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EXHIBIT 10.1
GARDEN BOTANIKA, INC.
1992 COMBINED INCENTIVE AND NONQUALIFIED
STOCK OPTION PLAN
(AS AMENDED THROUGH MAY 21, 1996)
1. Purpose. The purpose of the 1992 Combined Incentive and Nonqualified
Stock Option Plan (the "Plan") is to enable Garden Botanika, Inc. (the
"Company") to attract and retain the services of people with training,
experience and ability and to provide additional incentive to such persons by
granting them an opportunity to participate in the ownership of the Company.
2. Stock Subject to Plan. The stock subject to this Plan shall be the
Company's Common Stock, par value $.01 per share (the "Common Stock"), presently
authorized but unissued or now held or subsequently acquired by the Company as
treasury shares. Subject to adjustment as provided in Section 10, the aggregate
amount of Common Stock reserved for issuance or delivery upon exercise of all
options granted under this Plan shall not exceed 398,217 shares of Common Stock,
as constituted on date of adoption of this Plan by the Board of Directors. If
any option granted under this plan shall expire or terminate for any reason
without having been exercised in full, the unpurchased shares subject thereto
shall thereupon again be available for purposes of this Plan.
3. Administration. The Plan shall be administered by the Board of
Directors of the Company, in accordance with the following terms and conditions:
3.1 General Authority. Subject to the express provisions of the Plan,
the board of Directors shall have the authority, in its discretion, to determine
all matters relating to options to be granted under the Plan, including the
selection of individuals to be granted options, the number of shares to be
subject to each option, the exercise price, the term, whether such options shall
be immediately exercisable or shall become exercisable in increments over time,
and all other terms and conditions thereof. Grants under this Plan to persons
eligible need not be identical in any respect, even when made simultaneously.
The Board of Directors may from time to time adopt rules and regulations
relating to the administration of the Plan. The interpretation and construction
by the Board of Directors of any terms or provisions of this Plan or any option
issued hereunder, or of any rule or regulation promulgated in connection
herewith, shall be conclusive and binding on all interested parties. The Board
of Directors in its sole discretion, may grant incentive stock options
("Incentive Stock Options") as such term is defined in Section 422 of the
Internal Revenue code of 1986, as amended, (the "Code") and/or nonqualified
stock options ("Nonqualified Stock Options"). A Nonqualified Stock Option is a
stock option which is not an Incentive Stock Option. The type of option granted,
whether an Incentive Stock Option or a Nonqualified Stock Option shall be
clearly identified by the Board of Directors when granted. The term option when
used in this Plan refers to Incentive Stock Options and Nonqualified Stock
Options, collectively.
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3.2 Directors. A member of the Board of Directors shall be eligible to
participate in or receive or hold options under this Plan; provided, however,
that no member of the Board of Directors shall vote with respect to the granting
of an option hereunder to himself or herself, as the case may be.
3.3 Delegation to a Committee. Notwithstanding the foregoing, the Board
of Directors, if it so determines, may delegate to a committee of the Board of
Directors any or all authority for the administration of the Plan, and
thereafter references to the Board of Directors in this Plan shall be deemed to
be references to the committee to the extent provided in the resolution
establishing the committee.
3.4 Persons Subject to Section 16(b). Notwithstanding anything in the
Plan to the contrary, the Board of Directors, in its absolute discretion, may
bifurcate the Plan so as to restrict, limit or condition the use of any
provision of the Plan to participants who are officers or directors subject to
Section 16(b) of the Securities Exchange Act of 1934, as amended, (the "1934
Act") without so restricting, limiting or conditioning the Plan with respect to
other participants.
3.5 Replacement of Options. The Board of Directors, in its absolute
discretion, may grant options subject to the condition that options previously
granted at a higher or lower exercise price under the Plan be canceled or
exchanged in connection with such grant. The number of shares covered by the new
options, the exercise price, the term and the other terms and conditions of the
new option, shall be determined in accordance with the Plan and may be different
from the provisions of the canceled or exchanged options. Alternatively, the
Board of Directors may, with the agreement of the Optionee amend previously
granted options to establish the exercise price at the then current fair market
value of the Company's Common Stock, maintaining existing vesting and expiration
dates.
