, such
disposition can be made only in limited amounts in accordance with
the terms and conditions of such Rule, (v) sales of the Exercise
Shares may be difficult to effect because of the absence of public
information concerning the Company, (vi) a restrictive legend in
the form heretofore set forth shall be placed on the certificates
representing the Exercise Shares and (vii) a notation shall be made
in the appropriate records of the Company indicating that the
Exercise Shares are subject to restrictions on transfer and, if the
Company should in the future engage the services of a stock
transfer agent, appropriate stop transfer restrictions will be
issued to such transfer agent with respect to the Exercise Shares.
(d) Compliance with Rule 144. If any of the Exercise Shares
are to be disposed of in accordance with Rule 144 under the
Securities Act, the Grantee shall transmit to the Company an
executed copy of Form 144 (if required by Rule 144) no later than
the time such form is required to be transmitted to the Commission
for filing and such other documentation as the Company may
reasonably require to assure compliance with Rule 144 in connection
with such disposition.
(e) Ability to Bear Risk. The Grantee covenants that he will
not exercise all or any portion of the Option unless (i) the
financial situation of the Grantee is such that he can afford to
bear the economic risk of holding the Exercise Shares for an
indefinite period and (ii) he can afford to suffer the complete
loss of his investment in the Exercise Shares.
(f) Access to Information. The Grantee represents and
warrants that (i) he has been granted the opportunity to ask
questions of, and receive answers from, representatives of the
Company concerning the terms and conditions of the Options and the
purchase of the Exercise Shares upon exercise of the Options, and
to obtain any additional information that he deems necessary to
verify the accuracy of the information contained in the Memorandum
and such other material, (ii) his knowledge and experience in
financial and business matters is such that he is capable of
evaluating the risks of an investment in the Exercise Shares and
(iii) he is an officer or key employee of the Company or a direct
or indirect subsidiary of the Company on the date hereof.
(g) Registration; Restrictions on Sale upon Public Offering.
In respect of any Shares purchased upon exercise of all or any
portion of the Option, the Grantee shall be entitled to the rights
and subject to the obligations created under the Registration and
Participation Agreement, dated as of December 30, 1986 (the
"Registration Agreement"), among the Company and certain
stockholders of the Company, to the extent set forth therein. The
Grantee agrees that, in the event that the Company files a
registration statement under the Securities Act with respect to an
underwritten public offering of any shares of its capital stock,
the Grantee will not effect any public sale or distribution of any
shares of the Common Stock (other than as part of such underwritten
public offering) during the 20 days prior to and the 90 days (or
such longer period of days as may be set forth in Section 3.4(e)
of the Registration Agreement, as it may be amended from time to
time) after the effective date of such registration statement.
(h) Section 83(b) Election. The Grantee agrees that, within
20 days of any Exercise Date, he shall give notice to the Company
as to whether or not he has made an election pursuant to Section
83(b) of the U.S. Internal Revenue Code of 1986, as amended, with
respect to the Exercise Shares purchased on such date, and
acknowledges that he will be solely responsible for any and all tax
liabilities payable by him in connection with his receipt of the
Exercise Shares or attributable to his making or failing to make
such an election. The Grantee recognizes and agrees that he is
solely responsible for all federal, state and local tax
consequences associated with the granting and exercise of the
Option including, without limitation, any failure or any part of
the Option to qualify as an Incentive Stock Option.
7. Representations, Warranties and Covenants of the Company.
The Company represents and warrants to the Grantee that (a) the
Company has been duly incorporated and is an existing corporation
in good standing under the laws of the State of Delaware, (b) this
Agreement has been duly authorized, executed and delivered by the
Company and constitutes a valid and legally binding obligation of
the Company enforceable against the Company in accordance with its
terms, (c) all material regulatory consents, authorizations,
approvals and filings required to be obtained or made by the
Company under the federal laws of the United States, the General
Corporation Law of the State of Delaware and the laws of any
applicable foreign jurisdictions for the grant of the Option
pursuant to the terms hereof have been obtained or made, (d) the
execution, delivery and performance of this Agreement, the grant
of the Option contemplated hereby, and the issuance and sale of the
Shares upon exercise of the Option, will not result in a breach or
violation of any of the terms and provisions of, or constitute a
default under, any agreement or instrument to which the Company or
any of its subsidiaries is a party or by which the Company or any
such subsidiary is bound, other than any such breach, violation or
default as would not cause the grant of the Option pursuant to the
terms hereof to be void or voidable, (e) the Option, when granted
in accordance with the terms hereof, will be duly and validly
issued, and (f) the Shares, when issued, delivered and paid for,
upon exercise of the Option in accordance with the terms hereof and
the Management Stock Subscription Agreement, will be duly and
validly issued, fully paid and nonassessable, and free and clear
of any liens or encumbrances other than those created pursuant to
this Agreement or otherwise in connection with the transactions
contemplated hereby. The Company covenants that it will seek the
approval of the stockholders of the Company of the grant of the
Options in a timely manner, and in any event within six months of
the date hereof.
8. Certain Restrictions on Repurchases.
(a) Financing Agreements, etc. Notwithstanding any other
provision of this Agreement, the Company shall not be obligated to
repurchase all or any portion of the Option from the Grantee if (i)
such purchase would result in a violation of the terms or
provisions of, or result in a default or an event of default under,
(A) the Second Amended and Restated Revolving Credit and Term Loan
Agreement, dated as of November 1, 1988, as may from time to time
be amended, among Scott, the banks party thereto, and Manufacturers
Hanover Trust Company as agent for such banks, (B) the Indenture,
dated as of December 30, 1986, among Scott, the Company, as
guarantor, and The Connecticut National Bank, as trustee, with
respect to Scott's 13% Senior Subordinated Notes due December 15,
1996, (C) the Indenture, dated as of December 30, 1986, among
Scott, the Company, as guarantor, and The Connecticut National
Bank, as trustee, with respect to Scott's 13-1/2% Subordinated
Debentures due December 15, 1998, or (D) any other financing or
security agreement or document to be entered into at any time in
connection with financing the continuing operations and expansion
of the business of the Company after the date hereof (such
agreements and documents, the "Financing Agreements"), (ii) such
repurchase would violate any of the terms or provisions of the
Certificate of Incorporation of the Company or (iii) the Company
has no funds legally available therefor under the General
Corporation Law of the State of Delaware.
(b) Delay of Repurchase. In the event that a repurchase by
the Company otherwise required under Section 4(c) is prevented
solely by the terms of Section 8(a), then the Covered Option shall
be repurchased by the Company without the application of further
conditions or impediments (other than as set forth in Section 4 or
in this Section 8) at the first opportunity thereafter when such
repurchase will not result in any default, event of default or
violation under any of the Financing Agreements or in a violation
of any term or provision of the Certificate of Incorporation of the
Company, as the case may be, and when the Company, as the case may
be, has funds legally available therefor.
(c) Purchase Price Adjustment. In the event that a
repurchase of the Covered Option from the Grantee is delayed
pursuant to this Section 8, the purchase price for such Option when
the repurchase of such Option eventually takes place as
contemplated by Section 8(b) shall be (i) the Purchase Price of
such Covered Option determined in accordance with Section 4(g) at
the time that the repurchase of such Option would have occurred
but for the operation of this Section 8, plus (ii) an amount equal
to interest on such Purchase Price at the rate publicly announced
from time to time by Morgan Guaranty Trust Company of New York as
its reference rate for the period from the date on which the
completion of the repurchase would have taken place but for the
operation of this Section 8 to the date on which such repurchase
actually takes place.
(d) Determination. Notwithstanding any other provision of
this Section 8, the Company agrees that if any repurchase otherwise
required by Section 4(c) is delayed and the provisions of Section
8(a) and 8(b) are invoked, the Company shall provide the Grantee
with a copy of a resolution duly adopted by the Board or the
Executive Committee of the Board, finding that, in the good faith
opinion of the Board or such Committee, such delay is required by
this Section 8, and specifying the particulars of the violation,
default, event of default or other condition that requires such
delay.
9. No Rights as Stockholder. The Grantee shall have no
voting or other rights as a stockholder of the Company with respect
to any Shares covered by the Option until the exercise of the
Option and the issuance of a certificate or certificates to him for
such Shares. No adjustment shall be made for dividends or other
rights for which the record date is prior to the issuance of such
certificate or certificates.
10. Capital Adjustments. The number and price of the Shares
covered by the Option shall be proportionately adjusted to reflect
any stock dividend, stock split or share combination of the Common
Stock or any recapitalization of the Company. Subject to any
required action by the stockholders of the Company, in any merger,
consolidation, reorganization, exchange of shares, liquidation or
dissolution, the Option shall pertain to the securities and other
property, if any, that a holder of the number of shares of Common
Stock covered by the Option would have been entitled to receive in
connection with such event.
11. Miscellaneous.
(a) Notices. All notices and other communications required
or permitted to be given under this Agreement shall be in writing
and shall be deemed to have been given if delivered personally or
sent by certified or express mail, return receipt requested,
postage prepaid, or by any recognized international equivalent of
such delivery, to the Company, Fund II or the Grantee, as the case
may be, at the following addresses or to such other address as the
Company, Fund II or the Grantee, as the case may be, shall specify
by notice to the others:
(i) if to the Company, to it at:
The Scotts Company
a/o The O.M. Scott & Sons Company
14111 Scottslawn Road
Marysville, OH 43041
Attention: General Counsel
(ii) if to the Grantee, to the Grantee at the address set
forth on the signature page hereof.
(iii) if to Fund II, to:
The Clayton & Dubilier Private Equity
Fund II Limited Partnership
270 Greenwich Avenue
Greenwich, Connecticut 06830
Attention: Clayton & Dubilier Associates
II Limited Partnership,
Joseph L. Rice, III
All such notices and communications shall be deemed to have been
received on the date of delivery or on the third business day after
the mailing thereof. Copies of any notice or other communication
given under this Agreement shall also be given to:
Clayton & Dubilier, Inc.
126 East 56th Street
New York, New York 10022
Attention: Joseph L. Rice, III
and
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Attention: Franci J. Blassberg, Esq.
Fund II also shall be given a copy of any notice or other
communication between the Grantee and the Company under this
Agreement at its address as set forth above.
(b) Binding Effect; Benefits. This Agreement shall be
binding upon and inure to the benefit of the parties to this
Agreement and their respective successors and assigns. Except as
provided in Section 4, nothing in this Agreement, express or
implied, is intended or shall be construed to give any person other
than the parties to this Agreement or their respective successors
or assigns any legal or equitable right, remedy or claim under or
in respect of any agreement or any provision contained herein.
(c) Waiver; Amendment.
(i) Waiver. Any party hereto may by written notice to the
other parties (A) extend the time for the performance of any of
the obligations or other actions of the other parties under this
Agreement, (B) waive compliance with any of the conditions or
covenants of the other parties contained in this Agreement and
(C) waive or modify performance of any of the obligations of the
other parties under this Agreement, provided that any waiver of
the provisions of Section 4 must be consented to by Fund II.
Expect as provided in the preceding sentence, no action taken
pursuant to this Agreement, including, without limitation, any
investigation by or on behalf of any party, shall be deemed to
constitute a waiver by the party taking such action of
compliance with any representations, warranties, covenants or
agreements contained herein. The waiver by any party hereto of
a breach of any provision of this Agreement shall not operate
or be construed as a waiver of any preceding or succeeding
breach and no failure by a party to exercise any right or
privilege hereunder shall be deemed a waiver of such party's
rights or privileges hereunder or shall be deemed a waiver of
such party's rights to exercise the same at any subsequent time
or times hereunder.
(ii) Amendment. This Agreement may be amended, modified
or supplemented only by a written instrument executed by the
Grantee and the Company, provided that any amendment adversely
affecting the rights of Fund II hereunder must be consented to
by Fund II. The parties hereto acknowledge that the Company's
consent to an amendment or modification of this Agreement is
subject to the terms and provisions of the Financing Agreements.
(d) Assignability. Neither this Agreement nor any right,
remedy, obligation or liability arising hereunder or by reason
hereof shall be assignable by the Company or the Grantee without
the prior written consent of the other parties. Fund II may assign
from time to time all or any portion of its rights under Section
4 to one or more persons or other entities designated by it.
(e) Applicable Law. This Agreement shall be governed by and
construed in accordance with the law of the State of Delaware,
regardless of the law that might be applied under principles of
conflict of laws.
(f) Section and Other Headings. The section and other
headings contained in this Agreement are for reference purposes
only and shall not affect the meaning or interpretation of this
Agreement.
(g) Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an
original and all of which together shall constitute one and the
same instrument.
IN WITNESS WHEREOF, the Company and the Grantee have executed
this Agreement as of the date first above written.
THE SCOTTS COMPANY
By: /s/ Tadd C. Seitz
Name: Tadd C. Seitz
Title: Chairman and Chief
Executive Officer
THE GRANTEE:
/s/ Theodore J. Host
Theodore J. Host
Address of the Grantee:
10019 Wellington Boulevard
Powell, Ohio 43065
EXHIBIT 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration
Statements of The Scotts Company on Form S-8 (File Nos. 33-47073
and 33-60056) and on Form S-3 (File No. 33-53941) of our report
dated November 14, 1994 on our audits of the consolidated financial
statements and our report dated November 14, 1994 on our audits of
the financial statement schedules of The Scotts Company as of
September 30, 1993 and 1994 and for the years ended September 30,
1992, 1993 and 1994, which reports are included in this Annual
Report on Form 10-K.
Coopers & Lybrand L.L.P.
Columbus, Ohio
December 28, 1994
Exhibit 3(b)
Regulations of Registrant
REGULATIONS
OF
THE SCOTTS COMPANY
INDEX
Section Caption Page No.
ARTICLE ONE
MEETINGS OF SHAREHOLDERS
1.01 Annual Meetings . 1
1.02 Calling of Meetings . 1
1.03 Place of Meetings . . 1
1.04 Notice of Meetings. . 1
1.05 Waiver of Notice. 2
1.06 Quorum. 2
1.07 Votes Required. . 2
1.08 Order of Business . . 2
1.09 Shareholders Entitled to Vote . . 3
1.10 Proxies 3
1.11 Inspectors of Election. . 3
ARTICLE TWO
DIRECTORS
2.01 Authority and Qualifications. 3
2.02 Number of Directors and Term of
Office. 3
2.03 Election. . . 4
2.04 Removal 4
2.05 Vacancies . . 4
2.06 Meetings. . . 5
2.07 Notice of Meetings. . 5
2.08 Waiver of Notice. 5
2.09 Quorum. 6
2.10 Executive and Other Committees. . 6
2.11 Compensation. 6
2.12 By-Laws 7
ARTICLE THREE
OFFICERS
3.01 Officers. . . 7
3.02 Tenure of Office. 7
3.03 Duties of the Chairman of the Board . 7
3.04 Duties of the President . 8
3.05 Duties of the Vice Presidents . . 8
3.06 Duties of the Secretary . 8
3.07 Duties of the Treasurer . 9
ARTICLE FOUR
SHARES
4.01 Certificates. 10
4.02 Transfers . . 10
4.03 Transfer Agents and Registrars. . 11
4.04 Lost, Wrongfully Taken or Destroyed
Certificates. . . 11
ARTICLE FIVE
INDEMNIFICATION AND INSURANCE
5.01 Mandatory Indemnification . . 11
5.02 Court-Approved Indemnification. . 12
5.03 Indemnification for Expenses. 13
5.04 Determination Required. . 13
5.05 Advances for Expenses . . 14
5.06 Article FIVE Not Exclusive. . 14
5.07 Insurance . . 14
5.08 Certain Definitions . 15
5.09 Venue . 15
ARTICLE SIX
MISCELLANEOUS
6.01 Amendments. . 16
6.02 Action by Shareholders or Directors
Without a Meeting . . . . . . . . . . 16
CODE OF REGULATIONS
OF
THE SCOTTS COMPANY
ARTICLE ONE
MEETINGS OF SHAREHOLDERS
Section 1.01. Annual Meetings. The annual meeting of
the shareholders for the election of directors, for the
consideration of reports to be laid before such meeting and for
the transaction of such other business as may properly come before
such meeting, shall be held on the second Tuesday of March in each
year or on such other date as may be fixed from time to time by
the directors.
Section 1.02. Calling of Meetings. Meetings of the
shareholders may be called only by the chairman of the board, the
president, or, in case of the president's absence, death, or
disability, the vice president authorized to exercise the author-
ity of the president; the secretary; the directors by action at a
meeting, or a majority of the directors acting without a meeting;
or the holders of at least a majority of all shares outstanding
and entitled to vote thereat.
Section 1.03. Place of Meetings. All meetings of share-
holders shall be held at the principal office of the corporation,
unless otherwise provided by action of the directors. Meetings of
shareholders may be held at any place within or without the State
of Ohio.
Section 1.04. Notice of Meetings. (A) Written notice
stating the time, place and purposes of a meeting of the share-
holders shall be given either by personal delivery or by mail not
less than seven nor more than sixty days before the date of the
meeting, (1) to each shareholder of record entitled to notice of
the meeting, (2) by or at the direction of the chairman of the
board, the president or the secretary. If mailed, such notice
shall be addressed to the shareholder at his address as it appears
on the records of the corporation. Notice of adjournment of a
meeting need not be given if the time and place to which it is
adjourned are fixed and announced at such meeting. In the event
of a transfer of shares after the record date for determining the
shareholders who are entitled to receive notice of a meeting of
shareholders, it shall not be necessary to give notice to the
transferee. Nothing herein contained shall prevent the setting of
a record date in the manner provided by law, the Articles or the
Regulations for the determination of shareholders who are entitled
to receive notice of or to vote at any meeting of shareholders or
for any purpose required or permitted by law.
(B) Following receipt by the president or the secretary
of a request in writing, specifying the purpose or purposes for
which the persons properly making such request have called a
meeting of the shareholders, delivered either in person or by
registered mail to such officer by any persons entitled to call a
meeting of shareholders, such officer shall cause to be given to
the shareholders entitled thereto notice of a meeting to be held
on a date not less than seven nor more than sixty days after the
receipt of such request, as such officer may fix. If such notice
is not given within fifteen days after the receipt of such request
by the president or the secretary, then, and only then, the persons
properly calling the meeting may fix the time of meeting and give
notice thereof in accordance with the provisions of the
Regulations.
Section 1.05. Waiver of Notice. Notice of the time,
place and purpose or purposes of any meeting of shareholders may
be waived in writing, either before or after the holding of such
meeting, by any shareholder, which writing shall be filed with or
entered upon the records of such meeting. The attendance of any
shareholder, in person or by proxy, at any such meeting without
protesting the lack of proper notice, prior to or at the
commencement of the meeting, shall be deemed to be a waiver by such
shareholder of notice of such meeting.
Section 1.06. Quorum. At any meeting of shareholders,
the holders of a majority of the voting shares of the corporation
then outstanding and entitled to vote thereat, present in person
or by proxy, shall constitute a quorum for such meeting. The
holders of a majority of the voting shares represented at a
meeting, whether or not a quorum is present, or the chairman of
the board, the president, or the officer of the corporation acting
as chairman of the meeting, may adjourn such meeting from time to
time, and if a quorum is present at such adjourned meeting any
business may be transacted as if the meeting had been held as
originally called.
Section 1.07. Votes Required. At all elections of
directors, the candidates receiving the greatest number of votes
shall be elected. Any other matter submitted to the shareholders
for their vote shall be decided by the vote of such proportion of
the shares, or of any class of shares, or of each class, as is
required by law, the Articles or the Regulations.
Section 1.08. Order of Business. The order of business
at any meeting of shareholders shall be determined by the officer
of the corporation acting as chairman of such meeting unless
otherwise determined by a vote of the holders of a majority of the
voting shares of the corporation then outstanding, present in
person or by proxy, and entitled to vote at such meeting.
Section 1.09. Shareholders Entitled to Vote. Each
shareholder of record on the books of the corporation on the record
date for determining the shareholders who are entitled to vote at
a meeting of shareholders shall be entitled at such meeting to one
vote for each share of the corporation standing in his name on the
books of the corporation on such record date. The directors may
fix a record date for the determination of the shareholders who are
entitled to receive notice of and to vote at a meeting of
shareholders, which record date shall not be a date earlier than
the date on which the record date is fixed and which record date
may be a maximum of sixty days preceding the date of the meeting
of shareholders.
Section 1.10. Proxies. At meetings of the share-
holders, any shareholder of record entitled to vote thereat may be
represented and may vote by a proxy or proxies appointed by an
instrument in writing signed by such shareholder, but such
instrument shall be filed with the secretary of the meeting before
the person holding such proxy shall be allowed to vote thereunder.
No proxy shall be valid after the expiration of eleven months after
the date of its execution, unless the shareholder executing it
shall have specified therein the length of time it is to continue
in force.
Section 1.11. Inspectors of Election. In advance of
any meeting of shareholders, the directors may appoint inspectors
of election to act at such meeting or any adjournment thereof; if
inspectors are not so appointed, the officer of the corporation
acting as chairman of any such meeting may make such appointment.
In case any person appointed as inspector fails to appear or act,
the vacancy may be filled only by appointment made by the directors
in advance of such meeting or, if not so filled, at the meeting by
the officer of the corporation acting as chairman of such meeting.
No other person or persons may appoint or require the appointment
of inspectors of election.
ARTICLE TWO
DIRECTORS
Section 2.01. Authority and Qualifications. Except
where the law, the Articles or the Regulations otherwise provide,
all authority of the corporation shall be vested in and exercised
by its directors. Directors need not be shareholders of the
corporation.
Section 2.02. Number of Directors and Term of Office.
