Document:

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                               THE SCOTTS COMPANY
                          1992 LONG TERM INCENTIVE PLAN
                   (REFLECTS AMENDMENTS THROUGH MAY 15, 2000)

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                               THE SCOTTS COMPANY
                          1992 LONG TERM INCENTIVE PLAN
                   (REFLECTS AMENDMENTS THROUGH MAY 15, 2000)

                                   SECTION 1.

                                     PURPOSE

         The purpose of the Plan is to foster and promote the long-term
financial success of the Company and materially increase shareholder value by
(a) motivating superior performance by means of performance-related incentives,
(b) encouraging and providing for the acquisition of an ownership interest in
the Company by Employees and Eligible Directors, and (c) enabling the Company to
attract and retain the services of an outstanding Board and management team upon
whose judgment, interest, and special effort the successful conduct of its
operations is largely dependent.

                                   SECTION 2.

                                   DEFINITIONS

         2.1. Definitions. Whenever used herein, the following terms shall have
the respective meanings set forth below:

                  (a) "Act" means the Securities Exchange Act of 1934, as
         amended.

                  (b) "Award" means any Option, Stock Appreciation Right,
         Performance Share or any combination thereof, including Awards
         combining two or more types of Awards in a single grant.

                  (c) "Board" means the Board of Directors of the Company.

                  (d) "Cause" means (i) the willful failure by the Participant
         to perform substantially his duties as an Employee of the Company
         (other than due to physical or mental illness) after reasonable notice
         to the Participant of such failure, (ii) the Participant's engaging in
         serious misconduct that is injurious to the Company or any Subsidiary,
         (iii) the Participant's having been convicted of, or entered a plea of
         nolo contendere to, a crime that constitutes a felony or (iv) the
         breach by the Participant of any written covenant or agreement with the
         Company or any Subsidiary not to disclose any information pertaining to
         the Company or any Subsidiary or not to compete or interfere with the
         Company or any Subsidiary.

                  (e) "Change in Control" means the occurrence, of any of the
         following events:
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                           (i) the members of the Board at the beginning of any
                  consecutive twenty-four calendar month period (the "Incumbent
                  Directors") cease for any reason other than due to death to
                  constitute at least a majority of the members of the Board,
                  provided that any director whose election, or nomination for
                  election by the Company's shareholders, was approved by a vote
                  of at least a majority of the members of the Board then still
                  in office who were members of the Board at the beginning of
                  such twenty-four calendar month period, shall be treated as an
                  Incumbent Director; or

                           (ii) any "person," including a "group" (as such terms
                  are used in Sections 13(d) and 14(d)(2) of the Act, but
                  excluding the Company, any of its Subsidiaries, any employee
                  benefit plan of the Company or any of its Subsidiaries) is or
                  becomes the "beneficial owner" (as defined in Rule 13(d)(3)
                  under the Act), directly or indirectly, of securities of the
                  Company representing 35% or more of the combined voting power
                  of the Company's then outstanding securities; or

                           (iii) the shareholders of the Company shall approve a
                  definitive agreement (1) for the merger or other business
                  combination of the Company with or into another corporation, a
                  majority of the directors of which were not directors of the
                  Company immediately prior to the merger and in which the
                  shareholders of the Company immediately prior to the effective
                  date of such merger own less than 50% of the voting power in
                  such corporation or (2) for the sale or other disposition of
                  all or substantially all of the assets of the Company; or

                           (iv) the purchase of Stock pursuant to any tender or
                  exchange offer made by any "person," including a "group" (as
                  such terms are used in Sections 13(d) and 14(d)(2) of the
                  Act), other than the Company, any of its Subsidiaries, or an
                  employee benefit plan of the Company or any of its
                  Subsidiaries, for 35% or more of the Stock of the Company.

                  (f) "Change in Control Price" means the highest price per
         share of Stock offered in conjunction with any transaction resulting in
         a Change in Control (as determined in good faith by the Committee if
         any part of the offered price is payable other than in cash) or, in the
         case of a Change in Control occurring solely by reason of a change in
         the composition of the Board, the highest Fair Market Value of the
         Stock on any of the 30 trading days immediately preceding the date on
         which a Change in Control occurs. (g) "Code" means the Internal Revenue
         Code of 1986, as amended.

                  (h) "Committee" means the Compensation and Organization
         Committee of the Board, which shall consist of two or more members,
         each of whom shall be a "non-employee director" within the meaning of
         Rule 16b-3, as promulgated under the Act.

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                  (i) "Company" means The Scotts Company, an Ohio corporation,
         and any successor thereto.

                  (j) "Director Option" means a Nonstatutory Stock Option
         granted to each Eligible Director pursuant to Section 6.7 without any
         action by the Board or the Committee.

                  (k) "Disability" means the inability of the Participant to
         perform his duties for a period of at least six months due to a
         physical or medical infirmity.

                  (l) "Eligible Director" means, on any date, a person who is
         serving as a member of the Board and who is neither an Employee nor
         associated with Clayton, Dubilier & Rice, Inc.

                  (m) "Employee" means any officer or other key executive and
         management employee of the Company or any of its Subsidiaries.

                  (n) "Fair Market Value" means, on any date, the closing price
         of the Stock as reported on the New York Stock Exchange (or on such
         other recognized market or quotation system on which the trading prices
         of the Stock are traded or quoted at the relevant time) on such date.
         In the event that there are no Stock transactions reported on the New
         York Stock Exchange (or such other market or system) on such date, Fair
         Market Value shall mean the closing price on the immediately preceding
         date on which Stock transactions were so reported.

                  (o) "Option" means the right to purchase Stock at a stated
         price for a specified period of time. For purposes of the Plan, an
         Option may be either (i) an "Incentive Stock Option" (ISO) within the
         meaning of Section 422 of the Code or (ii) a "Nonstatutory Stock
         Option" (NSO).

                  (p) "Participant" means any Employee designated by the
         Committee to participate in the Plan.

                  (q) "Performance Period" means the period during which, and
         the conditions under which, receipt of the Performance Share will be
         deferred pursuant to Section 7 of the Plan.

                  (r) "Performance Share" means a right to receive from the
         Company, at the end of the Performance Period, either (i) a share of
         Stock, (ii) an amount of cash equal to the Fair Market Value of a share
         of Stock or (iii) an immediately exercisable Option which has a value
         (as determined by the Committee) which is equivalent to the Fair Market
         Value of a share of Stock, as elected by the Participant at the
         beginning of the applicable Performance Period.

                  (s) "Plan" means The Scotts Company 1992 Long Term Incentive
         Plan, as in effect from time to time.

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                  (t) "Retirement" means termination of a Participant's
         employment on or after the normal retirement date or, with the
         Committee's approval, on or after any early retirement date established
         under any retirement plan maintained by the Company or a Subsidiary in
         which the Participant participates.

                  (u) "Stock" means the common shares of the Company, without
         par value.

                  (v) "Stock Appreciation Right" means the right, subject to
         such terms and conditions as the Committee may impose, to receive an
         amount in cash or stock, as determined by the Committee, equal to the
         excess of (i) the Fair Market Value, as of the date such Stock
         Appreciation Right is exercised, of the number of shares of Stock
         covered by the Stock Appreciation Right being exercised over (ii) the
         aggregate exercise price of such Stock Appreciation Right.

                  (w) "Subsidiary" means any corporation or partnership in which
         the Company owns, directly or indirectly, 50% or more of the total
         combined voting power of all classes of stock of such corporation or of
         the capital interest or profits interest of such partnership.

         2.2. Gender and Number. Except when otherwise indicated by the context,
words in the masculine gender used in the Plan shall include the feminine
gender, the singular shall include the plural, and the plural shall include the
singular.

                                   SECTION 3.

                          ELIGIBILITY AND PARTICIPATION

         Except as otherwise provided in Section 6.7, the only persons eligible
to participate in the Plan shall be those Employees selected by the Committee as
Participants.

