<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission only
(as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
VERDANT BRANDS, INC.
(Name of Registrant as Specified in its Charter)
____________________________________
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
--------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
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3)Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
---------------------------------------------------
4)Proposed maximum aggregate value of transaction:
---------------------------------------------------
5)Total fee paid:
---------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
-------------------------------------------------
2) Form, Schedule or Registration Statement No.:
---------------------------
3) Filing Party:
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4) Date Filed:
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<PAGE>
[Logo of Verdant Brands]
April 16, 1999
Dear Shareholder:
You are cordially invited to attend the 1999 Annual Meeting of Shareholders of
Verdant Brands, Inc. on Tuesday, May 25, 1999 at 3:30 P.M. local time at the
offices of Verdant Brands at 9555 James Avenue South, Suite 200, Bloomington,
Minnesota 55431.
The Notice of Annual Meeting and Proxy Statement accompanying this letter
describe the business to be acted upon at the meeting. The Annual Report for the
year ended December 31, 1998 is also enclosed.
Your vote is important. Please vote your shares using the procedures described
in the Proxy Statement whether or not you plan to attend the meeting.
Sincerely,
/s/ Stanley Goldberg
STANLEY GOLDBERG
Chairman and Chief Executive Officer
<PAGE>
NOTICE OF ANNUAL MEETING
--------------
The Annual Meeting of Shareholders of Verdant Brands, Inc. will be held on
Tuesday, May 25, 1999 at 3:30 P.M. local time at the offices of Verdant Brands
at 9555 James Avenue South, Suite 200, Bloomington, Minnesota 55431 to take
action on the following matters:
1. To elect nine directors for a one year term.
2. To consider and vote upon the ratification of the selection of
independent accountants to audit the Company's consolidated financial
statements for 1999.
3. To consider and vote upon increasing the number of shares of Common
Stock available for issuance under the Company's 1996 Employee
Incentive Stock Option Plan by 750,000.
4 To transact such other business as may properly come before the
meeting or any adjournment thereof. The company knows of no other
business to be brought before the meeting.
Shareholders of record at the close of business on March 26, 1999 are
entitled to receive this notice and to vote their shares at the Annual Meeting.
By Order of the Board of Directors,
/s/ Mark G. Eisenschenk
MARK G. EISENSCHENK
Secretary
Dated: April 16, 1999
YOU ARE URGED TO DATE AND SIGN THE
ENCLOSED PROXY AND TO RETURN IT IN THE ENCLOSED ENVELOPE REGARDLESS
OF WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING.
<PAGE>
PROXY STATEMENT
--------------
GENERAL INFORMATION
The Board of Directors of Verdant Brands, Inc. ("Verdant" or the "Company")
is soliciting your proxy for use at the Annual Meeting of Shareholders to be
held on May 25, 1999. These proxy materials are being mailed to Shareholders
beginning on April 16, 1999. The Company's principal executive offices are
located at 9555 James Avenue South, Suite 200, Bloomington, Minnesota 55431 and
its main telephone number is (612) 703-3300.
WHO CAN VOTE
Holders of record of Verdant's Common Stock at the close of business on
March 26, 1999 are eligible to vote at the meeting. As of the close of business
on that date, Verdant had 25,889,214 shares of Common Stock outstanding.
HOW TO VOTE
In addition to voting in person at the meeting, Shareholders of record can
vote by proxy by mailing their signed proxy cards. If your shares are held in
the name of a bank, broker or other holder of record, you will receive
instructions from the holder of record that you must follow in order for your
shares to be voted.
REVOCATION OF PROXIES
A Shareholder of record may revoke the proxy at any time before the vote is
taken at the meeting by sending written notice of the revocation to the
Secretary of the Company, by submitting another proxy that is properly signed
and bears a later date or by voting in person at the meeting. All properly
executed proxies not revoked will be voted at the meeting in accordance with
their instructions. A proxy that is signed and returned by a Shareholder of
record with no specification marked in the instruction boxes will be voted in
accordance the recommendations of the Board of Directors as outlined in this
Proxy Statement. If any other proposals are brought before the meeting and
submitted to a vote, all proxies will be voted in accordance with the judgment
of the persons voting the proxies.
PROXY SOLICITATION
Directors, officers and employees of Verdant may solicit proxies on behalf
of the Company by communicating with Shareholders personally or by telephone,
facsimile transmission or mail. All expenses in connection with the solicitation
of proxies will be paid by the Company. Verdant will request banks and brokers
to solicit proxies from their customers where appropriate and will reimburse
them for reasonable out of pocket expenses.
QUORUM AND VOTING REQUIREMENTS
Verdant's by-laws provide that a majority of the shares entitled to a vote,
whether present in person or represented by proxy, constitutes a quorum at
meetings of Shareholders. Abstentions and broker "non-votes" are counted for
purposes of establishing a quorum. A broker "non-vote" occurs when a nominee
holding shares for a beneficial owner does not vote on a particular proposal
because the nominee does not have discretionary voting power for that particular
matter and has not received instructions from the beneficial owner. Each of the
matters to be voted on at the Annual Meeting shall be determined by the
affirmative vote of the majority of the votes cast on the matter.
- 1 -
<PAGE>
PROPOSAL ONE
------------
ELECTION OF DIRECTORS
The Board of Directors has set the number of directors to be elected for
the upcoming year at nine and recommends the election of Messrs. Goldberg,
Stofer, Fischer, Lovness, Pass, Yanni, Hetterick, Mayo and Oakey (the
"Nominees") to hold office until the next Annual Meeting of Shareholders and
until their successors are elected and qualified. Each Nominee is presently a
director of the Company.
Unless instructed not to vote for the election of directors, the proxies
will vote to elect the Nominees. If any of the Nominees is not a candidate for
election at the meeting, which is not presently anticipated, the proxy holders
may vote for such other person or persons as they so choose. The term of office
of each existing director extends until the next annual meeting and until their
successors are duly elected and qualified.
The following information is given as of December 31, 1998 and has been
furnished to the Company by the respective individuals listed below.
<TABLE>
<CAPTION>
Principal Occupation and
Name and Age Business Experience for Past Five Years Director Since
<S> <C> <C>
Stanley Goldberg Chairman of the Board of Directors of the Company since 1997; Chief Executive Officer September 1992
Age 52 of the Company since 1993; President of the Company from 1992 to 1998. Vice President
and General Manager of Thomson, S.A., World Wide Audio Division, a defense and
electronics company, from 1990 to 1992; General Manager of Thomson S.A., Audio
Americas Operations from 1988 to 1990; Manager of Product Development for General
Electric Company, a consumer and industrial products and defense company, from 1986 to
1988. Director of Destron-Fearing Corporation and Medi-Ject Corporation.
Gordon F. Stofer +.* President of Cherry Tree Investments, Inc. and Managing General Partner of Cherry Tree December 1985
Age 51 Ventures venture capital partnerships since 1980. Chairman of the Board of Directors
of the Company from 1986 to 1997. Director of Coda Music Technology, Inc. and
Insignia Systems Incorporated.
Robert W. Fischer.* President of R.W. Fischer & Company, Inc., a corporate development and investment June 1981
Age 80 banking services company, since 1979. Director of Carleton Corporation.