3.6 Loans to Optionees. The Board of Directors, in its absolute
discretion, may provide that the Company loan to Optionees sufficient funds to
exercise any option granted under the Plan and/or to pay withholding tax due
upon exercise of such option. The Board of Directors shall have the authority to
make such determinations at the time of grant or exercise and shall establish
repayment terms thereof, including installments, maturity and interest rate.
4. Eligibility. Options may be granted only to persons who, at the time
the option is granted, are employees or directors of, or consultants or
independent contractors to, the Company or any of its present or future parent
or subsidiary corporations (as those terms are used in Section 422(a) (2) and
(d) (1) and Section 424(e) and (f) of the Code, hereafter a "Parent" or
"Subsidiary"). Any individual to whom an option is granted under this Plan shall
be referred to hereinafter as "Optionee". Any Optionee may receive one or more
grants for options as the Board of Directors as shall from time to time
determine, and such determinations may be different as to different Optionees
and may vary as to different grants. Optionees who are not employees will only
be eligible to receive Nonqualified Stock Options.
5. Terms and Conditions of Options. Options granted under this Plan shall
be evidenced by written agreements which shall contain such terms, conditions,
limitations and restrictions as the Board of Directors shall deem advisable and
which are not inconsistent with this Plan. Each
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option granted hereunder shall clearly indicate whether it is an Incentive Stock
Option or Nonqualified Stock Option. Notwithstanding the foregoing, all such
options shall include or incorporate by reference the following terms and
conditions:
5.1 Number of Shares; Price. The maximum number of shares that may be
purchased pursuant to the exercise of each option and the price per share at
which such option is exercisable (the "exercise price") shall be as established
by the Board of Directors, provided that the exercise price of Incentive Stock
Options shall not be less than the fair market value per share of the common
Stock at the time the option is granted, as determined in good faith by the
Board of Directors. The exercise price of Nonqualified Stock Options may be
greater or less than the fair market value per share of the Common Stock at the
time the option is granted.
5.2 Duration of Options. Subject to the restrictions contained in
Section 9, the term of each option shall be established by the Board of
Directors and, if not so established, shall be ten years from the date it is
granted, but in no event shall the term of any Incentive Stock Option exceed ten
years.
5.3 Exercisability. Each option shall prescribe the installments, if
any, in which an option granted under the Plan shall become exercisable. The
Board of Directors, in its absolute discretion, may waive or accelerate any
installment requirement contained in outstanding options. In no case may an
option be exercised as to less than 100 shares at any one time (or the remaining
shares covered by the option if less than 100) during the term of the option.
Only whole shares shall be issued pursuant to the exercise of any option.
5.4 Incentive Stock Option. Any option which is issued as an Incentive
Stock Option under this Plan, shall, notwithstanding any other provisions of
this Plan or the option terms to the contrary, contain all of the terms,
conditions, restrictions, rights and limitations required to be an Incentive
Stock Option, and any provision to the contrary shall be disregarded.
6. Nontransferability of Options. Options granted under this Plan and the
rights and privileges conferred hereby may not be transferred, assigned, pledged
or hypothecated in any manner (whether by options of law or otherwise) other
than by will or the applicable laws of descent and distribution, and shall not
be subject to execution, attachment or similar process. Upon any attempt to
transfer, assign, pledge, hypothecate or otherwise dispose of any option under
this Plan or any right or privilege conferred hereby contrary to the provisions
hereof, or upon the sale or levy or any attachment or similar process, such
option thereupon shall terminate and become null and void. During an Optionee's
lifetime, any options granted under this Plan are personal to him or her and are
exercisable solely by such Optionee.
7. Certain Limitations Regarding Incentive Stock Options. The grant of
Incentive Stock Options shall be subject to the following special limitations:
7.1 Limitation on Amount of Grants. In no event shall any Optionee be
granted Incentive Stock Options that in the aggregate (together with all other
Incentive Stock Options granted by the Company or any Parents or Subsidiaries)
entitle the Optionee to purchase, in any calendar year during which such options
first become exercisable, stock of the Company, any
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Parent or any Subsidiary having a fair market value (determined as of the time
such options are granted) in excess of $100,000. No limitation shall apply to
Nonqualified Stock Options.
