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Exhibit 10(q)
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Specimen Form of Stock Option Agreement for
Non-Qualified Stock Options
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[NAME]
STOCK OPTION AGREEMENT
(Non-Qualified Stock Option)
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THIS AGREEMENT is made to be effective as of ________, 1997, by and
between The Scotts Company, an Ohio corporation (the "Company"), and
_____________________ (the "Optionee").
W I T N E S S E T H:
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WHEREAS, the Board of Directors of the Company adopted The Scotts
Company 1996 Stock Option Plan (the "1996 Plan") on February 12, 1996; and
WHEREAS, the shareholders of the Company, approved the 1996 Plan at the
Annual Meeting of Shareholders of the Company held on April 9, 1996; and
WHEREAS, the shareholders of the Company amended the 1996 Plan at the
Annual Meeting of Shareholders of the Company held on March 12, 1997 to increase
the number of shares authorized thereunder to 3,000,000; and
WHEREAS, the 1996 Plan, as amended, is hereinafter sometimes referred
to as "the Plan"; and
WHEREAS, pursuant to the provisions of the Plan, the Board of Directors
of the Company has appointed a Compensation and Organization Committee (the
"Committee") to administer the Plan and the Committee has determined that an
option to acquire common shares, without par value (the "Common Shares"), of the
Company should be granted to the Optionee under the terms and conditions set
forth in this Agreement;
NOW, THEREFORE, in consideration of the premises, the parties hereto
make the following agreements, intending to be legally bound thereby:
1. Grant of Option. The Company hereby grants to the Optionee an option
(the "Option") to purchase ________ Common Shares of the Company. The option
shall be granted under the 1996 Stock Option Plan. The Option is not intended to
qualify as an incentive stock option under Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code").
2. Terms and Conditions of the Option.
(A) Option Price. The purchase price (the "Option Price") to
be paid by the Optionee to the Company upon the exercise of the Option shall be
$____ per share (being 100% of the Fair Market Value (as that term is defined in
the Plan) for the Common Shares of the Company on the date of grant of the
Option), subject to adjustment as provided in Section 3.
(B) Exercise of the Option. The Option may be exercised as
follows:
(i) On _________ _______ of the Common Shares
subject to the Option;
(ii) On _________ an additional _______ of the
Common Shares subject to the Option.
(iii) On _________ the remaining _______ of the
Common Shares subject to the Option.
Subject to the other provisions of this Agreement and to the provisions
of the Plan, if the Option becomes exercisable as to certain Common Shares, it
shall remain exercisable as to those Common Shares until the date of expiration
of the term of the Option. The Committee may, but shall not be required to
(unless otherwise provided in this Agreement or in the Plan), accelerate the
schedule of the time or times when the Option may be exercised.
The grant of the Option shall not confer upon the Optionee any right to
continue in the employment of the Company nor limit in any way the right of the
Company to terminate the employment of the Optionee at any time in accordance
with law and the Company's governing corporate documents.
(C) Option Term. The Option shall in no event be exercisable
after the expiration of ten years from the date of this Agreement.
(D) Method of Exercise. To the extent that any portion of this
Option is exercisable, that portion of such Option may be exercised in whole or
in part by delivering to the Committee in the care of the General Counsel or the
Director, Legal Affairs of the Company, a written notice of exercise, signed by
the Optionee or, in the event of the death of the Optionee, by such other person
as is entitled to exercise the Option. The notice of exercise shall state the
number of full Common Shares in respect of which the Option is being exercised.
Payment for all such Common Shares shall be made to the Company at the time the
Option is exercised. The Option Price may be paid in cash (including check, bank
draft or money order) in U.S. dollars, or with the consent of the Committee, by
the transfer by the Optionee to the Company of free and clear Common Shares
already owned by the Optionee having a Fair Market Value (as that term is
defined in the Plan) on the exercise date equal to the Option Price, or by a
combination of cash and Common Shares already owned by the Optionee equal in the
aggregate to the Option Price for the Common Shares being purchased. After
payment in full for the Common Shares to be purchased upon exercise of the
Option has been made, the Company shall take all such action as is necessary to
deliver appropriate share certificates evidencing the Common Shares purchased
upon the exercise of the Option to the Optionee as promptly thereafter as is
reasonably practicable.
