EXHIBIT 10.37
MOVADO GROUP, INC.
1996 STOCK INCENTIVE PLAN
(AMENDED AND RESTATED AS OF APRIL 8, 2004)
1. PURPOSE
The purpose of the Plan is to provide a means through which the
Company and its Affiliates may attract able persons to enter and remain in the
employ of the Company and its Affiliates and to provide a means whereby
employees, directors and consultants of the Company and its Affiliates can
acquire and maintain Common Stock ownership, or be paid incentive compensation
measured by reference to the value of Common Stock, thereby strengthening their
commitment to the welfare of the Company and its Affiliates and promoting an
identity of interest between stockholders and these persons.
So that the appropriate incentive can be provided, the Plan provides
for granting Incentive Stock Options, Nonqualified Stock Options, Stock
Appreciation Rights, Restricted Stock Awards, Phantom Stock Units, Performance
Share Units and Stock Bonuses, or any combination of the foregoing.
This Plan in an amendment and restatement of the Movado Group, Inc.
1996 Stock Incentive Plan (the "1996 Plan"); provided, however, that all awards
granted under the 1996 Plan will continue to be governed by the terms of the
1996 Plan and the Award Agreements issued thereunder.
2. DEFINITIONS
The following definitions shall be applicable throughout the Plan.
(a) "Affiliate" means (i) any entity that directly or indirectly is
controlled by, controls or is under common control with the Company and (ii) any
entity in which the Company has a significant equity interest, in either case as
determined by the Committee.
(b) "Award" means, individually or collectively, any Incentive Stock
Option, Nonqualified Stock Option, Stock Appreciation Right, Restricted Stock
Award, Phantom Stock Unit Award, Performance Share Unit Award or Stock Bonus
Award.
(c) "Award Period" means a period of time within which performance
is measured for the purpose of determining whether an Award of Performance Share
Units has been earned.
(d) "Board" means the Board of Directors of the Company.
(e) "Change in Control," shall, unless in the case of a
particular Award, the applicable Award agreement states otherwise or contains a
different definition of "Change in Control," be deemed to occur upon:
(i) the acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act")) (a "Person") of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act)
of 20% or more (on a fully diluted basis) of (A) the then outstanding shares of
common stock of the Company, taking into account as outstanding for this purpose
such common stock issuable upon the exercise of options or warrants, the
conversion of convertible stock or debt, and the exercise of any similar right
to acquire such common stock (the "Outstanding Company Common Stock")
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and (B) the combined voting power of the then outstanding voting securities of
the Company entitled to vote generally in the election of directors (the
"Outstanding Company Voting Securities"); provided, however, that for purposes
of this Agreement, the following acquisitions shall not constitute a Change of
Control: (I) any acquisition by the Company or any Affiliate, (II) any
acquisition by any employee benefit plan sponsored or maintained by the Company
or any Affiliate, (III) any acquisition by a "Permitted Transferee," as defined
in the Company's Certificate of Incorporation, (IV) any acquisition which
complies with clauses (A), (B) and (C) of subsection (v) of this Section 2(e),
or (V) in respect of an Award held by a particular Participant, any acquisition
by the Participant or any group of persons including the Participant (or any
entity controlled by the Participant or any group of persons including the
Participant);
(ii) Individuals who, on the date hereof, constitute the
Board (the "Incumbent Directors") cease for any reason to constitute at least a
majority of the Board, provided that any person becoming a director subsequent
to the date hereof, whose election or nomination for election was approved by a
vote of at least two-thirds of the Incumbent Directors then on the Board (either
by a specific vote or by approval of the proxy statement of the Company in which
such person is named as a nominee for director, without written objection to
such nomination) shall be an Incumbent Director; provided, however, that no
individual initially elected or nominated as a director of the Company as a
result of an actual or threatened election contest with respect to directors or
as a result of any other actual or threatened solicitation of proxies or
consents by or on behalf of any person other than the Board shall be deemed to
be an Incumbent Director;
(iii) the dissolution or liquidation of the Company;
(iv) the sale of all or substantially all of the
business or assets of the Company; or
(v) the consummation of a merger, consolidation,
statutory share exchange or similar form of corporate transaction involving the
Company that requires the approval of the Company's stockholders, whether for
such transaction or the issuance of securities in the transaction (a "Business
Combination"), unless immediately following such Business Combination: (A) at
least 50% of the total voting power of (x) the corporation resulting from such
Business Combination (the "Surviving Company"), or (y) if applicable, the
ultimate parent corporation that directly or indirectly has beneficial ownership
of sufficient voting securities eligible to elect a majority of the directors of
the Surviving Company (the "Parent Company"), is represented by the Outstanding
Company Voting Securities that were outstanding immediately prior to such
Business Combination (or, if applicable, is represented by shares into which the
Outstanding Company Voting Securities were converted pursuant to such Business
Combination), and such voting power among the holders thereof is in
substantially the same proportion as the voting power of the Outstanding Company
Voting Securities among the holders thereof immediately prior to the Business
Combination, (B) no Person (other than any employee benefit plan sponsored or
maintained by the Surviving Company or the Parent Company or a "Permitted
Transferee," as defined in the Company's Certificate of Incorporation), is or
becomes the beneficial owner, directly or indirectly, of 20% or more of the
total voting power of the outstanding voting securities eligible to elect
directors of the Parent Company (or, if there is no Parent Company, the
Surviving Company) and (C) at least a majority of the members of the board of
directors of the Parent Company (or, if there is no Parent Company, the
Surviving Company) following the consummation of the Business Combination were
Board members at the time of the Board's approval of the execution of the
initial agreement providing for such Business Combination.
(f) "Code" means the Internal Revenue Code of 1986, as
amended. Reference in the Plan to any section of the Code shall be deemed to
include any amendments or successor provisions to such section and any
regulations under such section.
(g) "Committee" means a committee of at least two people as
the Board may appoint to administer the Plan or, if no such committee has been
appointed by the Board, the Board. Unless the Board is acting as the Committee
or the Board specifically determines otherwise, each member of the Committee
shall, at the time he takes any action with respect to an Award under the Plan,
be an
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Eligible Director. However, the mere fact that a Committee member shall fail to
qualify as an Eligible Director shall not invalidate any Award made by the
Committee which is otherwise validly granted under the Plan.