Donald E. Lovness Former Senior Scientist of the Company until his retirement in December 1988. June 1965
Age 74
Franklin Pass, M.D.+ Chairman and Chief Executive Officer of Medi-Ject Corporation, a manufacturer of June 1990
Age 62 needle-free injection devices, since 1993; President of International Agricultural
Investments, Ltd., an agricultural and consulting partnership, from 1990 to 1993;
Chairman and Chief Executive Officer of Bioseeds International, Inc., an agricultural
seed company, from 1987 to 1990. Director of Medi-Ject Corporation.
Richard Mayo President of Richard Mayo and Associates, a consulting firm specializing in the lawn May 1997
Age 57 and garden industry, since 1991; President of The Chas. H. Lilly Company, a marketer
of consumer lawn and garden pesticides, fertilizers and seeds, from 1990 to 1991;
</TABLE>
- 2 -
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Executive Vice President and Chief Operating Officer of The Chas.
H. Lilly Companyfrom 1987 to 1990.
Frederick F. Yanni, President and Chief Executive Officer of Health Services Medical June 1993
Jr.+.* Corporation of Central New York, Inc., a network health maintenance
Age 56 organization, since 1976; President and Chief Executive Officer of
Health Services Association, a provider of ambulatory care, since 1972.
John F. Hetterick President and Chief Operating Officer of the Company, effective June 1993
Age 53 January 1, 1999. Independent consultant in the consumer
products industry, from 1997 to 1998; President and Chief
Executive Officer of Rollerblade, Inc., a manufacturer of in-line
skates, from 1992 to 1997; President of Tonka International, a
division of Tonka, Corporation, a toy manufacturer, from 1989
to 1991; Vice President--Marketing of Pepsi-Cola International,
a manufacturer and distributor of soft drinks, from 1986 to 1989.
Volker G. Oakey Executive Vice President and Chief Technology Officer of the December 1998
Age 58 Company, since December 1998; President and Chief Executive
Officer of Consep, Inc. ( acquired by Verdant in December
1998), a developer, marketer and manufacturer of pest control
products for the consumer and commercial markets, since 1988.
</TABLE>
- ------------------------------------
+ Member of Audit Committee
. Member of Stock Option Committee
* Member of Compensation Committee
The Board of Directors recommends that you vote FOR each Nominee.
---
Meetings of the Board of Directors and Certain Committees
During the year ended December 31, 1998, the Board of Directors met nine
times. All of the directors attended more than 75% of the aggregate of all
meetings of the Board of Directors and meetings of the committees on which they
served. The Board of Directors and its committees also act from time to time by
written consent in lieu of meetings.
The Board of Directors of the Company has standing audit, compensation and
stock option committees which have a current membership as indicated in the
foregoing section. The Board of Directors has no standing nominating committee.
The audit committee makes recommendations as to the selection of auditors
and their compensation, and reviews with the auditors the scope of the annual
audit, matters of internal control and procedure and the adequacy thereof, the
audit results and reports and other general matters relating to the Company's
accounts, records, controls and financial reporting. During 1998, the audit
committee held one meeting.
The compensation committee reviews and recommends to the Board of Directors
the compensation guidelines for executive officers and other key personnel and
the composition and levels of participation in incentive compensation plans
(other than the Company's 1986 Employee Incentive Stock Option Plan and the
Company's 1996 Incentive and Stock Option Plan), fringe benefits and retirement
benefits for all employees. During 1998, the compensation committee held one
meeting.
- 3 -
<PAGE>
The stock option committee's sole function is to administer the Company's
1986 Employee Incentive Stock Option Plan, the Company's 1996 Incentive and
Stock Option Plan and the Company's Stock Option Plan for Non-Employee
Directors. During 1998, the stock option committee held one meeting.
EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
Name Age Position
<S> <C> <C>
Stanley Goldberg 52 Chairman, Chief Executive Officer and
President
Mark G. Eisenschenk 41 Executive Vice President,
Chief Financial Officer,
Treasurer and Secretary
Volker G. Oakey 58 Executive Vice President and Chief
Technology Officer
Scott A. Glatstein 39 Vice President and General Manager -
Retail Products Division
Steven R. Hartmeier 40 Vice President and General Manager -
Commercial Products Division
William J. DeMare 54 Senior Vice President - Operations
</TABLE>
See the biographical information on Mr. Goldberg and Mr. Oakey under
"Election of Directors."
Mark G. Eisenschenk joined the Company in January 1994 as Chief Financial
Officer, Vice President of Finance, Treasurer and Secretary. From 1991 to 1994,
Mr. Eisenschenk was the Vice President and Chief Financial Officer of ECM
Publishers, Inc. From 1986 to 1991, Mr. Eisenschenk was Director of Treasury,
Taxation and Accounting at Sinclair and Valentine, formerly a unit of Allied-
Signal, Inc.
Scott A. Glatstein joined the Company in March 1998 as Vice President and
General Manager - Retail Products Division. From 1990 to 1998, Mr. Glatstein
served in several director and vice president level consumer products marketing
positions with The Pillsbury Company. Prior to that he held various consumer
marketing manager positions with General Mills, Inc. and ConAgra.
Steven R. Hartmeier joined the Company in December 1998 in connection with
the Company's acquisition of Consep, Inc. From 1992 through 1998, Mr. Hartmeier
served in several director and vice president level commercial products
marketing positions with Consep, Inc. Prior to that he served in various sales
and marketing positions with Monsanto.
William J. DeMare joined the Company in December 1997 in connection with
the Company's acquisition of Southern Resources, Inc. From 1993 through 1997,
Mr. DeMare served as President of SureCo, Inc., a wholly owned operating
subsidiary of Southern Resources, Inc. Prior to that he served as President of
Southern Mill Creek Company, a pesticide formulating company based in Tampa,
Florida.
SECTION 16(a) BENEFICIAL OWNERSHIP COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires executive
officers, directors and persons who beneficially own more than ten percent (10%)
of the Company's Common Stock to file initial reports of ownership and reports
of changes in ownership with the Securities and Exchange Commission ("SEC").
Executive officers, directors
- 4 -
<PAGE>
and greater than ten percent (10%) beneficial owners are required by SEC
regulations to furnish the Company with copies of all Section 16(a) forms they
file.
Based solely on a review of the copies of such forms furnished to the
Company and written representations from the executive officers and directors,
the Company believes that all Section 16(a) filing requirements applicable to
its executive officers and directors were complied with.
SUMMARY COMPENSATION TABLE
The following table sets forth the compensation awarded to or earned by the
Company's Chief Executive Officer and each of the Company's four most highly
compensated executive officers for the years ended December 31, 1998, 1997 and
1996.
<TABLE>
<CAPTION>
Long-Term Compensation (1)
---------------------------------------
Awards Payouts
----------------------- -----------
Annual Compensation
--------------------------- Restricted Securities Long-Term All Other
Other Com- Stock Underlying Incentive Compen-
Name and Salary Bonus pensation Awards Options Payouts sation
Principal Position Year ($) ($) ($) ($) ($) (#) ($)
- --------------------------- ---------- ----------- --------- ------- -------------- ----------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Stanley Goldberg, 1998 200,000 -- 17,890(2) -- -- 74,675(3) 73,343(3)
Chairman and Chief 1997 187,500 25,000 20,380(2) -- 315,000 51,606(3) 50,587(3)
Executive Officer 1996 178,500 20,000 13,192(2) -- -- -- --
Mark G. Eisenschenk, 1998 125,000 -- 5,046 -- 50,000 16,822(3) 14,301(3)
Executive Vice President 1997 90,938 15,000 5,474 -- 50,000 11,594(3) 9,856(3)
and Chief Financial Officer 1996 81,333 7,500 4,800 -- -- -- --
William J. DeMare, 1998 113,893 -- 4,000 -- -- -- --
Sr.Vice President 1997 7,471(4) -- -- -- -- -- --
- Operations
Scott A. Glatstein, 1998 112,981(5) 15,000 3,600 -- 110,000 -- --
Vice President and General
Manager - Retail Products
David K. Vansant, 1998 101,484 -- 800 -- -- -- --
Executive Vice President - 1997 7,659(4) -- -- -- -- -- --
Corporate Development
</TABLE>
- ----------------------------------------
(1) Mr. Goldberg held 15,000 shares of restricted stock valued at $15,938 as of
December 31, 1998.