                                   SECTION 4.

                             POWERS OF THE COMMITTEE

         4.1. Power to Grant. The Committee shall determine the Participants to
whom Awards shall be granted, the type or types of Awards to be granted and the
terms and conditions of any and all such Awards. The Committee may establish
different terms and conditions for different types of Awards, for different
Participants receiving the same type of Award and for the same Participant for
each Award such Participant may receive, whether or not granted at different
times.

         4.2. Administration. The Committee shall be responsible for the
administration of the Plan. The Committee, by majority action thereof, is
authorized prescribe,

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amend, and rescind rules and regulations relating to the Plan, to provide for
conditions deemed necessary or advisable to protect the interests of the
Company, and to make all other determinations (including, without limitation,
whether a Participant has incurred a Disability) necessary or advisable for the
administration and interpretation of the Plan in order to carry out its
provisions and purposes. Determinations, interpretations, or other actions made
or taken by the Committee pursuant to the provisions of the Plan shall be final,
binding, and conclusive for all purposes and upon all persons. Notwithstanding
anything else contained in the Plan to the contrary (i) the Committee may
delegate to any officer of the Company or a committee of officers of the Company
the authority to make determinations under the Plan with respect to Participants
who are not subject to the reporting requirements of Section 16(a) of the Act,
including, without limitation, determinations as to whether such a Participant
has incurred a Disability or whether to consent to such a Participant's early
retirement and (ii) except as specifically provided under the Plan, neither the
Committee nor the Board shall have any discretion regarding whether an Eligible
Director receives a Director Option pursuant to Section 6.7, or regarding the
terms of any such Director Option, including, without limitation, the number of
shares subject to any such Director Option.

                                   SECTION 5.

                              STOCK SUBJECT TO PLAN

         5.1. Number. Subject to the provisions of Section 5.3, the number of
shares of Stock subject to Awards and Director Options under the Plan may not
exceed 1,700,000 shares of Stock, plus the lesser of (i) the number of shares of
Stock surrendered to exercise any Options (other than Director Options) granted
under the Plan or (ii) 1,000,000 shares of Stock. The Committee may grant Awards
under the Plan payable in cash, and the exercise of, or payment on, such cash
Awards shall not reduce the number of shares of Stock subject to Awards under
the Plan, unless such Award is a Stock Appreciation Right. The shares to be
delivered under the Plan may consist, in whole or in part, of treasury Stock or
authorized but unissued Stock, not reserved for any other purpose.

         5.2. Cancelled, Terminated, or Forfeited Awards. Except as provided in
Section 5.1, any shares of Stock subject to an Award which for any reason is
cancelled, terminated or otherwise settled without the issuance of any Stock
shall again be available for Awards and Director Options under the Plan.

         5.3. Adjustment in Capitalization. In the event of any Stock dividend
or Stock split, recapitalization (including, without limitation, the payment of
an extraordinary dividend), merger, consolidation, combination, spin-off,
distribution of assets to shareholders, exchange of shares, or other similar
corporate change, the aggregate number of shares of Stock available for Awards
and Director Options under Section 5.1 or subject to outstanding Awards and the
respective prices, limitations, and/or performance criteria applicable to
outstanding Awards may be appropriately adjusted by the Committee, whose
determination shall be conclusive. If, pursuant to the preceding sentence, an
adjustment is made to the number of shares subject to outstanding Options held
by Participants, a corresponding adjustment shall be made to the number of
shares subject to outstanding Director Options and if an adjustment is made to
the

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number of shares of Stock authorized for issuance under the Plan, a
corresponding adjustment shall be made to the number of shares subject to each
Director Option thereafter granted pursuant to Section 6.7.

                                   SECTION 6.

                   STOCK OPTIONS AND STOCK APPRECIATION RIGHTS

         6.1. Grant of Options. Options may be granted to Participants at such
time or times as shall be determined by the Committee, including, without
limitation, in settlement of any Performance Shares issued under the Plan.
Options granted under the Plan may be of two types: (i) Incentive Stock Options
and (ii) Nonstatutory Stock Options. The Committee shall have complete
discretion in determining the number of Options, if any, to be granted to a
Participant. Without limiting the foregoing, the Committee may grant Options
containing provisions for the issuance to the Participant, upon exercise of such
Option and payment of the exercise price therefor with previously owned shares
of Stock, of an additional Option for the number of shares so delivered, having
such other terms and conditions not inconsistent with the Plan as the Committee
shall determine. Each Option shall be evidenced by an Option agreement that
shall specify the type of Option granted, the exercise price, the duration of
the Option, the number of shares of Stock to which the Option pertains, and such
other terms and conditions not inconsistent with the Plan as the Committee shall
determine.

         6.2. Option Price. Nonstatutory Stock Options and Incentive Stock
Options granted pursuant to the Plan shall have an exercise price which is not
less than the Fair Market Value on the date the Option is granted.

         6.3. Exercise of Options. Options awarded to a Participant under the
Plan shall be exercisable at such times and shall be subject to such
restrictions and conditions including the performance of a minimum period of
service or the satisfaction of performance goals, as the Committee may impose,
either at or after the time of grant of such Options; provided, however, that if
the Committee does not specify another exercise schedule at the time of grant,
each Option shall become exercisable in three approximately equal installments
on each of the first three anniversaries of the date of grant, subject to the
Committee's right to accelerate the exercisability of such Option in its
discretion. Notwithstanding the foregoing, no Option shall be exercisable for
more than 10 years after the date on which it is granted.

         6.4. Payment. The Committee shall establish procedures governing the
exercise of Options, which shall require that written notice of exercise be
given and that the Option price be paid in full in cash or cash equivalents,
including by personal check, at the time of exercise or pursuant to any
arrangement that the Committee shall approve. The Committee may, in its
discretion, permit a Participant or an Eligible Director to tender Stock already
owned by the Participant or the Eligible Director, either by actual delivery of
the shares of Stock or by attestation, valued at its Fair Market Value on the
date of exercise, as partial or full payment of the exercise price. As soon as
practicable after receipt of a written exercise notice and full payment of the
exercise price, the Company shall deliver to the Participant or the Eligible
Director a certificate or certificates representing the acquired shares of
Stock.

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         6.5. Incentive Stock Options. Notwithstanding anything in the Plan to
the contrary, no term of this Plan relating to Incentive Stock Options shall be
interpreted, amended or altered, nor shall any discretion or authority granted
under the Plan be so exercised, so as to disqualify the Plan under Section 422
of the Code, or, without the consent of any Participant affected thereby, to
cause any Incentive Stock Option previously granted to fail to qualify for the
Federal income tax treatment afforded under Section 421 of the Code.

         6.6. Stock Appreciation Rights. Stock Appreciation Rights may be
granted in tandem with any Option granted under the Plan, either at or after the
time of the grant of such Option, subject to such terms and conditions, not
inconsistent with the provisions of the Plan, as the Committee shall determine.
Each Stock Appreciation Right shall only be exercisable to the extent that the
corresponding Option is exercisable, and shall terminate upon the termination or
exercise of the corresponding Option. Upon the exercise of any Stock
Appreciation Right, the corresponding Option shall terminate.

         6.7. Director Options. Notwithstanding anything else contained herein
to the contrary, on November 11, 1992 and on the first business day following
the date of each annual meeting of shareholders held during the term of the Plan
prior to the annual meeting of shareholders held in 1996, each Eligible Director
shall receive a Director Option to purchase 4,000 shares of Stock at an exercise
price per share equal to the Fair Market Value on the date of grant. No Director
Options shall be granted in connection with the 1996 annual meeting of
shareholders or thereafter. Each Director Option shall be exercisable six months
after the date of grant and shall remain exercisable until the earlier to occur
of (i) the tenth anniversary of the date of grant or (ii) the first anniversary
of the date the Eligible Director ceases to be a member of the Board, except
that if the Eligible Director ceases to be a member of the Board after having
been convicted of, or pled guilty or nolo contendere to, a felony, his Director
Options shall be cancelled on the date he ceases to be a director. An Eligible
Director may exercise a Director Option in the manner described in Section 6.4.