(h) "Common Stock" means the common stock, par value $0.01 per
share, of the Company, but does not include the Class A common stock of the
Company.
(i) "Company" means Movado Group, Inc.
(j) "Date of Grant" means the date on which the granting of an
Award is authorized, or such other date as may be specified in such
authorization or, if there is no such date, the date indicated on the applicable
Award agreement.
(k) "Effective Date" of this amendment and restatement means
April 8, 2004.
(l) "Eligible Director" means a person who is (i) a
"non-employee director" within the meaning of Rule 16b-3 under the Exchange Act,
or a person meeting any similar requirement under any successor rule or
regulation and (ii) an "outside director" within the meaning of Section 162(m)
of the Code, and the Treasury Regulations promulgated thereunder; provided,
however, that clause (ii) shall apply only with respect to grants of Awards with
respect to which the Company's tax deduction could be limited by Section 162(m)
of the Code if such clause did not apply.
(m) "Eligible Person" means any (i) individual regularly
employed by the Company, a Subsidiary or Affiliate who satisfies all of the
requirements of Section 6; provided, however, that no such employee covered by a
collective bargaining agreement shall be an Eligible Person unless and to the
extent that such eligibility is set forth in such collective bargaining
agreement or in an agreement or instrument relating thereto; (ii) director of
the Company, a Subsidiary or an Affiliate or (iii) consultant or advisor to the
Company, a Subsidiary or an Affiliate who may be offered securities pursuant to
Form S-8 (which, as of the Effective Date, includes those who (A) are natural
persons and (B) provide bona fide services to the Company other than in
connection with the offer or sale of securities in a capital-raising
transaction, and do not directly or indirectly promote or maintain a market for
the Company's securities).
(n) "Exchange Act" means the Securities Exchange Act of 1934,
as amended.
(o) "Fair Market Value, on a given date means (i) if the Stock
is listed on a national securities exchange, the mean between the highest and
lowest sale prices reported as having occurred on the primary exchange with
which the Stock is listed and traded on the date prior to such date, or, if
there is no such sale on that date, then on the last preceding date on which
such a sale was reported; (ii) if the Stock is not listed on any national
securities exchange but is quoted in the National Market System of the National
Association of Securities Dealers Automated Quotation System ("NASDAQ") on a
last sale basis, the average between the high bid price and low ask price
reported on the date prior to such date, or, if there is no such sale on that
date, then on the last preceding date on which a sale was reported; or (iii) if
the Stock is not listed on a national securities exchange nor quoted in NASDAQ
on a last sale basis, the amount determined by the Committee to be the fair
market value based upon a good faith attempt to value the Stock accurately and
computed in accordance with applicable regulations of the Internal Revenue
Service.
(p) "Incentive Stock Option" means an Option granted by the
Committee to a Participant under the Plan which is designated by the Committee
as an incentive stock option as described in Section 422 of the Code and
otherwise meets the requirements set forth herein.
(q) "Mature Shares" means shares of Stock or shares of Class A
common stock of the Company owned by a Participant which are not subject to any
pledge or other security interest
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and have either been held by the Participant for six months, previously acquired
by the Participant on the open market or meet such other requirements as the
Committee may determine are necessary in order to avoid an accounting earnings
charge on account of the use of such shares to pay the Option Price or satisfy a
withholding obligation in respect of an Option.
(r) "Nonqualified Stock Option" means an Option granted by the
Committee to a Participant under the Plan which is not designated by the
Committee as an Incentive Stock Option.
(s) "Option" means an Award granted under Section 7.
(y) "Option Period" means the period described in Section
7(c).
(u) "Option Price" means the exercise price for an Option as
described in Section 7(a).
(v) "Participant" means an Eligible Person who has been
selected by the Committee to participate in the Plan and to receive an Award
pursuant to Section 6.
(w) "Performance Goals" means the performance objectives of
the Company or Affiliate during an Award Period or Restricted Period established
for the purpose of determining whether, and to what extent, Awards will be
earned for an Award Period or Restricted Period. To the extent an Award is
intended to qualify as "performance-based compensation" under Section 162(m) of
the Code, the Performance Goals shall be established with reference to one or
more of the following, either on a Company-wide basis or, as relevant, in
respect of one or more Affiliates, divisions or operations of the Company:
(i) earnings (gross, net or per share)
(ii) stock price (absolute or relative to other
companies)
(iii) market share
(iv) gross or net profit margin
(v) return on equity
(vi) sales
(vii) costs or expenses
(x) "Performance Share Unit" means a hypothetical investment
equivalent to one share of Stock granted in connection with an Award made under
Section 9.
(y) "Phantom Stock Unit" means a hypothetical investment
equivalent to one share of Stock granted in connection with an Award made under
Section 10.
(z) "Plan" means this Movado Group, Inc. 1996 Stock Incentive
Plan, as amended and restated as of April 8, 2004.
(aa) "Restricted Period" means, with respect to any share of
Restricted Stock or any Phantom Stock Unit, the period of time determined by the
Committee during which such Award is subject to the restrictions set forth in
Section 10.
(bb) "Restricted Stock" means shares of Stock issued or
transferred to a Participant subject to forfeiture and the other restrictions
set forth in Section 10.
(cc) "Restricted Stock Award" means an Award of Restricted
Stock granted under Section 10.
(dd) "Securities Act" means the Securities Act of 1933, as
amended.
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(ee) "Stock" means the Common Stock or such other authorized
shares of stock of the Company as the Committee may from time to time authorize
for use under the Plan.
(ff) "Stock Appreciation Right" or "SAR" means an Award
granted under Section 8 of the Plan.
(gg) "Stock Bonus" means an Award granted under Section 11.
(hh) "Stock Option Agreement" means any agreement between the
Company and a Participant who has been granted an Option pursuant to Section 7
which defines the rights and obligations of the parties thereto.