(2) Includes compensation of $6,608, $6,929 and $4,869 in 1998, 1997 and 1996,
respectively, for automobile expense reimbursement. Includes compensation
of $4,365, $6,318 and $1,166 in 1998, 1997 and 1996, respectively, relating
to life insurance premiums paid for Mr. Goldberg. Includes $6,917,
$7,133 and $7,157, in 1998, 1997 and 1996, respectively, for disability
insurance premiums paid for Mr. Goldberg.
(3) Includes accruals for long-term incentive payouts and related accruals for
income tax reimbursements relating to Mr. Goldberg's and Mr. Eisenschenk's
employment with the Company. See "-Employment Agreements and Other
Agreements." No payouts were made to Mr. Goldberg in either 1998 or 1997.
A payout of $32,175 was made to Mr. Eisenschenk in 1998.
(4) Includes compensation beginning December 1, 1997, the effective date of
Verdant's acquisition of Southern Resources, Inc.
(5) Includes compensation beginning March 30, 1998, Mr. Glatstein's first date
of employment with the Company.
- 5 -
<PAGE>
Year End Option Values
-----------------------------------------------------
Value of
Number of Unexercised In-the-Money Options
Options at End of 1998 at End of 1998
-------------------------- --------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ----- ----------- ------------- ----------- -------------
Mr. Goldberg 208,250 106,750 $ -- $ --
Mr. Eisenschenk 56,944 43,056 -- --
Mr. Glatstein 27,500 82,500 -- --
Director Compensation
The Company pays $200 per month to its non-employee directors. Outside
directors who serve on committees of the Board are paid $500 per year. The
Company also reimburses directors for travel and related expenses to and from
Board of Directors and committee meetings which the directors attend. In 1993
the Board of Directors adopted the Stock Option Plan for Non-Employee Directors
(the "Director Plan"), which was approved by the shareholders of the Company at
the 1994 Annual Meeting. The plan provides that each non-employee director
shall receive an option to purchase 10,000 shares of Common Stock upon initial
election as a director and an option to purchase an additional 5,000 shares of
Common Stock on the first business day of each year in which he or she remains a
director, commencing October 1, 1993.
Effective May 8, 1998 each new non-employee director will be entitled to
receive an option to purchase 15,000 shares of Common Stock upon initial
election as a director and an option to purchase an additional 5,000 shares of
Common Stock on the first business day of each fiscal year in which he or she
remains a director, beginning October 1 of each year. The exercise price of all
options under the Director Plan is equal to the Common Stock's closing price on
the date of grant. Options granted under the Director Plan (i) are exercisable
in full on the date of the grant and (ii) expire five years from the date of the
grant. In the event any dividend, distribution, recapitalization, stock split,
merger, consolidation, or other event occurs that affects the Company's Common
Stock such that an adjustment is deemed appropriate to prevent dilution or
enlargement of benefits under the Director Plan, such adjustments may be made to
preserve the benefits intended under the Director Plan and such awards. Awards
granted under the Director Plan are not transferable.
Employment and Other Agreements
The Company and Stanley Goldberg entered into an Employment Agreement under
which Mr. Goldberg agreed to serve as the Chief Executive Officer of the
Company. The agreement, as amended, provides for a minimum annual base
compensation payable to Mr. Goldberg of $200,000. In addition, Mr. Goldberg is
eligible for an annual bonus of up to 40% of his base salary based on personal
and Company performance objectives established by the Company's Board of
Directors. The agreement further provides that Mr. Goldberg may be entitled to
severance pay in the event Mr. Goldberg's employment with the Company is
terminated under certain circumstances. Such severance pay is equal to (i) his
base monthly salary at the time of such termination, payable for a period of
three years following such termination and offset by any compensation received
by Mr. Goldberg after the date eighteen months following such termination from
other employment, and (ii) a lump-sum payment equal to the average bonus
received by Mr. Goldberg during the three years preceding such termination. The
Agreement further provides that if the Company sells substantially all of its
assets or a transaction occurs such that the members of the Board of Directors
at the time of the transaction do not remain on the Board of Directors after
such transaction, the Company shall pay Mr. Goldberg a sale bonus equal to (i)
300% of his annual base salary and (ii) the average bonus paid to Mr. Goldberg
for the three years immediately preceding such transaction.
The Company and Mark G. Eisenschenk also entered into an Employment
Agreement under which Mr. Eisenschenk agreed to serve as the Executive Vice
President and Chief Financial Officer of the Company. The
- 6 -
<PAGE>
agreement provides for a minimum annual base compensation payable to Mr.
Eisenschenk of $125,000. In addition, Mr. Eisenschenk is eligible for an annual
bonus of up to 30% of his base salary based on personal and Company performance
objectives established by the Company's Board of Directors. The agreement
further provides that Mr. Eisenschenk may be entitled to severance pay in the
event Mr. Eisenschenk's employment with the Company is terminated under certain
circumstances. Such severance pay is equal to (i) his base monthly salary at the
time of such termination, payable for a period of twelve months following such
termination and offset by any compensation received by Mr. Eisenschenk after the
date six months following such termination from other employment, and (ii) a
lump sum payment equal to the average bonus received by Mr. Eisenschenk during
the three years preceding such termination. The agreement further provides that
if the Company sells substantially all of its assets or a transaction occurs
such that the members of the Board of Directors at the time of the transaction
do not remain on the Board of Directors after such transaction, the Company
shall pay Mr. Eisenschenk a sale bonus equal to (i) 100% of his annual base
salary and (ii) the average bonus paid to Mr. Eisenschenk for the three years
immediately preceding such transaction.
In exchange for full-recourse promissory notes and the cancellation of
certain incentive stock options, in April 1997, Mr. Goldberg and Mr. Eisenschenk
purchased 150,000 and 50,000 shares respectively of the Company's unregistered,
restricted Common Stock for a combined purchase price of $262,500. The
promissory notes are secured by the stock purchased. Under certain
circumstances, as a means of providing a long-term incentive to Mr. Goldberg and
Mr. Eisenschenk, the Company may provide bonuses to the two executives
sufficient to pay the annual debt service requirements of the promissory notes,
which have terms of three and five years, and reimburse the executives for
income tax consequences of such bonuses. The Company made no such payments to
Mr. Goldberg in either 1998 or 1997. The Company made a payment to Mr.
Eisenschenk of $32,175 in 1998 and no payments to him in 1997.
