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Exhibit 10.3
GERALD STEVENS, INC.
1998 STOCK OPTION PLAN
Gerald Stevens, Inc. (the "Company") hereby adopts this Gerald Stevens,
Inc. 1998 Stock Option Plan (the "Plan"), the terms of which shall be as
follows:
1. PURPOSE
The Plan is intended to advance the interests of the Company by
providing eligible individuals (as designated pursuant to Section 4 below) with
an opportunity to acquire or increase a proprietary interest in the Company,
which thereby will create a stronger incentive to expend maximum effort for the
growth and success of the Company and its subsidiaries, and will encourage such
eligible individuals to remain in the employ of the Company or one or more of
its subsidiaries. Each stock option granted under the Plan (an "Option") shall
be an option that is not intended to constitute an "incentive stock option"
("Incentive Stock Option") within the meaning of Section 422 of the Internal
Revenue Code of 1986, or the corresponding provision of any subsequently-enacted
tax statute, as amended from time to time (the "Code") unless such Option is
granted to an employee of the Company or a "subsidiary corporation" (a
"Subsidiary") thereof within the meaning of Section 424(f) of the Code and is
specifically designated at the time of grant as being an Incentive Stock Option.
Any Option so designated shall constitute an Incentive Stock Option only to the
extent that it does not exceed the limitations set forth in Section 7 below.
2. ADMINISTRATION
(a) Board. The Plan shall be administered by the Board of
Directors of the Company (the "Board"), which shall have the full power and
authority to take all actions, and to make all determinations required or
provided for under the Plan or any Option granted or Option Agreement (as
defined in Section 8 below) entered into under the Plan and all such other
actions and determinations not inconsistent with the specific terms and
provisions of the Plan deemed by the Board to be necessary or appropriate to the
administration of the Plan or any Option granted or Option Agreement entered
into hereunder. All such actions and determinations shall be by the affirmative
vote of a majority of the members of the Board present at a meeting at which any
issue relating to the Plan is properly raised for consideration or without a
meeting by written consent of the Board executed in accordance with the
Company's Certificate of Incorporation and Bylaws, and with applicable law. The
interpretation and construction by the Board of any provision of the Plan or of
any Option granted or Option Agreement entered into hereunder shall be final and
conclusive.
(b) Committee. The Board may from time to time appoint a Stock
Option Committee (the "Committee") consisting of not less than two members of
the Board, none of whom shall be an officer or other salaried employee of the
Company or any Subsidiary, and each of whom shall qualify in all respects as a
"non-employee director" as defined in Rule 16b-3 of the Securities and Exchange
Commission under the Securities Exchange Act of 1934 (the "Exchange Act") and an
"outside director" for purposes of Section 162(m) of the Code. The Board, in its
sole discretion, may provide that the role of the Committee shall be limited to
making recommendations to the Board concerning any determinations to be made and
actions to be taken by the Board pursuant to
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or with respect to the Plan, or the Board may delegate to the Committee such
powers and authorities related to the administration of the Plan, as set forth
in Section 2(a) above, as the Board shall determine, consistent with the
Certificate of Incorporation and Bylaws of the Company and applicable law. The
Board may remove members, add members, and fill vacancies on the Committee from
time to time, all in accordance with the Company's Certificate of Incorporation
and Bylaws, and with applicable law. The majority vote of the Committee, or acts
reduced to or approved in writing by a majority of the members of the Committee,
shall be the valid acts of the Committee.
(c) No Liability. No member of the Board or of the Committee
shall be liable for any action or determination made in good faith with respect
to the Plan or any Option granted or Option Agreement entered into hereunder.
(d) Delegation to the Committee. In the event that the Plan or
any Option granted or Option Agreement entered into hereunder provides for any
action to be taken by or determination to be made by the Board, such action may
be taken by or such determination may be made by the Committee if the power and
authority to do so has been delegated to the Committee by the Board as provided
for in Section 2(b) above. Unless otherwise expressly determined by the Board,
any such action or determination by the Committee shall be final and conclusive.