(A) Until changed in accordance with the provisions of
the Regulations, the number of directors of the corporation shall
be nine. Each director shall be elected to serve until the next
annual meeting of shareholders and until his successor is duly
elected and qualified or until his earlier resignation, removal
from office or death.
(B) The number of directors may be fixed or changed at
a meeting of the shareholders called for the purpose of electing
directors at which a quorum is present, only by the affirmative
vote of the holders of not less than a majority of the voting
shares which are represented at the meeting, in person or by proxy,
and entitled to vote on such proposal.
(C) The directors may fix or change the number of
directors and may fill any director's office that is created by an
increase in the number of directors; provided, however, that the
directors may not reduce the number of directors to less than
three.
(D) No reduction in the number of directors shall of
itself have the effect of shortening the term of any incumbent
director.
Section 2.03. Election. At each annual meeting of
shareholders for the election of directors, the successors to the
directors whose term shall expire in that year shall be elected,
but if the annual meeting is not held or if one or more of such
directors are not elected thereat, they may be elected at a special
meeting called for that purpose. The election of directors shall
be by ballot whenever requested by the presiding officer of the
meeting or by the holders of a majority of the voting shares
outstanding, entitled to vote at such meeting and present in person
or by proxy, but unless such request is made, the election shall
be viva voce.
Section 2.04. Removal. A director or directors may be
removed from office, with or without assigning any cause, only by
the vote of the holders of shares entitling them to exercise not
less than a majority of the voting power of the corporation to
elect directors in place of those to be removed. In case of any
such removal, a new director may be elected at the same meeting
for the unexpired term of each director removed. Failure to elect
a director to fill the unexpired term of any director removed shall
be deemed to create a vacancy in the board.
Section 2.05. Vacancies. The remaining directors,
though less than a majority of the whole authorized number of
directors, may, by the vote of a majority of their number, fill
any vacancy in the board for the unexpired term. A vacancy in the
board exists within the meaning of this Section 2.05 in case the
shareholders increase the authorized number of directors but fail
at the meeting at which such increase is authorized, or an
adjournment thereof, to elect the additional directors provided
for, or in case the shareholders fail at any time to elect the
whole authorized number of directors.
Section 2.06. Meetings. A meeting of the directors
shall be held immediately following the adjournment of each annual
meeting of shareholders at which directors are elected, and notice
of such meeting need not be given. The directors shall hold such
other meetings as may from time to time be called, and such other
meetings of directors may be called only by the chairman of the
board, the president, or any two directors. All meetings of
directors shall be held at the principal office of the corporation
in Marysville or at such other place within or without the State
of Ohio, as the directors may from time to time determine by a
resolution. Meetings of the directors may be held through any
communications equipment if all persons participating can hear each
other and participation in a meeting pursuant to this provision
shall constitute presence at such meeting.
Section 2.07. Notice of Meetings. Notice of the time
and place of each meeting of directors for which such notice is
required by law, the Articles, the Regulations or the By-Laws shall
be given to each of the directors by at least one of the following
methods:
(A) In a writing mailed not less than three days
before such meeting and addressed to the residence or
usual place of business of a director, as such address
appears on the records of the corporation; or
(B) By telegraph, cable, radio, wireless, facsimile
or a similar writing sent or delivered to the residence
or usual place of business of a director as the same
appears on the records of the corporation, not later than
the day before the date on which such meeting is to be
held; or
(C) Personally or by telephone not later than the
day before the date on which such meeting is to be held.
Notice given to a director by any one of the methods specified in
the Regulations shall be sufficient, and the method of giving
notice to all directors need not be uniform. Notice of any meeting
of directors may be given only by the chairman of the board, the
president or the secretary of the corporation. Any such notice
need not specify the purpose or purposes of the meeting. Notice
of adjournment of a meeting of directors need not be given if the
time and place to which it is adjourned are fixed and announced at
such meeting.
Section 2.08. Waiver of Notice. Notice of any meeting
of directors may be waived in writing, either before or after the
holding of such meeting, by any director, which writing shall be
filed with or entered upon the records of the meeting. The
attendance of any director at any meeting of directors without
protesting, prior to or at the commencement of the meeting, the
lack of proper notice, shall be deemed to be a waiver by him of
notice of such meeting.
Section 2.09. Quorum. A majority of the whole
authorized number of directors shall be necessary to constitute a
quorum for a meeting of directors, except that a majority of the
directors in office shall constitute a quorum for filling a vacancy
in the board. The act of a majority of the directors present at
a meeting at which a quorum is present is the act of the board,
except as otherwise provided by law, the Articles or the
Regulations.
Section 2.10. Executive and Other Committees. The
directors may create an executive committee or any other committee
of directors, to consist of not less than three directors, and may
authorize the delegation to such executive committee or other
committees of any of the authority of the directors, however
conferred, other than that of filling vacancies among the directors
or in the executive committee or in any other committee of the
directors.
Such executive committee or any other committee of
directors shall serve at the pleasure of the directors, shall act
only in the intervals between meetings of the directors, and shall
be subject to the control and direction of the directors. Such
executive committee or other committee of directors may act by a
majority of its members at a meeting or by a writing or writings
signed by all of its members.
Any act or authorization of any act by the executive
committee or any other committee within the authority delegated to
it shall be as effective for all purposes as the act or
authorization of the directors. No notice of a meeting of the
executive committee or of any other committee of directors shall
be required. A meeting of the executive committee or of any other
committee of directors may be called only by the president or by
a member of such executive or other committee of directors.
Meetings of the executive committee or of any other committee of
directors may be held through any communications equipment if all
persons participating can hear each other and participation in such
a meeting shall constitute presence thereat.
Section 2.11. Compensation. Directors shall be entitled
to receive as compensation for services rendered and expenses
incurred as directors, such amounts as the directors may determine.
Section 2.12. By-Laws. The directors may adopt, and
amend from time to time, By-Laws for their own government, which
By-Laws shall not be inconsistent with the law, the Articles or
the Regulations.
ARTICLE THREE
OFFICERS
Section 3.01. Officers. The officers of the corporation
to be elected by the directors shall be a chairman of the board,
a president, a secretary, a treasurer, and, if desired, one or more
vice presidents and such other officers and assistant officers as
the directors may from time to time elect. The chairman of the
board must be a director. Officers need not be shareholders of the
corporation, and may be paid such compensation as the board of
directors may determine. Any two or more offices may be held by
the same person, but no officer shall execute, acknowledge, or
verify any instrument in more than one capacity if such instrument
is required by law, the Articles, the Regulations or the By-Laws
to be executed, acknowledged, or verified by two or more officers.
Section 3.02. Tenure of Office. The officers of the
corporation shall hold office at the pleasure of the directors.
Any officer of the corporation may be removed, either with or
without cause, at any time, by the affirmative vote of a majority
of all the directors then in office; such removal, however, shall
be without prejudice to the contract rights, if any, of the person
so removed.
Section 3.03. Duties of the Chairman of the Board. The
chairman of the board shall preside at all meetings of the
shareholders and directors at which he is present, shall be the
chief executive officer of the corporation, and shall have general
control and supervision of the policies and operations of the
corporation and shall see that all orders and resolutions of the
board of directors are carried into effect. He shall manage and
administer the corporation's business and affairs and shall also
perform all duties and exercise all powers usually pertaining to
the office of a chief executive officer of a corporation. He shall
have the authority to sign, in the name and on behalf of the
corporation, checks, orders, contracts, leases, notes, drafts and
other documents and instruments in connection with the business of
the corporation, and together with the secretary or an assistant
secretary, conveyances of real estate and other documents and
instruments. He shall have the authority to cause the employment
or appointment of such employees and agents of the corporation as
the conduct of the business of the corporation may require, and to
fix their compensation; and to remove or suspend any employee or
agent elected or appointed by the chairman of the board.
Section 3.04. Duties of the President. The president
shall be chief operating officer of the corporation, and, subject
to the control of the chairman of the board, shall have general
and active management of the ordinary business of the corporation
and shall see that all orders and resolutions of the board of
directors are carried into effect. In the absence of the chairman
of the board, the president shall exercise all the powers of the
chairman, including, without limitation, the authority to: (A)
sign, in the name and on behalf of the corporation, checks, orders,
contracts, leases, notes, drafts and other documents and
instruments in connection with the business of the corporation,
and, together with the secretary or an assistant secretary,
conveyances of real estate and other documents and instruments; (B)
cause the employment or appointment of such employees and agents
of the corporation as the conduct of the business of the
corporation may require and to fix their compensation; and (C)
remove or suspend any employee or agent who shall not have been
elected or appointed by the chairman of the board or the board of
directors. The president shall perform such other duties and have
such other powers as the board of directors or the chairman of the
board may from time to time prescribe.
Section 3.05. Duties of the Vice Presidents. Each vice
president shall perform such duties and exercise such powers as may
be assigned to him from time to time by the chairman of the board
or the president. In the absence of the chairman of the board or
the president, the duties of the chairman of the board or the
president shall be performed and his powers may be exercised by
such vice president as shall be designated by the chairman of the
board or the president, or failing such designation, such duties
shall be performed and such powers may be exercised by each vice
president in the order of their earliest election to that office,
subject in any case to review and superseding action by the
chairman of the board or the president.
Section 3.06. Duties of the Secretary. The secretary
shall have the following powers and duties:
(A) He shall keep or cause to be kept a record of
all the proceedings of the meetings of the shareholders
and of the board of directors in books provided for that
purpose.
(B) He shall cause all notices to be duly given in
accordance with the provisions of these Regulations and
as required by law.
(C) Whenever any committee shall be appointed
pursuant to a resolution of the board of directors, he
shall furnish a copy of such resolution to the members
of such committee.
(D) He shall be the custodian of the records of the
corporation.
(E) He shall properly maintain and file all books,
reports, statements, certificates and all other documents
and records required by law, the Articles or these
Regulations.
(F) He shall have charge of the stock books and
ledgers of the corporation and shall cause the stock and
transfer books to be kept in such manner as to show at
any time the number of shares of the corporation of each
class issued and outstanding, the names (alphabetically
arranged) and the addresses of the holders of record of
such shares, the number of shares held by each holder and
the date as of which each became such holder of record.
(G) He shall sign (unless the treasurer, an
assistant treasurer or assistant secretary shall have
signed) certificates representing shares of the
corporation the issuance of which shall have been
authorized by the board of directors.
(H) He shall perform, in general, all duties
incident to the office of secretary and such other duties
as may be specified in these Regulations or as may be
assigned to him from time to time by the board of
directors, the chairman of the board or the president.
Section 3.07. Duties of the Treasurer. The treasurer
shall have the following powers and duties:
(A) He shall have charge and supervision over and
be responsible for the moneys, securities, receipts and
disbursements of the corporation, and shall keep or cause
to be kept full and accurate records of all receipts of
the corporation.
(B) He shall cause the moneys and other valuable
effects of the corporation to be deposited in the name
and to the credit of the corporation in such banks or
trust companies or with such bankers or other
depositaries as shall be selected by the board of
directors, the chairman of the board or the president.
(C) He shall cause the moneys of the corporation
to be disbursed by checks or drafts upon the authorized
depositaries of the corporation and cause to be taken and
preserved proper vouchers for all moneys disbursed.
(D) He shall render to the board of directors, the
chairman of the board or the president, whenever
requested, a statement of the financial condition of the
corporation and of all his transactions as treasurer, and
render a full financial report at the annual meeting of
the shareholders, if called upon to do so.
(E) He shall be empowered from time to time to
require from all officers or agents of the corporation
reports or statements giving such information as he may
desire with respect to any and all financial transactions
of the corporation.
(F) He may sign (unless an assistant treasurer or
the secretary or an assistant secretary shall have
signed) certificates representing shares of the
corporation the issuance of which shall have been
authorized by the board of directors.
(G) He shall perform, in general, all duties
incident to the office of treasurer and such other duties
as may be specified in these Regulations or as may be
assigned to him from time to time by the board of
directors, the chairman of the board or the president.
ARTICLE FOUR
SHARES
Section 4.01. Certificates. Certificates evidencing
ownership of shares of the corporation shall be issued to those
entitled to them. Each certificate evidencing shares of the
corporation shall bear a distinguishing number; the signatures of
the chairman of the board, the president, or a vice president, and
of the secretary, an assistant secretary, the treasurer or an
assistant treasurer (except that when any such certificate is
countersigned by an incorporated transfer agent or registrar, such
signatures may be facsimile, engraved, stamped or printed); and
such recitals as may be required by law. Certificates evidencing
shares of the corporation shall be of such tenor and design as the
directors may from time to time adopt and may bear such recitals
as are permitted by law.
Section 4.02. Transfers. Where a certificate evidencing
a share or shares of the corporation is presented to the
corporation or its proper agents with a request to register
transfer, the transfer shall be registered as requested if:
(1) An appropriate person signs on each certificate so
presented or signs on a separate document an assignment or trans-
fer of shares evidenced by each such certificate, or signs a power
to assign or transfer such shares, or when the signature of an
appropriate person is written without more on the back of each such
certificate; and
(2) Reasonable assurance is given that the indorsement
of each appropriate person is genuine and effective; the
corporation or its agents may refuse to register a transfer of
shares unless the signature of each appropriate person is
guaranteed by a commercial bank or trust company having an office
or a correspondent in the City of New York or by a firm having
membership in the New York Stock Exchange; and
(3) All applicable laws relating to the collection of
transfer or other taxes have been complied with; and
(4) The corporation or its agents are not otherwise
required or permitted to refuse to register such transfer.
Section 4.03. Transfer Agents and Registrars. The
directors may appoint one or more agents to transfer or to register
shares of the corporation, or both.
Section 4.04. Lost, Wrongfully Taken or Destroyed
Certificates. Except as otherwise provided by law, where the owner
of a certificate evidencing shares of the corporation claims that
such certificate has been lost, destroyed or wrongfully taken, the
directors must cause the corporation to issue a new certificate in
place of the original certificate if the owner:
(1) So requests before the corporation has notice that
such original certificate has been acquired by a bona fide
purchaser; and
(2) Files with the corporation, unless waived by the
directors, an indemnity bond, with surety or sureties satisfactory
to the corporation, in such sums as the directors may, in their
discretion, deem reasonably sufficient as indemnity against any
loss or liability that the corporation may incur by reason of the
issuance of each such new certificate; and
(3) Satisfies any other reasonable requirements which
may be imposed by the directors, in their discretion.
ARTICLE FIVE
INDEMNIFICATION AND INSURANCE
Section 5.01. Mandatory Indemnification. The corpor-
ation shall indemnify any officer or director of the corporation
who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative
(including, without limitation, any action threatened or instituted
by or in the right of the corporation), by reason of the fact that
he is or was a director, officer, employee or agent of the cor-
poration, or is or was serving at the request of the corporation
as a director, trustee, officer, employee, member, manager or agent
of another corporation (domestic or foreign, nonprofit or for
profit), limited liability company, partnership, joint venture,
trust or other enterprise, against expenses (including, without
limitation, attorneys' fees, filing fees, court reporters' fees and
transcript costs), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best
interests of the corporation, and with respect to any criminal
action or proceeding, he had no reasonable cause to believe his
conduct was unlawful. A person claiming indemnification under this
Section 5.01 shall be presumed, in respect of any act or omission
giving rise to such claim for indemnification, to have acted in
good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation, and with respect
to any criminal matter, to have had no reasonable cause to believe
his conduct was unlawful, and the termination of any action, suit
or proceeding by judgment, order, settlement or conviction, or upon
a plea of nolo contendere or its equivalent, shall not, of itself,
rebut such presumption.
Section 5.02. Court-Approved Indemnification. Anything
contained in the Regulations or elsewhere to the contrary
notwithstanding:
(A) the corporation shall not indemnify any officer or
director of the corporation who was a party to any completed action
or suit instituted by or in the right of the corporation to procure
a judgment in its favor by reason of the fact that he is or was a
director, officer, employee or agent of the corporation, or is or
was serving at the request of the corporation as a director,
trustee, officer, employee, member, manager or agent of another
corporation (domestic or foreign, nonprofit or for profit), limited
liability company, partnership, joint venture, trust or other
enterprise, in respect of any claim, issue or matter asserted in
such action or suit as to which he shall have been adjudged to be
liable for acting with reckless disregard for the best interests
of the corporation or misconduct (other than negligence) in the
performance of his duty to the corporation unless and only to the
extent that the Court of Common Pleas of Union County, Ohio or the
court in which such action or suit was brought shall determine upon
application that, despite such adjudication of liability, and in
view of all the circumstances of the case, he is fairly and
reasonably entitled to such indemnity as such Court of Common Pleas
or such other court shall deem proper; and
(B) the corporation shall promptly make any such unpaid
indemnification as is determined by a court to be proper as contem-
plated by this Section 5.02.
Section 5.03. Indemnification for Expenses. Anything
contained in the Regulations or elsewhere to the contrary notwith-
standing, to the extent that an officer or director of the
corporation has been successful on the merits or otherwise in
defense of any action, suit or proceeding referred to in
Section 5.01, or in defense of any claim, issue or matter therein,
he shall be promptly indemnified by the corporation against ex-
penses (including, without limitation, attorneys' fees, filing
fees, court reporters' fees and transcript costs) actually and
reasonably incurred by him in connection therewith.
Section 5.04. Determination Required. Any indemni-
fication required under Section 5.01 and not precluded under
Section 5.02 shall be made by the corporation only upon a
determination that such indemnification of the officer or director
is proper in the circumstances because he has met the applicable
standard of conduct set forth in Section 5.01. Such determination
may be made only (A) by a majority vote of a quorum consisting of
directors of the corporation who were not and are not parties to,
or threatened with, any such action, suit or proceeding, or (B) if
such a quorum is not obtainable or if a majority of a quorum of
disinterested directors so directs, in a written opinion by in-
dependent legal counsel other than an attorney, or a firm having
associated with it an attorney, who has been retained by or who has
performed services for the corporation, or any person to be
indemnified, within the past five years, or (C) by the share-
holders, or (D) by the Court of Common Pleas of Union County, Ohio
or (if the corporation is a party thereto) the court in which such
action, suit or proceeding was brought, if any; any such
determination may be made by a court under division (D) of this
Section 5.04 at any time [including, without limitation, any time
before, during or after the time when any such determination may
be requested of, be under consideration by or have been denied or
disregarded by the disinterested directors under division (A) or
by independent legal counsel under division (B) or by the
shareholders under division (C) of this Section 5.04]; and no
failure for any reason to make any such determination, and no
decision for any reason to deny any such determination, by the
disinterested directors under division (A) or by independent legal
counsel under division (B) or by shareholders under division (C)
of this Section 5.04 shall be evidence in rebuttal of the
presumption recited in Section 5.01. Any determination made by the
disinterested directors under division (A) or by independent legal
counsel under division (B) of this Section 5.04 to make
indemnification in respect of any claim, issue or matter asserted
in an action or suit threatened or brought by or in the right of
the corporation shall be promptly communicated to the person who
threatened or brought such action or suit, and within ten days
after receipt of such notification such person shall have the right
to petition the Court of Common Pleas of Union County, Ohio or the
court in which such action or suit was brought, if any, to review
the reasonableness of such determination.
Section 5.05. Advances for Expenses. Expenses
(including, without limitation, attorneys' fees, filing fees, court
reporters' fees and transcript costs) incurred in defending any
action, suit or proceeding referred to in Section 5.01 shall be
paid by the corporation in advance of the final disposition of such
action, suit or proceeding to or on behalf of the officer or
director promptly as such expenses are incurred by him, but only
if such officer or director shall first agree, in writing, to repay
all amounts so paid in respect of any claim, issue or other matter
asserted in such action, suit or proceeding in defense of which he
shall not have been successful on the merits or otherwise:
(A) if it shall ultimately be determined as provided in
Section 5.04 that he is not entitled to be indemnified by the
corporation as provided under Section 5.01; or
(B) if, in respect of any claim, issue or other matter
asserted by or in the right of the corporation in such action or
suit, he shall have been adjudged to be liable for acting with
reckless disregard for the best interests of the corporation or
misconduct (other than negligence) in the performance of his duty
to the corporation, unless and only to the extent that the Court
of Common Pleas of Union County, Ohio or the court in which such
action or suit was brought shall determine upon application that,
despite such adjudication of liability, and in view of all the
circumstances, he is fairly and reasonably entitled to all or part
of such indemnification.
Section 5.06. Article FIVE Not Exclusive. The
indemnification provided by this Article FIVE shall not be
exclusive of, and shall be in addition to, any other rights to
which any person seeking indemnification may be entitled under the
Articles or the Regulations or any agreement, vote of shareholders
or disinterested directors, or otherwise, both as to action in his
official capacity and as to action in another capacity while
holding such office, and shall continue as to a person who has
ceased to be an officer or director of the corporation and shall
inure to the benefit of the heirs, executors, and administrators
of such a person.
Section 5.07. Insurance. The corporation may purchase
and maintain insurance or furnish similar protection, including but
not limited to trust funds, letters of credit, or self-insurance,
on behalf of any person who is or was a director, officer, employee
or agent of the corporation, or is or was serving at the request
of the corporation as a director, trustee, officer, employee,
member, manager or agent of another corporation (domestic or
foreign, nonprofit or for profit), limited liability company,
partnership, joint venture, trust or other enterprise, against any
liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or not the
corporation would have the obligation or the power to indemnify him
against such liability under the provisions of this Article FIVE.
Insurance may be purchased from or maintained with a person in
which the corporation has a financial interest.