Stock Option Plans
In 1986, the Board of Directors and the Shareholders of the Company
approved the 1986 Employee Incentive Stock Option Plan (the "1986 Plan") which
expired on September 17, 1996. As of December 31, 1998, 645,451 shares of
Common Stock were subject to outstanding options at a weighted exercise price of
$1.3125 per share of which options to purchase 517,502 shares were exercisable
as of such date. As of December 31, 1998, a total of twenty employees held
options under the 1986 Plan.
In 1996, the Board of Directors adopted, and in 1997 the shareholders
approved, the Verdant Brands, Inc. 1996 Incentive and Stock Option Plan (the
"1996 Plan"). As of December 31, 1998, 212,500 shares of Common Stock were
subject to outstanding options under the 1996 Plan at a weighted average
exercise price of $1.5066 per share, of which options to purchase 65,939 shares
were exercisable as of such date. As of December 31, 1998, a total of twenty-
six employees held options under the 1996 Plan.
In connection with the Company's acquisition of Consep, Inc., and under
terms of the Agreement and Plan of Merger by and between the Company and Consep,
Inc. (the "Merger Agreement"), which was approved by Shareholders of the Company
and of Consep at Special Meetings of Shareholders on December 7, 1998, the
Company agreed to continue to honor the general terms of Consep's outstanding
stock option agreements. The Merger Agreement specified that the Consep's stock
option agreements would be reissued under the same original terms, except that
they would be exercisable for Verdant Common Stock instead of Consep common
stock in amounts equal to 95% of the number of shares as to which options were
originally granted by Consep and at exercise prices equal to the exercise prices
of the Consep options divided by 0.95.
As of December 31, 1998, 622,843 shares of Consep common stock were subject
to outstanding options under the Consep plans at a weighted average exercise
price of $2.22 per share, of which 482,563 shares were exercisable as of that
date. The Company is in the process of converting the Consep stock options to
Verdant stock options. Had that conversion been completed as of December 31,
1998, 591,700 shares of Verdant Common Stock would have been subject to
outstanding options at a weighted average exercise price of $2.33 per share, of
which 458,434 shares would have been exercisable as of that date. As of
December 31, 1998, fifty-two Consep employees held Consep stock options.
- 7 -
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT AND OTHERS
The following table sets forth certain information as of December 31, 1998,
with respect to the beneficial ownership of the Company's Common Stock by (i)
all persons known by the Company to be the beneficial owners of more than 5% of
its outstanding shares, (ii) all directors and nominees for election as
directors, (iii) the executive officers named in the executive compensation
table and (iv) all officers and directors as a group. Unless noted below, the
address of each of the following shareholders is the same as the Company. Such
information is based upon information furnished by each owner, including, where
applicable, information furnished in a Schedule 13G or 13F filed by such owner
with the Securities and Exchange Commission. Percentages are based upon the
number of shares of Verdant Brands, Inc. Common Stock outstanding as of December
31, 1998 plus, where applicable, the number of shares that the indicated person
and group had a right to acquire within 60 days of such date.
Name and Address Amount and Nature of Percent
of Beneficial Owner Beneficial Ownership(1) of Class
Heartland Advisors, Inc.
790 North Milwaukee Street
Milwaukee, WI 53202 1,311,000 5.1%
David K. Vansant 1,125,000 4.2%
William J. DeMare 1,125,000 4.2%
Volker G. Oakey 487,487 1.8%
Stanley Goldberg 397,645 1.5%
Robert W. Fischer 112,001 *
Mark G. Eisenschenk 111,722 *
Patrick J. McGinnity, Ph.D. 72,750 *
Steven R. Hartmeier 64,836 *
Michael R. Goblet 56,660 *
John F. Hetterick 40,000 *
Donald E. Lovness 35,550 *
Scott A. Glatstein 33,611 *
Frederick F. Yanni, Jr. 28,300 *
Richard Mayo 30,000 *
Franklin Pass, M.D. 25,000 *
Gordon F. Stofer 17,648 *
Officers and directors as
a group (16 persons) (1) 3,763,210 14.1%
- --------------------------
- 8 -
<PAGE>
* Less than one percent
(1) The share amounts indicated in the above table include the following:
(i) Shares which may be acquired by exercising stock options as of December
31, 1998 or within 60 days thereafter: Stanley Goldberg, options to purchase
223,630 shares of Common Stock; Mark G. Eisenschenk, options to purchase 59,722
shares; Michael R. Goblet, options to purchase 50,750 shares; Patrick J.
McGinnity, Ph.D., options to purchase 72,750 shares; Scott A. Glatstein, options
to purchase 33,611 shares; Steven R. Hartmeier, options to purchase 45,836
shares; and for Volker G. Oakey, options to purchase 189,637 shares.
(ii) Shares which may be acquired by exercising stock options under the
Director Plan as of December 31, 1998 or within 60 days thereafter: Robert W.
Fischer, options to purchase 25,000 shares; Donald E. Lovness, options to
purchase 25,000 shares; Franklin Pass, M.D., options to purchase 25,000 shares;
Frederick F. Yanni, Jr., options to purchase 25,000 shares; John F. Hetterick,
options to purchase 25,000 shares; Gordon F. Stofer, options to purchase 5,000
shares; and for Richard Mayo, options to purchase 20,000 shares and warrants to
purchase 5,000 shares.
(iii) For all officers and directors as a group, options and warrants to
purchase 830,936 shares of Common Stock which are exercisable within 60 days.
PROPOSAL TWO
------------
RATIFICATION OF INDEPENDENT AUDITORS
The Board of Directors has appointed Deloitte & Touche as the Company's
independent auditors for the year ending December 31, 1999 and recommends that
the Shareholders ratify that appointment. Deloitte & Touche has served as the
Company's independent auditors for the fiscal years ended September 30, 1989
through 1997, the three month period ended December 31, 1997 and the year ended
December 31, 1998. Deloitte & Touche has no relationship with the Company other
than that arising from its employment as independent auditors. Representatives
of Deloitte & Touche will be present at the Annual Meeting. They will have an
opportunity to make a statement if they desire to do so and will be available to
respond to appropriate questions from Shareholders.
The Board of Directors recommends you vote FOR Proposal Two.
---
PROPOSAL THREE
--------------
TO APPROVE AN AMENDMENT TO INCREASE THE NUMBER OF SHARES OF COMMON STOCK
RESERVED FOR ISSUANCE PURSUANT TO THE COMPANY'S 1996 EMPLOYEE INCENTIVE STOCK
OPTION PLAN BY 750,000.
In 1996, the Board of Directors adopted the 1996 Employee Incentive Stock
Option Plan (the "Plan"), which was approved by the shareholders of the Company
at the 1997 Annual Meeting. The purpose of the Plan is to promote the interests
of the Company and its shareholders by aiding the Company in attracting and
retaining employees capable of contributing to the growth and success of the
Company, and by offering such employees an opportunity to acquire a proprietary
interest in the Company, thereby providing them with incentives to put forth
maximum efforts for the success of the Company's business and aligning the
interests of such employees with those of the Company's shareholders.
At the time the Company's shareholders approved the Plan, 500,000 shares of
Common Stock were reserved for issuance under the Plan. The Company continues
to recruit key personnel and believes that stock options or other grants under
the Plan are an important element in attracting highly skilled and qualified
individuals. In light of the 300% to 400% growth in the number of Company
employees since the Plan was put in place, at a meeting of the Board of
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Directors on March 18, 1999, the Board of Directors adopted an amendment to the
Plan increasing the number of shares of Common Stock reserved for issuance
thereunder from 500,000 shares to 1,250,000 shares. A description of the Plan
is set forth below.
The Plan is administered by a committee of the Board of Directors (the
"Committee"). The Committee has discretion to select the recipients of options
and awards, establish and amend the terms and conditions of each option and
award (subject to the provisions of the Plan and the applicable provisions of
the Internal Revenue Code), interpret and administer the Plan, and establish
Plan rules. Full and part-time employees, members of the Board of Directors,
consultants and independent contractors providing valuable services to the
Company or any affiliate of the Company are eligible to receive options and
awards under the Plan. Options and awards granted under the plan are
nontransferable except by will or by the laws of descent and distribution, and
are subject to various other conditions and restrictions.
The Plan provides for the granting of both incentive stock options intended
to qualify for preferential treatment under Section 422 of the Internal Revenue
Code of 1986, as amended ("incentive options"), and nonqualified options that do
not qualify for such treatment ("non-statutory options"). The option price of
an incentive option granted under the Plan must not be less than the fair market
value of the Company's Common Stock on the date of the grant, and the term of an
incentive option must not exceed ten years. For an incentive option granted
under the Plan to an optionee who owns capital stock representing more than 10%
of the voting rights of the capital stock of the Company and its subsidiaries,
however, the option price must be at least 110% of the fair market value of the
Company's Common Stock on the date of the grant, and the term must not exceed
five years. The Committee may permit grantees of options, subject to such terms
and conditions as it may impose, to surrender shares of Common Stock (either
shares received upon the exercise of the option or otherwise owned by the
optionee) to the Company in payment of the exercise price of the option or to
satisfy federal and state tax obligations incurred in connection with the
exercise.
The Plan also provides for restricted stock awards. At the time of an
award of restricted stock under the Plan, a restricted period is established for
each participant. During the restricted period, the restricted stock may not be
transferred, encumbered or sold unless the Committee may otherwise determine.
The participant, as owner of such shares, will have the rights of a stockholder,
including the right to receive cash dividends and to vote.
The Committee has the discretion, at the time of grant of any award under
the Plan or thereafter, to approve the payment of cash bonuses to any grantee,
to be paid upon the time of exercise of an option or receipt of another award,
in amounts necessary to fund all or part of the federal or state taxes due as
the result of the exercise or receipt.
The grant of an option under the Plan will result in no tax consequences
for the recipient or the Company or any subsidiary employing such individual
(the "employer"). The holder of an incentive stock option generally will have
no taxable income upon exercising the incentive stock option (except that the
alternative minimum tax may apply), and the employer generally will receive no
tax deduction when an incentive stock option is exercised. Upon exercise of a
stock option other than an incentive stock option, the optionee must recognize
ordinary income equal to the excess of the fair market value of the shares
acquired on the date of exercise over the option price, and the employer will
then be entitled to a tax deduction for the same amount. The tax consequences
to an optionee of a disposition of shares acquired through the exercise of an
option will depend on how long the shares have been held and upon whether such
shares were acquired by exercising an incentive stock option or non-statutory
stock option. Generally, there will be no tax consequence to the employer in
connection with a disposition of shares acquired under an option except that the
employer may be entitled to a tax deduction in the case of a disposition of
shares acquired under an incentive stock option before the applicable incentive
stock option holding period has been satisfied.
With respect to other awards granted under the Plan that are settled either
in cash, shares or other property that is either transferable or not subject to
a substantial risk of forfeiture, the holder of an award must recognize ordinary
income equal to the excess of (a) the cash or the fair market value of the
shares or other property received (determined as of the date of such settlement)
over (b) the amount (if any) paid for such shares or other property by the
holder of the award, and the employer will then be entitled to a deduction for
the same amount. With respect to awards that are settled in shares or other
property that is restricted as to transferability and subject to a substantial
risk of forfeiture, unless a special tax election is made to recognize ordinary
income upon receipt of the awards, the holder of the award must recognize
ordinary income equal to the excess of (i) the fair market value of the shares
or other property received
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(determined as of the first time the shares or other property become
transferable or not subject to a substantial risk of forfeiture, whichever
occurs earlier) over (ii) the amount (if any) paid by the participant for such
shares or other property, and the employer will then be entitled to a deduction
for the same amount.
Special rules apply in the case of individuals subject to Section 16(b) of
the Securities Exchange Act of 1934. In particular, under current law, shares
received pursuant to the exercise of a stock option, other purchase right, or
SAR may be treated as restricted as to transferability and subject to a
substantial risk of forfeiture for a period of up to six months after the date
of exercise. Accordingly, unless a special tax election is made, the amount of
ordinary income recognized and the amount of the employer's deduction may be
determined as of such date.
As of December 31, 1998, 287,450 shares of Common Stock remain available
for future awards under the Plan. The Board of Directors believes that that is
an inadequate number of shares if the Company is to continue to attract, retain
and motivate qualified employees, and has therefore adopted the proposal to
increase the total number of shares available under the Plan by 750,000 shares,
to 1,250,000 shares, subject to Shareholder approval.
The Board of Directors recommends a vote FOR Proposal Three.
---
PROPOSALS FOR THE NEXT ANNUAL MEETING
Any proposal by a shareholder to be presented at the next annual meeting
must be received at the Company's principal executive offices, 9555 James Avenue
South, Suite 200, Bloomington, Minnesota 55431, not later than March 16, 2000 in
order for such proposal to be included in the Company's proxy materials relating
to the year ending December 31, 1999.
By Order of the Board of Directors,
/s/ Mark G. Eisenschenk
Mark G. Eisenschenk
Secretary
Dated: April 16, 1999
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APPENDIX A
VERDANT BRANDS, INC.
1996 INCENTIVE AND STOCK OPTION PLAN
Section 1. Purpose.
The purpose of this 1996 Incentive and Stock Option Plan (the "Plan") is to
promote the interests of Ringer Corporation (the "Company") and its shareholders
by aiding the Company in attracting and retaining employees and directors
capable of contributing to the growth and success of, and providing strategic
direction to, the Company, and by offering such employees and directors an
opportunity to acquire a proprietary interest in the Company, thereby providing
them with incentives to put forth maximum efforts for the success of the
Company's business and aligning the interests of such employees and directors
with those of the Company's shareholders.
Section 2. Definitions.
As used in the Plan, the following terms shall have the meanings set forth
below:
(a) "Affiliate" shall mean (i) any entity that, directly or indirectly
through one or more intermediaries, is controlled by the Company and (ii) any
entity in which the Company has a significant equity interest, in each case as
determined by the Committee.
(b) "Award" shall mean any Option, Restricted Stock or other award
granted under the Plan.
(c) "Award Agreement" shall mean any written agreement, contract or
other instrument or document evidencing any Award granted under the Plan.
(d) "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and any regulations promulgated thereunder.
(e) "Committee" shall mean a committee of the Board of Directors of the
Company designated by such Board to administer the Plan, which shall consist of
members appointed from time to time by the Board of Directors and shall be
composed solely of two or more "non-employee directors" within the meaning of
Rule 16b-3, each of whom is an "outside director" within the meaning of Section
162(m) of the Code to the extent required by such Section.
(f) "Company" shall mean Ringer Corporation, a Minnesota corporation,
and any successor corporation.
(g) "Eligible Person" shall mean any employee, officer, director,
consultant or independent contractor providing services to the Company or any
Affiliate.
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(h) "Exchange Act" shall mean the Securities and Exchange Act of 1934,
as amended.
(i) "Fair Market Value" shall mean, with respect to any property
(including, without limitation, any Shares or other securities), the fair market
value of such property determined by such methods or procedures as the Committee
shall establish in good faith from time to time. Where there is a public market
for the Shares, the fair market value per Share on a given date shall be the
closing price of a Share in the over-the-counter market on such date, as
reported in The Wall Street Journal (or, if not so reported, as otherwise
reported by The Nasdaq Stock Market ("Nasdaq")) or, in the event the Shares are
traded on the Nasdaq National Market ("NMS") or listed on a stock exchange, the
fair market value per Share shall be the closing price on such system or
exchange on such date, as reported in The Wall Street Journal; if such market or
exchange is not open for trading on such date, the Fair Market Value shall be
determined as of the day closest to such date when such market or exchange is
open for trading.
(j) "Incentive Stock Option" shall mean an option granted under Section
6(a) of the Plan that is intended to meet the requirements of Section 422 of the
Code or any successor provision.
(k) "Non-Qualified Stock Option" shall mean an option granted under
Section 6(a) of the Plan that is not intended to be an Incentive Stock Option.
(l) "Option" shall mean an Incentive Stock Option or a Non-Qualified
Stock Option, and shall include Reload Options.
(m) "Other Stock Grant" shall mean any right granted under Section 6(c)
of the Plan.
(n) "Participant" shall mean an Eligible Person whom the Committee
designates to receive an Award under the Plan.
(o) "Person" shall mean any individual, corporation, partnership,
association or trust.
(p) "Restricted Stock" shall mean any Share granted under Section 6(c)
of the Plan.
(q) "Rule 16b-3" shall mean Rule 16b-3 promulgated by the Securities and
Exchange Commission under the Exchange Act or any successor rule or regulation.
(r) "Shares" shall mean shares of Common Stock, $.01 par value, of the
Company or such other securities or property as may become subject to Awards
pursuant to an adjustment made under Section 4(c) of the Plan.
Section 3. Administration.
(a) Power and Authority of the Committee. The Plan shall be administered
by the Committee. Subject to the express provisions of the Plan and to
applicable law, the Committee shall have full power and authority to: (i)
designate Participants; (ii) determine the type or types of Awards to be granted
to each Participant under the Plan; (iii) determine the number of Shares to be
covered by each Award; (iv) determine the terms and conditions of any Award or
Award Agreement;
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(v) amend the terms and conditions of any Award or Award Agreement and
accelerate the exercisability of Options or the lapse of restrictions relating
to Restricted Stock; (vi) interpret and administer the Plan and any instrument
or agreement relating to, or Award made under, the Plan; (vii) establish, amend,
suspend or waive such rules and regulations and appoint such agents as it shall
deem appropriate for the proper administration of the Plan; and (viii) make any
other determination and take any other action that the Committee deems necessary
or desirable for the administration of the Plan. Unless otherwise expressly
provided in the Plan, all designations, determinations, interpretations and
other decisions under or with respect to the Plan or any Award shall be within
the sole discretion of the Committee, may be made at any time and shall be
final, conclusive and binding upon any Participant, any holder or beneficiary of
any Award and any employee of the Company or any Affiliate.
(b) Delegation. The Committee may delegate its powers and duties under
the Plan to one or more officers of the Company or any Affiliate or a committee
of such officers, subject to such terms, conditions and limitations as the
Committee may establish in its sole discretion; provided, however, that the
Committee shall not delegate its powers and duties under the Plan (i) with
regard to officers or directors of the Company or any Affiliate who are subject
to Section 16 of the Exchange Act or (ii) in such a manner as would cause the
Plan not to comply with the requirements of Section 162(m) of the Code to the
extent required by such Section.
(c) Power and Authority of the Board of Directors. Notwithstanding
anything to the contrary contained herein, the Board of Directors may, at any
time and from time to time, without any further action of the Committee,
exercise the powers and duties of the Committee under the Plan.
Section 4. Shares Available for Awards.
(a) Shares Available. Subject to adjustment as provided in Section 4(c),
the aggregate number of Shares which may be issued under all Awards under the
Plan shall be 500,000. Shares to be issued under the Plan shall be authorized
but previously unissued Shares. If any Shares covered by an Award or to which an
Award relates are not purchased or are forfeited, or if an Award otherwise
terminates without delivery of any Shares, then the number of Shares counted
against the aggregate number of Shares available under the Plan with respect to
such Award, to the extent of any such forfeiture or termination, shall again be
available for granting Awards under the Plan.
(b) Accounting for Awards. For purposes of this Section 4, if an Award
entitles the holder thereof to receive or purchase Shares, the number of Shares
covered by such Award or to which such Award relates shall be counted on the
date of grant of such Award against the aggregate number of Shares available for
granting Awards under the Plan.
(c) Adjustments. In the event that the Committee shall determine that
any dividend or other distribution (whether in the form of cash, Shares, other
securities or other property), recapitalization, stock split, reverse stock
split, reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase or exchange of Shares or other securities of the Company, issuance of
warrants or other rights to purchase Shares or other securities of the Company
or other similar corporate transaction or event affects the Shares such that an
adjustment is determined by the
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Committee to be appropriate in order to prevent dilution or enlargement of the
benefits or potential benefits intended to be made available under the Plan,
then the Committee shall, in such manner as it may deem equitable, adjust any or
all of (i) the number and type of Shares (or other securities or other property)
which thereafter may be made the subject of Awards, (ii) the number and type of
Shares (or other securities or other property) subject to outstanding Awards and
(iii) the purchase or exercise price with respect to any Award; provided,
however, that the number of Shares covered by any Award or to which such Award
relates shall always be a whole number.
Section 5. Eligibility.
Any Eligible Person, including any Eligible Person who is an officer or
director of the Company or any Affiliate, shall be eligible to be designated a
Participant. In determining which Eligible Persons shall receive an Award and
the terms of any Award, the Committee may take into account the nature of the
services rendered by the respective Eligible Persons, their present and
potential contributions to the success of the Company or such other factors as
the Committee, in its discretion, shall deem relevant. Notwithstanding the
foregoing, an Incentive Stock Option may only be granted to full or part-time
employees (which term as used herein includes, without limitation, officers and
directors who are also employees), and an Incentive Stock Option shall not be
granted to an employee of an Affiliate unless such Affiliate is also a
"subsidiary corporation" of the Company within the meaning of Section 424(f) of
the Code or any successor provision.
Section 6. Awards.
(a) Options. The Committee is hereby authorized to grant Options to
Participants with the following terms and conditions and with such additional
terms and conditions not inconsistent with the provisions of the Plan as the
Committee shall determine:
(i) Exercise Price. The purchase price per Share purchasable
under an Option shall be determined by the Committee; provided,
however, that the purchase price per Share purchasable under an Option
shall not be less than 100% of the Fair Market Value of a Share on the
date of grant of such Option.
(ii) Option Term. The term of each Option shall be fixed by the
Committee; provided, however, that the term of an Incentive Stock
Option may not extend more than ten years from the date of grant of
such Incentive Stock Option.
(iii) Time and Method of Exercise. The Committee shall
determine the time or times at which an Option may be exercised in
whole or in part and the method or methods by which, and the form or
forms (including, without limitation, cash, Shares, other securities
or other property, or any combination thereof, having a Fair Market
Value on the exercise date equal to the relevant exercise price) in
which, payment of the exercise price with respect thereto may be made
or deemed to have been made.
(iv) Certain Options to be Treated as Non-Qualified Stock
Options. If the aggregate Fair Market Value of all Shares subject to
Incentive Stock Options granted
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to a Participant under all plans of the Company and its parent and
subsidiary corporations (as described in Section 422(d) of the Code)
that are exercisable for the first time during any calendar year
exceeds $100,000 at the time an Option is granted to such Participant,
then such Option shall be treated as an Option that does not qualify
as an Incentive Stock Option.
(v) Ten Percent Shareholder Rule. Notwithstanding any other
provision in the Plan, if at the time an Option is otherwise to be
granted pursuant to the Plan to a Participant who owns, directly or
indirectly (within the meaning of Section 424(d) of the Code), Common
Stock of the Company possessing more than 10% of the total combined
voting power of all classes of stock of the Company or its parent or
any subsidiary, then any Incentive Stock Option to be granted to such
Participant pursuant to the Plan shall satisfy the requirements of
Section 422(c)(5) of the Code, and the exercise price of such Option
shall be not less than 110% of the Fair Market Value of the Shares
covered, and such Option by its terms shall not be exercisable after
the expiration of five years from the date such Option is granted.
(vi) Option Limitations Under the Plan For Purposes of Section
162(m). No Eligible Person who is an employee of the Company at the
time of grant may be granted any Option, the value of which is based
solely on an increase in the value of the Shares after the date of
grant of such Option, covering more than 500,000 Shares in the
aggregate in any calendar year. The foregoing annual limitation
specifically includes the grant of any Option representing "qualified
performance-based compensation" within the meaning of Section 162(m)
of the Code to the extent required by such Section.
(b) Restricted Stock. The Committee is hereby authorized to grant Awards
of Restricted Stock to Participants with the following terms and conditions and
with such additional terms and conditions not inconsistent with the provisions
of the Plan as the Committee shall determine:
(i) Restrictions. Shares of Restricted Stock shall be subject to
such restrictions as the Committee may impose (including, without
limitation, any limitation on the right to vote a Share of Restricted Stock
or on the right to receive any dividend or other right or property with
respect thereto), which restrictions may lapse separately or in
combination, at such time or times, in such installments or otherwise as
the Committee may deem appropriate.
(ii) Stock Certificates. Any Restricted Stock granted under the Plan
shall be evidenced by issuance of a stock certificate or certificates,
which certificate or certificates shall be held by the Company. Such
certificate or certificates shall be registered in the name of the
Participant and shall bear an appropriate legend referring to the terms,
conditions and restrictions applicable to such Restricted Stock.
(iii) Forfeiture; Delivery of Shares. Except as otherwise
determined by the Committee, upon termination of employment (as determined
under criteria established by
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the Committee) during the applicable restriction period, all Shares of
Restricted Stock at such time subject to restriction shall be forfeited and
become authroized but unissued Shares; provided, however, that the
Committee, when it finds that a waiver would be in the best interests of
the Company, may waive in whole or in part any or all remaining
restrictions with respect to Shares of Restricted Stock. Any Share
representing Restricted Stock that is no longer subject to restrictions
shall be delivered to the holder thereof promptly after the applicable
restrictions lapse or are waived.
(c) Other Stock Grants. The Committee is hereby authorized, subject to
the terms of the Plan and any applicable Award Agreement, to grant to
Participants Shares without restrictions thereon as are deemed by the Committee
to be consistent with the purpose of the Plan; provided, however, that such
grants must comply with Rule 16b-3 and applicable law.
(d) General.
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(i) No Cash Consideration for Awards. Awards shall be granted for
no cash consideration or for such minimal cash consideration as may be
required by applicable law.
(ii) Grant of Additional Awards. An Eligible Person who has been
granted an Award under this Plan may be granted additional Awards under the
Plan if the Committee shall so determine.
(iii) Forms of Payment under Awards. Subject to the terms of the
Plan and of any applicable Award Agreement, payments or transfers to be
made by the Company or an Affiliate upon the grant, exercise or payment of
an Award may be made in such form or forms as the Committee shall determine
(including, without limitation, cash, Shares, other securities or other
property or any combination thereof), and may be made in a single payment
or transfer, in installments or on a deferred basis, in each case in
accordance with rules and procedures established by the Committee.
(iv) Limits on Transfer of Awards. No Award (other than Other Stock
Grants) and no right under any such Award shall be transferable by a
Participant otherwise than by will or by the laws of descent and
distribution. No Award or right under any such Award may be pledged,
alienated, attached or otherwise encumbered, and any purported pledge,
alienation, attachment or encumbrance thereof shall be void and
unenforceable against the Company or any Affiliate.
(v) Term of Awards. The term of each Award shall be for such period
as may be determined by the Committee and the Committee shall be under no
duty to provide terms of like duration for Awards granted under the Plan.
(vi) Restrictions; Securities Exchange Listing. All certificates for
Shares or other securities delivered under the Plan pursuant to any Award
or the exercise thereof shall be subject to such stop transfer orders and
other restrictions as the Committee may deem advisable under the Plan or
the rules, regulations and other requirements of the Securities and
Exchange Commission and any applicable federal or state securities laws,
and the Committee
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may cause a legend or legends to be placed on any such certificates to make
appropriate reference to such restrictions. If the Shares or other
securities are quoted on Nasdaq, traded on NMS or listed on a stock
exchange, the Company shall not be required to deliver any Shares or other
securities covered by an Award unless and until such Shares or other
securities have been admitted for quotation or trading on NMS or such stock
exchange.
Section 7. Income Tax Withholding; Tax Bonuses.
(a) Withholding. In order to comply with all applicable federal or state
income tax laws or regulations, the Company may take such action as it deems
appropriate to ensure that all applicable federal or state payroll, withholding,
income or other taxes, all of which are and shall remain the sole and absolute
responsibility of a Participant, are withheld or collected from such
Participant. In order to assist a Participant in paying all or a portion of the
federal and state taxes to be withheld or collected upon exercise or receipt of
(or the lapse of restrictions relating to) an Award, the Committee, in its
discretion and subject to such additional terms and conditions as it may adopt,
may permit the Participant to satisfy such tax obligation by (i) electing to
have the Company withhold a portion of the Shares otherwise to be delivered upon
exercise or receipt of (or the lapse of restrictions relating to) such Award
with a Fair Market Value equal to the amount of such taxes or (ii) delivering to
the Company Shares other than Shares issuable upon exercise or receipt of (or
the lapse of restrictions relating to) such Award with a Fair Market Value equal
to the amount of such taxes. The election, if any, must be made on or before the
date that the amount of tax to be withheld is determined.
(b) Tax Bonuses. The Committee, in its discretion, shall have the
authority, at the time of grant of any Award under this Plan or at any time
thereafter, to approve cash bonuses to designated Participants to be paid upon
their exercise or receipt of (or the lapse of restrictions relating to) Awards
in order to provide funds to pay all or a portion of the federal and state taxes
due as a result of such exercise or receipt (or the lapse of such restrictions).
The Committee shall have full authority in its discretion to determine the
amount of any such tax bonus.
Section 8. General Provisions.
(a) No Rights to Awards. No Eligible Person, Participant or other Person
shall have any claim to be granted any Award under the Plan, and there is no
obligation for uniformity of treatment of Eligible Persons, Participants or
holders or beneficiaries of Awards under the Plan. The terms and conditions of
Awards need not be the same with respect to any Participant or with respect to
different Participants.