3. STOCK
The stock that may be issued pursuant to Options granted under the Plan
shall be shares of common stock, $.01 par value, of the Company (the "Stock"),
which shares may be treasury shares or authorized but unissued shares. The
number of shares of Stock that may be issued pursuant to Options granted under
the Plan shall not exceed in the aggregate 4,000,000 shares, subject to
adjustment as provided in Section 16 below; provided, however, the number of
shares of Stock issuable pursuant to Options then outstanding (whether vested or
not) shall not exceed 10 percent of the outstanding shares of Stock. If any
Option expires, terminates, or is terminated or canceled for any reason prior to
exercise in full, the shares of Stock that were subject to the unexercised
portion of such Option shall be available for future Options granted under the
Plan.
4. ELIGIBILITY
Options may be granted under the Plan to any employee, consultant or
non-employee director of the Company, a Subsidiary or any other entity in which
the Company has a significant equity or other interest as determined by the
Committee (any other entity in which the Company has a significant equity or
other interest as determined by the Committee referred to as an "Affiliate"). An
individual may hold more than one Option, subject to such restrictions as are
provided herein.
5. EFFECTIVE DATE AND TERM OF THE PLAN
(a) Effective Date. The Plan shall be effective as of
May 20, 1998
(b) Term. The Plan shall terminate on the date 10 years from
the effective date.
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6. GRANT OF OPTIONS
Subject to the terms and conditions of the Plan, the Board may, at any
time and from time to time, prior to the date of termination of the Plan, grant
to such eligible individuals as the Board may determine ("Optionees"), Options
to purchase such number of shares of the Stock on such terms and conditions as
the Board may determine. The date on which the Board approves the grant of an
Option (or such later date as is specified by the Board) shall be considered the
date on which such Option is granted.
7. LIMITATION ON INCENTIVE STOCK OPTIONS
An Option intended to constitute an Incentive Stock Option (and so
designated at the time of grant) shall qualify as an Incentive Stock Option only
to the extent that the aggregate fair market value (determined at the time the
Option is granted) of the stock with respect to which Incentive Stock Options
are exercisable for the first time by the Optionee during any calendar year
(under the Plan and all other plans of the Optionee's employer corporation and
its parent and subsidiary corporations within the meaning of Section 422(d) of
the Code) does not exceed $100,000. This limitation shall be applied by taking
Options into account in the order in which they were granted.
8. OPTION AGREEMENTS
All Options granted pursuant to the Plan shall be evidenced by written
notification from the Company ("Option Agreements"), to be executed by the
Company and by the Optionee, in such form or forms as the Board shall from time
to time determine. Option Agreements covering Options granted from time to time
or at the same time need not contain similar provisions; provided, however, that
all such Option Agreements shall comply with all terms of the Plan.
9. OPTION PRICE
The purchase price of each share of the Stock subject to an Option (the
"Option Price") shall be fixed by the Board and stated in each Option Agreement,
and shall be not less than 100 percent of the fair market value of a share of
the Stock on the date the Option is granted (as determined in good faith by the
Board); provided, however, that in the event the Optionee would otherwise be
ineligible to receive an Incentive Stock Option by reason of the provisions of
Sections 422(b)(6) and 424(d) of the Code (relating to stock ownership of more
than 10 percent), the Option Price of an Option that is intended to be an
Incentive Stock Option shall be not less than 110 percent of the fair market
value of a share of Stock at the time such Option is granted. The fair market
value of a share of Stock on any date of reference shall mean the "Closing
Price" (as defined below) of the Stock on the business day immediately preceding
such date, unless the Board or the Committee in its sole discretion shall
determine otherwise. For the purpose of determining fair market value, the
"Closing Price" of the Stock on any business day shall be (i) if the Stock is
listed or admitted for trading on any United States national securities
exchange, or if actual transactions are otherwise reported on a consolidated
transaction reporting system, the last reported sale price of Stock on such
exchange or reporting system, as reported in any newspaper of general
circulation, (ii) if the Stock is quoted
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on the National Association of Securities Dealers Automated Quotations System
("NASDAQ"), or any similar system of automated dissemination of quotations of
securities prices in common use, the last reported sale price of Stock on such
system or, if sales prices are not reported, the mean between the closing high
bid and low asked quotations for such day of Stock on such system, as reported
in any newspaper of general circulation or (iii) if neither clause (i) or (ii)
is applicable, the mean between the high bid and low asked quotations for the
Stock as reported by the National Quotation Bureau, Incorporated if at least two
securities dealers have inserted both bid and asked quotations for Stock on at
least five of the ten preceding days. If neither (i), (ii) or (iii) above is
applicable, then fair market value shall be determined in good faith by the
Committee or the Board, and the Committee or the Board may determine such fair
market value as of any date that is not more than one year prior to the date for
which such determination is being made.