(E) Satisfaction of Taxes and Tax Withholding Requirements.
The Company has the right to withhold, or require the Optionee to remit to the
Company, an amount sufficient to satisfy any applicable federal, state or local
withholding tax requirements. The Committee may permit the Optionee to elect (i)
to have Common Shares otherwise issuable under the Plan withheld by the Company
or (ii) to deliver to the Company free and clear Common Shares already owned by
the Optionee having a Fair Market Value (as that term is defined in the Plan) on
the exercise date sufficient to pay all or part of the Optionee's estimated
total federal, state and local tax obligations.
3. Adjustments and Changes in the Common Shares. In the event of any
share dividend or share 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, appropriate adjustments shall be made by the Committee
in the number of Common Shares and Option Price applicable to the Option to
reflect such change.
4. Change in Control Provisions. In the event of a Change in Control
(as defined in the Plan), the Option shall be canceled in exchange for the
payment to the Optionee of cash in an amount equal to the excess of the highest
price paid (or offered) for Common Shares of the Company during the preceding 30
day period over the exercise price for such Option. Notwithstanding the
foregoing, if the Committee determines that the Optionee will receive a new
award (or have the Option honored in a manner which preserves their value and
eliminates the risk that the value of the Option will be forfeited due to
involuntary termination), no cash payment will be made as a result of a Change
in Control. If any cash payment with respect to the Option would result in the
Optionee's incurring potential liability under Section 16(b) of the Securities
Exchange Act of 1934, the cash payment will be deferred until the first time at
which such cash payment may be made without subjecting the Optionee to such
potential liability under Section 16 (b) by reason of such cash payment.
5. Nontransferability of the Option. The Option may not be sold,
transferred, pledged, assigned or otherwise alienated or hypothecated, other
than by will or by the laws of descent and distribution. The Option may not be
exercised during the lifetime of the Optionee except by the Optionee.
6. Exercise After Termination of Employment.
(A) In the event of the termination of the Optionee's
employment by reason of retirement, the Option may thereafter be exercised, to
the extent exercisable at the date of retirement, for a period of five years,
subject to the stated term of the Option.
(B) In the event of the Optionee's termination of employment
for cause, the Option shall be forfeited.
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(C) In the event of the Optionee's termination of employment
without cause, as a result of the Optionee's death or disability (as that term
is defined in the Plan), or as a result of a Change in Control, that portion of
the Option which is not yet exercisable shall continue to vest on the dates set
forth in Paragraph 2 (b) of this Agreement, assuming Optionee is still receiving
termination payments on such dates pursuant to the offer letter to Optionee
dated __________. Following Optionee's receipt of the last termination payment
under such offer letter, the Option may thereafter be exercisable to the extent
vested, for a period of five years.
(D) In the event of the Optionee's termination of employment
for any reason other than those enumerated in Paragraphs 6 (a) through 6 (c),
the Option shall be exercisable, to the extent exercisable at the date of
termination of employment, for a period of 30 days, subject to the stated term
of the Option.
7. Restrictions of Transfer of Common Shares. Anything contained in
this Agreement or elsewhere to the contrary notwithstanding:
(A) The Option shall not be exercisable for the purchase of
any Common Shares subject thereto except for:
(i) Common Shares subject thereto which at the time
of such exercise and purchase are registered under the Securities Act of 1933,
as amended (the "1933 Act");
(ii) Common Shares subject thereto which at the time
of such exercise and purchase are exempt or are the subject matter of an exempt
transaction or are registered by description, by coordination or by
qualification, or at such time are the subject matter of a transaction which has
been registered by description, all in accordance with Chapter 1707 of the Ohio
Revised Code, as amended; and
(iii) Common Shares subject thereto in respect of
which the laws of any state applicable to such exercise and purchase have been
satisfied.
