Exhibit 10.28
NON-QUALIFIED STOCK OPTION AGREEMENT
Name of Optionee: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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No. Of Option Shares: 50,000 Grant Date: August 25,1998
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Option Exercise Price: $2.0625 Expiration Date: August 25,2008
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Little Switzerland, Inc., a Delaware corporation (the "Company"), hereby
grants to the Optionee named above, who is now employed by the Company, an
option ("Stock Option") to purchase on or prior to the expiration date of this
Stock Option specified above (the "Expiration Date") all or any part of the
number of shares of common stock, par value $0.01 per share, (the "Common
Stock") of the Company specified above (the "Option Shares") at the per share
Stock Option exercise price specified above, subject to the terms and conditions
set forth herein. This Stock Option is not intended to qualify as an "incentive
stock option" under Section 422(b) of the Internal Revenue Code of 1986, as
amended from time to time (the "Code").
1. Vesting Schedule.
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(a) No portion of this Stock Option may be exercised until such
portion shall have vested. Except as set forth below, and subject to the
determination of the Board of Directors of the Company in its sole and absolute
discretion to accelerate the vesting schedule hereunder, this Stock Option shall
be vested and exercisable with respect to the following number of Option Shares
on the dates indicated:
Cumulative Number of
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Option Shares Exercisable Vesting Date
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10,000 August 25, 1998
20,000 August 25, 1999
30,000 August 25, 2000
40,000 August 25, 2001
50,000 August 25, 2002
In any event this Stock Option shall become fully vested and exercisable
with respect to all of the
Option Shares on August 25, 2002. Once vested, this Stock Option shall continue
to be exercisable at any time or times prior to the Expiration Date, subject to
the provisions hereof.
(b) In the event of a "change in control" (as defined below) of the
Company, all Stock Options then outstanding granted to the Optionee shall become
fully vested and immediately exercisable. For purposes of this Agreement, a
"change of control" shall be deemed to have occurred in the following instances:
(i) if there has occurred a change in control which the Company would be
required to report in response to Item 1 of Form 8-K promulgated under the
Securities Exchange Act of 1934, as amended (the "1934 Act"), or, if such
regulation is no longer in effect, any regulations promulgated by the Securities
and Exchange Commission pursuant to the 1934 Act which are intended to serve
similar purposes; (ii) if there has occurred a change in control which the
Company would be required to report in response to Item 6(e) of Schedule 14A
promulgated under the 1934 Act, or, if such regulation is no longer in effect,
any regulations promulgated by the Securities and Exchange Commission pursuant
to the 1934 Act which are intended to serve similar purposes; (iii) when any
"person" (as such term is used in Section 13(d) and 14(d)(2) of the ▇▇▇▇ ▇▇▇)
becomes a "beneficial owner" (as such term is defined in Rule 13d-3 promulgated
under the 1934 Act), directly or indirectly, of securities of the Company
representing fifteen percent (15%) or more of the total number of votes that may
be cast for the election of Directors of the Company; (iv) the sale, transfer or
other disposition of all or substantially all of the assets of the Company to
another person or entity; (v) the election of Directors of the Company equal to
one-third or more of the total number of Directors then in office who have not
been nominated by the Company's Board of Directors or a committee thereof as
constituted on the date hereof; or (vi) the signing of an agreement, contract or
other arrangement providing for any of the transactions described above in this
definition of change of control; provided, however, that a "change in control"
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shall not be deemed to have occurred as a result of the beneficial ownership of
the Company's Common Stock by any person who is a "Grandfathered Person" under
the Company's Shareholder Rights Agreement dated July 17, 1991, as amended (the
"Rights Agreement"), so long as such Grandfathered Person's beneficial ownership
of the Company's Common Stock does not exceed such Grandfathered Person's
"Grandfathered Percentage" (as defined in the Rights Agreement). If the
Optionee
is a Director or officer of Company he shall not be deemed, solely as a result
of his position as Director or officer of the Company, to be the beneficial
owner of any securities of the Company that are beneficially owned by any other
Director or officer of the Company.
2. Exercise of Stock Option.
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(a) The Optionee may exercise only vested portions of this Stock Option
and only in the following manner: Prior to the Expiration Date, the Optionee
may give written notice on any business day to the Compensation Committee of the
Board of Directors of the Company (the "Compensation Committee") of his election
to purchase some or all of the shares purchasable at the time of such notice.
Said notice shall specify the number of shares to be purchased and shall be
accompanied (i) by payment therefore in cash or, at the Optionee's election, in
shares of Common Stock of the Company having a fair market value (as determined
below) on the date of exercise equal to or less than the total option exercise
price, plus cash, in an amount equal to the amount, if any, by which the total
option exercise price exceeds the fair market value of such shares of Common
Stock, and (ii) by such agreement, statement or other evidence as the Company
may require in order to satisfy itself that the issuance and conveyance of the
shares being purchased pursuant to such exercise and any subsequent resale
thereof will be in compliance with applicable laws and regulations, including,
without limitation, all federal and state securities laws.