(ii) "Strike Price" means, in respect of an SAR, (i) in the
case of an SAR granted in tandem with an Option, the Option Price of the related
Option, or (ii) in the case of an SAR granted independent of an Option, the Fair
Market Value on the Date of Grant.
(jj) "Subsidiary" means any subsidiary of the Company as
defined in Section 424(f) of the Code.
(kk) "Vested Unit" shall have the meaning ascribed thereto in
Section 10(d).
3. Effective Date, Duration and Shareholder Approval
The amendment and restatement of the Plan is effective as of the
Effective Date; provided that the validity and exercisabilty of any and all
Awards granted on or after the Effective Date pursuant to the amended and
restated Plan (i) in respect of shares of Stock in excess of that available
under the Plan immediately prior to the Effective Date, (ii) of a type not
available under the Plan immediately prior to the Effective Date or (iii) to any
person not eligible to receive Awards under the Plan immediately prior to the
Effective Date, is contingent upon approval of the Plan by the shareholders of
the Company following the Effective Date, in a manner intended to comply with
the shareholder approval requirements of Sections 162(m) and 422 of the Code,
and of the New York Stock Exchange. No Option shall be treated as an Incentive
Stock Option unless the Plan has been approved by the shareholders of the
Company in a manner intended to comply with the shareholder approval
requirements of Section 422(b)(i) of the Code; provided that any Option intended
to be an Incentive Stock Option shall not fail to be effective solely on account
of a failure to obtain such approval, but rather such Option shall be treated as
a Nonqualified Stock Option unless and until such approval is obtained.
The expiration date of the Plan, on and after which no Awards may be
granted hereunder, shall be the day prior to the tenth anniversary of the
Effective Date; provided, however, that the administration of the Plan shall
continue in effect until all matters relating to Awards previously granted have
been settled.
4. ADMINISTRATION
The Committee shall administer the Plan. The majority of the members
of the Committee shall constitute a quorum. The acts of a majority of the
members present at any meeting at which a quorum is present or acts approved in
writing by a majority of the Committee shall be deemed the acts of the
Committee.
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Subject to the provisions of the Plan and applicable law, the
Committee shall have the power, and in addition to other express powers and
authorizations conferred on the Committee by the Plan, to: (i) designate
Participants; (ii) determine the type or types of Awards to be granted to a
Participant; (iii) determine the number of shares of Stock to be covered by, or
with respect to which payments, rights, or other matters are to be calculated in
connection with, Awards; (iv) determine the terms and conditions of any Award;
(v) determine whether, to what extent, and under what circumstances Awards may
be settled or exercised in cash, shares of Stock, other securities, other Awards
or other property, or canceled, forfeited, or suspended and the method or
methods by which Awards may be settled, exercised, canceled, forfeited, or
suspended; (vi) determine whether, to what extent, and under what circumstances
the delivery of cash, Stock, other securities, other Options other property and
other amounts payable with respect to an Award shall be deferred either
automatically or at the election of the holder thereof or of the Committee;
(vii) interpret, administer, reconcile any inconsistency, correct any default
and/or supply any omission in the Plan and any instrument or agreement relating
to, or Award made under, the Plan; (viii) establish, amend, suspend, or waive
such rules and regulations and appoint such agents as it shall deem appropriate
for the proper administration of the Plan; and (ix) make any other determination
and take any other action specified under the Plan or that the Committee deems
necessary or desirable for the administration of the Plan.
(b) Unless otherwise expressly provided in the Plan, all
designations, determinations, interpretations, and other decisions under or with
respect to the Plan or any Award or any documents evidencing Awards granted
pursuant to the Plan shall be within the sole discretion of the Committee, may
be made at any time and shall be final, conclusive and binding upon all parties,
including, without limitation, the Company, any Affiliate, any Participant, any
holder or beneficiary of any Award, and any shareholder.
(c) No member of the Committee shall be liable for any action or
determination made in good faith with respect to the Plan or any Award
hereunder.
5. Grant of Awards; Shares Subject to the Plan
The Committee may, from time to time, grant Awards of Options, Stock
Appreciation Rights, Restricted Stock, Phantom Stock Units, Performance Share
Units and/or Stock Bonuses to one or more Eligible Persons; provided, however,
that:
(a) Subject to Section 13, the aggregate number of shares of
Stock in respect of which Awards may be made under the Plan is 4,500,000 shares;
(b) Shares of Stock shall be deemed to have been used in
settlement of Awards whether they are actually delivered or the Fair Market
Value equivalent of such shares is paid in cash; provided, however, that shares
of Stock or Company Class A common stock delivered (either directly or by means
of attestation) in full or partial payment of the Option Price in accordance
with the third sentence of Section 7(b) shall be deducted from the number of
shares of Stock delivered to the Participant pursuant to such Option for
purposes of determining the number of shares of Stock acquired pursuant to the
Plan. In accordance with (and without limitation upon) the preceding sentence,
if and to the extent an Award under the Plan expires, terminates or is canceled
for any reason whatsoever without the Participant having received any benefit
therefrom, the shares covered by such Award shall again become available for
future Awards under the Plan. For purposes of the foregoing sentence, a
Participant shall not be deemed to have received any "benefit" in the case of
forfeited Restricted Stock Awards by reason of having enjoyed voting rights and
dividend rights prior to the date of forfeiture;
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(c) Stock delivered by the Company in settlement of Awards may
be authorized and unissued Stock or Stock held in the treasury of the Company or
purchased on the open market or by private purchase;
(d) Subject to Section 13, no person may be granted Options or
SARs under the Plan during any calendar year with respect to more than 1,200,000
shares of Stock; provided that such number shall be adjusted pursuant to Section
13, and shares otherwise counted against such number, only in a manner which
will not cause Options or SARs granted under the Plan to fail to qualify as
"performance-based compensation" under Section 162(m) of the Code; and
(e) Subject to Section 13, with respect to awards of
Performance Share Units, Restricted Stock or Phantom Stock Units intended to
qualify as "performance-based compensation" under Section 162(m) of the Code, no
person may be granted Performance Share Units, Restricted Stock or Phantom Stock
Units under the Plan during any calendar year with respect to more than
1,200,000 shares of Stock; provided that such number shall be adjusted pursuant
to Section 13, and shares otherwise counted against such number, only in a
manner which will not cause such Performance Share Units, Restricted Stock or
Phantom Stock Units granted under the Plan to fail to qualify as
"performance-based compensation" under Section 162(m) of the Code.
