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EXHIBIT 10.4
LITTLE SWITZERLAND, INC.
2002 EMPLOYEE STOCK PURCHASE PLAN
(EFFECTIVE AS OF JULY 1, 2002)
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LITTLE SWITZERLAND, INC.
2002 EMPLOYEE STOCK PURCHASE PLAN
1. PURPOSE OF THE PLAN
The purpose of the Plan is to provide a method by which eligible employees
may purchase shares of common stock of Little Switzerland, Inc. (the "Company"),
$.01 par value per share (the "Common Stock") by payroll deductions and at
discounted prices. By this means, eligible employees will be given an
opportunity to acquire an additional interest in the economic progress of the
Company and a further incentive to promote the best interests of the Company.
It is the intention of the Company that the Plan qualify as an "employee
stock purchase plan" under Section 423 of the Internal Revenue Code of 1986, as
amended (the "Code"), and the Plan shall be construed in accordance with such
purpose. The Plan is effective July 1, 2002, subject to the approval of the
Company's stockholders prior to such date.
2. ELIGIBLE EMPLOYEES
All persons who as of the Offering Date, as hereinafter defined, are
employees of the Company or any of its subsidiaries will be eligible to
participate in this Plan, except for the following who shall not be eligible:
(a) Any employee whose customary employment is 20 hours or less per
week or not more than 5 months during a calendar year;
(b) Any employee who, immediately after any Offering Date would own
(as determined under Section 424(d) of the Code), stock, and/or hold
outstanding options to purchase stock, possessing 5 percent or more of the
total combined voting power or value of all classes of stock of the
Company, any subsidiary, as defined under Section 424(f) of the Code or any
parent corporation, as defined under Section 424(e) of the Code;
(c) Any employee to whom the grant of an option hereunder would
permit his rights to purchase stock under the Plan and under all other
employee stock purchase plans, if any, of the Company or its subsidiaries
to accrue at a rate which exceeds $25,000 of the fair market value of such
stock (determined at the time such option is granted) for each calendar
year in which such option is outstanding at any time; and
(d) Any non-employee director of the Company.
3. NUMBER OF SHARES TO BE OFFERED
Subject to adjustment as provided under Section 17 of the Plan, a maximum
of 300,000 shares will be offered for subscription, provided, however, in the
event that the share reserve established under this Section 3 shall total
100,000 shares or less, the Board may, but shall not be required to, authorize
an increase in the share reserve such that after said increase the share reserve
under this Section 3 shall total 300,000 shares. Notwithstanding the foregoing,
if the Board determines that, on a given Purchase Date, the number of shares
with respect to which
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options are to be exercised may exceed (1) the number of shares of Common Stock
that were available for sale under the Plan on the Offering Date of the
applicable Offering Period, or (2) the number of shares available for sale under
the Plan on such Purchase Date, the Board may in its sole discretion provide (x)
that the Company shall make a pro rata allocation of the shares of Common Stock
available for purchase on such Offering Date or Purchase Date, as applicable, in
as uniform a manner as shall be practicable and as it shall determine in its
sole discretion to be equitable among all participants exercising options to
purchase Common Stock on such Purchase Date and continue the Plan then in
effect, or (y) that the Company shall make a pro rata allocation of the shares
available for purchase on such Offering Date or Purchase Date, as applicable, in
as uniform a manner as shall be practicable and as it shall determine in its
sole discretion to be equitable among all participants exercising options to
purchase Common Stock on such Purchase Date and terminate the Plan pursuant to
Section 16, below. The Company may make a pro rata allocation of the shares
available on the Offering Date of any applicable Offering Period pursuant to the
preceding sentence notwithstanding any authorization of additional shares for
issuance under the Plan by the Company's stockholders subsequent to the such
Offering Date. Purchases of Common Stock may be made on the open market or
through the delivery of treasury shares or newly-issued and authorized shares,
as determined by the Company.
4. OFFERING AND PURCHASE DATES
An offering will be made once each year on the first business day of July
commencing with July 1, 2002, such date being herein referred to as the
"Offering Date." The "Purchase Date" for the Offering Period shall be the last
business day in the succeeding June.
Subject to the provisions of Section 3, above, the offering will be reduced
on a pro rata basis to the extent that the authorized shares remaining are not
sufficient to enable the number of anticipated subscribers to subscribe to
purchase at least 100 shares each.
5. PURCHASE PRICE
The purchase price per share with respect to each offering shall be 85% of
the fair market value of the Common Stock on (i) the Offering Date, or (ii) the
Purchase Date, whichever date produces the lower price.
"Fair market value" shall mean the closing price of the Common Stock on the
applicable date, as reported on the principal national securities exchange in
which it is then traded or the Nasdaq Stock Market, Inc. or if not traded on
such principal national securities exchange or the Nasdaq Stock Market, Inc., as
quoted on an automated quotation system sponsored by the National Association of
Securities Dealers, Inc.