(B) If any Common Shares subject to the Option are sold or
issued upon the exercise thereof to a person who (at the time of such exercise
or thereafter) is an affiliate of the Company for purposes of Rule 144
promulgated under the 1933 Act, then upon such sale and issuance:
(i) such Common Shares shall not be transferable by
the holder thereof, and neither the Company nor its transfer agent or registrar,
if any, shall be required to register or otherwise to give effect to any
transfer thereof and may prevent any such transfer, unless the Company shall
have received an opinion from its counsel to the effect that any such transfer
would not violate the 1933 Act; and
(ii) the Company may cause each share certificate
evidencing such Common Shares to bear a legend reflecting the applicable
restrictions on the transfer thereof.
(C) Any share certificate issued to evidence Common Shares as
to which the Option has been exercised may bear such legends and statements as
the Company shall deem advisable to ensure compliance with applicable federal
and state laws and regulations.
(D) Nothing contained in this Agreement or elsewhere shall be
construed to require the Company to take any action whatsoever to make the
Option exercisable or to make transferable any Common Shares purchased and
issued upon the exercise of the Option.
(8) Rights of the Optionee as a Shareholder. The Optionee shall have no
rights or privileges as a shareholder of the Company with respect to any Common
Shares of the Company covered by the Option until the date of issuance and
delivery of a certificate to the Optionee evidencing such Common Shares.
(9) Plan as Controlling. All terms and conditions of the Plan
applicable to the Option which are not set forth in this Agreement shall be
deemed incorporated herein by reference. In the event that any term or condition
of this Agreement is inconsistent with the terms and conditions of the Plan, the
Plan shall be deemed controlling.
(10) Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Ohio.
(11) Rights and Remedies Cumulative. All rights and remedies of the
Company and of the Optionee enumerated in this Agreement shall be cumulative
and, except as expressly provided otherwise in this Agreement, none shall
exclude any other rights or remedies allowed by law or in equity, and each of
said rights or remedies may be exercised and enforced concurrently.
(12) Captions. The captions contained in this Agreement are included
only for convenience or reference and do not define, limit, explain or modify
this Agreement or its interpretation, construction or meaning and are in no way
to be construed as a part of this Agreement.
(13) Severability. If any provision of this Agreement or the
application of any provision hereof to any person or any circumstance shall be
determined to be invalid or unenforceable, then such determination shall not
affect any other provision of this Agreement or the application of such
provision to any other person or circumstance, all of which other provisions
shall remain in full force and effect, and it is the intention of each party to
this Agreement that if any provision of this Agreement is susceptible of two or
more constructions, one of which would render the provision enforceable and the
other or others of which would render the provision unenforceable, then the
provision shall have the meaning which renders it enforceable.
(14) Number and Gender. When used in this Agreement, the number and
gender of each pronoun shall be construed to be such number and gender as the
context, circumstances or its antecedent may require.
(15) Entire Agreement. This Agreement constitutes the entire Agreement
between the Company and the Optionee in respect of the subject matter of this
Agreement, and this Agreement supersedes all prior and contemporaneous
agreements between the parties hereto in connection with the subject matter of
this Agreement. No change, termination or attempted waiver of any of the
provisions of this Agreement shall be binding upon any party hereto unless
contained in a writing signed by the party to be charged.
(16) Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors and assigns (including successive, as well
as immediate, successors and assigns) of the Company.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed to be effective as of the date first written above.
COMPANY:
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The Scotts Company,
an Ohio corporation
By:
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Rosemary L. Smith
Its: Vice President, Human Resources
OPTIONEE: [NAME]
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Signature of Optionee
[ADDRESS]