6. ELIGIBILITY
Participation shall be limited to Eligible Persons who have received
written notification from the Committee, or from a person designated by the
Committee, that they have been selected to participate in the Plan.
7. OPTIONS
The Committee is authorized to grant one or more Incentive Stock
Options or Nonqualified Stock Options to any Eligible Person; provided, however,
that no Incentive Stock Options shall be granted to any Eligible Person who is
not an employee of the Company or a Subsidiary. Each Option so granted shall be
subject to the following conditions, or to such other conditions as may be
reflected in the applicable Stock Option Agreement.
(a) OPTION PRICE. Subject to Section 7(e), the exercise price
("Option Price") per share of Stock for each Option shall be set by the
Committee at the time of grant but shall not be less than the Fair Market Value
of a share of Stock at the Date of Grant.
(b) MANNER OF EXERCISE AND FORM OF PAYMENT. No shares of Stock
shall be delivered pursuant to any exercise of an Option until payment in full
of the Option Price therefor is received by the Company. Options which have
become exercisable may be exercised by delivery of written notice of exercise to
the Committee accompanied by payment of the Option Price. The Option Price shall
be payable (i) in cash and/or shares of Stock valued at the Fair Market Value at
the time the Option is exercised (including by means of attestation of ownership
of a sufficient number of shares of Stock in lieu of actual delivery of such
shares to the Company); provided, that such shares of Stock are Mature Shares,
(ii) in the discretion of the Committee, either (A) in other property having a
fair market value on the date of exercise equal to the Option Price or (B) by
delivering to the Committee a copy of irrevocable instructions to a stockbroker
to deliver promptly to the Company an amount of loan proceeds, or proceeds from
the sale of the Stock subject to the Option, sufficient to pay the Option Price,
(iii) to the extent provided in the Stock Option Agreement, by delivery of, or
attestation as to ownership of, shares of the Company's Class A common stock
convertible into an equivalent number of shares of Stock with a fair market
value equal to the portion of the Option Price to be paid thereby; provided that
such shares of Class A common stock are Mature Shares, or (iv) by such other
method as the Committee may allow.
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(c) VESTING, OPTION PERIOD AND EXPIRATION. Options shall vest
and become exercisable in such manner and on such date or dates determined by
the Committee and shall expire after such period, not to exceed ten years, as
may be determined by the Committee (the "Option Period"); provided, however,
that notwithstanding any vesting dates set by the Committee, the Committee may,
in its sole discretion, accelerate the exercisability of any Option, which
acceleration shall not affect the terms and conditions of such Option other than
with respect to exercisability. If an Option is exercisable in installments,
such installments or portions thereof which become exercisable shall remain
exercisable until the Option expires.
(d) STOCK OPTION AGREEMENT - OTHER TERMS AND CONDITIONS. Each
Option granted under the Plan shall be evidenced by a Stock Option Agreement.
Except as specifically provided otherwise in such Stock Option Agreement, each
Option granted under the Plan shall be subject to the following terms and
conditions:
(i) Each Option or portion thereof that is exercisable
shall be exercisable for the full amount or for any part thereof.
(ii) Each share of Stock purchased through the exercise
of an Option shall be paid for in full at the time of the exercise. Each
Option shall cease to be exercisable, as to any share of Stock, when the
Participant purchases the share or exercises a related SAR or when the
Option expires.
(iii) Subject to Section 12(k), Options shall not be
transferable by the Participant except by will or the laws of descent and
distribution and shall be exercisable during the Participant's lifetime
only by him.
(iv) Each Option shall vest and become exercisable by
the Participant in accordance with the vesting schedule established by the
Committee and set forth in the Stock Option Agreement.
(v) At the time of any exercise of an Option, the
Committee may, in its sole discretion, require a Participant to deliver to
the Committee a written representation that the shares to be acquired upon
such exercise are to be acquired for investment and not for resale or with
a view to the distribution thereof. Upon such a request by the Committee,
delivery of such representation prior to the delivery of any shares issued
upon exercise of an Option shall be a condition precedent to the right of
the Participant or such other person to purchase any shares. In the event
certificates for Stock are delivered under the Plan with respect to which
such investment representation has been obtained, the Committee may cause
a legend or legends to be placed on such certificates to make appropriate
reference to such representation and to restrict transfer in the absence
of compliance with applicable federal or state securities laws.
(vi) Each Participant awarded an Incentive Stock Option
under the Plan shall notify the Company in writing immediately after the
date he or she makes a disqualifying disposition of any Stock acquired
pursuant to the exercise of such Incentive Stock Option. A disqualifying
disposition is any disposition (including any sale) of such Stock before
the later of (A) two years after the Date of Grant of the Incentive Stock
Option or (B) one year after the date the Participant acquired the Stock
by exercising the Incentive Stock Option. The Company may, if determined
by the Committee and in accordance with procedures established by it,
retain possession of any Stock acquired pursuant to the exercise of an
Incentive Stock Option as agent for the applicable Participant until the
end of the period described in the preceding sentence, subject to
complying with any instructions from such Participant as to the sale of
such Stock.
(e) INCENTIVE STOCK OPTION GRANTS TO 10% STOCKHOLDERS.
Notwithstanding anything to the contrary in this Section 7, if an Incentive
Stock Option is granted to a Participant who owns stock representing more than
ten percent of the voting power of all classes of stock of the Company or of a
Subsidiary, the Option Period shall not exceed five years from the Date of Grant
of
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such Option and the Option Price shall be at least 110 percent of the Fair
Market Value (on the Date of Grant) of the Stock subject to the Option.
(f) $100,000 PER YEAR LIMITATION FOR INCENTIVE STOCK OPTIONS.