Section 5.08. Certain Definitions. For purposes of this
Article FIVE, and as examples and not by way of limitation:
(A) A person claiming indemnification under this
Article FIVE shall be deemed to have been successful on the merits
or otherwise in defense of any action, suit or proceeding referred
to in Section 5.01, or in defense of any claim, issue or other
matter therein, if such action, suit or proceeding shall be
terminated as to such person, with or without prejudice, without
the entry of a judgment or order against him, without a conviction
of him, without the imposition of a fine upon him and without his
payment or agreement to pay any amount in settlement thereof
(whether or not any such termination is based upon a judicial or
other determination of the lack of merit of the claims made against
him or otherwise results in a vindication of him); and
(B) References to an "other enterprise" shall include
employee benefit plans; references to a "fine" shall include any
excise taxes assessed on a person with respect to an employee
benefit plan; and references to "serving at the request of the
corporation" shall include any service as a director, officer,
employee or agent of the corporation which imposes duties on, or
involves services by, such director, officer, employee or agent
with respect to an employee benefit plan, its participants or
beneficiaries; and a person who acted in good faith and in a manner
he reasonably believed to be in the best interests of the
participants and beneficiaries of an employee benefit plan shall
be deemed to have acted in a manner "not opposed to the best
interests of the corporation" within the meaning of that term as
used in this Article FIVE.
Section 5.09. Venue. Any action, suit or proceeding to
determine a claim for indemnification under this Article FIVE may
be maintained by the person claiming such indemnification, or by
the corporation, in the Court of Common Pleas of Union County,
Ohio. The corporation and (by claiming such indemnification) each
such person consent to the exercise of jurisdiction over its or his
person by the Court of Common Pleas of Union County, Ohio in any
such action, suit or proceeding.
ARTICLE SIX
MISCELLANEOUS
Section 6.01. Amendments. The Regulations may be
amended, or new regulations may be adopted, at a meeting of
shareholders held for such purpose, only by the affirmative vote
of the holders of shares entitling them to exercise not less than
a majority of the voting power of the corporation on such proposal,
or without a meeting by the written consent of the holders of
shares entitling them to exercise not less than all of the voting
power of the corporation on such proposal.
Section 6.02. Action by Shareholders or Directors
Without a Meeting. Anything contained in the Regulations to the
contrary notwithstanding, any action which may be authorized or
taken at a meeting of the shareholders or of the directors or of
a committee of the directors, as the case may be, may be author-
ized or taken without a meeting with the affirmative vote or
approval of, and in a writing or writings signed by, all the
shareholders who would be entitled to notice of a meeting of the
shareholders held for such purpose, or all the directors, or all
the members of such committee of the directors, respectively, which
writings shall be filed with or entered upon the records of the
corporation.
Exhibit 11
Computation of Net Income Per Common Share
Exhibit 4(j)
Third Supplemental Indenture, dated as of
September 30, 1994, among Registrant, OMS
and Chemical Bank, as trustee
THIRD SUPPLEMENTAL INDENTURE, dated as of September 30, 1994,
among THE O.M. SCOTT & SONS COMPANY, a corporation duly organized
and existing under the laws of the State of Delaware, having its
principal office at 14111 Scottslawn Road, Marysville, Ohio 43043
("O.M. Scott"), THE SCOTTS COMPANY, a corporation duly organized
and existing under the laws of the State of Ohio, having its
principal office at 14111 Scottslawn Road, Marysville, Ohio 43043
("Scotts"), and CHEMICAL BANK, a banking corporation duly
organized and existing under the laws of the State of New York, as
Trustee (the "Trustee").
R E C I T A L S
WHEREAS, O.M. Scott and The Scotts Company, a corporation
formerly organized and existing under the laws of the State of
Delaware ("Scotts-Delaware") have heretofore executed and
delivered to the Trustee an Indenture, dated as of June 1, 1994
and a First Supplemental Indenture thereto dated June 12, 1994,
and O.M. Scott, Scotts and Scotts-Delaware have heretofore
executed a Second Supplemental Indenture thereto dated as of
September 20, 1994 (pursuant to which Scotts assumed the due and
punctual payment of the principal of and interest on all the
Securities (as defined herein) and the performance of every
covenant of the Indenture (as defined herein) on the part of
Scotts-Delaware to be performed or observed) (as supplemented, the
"Indenture"), providing for the issuance by Scotts of an unlimited
amount of its unsecured debentures, notes or other evidences of
indebtedness (the "Securities");
WHEREAS, pursuant to an Agreement and Plan of Merger dated as
of September 30, 1994 (the "Merger Agreement"), between O.M. Scott
and Scotts, O.M. Scott is merging (the "Merger") with and into
Scotts effective September 30, 1994 (the "Effective Date"), with
Scotts being the survivor of the Merger;
WHEREAS, Section 801 of the Indenture provides that, in the
event O.M. Scott shall consolidate with or merge into any other
corporation, the successor corporation shall expressly assume, by
an indenture supplemental to the Indenture, executed and delivered
to the Trustee, in form satisfactory to the Trustee, the due and
punctual payment of the principal of and interest on all the
Securities and the performance of every covenant of the Indenture
on the part of O.M. Scott to be performed or observed;
WHEREAS, Section 901(1) of the Indenture provides that each
of Scotts and O.M. Scott, when authorized by a Board Resolution,
and the Trustee may enter into a supplemental indenture without
the consent of any Holders to evidence the succession of another
corporation to O.M. Scott and the assumption by any such successor
of the covenants of O.M. Scott in the Indenture and in the
Securities;
WHEREAS, each of Scotts and O.M. Scott has delivered to the
Trustee (i) an Officers' Certificate and an Opinion of Counsel,
each to the effect that the Merger and this Third Supplemental
Indenture comply with Articles Eight and Nine of the Indenture and
that all conditions precedent in the Indenture relating to the
Merger and the execution and delivery of this Third Supplemental
Indenture have been complied with and (ii) a copy of the Board
Resolution authorizing the execution and delivery of this Third
Supplemental Indenture;
WHEREAS, immediately after giving effect to the Merger, no
Event of Default with respect to any series of Securities issued
pursuant to the Indenture, and no event which, after notice or
lapse of time or both, would become an Event of Default, will have
occurred and be continuing; and
WHEREAS, all things necessary to authorize the assumption by
Scotts of O.M. Scott's obligations under the Indenture and to make
this Third Supplemental Indenture, when executed by the parties
hereto, a valid and binding supplement to the Indenture have been
done and performed.
NOW, THEREFORE, for and in consideration of the premises
herein contained and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the
parties hereto do hereby mutually covenant and agree as follows:
SECTION 1. Assumption of Obligations. Scotts hereby
expressly assumes, from and after the Effective Date, the due and
punctual payment of the principal of and interest on all the
Securities and the performance of every covenant of the Indenture
on the part of O.M. Scott to be performed and observed.
SECTION 2. Succession and Substitution. Scotts, from and
after the Effective Date, by virtue of the aforesaid assumption
and the delivery of this Third Supplemental Indenture, shall
succeed to and be substituted for and may exercise every right and
power of O.M. Scott under the Indenture with the same effect as if
Scotts had been named as O.M. Scott in the Indenture.
SECTION 3. Representations and Warranties. Scotts, as of
the date of execution of this Third Supplemental Indenture,
represents and warrants that: (i) it is a corporation organized
and existing under the laws of the State of Ohio; (ii) it has full
corporate power and authority to execute and deliver this Third
Supplemental Indenture and to perform its obligations under this
Third Supplemental Indenture in accordance with its terms; and
that (iii) the execution, delivery and performance of this Third
Supplemental Indenture will not violate, conflict with or
constitute a breach of, or a default under, its Articles of
Incorporation or any other material agreement or instrument to
which it is a party or which is binding on it or its assets, and
will not result in the creation of any lien on, or security
interest in, any of its assets.
SECTION 4. Covenants. All covenants and agreements in this
Third Supplemental Indenture by Scotts shall bind its respective
successors and assigns, whether so expressed or not.
SECTION 5. Requests and Notices. Pursuant to Section 105 of
the Indenture, any request, demand, authorization, direction,
notice, consent, waiver or act of Holders or other document
provided or permitted by the Indenture to be made upon, given or
furnished to, or filed with, O.M. Scott shall, from and after the
Effective Date, instead be made upon, given or furnished to, or
filed with, Scotts and shall be addressed to Scotts at 14111
Scottslawn Road, Marysville, Ohio 43043 or at any other address
previously furnished in writing to the Trustee by Scotts.
SECTION 6. Separability. In case any provision in this
Third Supplemental Indenture shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired
thereby.
SECTION 7. No Third Party Benefits. Nothing in this Third
Supplemental Indenture, express or implied, shall give to any
Person, other than the parties hereto and their successors under
the Indenture, and the Holders of the Securities, any benefit or
any legal or equitable right, remedy or claim under the Indenture.
SECTION 8. Continuance of Indenture. This Third
Supplemental Indenture supplements the Indenture and shall be a
part of and subject to all the terms thereof. The Indenture, as
supplemented by this Third Supplemental Indenture, shall continue
in full force and effect. This Third Supplemental Indenture shall
become effective at the Effective Date.
SECTION 9. The Trustee. The Trustee shall not be responsible
in any manner for or in respect of the validity or sufficiency of
this Third Supplemental Indenture, or for or in respect of the
recitals contained herein, all of which recitals are made by O.M.
Scott and Scotts solely.
SECTION 10. Governing Law. This Third Supplemental
Indenture shall be governed by and construed in accordance with
the laws of the State of New York.
SECTION 11. Defined Terms. All capitalized terms used in
this Third Supplemental Indenture which are defined in the
Indenture but not otherwise defined herein shall have the same
meanings assigned to them in the Indenture.
SECTION 12. Counterparts. This Third Supplemental Indenture
may be executed in any number of counterparts, each of which so
executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Third
Supplemental Indenture to be duly executed, and their respective
corporate seals to be hereunto affixed and attested, all as of the
date and year first above written.
THE O.M. SCOTT & SONS COMPANY,
a Delaware corporation
By: /s/ P.D. Yeager
Name: Paul D. Yeager
Title: Executive Vice
President & CFO
Attest:
/s/ Craig D. Walley
THE SCOTTS COMPANY, an Ohio
corporation
By: /s/ P.D. Yeager
Name: Paul D. Yeager
Title: Executive Vice
President & CFO
Attest:
/s/ Craig D. Walley
CHEMICAL BANK, as Trustee
By: /s/ T. C. Knight
Name: T. C. Knight
Title: Asst. Vice
President
Attest:
Exhibit 10(b)
Second Restatement of The Scotts Company
Profit Sharing and Savings Plan
SECOND RESTATEMENT OF
THE SCOTTS COMPANY
PROFIT SHARING AND SAVINGS PLAN
TABLE OF CONTENTS
Description Page No.
SECTION 1. DEFINITIONS 1
SECTION 2. PARTICIPATION 10
2.1. Eligibility 10
2.2. Breaks in Service 10
2.3. Change in Status 10
2.4. Erroneous Omission or Inclusion of Employee 11
2.5. Waiver of Participation 11
SECTION 3. CONTRIBUTIONS 11
3.1. Profit Sharing Contributions 11
3.2. Savings Contributions 12
3.3. Limits on Elective Profit Sharing and
Savings Contributions 13
3.4. Timing of Contributions 14
3.5. Rollover Contributions 14
3.6. Exclusive Benefit; Refund of Contributions 15
3.7. Annual Additions and Limitations 16
3.8. Fail-Safe Allocations of Profit Sharing
Contributions 17
SECTION 4. INVESTMENT 18
4.1. Investment Direction 18
4.2. Investment Funds 19
4.3. Investment in Employment Securities 19
4.4. Voting Employer Securities 19
4.5. Tender Offers 19
4.6. Investment Managers 20
4.7. Section 16 Persons 20
SECTION 5. VALUATIONS AND CREDITING 20
5.1. Valuations 20
5.2. Credits to and Charges Against Accounts 20
5.3. Expenses 21
SECTION 6. BENEFITS 21
6.1. Forms of Benefit Payments 21
6.2. Retirement Benefit 22
6.3. Death Benefit 23
6.4. In-Service Distributions 24
6.5. Advance Distribution for Hardship 24
6.6. Loans to Participants 25
6.7. Latest Commencement of Benefits 26
6.8. Post-Distribution Credits 26
6.9. Prevention of Escheat 27
SECTION 7. TOP-HEAVY PLAN PROVISIONS 27
7.1. Minimum Benefits 27
7.2. Adjustment in Benefit Limitations 27
SECTION 8. CLAIMS PROCEDURES 28
8.1. Application for Benefits 28
8.2. Appeal of Denial of Claim for Benefits 28
8.3. Effect of Administrator Decision 29
SECTION 9. ALLOCATION OF AUTHORITY AND RESPONSIBILITY 29
9.1. Authority and Responsibilities of the
Administrator 29
9.2. Authority and Responsibilities of the
Advisory Committee 29
9.3. Authority and Responsibilities of the
Investment Committee 30
9.4. Appointment and Tenure 30
9.5. Meetings; Majority Rule 30
9.6. Compensation 30
9.7. Indemnification 30
9.8. Authority and Responsibilities of the Company 31
9.9. Obligations of Named Fiduciaries 31
SECTION 10. AMENDMENT, TERMINATION, MERGERS AND
CONSOLIDATIONS OF THE PLAN 32
10.1. Amendment 32
10.2. Plan Termination 32
10.3. Permanent Discontinuance of Profit
Sharing Contributions 33
10.4. Suspension of Profit Sharing Contributions 33
10.5. Mergers and Consolidations of Plans 33
10.6. Transfers of Assets to or from this Plan 33
10.7. Effect of Amendment and Restatement 34
SECTION 11.PARTICIPATING EMPLOYERS34
11.1. Adoption by Affiliates 34
11.2. Employee Transfers 34
11.3. Discontinuance of Participation 34
SECTION 12. MISCELLANEOUS PROVISIONS 35
12.1. Nonalienation of Benefits 35
12.2. No Contract of Employment 36
12.3. Title to Assets 36
12.4. Effect of Admission 36
12.5. Payments to Minors, Etc. 36
12.6. Approval of Restatement by Internal
Revenue Service 36
12.7. Other Miscellaneous 37
SIGNATURES 37
FIRST RESTATEMENT OF
THE SCOTTS COMPANY
PROFIT SHARING AND SAVINGS PLAN
WHEREAS, The O.M. Scott & Sons Company established and
maintained The O.M. Scott & Sons Company Profit Sharing and
Savings Plan (the "Plan") in recognition of the contribution made
to its successful operation by its employees and for the exclusive
benefit of its eligible employees and their beneficiaries; and
WHEREAS, The O.M. Scott & Sons Company has been merged
into The Scotts Company, an Ohio corporation (the "Company"),
which assumes sponsorship of the Plan; and
WHEREAS, the Plan was previously amended and restated
effective January 1, 1987 and effective April 1, 1992; and
WHEREAS, under the terms of the Plan, the Company has
the power to amend the Plan, provided the Trustee consents to such
amendment if the provisions of the Plan affecting the Trustee are
amended; and
WHEREAS, the Company wishes to amend, restate and rename
the Plan to reflect the change in sponsorship and comply with
changes in the law;
NOW, THEREFORE, the Company hereby amends, restates and
renames the Plan as of the Effective Amendment Date to provide as
follows:
SECTION 1
DEFINITIONS
"Account" means the account maintained for a
Participant, which shall be the entire interest of the Participant
in the Trust Fund. Unless otherwise specified, the value of an
Account shall be determined as of the Valuation Date coincident
with or next following the occurrence of the event to which
reference is made. A Participant's Account shall consist of the
Participant's Non-Elective Profit Sharing Account, Elective Profit
Sharing Account, Savings Account and Rollover Account. A
Participant shall always be fully vested in his or her Account.
"Administrator" means the Company which is the
administrator of the Plan within the meaning of Section 3(16) of
ERISA. The Company may appoint Employees to perform ministerial
acts with respect to the administration of the Plan in their
capacity as Employees of the Company.
"Advisory Committee" means the person or committee
appointed as such by the Board of Directors under the provisions
of the Plan or, in the absence of such appointment, the Company.
"Affiliate" means any entity which, with the Employer,
constitutes either (a) a controlled group of corporations (within
the meaning of Section 414(b) of the Code), (b) a group of trades
or businesses under common control (within the meaning of Section
414(c) of the Code), (c) an affiliated service group (within the
meaning of Section 414(m) of the Code), or (d) a group of entities
required to be aggregated pursuant to Section 414(o) of the Code
and the regulations thereunder.
"Aggregation Group" means (a) the Plan, (b) any plan of
the Employer or any Affiliate in which a Key Employee or any of a
Key Employee's beneficiaries is a participant, (c) any plan which
enables any plan described in (a) or (b) to meet the requirements
of Sections 401(a)(4) or 410 of the Code, (d) any plan maintained
by the Employer or an Affiliate within the last five years ending
on the last day of the immediately preceding Plan Year and would,
but for the fact it was terminated, be part of the Aggregation
Group, and (e) any plan of the Employer or any Affiliate
designated by the Employer, the inclusion of which in the
Aggregation Group would not cause the Aggregation Group to fail to
meet the requirements of Sections 401(a)(4) and 410 of the Code.
"Beneficiary" means the beneficiary under the Plan of a
deceased Participant.
"Board of Directors" means the board of directors of the
Company.
"Break in Service" means failure by an Employee to
complete more than 500 Hours of Service during any Plan Year. Any
Break in Service shall be deemed to have commenced on the first
day of the Plan Year in which it occurs. In the case of an
absence from work which begins in any Plan Year beginning after
December 31, 1984, if an Employee is absent from work for any
period by reason of pregnancy, the birth or placement for adoption
of a child, or for caring for a child for a period immediately
following the birth or placement, then for purposes of determining
whether a Break in Service has occurred (and not for purposes of
determining Years of Eligibility Service) such Employee shall be
credited with the Hours of Service which otherwise normally would
have been credited to such Employee, or, if the Administrator is
unable to determine the number of such Hours of Service, eight
Hours of Service for each day of absence, in any case not to
exceed 501 Hours of Service. The Hours of Service credited to an
Employee under this definition shall be treated as Hours of
Service in the Plan Year in which the absence from work begins, if
the Employee would be prevented from incurring a Break in Service
in such year solely because of such Hours of Service or, in any
other case, in the immediately following year. The Administrator
may require that the Employee certify and/or supply documentation
that his or her absence is for one of the permitted reasons and
the number of days for which there was such an absence.
"Code" means the Internal Revenue Code of 1986, as now
or hereafter amended, construed, interpreted and applied by
regulations, rulings or cases.
"Company" means The O.M. Scott & Sons Company, a
Delaware corporation, until the merger of The O.M. Scott & Sons
Company into The Scotts Company, an Ohio corporation, and The
Scotts Company thereafter, and any successor thereto.
"Company Stock Fund" means the Investment Fund
consisting of Employer Securities and cash or cash equivalents
needed to meet the obligations of such fund or for the purchase of
Employer Securities.
"Compensation" means an Employee's wages, salaries, fees
for professional service and other amounts received for personal
services actually rendered in the course of employment with the
Employer (including, but not limited to, commissions paid
salesmen, compensation for services on the basis of a percentage
of profits, commissions on insurance premiums, tips and bonuses),
but shall not include distributions from a plan of deferred
compensation (other than an unfunded non-qualified plan), amounts
realized from the exercise of a non-qualified stock option or from
the sale, exchange or other disposition of stock acquired under a
qualified stock option plan, and other amounts which receive
special tax benefits. For purposes of identifying Highly
Compensated Employees and computing the Compensation Deferral
Limit only, a Participant's Compensation includes amounts which
would have been includable in the Participant's income but for the
Participant's election to make Savings Contributions, Elective
Profit Sharing Contributions, and contributions to a cafeteria
plan maintained by the Employer, determined in accordance with
Section 414(s) of the Code. Notwithstanding the foregoing,
(i) effective for Plan Years beginning after December 31, 1988,
Compensation paid by the Employer during any Plan Year in excess
of $200,000 as adjusted at the same time and in the same manner as
under Section 415(d) of the Code shall be excluded; and
(ii) effective for Plan Years beginning after December 31, 1993,
Compensation paid by the Employer during any Plan Year in excess
of $150,000, adjusted under Section 401(a)(17) of the Code shall
be excluded. In determining the Compensation of a Participant for
purposes of the $200,000 or $150,000 limit, the family aggregation
rules of Section 414(q)(6) of the Code shall apply, except in
applying such rules, the term "family" shall include only the
spouse of the Participant and any lineal descendants of the
Participant who have not attained age 19 before the close of the
year. If, as a result of the application of such rules,
Compensation would exceed the adjusted $200,000 or $150,000
limitation, then the limitation shall be prorated among the
affected persons in proportion to each such person's Compensation
as determined under this paragraph prior to the application of
this limitation.
"Compensation Deferral Limit" means the greater of (a)
the average actual contribution deferral percentage of Non-Highly
Compensated Employees multiplied by 1.25, or (b) the lesser of (i)
the average actual contribution deferral percentage of Non-Highly
Compensated Employees multiplied by two, or (ii) the average
actual contribution deferral percentage of Non-Highly Compensated
Employees plus 2%, as determined under Section 401(k)(3) of the
Code and the regulations thereunder. A Participant's actual
contribution deferral percentage is the Savings Contributions and
Elective Profit Sharing Contributions made for the Participant
which may be taken into account for the Plan Year for purposes of
Section 401(k)(3) of the Code, divided by the Participant's
Compensation while a Participant during the Plan Year. All or any
portion of the Non-Elective Profit Sharing Contributions for the
Plan Year may be included in the calculation of the Compensation
Deferral Limit for the Plan Year at the option of the Employer.
"Effective Amendment Date" means: (a) in the case of any
change in the Plan required by a change in the Code or ERISA, the
date on which such change in the Plan is required to be effective;
(b) in the case of any change in the Plan for which an effective
date is specifically stated elsewhere in the Plan, such date; and
(c) in the case of any other change in the Plan, April 1, 1992.