                                   SECTION 7.

                               PERFORMANCE SHARES

         7.1. Grant of Performance Shares. The Committee may grant Performance
Shares to Participants at such times and in such amounts, and subject to such
other terms and conditions not inconsistent with the Plan as it shall determine.
Each grant of Performance Shares shall be evidenced by a written agreement
setting forth the terms of such Award.

         7.2. Restrictions on Transferability. Except as provided in Section
11.1, Performance Shares may not be sold, transferred, pledged, assigned, or
otherwise alienated until such time or until the satisfaction of such
performance goals as the Committee shall impose, either at or after the time of
grant. Notwithstanding the foregoing, the Committee may accelerate or waive such
restrictions in whole or in part at any time prior to the Participant's
termination of employment.

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         7.3. Rights With Respect to Performance Shares. Notwithstanding
anything else contained in the Plan to the contrary, a Participant who is
granted Performance Shares shall have no rights as a shareholder until shares of
Stock are issued, if at all, in settlement of the Participant's rights with
respect to such Performance Shares, and shall not be entitled to receive any
amounts with respect to any dividends declared on the Stock during the
Performance Period.

         7.4. Deferral Election. The Committee may permit a Participant to elect
to further defer receipt of an Award (or an installment of an Award) for a
specified period or until a specified event (the "Elective Period"), subject in
each case to the Committee's approval and to such terms as are determined by the
Committee, all in its sole discretion. Subject to any exceptions adopted by the
Committee, such election must generally be made at least 12 months prior to
completion of the Performance Period for such Performance Share Award (or such
installment).

                                   SECTION 8.

                            TERMINATION OF EMPLOYMENT

         8.1. Termination of Employment Due to Retirement. Unless otherwise
determined by the Committee at the time of grant, in the event a Participant's
employment terminates by reason of Retirement, (i) any Options granted to such
Participant which are then outstanding (whether or not exercisable prior to the
date of such termination) may be exercised at any time prior to the expiration
of the term of the Options or within five (5) years (or such shorter period as
the Committee shall determine at the time of grant) following the Participant's
termination of employment, whichever period is shorter and (ii) a pro rata
portion of any Performance Shares then outstanding which would have vested based
on actual performance at the end of the Performance Period shall become
non-forfeitable, based upon that portion of the Performance Period which expired
prior to the Participant's Retirement, provided that, unless the Committee
otherwise determines, payment for such pro rata portion of the Performance
Shares shall not be made until the expiration of the Performance Period.

         8.2. Termination of Employment Due to Death or Disability. Unless
otherwise determined by the Committee at the time of grant, in the event a
Participant's employment terminates by reason of death or Disability, (i) any
Options granted to such Participant which are then outstanding (whether or not
exercisable prior to the date of such termination) may be exercised by the
Participant or the Participant's designated beneficiary, and if none is named,
in accordance with Section 11.2, at any time prior to the expiration date of the
term of the Options or within five (5) years (or such shorter period as the
Committee shall determine at the time of grant) following the Participant's
termination of employment, whichever period is shorter; and (ii) a pro rata
portion of any Performance Shares then outstanding which would have vested based
on actual performance at the end of the Performance Period shall become
non-forfeitable based upon that portion of the Performance Period which expired
prior to the Participant's death or Disability, provided that, unless the
Committee otherwise determines, payment for such pro rata portion of the
Performance Shares shall not be made until the expiration of the Performance
Period.

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         8.3. Termination of Employment For Cause. Unless otherwise determined
by the Committee at the time of grant, in the event a Participant's employment
is terminated for Cause, any Options granted to such Participant which are then
outstanding (whether or not exercisable prior to the date of such termination)
shall be forfeited, and any Performance Shares then outstanding as to which the
Performance Period has not lapsed shall be forfeited.

         8.4. Termination of Employment for Any Other Reason. Unless otherwise
determined by the Committee at or after the time of grant, in the event the
employment of the Participant shall terminate for any reason other than one
described in Section 8.1, 8.2 or 8.3, any Options granted to such Participant
which are exercisable at the date of the Participant's termination of employment
shall remain exercisable until the earlier to occur of (i) the expiration of the
term of such Options or (ii) the thirtieth day following the Participant's
termination of employment, whichever period is shorter, and any Performance
Shares granted to the Participant which are then outstanding shall be forfeited
without any payment therefor.

                                   SECTION 9.

                                CHANGE IN CONTROL

         9.1. Accelerate Vesting and Payment. Subject to the provisions of
Section 9.2 below, in the event of a Change in Control, each Option (excluding
any Director Option) shall be cancelled in exchange for a payment in cash of an
amount equal to the excess of the Change in Control Price over the exercise
price for such Option, and all Performance Shares shall become non-forfeitable
and be immediately payable in cash, notwithstanding the form of payment
previously elected by the Participant.

         9.2. Alternative Awards. Notwithstanding Section 9.1, no cancellation,
acceleration of exercisability or vesting or cash settlement or other payment
shall occur with respect to any Award or any class of Awards if the Committee
reasonably determines in good faith prior to the occurrence of a Change in
Control that such Award or Awards shall be honored or assumed, or new rights
substituted therefor (such honored, assumed or substituted award hereinafter
called an "Alternative Award"), by a Participant's employer (or the parent or a
subsidiary of such employer) immediately following the Change in Control,
provided that any such Alternative Award must:

                           (i) be based on stock which is traded on an
                  established securities market, or which will be so traded
                  within 60 days of the Change in Control;

                           (ii) provide such Participant (or each Participant in
                  a class of Participants) with rights and entitlements
                  substantially equivalent to or better than the rights, terms
                  and conditions applicable under such Award, including, but not
                  limited to, an identical or better exercise or vesting
                  schedule and identical or better timing and methods of
                  payment;

                           (iii) have substantially equivalent economic value to
                  such Award (determined at the time of the Change in Control);

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                           (iv) have terms and conditions which provide that in
                  the event that the Participant's employment is involuntarily
                  terminated or constructively terminated, any conditions on a
                  Participant's rights under, or any restrictions on transfer or
                  exercisability applicable to, each such Alternative Award
                  shall be waived or shall lapse, as the case may be.

For this purpose, a constructive termination shall mean a termination by a
Participant following a material reduction in the Participant's compensation, a
material reduction in the Participant's responsibilities or the relocation of
the Participant's principal place of employment to another location, in each
case without the Participant's written consent.

         9.3. Director Options. Upon a Change in Control, each Director Option
granted to an Eligible Director shall be cancelled in exchange for a payment in
cash of an amount equal to the excess of the Change in Control Price over the
exercise price for such Director Option unless (i) the Stock remains traded on
an established securities market following the Change in Control and (ii) such
Eligible Director remains on the Board following the Change in Control.

         9.4. Options Granted Within Six Months of the Change in Control. If any
Option (including a Director Option) granted within six months of the date on
which a Change in Control occurs (i) is held by a person subject to the
reporting requirements of Section 16(a) of the Act and (ii) is to be cashed out
pursuant to Section 9.1 or 9.3, such cash out shall not occur until the later of
(x) the date which is six months and one day after the date the Option was
granted or (y) the first date on which, in the opinion of the Company's counsel,
such cash out could occur without such reporting person being potentially
subject to liability under Section 16(b) of the Act by reason of such cash out.

                                  SECTION 10.

                AMENDMENT, MODIFICATION, AND TERMINATION OF PLAN

         The Board or the Committee at any time may terminate or suspend the
Plan, and from time to time may amend or modify the Plan; provided, however,
that no amendment may be made to Section 6.7 or any other provision of the Plan
relating to Director Options within six months of the last date on which any
such provision was amended. No amendment, modification, or termination of the
Plan shall in any manner adversely affect any Award theretofore granted under
the Plan, without the consent of the Participant.