To the extent the aggregate Fair Market Value (determined as of the Date of
Grant) of Stock for which Incentive Stock Options are exercisable for the first
time by any Participant during any calendar year (under all plans of the
Company) exceeds $100,000, such excess Incentive Stock Options shall be treated
as Nonqualified Stock Options.
(g) RELOAD OPTIONS. The Committee may provide for the grant to
any Participant of additional Options ("Reload Options") upon the exercise of
Options, including Reload Options, through the delivery of shares of Stock or
shares of Class A common stock of the Company; provided, however, that the
Reload Options (i) may only be granted in connection with a grant of
Nonqualified Stock Options; (ii) may only be granted with respect to the same
number of shares of Stock or Class A common stock as were surrendered to
exercise the Nonqualified Stock Options and the number of shares of Stock
withheld for tax purposes pursuant to Section 12(d)(ii), (iii) shall have an
exercise price per share not less than the greater of (A) five dollars more than
the exercise price of the Nonqualified Stock Options, the exercise of which
resulted in the grant of the Reload Options, or (B) 110% of the Fair Market
Value of a share of Stock on the date of exercise of the Nonqualified Stock
Options which resulted in the grant of the Reload Options, (iv) shall not be
exercisable until six months after the exercise of the Nonqualified Stock
Options which resulted in the grant of the Reload Options, (v) shall not be
exercisable after the expiration of the term of the Nonqualified Stock Options,
the exercise of which resulted in the grant of the Reload Options, and (vi)
shall otherwise be subject to the same terms and conditions of the Nonqualified
Stock Options, the exercise of which resulted in the grant of the Reload
Options. Notwithstanding any provision of this Plan or a Stock Option Agreement
to the contrary, unless the Stock Option Agreement specifically provides for the
grant of Reload Options pursuant to Section 7(g) of the Plan, no grant of a
Nonqualified Stock Option shall include a grant of Reload Options.
8. STOCK APPRECIATION RIGHTS
Any Option granted under the Plan may include SARS, either at the
Date of Grant or, except in the case of an Incentive Stock Option, by subsequent
amendment. The Committee also may award SARs to Eligible Persons independent of
any Option. An SAR shall be subject to such terms and conditions not
inconsistent with the Plan as the Committee shall impose, including, but not
limited to, the following:
(a) VESTING, TRANSFERABILITY AND EXPIRATION. SARs granted in
connection with an Option shall become exercisable, be transferable and shall
expire according to the same vesting schedule, transferability rules and
expiration provisions as the corresponding Option. An SAR granted independent of
an Option shall become exercisable, be transferable and shall expire in
accordance with a vesting schedule, transferability rules and expiration
provisions as established by the Committee and reflected in an Award agreement.
(b) AUTOMATIC EXERCISE. If on the last day of the Option
Period (or in the case of an SAR independent of an option, the period
established by the Committee after which the SAR shall expire), the Fair Market
Value exceeds the Strike Price, the Participant has not exercised the SAR or the
corresponding Option, and neither the SAR nor the corresponding Option has
expired, such SAR shall be deemed to have been exercised by the Participant on
such last day and the Company shall make the appropriate payment therefor.
(c) PAYMENT. Upon the exercise of an SAR, the Company shall
pay to the Participant an amount equal to the number of shares subject to the
SAR multiplied by the excess, if any, of the Fair Market Value of one share of
Stock on the exercise date over the Strike Price. The Company shall
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pay such excess in cash, in shares of Stock valued at Fair Market Value, or any
combination thereof, as determined by the Committee. Fractional shares shall be
settled in cash.
(d) METHOD OF EXERCISE. A Participant may exercise an SAR at
such time or times as may be determined by the Committee at the time of grant by
filing an irrevocable written notice with the Committee or its designee,
specifying the number of SARs to be exercised, and the date on which such SARs
were awarded.
(e) EXPIRATION. Except as otherwise provided in the case of
SARs granted in connection with Options, an SAR shall expire on a date
designated by the Committee which is not later than ten years after the Date of
Grant of the SAR.
9. PERFORMANCE SHARES
(a) AWARD GRANTS. The Committee is authorized to establish
Performance Share programs to be effective over designated Award Periods
determined by the Committee. At the beginning of each Award Period, the
Committee will establish in writing Performance Goals based for such Award
Period and a schedule relating the accomplishment of the Performance Goals to
the Awards to be earned by Participants. The Committee shall determine the
number of Performance Share Units to be awarded, if any, to each Participant who
is selected to receive such an Award. The Committee may add new Participants to
a Performance Share program after its commencement by making pro-rata grants.
(b) DETERMINATION OF AWARD. At the completion of a Performance
Share Award Period, or at other times as specified by the Committee, the
Committee shall calculate the number of shares of Stock earned with respect to
each Participant's Performance Share Unit Award by multiplying the number of
Performance Share Units granted to the Participant by a performance factor
representing the degree of attainment of the Performance Goals.
(c) PARTIAL AWARDS. A Participant for less than a full Award
Period, whether by reason of commencement or termination of employment or
otherwise, shall receive such portion of an Award, if any, for that Award Period
as the Committee shall determine.
(d) PAYMENT OF PERFORMANCE SHARE UNIT AWARDS. Performance
Share Unit Awards shall be payable in that number of shares of Stock determined
in accordance with Section 9(b); provided, however, that, at its discretion, the
Committee may make payment to any Participant in the form of cash. The amount of
any payment made in cash shall be based upon the Fair Market Value of the Stock
on the day prior to payment. Payments of Performance Share Unit Awards shall be
made as soon as practicable after the completion of an Award Period.
(e) ADJUSTMENT OF PERFORMANCE GOALS. The Committee may, during
the Award Period, make such adjustments to Performance Goals as it may deem
appropriate to compensate for, or reflect, (i) extraordinary or non-recurring
events experienced during an Award Period by the Company or by any other
corporation whose performance is relevant to the determination of whether
Performance Goals have been attained; (ii) any significant changes that may have
occurred during such Award Period in applicable accounting rules or principles
or changes in the Company's method of accounting or in that of any other
corporation whose performance is relevant to the determination of whether an
Award has been earned or (iii) any significant changes that may have occurred
during such Award Period in tax laws or other laws or regulations that alter or
affect the computation of the measures of Performance Goals used for the
calculation of Awards.