"Elective Profit Sharing Account" means the portion of
the Account of a Participant consisting of Elective Profit Sharing
Contributions, as adjusted under the Plan.
"Elective Profit Sharing Contribution" means the portion
of the Profit Sharing Pool which is allocated to the Participant
and which is contributed to the Plan under Section 3.1 on behalf
of the Participant, as a result of an absence of an election by
the Participant to receive such amount in cash.
"Eligible Compensation" means, for the period during a
Plan Year that an Employee is a Participant, amounts paid by the
Employer plus amounts which would have been includable in a
Participant's income but for a Participant's election to make
Savings Contributions and contributions to a cafeteria plan
maintained by the Employer, which are or would have been (a)
wages, (b) salaries and executive, management and sales
incentives, not in excess of the maximum of an Employee's salary
band, (c) overtime, and (d) commissions. Notwithstanding the
foregoing, a Participant's Eligible Compensation shall not include
amounts paid in lieu of Elective Profit Sharing Contributions and
shall not exceed the lesser of (i) the maximum of Zone 2 in Band
F as defined in The Scotts Company Salaried, Exempt and Office
Technical Salaried Non-Exempt Compensation Policy and The Scotts
Company Job Evaluation Plan, or (ii) effective for Plan Years
starting before January 1, 1994 $200,000 as adjusted at the same
time and in the same manner as under Section 415(d) of the Code
and effective for Plan Years starting on or after January 1, 1994,
$150,000 as adjusted under Section 401(a)(17) of the Code. In
determining the Eligible Compensation of a Participant for
purposes of this limitation, the family aggregation rules of
Section 414(q)(6) of the Code shall apply, except in applying such
rules, the term "family" shall include only the spouse of the
Participant and any lineal descendants of the Participant who have
not attained age 19 before the close of the year. If, as a result
of the application of such rules, Compensation would exceed the
adjusted $200,000 or $150,000 limitation, then the limitation
shall be prorated among the affected persons in proportion to each
such person's Eligible Compensation as determined under this
paragraph prior to the application of this limitation.
"Eligibility Computation Period" means (a) the initial
Eligibility Computation Period of 12 consecutive months commencing
on an Employee's most recent date of employment commencement, and
(b) each and every full Plan Year, commencing with the Plan Year
in which falls the last day of an Employee's initial Eligibility
Computation Period, during which the Employee is in the service of
the Employer.
"Eligible Rollover Distribution" means any distribution
of all or any portion of the balance to the credit of the
distributee, except that an eligible rollover distribution does
not include: (a) any distribution that is one of a series of
substantially equal periodic payments (not less frequently than
annually) made for the life (or life expectancy) of the
distributee or the joint lives (or joint life expectancies) of the
distributee and the distributee's designated beneficiary, or for
a specified period of ten years or more; (b) any distribution to
the extent such distribution is required under section 401(a)(9)
of the Code; and (c) the portion of any distribution that is not
includible in gross income (determined without regard to the
exclusion for net unrealized appreciation with respect to employer
securities).
"Employee" means any person employed by the Employer or
an Affiliate working with the Scotts product line or with
corporate management and administration, other than persons (a)
whose terms and conditions of employment are determined by
collective bargaining with a third party, with respect to whom
inclusion in this Plan has not been provided for in the collective
bargaining agreement setting forth those terms and conditions of
employment, (b) who are nonresident aliens described in Section
410(b)(3)(C) of the Code, and (c) who are Leased Employees.
"Employer" means the Company and any Affiliate which,
with the consent of the Board of Directors, adopts this Plan and
joins in the corresponding Trust Agreement.
"Employer Securities" means stock or other securities of
the Employer or an Affiliate permitted to be held by the Plan
under ERISA and the Code.
"Employer Securities Contribution Fund" means a fund
consisting of Employer Securities contributed by the Employer and
held by the Trustee in accordance with the Plan.
"Enrollment Date" means the date on which an Employee
first becomes a Participant and the first day of each quarter of
the Plan Year and any additional dates designated by the
Administrator as dates on which Participants may enter into or
modify elections to make Savings Contributions and/or change their
investment directions.
"ERISA" means the Employee Retirement Income Security
Act of 1974 (P.L. No. 93-406), as now existing or hereafter
amended, and as now or hereafter construed, interpreted and
applied by regulations, rulings or cases.
"Highly Compensated Employee" means any Employee who
performs service for the Employer during the Plan Year of
determination and who, during the prior Plan Year (a) received
Compensation in excess of $75,000 (as adjusted pursuant to Section
415(d) of the Code), (b) received Compensation in excess of
$50,000 (as adjusted pursuant to Section 415(d) of the Code) and
was a member of the top-paid group of the Employer and its
Affiliates for such year, or (c) was an officer of the Employer
and received Compensation during such year that is greater than 50
percent of the dollar limitation in effect under Section
415(b)(1)(A) of the Code (not to exceed 50 officers). The term
Highly Compensated Employee also includes (i) an Employee who
would have been a Highly Compensated Employee under the preceding
sentence if the determination was made based on the current Plan
Year and if he or she is one of the 100 people who received the
most Compensation from the Employer and its Affiliates during the
current Plan Year, and (ii) an Employee who is a 5% owner at any
time during the current Plan Year or the prior Plan Year. The
number and identities of Employees in the top-paid group will be
determined without regard to minimum service requirements. If an
Employee is, during the current Plan Year or prior Plan Year, a
family member of either a 5% owner or a Highly Compensated
Employee who is one of the 10 most Highly Compensated Employees
ranked on the basis of Compensation paid by the Employer and its
Affiliates during such year, then the family member and the 5%
owner or top-ten Highly Compensated Employee shall be aggregated.
In such case, the family member and 5% owner or top-ten Highly
Compensated Employee shall be treated as a single Employee
receiving Compensation and Plan contributions equal to the sum of
such Compensation and contributions of the family member and 5%
owner or top-ten Highly Compensated Employee. For purposes of
this definition, family member includes the spouse, lineal
ascendants and descendants of the Employee and the spouses of such
lineal ascendants and descendants. The determination of who is a
Highly Compensated Employee shall be made in accordance with
Section 414(q) of the Code and the regulations thereunder.
"Hour of Service" means (a) each hour for which an
Employee is paid or entitled to payment for the performance of
duties for the Employer or an Affiliate during the applicable
computation period, (b) each hour for which an Employee is paid or
entitled to payment by the Employer or an Affiliate on account of
a period of time during which no duties are performed
(irrespective of whether the employment relationship has
terminated) due to vacation, holiday, illness, incapacity
(including disability), layoff, jury or military duty, or leave of
absence, and (c) each hour for which back pay, irrespective of
mitigation of damages, is either awarded or agreed to by the
Employer or an Affiliate. In computing Hours of Service on a
weekly or monthly basis when a record of hours of employment is
not available, the Employee shall be assumed to have worked 40
hours for each full week of employment and eight hours for each
day in less than a full week of employment, regardless of whether
the Employee has actually worked fewer hours. Notwithstanding the
foregoing, (i) not more than 501 Hours of Service shall be
credited to an Employee on account of any single continuous period
during which the Employee performs no duties, (ii) no credit shall
be granted for any period with respect to which an Employee
receives payment or is entitled to payment under a plan maintained
solely for the purpose of complying with applicable workers'
compensation or disability insurance laws, and (iii) no credit
shall be granted for a payment which solely reimburses an Employee
for medical or medically related expenses incurred by the
Employee. In the case of a person who was a Leased Employee and
who subsequently becomes an Employee, hours of service as a Leased
Employee shall count as Hours of Service as an Employee.
Determination and crediting of Hours of Service shall be made
under Department of Labor Regulations Sections 2530.200b-2 and 3.
"Investment Committee" means the person or committee
appointed as such by the Board of Directors under the provisions
of the Plan or, in the absence of such appointment, the Company.
"Investment Funds" means the funds described in Section
4.2.
"Key Employee" has the meaning set forth in
Section 416(i) of the Code and the regulations thereunder.
"Leased Employee" means any person (other than an
Employee) who pursuant to an agreement between the Employer and
any other person ("leasing organization") has performed services
for the Employer (or for the Employer and related persons
determined in accordance with Section 414(n)(6) of the Code) on a
substantially full time basis for a period of at least one year,
and such services are of a type historically performed by
Employees in the business field of the Employer. Contributions or
benefits provided a Leased Employee by the leasing organization
which are attributable to services performed for the Employer
shall be treated as provided by the Employer. A person who would
otherwise be considered a Leased Employee shall not be considered
a Leased Employee if (a) such person is covered by a money
purchase pension plan providing (i) a nonintegrated employer
contribution rate of at least 10% of compensation, as defined in
Section 415(c)(3) of the Code, but including amounts contributed
pursuant to a salary reduction agreement which are excludable from
the person's gross income under Section 125, Section 402(a)(8),
Section 402(h) or Section 403(b) of the Code, (ii) immediate
participation, and (iii) full and immediate vesting; and (b)
Leased Employees do not constitute more than 20 percent of the
Employer's Non-Highly Compensated Employees.
"Non-Elective Profit Sharing Account" means the portion
of the Account of a Participant consisting of Non-Elective Profit
Sharing Contributions plus the amount in the Account of the
Participant prior to January 1, 1987 (excluding any portion as to
which the Participant had a distribution election in effect on
January 1, 1987), as adjusted under the Plan.
"Non-Elective Profit Sharing Contribution" means the
portion of the Profit Sharing Pool which the Participant does not
have the opportunity to elect to receive in cash and which is
automatically contributed to the Plan on behalf of the
Participant.
"Non-Highly Compensated Employee" means any Employee
other than a Highly Compensated Employee.
"Non-Key Employee" means any Employee other than a Key
Employee.
"Participant" means any person who has been admitted to
participation in the Plan and has not ceased participation in the
Plan.
"Plan" means the Second Restatement of The Scotts
Company Profit Sharing and Savings Plan as set forth herein and as
from time to time amended. The Plan is a profit sharing and stock
bonus plan.
"Plan Year" means the calendar year.
"Profit Sharing Contribution" means a Non-Elective
Profit Sharing Contribution or an Elective Profit Sharing
Contribution.
"Profit Sharing Pool" means for a Plan Year the dollar
amount which the Company determines is available for Non-Elective
Profit Sharing Contributions and, at the option of Participants,
Elective Profit Sharing Contributions or cash compensation.
"Rollover Account" means the portion of the Account of
a Participant consisting of Rollover Contributions, as adjusted
under the Plan.
"Rollover Contribution" means the amount contributed by
an Employee as a rollover contribution in accordance with Section
402 of the Code.
"Savings Contribution" means an Employer contribution to
the Plan in an amount equal to the reduction in the Participant's
Compensation pursuant to the Participant's election under the
Plan.
"Savings Account" means the portion of the Account of a
Participant consisting of Savings Contributions, as adjusted under
the Plan.
"Section 16 Person" means (a) any member of the board of
directors of The Scotts Company, (b) The Scotts Company's
president, principal financial officer, principal accounting
officer (or, if there is no such accounting officer, the
controller), any vice-president in charge of a principal business
unit, division or function, or any other officer or other person
who performs a significant policy making function, or (c) any
person who is the beneficial owner of more than 10% of the
outstanding common stock of The Scotts Company. The principal
financial officer of The Scotts Company shall designate those
persons who are Section 16 Persons and deliver a list of the
Section 16 Persons eligible to participate in the Plan to the
Administrator from time to time or at the request of the
Administrator. Such list of Section 16 Persons will be conclusive
on the Administrator and the sole source for determining who is a
Section 16 Person, and the Administrator shall not be required to
further investigate whether a person is a Section 16 Person.
"Termination Date" means the date on which an Employee
quits, is discharged, retires, dies or otherwise terminates
employment. For purposes of this Plan, a Participant who has
ceased to perform services for the Employer shall be deemed to
incur a Termination Date on the date he or she is found by the
Company to be permanently and totally disabled under The Scotts
Company Long Term Disability Plan.
"Top-Heavy Plan" has the meaning set forth in Section
416 of the Code and the regulations thereunder. For purposes of
determining whether the Plan is a Top-Heavy Plan, the
determination date is, for the first Plan Year, the last day of
the Plan Year and for each succeeding Plan Year, the last day of
the preceding Plan Year.
"Trust" means the trust created by the Trust Agreement.
"Trust Agreement" means The O.M. Scott & Sons Company
Profit Sharing Plan Trust Agreement as the same presently exists
and as it may from time to time hereafter be amended.
"Trust Fund" means all of the assets of the Plan held by
the Trustee under the Trust Agreement.
"Trustee" means the party or parties acting as such
under the Trust Agreement.
"Valuation Date" means the last day of each quarter of
the Plan Year and each interim date as of which the Administrator
directs the allocation of distributions, contributions and
earnings of the Trust Fund.
"Year of Eligibility Service" means an Eligibility
Computation Period in which a person has 1,000 or more Hours of
Service.
SECTION 2
PARTICIPATION
2.1. Eligibility. An Employee shall become a
Participant on the first day of the month coincident with or next
following the date on which the Employee completes one Year of
Eligibility Service; provided, that no person shall become a
Participant if such person is no longer an Employee on the date as
of which such person's admission to participation would otherwise
have become effective. Each Employee who becomes eligible for
admission to participation in this Plan shall complete such forms
and provide such data as are reasonably required by the
Administrator. Participation shall cease on a Participant's
Termination Date.
2.2. Breaks in Service. If an Employee had no Account
attributable to Profit Sharing Contributions before any period of
consecutive Breaks in Service, and if the number of consecutive
Breaks in Service within such period equals or exceeds five, the
Employee shall upon reemployment be required to satisfy the
requirements for participation in the Plan as though such Employee
had not previously been an Employee. If any Years of Eligibility
Service are not required to be taken into account because of a
period of Breaks in Service to which this Section applies, such
Years of Eligibility Service shall not be taken into account in
applying this Section to any subsequent Breaks in Service.
2.3. Change in Status. If a person who has been in the
employ of the Employer or an Affiliate in a category of employment
not eligible for participation in this Plan subsequently becomes
an Employee by reason of a change in status to a category of
employment eligible for participation, such person shall become a
Participant as of the date on which the change in status occurs,
if, on such date, such person has otherwise satisfied the
requirements for participation in the Plan.
2.4. Erroneous Omission or Inclusion of Employee. If,
in any Plan Year, any Employee who should have been included as a
Participant in the Plan is erroneously omitted and discovery of
such omission is not made until after a Profit Sharing
Contribution for the Plan Year has been made and allocated, the
Employer shall make a contribution with respect to the omitted
Employee equal to the amount which the Employee would have
received as an allocation had the Participant not been omitted.
If, in any Plan Year, any person who should not have been included
as a Participant in the Plan is erroneously included and discovery
of such incorrect inclusion is not made until after a contribution
for the Plan Year has been made and allocated, the Employer shall
not be entitled to recover the contribution made with respect to
the ineligible person, and any earnings thereon, unless no
deduction is allowable with respect to such contribution. The
amount contributed with respect to the ineligible person, together
with any earnings thereon, shall be applied to reduce Profit
Sharing Contributions for the Plan Year in which the discovery is
made.
2.5. Waiver of Participation. The Administrator shall
have the right to permit an Employee to waive participation in the
Plan on a year-to-year, nondiscriminatory basis.
SECTION 3
CONTRIBUTIONS
3.1. Profit Sharing Contributions.
3.1.1. The Employer intends to create a Profit
Sharing Pool for each Plan Year during which the Plan is in effect
in such amount as the Employer in its absolute discretion shall
timely determine. This provision shall not be construed as
requiring the Employer to create a Profit Sharing Pool for any
specific Plan Year. The Profit Sharing Pool shall be allocated as
of the last day of the Plan Year among all Participants who are
Employees on the last day of the Plan Year, in proportion to the
Eligible Compensation of each such Participant to the Eligible
Compensation of all such Participants for the Plan Year. In the
Plan Year of his or her Termination Date, a Participant who
retires under The Scotts Company Employees' Pension Plan, dies or
incurs a permanent and total disability under The Scotts Long Term
Disability Plan shall share in the Profit Sharing Pool as if he or
she were an Employee on the last day of the Plan Year.
3.1.2. One-half of the amount of the Profit
Sharing Pool allocated to a Participant shall be contributed by
the Employer to the Plan as a Non-Elective Profit Sharing
Contribution and allocated to the Participant's Non-Elective
Profit Sharing Account. The remainder of the Profit Sharing Pool
allocated to the Participant shall be paid to the Participant as
a bonus or contributed by the Employer to the Plan as an Elective
Profit Sharing contribution and allocated to the Participant's
Elective Profit Sharing Account, in accordance with the
Participant's profit sharing election.
3.1.3. Each Participant shall have the opportunity
to make a profit sharing election to have one-half of his or her
share in the Profit Sharing Pool, if any, (a) if the Participant
so elects, paid to the Participant as a bonus, or (b) if the
Participant so elects or fails to make an election, contributed to
the Plan and allocated to the Participant's Elective Profit
Sharing Account. A Participant may enter into or modify his or
her profit sharing election effective as to the current Plan Year
by submitting a new profit sharing election to the Administrator
at least 30 days prior to the last day of the Plan Year (or such
other date as the Administrator may establish for purposes of
administrative convenience). A profit sharing election for a
prior Plan Year may not be modified and a profit sharing election
for the current Plan Year shall not be effective for future Plan
Years. The Administrator may limit the Elective Profit Sharing
Contributions of some or all Highly Compensated Employees, in such
manner as the Administrator determines, so as to comply with a
projected Compensation Deferral Limit as provided in Section
401(k) of the Code and the regulations thereunder.
3.2. Savings Contributions. Each Participant shall be
entitled to make a Savings Contribution enrollment election, which
shall be in the form prescribed by the Administrator. The
enrollment election shall provide for a reduction of the
Participant's Compensation, in whole percentage points up to 15%
of Compensation, and a corresponding contribution to the
Participant's Savings Account as a Savings Contribution. A
Participant may enter into or modify his or her enrollment
election as of any Enrollment Date by submitting a new enrollment
election to the Administrator at least 30 days prior to the
Enrollment Date (or such greater or lesser period prior to the
Enrollment Date as the Administrator may establish for purposes of
administrative convenience). A Participant may terminate his or
her enrollment election at any time upon 30 days prior written
notice (or such greater or lesser period as the Administrator may
establish for purposes of administrative convenience).
3.3. Limits on Elective Profit Sharing and Savings
Contributions.
3.3.1. A Participant's Savings Contributions for
a calendar year, plus the Elective Profit Sharing Contributions
actually made for the Participant during the calendar year, shall
not exceed the limit in Section 402(g) of the Code. Any Savings
Contribution which, when combined with the Participant's Elective
Profit Sharing Contribution and deferrals under any other plans
sponsored by an Affiliate, exceeds the limit in Section 402(g) of
the Code shall be returned together with earnings for the Plan
Year to the Participant not later than the April 15 following the
close of the calendar year for which the contribution was made.
If a Participant's Savings Contribution, Elective Profit Sharing
Contribution and deferrals under plans not sponsored by Affiliates
exceed the limit in Section 402(g) of the Code, the Participant
may assign to the Plan any portion of the excess by notifying the
Administrator in writing of such excess by March 31 of the
following year. Any excess and income allocatable to such excess
for the Plan Year shall be distributed to the Participant no later
than the April 15 of the following year.
3.3.2. In the case of a Highly Compensated
Employee, the Savings Contributions, Elective Profit Sharing
Contributions and, to the extent they are taken into account in
calculating the Compensation Deferral Limit, Non-Elective Profit
Sharing Contributions made for the Participant which may be taken
into account for the Plan Year for purposes of Section 401(k)(3)
of the Code, shall not exceed the Compensation Deferral Limit.
The Administrator may limit the Savings Contributions of some or
all Highly Compensated Employees, in such manner as the
Administrator determines, so as to comply with a projected
Compensation Deferral Limit as provided in Section 401(k) of the
Code and the regulations thereunder. Any Savings Contribution
and/or Elective Profit Sharing Contribution which exceeds the
Compensation Deferral Limit shall be returned together with
earnings for the Plan Year to the Participant within two and
one-half (2-1/2) months after the close of the Plan Year for which
the contribution was made.
3.3.3. The amount of excess contributions for a
Highly Compensated Employee shall be determined in the following
manner: first, the actual deferral ratio of the Highly Compensated
Employee(s) with the highest actual deferral ratio is reduced to
the extent necessary to meet the Compensation Deferral Limit or
cause such ratio to be equal to the actual deferral ratio of the
Highly Compensated Employee with the next highest ratio. Second,
the process is repeated until the Compensation Deferral Limit is
met. The amount of excess contributions for a Highly Compensated
Employee is then equal to the total of elective and other
contributions taken into account in computing the Compensation
Deferral Limit, minus the product of the Highly Compensated
Employee's contribution ratio as determined above and the Highly
Compensated Employee's Compensation.
3.3.4. If the Highly Compensated Employee's actual
deferral ratio is determined by combining the contributions and
compensation of all family members, then the actual deferral ratio
is reduced in accordance with the "leveling" method described in
Section 1.401(k)-1(f)(2) of the regulations under the Code and the
excess contributions for the family unit are allocated among the
family members in proportion to the contributions of each family
member that have been combined. If the Highly Compensated
Employee's actual deferral ratio is determined by combining the
contributions and compensation of only those family members who
are Highly Compensated Employees without regard to family
aggregation, then the actual deferral ratio is reduced in
accordance with the leveling method but not below the actual
deferral ratio of eligible family members who are Non-Highly
Compensated Employees. Excess contributions are determined by
taking into account the contributions of the eligible family
members who are Highly Compensated Employees without regard to
family aggregation and are allocated among such family members in
proportion to their contributions. If further reduction of the
actual deferral ratio is required, excess contributions resulting
from this reduction are determined by taking into account the
contributions of all eligible family members and are allocated
among such family members in proportion to their contributions.