(b) Certificates for the shares so purchased will be issued and delivered
to the Optionee upon compliance to the satisfaction of the Company with all
requirements under applicable laws or regulations in connection with such
issuance. Until the Optionee shall have complied with the requirements hereof,
the Company shall be under no obligation to issue the shares subject to this
Stock Option, and the determination of the Compensation Committee as to such
compliance shall be final and binding on the Optionee. The Optionee shall not
be deemed to be the holder of, or to have any of the rights of a holder with
respect to, any shares of Common Stock subject to this Stock Option unless and
until this Stock Option shall have been exercised pursuant to the terms hereof,
the Company shall have issued and delivered the shares to the Optionee, and the
Optionee's name shall have been entered as a stockholder of record on the books
of the Company. Thereupon, the Optionee shall have full voting, dividend and
other ownership rights with
respect to such shares of Common Stock.
(c) The minimum number of shares with respect to which this Stock Option
may be exercised at any one time shall be 100 shares, unless the number of
shares with respect to which this Stock Option is being exercised is the total
number of shares subject to exercise under this Stock Option at the time.
(d) Notwithstanding any other provision hereof, no portion of this Stock
Option shall be exercisable after the Expiration Date.
(e) For purposes of this Agreement, the fair market value of the Common
Stock shall be determined in good faith by the Compensation Committee, provided,
however, that (x) if the Common Stock is admitted to quotation on the National
Association of Securities Dealers Automated Quotation System on the date the
Stock Option is granted, fair market value shall not be less than the average of
the highest bid and lowest asked prices of the Common Stock on such date or on
the last preceding date on which a sale was reported, or if the Common Stock is
admitted to trading on the National Association of Securities Dealers Automated
Quotation National Market System on the date the Stock Option is granted, fair
market value shall not be less than the closing price reported for the Common
Stock on such National Market System on such date or on the last preceding date
on which a sale was reported, or (y) if the Common Stock is admitted to trading
on a national securities exchange on the date the Stock Option is granted, fair
market value shall not be less than the last sale price reported for the Common
Stock on such exchange on such date or on the last date preceding such date on
which a sale was reported.
3. Termination of Employment.
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(a) If the Optionee's employment by the Company terminates by reason of
his death or disability, this Stock Option may thereafter be exercised, to the
extent it was exercisable on the date of such termination, until the earlier of
(i) one year from the date of such termination or (ii) the Expiration Date.
(b) If the Optionee's employment by the Company terminates by reason of
his retirement in accordance with the Company's normal retirement policy as
determined by the Board of Directors of the Company, this Stock Option may
thereafter be exercised, to the extent it was exercisable on the date of such
termination, until the earlier of (i) one year from the date of such termination
or (ii) the Expiration Date.
(c) If the Optionee's employment by the Company terminates by reason of
cause, this Stock Option shall lapse immediately upon the effective date of such
termination and shall not be exercisable at any time thereafter. Only the
following shall constitute "cause" for termination: (i) deliberate dishonesty of
the Optionee with respect to the Company or any subsidiary or affiliate thereof;
(ii) conviction of the Optionee of (A) a felony or (B) any crime involving moral
turpitude, deceit, dishonesty or fraud; (iii) material failure to perform a
substantial portion of the Optionee's duties and responsibilities with respect
to the Company or any subsidiary or affiliate thereof, which failure continues
for more than thirty (30) days after written notice given to the Optionee
pursuant to a two-thirds vote of all of the members of the Board of Directors of
the Company, such vote to set forth in reasonable detail the nature of such
failure; or (iv) gross negligence or willful misconduct of the Optionee with
respect to the Company or any subsidiary or affiliate thereof.
(d) If the Optionee's employment by the Company is terminated for any
reason other than death, disability, retirement or cause, this Stock Option may
thereafter be exercised, to the extent it was exercisable on the date of such
termination, until the earlier of (i) ninety (90) days following such
termination or (ii) the Expiration Date.
(e) The Compensation Committee shall have sole discretion to determine the
reason for the termination of the Optionee's Directorship with the Company.
4. Transferability. This Agreement is personal to the Optionee and is
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not transferable by the Optionee in any manner other than by will or the laws of
descent and distribution or pursuant to a qualified domestic relations order as
defined by the Code, or Title I of the Employee Retirement Income Security Act,
as amended, or the rules thereunder; provided, however, that the designation of
a beneficiary by the Optionee does not constitute a transfer. Options may be
exercised during the Optionee's lifetime only by the Optionee.
5. Restrictions on Issuance of Option Shares. The issuance of Option
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Shares upon exercise
thereof shall be subject to compliance with all of the applicable laws, rules
and regulations, including all applicable federal and state securities laws, and
the obtaining of all such approvals by governmental agencies as may be deemed
necessary or appropriate by the Board of Directors of the Company.
6. Adjustment Upon Changes in Capitalization.
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(a) The shares of stock covered by this Stock Option are shares of the
Common Stock of the Company. If the shares of the Company's Common Stock as a
whole are increased, decreased, changed into or exchanged for a different number
or kind of shares or securities of the Company, whether through merger,
consolidation, reorganization, recapitalization, reclassification, stock
dividend, stock split, combination of shares, exchange of shares, change in
corporate structure or the like, an appropriate and proportionate adjustment
shall be made in the number and kind of shares, and the per share exercise price
of shares subject to any unexercised portion of this Stock Option. In the event
of any such adjustment in this Stock Option, the Optionee thereafter shall have
the right to purchase the number of shares under this Stock Option at the per
share price, as so adjusted, which the Optionee could purchase at the total
purchase price applicable to this Stock Option immediately prior to such
adjustment. Adjustments under this Paragraph 6 shall be made by the
Compensation Committee of the Company, whose determination as to what adjustment
shall be made, and the extent thereof, shall be conclusive. No fractional
shares of Common Stock shall be issued on account of any adjustment specified
above.
7. Effect of Certain Transactions. In the case of (a) the dissolution or
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liquidation of the Company, (b) a merger, reorganization or consolidation in
which the Company is acquired by another person or in which the Company is not
the surviving corporation, or (c) the sale of all or substantially all of the
assets of the Company to another corporation, this Stock Option shall terminate
on the effective date of such dissolution, liquidation, merger, reorganization,
consolidation or sale, unless provision is made in such transaction for the
assumption of this Stock Option or the substitution for this Stock Option of a
new Stock Option of the successor employer corporation or a parent or subsidiary
thereof, with appropriate adjustment as to the number and kind of shares and the
per share exercise price, as provided in Paragraph 6. In the event of such a
termination, the Optionee will receive written notice thereof at least twenty
(20) days prior
to the effective date of such transaction.
8. Tax Withholding.
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(a) The Optionee, no later than the date as of which the value of any
Common Stock first becomes includable in the gross income of the Optionee for
federal income tax purposes, shall pay to the Company, or make arrangements
satisfactory to the Compensation Committee regarding payment of any federal,
state or local taxes of any kind required by law to be withheld with respect to
such income. The Company shall, to the extent permitted by law, have the right
to deduct any such taxes from any payment of any kind otherwise due to the
Optionee.
(b) The Optionee may elect to have such tax withholding obligation
satisfied, in whole or in part, by:
(i) authorizing the Company to withhold from shares of Common
Stock to be issued pursuant to the Stock Option a number of shares
with an aggregate fair market value that would satisfy the withholding
amount due, or
(ii) transferring to the Company shares of Common Stock owned by
the Optionee with an aggregate fair market value that would satisfy
the withholding amount due. While the Optionee is a director or
officer of the Company within the meaning of Section 16(b) of the 1934
Act, the following additional restrictions shall apply: (1) the
election to satisfy tax withholding obligations relating to the Stock
Option in the manner permitted by this Section 8(b)(ii) shall be made
either (A) during the period beginning on the third business day
following the date of release of quarterly or annual summary
statements of sales and earnings of the Company and ending on the
twelfth business day following such date, or (B) irrevocably at least
six months prior to the date as of which the receipt of such Common
Stock first becomes a taxable event for federal income tax purposes;
and (2) such election shall not be made within six months of the date
of grant of the option.
9. Amendment. This Agreement may be amended or modified only by a
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written instrument signed by the Optionee and a duly authorized representative
of the Company.
10. Governing Law. This Agreement shall be governed by the laws of the
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State of Delaware, except to the extent that such law is preempted by federal
law.
11. Miscellaneous. Notice hereunder shall be mailed or delivered to the
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Company at its principal place of business, and shall be mailed or delivered to
the Optionee at the address set forth below, or in either case at such other
address as one party may subsequently furnish to the other party in writing.
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LITTLE SWITZERLAND, INC.
By:/s/ C. ▇▇▇▇▇▇▇ ▇▇▇▇▇
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Name: C. ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: Chairman
The foregoing Agreement is hereby accepted and the terms and conditions
thereof hereby agreed to by the undersigned.
Dated: 10/14/98 /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Optionee's Address:
St. ▇▇▇▇▇▇, U.S.V.I
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