                                  SECTION 11.

                            MISCELLANEOUS PROVISIONS

         11.1. Assignability of Nonstatutory Options, Performance Shares and
Director Options. With the permission of the Committee, a Participant or a
specified group of Participants who has or have been granted a Nonstatutory
Option or Performance Share under

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the Plan, may transfer it to a revocable inter vivos trust as to which the
Participant is the settlor or may transfer it to a "Permissible Transferee." A
Permissible Transferee shall be defined as any member of the immediate family of
the Participant, any trust, whether revocable or irrevocable, solely for the
benefit of members of the Participant's immediate family, or any partnership or
limited liability company whose only partners or members are members of the
Participant's immediate family. Any such transferee shall remain subject to all
of the terms and conditions applicable to such Nonstatutory Option or
Performance Share and subject to the rules and regulations prescribed by the
Committee. A Nonstatutory Option or Performance Share may not be retransferred
by a Permissible Transferee except by will or the laws of descent and
distribution and then only to another Permissible Transferee. Other than as
described above, a Nonstatutory Option or Performance Share granted under the
Plan may not be transferred except by will or the laws of descent and
distribution and, during the lifetime of the Participant to whom granted, may be
exercised only by the Participant or the Participant's guardian or legal
representative.

         With the permission of the Committee, an Eligible Director who has been
granted a Director Option under the Plan, may transfer such Director Option to a
revocable inter vivos trust as to which the Eligible Director is the settlor or
may transfer such Director Option to a "Permissible Transferee." A Permissible
Transferee shall be defined as any member of the immediate family of the
Eligible Director, any trust, whether revocable or irrevocable, solely for the
benefit of members of the Eligible Director's immediate family, or any
partnership or limited liability company whose only partners or members are
members of the Eligible Director's immediate family. Any such transferee shall
remain subject to all of the terms and conditions applicable to such Director
Option and subject to the rules and regulations prescribed by the Committee. A
Director Option may not be retransferred by a Permissible Transferee except by
will or the laws of descent and distribution and then only to another
Permissible Transferee. Other than as described above, a Director Option granted
under the Plan may not be transferred except by will or the laws of descent and
distribution and, during the lifetime of the Eligible Director to whom granted,
may be exercised only by the Eligible Director or the Eligible Director's
guardian or legal representative.

         11.2. Beneficiary Designation. Each Participant and each Eligible
Director under the Plan may from time to time name any beneficiary or
beneficiaries (who may be named contingently or successively) to whom any
benefit under the Plan is to be paid or by whom any right under the Plan is to
be exercised in case of his death. Each designation will revoke all prior
designations by the same Participant or Eligible Director, shall be in a form
prescribed by the Committee, and will be effective only when filed in writing
with the Committee. In the absence of any such designation, benefits remaining
unpaid at the Participant's death shall be paid to or exercised by the
Participant's surviving spouse, if any, or otherwise to or by his estate and
Director Options outstanding at the Eligible Director's death shall be exercised
by the Eligible Director's surviving spouse, if any, or otherwise by his estate.

         11.3. No Guarantee of Employment or Participation. Nothing in the Plan
shall interfere with or limit in any way the right of the Company or any
Subsidiary to terminate any Participant's employment at any time, nor confer
upon any Participant any right to continue in the employ of the Company or any
Subsidiary or affiliate. No Employee shall have a right to be

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selected as a Participant, or, having been so selected, to receive any future
Awards. Nothing in the Plan shall confer upon an Eligible Director a right to
continue to serve on the Board or to be nominated for reelection to the Board.

         11.4. Tax Withholding. The Company shall have the power to withhold, or
require a Participant or Eligible Director to remit to the Company, an amount
sufficient to satisfy Federal, state, and local withholding tax requirements on
any Award or Director Option under the Plan, and the Company may defer payment
of cash or issuance of Stock until such requirements are satisfied. The
Committee may, in its discretion, permit a Participant or an Eligible Director
to elect, subject to such conditions as the Committee shall impose, (i) to have
shares of Stock otherwise issuable under the Plan withheld by the Company or
(ii) to deliver to the Company previously acquired shares of Stock having a Fair
Market Value sufficient to satisfy all or part of the Participant's or the
Eligible Director's estimated total Federal, state, and local tax obligation
associated with the transaction.

         11.5. Indemnification. Each person who is or shall have been a member
of the Committee or of the Board shall be indemnified and held harmless by the
Company against and from any loss, cost, liability, or expense that may be
imposed upon or reasonably incurred by him in connection with or resulting from
any claim, action, suit, or proceeding to which he may be made a party or in
which he may be involved by reason of any action taken or failure to act under
the Plan and against and from any and all amounts paid by him in settlement
thereof, with the Company's approval, or paid by him in satisfaction of any
judgment in any such action, suit, or proceeding against him, provided he shall
give the Company an opportunity, at its own expense, to handle and defend the
same before he undertakes to handle and defend it on his own behalf. The
foregoing right of indemnification shall not be exclusive and shall be
independent of any other rights of indemnification to which such persons may be
entitled under the Company's articles of incorporation or regulations, by
contract, as a matter of law, or otherwise.

         11.6. No Limitation on Compensation. Nothing in the Plan shall be
construed to limit the right of the Company to establish other plans or to pay
compensation to its employees or directors in cash or property, in a manner
which is not expressly authorized under the Plan.

         11.7. Requirements of Law. The granting of Awards and the issuance of
shares of Stock shall be subject to all applicable laws, rules, and regulations,
and to such approvals by any governmental agencies or national securities
exchanges as may be required.

         11.8. Term of Plan. The Plan shall be effective upon its adoption by
the Committee, subject to approval by the Board and approval by the affirmative
vote of a majority of the shares of stock present in person or represented by
proxy at the annual meeting of shareholders. The Plan shall continue in effect,
unless sooner terminated pursuant to Section 11, until the tenth anniversary of
the date on which it is adopted by the Board.

         11.9. Governing Law. The Plan, and all agreements hereunder, shall be
construed in accordance with and governed by the laws of the State of Ohio.

                                       12
<PAGE>   14
         11.10. No Impact On Benefits. Plan Awards are not compensation for
purposes of calculating an Employee's rights under any employee benefit plan.

                                       13<PAGE>   1
                               THE SCOTTS COMPANY
                             1996 STOCK OPTION PLAN
                   (REFLECTS AMENDMENTS THROUGH MAY 15, 2000)

<PAGE>   2
                               THE SCOTTS COMPANY
                             1996 STOCK OPTION PLAN
                   (REFLECTS AMENDMENTS THROUGH MAY 15, 2000)

                                   SECTION 1.

                                     PURPOSE

         The purpose of the Plan is to foster and promote the long-term
financial success of the Company and materially increase shareholder value by
(a) encouraging and providing for the acquisition of an ownership interest in
the Company by Employees and Eligible Directors, and (b) enabling the Company to
attract and retain the services of an outstanding management team upon whose
judgment, interest, and special effort the successful conduct of its operations
is largely dependent.

                                   SECTION 2.

                                   DEFINITIONS

         2.1 Definitions. Whenever used herein, the following terms shall have
the respective meanings set forth below:

         (a) "Act" means the Securities Exchange Act of 1934, as amended.

         (b) "Annual Meeting" means the annual meeting of the shareholders of
the Company.

         (c) "Annual Retainer" means the annual retainer fee, established by the
Board, paid to an Eligible Director for services on the Board.

         (d) "Award" means any Option or Stock Unit.

         (e) "Board" means the Board of Directors of the Company.