3.3.5. The amount of excess contributions to be
distributed shall be reduced by excess deferrals previously
distributed for the taxable year ending in the same Plan Year and
excess deferrals to be distributed for a taxable year will be
reduced by excess contributions previously distributed for the
Plan Year beginning in such taxable year.
3.4. Timing of Contributions. All Savings
Contributions shall be made no later than the earlier of (a) the
earliest date after the reduction of Participants' Compensation on
which the Savings Contributions can reasonably be segregated from
the Employer's general assets, or (b) 90 days after the reduction
of Participants' Compensation. Non-Elective Profit Sharing
Contributions and Elective Profit Sharing Contributions shall be
made no later than the due date (including extensions) of the
income tax return of the Company for the fiscal year of the
Company including the last day of the Plan Year for which such
contribution is made. All contributions shall be paid over to the
Trustee and shall be invested by the Trustee in accordance with
the Plan and the Trust Agreement.
3.5. Rollover Contributions.
3.5.1. An Employee may roll over a cash
distribution from a qualified plan or conduit individual
retirement account to this Plan, provided that (a) the
distribution is (i) received from a qualified plan as an Eligible
Rollover Distribution, and (ii) rolled over directly from the
qualified plan or within the 60 days following the date the
Employee received the distribution, or (b) the distribution is (i)
received from a conduit individual retirement account which has no
assets other than assets attributable to an Eligible Rollover
Distribution or a "qualified total distribution" within the
meaning of Section 402 of the Code as in effect prior to January
1, 1993, which was deposited in the conduit individual retirement
account within 60 days of the date the Employee received the
distribution, plus earnings, (ii) eligible for tax free rollover
to a qualified plan, and (iii) rolled over within the 60 days
following the date the Employee received the distribution. The
Employee shall present a written certification to the foregoing
requirements to the Administrative Committee. The Administrative
Committee may also require the Employee to provide an opinion of
counsel that the amount rolled over meets the requirements of this
Section.
3.5.2. The foregoing contributions, which shall be
Rollover Contributions, shall be accounted for separately and
shall be credited to an Employee's Rollover Account. An Employee
shall not be permitted to withdraw any portion of his or her
Rollover Account until the earlier of the date the Employee
attains age 59-1/2 or such time as the Employee is otherwise
eligible to make a withdrawal from or receive a distribution of
his or her Account. An Employee who has made a Rollover
Contribution shall be deemed to be a Participant with respect to
his or her Rollover Account even if he or she is not otherwise a
Participant.
3.6. Exclusive Benefit; Refund of Contributions.
3.6.1. All contributions made by the Employer are made
for the exclusive benefit of the Participants and their
Beneficiaries, and such contributions shall not be used for or
diverted to purposes other than for the exclusive benefit of the
Participants and their Beneficiaries, including the costs of
maintaining and administering the Plan and Trust.
3.6.2. Notwithstanding any other provision of this
Section, amounts contributed to the Trust by the Employer may be
refunded to the Employer, to the extent that such refunds do not,
in themselves, deprive the Plan of its qualified status, under the
following circumstances and subject to the following limitations:
(a) to the extent that a federal income tax deduction is
disallowed for any contribution made by the Employer, the Trustee
shall refund to the Employer the amount so disallowed within one
year of the date of such disallowance; (b) if a contribution is
made, in whole or in part, by reason of a mistake of fact, there
shall be returned to the Employer so much of such contribution as
is attributable to the mistake of fact within one year after the
payment of the contribution to which the mistake applies; and (c)
except as provided in the event of an erroneous allocation to an
ineligible person, if the Plan initially or as a result of an
amendment fails to satisfy the qualification requirements of
Section 401(a) of the Code, and if the Employer declines to amend
the Plan to satisfy such qualification requirements, contributions
made prior to the determination that the Plan has failed to
qualify shall be returned to the Employer within one year of
denial of qualification.
3.6.3. Notwithstanding any other provision of this
Section, no refund shall be made to the Employer which is
specifically chargeable to the Account of any Participant in
excess of 100% of the amount in such Account nor shall a refund be
made by the Trustee of any funds, otherwise subject to refund
hereunder, which have been distributed to any Participant or
Beneficiary. If any such distributions become refundable, the
Employer shall have a claim directly against the distributees to
the extent of the refund to which it is entitled.
3.6.4. All refunds under this Section shall be limited
in amount, circumstance and timing by the provisions of Section
403 of ERISA, and no such refund shall be made if, solely because
of such refund, the Plan would cease to be a qualified plan under
Section 401(a) of the Code.
3.7. Annual Additions and Limitations.
3.7.1. Notwithstanding any other provisions of this
Plan, in no event shall the annual addition to a Participant's
Account for any Plan Year exceed the lesser of $30,000 (or such
other limit as may be the maximum permitted under Section 415 of
the Code and regulations issued thereunder) or 25% of such
Participant's Compensation. All amounts contributed to any
defined contribution plan maintained by the Employer or any
Affiliate shall be aggregated with contributions under this Plan
in computing any Employee's annual additions limitation. In no
event shall the amount allocated to the Account of any Participant
be greater than the maximum amount allowed under Section 415 of
the Code with respect to any combination of plans without
disqualification of any such plan. Any adjustment to the dollar
limitation set forth in this Section shall be effective only for
the Plan Years ending on or after January 1 of the year for which
the adjustment is made. For purposes of this Section, the term
"annual addition" shall mean the sum of Non-Elective Profit
Sharing Contributions, Elective Profit Sharing Contributions and
Savings Contributions allocable to the Participant's Account for
the Plan Year.
3.7.2. In the event a Participant is a participant in
any other defined contribution plan and/or defined benefit plan
sponsored by the Employer or any Affiliate, and the sum of the
"defined benefit plan fraction" and the "defined contribution plan
fraction" would exceed 1.0 but for the operation of this Section,
the "defined contribution fraction" shall be reduced so that the
sum of the fractions shall not exceed 1.0. For purposes of this
subsection, the "defined benefit plan fraction" is the ratio that
(a) the Participant's projected annual retirement benefit as of
the end of the Plan Year under the defined benefit plans bears to
(b) the lesser of (i) the product of 1.25 multiplied by the dollar
limitation in effect under Section 415(b)(1)(A) of the Code for
such Plan Year, or (ii) the product of 1.4 multiplied by the
maximum amount permitted under Section 415(b)(1)(B) of the Code
for such Plan Year. The "defined contribution plan fraction" is
the ratio of (a) the Participant's annual additions for the Plan
Year to the defined contribution plans bears to (b) the lesser of
the following amounts determined for such Plan Year and for each
prior Year of Service with the Employer: (i) the product of 1.25
multiplied by the dollar limitation in effect under Section
415(c)(1)(A) of the Code for such year, or (ii) the product of 1.4
multiplied by the maximum amount permitted under Section
415(c)(1)(B) of the Code for such year.
3.7.3. If the annual addition to a Participant's Account
exceeds the amount permitted under this Section due to a
reasonable error in estimating a Participant's Compensation or in
determining the amount of Savings Contributions and Elective
Profit Sharing Contributions which may be made under the limits of
Section 415 of the Code, such excess shall be disposed of as
follows:
(a) At the discretion of the Administrator, Savings
Contributions and Elective Profit Sharing Contributions will be
returned to the Participant;
(b) If the Participant is a Participant on the last
day of the Plan Year, such excess shall be applied to reduce
Non-Elective Profit Sharing Contributions for such Participant in
subsequent Plan Years, and no Profit Sharing Contribution shall be
made to such Participant's Account until such excess annual
addition is eliminated;
(c) If at any time while an excess annual addition
is being applied or would be applied to reduce future Non-Elective
Profit Sharing Contributions for a Participant, such Participant
ceases to be a Participant, then such excess annual addition shall
be held unallocated in a suspense account for the Plan Year and
shall be allocated in the next Plan Year as an Employer
contribution, and no contribution which would constitute an annual
addition shall be made until any such suspense account is
completely allocated; and
(d) No suspense account maintained under this
Section shall participate in allocations of gains and losses of
the Investment Funds unless otherwise directed by the
Administrator.
3.8. Fail-Safe Allocations of Profit Sharing Contributions.
Notwithstanding anything in the Plan to the contrary, for Plan
Years beginning after December 31, 1989, if the Plan would
otherwise fail to meet the requirements of Section 401(a)(4) or
Section 410(b) of the Code and the regulations thereunder because
Non-Elective Profit Sharing Contributions have not been allocated
to a sufficient number or percentage of Participants for a Plan
Year, then the group of Participants eligible to share in the
Non-Elective Profit Sharing Contribution for the Plan Year shall
be expanded to include the minimum number of former Participants
(who are not employed on the last day of the Plan Year and so
would not otherwise be eligible to share in the Non-Elective
Profit Sharing Contribution) as are necessary to satisfy the
applicable test. The specific former Participants who shall
become eligible under the terms of this paragraph shall be those
former Participants who are Non-Highly Compensated Employees who,
when compared to similarly situated former Participants, have
completed the greatest number of Hours of Service in the Plan Year
before terminating employment. Nothing in this Section shall
permit the reduction of a Participant's benefit. Therefore any
amounts that have previously been allocated to Participants may
not be reallocated to satisfy these requirements. In the event
additional allocations are required, the Employer shall make an
additional contribution equal to the additional allocations, even
if it exceeds the amount which would be deductible under Section
404 of the Code. Any adjustment to the allocations pursuant to
this Section shall be made by the October 15 after the Plan Year
and shall be considered to be made as of the last day of the Plan
Year.
SECTION 4
INVESTMENT
4.1. Investment Direction.
4.1.1. Each Participant shall have the right to direct,
in multiples of five percentage points, that (a) future
contributions to and the existing balance in the Participant's
Non-Elective and Elective Profit Sharing Accounts be invested in
one or more of the Investment Funds, (b) future contributions to
and the existing balance in the Participant's Savings Account be
invested in one or more Investment Funds, and (c) future
contributions to and the existing balance in the Participant's
Rollover Account be invested in one or more Investment Funds.
4.1.2. A Participant may change his or her investment
direction as of any Enrollment Date by submitting a form
prescribed by the Administrator to the Administrator at least 30
days prior to the Enrollment Date (or such greater or lesser
period prior to the Enrollment Date as the Administrator may
establish for purposes of administrative convenience) along with
payment of a reasonable charge established by the Administrator to
defray the administrative expense of processing the investment
direction.
4.2. Investment Funds. One of the Investment Funds shall
be the Company Stock Fund, consisting of Employer Securities and
cash or cash equivalents needed to meet obligations of such fund
or for the purchase of Employer Securities. The Investment
Committee shall direct the Trustee to create and maintain three or
more additional Investment Funds according to investment criteria
established by the Investment Committee. The Investment Committee
shall have the right to direct the Trustee to merge or modify any
existing Investment Funds, other than the Company Stock Fund.
4.3. Investment in Employer Securities. One of the purposes
of the Plan is to provide Participants with ownership interests in
the Employer, and to the extent practicable, all available assets
of the Company Stock Fund shall be used to purchase Employer
Securities, which shall be held by the Trustee until distribution
or sale for distribution of cash to Participants or Beneficiaries
or until disposition is required to implement changes in
investment designations. In addition, all or any portion of any
other Investment Fund may consist of Employer Securities. Such
percentage of the Trust Fund, up to 100%, shall be invested in
Employer Securities as results from the operation of this Section.
4.4. Voting Employer Securities. The Investment Committee
shall have the power to direct the Trustee in the voting of all
Employer Securities held by the Trustee. All voting of Employer
Securities shall be in compliance with all applicable rules and
regulations of the Securities and Exchange Commission and all
applicable rules of or any agreement with any stock exchange on
which the Employer Securities being voted are traded. The Trustee
shall vote all Employer Securities as directed by the Investment
Committee and in the absence of such directions shall vote or not
vote Employer Securities in such manner as the Trustee shall, in
its sole discretion, determine. Notwithstanding the foregoing,
the Investment Committee may, in its sole discretion and at any
time or from time to time, permit Participants and Beneficiaries
to direct the manner in which any Employer Securities allocated to
their Accounts shall be voted on such matter as the Investment
Committee permits.
4.5. Tender Offers. Each Participant and Beneficiary shall
have the sole right to direct the Trustee as to the manner in
which to respond to a tender or exchange offer for Employer
Securities allocated to such person's Account. The Investment
Committee shall use its best efforts to notify or cause to be
notified each Participant and Beneficiary of any tender or
exchange offer and to distribute or cause to be distributed to
each Participant and Beneficiary such information as is
distributed in connection with any tender or exchange offer to
holders generally of Employer Securities, together with the
appropriate forms for directing the Trustee as to the manner in
which to respond to such tender or exchange offer. Upon timely
receipt of directions under this Section from the Participant or
Beneficiary, the Trustee shall respond to the tender or exchange
offer in accordance with, and only in accordance with, such
directions. If the Trustee does not receive timely directions
from a Participant or Beneficiary under this Section, the Trustee
shall not tender, sell, convey or transfer any Employer Securities
allocated to such person's Account in response to any tender or
exchange offer.
4.6. Investment Managers. The Investment Committee may
appoint one or more investment managers to manage all or any
portion of all or any of the Investment Funds, and one or more
custodians for all or any portion of any Investment Fund. The
Investment Committee may also establish investment guidelines for
the Trustee or any one or more investment managers and may direct
that all or any portion of the assets in an Investment Fund be
invested in one or more guaranteed investment contracts having
such terms and conditions as the Investment Committee deems
appropriate. The Investment Committee or the Trustee, at the
direction of the Investment Committee, may enter into such
agreements as the Investment Committee deems advisable to carry
out the purposes of this Section.
4.7. Section 16 Persons. Notwithstanding anything in the
Plan to the contrary, Section 16 Persons may not direct the
investment of their Accounts into the Company Stock Fund unless
the Investment Committee determines otherwise.
SECTION 5
VALUATIONS AND CREDITING
5.1. Valuations. The Trust Fund shall be valued by the
Trustee at fair market value as of the close of business on each
Valuation Date. In determining the fair market value of assets
other than securities for which trading or bid prices can be
obtained, the Trustee shall rely on valuations provided by the
Investment Committee, which may appraise such assets itself or
employ one or more appraisers, including the Trustee or an
affiliate of the Trustee, for that purpose. The portions of all
Accounts held in the Company Stock Fund shall be maintained on a
share basis.
5.2. Credits to and Charges Against Accounts. All crediting
to and charging against Accounts shall be made as follows:
5.2.1. First, there shall be determined the net adjusted
Account by (a) charging all distributions and withdrawals made
during the period from the prior Valuation Date to the current
Valuation Date, and (b) crediting Savings Contributions and
Rollover Contributions on such time weighted basis as the
Administrator determines.
5.2.2. Second, all earnings of the Trust Fund shall then
be allocated to and among the Participants' Accounts according to
their net adjusted Accounts and the relative investment results of
the Investment Funds in which their Accounts were invested.
5.2.3. Third, at the option of the Administrator, all
administrative expenses relating to the maintenance of Accounts of
former Participants shall be charged against such Accounts.
5.2.4. Last, there shall be credited to each
Participant's Account, (a) Non-Elective Profit Sharing
Contributions and Elective Profit Sharing Contributions allocated
to such Account, and (b) Savings Contributions and Rollover
Contributions to such Account not previously credited under this
Section.
5.3. Expenses. All brokerage fees, transfer taxes, and
other expenses incurred in connection with the investment of the
Trust Fund shall be added to the cost of such investments or
deducted from the proceeds thereof, as the case may be. All other
costs and expenses of administering the Plan shall be paid from
the Trust Fund unless the Employer elects to pay such costs and
expenses.
SECTION 6
BENEFITS
6.1. Forms of Benefit Payments. A Participant or
Beneficiary shall receive any benefit to which he or she is
entitled in the form of:
6.1.1. A lump sum distribution to the Participant or
Beneficiary consisting of cash for amounts not invested in the
Company Stock Fund and, for amounts invested in the Company Stock
Fund, (i) the greatest number of whole shares of Employer
Securities which can be distributed on the basis of the portion of
his or her Account balance invested in the Company Stock Fund plus
cash for any fractional share, if the number of whole shares is 20
or more and the Participant or Beneficiary elects to receive
shares, or (ii) cash if the number of whole shares is less than 20
or if the Participant or Beneficiary elects to receive cash; or
6.1.2. Effective for distributions made after December
31, 1993, at the election of the Participant or Beneficiary who is
the Participant's surviving or former spouse, if the benefit is an
Eligible Rollover Distribution, a lump sum payment of the benefit
directly to an Eligible Retirement Plan specified by the
Participant or Beneficiary in the form of cash for amounts not
invested in the Company Stock Fund and, for amounts invested in
the Company Stock Fund, (i) the greatest number of whole shares of
Employer Securities which can be distributed on the basis of the
portion of his or her Account balance invested in the Company
Stock Fund plus cash for any fractional share, if the number of
whole shares is 20 or more and the Participant or Beneficiary
elects to receive shares, or (ii) cash if the number of whole
shares is less than 20 or if the Participant or Beneficiary elects
to receive cash; or
6.1.3. Effective for distributions made after December
31, 1993, at the election of the Participant or Beneficiary who is
the Participant's surviving or former spouse, if the benefit is an
Eligible Rollover Distribution, distribution to both the
Participant or Beneficiary and an Eligible Retirement Plan as
follows:
(a) for amounts not invested in the Company Stock Fund,
a lump sum cash payment to:
(i) the Participant or Beneficiary; or
(ii) an Eligible Retirement Plan specified by
the Participant or Beneficiary; or
(iii) the Participant or Beneficiary of a
portion of the benefit specified by the Participant or
Beneficiary, with the remainder paid to an Eligible
Retirement Plan, and
(b) for amounts invested in the Company Stock Fund:
(i) a lump sum cash payment to the Participant
or Beneficiary; or
(ii) a distribution to the Participant or
Beneficiary of the greatest number of whole shares of
Employer Securities which can be distributed on the basis
of the portion of his or her Account balance invested in
the Company Stock Fund plus cash for any fractional
share, if the number of whole shares is 20 or more: or
(iii) a lump sum cash payment to an Eligible
Retirement Plan specified by the Participant or
Beneficiary; or
(iv) a distribution to an Eligible Retirement
Plan of the greatest number of whole shares of Employer
Securities which can be distributed on the basis of the
portion of the Participant's Account balance invested in
the Company Stock Fund plus cash for any fractional
share, if the number of whole shares is 20 or more.
6.2. Retirement Benefit. Effective January 1, 1993, any
Participant who has incurred a Termination Date shall receive his
or her retirement benefit as soon as administratively practicable
after:
(a) if the Participant's benefit is $3,500 or less, the
Valuation Date coincident with or following the Participant's
Termination Date; or
(b) if the Participant's benefit is more than $3,500:
(i) the Valuation Date coincident with or
following the later of the Participant's Termination Date
and the date the Participant attains age 62, or
(ii) at the election of the Participant (made
during the time period, before and after the applicable
Valuation Date, that the Administrative Committee
establishes for purposes of administrative convenience),
the Valuation Date following the Participant's Separation
Date; or
(iii) at the election of the Participant (made
in the time period, before the applicable Valuation Date,
that the Administrative Committee establishes for the
purposes of administrative convenience), any Valuation
Date, starting with the third Valuation Date after the
Participant's Separation Date and ending with the
Valuation Date in (i).
The amount of the retirement benefit shall be equal to the
undistributed balance in the Participant's Account determined as
of the applicable Valuation Date. Such distribution shall be made
as soon as practicable after the applicable Valuation Date.
6.3. Death Benefit.
6.3.1. If a Participant dies before receiving a
distribution of his or her retirement benefit, the Participant's
Beneficiary shall receive a death benefit, in lieu of the
retirement benefit, as soon as administratively practicable after
the Valuation Date coincident with or next following the
Participant's death. The amount of the death benefit shall be
equal to the undistributed balance in the Participant's Account
determined as of the applicable Valuation Date.
6.3.2. A married Participant may, with the consent of
his or her spouse, designate and from time to time change the
designation of one or more Beneficiaries or contingent
Beneficiaries to receive any death benefit. The designation and
consent shall be on a form supplied by the Administrator, which
form shall describe the effect of the designation on the
Participant's spouse, and shall be signed by the Participant and
the Participant's spouse. The spouse's signature shall be
witnessed by a Plan representative or a notary public.
Notwithstanding the foregoing, a Beneficiary designation made by
a married Participant who has no Hours of Service and no paid
leave of absence on or after August 23, 1984, shall be effective
without the consent of such Participant's spouse. An unmarried
Participant or a married Participant whose spouse has abandoned
him or her or cannot be located may designate a Beneficiary or
Beneficiaries without the consent of any other person, after
having first established to the satisfaction of the Administrator
either that he or she has no spouse or that his or her spouse
cannot be located. All records of Beneficiary designations shall
be maintained by the Administrator.
6.3.3. In the event that the Participant fails to
designate a Beneficiary to receive a benefit that becomes payable
under the provisions of this Section, or in the event that the
Participant is predeceased by all designated primary and
contingent Beneficiaries, (a) if the Participant is survived by a
spouse, the death benefit shall be payable to the Participant's
surviving spouse who shall be deemed to be the Participant's
designated Beneficiary for all purposes under this Plan, or (b) if
the Participant is not survived by a spouse, the death benefit
shall be payable to the Participant's estate.