(f) APPLICABILITY OF SECTION 162(m). With respect to Awards of
Performance Shares intended to qualify as "performance-based compensation" under
Section 162(m) of the Code, this Section 9 (including the substance of the
Performance Goals, the timing of establishment of the Performance Goals, the
adjustment of the Performance Goals and determination of the Award) shall be
11
implemented by the Committee in a manner designed to preserve such Awards as
such "performance-based compensation."
10. Restricted Stock Awards and Phantom Stock Units
(a) AWARD OF RESTRICTED STOCK AND PHANTOM STOCK UNITS.
(i) The Committee shall have the authority (1) to grant
Restricted Stock and Phantom Stock Unit Awards to Eligible Persons, (2) to
issue or transfer Restricted Stock to Participants, and (3) to establish
terms, conditions and restrictions applicable to such Restricted Stock and
Phantom Stock Units, including the Restricted Period, which may differ
with respect to each grantee, the time or times at which Restricted Stock
or Phantom Stock Units shall be granted or become vested and the number of
shares or units to be covered by each grant.
(ii) Each Participant granted a Restricted Stock Award
shall execute and deliver to the Company an Award agreement with respect
to the Restricted Stock setting forth the restrictions and other terms and
conditions applicable to such Restricted Stock. If the Committee
determines that the Restricted Stock shall be held in escrow rather than
delivered to the Participant pending the release of the applicable
restrictions, the Committee may require the Participant to additionally
execute and deliver to the Company (i) an escrow agreement satisfactory to
the Committee and (ii) the appropriate blank stock powers with respect to
the Restricted Stock covered by such agreement. If a Participant shall
fail to execute a Restricted Stock agreement and, if applicable, an escrow
agreement and stock powers, the Award shall be null and void. Subject to
the restrictions set forth in Section 10(b), the Participant generally
shall have the rights and privileges of a stockholder as to such
Restricted Stock, including the right to vote such Restricted Stock. At
the discretion of the Committee, cash dividends and stock dividends with
respect to the Restricted Stock may be either currently paid to the
Participant or withheld by the Company for the Participant's account, and
interest may be credited on the amount of cash dividends withheld at a
rate and subject to such terms as determined by the Committee. The cash
dividends or stock dividends so withheld by the Committee and attributable
to any particular share of Restricted Stock (and earnings thereon, if
applicable) shall be distributed to the Participant upon the release of
restrictions on such share and, if such share is forfeited, the
Participant shall have no right to such cash dividends, stock dividends or
earnings.
(iii) Upon the Award of Restricted Stock, the Committee
shall cause a stock certificate registered in the name of the Participant
to be issued and, if it so determines, deposited together with the stock
powers with an escrow agent designated by the Committee. If an escrow
arrangement is used, the Committee may cause the escrow agent to issue to
the Participant a receipt evidencing any stock certificate held by it
registered in the name of the Participant.
(iv) The terms and conditions of a grant of Phantom
Stock Units shall be reflected in a written Award agreement. No shares of
Stock shall be issued at the time a Phantom Stock Unit Award is made, and
the Company will not be required to set aside a fund for the payment of
any such Award. At the discretion of the Committee, each Phantom Stock
Unit (representing one share of Stock) awarded to a Participant may be
credited with cash and stock dividends paid by the Company in respect of
one share of Stock ("Dividend Equivalents"). At the discretion of the
Committee, Dividend Equivalents may be either currently paid to the
Participant or withheld by the Company for the Participant's account, and
interest may be credited on the amount of cash Dividend Equivalents
withheld at a rate and subject to such terms as determined by the
Committee. Dividend Equivalents credited to a Participant's account and
attributable to any particular Phantom Stock Unit (and earnings thereon,
if applicable) shall be distributed to the Participant upon settlement of
such Phantom Stock Unit and, if such Phantom Stock Unit is forfeited, the
Participant shall have no right to such Dividends Equivalents.
(b) RESTRICTIONS.
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(i) Restricted Stock awarded to a Participant shall be
subject to the following restrictions until the expiration of the
Restricted Period, and to such other terms and conditions as may be set
forth in the applicable Award agreement: (1) if an escrow arrangement is
used, the Participant shall not be entitled to delivery of the stock
certificate; and (2) the shares shall be subject to forfeiture during the
Restricted Period and restrictions on transferability, each as set forth
in the Award agreement and, to the extent such shares are forfeited, the
stock certificates shall be returned to the Company, and all rights of the
Participant to such shares and as a shareholder shall terminate without
further obligation on the part of the Company.
(ii) Phantom Stock Units awarded to any Participant
shall be subject to (1) forfeiture until the expiration of the Restricted
Period, to the extent provided in the applicable Award agreement, and to
the extent such Phantom Stock Units are forfeited, all rights of the
Participant to such Phantom Stock Units shall terminate without further
obligation on the part of the Company and (2) such other terms and
conditions as may be set forth in the applicable Award agreement.
(iii) The Committee shall have the authority to remove
any or all of the restrictions on the Restricted Stock and Phantom Stock
Units whenever it may determine that, by reason of changes in applicable
laws or other changes in circumstances arising after the date of the
Restricted Stock Award or Phantom Stock Award, such action is appropriate.
(c) RESTRICTED PERIOD. The Restricted Period of Restricted
Stock and Phantom Stock Units shall commence on the Date of Grant and shall
expire from time to time as to that part of the Restricted Stock and Phantom
Stock Units indicated in a schedule established by the Committee in the
applicable Award agreement.
(d) DELIVERY OF RESTRICTED STOCK AND SETTLEMENT OF PHANTOM
STOCK UNITS. Upon the expiration of the Restricted Period with respect to any
shares of Stock covered by a Restricted Stock Award, the restrictions set forth
in Section 10(b) and the applicable Award agreement shall be of no further force
or effect with respect to shares of Restricted Stock which have not then been
forfeited, except as otherwise set forth in the applicable Award agreement. If
an escrow arrangement is used, upon such expiration, the Company shall deliver
to the Participant, or his beneficiary, without charge, the stock certificate
evidencing the shares of Restricted Stock which have not then been forfeited and
with respect to which the Restricted Period has expired (to the nearest full
share) and any cash dividends or stock dividends credited to the Participant's
account with respect to such Restricted Stock and the interest thereon, if any.