         (f) "Cause" means (i) the willful failure by a Participant to perform
substantially the Participant's duties as an Employee of the Company (other than
due to physical or mental illness) after reasonable notice to the Participant of
such failure, (ii) the Participant's engaging in serious misconduct that is
injurious to the Company or any Subsidiary, (iii) the Participant's having been
convicted of, or entered a plea of nolo contendere to, a crime that constitutes
a felony or (iv) the breach by the Participant of any written covenant or
agreement with the Company or any Subsidiary not to disclose any information
pertaining to the Company or any Subsidiary or not to compete or interfere with
the Company or any Subsidiary.

                                       2
<PAGE>   3
         (g) "Change in Control" means the occurrence of any of the following
events:

                  (i) the members of the Board at the beginning of any
         consecutive twenty-four calendar month period (the "Incumbent
         Directors") cease for any reason other than due to death to constitute
         at least a majority of the members of the Board, provided that any
         director whose election, or nomination for election by the Company's
         shareholders, was approved by a vote of at least a majority of the
         members of the Board then still in office who were members of the Board
         at the beginning of such twenty-four calendar month period, shall be
         treated as an Incumbent Director; or

                  (ii) any "person," including a "group" (as such terms are used
         in Sections 13(d) and 14(d)(2) of the Act, but excluding the Company,
         any of its Subsidiaries, or any employee benefit plan of the Company or
         of any of its Subsidiaries) is or becomes the "beneficial owner" (as
         defined in Rule 13(d)(3) under the Act), directly or indirectly, of
         securities of the Company representing more than 49% of the combined
         voting power of the Company's then outstanding securities; or

                  (iii) the shareholders of the Company shall approve a
         definitive agreement (1) for the merger or other business combination
         of the Company with or into another corporation, a majority of the
         directors of which were not directors of the Company immediately prior
         to the merger and in which the shareholders of the Company immediately
         prior to the effective date of such merger own less than 50% of the
         voting power in such corporation; or (2) for the sale or other
         disposition of all or substantially all of the assets of the Company;
         or

                  (iv) the purchase of Stock pursuant to any tender or exchange
         offer made by any "person," including a "group" (as such terms are used
         in Sections 13(d) and 14(d)(2) of the Act), other than the Company, any
         of its Subsidiaries, or an employee benefit plan of the Company or of
         any of its Subsidiaries, for more than 49% of the Stock of the Company.

         (h) "Change in Control Price" means the highest price per share of
Stock offered in conjunction with any transaction resulting in a Change in
Control (as determined in good faith by the Committee if any part of the offered
price is payable other than in cash) or, in the case of a Change in Control
occurring solely by reason of a change in the composition of the Board, the
highest Fair Market Value of the Stock on any of the 30 trading days immediately
preceding the date on which a Change in Control occurs.

         (i) "Code" means the Internal Revenue Code of 1986, as amended.

         (j) "Committee" means the Compensation and Organization Committee of
the Board which shall have the meaning ascribed to a "compensation committee" in
Section 1.162-27(c)(4) of the final regulations promulgated under Section 162(m)
of the Code and

                                       3
<PAGE>   4
which shall consist of three or more members, each of whom shall be (i) a person
from time to time permitted by the rules promulgated under Section 16 of the Act
in order for grants of Awards to be exempt transactions under said Section 16
and (ii) receiving remuneration in no other capacity than as a director, except
as permitted under Section 1.162-27(e)(3) of the final regulations promulgated
under Section 162(m) of the Code and the rulings thereunder.

         (k) "Company" means The Scotts Company, an Ohio corporation, and any
successor thereto.

         (l) "Director Option" means a "nonstatutory stock option" ("NSO")
granted to each Eligible Director pursuant to Section 6.6 without any action by
the Board or the Committee.

         (m) "Disability" means the inability of the Participant to perform the
Participant's duties for a period of at least six months due to a physical or
medical infirmity. Notwithstanding the foregoing, with respect to Incentive
Stock Options, the term "Disability" shall be defined as such term is defined in
Section 22(e)(3) of the Code.

         (n) "Eligible Director" means, on any date, a person who is serving as
a member of the Board and who is not an Employee.

         (o) "Employee" means any officer or other key executive and management
employee of the Company or of any of its Subsidiaries.

         (p) "Fair Market Value" means, on any date, the closing price of the
Stock as reported on the New York Stock Exchange (or on such other recognized
market or quotation system on which the trading prices of the Stock are traded
or quoted at the relevant time) on such date. In the event that there are no
Stock transactions reported on the New York Stock Exchange (or such other market
or system) on such date, Fair Market Value shall mean the closing price on the
immediately preceding date on which Stock transactions were so reported.

         (q) "Option" means the right to purchase Stock at a stated price for a
specified period of time. For purposes of the Plan, an Option may be either (i)
an "Incentive Stock Option" (ISO) within the meaning of Section 422 of the Code
or (ii) an NSO which does not qualify for treatment as an "Incentive Stock
Option."

         (r) "Participant" means any Employee designated by the Committee to
participate in the Plan.

         (s) "Plan" means The Scotts Company 1996 Stock Option Plan, as in
effect from time to time.

         (t) "Retirement" means termination of a Participant's employment on or
after the normal retirement date or, with the Committee's approval, on or after
any early

                                       4
<PAGE>   5
retirement date established under any retirement plan maintained by the Company
or a Subsidiary in which the Participant participates.

         (u) "Stock" means the Common Shares, without par value, of the Company.

         (v) "Stock Unit" means a right to receive payment, in accordance with
the provisions hereof, of the Fair Market Value of a share of Stock.

         (w) "Subsidiary" means any corporation or partnership in which the
Company owns, directly or indirectly, 50% or more of the total combined voting
power of all classes of stock of such corporation or of the capital interest or
profits interest of such partnership.

         2.2 Gender and Number. Except when otherwise indicated by the context,
words in the masculine gender used in the Plan shall include the feminine
gender, the singular shall include the plural, and the plural shall include the
singular.

                                   SECTION 3.

                          ELIGIBILITY AND PARTICIPATION

         Except as otherwise provided in Sections 6.6 and 6.7, the only persons
eligible to participate in the Plan shall be those Employees selected by the
Committee as Participants.

                                   SECTION 4.

                             POWERS OF THE COMMITTEE

         4.1 Power to Grant. The Committee shall determine the Participants to
whom Options shall be granted, the type or types of Options to be granted and
the terms and conditions of any and all such Options. The Committee may
establish different terms and conditions for different types of Options, for
different Participants receiving the same type of Option and for the same
Participant for each Option such Participant may receive, whether or not granted
at different times.

         4.2 Administration. The Committee shall be responsible for the
administration of the Plan. The Committee, by majority action thereof, is
authorized to prescribe, amend, and rescind rules and regulations relating to
the Plan, to provide for conditions deemed necessary or advisable to protect the
interests of the Company, and to make all other determinations (including,
without limitation, whether a Participant has incurred a Disability) necessary
or advisable for the administration and interpretation of the Plan in order to
carry out its provisions and purposes. Determinations, interpretations, or other
actions made or taken by the Committee pursuant to the provisions of the Plan
shall be final, binding, and conclusive for all purposes and upon all persons.

                                       5
<PAGE>   6
                                   SECTION 5.

                              STOCK SUBJECT TO PLAN

         5.1 Number. Subject to the provisions of Section 5.3, the number of
shares of Stock subject to Awards under the Plan may not exceed 5,500,000 shares
of Stock. Subject to the provisions of Section 5.3, no Participant shall receive
Options for more than 150,000 shares of Stock over any one-year period. For this
purpose, to the extent that any Option is canceled (as described in Section
1.162-27(e)(2)(vi)(B) of the final regulations promulgated under Section 162(m)
of the Code), such canceled Option shall continue to be counted against the
maximum number of shares of Stock for which Options may be granted to a
Participant under the Plan. The shares of Stock to be delivered under the Plan
may consist, in whole or in part, of treasury Stock or authorized but unissued
Stock, not reserved for any other purpose.