10. TERM AND EXERCISE OF OPTIONS
(a) Option Period. Each Option granted under the Plan shall
terminate and all rights to purchase shares thereunder shall cease upon the
expiration of ten years from the date such Option is granted, or on such date
prior thereto as may be fixed by the Board and stated in the Option Agreement
relating to such Option; provided, however, that in the event the Optionee would
otherwise be ineligible to receive an Incentive Stock Option by reason of the
provisions of Sections 422(b)(6) and 424(d) of the Code (relating to stock
ownership of more than 10 percent), an Option granted to such Optionee that is
intended to be an Incentive Stock Option shall in no event be exercisable after
the expiration of five years from the date it is granted.
(b) Vesting and Limitations on Exercise. Each Option shall
become exercisable with respect to 25% of the total number of shares subject to
the Option on the date that is 12 months after the date of its grant (the
"Vesting Date") and with respect to an additional 25% of the number of such
shares on each of the next three succeeding anniversaries of the Vesting Date;
provided, however, that the Board may in its discretion provide that an Option
may be exercised, in whole or in part, at any time and from time to time, over a
period commencing on or after the date of grant and ending upon the expiration
or termination of the Option, as the Board shall determine and set forth in the
Option Agreement relating to such Option. Without limiting the foregoing, the
Board, subject to the terms and conditions of the Plan, may in its sole
discretion provide that an Option may be exercised immediately upon grant or
that it may not be exercised in whole or in part for any period or periods of
time during which such Option is outstanding; provided, however, that any
vesting requirement or other such limitation on the exercise of an Option may be
rescinded, modified or waived by the Board, in its sole discretion, at any time
and from time to time after the date of grant of such Option, so as to
accelerate the time at which the Option may be exercised.
(c) Method of Exercise. An Option that is exercisable
hereunder may be exercised by delivery to the Company on any business day, at
its principal office, addressed to the attention of the Stock Option
Administrator, of written notice of exercise, which notice shall specify the
number of shares with respect to which the Option is being exercised, and shall
be accompanied by payment in full of the Option Price of the shares for which
the Option is being exercised, except as provided below. The minimum number of
shares of Stock with respect to which an Option may be exercised, in whole or in
part, at any time shall be the lesser of 100 shares or the maximum
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number of shares available for purchase under the Option at the time of
exercise. Payment of the Option Price for the shares of Stock purchased pursuant
to the exercise of an Option shall be made (i) in cash or in cash equivalents;
or (ii) by delivering a written direction to the Company that the Option be
exercised pursuant to a "cashless" exercise/sale procedure (pursuant to which
funds to pay for exercise of the Option are delivered to the Company by a broker
upon receipt of stock certificates from the Company) or a cashless exercise/loan
procedure (pursuant to which the Optionees would obtain a margin loan from a
broker to fund the exercise) through a licensed broker acceptable to the Company
whereby the stock certificate or certificates for the shares of Stock for which
the Option is exercised will be delivered to such broker as the agent for the
individual exercising the Option and the broker will deliver to the Company cash
(or cash equivalents acceptable to the Company) equal to the Option Price for
the shares of Stock purchased pursuant to the exercise of the Option plus the
amount (if any) of federal and other taxes that the Company, may, in its
judgment, be required to withhold with respect to the exercise of the Option.
Payment in full of the Option Price need not accompany the written notice of
exercise if the Option is exercised pursuant to the cashless exercise/sale
procedure described above. An attempt to exercise any Option granted hereunder
other than as set forth above shall be invalid and of no force and effect.