6. METHOD OF PAYMENT
Payment will be made through payroll deductions authorized as provided in
Section 7 hereof, which shall not be less than $3.00 per week ($12.00 per
month), nor more than 15 percent of the employee's gross base compensation
(including commissions, payroll deductions under Sections 401(k) and 125 of the
Code but excluding any overtime, incentive or bonuses awards, or other extra or
non-cash compensation) per payroll period.
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If, as of any Purchase Date, any participant has made an overpayment for
the amount of shares for which the participant has subscribed, either due to the
operation of Section 5 hereof, or otherwise, such overpayment shall be credited
to his account for the next succeeding offering, unless a refund is requested by
the employee or at the option of the Company.
7. HOW AND WHEN TO SUBSCRIBE
Subscription agreements will be made available to all eligible employees.
To subscribe to the first offering under the Plan, an eligible employee must
sign and deliver a payroll deduction authorization/subscription form to the
Company on or before July 1, 2002.
Employees who are eligible to participate in the first offering under the
Plan, but who choose not to participate, employees who subsequently become
eligible to participate, and employees who have canceled their participation in
the Plan may subscribe to any subsequent offering for which they are eligible by
signing and delivering a payroll deduction authorization/subscription form to
the Company prior to the applicable Offering Date in the time and manner
determined by the Company.
A payroll deduction authorization/subscription form once filed by an
employee shall remain effective for all subsequent offerings under the Plan,
subject to an employee's right to cancel participation as provided in
Section 11.
8. LIMIT ON NUMBER OF SHARES SUBSCRIBED
The subscription by an eligible employee in any offering may not exceed
20,000 shares of Common Stock, subject to adjustment as provided in Section 17.
9. DATE OF GRANTING OPTION AND EXERCISING OPTION AND LIFE OF OPTION
Options to purchase 20,000 shares of Common Stock shall be deemed granted
to each participating employee as of the respective Offering Dates. As of the
applicable Purchase Date, a participant's option shall be exercised
automatically for the purchase of that number of full shares of Common Stock
which the accumulated payroll deductions credited to his account at that time
will purchase at the applicable price specified in Section 5 hereof. Options not
exercised as of the applicable Purchase Date shall automatically lapse.
10. METHOD OF HANDLING EMPLOYEES' PAYROLL DEDUCTIONS
The Company will maintain a payroll deduction account for each
participating employee in the Plan. The balance credited to each such account
will be applied in accordance with the provisions of the Plan. Stock
certificates representing shares purchased by participants will be issued as
soon as practicable after the Purchase Date. Simultaneously with the issuance of
the certificates, each applicable payroll deduction account will be adjusted
accordingly.
11. CANCELLATION OF PARTICIPATION
Any participating employee may cancel his participation in the Plan at any
time by giving written notice of cancellation to the Company not less than 10
business days prior to the
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Purchase Date. In such event, the balance then credited to the payroll deduction
account established for such employee will be refunded.
Any employee who cancels his participation in the Plan may subscribe in the
manner prescribed in Section 7 hereof to subsequent offerings which commence at
least six months after such cancellation.
12. INTEREST
No interest will be paid or allowed under any circumstances on any money
paid under the Plan by participating employees.
13. RIGHTS NOT TRANSFERABLE
An employee's rights under the Plan belong to the employee and may not be
transferred or assigned to or availed of for any purpose by any other person
during the employee's lifetime.
14. TERMINATION OF RIGHTS
Upon termination of employment for any reason other than retirement,
disability or death, the participating employee or his estate will be refunded
the balance then credited to the payroll deduction account established for such
employee under the Plan. In the case of retirement, disability or death, the
participating employee or his estate may elect within thirty days after the
happening of such event to (i) receive in cash the balance then credited to the
payroll deduction account established for such employee under Plan, or (ii) have
the balance then credited to such account for the employee applied to the
purchase of as many full shares as such balance will purchase at the applicable
purchase price determined as of the Offering Date, and any remaining balance
refunded. A failure to make such election within the said thirty-day period will
be treated as notice of cancellation and the amount then held for the employee
will be refunded.
15. PERSONS TO WHOM SHARES WILL BE ISSUED
Unless otherwise directed, the shares will be issued in the name of the
participating employee. However, the employee may direct registration of the
shares in his name and in the name of one other person, but only as tenants by
the entireties or joint tenants with right of survivorship.
16. AMENDMENT OR DISCONTINUANCE OF PLAN
The Board of Directors of the Company shall have the right to amend,
modify, suspend or terminate the Plan at any time without notice, provided that
no employee's then existing rights are adversely affected, and provided further
that no such amendment of the Plan shall, except as provided in Section 17: (i)
increase the total number of shares of Common Stock to be offered (subject to
increase under Section 3 and adjustment under Section 17, hereof), (ii) change
the formula for determining the price at which the shares will be paid, (iii)
increase the maximum number of shares which an eligible employee may purchase,
or (iv) extend the duration of the Plan beyond the tenth anniversary of its
effective date.
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17. ADJUSTMENT OF SUBSCRIPTION
In the event of reorganization, recapitalization, stock split, stock
dividend, merger, consolidation or any other change in the structure of shares
of the Common Stock of the Company, the Board of Directors of the Company may
make such adjustment as it may deem appropriate in the number, kind and
subscription price of shares available for purchase under the Plan.