         5.2 Canceled, Terminated, or Forfeited Awards. Except as provided in
Section 5.1, any shares of Stock subject to an Award which for any reason is
canceled, terminated or otherwise settled without the issuance of any Stock
shall again be available for Awards under the Plan.

         5.3 Adjustment in Capitalization. In the event of any Stock dividend or
Stock split, recapitalization (including, without limitation, the payment of an
extraordinary dividend), merger, consolidation, combination, spin-off,
distribution of assets to shareholders, exchange of shares, or other similar
corporate change, the aggregate number of shares of Stock available for Awards
under Section 5.1 or subject to outstanding Awards and the respective prices
and/or limitations applicable to outstanding Awards shall be appropriately
adjusted by the Committee, whose determination shall be conclusive. A
corresponding adjustment shall be made to the number of shares subject to
outstanding Director Options and Stock Units, and a corresponding adjustment
shall also be made to the number of shares subject to each Director Option and
each Stock Unit thereafter granted pursuant to Section 6.6 or Section 6.7.

                                   SECTION 6.

                             OPTIONS AND STOCK UNITS

         6.1 Grant of Options. Options may be granted to Participants at such
time or times as shall be determined by the Committee. Options granted under the
Plan may be of two types: (i) Incentive Stock Options and (ii) NSOs. The
Committee shall have complete discretion in determining the number of Options,
if any, to be granted to a Participant. Without limiting the foregoing, the
Committee may grant Options containing provisions for the issuance to the
Participant, upon exercise of such Option and payment of the exercise price
therefor with previously owned shares of Stock, of an additional Option for the
number of shares so delivered, having such other terms and conditions not
inconsistent with the Plan as the Committee shall determine. Each Option shall
be evidenced by an Option

                                       6
<PAGE>   7
agreement that shall specify the type of Option granted, the exercise price, the
duration of the Option, the number of shares of Stock to which the Option
pertains, and such other terms and conditions not inconsistent with the Plan as
the Committee shall determine.

         6.2 Option Price. NSOs and Incentive Stock Options granted pursuant to
the Plan shall have an exercise price which is not less than the Fair Market
Value of the Stock on the date the Option is granted. To the extent that an
Incentive Stock Option is granted to a Participant who owns (actually or
constructively under the provisions of Section 424(d) of the Code) Stock
possessing more than 10% of the total combined voting power of all classes of
Stock of the Company or of any Subsidiary, such Incentive Stock Option shall
have an exercise price which is not less than 110% of the Fair Market Value on
the date the Option is granted.

         6.3 Exercise of Options. Options granted to a Participant under the
Plan shall be exercisable at such times and shall be subject to such
restrictions and conditions including the performance of a minimum period of
service, as the Committee may impose, either at or after the time of grant of
such Options; provided, however, that if the Committee does not specify another
exercise schedule at the time of grant, each Option shall become exercisable on
the third anniversary of the date of grant, subject to the Committee's right to
accelerate the exercisability of such Option in its discretion. Notwithstanding
the foregoing, no Option shall be exercisable for more than ten years after the
date on which it is granted; provided, however, in the case of an Incentive
Stock Option granted to a Participant who owns (actually or constructively under
the provisions of Section 424(d) of the Code) Stock possessing more than 10% of
total combined voting power of all classes of Stock of the Company or any
Subsidiary, such Incentive Stock Option shall not be exercisable for more than
five years after the date on which it is granted.

         6.4 Payment. The Committee shall establish procedures governing the
exercise of Options, which shall require that written notice of exercise be
given and that the Option price be paid in full in cash or equivalents,
including by personal check, at the time of exercise or pursuant to any
arrangement that the Committee shall approve. The Committee may, in its
discretion, permit a Participant or an Eligible Director to tender Stock already
owned by the Participant or the Eligible Director, either by actual delivery of
the shares of Stock or by attestation, valued at its Fair Market Value on the
date of exercise, as partial or full payment of the exercise price. As soon as
practicable after receipt of a written exercise notice and full payment of the
exercise price, the Company shall deliver to the Participant or the Eligible
Director a certificate or certificates representing the acquired shares of
Stock.

         6.5 Incentive Stock Options. Notwithstanding anything in the Plan to
the contrary, no term of this Plan relating to Incentive Stock Options shall be
interpreted, amended or altered, nor shall any discretion or authority granted
under the Plan be so exercised, so as to disqualify the Plan under Section 422
of the Code, or, without the consent of any Participant affected thereby, to
cause any Incentive Stock Option previously granted to fail to qualify for the
Federal income tax treatment afforded under Section 421 of the Code. Further,
the aggregate Fair Market Value (determined as of the time an Incentive Stock
Option is

                                       7
<PAGE>   8
granted) of the Stock with respect to which Incentive Stock Options are
exercisable for the first time by any Participant during any calendar year
(under all option plans of the Company and all Subsidiaries of the Company)
shall not exceed $100,000.

         6.6 Director Options. Notwithstanding anything else contained herein to
the contrary, on the first business day following the date of each annual
meeting of shareholders during the term of the Plan, each Eligible Director
shall receive a Director Option to purchase 5,000 shares of Stock at an exercise
price per share equal to the Fair Market Value of the Stock on the date of
grant. An Eligible Director who is a member of one or more Board committees,
shall receive an additional grant covering 500 shares of Stock for each
committee of which the Eligible Director is a member. An Eligible Director who
chairs one or more Board committees shall receive (over and above that
additional grant covering 500 shares for each committee membership) an
additional grant covering 1,000 shares of Stock for each committee the Eligible
Director chairs. Each Director Option shall be exercisable six months after the
date of grant and shall remain exercisable until the earlier to occur of (a) the
tenth anniversary of the date of grant or (b) the first anniversary of the date
the Eligible Director ceases to be a member of the Board, except that (i) if the
Eligible Director ceases to be a member of the Board after having been convicted
of, or pled guilty or nolo contendere to, a felony, the Eligible Director's
Director Options shall be canceled on the date the Eligible Director ceases to
be a director, or (ii) if the Eligible Director ceases to be a member of the
Board due to a Director Retirement, any Director Options granted to such
Eligible Director which are then outstanding (whether or not exercisable prior
to the date of such Director Retirement), may be exercised at any time prior to
the expiration of the term of the Director Options or within five years
following the Director Retirement, whichever period is shorter. For the purposes
of this Section 6.6, "Director Retirement" means the retirement of an Eligible
Director from service on the Board after having served at least ten years as a
member of the Board and after having attained the age of 55, unless the Board
specifies a shorter period of required service. An Eligible Director may
exercise a Director Option in the manner described in Section 6.4.

         6.7 Stock Units. Effective beginning in the calendar year 2000, each
Eligible Director shall be provided with the opportunity to elect to receive all
or a portion, in 25% increments, of the Eligible Director's Annual Retainer: (a)
in cash or (b) in Stock Units. An Eligible Director's first such election shall
be made on a form provided by the Committee at least two weeks in advance of the
2000 Annual Meeting. Such election shall be effective until the next Annual
Meeting. Elections for annual periods thereafter shall be made on an annual
basis, at least two weeks in advance of the applicable Annual Meeting. In the
event no election is received from an Eligible Director for an applicable
period, the Eligible Director shall be deemed to have elected payment of the
Eligible Director's Annual Retainer in cash. Any portion of an Eligible
Director's Annual Retainer which is elected to be paid in cash shall be paid in
accordance with the Company's regular practice for such payments. To the extent
that the Eligible Director elects to receive Stock Units in lieu of all or a
portion of the Eligible Director's Annual Retainer, the Eligible Director shall
receive a number of Stock Units (including fractional Stock Units) determined by
dividing the dollar amount of Annual Retainer elected by the Fair Market Value
of a share of Stock on the next

                                       8
<PAGE>   9
business day following the date of the Annual Meeting; provided that for the
calendar year 2000, the Fair Market Value as of March 31, 2000 shall be the
value used. All payments in respect of Stock Units shall be settled as soon as
practicable after the earlier of (a) the occurrence of a Change in Control or
(b) the Eligible Director's cessation of service on the Board; provided,
however, that if the Eligible Director has elected on a form provided by the
Committee at least one year prior to the commencement of payment of the value of
the Eligible Director's Stock Units, payment thereof shall be made over a period
of up to ten years, as elected by the Eligible Director. All such payments to
the Eligible Director shall be made in cash or in Stock, as elected by the
Eligible Director on the deferral form provided by the Committee. If
distributions are made in cash pursuant to such Eligible Director's election,
distribution shall be made at Fair Market Value determined as of the date
immediately preceding the date of distribution. Upon the death of an Eligible
Director, the value of any unpaid Stock Units shall be paid in a lump sum in
cash in accordance with the provisions of Section 10.2.