7.2 Grants to 10% Shareholders. Incentive Stock Options may be granted
a person owning more than 10% of the total combined voting power of all classes
of stock of the Company and any Parent or Subsidiary only if (i) the exercise
price is at least 110% of the fair market value of the stock at the time of
grant, and (ii) the option is not exercisable after the expiration of five years
from the date of grant.
8. Exercise of Options. Options shall be exercised in accordance with the
following terms and conditions:
8.1 Procedure. Options shall be exercised by delivery to the Company of
written notice of the number of shares with respect to which the option is
exercised.
8.2 Payment. Payment of the option price shall be made in full within 5
business days of the notice of exercise of the option and shall be in cash or
bank-certified or cashier's checks, or personal check if permitted by the Board
of Directors. To the extent permitted by applicable laws and regulations
(including but not limited to, federal tax and securities laws and regulations),
an option may be exercised by delivery of shares of Common Stock of the company
held by the Optionee having a fair market value equal to the exercise price,
such fair market value to be determined in good faith by the Board of Directors.
Such payment in stock may occur in the context of a single exercise of an option
or successive and simultaneous exercises, sometimes referred to as "pyramiding",
which provides that, rather than physically exchanging certificates for a series
of exercises, bookkeeping entries will be made pursuant to which the Optionee is
permitted to retain his existing stock certificate and a new stock certificate
is issued for the net shares.
8.3 Federal Withholding Tax Requirements. Upon exercise of an option,
the Optionee shall, upon notification of the amount due and prior to or
concurrently with the delivery of the certificates representing the shares, pay
to the Company amounts necessary to satisfy any applicable federal, state and
local withholding tax requirements or shall otherwise make arrangements
satisfactory to the Company for such requirements. Such arrangements may include
payment of the appropriate withholding tax in shares of stock of the Company
having a fair market value equal to such withholding tax, either through
delivery of shares held by the Optionee or by reduction in the number of shares
to be delivered to the Optionee upon exercise of such option.
9. Termination of Employment, Disability and Death.
9.1 General. If the employment of the Optionee by the Company, a Parent
or a Subsidiary shall terminate by retirement or for any reason other than
death, disability or cause as hereinafter provided, the option may be exercised
by the Optionee at any time prior to the expiration of three months after the
date of such termination of employment (unless by its terms the option sooner
terminates or expires), but only if, and to the extent the Optionee was entitled
to exercise the option at the date of such termination.
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9.2 Disability. If the employment of the Optionee by the Company, a
Parent or a Subsidiary is terminated because of the Optionee's disability (as
herein defined), the option may be exercised by the Optionee at any time prior
to the expiration of one year after the date of such termination (unless by its
terms the option sooner terminates or expires), but only if, and to the extent
the Optionee was entitled to exercise the Option at the date of such
termination. For purposes of this section, an Optionee will be considered to be
disabled if the Optionee is unable to engage in any substantial gainful activity
by reason of any medically determinable mental or physical impairment which can
be expected to result in death or which has lasted or can be expected to last a
continuous period of not less than 12 months.
9.3 Death. In the event of the death of an Optionee while in the employ
of the Company, a Parent or a Subsidiary, the option shall be exercisable on or
prior to the expiration of one year after the date of such death (unless by its
terms the option sooner terminates and expires), but only if and to the extent
the Optionee was entitled to exercise the option at date of such death and only
by the Optionee's personal representative if then subject to administration as
part of the Optionee's estate, or by the person or persons to whom such
Optionee's rights under the option shall have passed by the Optionee's will or
by the applicable laws of descent and distribution.
9.4 Termination for Cause. If the Optionee's employment with the
company, a Parent or a Subsidiary is terminated for cause, any option granted
hereunder shall automatically terminate as of the first advice or discussion
thereof, and such Optionee shall thereupon have no right to purchase any shares
pursuant to such option. "Termination for Cause" shall mean dismissal for
dishonesty, conviction or confession of a crime punishable by law (except minor
violations) intoxication while at work, fraud, misconduct or disclosure of
confidential information.