6.4. In-Service Distributions. Any Participant who has
completed more than five years of participation in the Plan and
who has attained age 59-1/2 may withdraw from the Trust as of any
Valuation Date all of his or her Savings Account, or any portion
of his or her Savings Account which would not reduce the amount in
his or her Savings Account to less than $500. Upon receipt of a
request for withdrawal of a portion of a Participant's Savings
Account which would reduce it to less than $500, the Trustee shall
distribute the entire amount of the Participant's Savings Account.
6.5. Advance Distribution for Hardship.
6.5.1. If a Participant has an immediate and heavy
financial need and has obtained all distributions, other than
hardship distributions, currently available under the Plan and any
other plans maintained by the Employer or an Affiliate, he or she
may obtain a hardship distribution of his or her Savings
Contributions. The amount of the hardship distribution shall be
the lesser of the Participant's Savings Contributions or the
amount necessary to satisfy the immediate and heavy financial need
(including amounts necessary to pay reasonably anticipated taxes
and penalties on the hardship distribution). Hardship
distributions of other amounts shall not be allowed.
6.5.2. An amount shall not be treated as necessary to
satisfy the immediate and heavy financial need if the need can be
reasonably relieved by (a) reimbursement or compensation from
insurance or otherwise, (b) reasonable liquidation of the
Participant's assets, to the extent such liquidation would not
itself cause an immediate and heavy financial need, (c) cessation
of Savings Contributions and Elective Profit Sharing
Contributions, (d) other distributions from the Plan or any other
plan, (e) loans from the Plan or any other plans, or (f) loans
from commercial sources on reasonable terms. A need cannot
reasonably be relieved by one of the listed actions if the effect
would be to increase the amount of the need. The Administrator
shall be entitled to rely on the Participant's certification of
the foregoing except that the Administrator may require further
documentation as to the amount necessary to satisfy the immediate
and heavy financial need, or deny the hardship distribution, if
under the circumstances the Administrator's reliance on the
certification is not reasonable.
6.5.3. For purposes of this Plan, an immediate and heavy
financial need is the need for money for:
(a) expenses for or necessary to obtain medical care
described in Section 213(d) of the Code for the Participant or the
Participant's spouse or dependents;
(b) costs directly related to the purchase (excluding
mortgage payments) of a principal residence of the Participant;
(c) the payment of tuition and related educational
fees for the next 12 months of post-secondary education for the
Participant or the Participant's spouse, children or dependents;
(d) the prevention of the eviction of the Participant
from his or her principal residence or the foreclosure on the
mortgage of the Participant's principal residence; or
(e) any other reason added to the list of deemed
immediate and heavy financial needs by the Commissioner of the
Internal Revenue Service.
6.5.4. A Participant who has obtained a hardship
distribution shall not be eligible to make any Savings
Contributions or Elective Profit Sharing Contributions for the 12
months after the hardship distribution.
6.6. Loans to Participants.
6.6.1. Loans to a Participant from his or her Savings
Account and, effective July 1, 1994, from his or her Rollover
Account shall be allowed, subject to such uniform and
nondiscriminatory rules as may from time to time be adopted by the
Administrator. Loans from other Accounts shall not be allowed.
The Trustee may make a loan to a Participant who has applied for
a loan, in accordance with rules adopted by the Administrator, on
forms provided by the Administrator.
6.6.2. A Participant shall be permitted to borrow no
more than the lesser of (a) $50,000 reduced by the excess (if any)
of (i) the highest outstanding balance of Plan loans during the
previous 12 months over (ii) the current outstanding balance of
Plan loans, or (b) 50% of the value of the Participant's Account
as of the Valuation Date coincident with or next preceding the
date on which the loan is made.
6.6.3. Loans shall be available to all Participants on
a reasonably equivalent basis; provided, however, that the Trustee
may make reasonable distinctions among prospective borrowers on
the basis of creditworthiness and available security. Any amount
withdrawn by or payable to a Participant from his or her Account
while a loan is outstanding shall be immediately applied to reduce
such loan.
6.6.4. (a) All loans to Participants made by the
Trustee shall be secured by the pledge of the Participant's
Account.
(b) Interest shall be charged at an interest rate
which the Administrator finds to be reasonable on the date of the
loan.
(c) Loans shall be for a term of five years or for
such lesser term as the Administrator and the Trustee agree is
appropriate, with substantially level amortization over the term
of the loan.
(d) If not paid as and when due, any such
outstanding loan or loans may be deducted from any benefit which
is or becomes payable to such Participant or the Participant's
Beneficiary. The Participant shall remain liable for any
deficiency, and any surplus remaining shall be paid to the
Participant.
(e) Any loan made to a Participant shall be (i)
treated as an investment of the Participant's Account with
interest payments credited and expenses deducted from the
Participant's Account, and (ii) excluded from the Participant's
Account for purposes of implementing the Participant's investment
directions and allocation of the investment results of the
Investment Funds.
6.7. Latest Commencement of Benefits. Payment of benefits
shall commence in accordance with this Section, provided, however,
in no event shall payment of benefits commence later than the
April 1 of the calendar year following the calendar year in which
the Participant attains age 70-1/2.
6.8. Post-Distribution Credits. If, after the distribution
of retirement or death benefits under this Plan, there remain in
a Participant's Account any funds, or any funds shall be
subsequently credited thereto, such funds shall be distributed to
the Participant or his or her Beneficiary as promptly as
practicable.
6.9. Prevention of Escheat. If the Administrator cannot
ascertain the whereabouts of any person to whom a payment is due
under the Plan, the Administrator may place the amount of the
payment in a segregated account. If a segregated account is an
interest bearing account, the interest, which may be net of
expenses, shall be credited to the segregated account. If a
segregated account holds Employer Securities, any dividends may be
treated as earnings of the Trust Fund or of the segregated
account, at the option of the Administrator. After two years from
the date such payment is due, the Administrator may mail a notice
of the payment to the last known address of such person as shown
on the records of the Plan, the Employer and all Affiliates. If
such person has not made claim for the payment within three months
after the date of the mailing of the notice or if the notice is
returned as undeliverable, then the payment and all remaining
payments which would otherwise be due to such person shall be
cancelled and the amount thereof shall be applied to reduce Profit
Sharing Contributions. If any person subsequently has a claim
allowed for such benefits, such person shall be treated as an
omitted eligible Employee.
SECTION 7
TOP-HEAVY PLAN PROVISIONS
7.1. Minimum Benefits. For any Plan Year that this Plan is
a Top-Heavy Plan, the Employer shall contribute, for and on behalf
of each Non-Key Employee who is a Participant on the last day of
the Plan Year, an amount which is not less than the lesser of (a)
3% of such Participant's Compensation, or (b) such Participant's
Compensation multiplied by a fraction, determined with respect to
the Key Employee for whom the fraction is greatest, the numerator
of which is the contributions allocated to such Key Employee's
Account for the Plan Year and the denominator of which is the Key
Employee's Compensation for the Plan Year. In determining the
minimum benefit, all contributions, including Savings
Contributions, for any Participant to any plan included in the
Aggregation Group shall be taken into account. If a Participant
participates in this Plan and a defined benefit plan in the
Aggregation Group, the Participant shall receive minimum benefits
under such defined benefit plan.
7.2. Adjustment in Benefit Limitations. In applying the
limits of Section 415 of the Code where a Participant participates
in both one or more defined benefit plans and one or more defined
contribution plans of the Employer, paragraphs (2)(B) and (3)(B)
of Section 415(e) of the Code shall be applied by substituting
"1.0" for "1.25", unless (a) the sum of the account balances and
the present value of the accrued benefits of Key Employees do not
exceed 90% of the account balances and the present value of the
accrued benefits of all participants and their beneficiaries, as
determined under Section 416(h) of the Code, and (b) the Employer
elects to have the minimum benefit under Section 416 of the Code
applied by substituting "4%" for "3%" therein.
SECTION 8
CLAIMS PROCEDURES
8.1. Application for Benefits. Each Participant or
Beneficiary believing himself or herself eligible for benefits
under this Plan may apply for such benefits by completing and
filing with the Administrator an application for benefits on a
form supplied by the Administrator. Before the date on which
benefit payments commence, each such application must be supported
by such information and data as the Administrator deems relevant
and appropriate. Evidence of age, marital status (and, in the
appropriate instances, death), and location of residence shall be
required of all applicants for benefits.
8.2. Appeal of Denial of Claim for Benefits. In the event
that any claim for benefits is denied in whole or in part, the
Participant or Beneficiary whose claim has been so denied shall be
notified of such denial in writing by the Administrator within 90
days after the Administrator receives the claim. The notice
advising of the denial shall specify the reasons for denial, make
specific reference to pertinent Plan provisions, describe any
additional material or information necessary for the claimant to
perfect the claim (explaining why such material or information is
needed), and shall advise the Participant or Beneficiary, as the
case may be, of the procedure for the appeal of such denial. If
a claimant wishes to appeal the denial of the claim, the claimant
shall submit a written appeal to the Advisory Committee within 60
days after the Administrator notifies the claimant of the denial.
The appeal shall set forth all of the facts upon which the appeal
is based. Appeals which are not timely filed shall be barred.
The Advisory Committee shall consider the merits of the claimant's
appeal, the merits of any facts or evidence in support of the
denial of benefits, and such other facts and circumstances as the
Advisory Committee deems relevant. The Advisory Committee shall
give the Administrator a written statement as to its
recommendation on the appeal within 30 days after the Advisory
Committee receives the appeal, unless special circumstances or the
need to hold a hearing require an extension of up to 30 additional
days. The Administrator shall then consider the recommendation of
the Advisory Committee and give the claimant a written statement
as to the Administrator's determination on the appeal within 60
days after the Advisory Committee receives the appeal, unless
special circumstances or the need to hold a hearing require an
extension of up to 60 additional days.
8.3. Effect of Administrator Decision. Any decision or
action of the Administrator on appeal shall be final and binding
on all persons absent fraud or arbitrary abuse of the wide
discretion granted to the Administrator. No appeal or contest of
any decision or action may be brought other than after following
the procedures for claims and appeals as set forth herein by a
legal proceeding in a court of competent jurisdiction brought
within one year after such decision or action.
SECTION 9
ALLOCATION OF AUTHORITY AND RESPONSIBILITY
9.1. Authority and Responsibilities of the Administrator.
The Administrator shall have the following duties and
responsibilities: (a) to maintain and retain records relating to
the Participants and Beneficiaries; (b) to prepare and furnish to
Participants all information required under federal law or
provisions of this Plan to be furnished to them; (c) to prepare
and furnish to the Trustee sufficient Employee data and the amount
of contributions received from all sources so that the Trustee may
maintain separate Accounts for Participants and make required
payments of benefits; (d) to provide directions to the Trustee
with respect to payments of benefits and all other matters where
called for in the Plan or requested by the Trustee; (e) to prepare
and file or publish with the Secretary of Labor, the Secretary of
the Treasury, their delegates and all other appropriate
governmental officials, all reports and other information required
under law to be so filed or published; (f) to arrange for bonding;
(g) to consult with the Advisory Committee and the Investment
Committee with respect to matters determined under Sections 9.2
and 9.3, respectively; (h) to recommend and facilitate approval of
Plan changes; and (i) to coordinate implementation of changes to
and administration of the Plan. The Administrator shall have the
right to hire such professional assistants and consultants as it
deems necessary or advisable, including, but not limited to: (i)
accountants; (ii) actuaries; (iii) attorneys; (iv) consultants;
and (v) clerical and office personnel. The costs for such
assistants and advisers shall be paid from the Trust Fund as an
expense of the Trust Fund unless the Employer elects to pay such
costs.
9.2. Authority and Responsibilities of the Advisory
Committee. The Advisory Committee shall have the following duties
and responsibilities: (a) to provide assistance and consultation
to the Administrator with respect to Plan changes and
administrative procedures; (b) to develop recommendations for Plan
changes, as deemed appropriate by the Advisory Committee; (c) to
consult with the Administrator with respect to other matters at
the discretion of the Administrator; and (d) to review appeals of
denial of claims and make recommendations for action to the
Administrator.
9.3. Authority and Responsibilities of the Investment
Committee. The Investment Committee shall have the following
duties and responsibilities: (a) to appoint the Trustee, to
monitor the performance of the Trustee, and to terminate such
appointment; (b) to provide direction to the Trustee including
direction of investment of all or part of the Trust Fund and the
establishment of investment criteria and Investment Funds; and (c)
to appoint investment advisors and investment managers, to monitor
their performances, and to terminate such appointments.
9.4. Appointment and Tenure. The Advisory Committee and the
Investment Committee shall each consist of a committee of one or
more members who shall serve at the pleasure of the Board of
Directors. Any committee member may be dismissed at any time,
with or without cause, upon notice from the Board of Directors.
Any committee member may resign by delivering his or her written
resignation to the Board of Directors. Vacancies arising by the
death, resignation or removal of a committee member shall be
filled by the Board of Directors. If the Board of Directors fails
to act, and in any event, until the Board of Directors so acts,
the remaining members of a committee may appoint an interim member
to fill any vacancy occurring on the committee. If no person has
been appointed to the Advisory Committee or the Investment
Committee, or if no person remains on one of the committees, the
Company shall be deemed to be such committee.
9.5. Meetings; Majority Rule. Any and all acts of the
Advisory Committee or the Investment Committee taken at a meeting
shall be by a majority of all members of such committee. A
committee may act by vote taken in a meeting (at which a majority
of members shall constitute a quorum) if all members of the
committee have received at least 10 days' written notice of such
meeting or have waived notice. A committee may also act by
majority consent in writing without the formality of convening a
meeting. Each committee shall elect one of its members to serve
as chairman. The chairman shall preside at all meetings of the
committee or shall delegate such responsibility to another
committee member.
9.6. Compensation. The Advisory Committee, the Investment
Committee and the Administrator shall serve without compensation
for services as such, but all expenses of such persons shall be
paid or reimbursed by the Employer, and if not so paid or
reimbursed, shall be paid from the Trust Fund.
9.7. Indemnification. Each member of the Advisory
Committee, each member of the Investment Committee, and Employees
carrying out the duties of the Administrator shall be indemnified
by the Employer against costs, expenses and liabilities (other
than amounts paid in settlement to which the Employer does not
consent) reasonably incurred by the person in connection with any
action to which the person may be a party by reason of his or her
service as a member of the committee or for the Administrator,
except in relation to matters as to which he or she shall be
adjudged in such action to be personally guilty of negligence or
willful misconduct in the performance of his or her duties. The
foregoing right to indemnification shall be in addition to such
other rights as the person may enjoy as a matter of law or by
reason of insurance coverage of any kind, but shall not extend to
costs, expenses and/or liabilities otherwise covered by insurance
or that would be so covered by any insurance then in force if such
insurance contained a waiver of subrogation. Rights granted
hereunder shall be in addition to and not in lieu of any rights to
indemnification to which the person may be entitled under the
bylaws of the Company. Service on the Advisory Committee or the
Investment Committee or for the Administrator shall be deemed in
partial fulfillment of the person's function as an Employee,
officer and/or director of the Employer, if the person serves in
such capacity as well.
9.8. Authority and Responsibilities of the Company. The
Company, as Plan sponsor, shall have the following (and only the
following) authority and responsibilities: (a) to act as
Administrator, (b) to appoint the Advisory Committee and the
Investment Committee and to monitor each of their performances;
(c) to communicate such information to the Advisory Committee, the
Investment Committee, and the Trustee as each needs for the proper
performance of its duties; (d) to provide channels and mechanisms
through which the Advisory Committee, the Investment Committee,
the Administrator and/or the Trustee can communicate with
Participants and Beneficiaries; and (e) to perform such duties as
are imposed by law or by regulation and to serve as Advisory
Committee or the Investment Committee in the absence of an
appointed committee or person. Any action which may be taken and
any decision which may be made by the Company under the Plan
(including authorization of Plan amendments or termination) may be
made by: (a) the Board of Directors; or (b) any committee to which
the Board of Directors delegates discretionary authority with
respect to the Plan.
9.9. Obligations of Named Fiduciaries. The Investment
Committee, the Administrator and the Trustee are named fiduciaries
within the meaning of Section 402(a) of ERISA. A named fiduciary
shall have only those particular powers, duties, responsibilities
and obligations specifically given to it under this Plan or the
Trust Agreement. No named fiduciary shall have authority or
responsibility to deal with matters other than as delegated to it
under this Plan, under the Trust Agreement or by operation of law.
Notwithstanding the foregoing, named fiduciaries may perform in
more than one fiduciary capacity if so appointed and may
reallocate duties between themselves by mutual agreement. A named
fiduciary shall not in any event be liable for breach of fiduciary
responsibility or obligation by another fiduciary (including named
fiduciaries) if the responsibility or authority of the act or
omission deemed to be a breach was not within the scope of such
named fiduciary's authority or responsibility.
SECTION 10
AMENDMENT, TERMINATION, MERGERS AND CONSOLIDATIONS OF THE PLAN
10.1. Amendment. The Company (by its Board of Directors,
an executive committee of its Board of Directors or other
committee to which the Board of Directors delegates discretionary
authority with respect to the Plan) may amend the provisions of
this Plan at any time and from time to time, after consultation
with the Advisory Committee; provided, however, that:
10.1.1. No amendment shall increase the duties or
liabilities of the Trustee without the consent of such party.
10.1.2. No amendment shall deprive any Participant or
Beneficiary of a deceased Participant of any of the benefits to
which such person is entitled under the Plan with respect to
contributions previously made or decrease the balance in any
Participant's Account, except as permitted by Section 412(c)(8) of
the Code and Section 302(c)(8) of ERISA.
10.1.3. No amendment changing the vesting schedule shall
decrease the vested percentage of any Participant.
10.1.4. No amendment shall eliminate an optional form
of benefit in violation of Section 411(d)(6).
10.1.5. No amendment shall provide for the use of funds
or assets held to provide benefits under the Plan other than for
the benefit of Employees and Beneficiaries, except as may be
specifically authorized by statute or regulation.
10.1.6. Any amendment necessary to maintain the
qualification of the Plan under Section 401(a) of the Code may be
made without the further approval of the Board of Directors or any
committee if signed by an officer of the Company.
10.2. Plan Termination. The Company reserves the right to
terminate the Plan in whole or in part, after consultation with
the Advisory Committee. Plan termination shall be effective as of
the date specified by resolution of the Board of Directors. The
Company shall instruct the Trustee to either (a) continue to
manage and administer the assets of the Trust for the benefit of
Participants and Beneficiaries under the terms and provisions of
the Trust Agreement, or (b) pay over to each Participant the value
of his or her interest, and thereupon dissolve the Trust.
10.3. Permanent Discontinuance of Profit Sharing
Contributions. While it is the Company's intention to make
substantial and recurring contributions to the Trust Fund under
the provisions of the Plan, the right is, nevertheless, reserved
to permanently discontinue Profit Sharing Contributions at any
time. Such permanent discontinuance shall have the effect of a
termination of the Plan, except that the Trustee shall not have
the authority to dissolve the Trust Fund except upon adoption of
a further resolution by the Board of Directors to the effect that
the Plan is terminated and upon receipt from the Company of
instructions to dissolve the Trust Fund. Failure to make a
contribution solely because of a lack of net income shall not be
deemed to be a permanent discontinuance of Profit Sharing
Contributions.
10.4. Suspension of Profit Sharing Contributions. The
Company shall have the right, at any time and from time to time,
to suspend Profit Sharing Contributions to the Trust Fund under
the Plan. Such suspension shall have no effect on the operation
of the Plan except as set forth below:
10.4.1. If the Board of Directors determines by
resolution that such suspension shall be permanent, a permanent
discontinuance of contributions shall be deemed to have occurred
as of the date of such resolution or such earlier date as is
therein specified.
10.4.2. If a temporary suspension becomes a permanent
discontinuance or a Plan termination, the discontinuance or
termination shall be deemed to have occurred on the earlier of:
(a) the date specified by resolution of the Board of Directors, or
(b) the last day of the Plan Year next following the first Plan
Year during the period of suspension in which there occurred a
failure of the Employer to make contributions in a year in which
there was net income out of which such contributions could have
been made.
10.5. Mergers and Consolidations of Plans. In the event of
any merger or consolidation of the Plan with, or transfer of
assets or liabilities to, any other plan, each Participant and
Beneficiary shall have a benefit in the surviving or transferee
plan (determined as if such plan were then terminated immediately
after such merger, etc.) that is equal to or greater than the
benefit he or she would have been entitled to receive immediately
before such merger, etc., in this Plan (had this Plan been
terminated at that time).
10.6. Transfers of Assets to or from this Plan. A transfer
of all or any portion of the assets or liabilities of the Plan to
any other plan, or the transfer of all or any portion of the
assets or liabilities of another plan to this Plan, shall be in
accordance with directions of the Company. The Plan shall not
accept a direct or indirect transfer of assets which would make
the Plan subject to Sections 401(a)(11) and 417 of the Code with
respect to any Participant.
10.7. Effect of Amendment and Restatement. Notwithstanding
anything herein to the contrary, the identities, Account balances,
Hours of Service, and Years of Eligibility Service of Participants
and Employees as of the Effective Amendment Date, and the rights
of persons terminating their employment with the Employer and all
Affiliates prior to the Effective Amendment Date, shall be
determined under the Plan as in effect prior to the Effective
Amendment Date.
SECTION 11
PARTICIPATING EMPLOYERS
11.1. Adoption by Affiliates. With the consent of the
Company, any Affiliate may adopt the Plan as a participating
Employer. Each participating Employer shall be required to use
the same Trustee and Trust Agreement as provided in this Plan, and
the Trustee shall commingle, hold and invest as one Trust Fund all
contributions made by participating Employers, as well as all
increments thereof. With respect to all relations with the
Trustee, the Advisory Committee, the Administrator and the
Investment Committee, each participating Employer shall be deemed
to have irrevocably designated the Company as its agent. The
Company shall have authority to make any and all necessary rules
or regulations, binding upon all participating Employers and all
Participants, to effectuate the purposes of the Plan.