Promptly after the exercise of an Option, the individual exercising the Option
shall be entitled to the issuance of a Stock certificate or certificates
evidencing his ownership of such shares. A separate Stock certificate or
certificates shall be issued for any shares purchased pursuant to the exercise
of an Option that is intended to be an Incentive Stock Option, which certificate
or certificates shall not include any shares that were purchased pursuant to the
exercise of an Option that is not an Incentive Stock Option. An individual
holding or exercising an Option shall have none of the rights of a shareholder
until the shares of Stock covered thereby are fully paid and issued to him and,
except as provided in Section 16 below, no adjustment shall be made for
dividends or other rights for which the record date is prior to the date of such
issuance.
(d) Restrictions on Transfer of Stock. If an Option is
exercised before the date that is six months from the later of (i) the date of
grant of the Option or (ii) the date of shareholder approval of the Plan and the
sale of stock acquired pursuant to such exercise would subject the individual
exercising the Option to liability under Section 16 of the Exchange Act, then
such certificate or certificates shall bear a legend restricting the transfer of
the Stock covered thereby until the expiration of six months from the later of
the date specified in clause (i) above or the date specified in clause (ii)
above.
11. TRANSFERABILITY OF OPTIONS
No Option shall be assignable or transferable by the Optionee to whom
it is granted, other than by will or the laws of descent and distribution,
except that, upon approval by the Board, the Optionee may transfer an Option
that is not intended to constitute an Incentive Stock Option (a) pursuant to a
qualified domestic relations order as defined for purposes of the Employee
Retirement Income Security Act of 1974, as amended, or (b) by gift: to a member
of the "Family" (as defined below) of the Optionee, to or for the benefit of one
or more organizations qualifying under Code 501(c)(3) and 170(c)(2) (a
"Charitable Organization") or to a trust for the exclusive benefit of the
Optionee, one or more members of the Optionee's Family, one or more Charitable
Organizations, or any combination of the foregoing, provided that any such
transferee shall enter into a written
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agreement to be bound by the terms of this Agreement. For this purpose, "Family"
shall mean the ancestors, spouse, siblings, spouses of siblings, lineal
descendants and spouses of lineal descendants of the Optionee. During the
lifetime of an Optionee to whom an Incentive Stock Option is granted, only such
Optionee (or, in the event of legal incapacity or incompetence, the Optionee's
guardian or legal representative) may exercise the Incentive Stock Option.
12. TERMINATION OF EMPLOYMENT OR SERVICE
Upon the termination of the employment or other service of an Optionee
with the Company, any Subsidiary or Affiliate, any Option that was not vested
and exercisable on the date of the termination of such Optionee's employment
shall expire and be forfeited as of such date, and any Option that was vested
and exercisable on the date of the termination of such Optionee's employment
shall expire and be forfeited as of such date, except that: (i) if any Optionee
dies or has a "permanent and total disability" (within the meaning of Section
22(e)(3) of the Code), such Optionee's Option shall expire 12 months after the
date of his death or "permanent and total disability", but in no event after the
termination of the Option pursuant to Section 10(a) above, and (ii) if any
Optionee is terminated other than for "cause", such Optionee's Option shall
expire 90 days after the date of his termination, but in no event after the
termination of the Option pursuant to Section 10(a) above. Notwithstanding the
foregoing provisions of this Section 12, the Board may provide, in its
discretion, that following the termination of employment or service of an
Optionee with the Company, or any Subsidiary or Affiliate, an Optionee may
exercise an Option, in whole or in part, at any time subsequent to such
termination of employment or service and prior to termination of the Option
pursuant to Section 10(a) above, either subject to or without regard to any
vesting or other limitation on exercise imposed pursuant to Section 10(b) above.