9.5 Waiver or Extension of Time Periods. The Board of Directors shall
have the authority, prior to or within the times specified in this Section 9 for
the exercise of any such option, to extend such time period or waive in its
entirety any such time period to the extent that such time period expires prior
to the expiration of the term of such option. In addition, the Board of
Directors may grant, pursuant to a specific resolution adopted at the time of
grant, modify or eliminate the time periods specified in this Section 9.
However, no Incentive Stock Option may be exercised after the expiration of ten
years from the date such option is granted. If an Optionee holding an Incentive
Stock Option exercises such option, by permission, after the expiration of the
time period specified in this Section 9, the option will no longer be treated as
an Incentive Stock Option under the Code and shall automatically be converted
into a Nonqualified Stock Option.
9.6 Termination of Options. To the extent that the option of any
deceased Optionee or of any Optionee whose employment is terminated shall not
have been exercised within the limited periods prescribed in this Section 9, all
further rights to purchase shares pursuant to such option shall cease and
terminate at the expiration of such period. No Incentive Stock Option may be
exercised after the expiration of ten (10) years from the date such option is
granted, notwithstanding any provision to the contrary.
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9.7 Non-Employee Optionees. Options granted to Optionees who are not
employees of the Company, a Parent or a Subsidiary at the time of grant shall
not be subject to the provisions of this Section 9, except as specifically
provided in the option.
10. Option Adjustments.
10.1 Adjustments Upon Changes in Capitalization. The aggregate number
and class of shares on which options may be granted under this Plan, the number
and class shares covered by each outstanding option and the exercise price per
share thereof (but not the total price), and all such options, shall each be
proportionately adjusted for any increase or decrease in the number of issued
shares of Common Stock of the Company resulting from a split-up or consolidation
of shares or any like capital adjustment, or the payment of any stock dividend,
or any other increase or decrease in the number of shares of Common stock of the
Company without the receipt of consideration by the Company.
10.2 Effect of Certain Transactions. Except as provided in subsection
10.3, upon a merger, consolidation, acquisition of property or stock
reorganization or liquidation of the Company, as a result of which the
shareholders of the Company receive cash, stock or other property in exchange
for their shares of Common Stock, any option granted hereunder shall terminate,
provided that the Optionee shall have the right immediately prior to any such
merger consolidation, acquisition of property or stock, separation,
reorganization or liquidation to exercise his or her option in whole or in part
whether or not the vesting requirements set forth in the option agreement have
been satisfied.
10.3 Conversion of Options on Stock for Stock Exchange. If the
shareholders of the Company receive capital stock of another corporation
("Exchange Stock") in exchange for their shares of Common Stock in any
transaction involving a merger, consolidation, acquisition of property or stock
or reorganization, all options granted hereunder shall terminate in accordance
with the provision of subsection 10.2 unless the Board of Directors and the
corporation issuing the Exchange Stock, in their sole discretion and subject to
any required action by the share-holders of the company and such corporation,
agree that all such options granted hereunder are converted into options to
purchase shares of Exchange Stock. The amount and price of the such options
granted shall be determined by adjusting the amount and price of the options
granted hereunder in the same proportion as used for determining the number of
shares of Exchange Stock the holders of the Common Stock receive in such merger,
consolidation, acquisition of property or stock, separation or reorganization.
The vesting schedule set forth in the option agreement shall continue to apply
to the options granted for the Exchange Stock.
10.4 Fractional Shares. In the event of any adjustment in the number of
shares covered by any option, any fractional shares resulting from such
adjustment shall be disregarded and each such option shall cover only the number
of full shares resulting from such adjustment.
10.5 Determination of Board of Directors to be Final. All such
adjustments shall be made by the Board of Directors and its determination as to
what adjustments shall be made, and the extent thereof, shall be final, binding
and conclusive.
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11. Securities Regulations.