11.2. Employee Transfers. If an Employee is transferred
between Employers, the Employee involved shall carry with him or
her the Employee's accumulated service and eligibility, no such
transfer shall effect a termination of employment hereunder, and
the participating Employer to which the Employee is transferred
shall thereupon become obligated with respect to such Employee in
the same manner as was the participating Employer from whom the
Employee was transferred.
11.3. Discontinuance of Participation. Any participating
Employer may discontinue or revoke its participation in the Plan.
At the time of any such discontinuance or revocation, satisfactory
evidence thereof and of any applicable conditions imposed shall be
delivered to the Trustee. The Trustee shall retain assets for the
Employees of the participating Employer under the Plan.
SECTION 12
MISCELLANEOUS PROVISIONS
12.1. Nonalienation of Benefits.
12.1.1. None of the payments, benefits or rights of any
Participant or Beneficiary shall be subject to any claim of any
creditor, and, in particular, to the fullest extent permitted by
law, all such payments, benefits and rights shall be free from
attachment, garnishment, trustee's process or any other legal or
equitable process available to any creditor of such Participant or
Beneficiary. No Participant or Beneficiary shall have the right
to alienate, anticipate, commute, pledge, encumber, or assign any
of the benefits or payments which he or she may expect to receive,
contingently or otherwise, under this Plan, except the right to
designate a Beneficiary or Beneficiaries as hereinbefore provided.
Notwithstanding the foregoing, assignments permitted under the
Code shall be permitted under the Plan, including (a) assignments
pursuant to a qualified domestic relations order, and (b) any
loans made by the Trustee to a Participant that are secured by a
pledge of the borrower's Account, which shall give the Trustee a
first lien on such interest to the extent of the entire
outstanding amount of such loan, unpaid interest thereon, and all
costs of collection.
12.1.2. If a domestic relations order is received by the
Administrator, the Administrator shall make a determination as to
whether the domestic relations order is a qualified domestic
relations order as defined in Section 414(p) of the Code, treating
the domestic relations order as a claim for benefits under the
Plan and all alternate payees and the Participant as claimants.
Within 30 days after the Administrator's receipt of the domestic
relations order and at least 30 days prior to its determination,
the Administrator shall notify the Participant and any alternate
payees other than the one who is the subject of the domestic
relations order of the receipt of the domestic relations order and
the procedures that the Administrator will follow in determining
the qualified status of the domestic relations order. During any
period in which the issue of whether the domestic relations order
is a qualified domestic relations order is pending, the
Administrator shall segregate in a separate account under the Plan
the amounts which would have been payable to the alternate payee
during such period if the domestic relations order had been
determined to be a qualified domestic relations order. If, within
18 months, it is finally determined that the domestic relations
order is a qualified domestic relations order, the Administrator
shall direct the Trustee to pay the segregated amount to the
person entitled thereto. If, within 18 months, it is finally
determined that the domestic relations order is not a qualified
domestic relations order, or the issue has not yet been resolved,
the Administrator shall direct the Trustee to pay the segregated
amount without regard to the terms of the domestic relations
order. Any determination that a domestic relations order is a
qualified domestic relations order which is made after the close
of the 18 month period shall be applied prospectively only.
12.1.3. The Trustee may make a lump sum distribution to
an alternate payee pursuant to a qualified domestic relations
order as soon as administratively practical after the Valuation
Date following the earlier of the date a Participant attains age
50 or the date a Participant terminates employment. The Trustee
may make a lump sum distribution pursuant to a qualified domestic
relations order before such date provided no more than one
distribution is made to each alternate payee.
12.2. No Contract of Employment. Neither the establishment
of the Plan, nor any modification thereof, nor the creation of any
fund, trust or Account, nor the payment of any benefits, shall be
construed as giving any Participant or Employee, or any person
whomsoever, the right to be retained in the service of the
Employer, and all Participants and other Employees shall remain
subject to discharge to the same extent as if the Plan had never
been adopted.
12.3. Title to Assets. No Participant or Beneficiary shall
have any right to, or interest in, any assets of the Trust Fund
upon termination of his or her employment or otherwise, except to
the extent of the benefits payable under the Plan to such
Participant or Beneficiary out of the assets of the Trust Fund.
All payments of benefits as provided for in this Plan shall be
made from the assets of the Trust Fund, and neither the Employer
nor any other person shall be liable therefor in any manner.
12.4. Effect of Admission. By becoming a Participant, each
Employee shall be conclusively deemed to have assented to the
provisions of the Plan and the corresponding Trust Agreement and
to all amendments to such instruments.
12.5. Payments to Minors, Etc. Any benefit payable to or
for the benefit of a minor, an incompetent person or other person
incapable of receipting therefor shall be deemed paid when paid to
such person's guardian or to the party providing, or reasonably
appearing to provide, for the care of such person, and such
payment shall fully discharge the Trustee, the Administrator, the
Employer and all other parties with respect thereto.
12.6. Approval of Restatement by Internal Revenue Service.
Notwithstanding anything herein to the contrary, if the
Commissioner of the Internal Revenue Service or his delegate
should determine that the Plan, as amended and restated, does not
qualify as a tax-exempt plan and trust under Sections 401 and 501
of the Code, and such determination is not contested, or if
contested, is finally upheld, then the Plan shall operate as if it
had not been amended and restated.
12.7. Other Miscellaneous. If any provision of this Plan
is held invalid or unenforceable, such holding will not affect any
other provisions hereof, and the Plan shall be construed and
enforced as if such provisions were not been included. The Plan
shall be binding upon the heirs, executors, administrators,
personal representatives, successors, and assigns of the parties,
including each Participant and Beneficiary, present and future.
The headings and captions herein are provided for convenience
only, shall not be considered a part of the Plan, and shall not be
employed in the construction of the Plan. Except where otherwise
clearly indicated by context, the masculine and the neuter shall
include the feminine and the neuter, the singular shall include
the plural, and vice-versa. The Plan shall be construed and
enforced according to the laws of the State of Ohio to the extent
not preempted by federal law, which shall otherwise control.
IN WITNESS WHEREOF, the Company has caused this Plan to be
executed as of the _______ day of December, 1994.
THE SCOTTS COMPANY
By: /s/ Robert A. Stern
Robert A. Stern, Vice President
- Human Resources
Exhibit 4(f)
Fifth Amendment and Consent, dated as of
September 20, 1994, to the Third Amended and
Restated Credit Agreement among Scotts
Delaware, OMS, the banks listed therein and
Chemical Bank, as agent
FIFTH AMENDMENT AND CONSENT, dated as of September 20, 1994
(this "Fifth Amendment"), to the Third Amended and Restated Credit
Agreement dated as of April 7, 1992, as amended by a First
Amendment dated as of November 19, 1992, a Second Amendment dated
as of February 23, 1993, a Third Amendment dated as of December 15,
1993, and a Fourth Amendment dated as of July 5, 1994 (as so
amended and as the same may be further amended, supplemented or
otherwise modified from time to time, the "Credit Agreement";
capitalized terms used herein which are defined in the Credit
Agreement, as amended hereby, are used herein as so defined), among
The Scotts Company, a Delaware corporation ("Holdings"), The O.M.
Scott & Sons Company, a Delaware corporation (the "Company"), the
lenders from time to time parties thereto (collectively, the
"Banks"; individually, a "Bank") and CHEMICAL BANK, a New York
banking corporation ("Chemical"), as agent for the Banks (in such
capacity, the "Agent").
W I T N E S S E T H:
WHEREAS, the Company and Holdings have requested that the
Banks consent, subject to the terms and conditions hereof, to the
merger of Holdings with and into The Scotts Company, an Ohio
corporation ("Scotts Ohio"), with Scotts Ohio as the surviving
corporation (the "Holdings Merger");
WHEREAS, the Company and Holdings have requested that the
Banks consent, subject to the terms and conditions hereof, to the
merger of the Company with and into Scotts Ohio with Scotts Ohio
as the surviving corporation (the "Company Merger");
WHEREAS, the Company and Holdings have requested that the
Banks consent, subject to the terms and conditions hereof, to the
creation of a new, direct, wholly-owned Subsidiary of Scotts Ohio
which shall be organized under the laws of Delaware (the "IP
Holding Company"), and to the transfer from time to time to the IP
Holding Company of certain patents, trademarks and other
intellectual property rights currently owned by Holdings, the
Company and their respective Subsidiaries;
WHEREAS, the Company and Holdings have requested that the
Banks consent, subject to the terms and conditions hereof, to the
creation of a new, direct, wholly-owned Subsidiary of the IP
Holding Company which, at the option the Company (or, if the
Company Merger has been consummated, Scotts Ohio), shall be
organized under the laws of the Netherlands or the United Kingdom
("International Holdings"), and to the subsequent reorganization
of certain of their respective foreign Subsidiaries under
International Holdings, all as more fully described on Annex I
hereto (the "Foreign Reorganization");
WHEREAS, the Banks have agreed to consent, subject to the
terms and conditions hereof, to the Holdings Merger, the Company
Merger, the creation of International Holdings and the Foreign
Reorganization and the creation of the IP Holding Company; and
WHEREAS, in connection with such transactions, the Company,
Holdings, Scotts Ohio and the Banks have agreed to the amendments
and modifications of the Credit Agreement and the other Loan
Documents provided for herein;
NOW, THEREFORE, in consideration of the premises and mutual
agreements herein contained, the parties hereto hereby agree as
follows:
ARTICLE 1. AMENDMENTS TO CREDIT AGREEMENT.
1.1 Amendment to Subsection 1.1 (Definitions). (a) Addition
of Certain Definitions. Subsection 1.1 of the Credit Agreement is
hereby amended by adding thereto the following new definitions in
appropriate alphabetical order:
"Assumption Agreement (Company Merger)" shall mean the
Assignment and Assumption Agreement (Company Merger) to be
executed and delivered by the Company, Scotts Ohio and, if the
Holdings Merger has not theretofore been consummated, Holdings
in favor of the Agent for the benefit of the Banks on the
effective date of the Company Merger, substantially in the form
of Exhibit A to the Fifth Amendment.
"Assumption Agreement (Holdings Merger)" shall mean the
Assignment and Assumption Agreement (Holdings Merger) to be
executed and delivered by Holdings, Scotts Ohio and, if the
Company Merger has not theretofore been consummated, the Company
in favor of the Agent for the benefit of the Banks on the
effective date of the Holdings Merger, substantially in the form
of Exhibit B to the Fifth Amendment.
"Company Merger" shall mean the merger of the Company with
and into Scotts Ohio, with Scotts Ohio as the surviving
corporation, pursuant to the terms of the Company Merger
Agreement.
"Company Merger Agreement" shall mean that certain agreement
of merger to be entered into between the Company and Scotts Ohio
and pursuant to which the Company will be merged with and into
the Scotts Ohio.
"Fifth Amendment" shall mean the Fifth Amendment and Consent,
dated as of September 20, 1994, to this Agreement.
"Foreign Reorganization" shall mean the reorganization of
certain foreign Subsidiaries of Holdings under International
Holdings, all as more fully described on Annex I to the Fifth
Amendment.
"Holdings Merger" shall mean the merger of Holdings with and
into Scotts Ohio, with Scotts Ohio the surviving corporation,
pursuant to the terms of the Holdings Merger Agreement.
"Holdings Merger Agreement" shall mean that certain agreement
of merger to be entered into between Holdings and Scotts Ohio
and pursuant to which Holdings will be merged with and into the
Scotts Ohio.
"Scotts Ohio" shall mean The Scotts Company, an Ohio
corporation.
(b) Deletion of Certain Definitions. Subsection 1.1 of the
Credit Agreement is hereby amended by deleting the definition set
forth below in its entirety:
"Subordinated Note Indenture" shall mean the Indenture dated
as of December 30, 1986, among the Company, Holdings and The
Connecticut National Bank, as trustee, providing for the
issuance of the Subordinated Notes, as amended, modified or
supplemented, as permitted hereunder.
(c) Amendment to Subsection 1.1. Subsection 1.1 of the
Credit Agreement is hereby amended by (i) deleting the definition
of "Basic Agreements" in its entirety and (ii) inserting the
following in lieu thereof:
"Basic Agreements" shall mean the collective reference to
this Agreement, the Notes, the Collateral Documents, the Letters
of Credit and, from and after the execution and delivery thereof
to the Agent pursuant to the Fifth Amendment, the Assumption
Agreement (Company Merger), the Assumption Agreement (Holdings
Merger) and each other agreement executed and delivered to the
Agent by Holdings, the Company or any of their respective
Subsidiaries pursuant to the Fifth Amendment.
ARTICLE 2. CONSENT TO HOLDINGS MERGER.
2.1 Consent to Holdings Merger. Notwithstanding anything to
the contrary contained in the Credit Agreement but subject to the
satisfaction of the conditions precedent set forth below, each of
the undersigned Banks hereby consents to (i) the formation by
Holdings of Scotts Ohio and (ii) the Holdings Merger. Such consent
shall not be effective unless and until the following conditions
precedent have been satisfied:
(a) Execution of Fifth Amendment. The Agent shall have
received this Fifth Amendment, executed and delivered by a duly
authorized officer of each of Holdings, the Company, Scotts Ohio
and each Bank.
(b) Assumption Agreement (Holdings Merger). The Agent shall
have received the Assumption Agreement (Holdings Merger),
executed and delivered by a duly authorized officer of each of
Holdings, Scotts Ohio and, if the Company Merger has not
theretofore been consummated, the Company.
(c) Opinion of Counsel. The Agent shall have received an
executed legal opinion of Vorys, Sater, Seymour and Pease, dated
the effective date of the Holdings Merger and addressed to the
Agent and Banks, substantially in the form of Exhibit C-1
hereto.
(d) Holdings Merger Agreement. The Agent shall have received
true and complete copies (certified as such by the Secretary or
an Assistant Secretary of Holdings and Scotts Ohio) of the
Holdings Merger Agreement and any other agreements entered into
by Scotts Ohio and/or Holdings in connection therewith; the
Holdings Merger Agreement and such other agreements shall be in
form and substance reasonably satisfactory to the Agent and its
counsel.
(e) Consents, Licenses, Approvals, etc.. The Agent shall
have received true and complete copies (certified as such by the
Secretary or an Assistant Secretary of Holdings and Scotts Ohio)
of all consents, licenses and approvals required in connection
with (i) the Holdings Merger or (ii) the execution, delivery,
performance, validity and enforceability of this Fifth
Amendment, the Credit Agreement (as amended hereby), the other
Loan Documents and the Assumption Agreement (Holdings Merger),
and such consents, licenses and approvals shall be in full force
and effect.
(f) Representations and Warranties. (i) Each of the
representations and warranties made by Holdings and its
Subsidiaries in or pursuant to the Credit Agreement and any
other Basic Agreement to which any one or more of them are a
party and the representations and warranties of Holdings and its
Subsidiaries which are contained in any certificate or document
furnished under of in connection herewith or therewith shall be
true and correct in all material respects immediately prior to
the effectiveness of the Holdings Merger as if made on and as of
such time, (ii) each of the representations and warranties made
by Scotts Ohio, as successor by merger to Holdings, and its
Subsidiaries in or pursuant to the Credit Agreement and any
other Basic Agreement to which any one or more of them are a
party, and the representations and warranties of Scotts Ohio, as
successor by merger to Holdings, and its Subsidiaries which are
contained in any certificate or document furnished under or in
connection herewith or therewith shall be true and correct in
all material respects immediately after the effectiveness of the
Holdings Merger as if made on and as of such time, and (iii) the
Agent shall have received a certificate of a duly authorized
officer of each of Holdings and Scotts Ohio certifying the
matters set forth above in clauses (i) and (ii), respectively.
(g) No Default or Event of Default. No Default or Event of
Default shall have occurred and be continuing both immediately
prior to and after giving effect to the Holdings Merger.
(h) Stock Powers. Unless the Company Merger shall have
theretofore been consummated, the Agent shall have received (i)
stock powers duly executed by Holdings and evidencing the
transfer from Holdings to Scotts Ohio of the ownership of the
outstanding capital stock of the Company, (ii) undated stock
powers for each such certificate duly executed in blank by
Scotts Ohio and (iii) a letter from Scotts Ohio confirming that
such certificates have been delivered to the Agent pursuant to
the Holdings Guarantee, in each case in form and substance
reasonably satisfactory to the Agent and its counsel.
2.2 Amendments to the Credit Agreement and the other Loan
Documents. Upon the effectiveness of the Holdings Merger, the
following amendments to the Credit Agreement and the other Loan
Documents shall become effective:
(a) All references in the Credit Agreement and the other Loan
Documents to "Holdings" shall be replaced by references to "Scotts
Ohio, as successor by merger to Holdings".
ARTICLE 3. CONSENT TO COMPANY MERGER.
3.1 Consent to Company Merger. Notwithstanding anything to
the contrary contained in the Credit Agreement but subject to the
satisfaction of the conditions precedent set forth below, each of
the undersigned Banks hereby consents to the Company Merger. Such
consent shall not be effective unless and until the following
conditions precedent have been satisfied:
(a) Execution of Fifth Amendment. The Agent shall have
received this Fifth Amendment, executed and delivered by a duly
authorized officer of each of Holdings, the Company, Scotts Ohio
and each Bank.
(b) Assumption Agreement (Company Merger). The Agent shall
have received the Assumption Agreement (Company Merger),
executed and delivered by a duly authorized officer of each of
the Company, Scotts Ohio and, if the Holdings Merger has not
theretofore been consummated, Holdings.
(c) Opinion of Counsel. The Agent shall have received an
executed legal opinion of Vorys, Sater, Seymour and Pease, dated
the effective date of the Company Merger and addressed to the
Agent and Banks, substantially in the form of Exhibit C-2
hereto.
(d) Company Merger Agreement. The Agent shall have received
true and complete copies (certified as such by the Secretary or
an Assistant Secretary of Scotts Ohio) of the Company Merger
Agreement and all other agreements entered into by Scotts Ohio
and/or the Company in connection therewith; the Company Merger
Agreement and such other agreements shall be in form and
substance reasonably satisfactory to the Agent and its counsel.
(e) Consents, Licenses, Approvals, etc. The Agent shall have
received true and complete copies (certified as such by the
Secretary or an Assistant Secretary of Scotts Ohio) of all
consents, licenses and approvals required in connection with (i)
the Company Merger or (ii) the execution, delivery, performance,
validity and enforceability of this Fifth Amendment, the Credit
Agreement (as amended hereby), the other Loan Documents and the
Assumption Agreement (Company Merger)
(f) Representations and Warranties. (i) Each of the
representations and warranties made by the Company and its
Subsidiaries in or pursuant to the Credit Agreement and any
other Basic Agreement to which any one or more of them are a
party and the representations and warranties of the Company and
its Subsidiaries which are contained in any certificate or
document furnished under of in connection herewith or therewith
shall be true and correct in all material respects immediately
prior to the effectiveness of the Company Merger as if made on
and as of such time, (ii) each of the representations and
warranties made by Scotts Ohio, as successor by merger to the
Company, and its Subsidiaries in or pursuant to the Credit
Agreement and any other Basic Agreement to which any one or more
of them are a party, and the representations of Scotts Ohio, as
successor by merger to the Company, and its Subsidiaries which
are contained in any certificate or document furnished under or
in connection herewith or therewith shall be true and correct in
all material respects immediately after the effectiveness of the
Company Merger as if made on and as of such time, and (iii) the
Agent shall have received a certificate from a duly authorized
officer of each of the Company and Scotts Ohio certifying the
matters set forth above in clauses (i) and (ii), respectively.
(g) Stock Powers. The Agent shall have received (i) stock
powers duly executed by Holdings and evidencing the transfer
from the Company to Scotts Ohio of the ownership of the
outstanding capital stock of each Subsidiary of the Company
whose capital stock was pledged to the Agent pursuant to the
Company Pledge Agreement immediately prior to the effectiveness
of the Company Merger, (ii) undated stock powers for each such
certificate duly executed in blank by Scotts Ohio and (iii) a
letter from Scotts Ohio confirming that such certificates have
been delivered to the Agent pursuant to the Company Pledge
Agreement, in each case in form and substance reasonably
satisfactory to the Agent and its counsel.
(h) No Default or Event of Default. No Default or Event of
Default shall have occurred and be continuing both immediately
prior to and after giving effect to the Company Merger.
(i) Filings, Registrations and Recordings. All filings,
registrations and recordings described in Schedule I hereto
shall have been completed in a manner satisfactory to the Agent
and its counsel.
3.2 Amendments to the Credit Agreement. Upon the
effectiveness of the Company Merger, the following amendments to
the Credit Agreement and the other Loan Documents shall become
effective:
(a) All references in the Credit Agreement and the other Loan
Documents to the Company shall be replaced by references to "Scotts
Ohio, as successor by merger to the Company".
(b) Paragraph (i) of Section 9 to the Credit Agreement shall
be amended to read in its entirety as follows:
(i) Change in Control. The occurrence of either of the
following events: (i) any Person shall at any time own more
than 30% of the issued and outstanding capital stock of the
Company or (ii) a "Change of Control" as defined in the Section
1008 of the Subordinated Note Indenture shall occur.
(c) Subsection 7.15 of the Credit Agreement shall be deleted
in its entirety and the following statement shall be substituted
in lieu thereof: "Intentionally Omitted".
ARTICLE 4. CONSENT TO THE REORGANIZATION OF THE FOREIGN
SUBSIDIARIES.