Upon the expiration of the Restricted Period with respect to any
Phantom Stock Units covered by a Phantom Stock Unit Award, the Company shall
deliver to the Participant, or his beneficiary, without charge, one share of
Stock for each Phantom Stock Unit which has not then been forfeited and with
respect to which the Restricted Period has expired ("Vested Unit"); provided,
however, that, if so noted in the applicable Award agreement, the Committee may,
in its sole discretion, elect to pay cash or part cash and part Stock in lieu of
delivering only Stock for Vested Units. If cash payment is made in lieu of
delivering Stock, the amount of such payment shall be equal to the Fair Market
Value of the Stock as of the date on which the Restricted Period lapsed with
respect to such Vested Unit.
(e) STOCK RESTRICTIONS. Each certificate representing
Restricted Stock awarded under the Plan shall bear a legend substantially in the
form of the following until the lapse of all restrictions with respect to such
Stock:
Transfer of this certificate and the shares represented hereby is
restricted pursuant to the terms of the Movado Group, Inc. 1996 Stock
Incentive Plan and a Restricted Stock Purchase and Award Agreement, dated
as of _____________, between
13
Movado Group, Inc. and __________________. A copy of such Agreement is on
file at the offices of Movado Group, Inc.
Stop transfer orders shall be entered with the Company's transfer agent and
registrar against the transfer of legended securities.
(f) APPLICABILITY OF SECTION 162(m). With respect to Awards of
Restricted Stock or Phantom Stock Units intended to qualify as
"performance-based compensation" under Section 162(m) of the Code, the Committee
shall establish and administer Performance Goals in the manner described in
Section 9 as an additional condition to the vesting and payment of such Awards.
11. STOCK BONUS AWARDS
The Committee may issue unrestricted Stock, or other awards
denominated in Stock, under the Plan to Eligible Persons, alone or in tandem
with other Awards, in such amounts and subject to such terms and conditions as
the Committee shall from time to time in its sole discretion determine. Stock
Bonus Awards under the Plan shall be granted as, or in payment of, a bonus, or
to provide incentives or recognize special achievements or contributions. With
respect to Stock Bonus Awards intended to qualify as "performance-based
compensation" under Section 162(m) of the Code, the Committee shall establish
and administer Performance Goals in the manner described in Section 9 as an
additional condition to the vesting and payment of such Stock Bonus Awards.
12. GENERAL
(a) ADDITIONAL PROVISIONS OF AN AWARD. Awards to a Participant
under the Plan also may be subject to such other provisions (whether or not
applicable to the benefit awarded to any other Participant) as the Committee
determines appropriate including, without limitation, provisions to assist the
Participant in financing the purchase of Stock upon the exercise of Options
(provided, that the Committee determines that providing such financing does not
violate the Sarbanes-Oxley Act of 2002), provisions for the forfeiture of or
restrictions on resale or other disposition of shares of Stock acquired under
any Award, provisions giving the Company the right to repurchase shares of Stock
acquired under any Award in the event the Participant elects to dispose of such
shares, provisions allowing the Participant to elect to defer the receipt of
payment in respect of Awards for a specified period or until a specified event,
and provisions to comply with Federal and state securities laws and Federal and
state tax withholding requirements. Any such provisions shall be reflected in
the applicable Award agreement.
(b) PRIVILEGES OF STOCK OWNERSHIP. Except as otherwise
specifically provided in the Plan, no person shall be entitled to the privileges
of ownership in respect of shares of Stock which are subject to Awards hereunder
until such shares have been issued to that person.
(c) GOVERNMENT AND OTHER REGULATIONS. The obligation of the
Company to settle Awards in Stock shall be subject to all applicable laws,
rules, and regulations, and to such approvals by governmental agencies as may be
required. Notwithstanding any terms or conditions of any Award to the contrary,
the Company shall be under no obligation to offer to sell or to sell and shall
be prohibited from offering to sell or selling any shares of Stock pursuant to
an Award unless such shares have been properly registered for sale pursuant to
the Securities Act with the Securities and Exchange Commission or unless the
Company has received an opinion of counsel, satisfactory to the Company, that
such shares may be offered or sold without such registration pursuant to an
available exemption therefrom and the terms and conditions of such exemption
have been fully complied with. The Company shall be under no obligation to
register for sale under the Securities Act any of the shares of Stock to be
offered or sold under the Plan. If the shares of Stock offered for sale or sold
under the Plan are offered or sold pursuant to an exemption from registration
under the Securities Act, the Company may restrict the transfer of such shares
and may legend the Stock certificates representing such shares in such manner as
it deems advisable to ensure the availability of any such exemption.
14
(d) TAX WITHHOLDING.
(i) A Participant may be required to pay to the Company
or any Affiliate and the Company or any Affiliate shall have the right and is
hereby authorized to withhold from any shares of Stock or other property
deliverable under any Award or from any compensation or other amounts owing to a
Participant the amount (in cash, Stock or other property) of any required tax
withholding and payroll taxes in respect of an Award, its exercise, or any
payment or transfer under an Award or under the Plan and to take such other
action as may be necessary in the opinion of the Company to satisfy all
obligations for the payment of such taxes.
(ii) Without limiting the generality of clause (i)
above, the Committee may, in its sole discretion, permit a Participant to
satisfy, in whole or in part, the foregoing withholding liability (but no more
than the minimum required withholding liability) by (A) delivery of Mature
Shares of Stock or Class A common stock owned by the Participant with a Fair
Market Value equal to such withholding liability or (B) having the Company
withhold from the number of shares of Stock otherwise issuable pursuant to the
exercise or settlement of the Award a number of shares with a Fair Market Value
equal to such withholding liability.