11.1 Compliance. Shares shall not be issued with respect to an option
granted under this Plan unless the exercise of such option and the issuance and
delivery of such shares pursuant thereto shall comply with all relevant
provisions of law including, without limitation, any applicable state securities
laws, the Securities Act of 1993, as amended, the 1934 Act, the rules and
regulations promulgated thereunder and the requirements of any stock exchange
upon which the shares may then be listed, and shall further be subject to the
approval of counsel of the Company with respect to such compliance. Inability of
the Company to obtain from any regulatory body having jurisdiction, the
authority deemed by the Company's counsel to be necessary for the lawful
issuance and sale of any shares hereunder, shall relieve the Company of any
liability in respect of the nonissuance or sale of such shares as to which such
requisite authority shall not have been obtained.
11.2 Representations by Optionee. As a condition to the exercise of an
option, the Company may require the Optionee to represent and warrant at the
time of any such exercise that the shares are being purchased only for
investment and without any present intention to sell or distribute such shares,
if, in the opinion of counsel for the Company, such representation is required
by any relevant provision of the laws referred to in Section 11.1. At the option
of the Company, a stop transfer order against any records of the Company, and a
legend indicating that the stock may not be pledged, sold or otherwise
transferred unless an opinion of counsel was provided (concurred in by counsel
for the Company) stating that such transfer is not in violation of any
applicable law or regulation may be stamped on the stock certificate in order to
assure exemption from registration. The Board of Directors may also require such
other action or agreement by the Optionees as may from time to time be necessary
to comply with the federal and state securities laws. This provision shall not
obligate the Company to undertake registration of options or stock hereunder.
12. Employment Rights. Nothing in this Plan or any option or right granted
pursuant hereto shall confer upon any Optionee any right to be continued in the
employment of the Company, a Parent or any Subsidiary of the Company or to
remain a director, or to interfere in any way with the right of the Company, a
Parent or any Subsidiary, in its sole discretion, to terminate such Optionee's
employment at any time or to remove the Optionee as a director at any time.
13. Amendment and Termination.
13.1 Action by Shareholders. The Plan may be terminated, modified, or
amended by the shareholders of the Company.
13.2 Action by Board of Directors. The Board of Directors may also
terminate the Plan, or modify or amend the Plan in such respects as it shall
deem advisable in order to conform to any changes in law or regulation
applicable thereto, or in other respects; provided, however, that the Board of
Directors may not, without further approval by the shareholders of the Company:
(i) Change the number of shares in the aggregate which may be sold
pursuant to options granted under the Plan;
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(ii) Except as provided in Section 9.5, increase the period during
which options may be granted or exercised; or
(iii) Change the terms of the Plan which causes the Plan to lose
its qualification as an incentive stock option plan under Section 422 of the
Code.
No termination, suspension or amendment of the Plan may, without
the consent of each Optionee to whom any option shall theretofore have been
granted, adversely affect the rights of such Optionees under such options.
13.3 Automatic Termination. Unless the Plan shall theretofore have been
terminated as herein provided, this Plan shall terminate ten (10) years from the
earlier of: (i) the date on which the Plan is adopted; or (ii) the date on which
this Plan is approved by the shareholders of the Company. No option may be
granted after such termination, or during any suspension of this Plan. The
amendment or termination of this Plan shall not, without the consent of the
Optionee, alter or impair any rights or obligations under any option theretofore
granted under this Plan.
14. Effective Date of the Plan. This Plan shall become effective on the
date of its adoption by the Board of Directors of the Company and options may be
granted immediately thereafter but no option may be exercised under the Plan
unless and until the Plan shall have been approved by the shareholders within 12
months after the date of adoption of the Plan by the Board of Directors. If such
approval is not obtained within such period the Plan and any options granted
thereunder shall be null and void.
Approved by the Board of Directors on July 21, 1992
Approved by Shareholders at Annual Shareholders' Meeting May 3, 1993
Amended by the Board of Directors July 29, 1993
Amendment Approved by Shareholders at Special Shareholders' Meeting
September 14, 1993
Amended by the Board of Directors January 3, 1995
Amendment Approved by Shareholders at Special Shareholders' Meeting
January 19, 1995
Amended by Board of Directors August 31, 1995 and December 8, 1995
Amendment Approved by Shareholders at Annual Shareholders' Meeting
October 30, 1995
Reflects Reverse Stock Split effective May 21, 1996
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