Whether a leave of absence or leave on military or government service shall
constitute a termination of employment of service with the Company, or any
Subsidiary or Affiliate, shall not be deemed to occur if the Optionee is
immediately thereafter employed by or otherwise providing services to the
Company, or any Subsidiary or Affiliate. Whether a termination of employment or
service is to be considered by reason of "permanent and total disability" for
purposes of this Plan shall be determined by the Board, which determination
shall be final and conclusive. For the purposes of this Plan, "cause" shall mean
(i) an Optionee's theft or embezzlement, or attempted theft or embezzlement, of
money or property of the Company, an Optionee's perpetration or attempted
perpetration of fraud, or an Optionee's participation in a fraud or attempted
fraud, on the Company or an Optionee's unauthorized appropriation of, or an
Optionee's attempt to misappropriate, any tangible or intangible asset or
property of the Company, (ii) any act or acts of disloyalty, misconduct or moral
turpitude by an Optionee materially injurious to the interest, property,
operations, business or reputation of the Company or an Optionee's conviction of
a crime the commission of which results in injury to the Company or (iii) an
Optionees' failure or inability (other than by reason of "permanent and total
disability") to carry out effectively his duties and obligations to the Company
or to participate effectively and actively in the management of the Company, as
determined in the reasonable judgment of the Board and after an Optionee has
been given notice by the Company and a reasonable opportunity to cure such
failure or inability.
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13. USE OF PROCEEDS
The proceeds received by the Company from the sale of Stock pursuant
to Options granted.
14. REQUIREMENTS OF LAW
(a) Violations of Law. The Company shall not be required to
sell or issue any shares of Stock under any Option if the sale or issuance of
such shares would constitute a violation by the individual exercising the Option
or the Company of any provisions of any law or regulation of any governmental
authority, including without limitation any federal or state securities laws or
regulations. Any determination in this connection by the Board shall be final,
binding, and conclusive. The Company shall not be obligated to take any
affirmative action in order to cause the exercise of an Option or the issuance
of shares pursuant thereto to comply with any law or regulation of any
governmental authority. As to any jurisdiction that expressly imposes the
requirement that an Option shall not be exercisable unless and until the shares
of Stock covered by such Option are registered or are subject to an available
exemption from registration, the exercise of such Option (under circumstances in
which the laws of such jurisdiction apply) shall be deemed conditioned upon the
effectiveness of such registration or the availability of such an exemption.
(b) Compliance with Rule 16b-3. The intent of this Plan is to
qualify for the exemption provided by Rule 16b-3 under the Exchange Act. To the
extent any provision of the Plan does not comply with the requirements of Rule
16b-3, it shall be deemed inoperative to the extent permitted by law and deemed
advisable by the Board and shall not affect the validity of the Plan. In the
event Rule 16b-3 is revised or replaced, the Board, or the Committee acting on
behalf of the Board, may exercise discretion to modify this Plan in any respect
necessary to satisfy the requirements of the revised exemption or its
replacement.
15. AMENDMENT AND TERMINATION OF THE PLAN
The Board may, at any time and from time to time, amend, suspend or
terminate the Plan as to any shares of Stock as to which Options have not been
granted; provided, however, that no amendment by the Board shall, without
approval by a majority of the shares present and entitled to vote at a duly held
meeting of the shareholders of the Company at which a quorum representing a
majority of all outstanding voting stock is, either in person or by proxy,
present and voting on the amendment, or by written consent in accordance with
applicable state law and the Certificate of Incorporation and Bylaws of the
Company, change the requirements as to eligibility to receive Options that are
intended to qualify as Incentive Stock Options, increase the maximum number of
shares of Stock in the aggregate that may be sold pursuant to Options that are
intended to qualify as Incentive Stock Options granted under the Plan (except as
permitted under Section 16 hereof) or modify the Plan so that Options granted
under the Plan could not satisfy the applicable requirements of Code 162(m).
Except as permitted under Section 16 hereof, no amendment, suspension or
termination of the Plan shall, without the consent of the holder of the Option,
alter or impair rights or obligations under any Option theretofore granted under
the Plan.
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16. EFFECT OF CHANGES IN CAPITALIZATION
(a) Recapitalization. If the outstanding shares of Stock are
increased or decreased or changed into or exchanged for a different number or
kind of shares or other securities of the Company by reason of any
recapitalization, reclassification, stock split, reverse split, combination of
shares, exchange of shares, stock dividend or other distribution payable in
capital stock, or other increase or decrease in such shares effected without
receipt of consideration by the Company, occurring after the effective date of
the Plan, the number and kinds of shares for the purchase of which Options may
be granted under the Plan shall be adjusted proportionately and accordingly by
the Company. In addition, the number and kind of shares for which Options are
outstanding shall be adjusted proportionately and accordingly so that the
proportionate interest of the holder of the Option immediately following such
event shall, to the extent practicable, be the same as immediately prior to such
event. Any such adjustment in outstanding Options shall not change the aggregate
Option Price payable with respect to shares subject to the unexercised portion
of the Option outstanding but shall include a corresponding proportionate
adjustment in the Option Price per share.