4.1 Consent to Reorganization of Foreign Subsidiaries.
Notwithstanding anything to the contrary contained in the Credit
Agreement but subject to the satisfaction of the conditions
precedent set forth below, each of the undersigned Banks hereby
consents to (i) the creation of International Holdings and (ii)
the subsequent Foreign Reorganization. Such consent shall not be
effective unless and until the following conditions precedent have
been satisfied:
(a) IP Holdings Agreement. The Agent shall receive an
agreement (in form and substance reasonably satisfactory to the
Agent and its counsel) executed by IP Holdings and containing a
covenant of IP Holdings to the effect that, if International
Holdings acquires any material assets or property, IP Holdings
will promptly (i) pledge 65% of the capital stock of
International Holdings to the Agent for the benefit of the Banks
by executing and delivering to the Agent a pledge agreement,
substantially in the form of the UK Pledge Agreement (if
International Holdings is organized under the laws of the United
Kingdom) or the Netherlands Pledge Agreement (if International
Holdings is organized under the laws of the Netherlands), (ii)
take such other action as the Agent may reasonably request to
ensure the perfection of the security interests granted to the
Agent in the capital stock of International Holdings pursuant
thereto and (iii) deliver to the Agent executed legal opinions
(in form and substance reasonably satisfactory to the Agent and
its counsel) of New York (or Ohio) and Netherlands or United
Kingdom counsel (as applicable) as to the due authorization,
execution, delivery and enforceability of such pledge agreement
and the perfection of the security interest granted to the Agent
in the capital stock of International Holdings pursuant thereto.
(b) International Holdings Agreement. The Agent shall
receive (i) an agreement (in form and substance reasonably
satisfactory to the Agent and its counsel) of International
Holdings pursuant to which International Holdings will agree (A)
to assume all obligations of Scotts-Sierra Horticultural
Products Company ("SSHPC") and the Company (or, if the Company
Merger has been consummated, Scotts Ohio) under the Netherlands
Pledge Agreement and the UK Pledge Agreement, respectively, (B)
to assume all obligations of SSHPC under the Pledge and Security
Agreement, dated as of December 16, 1993 (the "SSHPC Pledge
Agreement") made by SSHPC in favor of the Agent to the extent
such obligations relate to the Pledged Stock (as defined
therein) of, Sierra United Kingdom, Ltd. (formerly known as
Grace-Sierra United Kingdom), Scotts Belgium, B.V.B.A.
(formerly known as Grace-Sierra Belgium B.V.B.A.), Scotts
Deutschland Gartenbauprodutke GMBH (formerly known as Grace-
Sierra Deutschland Gardenbauprodukbe GMBH) and Scotts Australia
PTY (formerly known as Grace-Sierra Australia PTY) (or, at the
request of the Agent in lieu of the foregoing, to enter into a
new pledge agreement substantially in the form of SSHPC Pledge
Agreement with respect to such Pledged Stock) and (C) to take
all actions necessary to ensure the continued perfection of the
security interests granted to the Agent in the Mortgaged
Securities (as defined in the UK Pledge Agreement) and the
Pledged Stock (as defined in the Netherlands Pledge Agreement),
(ii) stock powers duly executed by SSHPC evidencing the transfer
from SSHPC to International Holdings of the ownership of the
share certificates and evidencing such Pledged Stock of the
various Persons referred to in clause (B) above, together with
undated stock powers for each such share certificate duly
executed in blank by International Holdings and a letter from
International Holdings confirming that such share certificates
have been delivered pursuant to the SSHPC Pledge Agreement and
(iii) executed legal opinions (in form and substance reasonably
satisfactory to the Agent and its counsel) of New York, United
Kingdom and Netherlands counsels as to the enforceability of the
UK Pledge Agreement and the Netherlands Pledge Agreement against
International Holdings and the perfection of the security
interests granted to the Agent pursuant to the UK Pledge
Agreement and the Netherlands Pledge Agreement and as to the
enforceability of the SSHPC Pledge Agreement against
International Holdings, and such other matters as the Agent and
its counsel may reasonably request.
(c) Scotts Europe, B.V. Agreement. The Agent shall receive
(i) an agreement (in form and substance reasonably satisfactory
to the Agent and its counsel) of Scotts Europe, B.V. (formerly
know as Grace-Sierra International, BV) pursuant to which Scotts
Europe, B.V. will agree to assume all obligations of SSHPC under
the SSHPC Pledge Agreement to the extent such obligations relate
to the Pledged Stock (as defined therein) of Scotts France, SARL
(formerly known as Grace-Sierra France, SARL) and Scotts
Hispania S.A. (formerly known as Grace-Sierra Espana, S.A.),
(ii) stock powers duly executed by SSHPC and evidencing the
transfer from SSHPC to Scotts Europe, B.V. of the ownership of
the share certificates evidencing such Pledged Stock, together
with undated stock powers for each share certificate duly
executed in blank by Scotts Europe, B.V. and a letter from
Scotts Europe, B.V. confirming that such share certificates are
being delivered pursuant to the SSHPC Pledge Agreement and (iii)
executed legal opinions (in form and substance reasonably
satisfactory to the Agent and its counsel) of Netherlands and
New York (or Ohio) counsel as to the enforceability of the SSHPC
Pledge Agreement against Scotts Europe, B.V. and such other
matters as the Agent and its counsel may reasonably request.
ARTICLE 5. CONSENT TO CREATION OF THE INTELLECTUAL
PROPERTY HOLDING COMPANY.
5.1 Consent to Creation of the Intellectual Property Holding
Company. Notwithstanding anything to the contrary contained in the
Credit Agreement but subject to the satisfaction of the conditions
precedent set forth below, each of the undersigned Banks hereby
consent to the creation of the IP Holding Company. Such consent
shall not be effective unless and until the following conditions
precedent have been satisfied:
(a) Execution of Counterpart of Subsidiary Guarantee. The IP
Holding Company shall become a party to the Subsidiaries
Guarantee as a Guarantor under and as defined therein, and the
Agent shall have received a counterpart to the Subsidiary
Guarantee, executed and delivered by a duly authorized officer
of the IP Holding Company.
(b) Execution of Subsidiary Security Agreement. The Agent
shall have received a Subsidiary Security Agreement,
substantially in the form of Exhibit D to this Fifth Amendment,
executed and delivered by a duly authorized officer of the IP
Holding Company.
(c) Stock Certificates/Powers; Opinion. The Agent shall have
received (i) stock certificates evidencing the Company's (or, if
the Company Merger has been consummated, Scotts Ohio's)
ownership of the outstanding capital stock of the IP Holding
Company, together with undated stock powers for each such
certificate duly executed in blank by the Company or Scotts Ohio
(as applicable) and a letter from the Company or Scotts Ohio (as
applicable) confirming that such share certificates are being
delivered to the Agent pursuant to the Company Pledge Agreement,
in each case in form and substance reasonably satisfactory to
the Agent and its counsel and (ii) an opinion (in form and
substance reasonably satisfactory to the Agent and its counsel)
of New York (or Ohio) counsel as to the due authorization,
execution, delivery and enforceability of the Subsidiary
Guarantee and the Subsidiary Security Agreement referred to in
clause (b) above and such other matters as the Agent and its
counsel may reasonably request.
ARTICLE 6. MISCELLANEOUS.
6.1 Collateral Documents. Each of the parties hereto hereby
acknowledges and agrees that each of the documents executed and
delivered by International Holdings and the IP Holding Company (or
either of them) pursuant to subsections 4 or 5 hereof,
respectively, shall be deemed to be a Collateral Document for
purposes of the Credit Agreement and all Loan Documents.
6.2 Limited Effect. Except as expressly amended hereby, all
of the provisions, covenants, terms and conditions of the Credit
Agreement and the other Basic Agreements shall continue to be, and
shall remain, in full force and effect in accordance with their
respective terms.
6.3 Expenses. Holdings, the Company and Scotts Ohio hereby
agree to reimburse the Agent for all its reasonable costs and
expenses (including, without limitation, reasonable legal fees and
expenses) incurred in connection with the preparation, execution
and delivery of this Fifth Amendment.
6.4 GOVERNING LAW. THIS FIFTH AMENDMENT SHALL BE GOVERNED
BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF
THE STATE OF NEW YORK.
6.5 Counterparts. This Fifth Amendment may be executed by
one or more parties to this Fifth Amendment on any number of
separate counterparts, and all of said counterparts taken together
shall be deemed to constitute one and the same instrument.
6.6 Further Assurances. Each of Holdings, the Company and
Scotts Ohio agree that at any time and from time to time upon the
written request of the Agent, Holdings, the Company, Scotts Ohio
and their respective Subsidiaries will execute and deliver such
further documents and to do such further acts and things as the
Agent may reasonably request in order to give effect to the
purposes of this Fifth Amendment, the Assumption Agreement
(Holdings Merger), the Assumption Agreement (Company Merger) and
the Collateral Documents. Without limitation of the foregoing,
each of Holdings, the Company and Scotts Ohio agrees to execute
and deliver Uniform Commercial Code financing statements (or
amendments to existing financing statements) and amendments to the
Mortgages, and to make such recordations and filings as may be
necessary, and to do such other things which the Agent may from
time to time determine are necessary or desirable, to perfect or
to preserve the security interests in the Collateral or any part
thereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed and delivered by their proper and duly
authorized officers as of the date first above written.
THE SCOTTS COMPANY,
a Delaware corporation
By: /s/ P. D. Yeager
Title: Executive Vice President
& CFO
THE O.M. SCOTT & SONS COMPANY,
a Delaware Corporation
By: /s/ P. D. Yeager
Title: Executive Vice President
& CFO
THE SCOTTS COMPANY,
an Ohio corporation
By: /s/ P. D. Yeager
Title: Executive Vice President
& CFO
CHEMICAL BANK, as Agent and
as a Bank
By:
Title: Vice President
BANK ONE, COLUMBUS, N.A.
By: /s/ Douglas H. Klamfoth
Title: Douglas H. Klamfoth
Vice President
COMERICA BANK
By:
Title: Vice President
NBD BANK, N.A.
By:
Title: VP
PNC BANK, OHIO NATIONAL ASSOCIATION
By:
Title: AVP
NATIONAL CITY BANK, COLUMBUS,
F.K.A. BANKOHIO NATIONAL BANK
By: /s/ Anthony F. Salvatore, VP
Title: Vice President
THE BANK OF TOKYO TRUST COMPANY
By:
Title: Vice President
THE FIRST NATIONAL BANK OF CHICAGO
By: /s/ Richard T. Bedell
Title: Richard T. Bedell
Corporate Banking
Officer
THE BANK OF NOVA SCOTIA
By: /s/ A.S. Norsworthy
Title: Amanda Norsworthy
Assistant Agent
THE TORONTO-DOMINION BANK
By:
Title: Director-Corporate Accts.
UNION BANK
By:
Title: Vice President and
District Manager
CREDIT LYONNAIS CAYMAN ISLAND BRANCH
By:
Title: Authorized Signature
SOCIETE GENERALE
By:
Title: Vice President
SOCIETY NATIONAL BANK
By:
Title: Vice President
Each of the undersigned hereby consents to the foregoing Fifth
Amendment and hereby confirms, reaffirms and restates that its
obligations under each Loan Document to which it is a party will
remain in full force and effect after giving effect to such Fifth
Amendment and the amendments to the Credit Agreement and the other
Loan Documents effected thereby.
BUNYON ENTERPRISES, INC.
BUNYON TRUCKING COMPANY, INC.
HYPER-HUMUS COMPANY, INC.
HYPONEX COMPANY, INC.
HYPONEX CORPORATION-MISSOURI
HYPONEX CORPORATION-CALIFORNIA
HYPONEX CORPORATION-COLORADO
HYPONEX CORPORATION-FLORIDA
HYPONEX CORPORATION-TEXAS
OLD FORT FINANCIAL CORP.
SCOTTS GRASS CO.
SCOTTS SOD CO.
SCOTTS ENERGY CO.
SCOTTS PESTICIDE CO.
SCOTTS GREEN LAWNS CO.
SCOTTS SERVICE CO.
SCOTTS PRODUCTS CO.
SCOTTS PLANT CO.
SCOTTS TREE CO.
SCOTTS PARK CO.
SCOTTS PRO TURF CO.
SCOTTS FERTILIZER CO.
SCOTTS PROFESSIONAL PRODUCTS CO.
SCOTTS TURF CO.
SCOTTS BEST LAWNS CO.
SCOTTS WEED CONTROL CO.
SCOTTS DESIGN CO.
SCOTTS TECH REP CO.
SCOTTS BROAD LEAF CO.
SCOTTS INSECTICIDE CO.
SCOTTS SPREADER CO.
SCOTTS IMPROVEMENT CO.
SCOTTS GOLF CO.
SCOTTS GARDEN CO.
SCOTTS CONTROL CO.
REPUBLIC TOOL & MANUFACTURING CORP.
By: /s/ Craig D. Walley
Title: Vice President &
Secretary
SCOTTS-SIERRA HORTICULTURAL
PRODUCTS COMPANY
By: /s/ Ken Holbrook
Title: President
SCOTTS-SIERRA CROP PROTECTION COMPANY
By: /s/ Ken Holbrook
Title: President
SCOTTS EUROPE, B.V. (f/k/a
Scotts-Sierra International, BV)
SIERRA UNITED KINGDOM, LTD. (f/k/a
Grace-Sierra United Kingdom)
SCOTTS HISPANIA, S.A. (f/k/a
Grace-Sierra Espana, S.A.)
SCOTTS BELGIUM B.V.B.A. (f/k/a
Grace-Sierra Belgium B.V.B.A.)
SCOTTS DEUTSCHLAND
GARTENBAUPRODUTKE GmbH (f/k/a
Grace-Sierra Deutschland
Gardenbauprodukbe GmbH)
By: /s/ Ken Holbrook
Title: Chairman
SCOTTS FRANCE, SARL (f/k/a
Grace-Sierra France, SARL)
By: /s/ Ken Holbrook
Title: Chairman
By:________________________________
Title:
SCOTTS AUSTRALIA PTY (f/k/a
Grace-Sierra Australia PTY)
By: /s/ Ken Holbrook
Title: Chairman
Exhibit 4(i)
Second
Supplem
ental
Indentu
re,
dated as
of
Septemb
er 20,
1994,
among
Registr
ant,
OMS,
Scotts
Delaware
and
Chemical
Bank, as
trustee
SECOND SUPPLEMENTAL INDENTURE, dated as of September 20, 1994,
among THE SCOTTS COMPANY, a corporation duly organized and existing
under the laws of the State of Delaware, having its principal office
at 14111 Scottslawn Road, Marysville, Ohio 43043 (the "Company"),
THE O.M. SCOTT & SONS COMPANY, a corporation duly organized and
existing under the laws of the State of Delaware, having its
principal office at 14111 Scottslawn Road, Marysville, Ohio 43043,
THE SCOTTS COMPANY, a corporation duly organized and existing under
the laws of the State of Ohio, having its principal office at 14111
Scottslawn Road, Marysville, Ohio 43043 ("Scotts"), and CHEMICAL
BANK, a banking corporation duly organized and existing under the
laws of the State of New York, as Trustee (the "Trustee").
R E C I T A L S
WHEREAS, the Company has heretofore executed and delivered to
the Trustee an Indenture, dated as of June 1, 1994, and a First
Supplemental Indenture thereto dated June 12, 1994 (collectively,
the "Indenture"), providing for the issuance by the Company of an
unlimited amount of its unsecured debentures, notes or other
evidences of indebtedness (the "Securities");
WHEREAS, pursuant to an Agreement and Plan of Merger dated as
of September 20, 1994 (the "Merger Agreement"), between the Company
and Scotts, the Company is merging (the "Merger") with and into
Scotts effective September 20, 1994 (the "Effective Date") which
Scotts being the survivor of the Merger;
WHEREAS, Section 801 of the Indenture provides that, in the
event the Company shall consolidate with or merge into any other
corporation, the successor corporation shall expressly assume, by an
indenture supplemental to the Indenture, executed and delivered to
the Trustee, in form satisfactory to the Trustee, the due and
punctual payment of the principal of and interest on all the
Securities and the performance of every covenant of the Indenture on
the part of the Company to be performed or observed;
WHEREAS, Section 901(1) of the Indenture provides that the
Company, when authorized by the Board Resolution and the Trustee may
enter into a supplemental indenture without the consent of any
Holders to evidence the succession of another corporation to the
Company and the assumption by any such successor of the covenants of
the Company in the Indenture and in the Securities;
WHEREAS, the Company has delivered to the Trustee (i) an
Officers' Certificate and an Opinion of Counsel, each to the effect
that the Merger and this Second Supplemental Indenture comply with
Articles Eight and Nine of the Indenture and that all conditions
precedent in the Indenture relating to the Merger and the execution
and delivery of this Second Supplemental Indenture have been
complied with and (ii) a copy of the Board Resolution authorizing
the execution and delivery of this Second Supplemental Indenture;
WHEREAS, immediately after giving effect to the Merger, no
Event of Default with respect to any series of Securities issued
pursuant to the Indenture, and no event which, after notice or lapse
of time or both, would become an Event of Default, will have
occurred and be continuing; and
WHEREAS, all things necessary to authorize the assumption by
Scotts of the Company's obligations under the Indenture and to make
this Second Supplemental Indenture, when executed by the parties
hereto, a valid and binding supplement to the Indenture have been
done and performed.
NOW, THEREFORE, for and in consideration of the premises and
for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto do
hereby mutually covenant and agree as follows:
SECTION 1. Assumption of Obligations. Scotts hereby expressly
assumes, from and after the Effective Date, the due and punctual
payment of the principal of and interest on all the Securities and
the performance of every covenant of the Indenture on the part of
the Company to be performed and observed. The Holder of each
Security outstanding as of the date hereof shall have the right
hereafter to receive on the Exchange Date of such Security
securities of Scotts of line tenor, series, Stated Maturity and
principal amount and with a market value equal to the principal
amount of such Security.
SECTION 2. Succession and Substitution. Scotts, from and
after the Effective Date, by virtue of the aforesaid assumption and
the delivery of this Second Supplemental Indenture, shall succeed to
and be substituted for and may exercise every right and power of the
Company under the Indenture with the same effect as if Scotts had
been named as the Company in the Indenture.
SECTION 3. Representations and Warranties. Scotts, as of the
date of execution of this Second Supplemental Indenture, represents
and warrants that: (i) it is a corporation organized and existing
under the laws of the State of Ohio; (ii) it has full corporate
power and authority to execute and deliver this Second Supplemental
Indenture and to perform its obligations under this Second
Supplemental Indenture in accordance with its terms; and that (iii)
the execution, delivery and performance of this Second Supplemental
Indenture will not violate, conflict with or constitute a breach of,
or a default under, its Articles of Incorporation or any other
material agreement or instrument to
will not result in the creation of
any lien on, or security interest
in, any of its assets.
SECTION 4. Covenants. All covenants and agreements in this
Second Supplemental Indenture by Scotts shall bind its respective
successors and assigns, whether so expressed or not.
SECTION 5. Requests and Notices. Pursuant to Section 105 of
the Indenture, any request, demand, authorization, direction,
notice, consent, waiver or act of Holders or other document provided
or permitted by the Indenture to be made upon, given or furnished
to, or filed with the Company shall be addressed to Scotts at 14111
Scottslawn Road, Marysville, Ohio 43043 or at any other address
previously furnished in writing to the Trustee by Scotts.
SECTION 6. Separability. In case any provision in this Second
Supplemental Indenture shall be invalid, illegal or unenforceable,
the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
SECTION 7. No Third Party Benefits. Nothing in this Second
Supplemental Indenture, express or implied, shall give to any
Person, other than the parties hereto and their successors under the
Indenture, and the Holders of the Securities, any benefit or any
legal or equitable right, remedy or claim under the Indenture.
SECTION 8. Continuance of Indenture. This Second Supplemental
Indenture supplements the Indenture and shall be a part of and
subject to all the terms thereof. The Indenture, as supplemented by
this Second Supplemental Indenture, shall continue in full force and
effect. This Second Supplemental Indenture shall become effective
at the Effective Date.
SECTION 9. The Trustee. The Trustee shall not be responsible
in any manner for or in respect of the validity or sufficiency of
this Second Supplemental Indenture, or for or in respect of the
recitals contained herein, all of which recitals are made by the
Company, The O.M. Scott & Sons Company and Scotts solely.
SECTION 10. Governing Law. This Second Supplemental Indenture
shall be governed by and construed in accordance with the laws of
the State of New York.
SECTION 11. Defined Terms. All capitalized terms used in this
Second Supplemental Indenture which are defined in the
Indenture but not
otherwise defined herein shall have the same
meaning assigned to them in the Indenture.
SECTION 12. Counterparts. This Second Supplemental Indenture
may be executed in any number of counterparts, each of which so
executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Second
Supplemental Indenture to be duly executed, and their respective
corporate seals to be hereunto affixed and attested, all as of the
date and year Second above written.
THE SCOTTS COMPANY, a Delaware
corporation
By: /s/ P.D. Yeager
Name: Paul D. Yeager
Title: Executive Vice President &
Chief Financial Officer
Attest:
/s/ Christiane W. Schmenk
THE O.M. SCOTT & SONS COMPANY,
a Delaware corporation
By: /s/ P.D. Yeager
Name: Paul D. Yeager
Title: Executive Vice President
& Chief Financial Officer
Attest:
/s/ Christiane W. Schmenk
THE SCOTTS COMPANY, an Ohio
corporation
By: /s/ P. D. Yeager
Name: Paul D. Yeager
Title: Executive Vice President
& Chief Financial Officer
Attest:
/s/ Christiane W. Schmenk
CHEMICAL BANK, as Trustee
By: /s/ F. J. Grippo
Name: F. J. Grippo
Title: Vice President
Attest: