<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
VERDANT BRANDS
- --------------------------------------------------------------------------------
(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)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
[Logo of Verdant Brands]
April 19, 2000
Dear Shareholder:
You are cordially invited to attend the 2000 Annual Meeting of Shareholders of
Verdant Brands, Inc. on Thursday, May 25, 2000 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, 1999 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/ John Hetterick
JOHN HETTERICK
President and Chief Executive Officer
<PAGE>
[Logo of Verdant Brands]
NOTICE OF ANNUAL MEETING
----------
The Annual Meeting of Shareholders of Verdant Brands, Inc. will be held on
Thursday, May 25, 2000 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 eight 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 2000.
3. To consider and vote upon a proposal to amend the Company's 1996
Incentive and Stock Option Plan to increase the number of shares of
Company common stock available for issuance and to increase the limit
on options that may be granted to any individual in any year.
4. To consider and vote upon a proposal to amend the Company's Stock
Option Plan for Non-Employee Directors to increase the number of
shares of Company common stock available for issuance, to eliminate
the automatic grant of options, and to give the Board of Directors
discretion with respect to the size and timing of grants to directors.
5. 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 27, 2000 are
entitled to receive this notice and to vote their shares at the Annual Meeting.
By Order of the Board of Directors,
/s/ Monica Jeffries
MONICA JEFFRIES
Secretary
Dated: April 19, 2000
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, 2000. These proxy materials are being mailed to Shareholders
beginning on April 19, 2000. 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 27, 2000 are eligible to vote at the meeting. As of the close of business
on that date, Verdant had 5,112,850 shares of Common Stock outstanding, each
share being entitled to one vote.
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,
mail, facsimile transmission, email 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. Generally, the affirmative vote of a majority of the
shares of Common Stock present and entitled to vote on each matter is required
for the election of each director nominee and the approval of each other matter
to be acted upon. However, if the shares present and entitled to vote on
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that item of business would not constitute a quorum for the transaction of
business at the meeting, then the item must be approved by a majority of the
voting power of the minimum number of shares that would constitute such a
quorum. Each share is entitled to one vote. Cumulative voting is not permitted.
Shares voted as abstentions on any matter (or a "withhold vote for" as to a
director) will be counted as shares that are present and entitled to vote for
purposes of determining the presence of a quorum at the meeting and as unvoted,
although present and entitled to vote, for purposes of determining the approval
of each matter as to which the shareholder has abstained. Consequently,
abstentions and withheld votes have the same effect as a no vote. If a broker
submits a proxy that indicates the broker does not have discretionary authority
as to certain shares to vote on one or more matters, those shares will be
counted as shares that are present and entitled to vote for purposes of
determining the presence of a quorum at the meeting, but will not be considered
as present and entitled to vote with respect to such matters.
PROPOSAL ONE
------------
ELECTION OF DIRECTORS
The Board of Directors recommends the election as directors of the Company
of Messrs. Goldberg, Stofer, Fischer, Lovness, Pass, Yanni, Hetterick 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 his
successor is duly elected and qualified.
The following information 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 September 1992
Age 53 since 1997; Chief Executive Officer of the Company
from 1993 to 1999; 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.
John F. Hetterick President and Chief Executive Officer of the June 1993
Age 54 Company, effective December 1, 1999; President and
Chief Operating Officer of the Company from January
to December 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. Director of Bell Sports Corporation.
</TABLE>
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<TABLE>
<CAPTION>
<S> <C> <C>
Volker G. Oakey Chief Financial Officer of the Company, effective December 1998
Age 59 December 6, 1999, Executive Vice President of
Technology of the Company, since December 1998;
President 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 1985.
Robert W. Fischer@* President of R.W. Fischer & Company, Inc., a June 1981
Age 81 corporate development and investment banking services
company, since 1979.
Donald E. Lovness Former Senior Scientist of the Company until his June 1965
Age 76 retirement in December 1988.
Franklin Pass, M.D.+ Chairman and Chief Executive Officer of Medi-Ject June 1990
Age 63 Corporation, a manufacturer of needle-free
injection devices, since 1993; Chairman and Chief
Executive Officer 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.
Gordon F. Stofer+@* President of Cherry Tree Investments, Inc. and December 1985
Managing General Partner of Cherry Tree 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 Inc.
Frederick F. Yanni, President and Chief Executive Officer of Health June 1993
Jr.+@* Services Medical Corporation of Central New York,
Age 57 Inc., a network health maintenance organization,
since 1976; President and Chief Executive Officer
of Health Services Association, a provider of
ambulatory care, since 1972.
</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, 1999, 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.
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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 1999, the audit
committee held three meetings.
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 1999, the compensation committee held four
meetings.
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 1999, the stock option committee held four meetings.
EXECUTIVE OFFICERS
Name Age Position
John Hetterick 54 Chief Executive Officer and
President
Volker G. Oakey 59 Executive Vice President and Chief
Technology Officer; Chief Financial
Officer
Scott A. Glatstein 41 Vice President and General Manager -
Retail Products Division
Steven R. Hartmeier 42 Vice President and General Manager -
Commercial Products Division
Paul DiCicco 48 Senior Vice President - Operations
Monica Jeffries 39 Vice President - Finance; Secretary
See the biographical information on Mr. Hetterick and Mr. Oakey under
"Election of Directors."
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.
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<PAGE>
Paul DiCicco joined the Company in August 1999 as Senior Vice President -
Operations. From 1994 to 1999, Mr. DiCicco served as Vice President and General
Manager of Minneapolis Operations with Mentor Corp., a medical device
manufacturer and distributer.
Monica Jeffries joined the Company in September 1999 as Vice President -
Finance and Secretary. In 1999, Ms. Jeffries served as Assistant Corporate
Controller at Imation Corp., a high-tech manufacturer. Ms. Jeffries served as
Group Controller from 1997 to 1998 and as Divisional Controller from 1994 to
1997 with ADC Telecommunications, Inc., a manufacturer of telecommunications
equipment.
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 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.
-5-
<PAGE>
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, 1999, 1998 and
1997.
<TABLE>
<CAPTION>
Long-Term Compensation (12)
------------------------------------
Annual Compensation Awards Payouts
------------------------------- ------------------------ ---------
Other Restricted Securities Long-Term
Annual Stock Underlying Incentive All Other
Name and Salary Bonus Compens- Awards Options Payouts Compensation
Principal Position Year ($) ($) ation ($) ($) (#) ($)(8) ($)(8)
- ------------------------------- ----- ---------- -------- ---------- -------- ----------- -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
John F. Hetterick, 1999 200,000 -- 7,574 (2) -- 72,000 -- --
Chief Executive Officer
and President (1)
Volker G. Oakey, 1999 125,825 -- -- -- -- -- --
Executive Vice President of 1998 7,867 (3) -- -- -- -- -- --
Technology and Chief
Financial Officer
Scott A. Glatstein, 1999 150,000 -- 4,800 (4) -- 5,000 -- --
Vice President and General 1998 112,981 (5) 15,000 3,600 (4) -- 22,000 -- --
Manager - Retail
Products
Steven R. Hartmeier, 1999 114,800 -- -- -- 5,000 -- --
Vice President and 1998 7,175 (3) -- -- -- -- -- --
General Manager -
Commercial Products
Division
Stanley Goldberg, 1999 183,860 -- 18,608 (7) -- 102,000 92,323 332,774 (9)
Former Chairman and Chief 1998 200,000 -- 17,890 (7) -- -- 74,675 73,343
Executive Officer (6) 1997 187,500 25,000 20,380 (7) -- 63,000 51,606 50,587
Mark G. Eisenschenk, 1999 114,583 25,000 5,090 -- 20,000 29,899 152,709 (11)
Former Executive Vice 1998 125,000 -- 5,046(10) -- 10,000 16,822 14,301
President and 1997 90,938 15,000 5,474(10) -- 10,000 11,594 9,856
Chief Financial
Officer (6)
</TABLE>
- ----------
(1) Mr. Hetterick joined the Company in January 1999 and was named Chief
Executive Officer and President of the Company on December 1, 1999. Prior
thereto, Mr. Hetterick served as President and Chief Operating Officer.
(2) Includes compensation of $6,000 for automobile expense reimbursement, $853
relating to life insurance premiums and $721 for disability insurance
premiums paid for Mr. Hetterick.
(3) Includes compensation beginning December 8, 1998, Mr. Volker's and Mr.
Hartmeier's first date of employment with the Company.
(4) Automobile expense reimbursement.
(5) Includes compensation beginning March 30, 1998, Mr. Glatstein's first date
of employment with the Company.
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<PAGE>
(6) Mr. Goldberg and Mr. Eisenschenk each resigned their positions with the
Company effective as of December 1, 1999.
(7) Includes compensation of $6,495, $6,608 and $6,929 in 1999, 1998 and 1997,
respectively, for automobile expense reimbursement. Includes compensation
of $5,300, $4,365 and $6,318 in 1999, 1998 and 1997, respectively, relating
to life insurance premiums paid for Mr. Goldberg. Includes $6,813, $6,917
and $7,133 in 1999, 1998 and 1997, respectively, for disability insurance
premiums paid for Mr. Goldberg.
(8) 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."
(9) Includes a severance payment of $235,000 paid in December 1999.
(10) Includes compensation of $4,960, $4,800 and $4,800 in 1999, 1998 and 1997,
respectively, for automobile expense reimbursement. Includes compensation
of $130, $246 and $674 in 1999, 1998 and 1997, respectively, for disability
insurance premiums paid for Mr. Eisenschenk.
(11) Includes a severance payment of $125,000 which accrued in 1999.
(12) Mr. Goldberg held 3,000 shares of restricted stock valued at $9,375 as of
December 31, 1999.
OPTION GRANTS IN LAST FISCAL YEAR (1)
<TABLE>
<CAPTION>
% of Total
Number of Options
Securities Granted to
Underlying Options Employees Exercise
Name Granted in 1999 Price Expiration Date
---- --------- ------- ------ -------------
<S> <C> <C> <C> <C>
John F. Hetterick 72,000(2) 24.1 5.3125 1/4/2009
Volker G. Oakey -- -- -- --
Scott A. Glatstein 5,000(2) 1.7 6.5625 12/31/2008
Steven R. Hartmeier 5,000(2) 1.7 6.5625 12/7/2008
Stanley Goldberg 102,000(3) 34.2 2.81 12/1/2004
Mark G. Eisenschenk 20,000(4) 6.7 4.6875 12/1/1999
</TABLE>
- ----------
(1) The options are non-transferable and become immediately exercisable in full
upon a change in control.
(2) Options vest in equal monthly installments over a period of three years.
(3) Options for 52,000 shares vest immediately upon grant. Options for the
remaining 50,000 shares vest in equal monthly installments over the
five-year term of the option.
(4) Option granted May 25, 1999 and cancelled December 1, 1999 in connection
with Mr. Eisenschenk's resignation.
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<PAGE>
Year End Option Values
<TABLE>
<CAPTION>
Value of Unexercised
Number of Securities Underlying Unexercised In-the-Money Options
Options at End of 1999 at End of 1999
Name Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Mr. Hetterick 26,000 50,000 $0 $0
Mr. Oakey 21,385 7,578 $0 $0
Mr. Glatstein 14,499 12,501 $0 $0
Mr. Hartmeier 9,339 7,655 $0 $0
Mr. Goldberg 109,050 50,000 $16,380 $15,750
Mr. Eisenschenk 10,000 0 $0 $0
</TABLE>
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 Director Plan currently provides that each
non-employee director shall receive an option to purchase 2,000 shares of Common
Stock upon initial election as a director and an option to purchase an
additional 1,000 shares of Common Stock on the first business day of each year
in which he or she remains a director. The Director Plan is proposed to be
amended as set forth herein to eliminate the automatic grants thereunder and to
give the Board of Directors discretion with respect to the size and timing of
grants to non-employee directors. See "Proposal Four - Amendment to Stock Option
Plan for Non-Employee Directors."
The exercise price of all options under the Director Plan is equal to the
Common Stock's closing price on the date of grant. Unless otherwise provided by
the Board of Directors at the time 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. Awards granted under the Director Plan are not
transferable.
Pursuant to an Agreement between Mr. Goldberg and the Company, dated as of
December 6, 1999, Mr. Goldberg will provide consulting services to the Company.
During the time Mr. Goldberg is providing these services, he will not be
eligible to participate in the Company's Director Plan. See "Employment and
Other Agreements - Goldberg Separation Agreement" below.
Employment and Other Agreements
Goldberg Employment Agreement
-----------------------------
The Company and Stanley Goldberg entered into an Employment Agreement dated
September 23, 1992 and amended December 5, 1997 (the "Goldberg Employment
Agreement") under which Mr. Goldberg agreed to serve as the Chief Executive
Officer of the Company. The Goldberg Employment Agreement, as amended, provided
for a minimum annual base compensation payable to Mr. Goldberg of $200,000 and
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 Goldberg Employment Agreement also contained
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severance pay provisions triggered by the termination of Mr. Goldberg's
employment with the Company under certain circumstances.
Goldberg Stock Purchase Agreement
---------------------------------
On April 29, 1997, the Company and Mr. Goldberg entered into a Stock
Purchase Agreement (the "Goldberg Stock Purchase Agreement") whereby the Company
sold 30,000 shares of its common stock to Mr. Goldberg and Mr. Goldberg made
payment of the purchase price of the shares by delivering to the Company an
installment promissory note secured by the shares purchased in the amount of
$196,875. Under the Goldberg Stock Purchase Agreement, the Company agreed that,
under certain circumstances, it would provide Mr. Goldberg with a bonus
sufficient to pay the annual debt service requirements of the promissory note
and reimburse Mr. Goldberg for the tax consequences of such bonus.
Goldberg Separation Agreement
-----------------------------
Pursuant to an Agreement between Mr. Goldberg and the Company, dated as of
December 6, 1999 (the "Goldberg Separation Agreement"), Mr. Goldberg resigned as
the Chief Executive Officer of the Company as of December 1, 1999 and Mr.
Goldberg's employment with the Company was terminated. Under the terms of the
Goldberg Separation Agreement, the Company paid Mr. Goldberg a severance payment
in the amount of $235,000, issued Mr. Goldberg a fully-vested, five-year option
to purchase 52,000 shares of the Company's common stock at an exercise price of
$2.81 per share (the fair market value on the date of the grant), and agreed to
provide medical, dental, and disability insurance to Mr. Goldberg and to pay Mr.
Goldberg an office space allowance of $1,000 per month for a period of one year.
Under the Goldberg Separation Agreement, the Company also agreed to cancel the
Goldberg Stock Purchase Agreement, to forgive Mr. Goldberg's principal and
accrued interest obligations under the installment promissory note in the amount
of $67,962 issued in connection with the Goldberg Stock Purchase Agreement, and
to deliver to Mr. Goldberg stock certificates representing the 30,000 shares of
common stock pledged to the Company to secure the payment of the note.
The Goldberg Separation Agreement also contains provisions whereby Mr.
Goldberg agreed to serve as Chairman of the Board of Directors of the Company
and to provide ongoing consulting services to the Company for a period of three
years (the "Consulting Agreement"). The Consulting Agreement may be terminated
by either the Company or Mr. Goldberg by giving sixty days notice. Additionally,
the Consulting Agreement will terminate in the event of Mr. Goldberg's death or
disability, or in the event Mr. Goldberg is not reelected to the Company's Board
of Directors by the Company's shareholders, or if the Company's Board of
Directors determines that cause (as that term is defined) exists for the
termination of the Consulting Agreement. The Consulting Agreement also contains
confidentiality and non-competition provisions.
As compensation for his consulting services, the Company agreed to pay Mr.
Goldberg an annual fee of $125,000 and grant him a five-year option to purchase
50,000 shares of the Company's common stock. This option vests and becomes
exercisable in equal monthly installments over the three year term of the
Consulting Agreement and has an exercise price of $2.81 per share. Upon a sale
or change of control of the Company, all unvested options will immediately vest.
If Mr. Goldberg ceases to provide consulting services to the Company under the
Consulting Agreement, all unvested options will terminate; except that, if the
Consulting Agreement is terminated by the Company without cause or if Mr.
Goldberg is not reelected to the Company's Board of Directors, all options which
otherwise would have vested during the contract year (i.e. the fiscal period
ending on the next November 30th) will become fully vested as of the termination
date. Additionally, if the Consulting Agreement is terminated by the Company
without cause or if Mr. Goldberg is not reelected to the Company's Board of
Directors, the Company will pay to Mr. Goldberg his fee for the balance of the
three-year term. In connection with the compensation to be paid under the
Consulting Agreement, Mr. Goldberg has agreed that he will not be eligible to
participate in the Company's Stock Option Plan for Non-employee Directors during
the time that he is providing consulting services to the Company.
Additionally, under the Consulting Agreement, the Company will pay Mr.
Goldberg a bonus in the event that Mr. Goldberg, at the request of the Board of
Directors or Chief Executive Officer, participates as one of the Company's
principal representatives in negotiations leading to the completion of a sale of
the Company or any business unit of the Company or in the acquisition of any
other business. In such an event, the Company will pay Mr. Goldberg the lesser
of $250,000 or one percent of the consideration paid or received by the Company
or its shareholders, except that the fee shall be reduced to one-half of one
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percent of the consideration paid or received by the Company in the event that
the Company is obligated to pay a success fee to any investment banker or
business broker in connection with such transaction.
Eisenschenk Employment Agreement
--------------------------------
The Company and Mark G. Eisenschenk entered into an Employment Agreement
(the "Eisenschenk Employment Agreement") under which Mr. Eisenschenk agreed to
serve as the Executive Vice President and Chief Financial Officer of the
Company. The Eisenschenk Employment Agreement provided for a minimum annual base
compensation payable to Mr. Eisenschenk of $125,000 and 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 Eisenschenk
Employment Agreement also contained severance pay provisions triggered by the
termination of Mr. Eisenschenk's employment with the Company under certain
circumstances.
Eisenschenk Stock Purchase Agreement
------------------------------------
On April 29, 1997, the Company and Mr. Eisenschenk entered into a Stock
Purchase Agreement (the "Eisenschenk Stock Purchase Agreement") whereby the
Company sold 10,000 shares of its common stock to Mr. Eisenschenk and Mr.
Eisenschenk made payment of the purchase price of the shares by delivering to
the Company an installment promissory note secured by the shares purchased in
the amount of $65,625. Under the Eisenschenk Stock Purchase Agreement, the
Company agreed that, under certain circumstances, it would provide Mr.
Eisenschenk with a bonus sufficient to pay the annual debt service requirements
of the promissory note and reimburse the Mr. Eisenschenk for the tax
consequences of such bonus.
Eisenschenk Separation Agreement
--------------------------------
Under a Separation Agreement and General Release between Mr. Eisenschenk
and the Company, dated as of December 6, 1999 (the "Eisenschenk Separation
Agreement"), Mr. Eisenschenk resigned as the Executive Vice President, Chief
Financial Officer, and as an employee of the Company as of December 1, 1999 and
the Eisenschenk Employment Agreement was terminated. Under the terms of the
Eisenschenk Separation Agreement, the Company agreed to pay Mr. Eisenschenk a
severance payment of $125,000, payable semi-monthly between December 1, 1999 and
December 1, 2000 (the "Severance Period"), to provide medical, dental, and
disability insurance to Mr. Eisenschenk for a period of one year after the
effective date of the Eisenschenk Separation Agreement, to pay Mr. Eisenschenk
an office space allowance of $1,000 per month for a period of one year after the
effective date of the Eisenschenk Separation Agreement, and transfer to Mr.
Eisenschenk the computer system he used at the Company. If Mr. Eisenschenk
obtains full-time employment during the Severance Period, any compensation from
other employment paid to Mr. Eisenschenk after June 1, 2000 will be offset
against the Company's severance obligations under the Eisenschenk Separation
Agreement and the insurance benefits provided by the Company will be terminated
as of the date that comparable coverage under new employment commences. Under
the Eisenschenk Separation Agreement, the Company also agreed to cancel the
Eisenschenk Stock Purchase Agreement, to forgive Mr. Eisenschenk's principal and
accrued interest obligations under the installment promissory note in the amount
of $40,777 issued in connection with the Eisenschenk Stock Purchase Agreement,
and to deliver to Mr. Eisenschenk stock certificates representing the 10,000
shares of common stock pledged to the Company to secure the payment of the note.
Hetterick Employment Agreement
------------------------------
The Company and John Hetterick entered into an Employment Agreement, dated
December 1, 1999 (the "Hetterick Employment Agreement"), under which Mr.
Hetterick agreed to serve as the Company's President and Chief Executive
Officer. The Hetterick Employment Agreement provides for a minimum base salary
of $200,000 per year plus a monthly car allowance of $500 per month. In
addition, Mr. Hetterick is eligible for an annual bonus of up to 60% of his base
salary based on personal and Company performance objectives established by the
Company's Board of Directors. The Hetterick Employment Agreement further
provides that the Company shall issue to Mr. Hetterick an option to purchase
150,000 shares of the Company's common stock contemporaneously with and
contingent upon shareholder approval of an amendment to the Company's 1996
Incentive and Stock Option Plan (as set forth herein). The option will have an
exercise price equal to the fair market value on the date of grant and will vest
in equal monthly installments over a three year period. The Hetterick Employment
Agreement also provides that Mr. Hetterick may be entitled to severance pay in
the event that Mr. Hetterick's employment with the Company is terminated under
certain
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<PAGE>
circumstances. Such severance pay is equal to (i) his base monthly salary at the
time of termination, payable over a period of twenty-four months and offset by
any compensation received by Mr. Hetterick after the date twelve months
following the termination, and (ii) a lump sum payment equal to the average
bonus received by Mr. Hetterick during the two years preceding termination.
Additionally, if Mr. Hetterick is terminated by the Company without cause or
following a change in control (as those terms are defined), all unvested options
will become fully vested and immediately exercisable. The Hetterick Employment
Agreement also contains confidentiality and non-competition provisions.
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, 1999, 106,840 shares of Common
Stock were subject to outstanding options under the 1986 Plan at a weighted
exercise price of $6.5625 per share of which options to purchase 105,570 shares
were exercisable as of such date. As of December 31, 1999, 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, 1999, 235,700 shares of Common Stock were
subject to outstanding options under the 1996 Plan at a weighted average
exercise price of $4.48 per share, of which options to purchase 102,697 shares
were exercisable as of such date. As of December 31, 1999, a total of 40
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.
During 1999, the Company converted the Consep stock options to options to
purchase Verdant Common Stock. Pursuant to the Consep conversion, on December
31, 1999, 80,862 shares of Verdant Common Stock were subject to outstanding
options at a weighted exercise price of $9.59 per share, of which 57,725 shares
were exercisable as of that date. As of December 31, 1999, a total of 34 Consep
employees held options pursuant to the Consep conversion.
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<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT AND OTHERS
The following table sets forth certain information as of March 1, 2000,
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 March 1,
2000 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
Stanley Goldberg 90,969 1.8
John F. Hetterick 47,200 *
Robert W. Fischer 22,400 *
Donald E. Lovness 7,110 *
Volker G. Oakey 82,062 1.6
Franklin Pass, M.D. 5,000 *
Gordon F. Stofer 2,945 *
Frederick F. Yanni, Jr. 7,640 *
Scott A. Glatstein 17,499 *
Steven R. Hartmeier 10,604 *
Mark G. Eisenschenk 0 *
GE Capital Corporation 334,793 6.1
10 South LaSalle Street, Suite 2800
Chicago, Illinois 60603-1002
Ray Lipkin 325,400 6.4
161 Ferndale Avenue South
Wayzata, Minnesota 55391
Officers and directors as
a group (12 persons) (1) 300,012 5.7
- ----------
* Less than one percent
-12-
<PAGE>
(1) The share amounts indicated in the above table include the following:
Beneficially owned shares subject to options exercisable within sixty days
of March 1, 2000 included in the table above.
Shares
Subject to
Options
----------
Stanley Goldberg 56,166
Scott A. Glatstein 17,499
Steven R. Hartmeier 10,604
Volker G. Oakey 22,492
Robert W. Fischer 5,000
Donald E. Lovness 5,000
Franklin Pass, M.D. 5,000
Frederick F. Yanni, Jr. 5,000
John F. Hetterick 34,000
Gordon F. Stofer 2,000
All officers and directors as a group 164,844
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, 2000 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 years ended
December 31, 1998 and 1999. 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 that you vote FOR Proposal Two.
PROPOSAL THREE
--------------
TOAPPROVE AN AMENDMENT TO INCREASE THE NUMBER OF SHARES OF COMMON STOCK
AVAILABLE FOR ISSUANCE UNDER TO THE COMPANY'S 1996 EMPLOYEE INCENTIVE STOCK
OPTION PLAN BY 500,000 AND TO INCREASE THE LIMIT ON THE NUMBER OF OPTIONS
THAT MAY BE GRANTED TO AN EMPLOYEE IN A TWELVE MONTH PERIOD FROM 100,000
SHARES TO 250,000 SHARES
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. The 1996
Plan has been designed to meet the requirements of Section 162(m) of the
Internal Revenue Code regarding the deductibility of executive compensation.
There are currently 250,000 shares of Common Stock reserved for issuance
under the Plan. As of December 31, 1999, 14,300 shares of Common Stock remain
available for future awards under the Plan. The Board of Directors believes that
it must have a sufficient number of available shares if it is to continue to
attract, retain and motivate qualified employees, and has therefore approved an
amendment to the Plan, subject to shareholder approval, to increase the total
number of shares available
-13-
<PAGE>
under the Plan from 250,000 to 750,000 shares. The amendment also provides that
the maximum number of shares for which options may be granted to any eligible
person in any calendar year be increased from 100,000 shares to 250,000 shares.
A description of the Plan is set forth below.
1996 Incentive and Stock Option Plan
- ------------------------------------
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
-14-
<PAGE>
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 (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.
The Board of Directors recommends that you vote FOR Proposal Three.
PROPOSAL FOUR
-------------
TO APPROVE AN AMENDMENT TO INCREASE THE NUMBER OF SHARES OF COMMON STOCK
AVAILABLE FOR ISSUANCE PURSUANT TO THE COMPANY'S STOCK OPTION PLAN FOR
NON-EMPLOYEE DIRECTORS BY 150,000 AND TO CHANGE THE MANNER IN WHICH OPTIONS
ARE GRANTED TO NON-EMPLOYEE DIRECTORS
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 of shareholders.
Currently under the Director Plan, each new non-employee director of the Company
is automatically granted an option to purchase 2,000 shares of Common Stock upon
his or her initial election to the Board of Directors and on the first business
day of each new fiscal year, each non-employee director is automatically granted
an option to purchase 1,000 shares of Common Stock.
The purpose of the Director Plan is to promote the interests of the Company
and its shareholders by aiding the Company in attracting and retaining
non-employee directors capable of contributing to the growth and success of, and
providing strategic direction to, the Company, and by offering such 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 directors with those of
the Company's shareholders. The Company believes that stock options under the
Director Plan are an important element in attracting and retaining highly
skilled and qualified directors.
There are currently 80,000 shares of Common Stock authorized for issuance
under the Director Plan and as of December 31, 1999, 46,000 shares of Common
Stock remain available for future awards under the Director Plan. The Board of
Directors believes that the current number of available shares is inadequate if
the Company is to attract, retain and motivate qualified non-employee directors,
and has therefore approved an amendment to the Director Plan, subject to
shareholder approval, to increase the number of shares of Common Stock reserved
for issuance thereunder from 80,000 shares to 230,000 shares.
Additionally, the Board of Directors believes it to be in the best
interests of the Company and its shareholders to eliminate the automatic grant
of options to non-employee directors and instead authorize the grant of options
to non-employee directors on a discretionary basis to reflect the Company's
performance, individual contributions to the Board of Directors and other
factors. Therefore, it has approved an amendment to the Director Plan, subject
to shareholder approval, to eliminate the automatic grant of options under the
Director Plan and to replace it with a provision that gives the Board of
Directors the discretion to determine the size and timing of options to be
granted to non-employee directors.
A description of the Director Plan is set forth below.
-15-
<PAGE>
Stock Option Plan for Non-Employee Directors
- --------------------------------------------
The Director Plan is administered by a committee of the Board of Directors
(the "Committee"). The Committee has discretion (subject to the provisions of
the Plan and the applicable provisions of the Internal Revenue Code) to
interpret and administer the Director Plan, and establish Director Plan rules.
The Director Plan currently provides that each non-employee director shall
receive an option to purchase 2,000 shares of Common Stock upon initial election
as a director and an option to purchase an additional 1,000 shares of Common
Stock on the first business day of each fiscal year in which he or she remains a
director. The Director Plan has been proposed to be amended to eliminate the
automatic grant of options and to give the Board of Directors discretion with
respect to the size and timing of grants under the Director Plan.
The exercise price of all options under the Director Plan is equal to the
fair market value on the date of grant. Options granted under the Director Plan
shall expire no later than ten years from the date of the grant. Options issued
under the Director Plan vest and become exercisable in 60 equal monthly
installments, commencing one month after the date of the grant. After the 60th
month, options granted under the Director Plan are exercisable in full until the
end of the term of the option. 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 except by will or the laws of descent and distribution, and are
subject to various other conditions and restrictions.
The grant of an option issued under the Director Plan is not expected to
result in any taxable income for the recipient. Upon exercising an option issued
under the Director Plan, the optionee must recognize ordinary income equal to
the excess of the fair market value of the shares of Common Stock acquired on
the date of exercise over the exercise price, and the Company will be entitled
at that time to a tax deduction for the same amount. The tax consequence to an
optionee upon a disposition of shares acquired through the exercise of an option
issued under the Director Plan will depend on how long the shares have been
held. Generally, there will be no tax consequence to the Company in connection
with disposition of shares of Common Stock acquired under an option issued under
the Director Plan.
The Board of Directors recommends that you vote FOR Proposal Four.
-16-
<PAGE>
PROPOSALS FOR THE NEXT ANNUAL MEETING
In order to be eligible for inclusion in the Company's proxy solicitation
materials for its next annual meeting of shareholders, any shareholder proposal
to be considered at such meeting must be received at the Company's principal
executive offices, 9555 James Avenue South, Suite 200, Bloomington, Minnesota
55431, not later than December 21, 2000. Any proposal by a shareholder to be
presented at the next annual meeting must be received at the Company's principal
executive offices not later than March 4, 2001. Management may use discretionary
authority to vote against any shareholder proposal presented at the 2001 annual
meeting if: (1) such proposal has been properly omitted from the Company's proxy
materials under federal securities law; or (2) such proposal was not received at
the Company's principal executive offices by March 4, 2001; or (3) the proponent
has not solicited proxies in compliance with federal securities law from the
holders of at least the percentage of the Company's voting shares required to
carry the proposal.
By Order of the Board of Directors,
/s/ Monica Jeffries
MONICA JEFFRIES
Secretary
Dated: April 19, 2000
-17-
<PAGE>
VERDANT BRANDS, INC.
(formerly Ringer Corporation)
STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
(as amended through March 31, 2000)
1. Purpose of Plan
This plan shall be known as the "Verdant Brands, Inc. Stock Option Plan For
Non-Employee Directors" and is hereinafter referred to as the "Plan." The
purpose of the Plan is to promote the interests of Verdant Brands, Inc., a
Minnesota corporation (the "Company"), by enhancing its ability to attract and
retain the services of experienced and knowledgeable non-employee directors and
by providing additional incentive for such directors to increase their interest
in the Company's long-term success and progress. Options granted under this Plan
shall be nonqualified stock options which do not qualify as incentive stock
options within the meaning of Section 422A of the Internal Revenue Code of 1986,
as amended (the "Code").
2. Stock Subject to Plan
Subject to the provisions of Section 10 hereof, the stock to be subject to
options under the Plan shall be authorized but unissued shares of the Company's
common stock, $.01 par value per share (the "Common Stock"). Subject to the
adjustment as provided in Section 10 hereof, the maximum number of shares on
which options may be exercised under this Plan shall be 230,000 shares. If an
option under the Plan expires, or for any reason is terminated or unexercised
with respect to any shares, such shares shall again be available for options
thereafter granted during the term of the Plan.
3. Administration of Plan
The Plan shall be administered by a committee composed of members of the
Board of Directors of the Company (the "Committee"). The Committee shall have
plenary authority in its discretion, subject to the express provisions of this
Plan including the restrictions contained in Section 11 below, to interpret the
Plan, to prescribe, amend, and rescind rules and regulations relating to the
Plan, and to make all other determinations necessary or advisable for the
administration of the Plan. The Committee's determinations on the foregoing
matters shall be final and conclusive.
4. Eligibility
(a) Each director of the Company who is not otherwise an employee of
the Company or any subsidiary of the Company (an "Eligible Director") shall
be eligible under the Plan for grants of options to purchase shares of
Common Stock.
<PAGE>
(b) The Board of Directors shall have plenary authority in its
discretion to determine the Eligible Directors to whom and the time or
times at which such options will be granted and the number of shares of
Common Stock to be subject to each option.
5. Price
The option price for all options granted under the Plan shall be the fair
market value of the shares covered by the option on the date the option is
granted. For purposes of this Plan, the fair market value of the Common Stock on
a given date shall be (i) the average of the closing representative bid and
asked prices of the Common Stock as reported on the National Association of
Securities Dealers Automated Quotation System ("NASDAQ") on such date, if the
Common Stock is then quoted on NASDAQ; (ii) the last sale price of the Common
Stock as reported on the NASDAQ National Market System on such date, if the
Common Stock is then quoted on the NASDAQ National Market System; or (iii) the
closing price of the Common Stock on such date on a national securities
exchange, if the Common Stock is then being traded on a national securities
exchange. If on the date as of which the fair market value is being determined
the Common Stock is not publicly traded, the Committee shall make a good faith
attempt to determine such fair market value and, in connection therewith, shall
take such actions and consider such factors as it deems necessary or advisable.
6. Term
Each option and all rights and obligations thereunder shall, subject to the
provisions of Section 8 herein, expire no later than 10 years from the date of
granting of the option.
7. Exercise of Option
(a) Options granted under the Plan shall not be initially exercisable
by the optionee but shall become exercisable on the first day of each month
after the date of grant with respect to one-sixtieth (1/60) of the number
of shares subject thereto (rounded up to the nearest whole number of
shares) until the first day after the fifth annual anniversary of the date
hereof when options granted hereunder shall be exercisable in full. Such
installments shall cumulate and, if at any time the full amount purchasable
is not purchased, the shares not purchased shall be purchasable at any
subsequent time during the term of the option, subject to the provisions of
Section 8 hereof.
(b) The exercise of any option granted hereunder shall only be
effective at such time as counsel to the Company shall have determined that
the issuance and delivery of Common Stock pursuant to such exercise will
not violate any state or federal securities or other laws. An optionee
desiring to exercise an option may be required by the Company, as a
condition of the effectiveness of any exercise of an option granted
hereunder, to agree in writing that all Common Stock to be acquired
pursuant to such exercise shall be held for his or her own account without
a view to any further distribution thereof, that the certificates for such
shares shall bear an appropriate legend to that effect
-2-
<PAGE>
and that such shares will not be transferred or disposed of except in
compliance with applicable federal and state securities laws.
(c) An optionee electing to exercise an option shall give written
notice to the Company of such election and of the number of shares subject
to such exercise. The full purchase price of such shares shall be tendered
with such notice of exercise. Payment shall be made to the Company either
(i) in cash (including check, bank draft or money order), or (ii) by
delivering the Company's Common Stock already owned by the optionee having
a fair market value on the date of exercise equal to the full purchase
price of the shares, or (iii) by any combination of cash and the method
specified in (ii) of this sentence; provided, however, that an optionee
shall not be entitled to tender shares of Common Stock pursuant to
successive, substantially simultaneous exercises of options granted
hereunder or in any manner tantamount to the technique commonly referred to
as "pyramiding." For purposes of the preceding sentence, the fair market
value of Common Stock tendered shall be determined as provided in Section 5
hereof as of the date of exercise. Until such person has been issued a
certificate or certificates for the shares subject to such exercise, he or
she shall possess no rights as a shareholder with respect to such shares.
8. Effect of Termination of Directorship or Death or Disability
(a) In the event that an optionee shall resign or be removed without
cause as a member of the Board of Directors of the Company or its
subsidiaries, such optionee (or such optionee's guardian, administrators or
personal representative in the case of disability or death) shall have the
right to exercise the option for a period of ninety (90) days after such
resignation or removal to the extent of the full number of shares he or she
was entitled to purchase under the option on the date of termination,
subject to the condition that no option shall be exercisable after the
expiration of the term of the option.
(b) In the event that an optionee shall die or become disabled while a
Director of the Company or its subsidiaries, such optionee (or such
optionee's guardian, administrators or personal representative) shall have
the right to exercise the option for a period of one year after the date of
such death or disability to the extent of the full number of shares he or
she was entitled to purchase under the option on the date of death or
disability, subject to the condition that no option shall be exercisable
after the expiration of the term of the option.
(c) In the event that an optionee shall cease to be a director of the
Company by reason of his or her gross and willful misconduct during the
course of his or her service as a director of the Company, including but
not limited to wrongful appropriation of funds of the Company, or the
commission of a gross misdemeanor or felony, the option shall be terminated
as of the date of the misconduct.
-3-
<PAGE>
(d) Nothing in this Plan or in any agreement hereunder shall confer on
any optionee any right to continue as a director of the Company or affect
in any way any legal rights with respect to termination of such
directorship or removal of such optionee as a director.
9. Non-Transferability
No option granted under the Plan shall be transferable by optionee,
otherwise than by will or the laws of descent or distribution. Except as
provided in Section 8 herein with respect to disability of the optionee, during
the lifetime of an optionee, the option shall be exercisable only by such
optionee.
10. Dilution or Other Adjustments
If there shall be any change in the Common Stock through merger,
consolidation, reorganization, recapitalization, stock dividend (of whatever
amount), stock split or other change in the corporate structure, appropriate
adjustments in the Plan and outstanding options shall be made. In the event of
any such changes, adjustments shall include, where appropriate, changes in the
aggregate number of shares subject to the Plan, the number of shares subject to
outstanding options and the exercise prices thereof in order to prevent dilution
or enlargement of option rights.
11. Amendment or Discontinuance of Plan
The Committee may amend or discontinue the Plan at any time. However,
subject to the provisions of Section 10, no amendment of the Plan shall, without
shareholder approval: (a) increase the maximum number of shares with respect to
which options may be granted under the Plan as provided in Section 2 hereof, (b)
modify the eligibility requirements for participation in the Plan as provided in
Section 4 hereof, or (c) change the provisions of the Plan relating to the terms
of options, including the date of grant or exercise price of, the number of
shares subject to, or the vesting and termination of, options granted or to be
granted to Eligible Directors. The Committee shall not alter or impair any
option theretofore granted under the Plan.
12. Time of Granting
Nothing contained in the Plan or in any resolution adopted or to be adopted
by the Committee, the Board of Directors or the shareholders of the Company, and
no action taken by the Committee (other than the execution and delivery of an
option), shall constitute the granting of an option hereunder.
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<PAGE>
13. Effective Date and Termination of Plan
(a) The Plan was approved by the Board of Directors on July 21, 1993,
and shall be effective from that date, subject to the approval by
shareholders of the Company. The Plan shall be submitted for approval to
shareholders of the Company within 12 months of the effective date.
(b) Unless the Plan shall have been discontinued as provided in
Section 11 hereof, the Plan shall terminate on July 21, 2003. No option may
be granted after such termination, but termination of the Plan shall not,
without the consent of the optionee, alter or impair any rights or
obligations under any option theretofore granted.
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<PAGE>
VERDANT BRANDS, INC.
(formerly Ringer Corporation)
1996 INCENTIVE AND STOCK OPTION PLAN
(as amended through March 31, 2000)
Section 1. Purpose.
The purpose of this 1996 Incentive and Stock Option Plan (the "Plan") is to
promote the interests of Verdant Brands, Inc. (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 Verdant Brands, Inc., a Minnesota
corporation, and any successor corporation.
<PAGE>
(g) "Eligible Person" shall mean any employee, officer, director,
consultant or independent contractor providing services to the Company or
any Affiliate.
(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.
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<PAGE>
(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; (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 750,000. 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
an Award otherwise terminates without delivery of any Shares, then the
number of Shares counted against the
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<PAGE>
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 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:
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<PAGE>
(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 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
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<PAGE>
250,000 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 the Committee) during the
applicable restriction period, all Shares of Restricted Stock at such
time subject to restriction shall be forfeited and become authorized
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.
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<PAGE>
(d) General.
(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 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.
-7-
<PAGE>
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.
(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,
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<PAGE>
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.
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:
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<PAGE>
(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
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<PAGE>
[Logo of Verdant Brands]
Please detach here
- --------------------------------------------------------------------------------
The Board of Directors Recommends a Vote FOR Items 1, 2, 3, 4 and 5.
1. Election of 01 Robert W. Fischer 04 Donald E. Lovness 07 Gordon F. Stofer
Directors: 02 Stanley Goldberg 05 Volker G. Oakey 08 Frederick F.
03 John F. Hetterick 06 Franklin Pass Yanni, Jr.
[_] Vote FOR all nominees [_] Vote WITHHELD
(except as marked) from all nominees
(Instructions: To withhold authority to vote for -----------------------
any indicated nominee, write the number(s) of the
nominee(s) in the box provided to the right.) -----------------------
2. Ratification of the appointment of Deloitte & Touche LLP as the Company's
independent auditors for the year ending December 31, 2000.
[_] For [_] Against [_] Abstain
3. To approve an amendment to increase the number of shares of common stock
available for issuance under to the Company's 1996 Employee Incentive Stock
Option Plan by 500,000 and to increase the limit on the number of options
that may be granted to an employee in a twelve month period from 100,000
shares to 250,000 shares.
[_] For [_] Against [_] Abstain
4. To approve an amendment to increase the number of shares of common stock
available for issuance pursuant to the Company's Stock Option Plan for
non-employee directors by 150,000 and to change the manner in which options
are granted to non-employee directors.
[_] For [_] Against [_] Abstain
5. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
Address Change? Mark Box [_] Indicate changes below:
Dated:_________________________, 2000
- --------------------------------------------
- --------------------------------------------
Signature(s) in Box
Please sign exactly as your name appear 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.
<PAGE>
VERDANT BRANDS, INC.
ANNUAL MEETING OF SHAREHOLDERS
Thursday, May 25, 2000
3:30 p.m., Central Standard Time
9555 James Avenue South
Suite 200
Bloomington, Minnesota
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Verdant Brands, Inc.
9555 James Avenue South, Suite 200, Bloomington, Minnesota 55431 Proxy
- -----------------------------------------------------------------------------
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 19, 2000 appoints John Hetterick and Volker Oakey proxies
(each with the power to act alone and with the power of substitution and
revocation), to represent the undersigned and to vote, as designated 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 Thursday, May 25, 2000 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.
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.
See reverse for voting instructions.