(b) Reorganization in Which the Company Is the Surviving
Corporation. Subject to Subsection (c) hereof, if the Company shall be the
surviving corporation in any reorganization, merger, or consolidation of the
Company with one or more other corporations, any Option theretofore granted
pursuant to the Plan shall pertain to and apply to the securities to which a
holder of the number of shares of Stock subject to such Option would have been
entitled immediately following such reorganization, merger, or consolidation,
with a corresponding proportionate adjustment of the Option Price per share so
that the aggregate Option Price thereafter shall be the same as the aggregate
Option Price of the shares remaining subject to the Option immediately prior to
such reorganization, merger, or consolidation.
(c) Dissolution or Liquidation; Reorganization in Which the
Company Is Not the Surviving Corporation or Sale of Assets or Stock. Upon the
dissolution or liquidation of the Company the Plan and all Options outstanding
hereunder shall terminate. In the event of any termination of the Plan under
this Section 16(c), each individual holding an Option shall have the right,
immediately prior to the occurrence of such termination and during such
reasonable period as the Board in its sole discretion shall determine and
designate, to exercise such Option in whole or in part, whether or not such
Option was otherwise exercisable at the time such termination occurs and without
regard to any vesting or other limitation on exercise imposed pursuant to
Section 10(b) above. In connection with a merger, consolidation, reorganization
or other business combination of the Company with one or more other entities in
which the Company is not the surviving entity, or upon a sale of all or
substantially all of the assets of the Company to another entity, or upon any
transaction (including, without limitation, a merger or reorganization in which
the Company is the surviving corporation) that results in any person or entity
(or persons or entities acting as a group or otherwise in concert) owning more
than 50 percent of the combined voting power of all classes of stock of the
Company, the Company and the acquiring or surviving entity shall provide for the
continuation of the Plan and the assumption of the Options theretofore granted,
or for the substitution for such Options of new options covering the stock of a
successor entity, or a parent or subsidiary thereof, with appropriate
adjustments as to the number and kinds of shares and exercise prices. The Board
shall send prior written notice of the occurrence of an event described in this
Section 16(c)
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to all individuals who hold Options not later than the time at which the Company
gives notice to its shareholders that such event is proposed.
(d) Adjustments. Adjustments under this Section 16 related to
stock or securities of the Company shall be made by the Board, whose
determination in that respect shall be final, binding, and conclusive. No
fractional shares of Stock or units of other securities shall be issued pursuant
to any such adjustment, and any fractions resulting from any such adjustment
shall be eliminated in each case by rounding downward to the nearest whole share
or unit.
(e) No Limitations on Corporation. The grant of an Option
pursuant to the Plan shall not affect or limit in any way the right or power of
the Company to make adjustments, reclassifications, reorganizations or changes
of its capital or business structure or to merge, consolidate, dissolve or
liquidate, or to sell or transfer all or any part of its business or assets.
17. DISCLAIMER OF RIGHTS
No provision in the Plan or in any Option granted or Option Agreement
entered into pursuant to the Plan shall be construed to confer upon any
individual the right to remain in the employ or service of the Company, any
Subsidiary or Affiliate, or to interfere in any way with the right and authority
of the Company, any Subsidiary or Affiliate either to increase or decrease the
compensation of any individual at any time, or to terminate any employment or
other relationship between any individual and the Company, any Subsidiary or
Affiliate.
18. NONEXCLUSIVITY OF THE PLAN
Neither the adoption of the Plan nor the submission of the Plan to the
shareholders of the Company for approval shall be construed as creating any
limitations upon the right and authority of the Board to adopt such other
incentive compensation arrangements (which arrangements may be applicable either
generally to a class or classes of individuals or specifically to a particular
individual or individuals) as the Board in its discretion determines desirable,
including, without limitation, the granting of stock options or stock
appreciation rights otherwise than under the Plan.
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