(b) Award Agreements. No Participant will have rights under an Award
granted to such Participant unless and until an Award Agreement shall have been
duly executed on behalf of the Company and, if requested by the Company, signed
by the Participant.
(c) No Limit on Other Compensation Arrangements. Nothing contained in
the Plan shall prevent the Company or any Affiliate from adopting or continuing
in effect other or additional compensation arrangements, and such arrangements
may be either generally applicable or applicable only in specific cases.
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(d) No Right to Employment. The grant of an Award shall not be construed
as giving a Participant the right to be retained as an employee or director of
the Company or any Affiliate, nor will it affect in any way the right of the
Company or an Affiliate to terminate such employment or directorship at any
time, with or without cause. In addition, the Company or an Affiliate may at any
time dismiss a Participant from employment or directorship free from any
liability or any claim under the Plan, except as otherwise expressly provided in
the Plan or in any Award Agreement.
(e) Governing Law. The validity, construction and effect of the Plan or
of any Award, and any rules and regulations relating to the Plan or any Award,
shall be determined in accordance with the laws of the State of Minnesota.
(f) Severability. If any provision of the Plan or any Award is or
becomes or is deemed to be invalid, illegal or unenforceable in any jurisdiction
or would disqualify the Plan or any Award under any law deemed applicable by the
Committee or the Board of Directors, such provision shall be construed or deemed
amended to conform to applicable law, or if it cannot be so construed or deemed
amended without, in the determination of the Committee or the Board of
Directors, materially altering the purpose or intent of the Plan or the Award,
such provision shall be stricken as to such jurisdiction or Award, and the
remainder of the Plan or any such Award shall remain in full force and effect.
(g) No Trust or Fund Created. Neither the Plan nor any Award shall
create or be construed to create a trust or separate fund of any kind or a
fiduciary relationship between the Company or any Affiliate and a Participant or
any other Person. To the extent that any Person acquires a right to receive
payments from the Company or any Affiliate pursuant to an Award, such right
shall be no greater than the right of any unsecured general creditor of the
Company or any Affiliate.
(h) No Fractional Shares. No fractional Shares shall be issued or
delivered pursuant to the Plan or any Award, and the Committee shall determine
whether cash shall be paid in lieu of any fractional Shares or whether such
fractional Shares or any rights thereto shall be canceled, terminated or
otherwise eliminated.
(i) Headings. Headings are given to the Sections and subsections of the
Plan solely as a convenience to facilitate reference. Such headings shall not
be deemed in any way material or relevant to the construction or interpretation
of the Plan or any provision thereof.
(j) Other Benefits. No compensation or benefit awarded to or realized by
any Participant under the Plan shall be included for the purpose of computing
such Participant's compensation under any compensation-based retirement,
disability, or similar plan of the Company unless required by law or otherwise
provided by such other plan.
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Section 9. Amendment and Termination; Adjustments.
Except to the extent prohibited by applicable law and unless otherwise
expressly provided in an Award Agreement or in the Plan:
(a) Amendments to the Plan. The Board of Directors of the Company may
amend, alter, suspend, discontinue or terminate the Plan; provided, however,
that, notwithstanding any other provision of the Plan or any Award Agreement,
without the approval of the shareholders of the Company, no such amendment,
alteration, suspension, discontinuation or termination shall be made that,
absent such approval, would:
(i) violate the rules or regulations of Nasdaq, NMS or any stock
exchange that are applicable to the Company; or
(ii) cause the Company to be unable, under the Code, to grant
Incentive Stock Options under the Plan.
(b) Amendments to Awards. The Committee may waive any conditions or
rights of the Company under any outstanding Award, prospectively or
retroactively. The Committee may not amend, alter, suspend, discontinue or
terminate any outstanding Award, prospectively or retroactively, without the
consent of the Participant or holder or beneficiary thereof, except as otherwise
provided herein or in the Award Agreement.
(c) Correction of Defects, Omissions and Inconsistencies. The Committee
may correct any defect, supply any omission or reconcile any inconsistency in
the Plan or any Award in the manner and to the extent it shall deem desirable to
carry the Plan into effect.
Section 10. Effective Date; Term.
(a) Effective Date. The Plan shall be effective as of November 25, 1996
(the "Effective Date"); provided, however, that if the Company's shareholders do
not approve the Plan at the next meeting of Shareholders, the Plan shall be null
and void and all Awards granted prior to the date of such Special Meeting shall
be of no force or effect.
(b) Term. Awards shall be granted under the Plan only during a 10-year
period beginning on the Effective Date. Unless otherwise expressly provided in
the Plan or in an applicable Award Agreement, however, any Award theretofore
granted may extend beyond the end of such 10-year period, and the authority of
the Committee provided for hereunder with respect to the Plan and any Awards,
and the authority of the Board of Directors of the Company to amend the Plan,
shall extend beyond the termination of the Plan.
________________
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<PAGE>
PROXY
Verdant Brands, Inc.
9555 James Avenue South, Suite 200
Bloomington, Minnesota 55431
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, having duly received the Notice of Annual Meeting and
Proxy Statement dated April 16, 1999 appoints Stanley Goldberg and Mark
Eisenschenk proxies (each with the power to act alone and with the power of
substitution and revocation), to represent the undersigned and to vote, as
designed below, all shares of Common Stock of Verdant Brands, Inc. which the
undersigned is entitled to vote at the Annual Meeting of Shareholders of Verdant
Brands, Inc. to be held on Tuesday, May 25, 1999 at the offices of Verdant at
9555 James Avenue South, Suite 200, Bloomington, Minnesota 55431 at 3:30 p.m.
local time. Each of the matters set forth below has been proposed by the
Company.
1. ELECTION OF DIRECTORS
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY to vote for
(except as marked to the
contrary below) all nominees
listed below
(Instruction: To withhold authority for any individual nominee, strike a line
through the nominee's name in the list below.)
Stanley Goldberg, Gordon F. Stofer, Robert W. Fischer, Donald E. Lovness,
Franklin Pass, Frederick F. Yanni, Jr., John F. Hetterick, Richard Mayo
and Volker G. Oakey
2. RATIFICATION OF INDEPENDENT AUDITORS
[ ] FOR the ratification of Deloitte & Touche as the Company's independent
auditors for the year ending December 31, 1999
[ ] WITHHOLD AUTHORITY to vote for the ratification of Deloitte & Touche
as the Company's independent auditors for the year ending
December 31, 1999
3. PROPOSAL TO APPROVE INCREASING THE NUMBER OF SHARES OF COMMON STOCK
AVAILABLE FOR ISSUANCE UNDER THE COMPANY'S 1996 INCENTIVE STOCK OPTION
PLAN BY 750,000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
This Proxy, when properly executed, will be voted in the manner directed
herein by the undersigned shareholder. If no direction is made, this Proxy
will be voted FOR all of the above items.
PLEASE SIGN, DATE AND MAIL THIS PROXY IN THE ENCLOSED ADDRESSED ENVELOPE,
WHICH REQUIRES NO POSTAGE IF MAILED IN THE U.S.
Please sign exactly as your name appears hereon. Jointly owned shares will
be voted as directed if one owner signs unless another owner instructs to
the contrary, in which case the shares will not be voted. If signing in a
representative capacity, please indicate title and authority.
Date: ______________________________, 1999
Signature:________________________________________