18. COORDINATION WITH 401(k) PLAN
In the event a participant makes a hardship withdrawal of employee deferral
(401(k)) contributions under a 401(k) profit sharing plan of the Company or a
subsidiary or any other plan qualified under Section 401(a) of the Code that
contains a Code Section 401(k) feature, such participant's payroll deductions
and the purchase of shares of Common Stock under the Plan shall be suspended
until the first payroll period following the Offering Date commencing after the
six (6) month period after such hardship withdrawal. If a participant who elects
a hardship withdrawal under such a 401(k) profit sharing plan (or such other
plan) has a balance credited to the payroll deduction account established for
such employee under the Plan at the time of withdrawal that has not already been
applied to purchase shares of Common Stock, such balance shall be returned to
the participant as soon as administratively practicable.
19. ADMINISTRATION
The Plan shall be administered by a committee appointed by the Board (or if
no Committee is appointed by the Board, the Board) (the "Committee"), and the
Committee may select an administrator to whom its duties and responsibilities
hereunder may be delegated. The Committee shall have full power and authority,
subject to the provisions of the Plan, to promulgate such rules and regulations
as it deems necessary for the proper administration of the Plan, to interpret
the provisions and supervise the administration of the Plan, and to take all
action in connection therewith or in relation thereto as it deems necessary or
advisable. The Committee may adopt special guidelines and provisions for persons
who are residing in, or subject to, the laws of, countries other than the United
States to comply with applicable tax and securities laws. All interpretations
and determinations of the Committee shall be made in its sole and absolute
discretion based on the Plan document and shall be final, conclusive and binding
on all parties.
The Committee may employ such legal counsel, consultants, brokers and
agents as it may deem desirable for the administration of the Plan and may rely
upon any opinion received from any such counsel or consultant and any
computation received from any such consultant, broker or agent. The Committee
may, in its sole discretion, designate an agent to administer the Plan, purchase
and sell shares of Common Stock in accordance with the Plan, keep records, send
statements of account to employees and to perform other duties relating to the
Plan, as the Committee may request from time to time. The Committee may adopt,
amend or repeal any guidelines or requirements necessary for the custody and
delivery of the Common Stock, including, without limitation, guidelines
regarding the imposition of reasonable fees in certain circumstances.
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20. USE OF FUNDS
Notwithstanding anything herein to the contrary, all payroll deductions
received or held by the Company under the Plan may be used by the Company for
any corporate purpose, and the Company shall not be obligated to segregate such
payroll deductions.
21. REGULATIONS AND OTHER APPROVALS
The obligation of the Company to sell or deliver shares of Common Stock
with respect to options granted under the Plan shall be subject to all
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 Committee.
To the extent required, the Plan is intended to comply with Rule 16b-3
promulgated under Section 16 of the Securities Exchange Act of 1934, as amended
("Rule 16b-3") and the Committee shall interpret and administer the provisions
of the Plan in a manner consistent therewith. Any provisions inconsistent with
Rule 16b-3 shall be inoperative and shall not affect the validity of the Plan.
22. WITHHOLDING OF TAXES
If a participant makes a disposition, within the meaning of Section 424(c)
of the Code and regulations promulgated thereunder, of any share or shares
issued to such participant pursuant to such participant's exercise of an option,
and such disposition occurs within the two-year period commencing on the day
after the Offering Date or within the one-year period commencing on the day
after the Purchase Date, such participant shall immediately, or as soon as
practicable thereafter, notify the Company thereof and thereafter immediately
deliver to the Company any amount of federal, state or local income taxes and
other amounts which the Company informs the participant the Company is required
to withhold.
Notwithstanding anything herein to the contrary, the Company and each
subsidiary shall have the right to make such provisions as it deems necessary to
satisfy any obligations to withhold federal, state, or local income taxes or
other taxes incurred by reason of the issuance of Common Stock pursuant to the
Plan. Notwithstanding anything herein to the contrary, the Company or any
subsidiary may require a participant to remit an amount equal to the required
withholding amount and may invalidate any election if the participant does not
remit applicable withholding taxes.
23. NO EMPLOYMENT RIGHTS
The establishment and operation of this Plan shall not confer any legal
rights upon any participant or other person for a continuation of employment,
nor shall it interfere with the rights of the Company or a subsidiary to
discharge any employee and to treat him without regard to the effect which that
treatment might have upon him as a participant or potential participant under
the Plan.
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24. SEVERABILITY OF PROVISIONS
If any provision of the Plan shall be held invalid or unenforceable, such
invalidity or unenforceability shall not affect any other provisions hereof, and
the Plan shall be construed and enforced as if such provisions had not been
included.
25. PLAN TERMINATION
The Plan will automatically terminate on July 1, 2012, unless terminated
earlier by the Company.
26. CONSTRUCTION
The use of a masculine pronoun shall include the feminine, and the singular form
shall include the plural form, unless the context clearly indicates otherwise.
The headings and captions herein are provided for reference and convenience
only, shall not be considered part of the Plan, and shall not be employed in the
construction of the Plan.