                                   SECTION 7.

                            TERMINATION OF EMPLOYMENT

         7.1 Termination of Employment Due to Retirement. Unless otherwise
determined by the Committee at the time of grant, in the event a Participant's
employment terminates by reason of Retirement, any Options granted to such
Participant which are then outstanding (whether or not exercisable prior to the
date of such termination) may be exercised at any time prior to the expiration
of the term of the Options or within five years (or such shorter period as the
Committee shall determine at the time of grant) following the Participant's
termination of employment, whichever period is shorter. Notwithstanding any
provision contained herein, with respect to any Incentive Stock Option, a
Participant who terminates the Participant's employment by reason of Retirement
may exercise such Incentive Stock Option at any time prior to the expiration of
the term of the Option or within three months following the Participant's
termination of employment, whichever period is shorter.

         7.2 Termination of Employment Due to Death or Disability. Unless
otherwise determined by the Committee at the time of grant, in the event a
Participant's employment terminates by reason of death or Disability, any
Options granted to such Participant which are then outstanding (whether or not
exercisable prior to the date of such termination) may be exercised by the
Participant or the Participant's designated beneficiary, and if none is named,
in accordance with Section 10.2, at any time prior to the expiration date of the
term of the Options or within five years (or such shorter period as the
Committee shall determine at the time of grant) following the Participant's
termination of employment, whichever period is shorter. Notwithstanding any
provision contained herein, with respect to any Incentive Stock Option, a
Participant whose employment terminates by reason of death or Disability may
exercise (or the Participant's designated beneficiary may exercise, in the case
of death) such Incentive Stock Option at any time prior to the expiration of the
term of the Option or within one year following the Participant's termination of
employment, whichever period is shorter.

                                       9
<PAGE>   10
         7.3 Termination of Employment For Cause. Unless otherwise determined by
the Committee at the time of grant, in the event a Participant's employment is
terminated for Cause, any Options granted to such Participant which are then
outstanding (whether or not exercisable prior to the date of such termination)
shall be forfeited.

         7.4 Termination of Employment for Any Other Reason. Unless otherwise
determined by the Committee at or after the time of grant, in the event the
employment of the Participant shall terminate for any reason other than one
described in Section 7.1, 7.2 or 7.3, any Options granted to such Participant
which are exercisable at the date of the Participant's termination of
employment, or on such accelerated basis as the Committee may have determined in
its discretion, shall remain exercisable until the earlier to occur of (a) the
expiration of the term of such Options or (b) the ninetieth day following the
Participant's termination of employment, whichever period is shorter.

         7.5 Limitations on Exercisability Following Termination of Employment.
No Options shall be exercisable after termination of employment unless the
Participant shall have, during the time period in which the Options are
exercisable, (a) refrained from serving as an officer, director or employee of
any individual, partnership or corporation, or the owner of a business, or a
member of a partnership which conducts business in competition with the Company
or renders any service (including, without limitation, advertising agencies and
business consultants) to competitors with any portion of the business of the
Company, (b) been available, if so requested by the Company, at reasonable times
and upon a reasonable basis, to consult with, supply information to, and
otherwise cooperate with, the Company, and (c) refrained from engaging in a
deliberate action which has been determined by the Committee to cause
substantial harm to the interests of the Company. If any of these conditions is
not fulfilled, the Committee may require the Participant to forfeit all rights
to any Options which have not been exercised prior to the date of the breach of
the condition.

                                   SECTION 8.

                                CHANGE IN CONTROL

         8.1 Accelerated Vesting and Payment. Subject to the provisions of
Section 8.2 below, in the event of a Change in Control, each Participant shall
be permitted, in the Participant's discretion, to surrender any Option
(excluding any Director Option) or portion thereof in exchange for a payment in
cash of an amount equal to the excess of the Change in Control Price over the
exercise price of the Option. Such right to surrender an Option in exchange for
a payment in cash shall remain in effect only during the fifteen-day period
commencing with the day following the date of a Change in Control. Thereafter,
the Option shall only be exercisable in accordance with the terms and conditions
of the Stock Option Agreement and the provisions of the Plan.

         8.2 Alternative Awards. Notwithstanding Section 8.l, no cancellation or
cash settlement or other payment shall occur with respect to any Option or any
class of Options if

                                       10
<PAGE>   11
the Committee reasonably determines in good faith prior to the occurrence of a
Change in Control that such Option or Options shall be honored or assumed, or
new rights substituted therefor (such honored, assumed or substituted award
hereinafter called an "Alternative Award"), by a Participant's employer (or the
parent or a subsidiary of such employer) immediately following the Change in
Control, provided that any such Alternative Award must:

         (a) be based on stock which is traded on an established securities
market, or which will be so traded within 60 days of the Change in Control;

         (b) provide such Participant (or each Participant in a class of
Participants) with rights and entitlements substantially equivalent to or better
than the rights, terms and conditions applicable under such Option, including,
but not limited to, an identical or better exercise or vesting schedule and
identical or better timing and methods of payment;

         (c) have substantially equivalent economic value to such Option
(determined at the time of the Change in Control); and

         (d) have terms and conditions which provide that in the event that the
Participant's employment is involuntarily terminated or constructively
terminated, any conditions on a Participant's rights under, or any restrictions
on transfer or exercisability applicable to, each such Alternative Award shall
be waived or shall lapse, as the case may be.

         For this purpose, a constructive termination shall mean a termination
by a Participant following a material reduction in the Participant's
compensation, a material reduction in the Participant's responsibilities or the
relocation of the Participant's principal place of employment to another
location, in each case without the Participant's written consent.

         8.3 Director Options and Stock Units. Upon a Change in Control, each
Director Option granted to an Eligible Director and all Stock Units credited to
an Eligible Director shall be canceled in exchange for a payment in cash. The
amount of cash exchanged for each Director Option shall be the excess of the
Change in Control Price over the exercise price for such Director Option unless
(a) the Stock remains traded on an established securities market following the
Change in Control and (b) such Eligible Director remains on the Board following
the Change in Control. The amount of cash exchanged for each Stock Unit shall be
the Change in Control Price.

         8.4 Options Granted Within Six Months of the Change in Control. If any
Option (including a Director Option) granted within six months of the date on
which a Change in Control occurs (a) is held by a person subject to the
reporting requirements of Section 16(a) of the Act and (b) is to be cashed out
pursuant to Section 8.1 or 8.3, such cash out shall not occur unless and until,
in the opinion of the Company's counsel, such cash out could occur without such
reporting person being potentially subject to liability under Section 16(b) of
the Act by reason of such cash out.

                                       11
<PAGE>   12
                                   SECTION 9.

                AMENDMENT, MODIFICATION, AND TERMINATION OF PLAN

         The Board or the Committee may at any time terminate or suspend the
Plan, and from time to time may amend or modify the Plan. Any such amendment,
termination or suspension may be made without the approval of the shareholders
of the Company except as such shareholder approval may be required (a) to
satisfy the requirements of Rule 16b-3 under the Act, or any successor rule or
regulation, (b) to satisfy applicable requirements of the Code or (c) to satisfy
applicable requirements of any securities exchange on which are listed any of
the Company's equity securities. No amendment of the Plan shall result in any
loss of a Committee member's status as a "non-employee director" as defined in
Rule 16b-3 under the Act, or any successor rule or regulation, with respect to
any employee benefit plan of the Company or result in the Plan losing its status
as a plan satisfying the requirements of said Rule 16b-3. No amendment,
modification, or termination of the Plan shall in any manner adversely affect
any Award theretofore made under the Plan, without the consent of the
Participant.

                                   SECTION 10.

                            MISCELLANEOUS PROVISIONS

         10.1 Assignability. With the permission of the Committee, a Participant
or a specified group of Participants who has or have been granted an NSO under
the Plan, may transfer such Option to a revocable inter vivos trust as to which
the Participant is the settlor or may transfer such Option to a "Permissible
Transferee." A Permissible Transferee shall be defined as any member of the
immediate family of the Participant, any trust, whether revocable or
irrevocable, solely for the benefit of members of the Participant's immediate
family, or any partnership or limited liability company whose only partners or
members are members of the Participant's immediate family. Any such transferee
of an NSO shall remain subject to all of the terms and conditions applicable to
such NSO and subject to the rules and regulations prescribed by the Committee.
An NSO may not be retransferred by a Permissible Transferee except by will or
the laws of descent and distribution and then only to another Permissible
Transferee. Other than as described above, an Option granted under the Plan may
not be transferred except by will or the laws of descent and distribution and,
during the lifetime of the Participant to whom granted, may be exercised only by
the Participant, the Participant's guardian or legal representative.

         With the permission of the Committee, an Eligible Director who has been
granted a Director Option or has received a Stock Unit under the Plan, may
transfer such Director Option or Stock Unit to a revocable inter vivos trust as
to which the Eligible Director is the settlor or may transfer such Director
Option or Stock Unit to a "Permissible Transferee." A Permissible Transferee
shall be defined as any member of the immediate family of the Eligible Director,
any trust, whether revocable or irrevocable, solely for the benefit of

                                       12
<PAGE>   13
members of the Eligible Director's immediate family, or any partnership or
limited liability company whose only partners or members are members of the
Eligible Director's immediate family. Any such transferee shall remain subject
to all of the terms and conditions applicable to such Director Option or Stock
Unit and subject to the rules and regulations prescribed by the Committee. A
Director Option or Stock Unit may not be retransferred by a Permissible
Transferee except by will or the laws of descent and distribution and then only
to another Permissible Transferee. Other than as described above, a Director
Option granted or Stock Unit received under the Plan may not be transferred
except by will or the laws of descent and distribution and, during the lifetime
of the Eligible Director to whom granted or by whom received, may be exercised
only by the Eligible Director or the Eligible Director's guardian or legal
representative.

         10.2 Beneficiary Designation. Each Participant and each Eligible
Director may from time to time name a beneficiary or beneficiaries (who may be
named contingently or successively) to whom any benefit under the Plan is to be
paid or by whom any right under the Plan is to be exercised in case of the
Participant's or Eligible Director's death. Each designation shall revoke all
prior designations by the same Participant or Eligible Director, shall be in a
form prescribed by the Committee, and shall be effective only when filed in
writing with the Committee. In the absence of any such designation, benefits
remaining unpaid at the Participant's or Eligible Director's death shall be paid
to the Participant or Eligible Director's surviving spouse, if any, or otherwise
to the Participant's or Eligible Director's estate and Options outstanding at
the Eligible Director's death shall be exercised by the Participant or Eligible
Director's surviving spouse, if any, or otherwise by the Participant's or
Eligible Director's estate.

         10.3 No Guarantee of Employment or Participation. Nothing in the Plan
shall interfere with or limit in any way the right of the Company or any
Subsidiary to terminate any Participant's employment at any time, nor confer
upon any Participant any right to continue in the employ of the Company or any
Subsidiary. No Employee shall have a right to be selected as a Participant, or,
having been so selected, to receive any future Awards. Nothing in the Plan shall
confer upon an Eligible Director a right to continue to serve on the Board or to
be nominated for reelection to the Board.

         10.4 Tax Withholding. The Company shall have the power to withhold, or
require a Participant or Eligible Director to remit to the Company, an amount
sufficient to satisfy Federal, state, and local withholding tax requirements on
any Award under the Plan, and the Company may defer payment of cash or issuance
of Stock until such requirements are satisfied. The Committee may, in its
discretion, permit a Participant or an Eligible Director to elect, subject to
such conditions as the Committee shall impose, (a) to have shares of Stock
otherwise issuable under the Plan withheld by the Company or (b) to deliver to
the Company previously acquired shares of Stock having a Fair Market Value
sufficient to satisfy all or part of the Participant's or the Eligible
Director's estimated total Federal, state, and local tax obligation associated
with the transaction.

                                       13
<PAGE>   14
         10.5 Indemnification. Each person who is or shall have been a member of
the Committee or of the Board shall be indemnified and held harmless by the
Company against and from any loss, cost, liability, or expense that may be
imposed upon or reasonably incurred by such person in connection with or
resulting from any claim, action, suit, or proceeding to which such person may
be made a party or in which such person may be involved by reason of any action
taken or failure to act under the Plan and against and from any and all amounts
paid by such person in settlement thereof, with the Company's approval, or paid
by such person in satisfaction of any judgment in any such action, suit, or
proceeding against such person provided such person shall give the Company an
opportunity, at its own expense, to handle and defend the same before such
person undertakes to handle and defend it on such person's own behalf. The
foregoing right of indemnification shall not be exclusive and shall be
independent of any other rights of indemnification to which such persons may be
entitled under the Company's articles of incorporation or code of regulations,
by contract, as a matter of law, or otherwise.

         10.6 No Limitation on Compensation. Nothing in the Plan shall be
construed to limit the right of the Company to establish other plans or to pay
compensation to its Employees or directors, in cash or property, in a manner
which is not expressly authorized under the Plan.

         10.7 International Employees. It is the Company's desire to provide the
same motivation to materially increase shareholder value and to enable the
Company to attract and retain the services of outstanding managers in the
international locations where the Company maintains facilities and employs
people. To this end, the Company will adopt incentives in its foreign locations
that provide as closely as possible the same motivational effect as Options
provide to domestic Participants. The Committee may grant Options to employees
who are subject to the tax laws of nations other than the United States, which
Options may have terms and conditions that differ from other Options granted
under the Plan for the purposes of complying with foreign tax laws.

         10.8 Requirements of Law. The making of Awards and the issuance of
shares of Stock shall be subject to all applicable laws, rules, and regulations,
and to such approvals by any governmental agencies or national securities
exchanges as may be required. Notwithstanding the foregoing, no Stock shall be
issued under the Plan unless the Company is satisfied that such issuance will be
in compliance with applicable federal and state securities laws. Certificates
for Stock delivered under the Plan may be subject to such stock transfer orders
and other restrictions as the Committee may deem advisable under the rules,
regulations and other requirements of the Securities and Exchange Commission,
any stock exchange upon which the Stock is then listed or traded, the Nasdaq
National Market or any applicable federal or state securities law. The Committee
may cause a legend or legends to be placed on any such certificates to make
appropriate reference to such restrictions.

         10.9 Term of Plan. The Plan shall be effective upon its adoption by the
Committee, subject to approval by the Board and approval by the affirmative vote
of the holders of a majority of the shares of voting stock present in person or
represented by proxy at the 1996

                                       14
<PAGE>   15
Annual Meeting. The Plan shall continue in effect, unless sooner terminated
pursuant to Section 9, until the tenth anniversary of the date on which it is
adopted by the Board.

         10.10 Governing Law. The Plan, and all agreements hereunder, shall be
construed in accordance with and governed by the laws of the State of Ohio.

         10.11 No Impact On Benefits. Plan Awards are not compensation for
purposes of calculating an Employee's rights under any employee benefit plan.

                                       15

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