(e) CLAIM TO AWARDS AND EMPLOYMENT RIGHTS. No employee of the
Company, a Subsidiary or Affiliate, or other person, shall have any claim or
right to be granted an Award under the Plan or, having been selected for the
grant of an Award, to be selected for a grant of any other Award. Neither the
Plan nor any action taken hereunder shall be construed as giving any Participant
any right to be retained in the employ or service of the Company, a Subsidiary
or an Affiliate.
(f) DESIGNATION AND CHANGE OF BENEFICIARY. Each Participant
shall file with the Committee a written designation of one or more persons as
the beneficiary who shall be entitled to receive the amounts payable with
respect to an Award, if any, due under the Plan upon his death. A Participant
may, from time to time, revoke or change his beneficiary designation without the
consent of any prior beneficiary by filing a new designation with the Committee.
The last such designation received by the Committee shall be controlling;
provided, however, that no designation, or change or revocation thereof, shall
be effective unless received by the Committee prior to the Participant's death,
and in no event shall it be effective as of a date prior to such receipt. If no
beneficiary designation is filed by a Participant, the Beneficiary shall be
deemed to be his or her spouse or, if the Participant is unmarried at the time
of death, his or her estate.
(g) PAYMENTS TO PERSONS OTHER THAN PARTICIPANTS. If the
Committee shall find that any person to whom any amount is payable under the
Plan is unable to care for his affairs because of illness or accident, or is a
minor, or has died, then any payment due to such person or his estate (unless a
prior claim therefor has been made by a duly appointed legal representative)
may, if the Committee so directs the Company, be paid to his spouse, child,
relative, an institution maintaining or having custody of such person, or any
other person deemed by the Committee to be a proper recipient on behalf of such
person otherwise entitled to payment. Any such payment shall be a complete
discharge of the liability of the Committee and the Company therefor.
(h) NO LIABILITY OF COMMITTEE MEMBERS. No member of the
Committee shall be personally liable by reason of any contract or other
instrument executed by such member or on his behalf in his capacity as a member
of the Committee nor for any mistake of judgment made in good faith, and the
Company shall indemnify and hold harmless each member of the Committee and each
other employee, officer or director of the Company to whom any duty or power
relating to the administration or interpretation of the Plan may be allocated or
delegated, against any cost or expense (including counsel fees) or liability
(including any sum paid in settlement of a claim) arising out of any act or
omission to act in connection with the Plan unless arising out of such person's
own fraud or willful bad faith; provided, however, that approval of the Board
shall be required for the payment of any amount in settlement of a claim against
any such person. The foregoing right of indemnification shall not be exclusive
of any other rights of indemnification to which such persons may be entitled
under the Company's Articles of
15
Incorporation or By-Laws, as a matter of law, or otherwise, or any power that
the Company may have to indemnify them or hold them harmless.
(i) GOVERNING LAW. The Plan shall be governed by and construed
in accordance with the internal laws of the State of New York applicable to
contracts made and performed wholly within the State of New York.
(j) FUNDING. No provision of the Plan shall require the
Company, for the purpose of satisfying any obligations under the Plan, to
purchase assets or place any assets in a trust or other entity to which
contributions are made or otherwise to segregate any assets, nor shall the
Company maintain separate bank accounts, books, records or other evidence of the
existence of a segregated or separately maintained or administered fund for such
purposes. Holders shall have no rights under the Plan other than as unsecured
general creditors of the Company, except that insofar as they may have become
entitled to payment of additional compensation by performance of services, they
shall have the same rights as other employees under general law.
(k) NONTRANSFERABILITY.
(i) Each Award shall be exercisable only by a
Participant during the Participant's lifetime, or, if permissible under
applicable law, by the Participant's legal guardian or representative. No Award
may be assigned, alienated, pledged, attached, sold or otherwise transferred or
encumbered by a Participant otherwise than by will or by the laws of descent and
distribution and any such purported assignment, alienation, pledge, attachment,
sale, transfer or encumbrance shall be void and unenforceable against the
Company, a Subsidiary or an Affiliate; provided that the designation of a
beneficiary shall not constitute an assignment, alienation, pledge, attachment,
sale, transfer or encumbrance.
(ii) Notwithstanding the foregoing, the Committee may,
in its sole discretion, permit Awards other than Incentive Stock Options to be
transferred by a Participant, without consideration, subject to such rules as
the Committee may adopt consistent with any applicable Award agreement to
preserve the purposes of the Plan, to:
(A) any person who is a "family member" of the
Participant, as such term is used in the
instructions to Form S-8 (collectively, the
"Immediate Family Members");
(B) a trust solely for the benefit of the Participant
and his or her Immediate Family Members;
(C) a partnership or limited liability company whose
only partners or shareholders are the Participant
and his or her Immediate Family Members; or
(D) any other transferee as may be approved either (a)
by the Board or the Committee in its sole
discretion, or (b) as provided in the applicable
Award agreement;
(each transferee described in clauses (A), (B), (C) and (D) above is hereinafter
referred to as a "Permitted Transferee"); provided that the Participant gives
the Committee advance written notice describing the terms and conditions of the
proposed transfer and the Committee notifies the Participant in writing that
such a transfer would comply with the requirements of the Plan.
(iii) The terms of any Award transferred in
accordance with the immediately preceding sentence shall apply to the Permitted
Transferee and any reference in the Plan, or in any applicable Award Agreement,
to a Participant shall be deemed to refer to the Permitted Transferee,
16
except that (A) Permitted Transferees shall not be entitled to transfer any
Awards, other than by will or the laws of descent and distribution; (B)
Permitted Transferees shall not be entitled to exercise any transferred Option
unless there shall be in effect a registration statement on an appropriate form
covering the shares of Stock to be acquired pursuant to the exercise of such
Option if the Committee determines, consistent with any applicable Award
agreement, that such a registration statement is necessary or appropriate, (C)
the Committee or the Company shall not be required to provide any notice to a
Permitted Transferee, whether or not such notice is or would otherwise have been
required to be given to the Participant under the Plan or otherwise, and (D) the
consequences of the termination of the Participant's employment by, or services
to, the Company, a Subsidiary or an Affiliate under the terms of the Plan and
the applicable Award agreement shall continue to be applied with respect to the
Participant, following which any transferred Options shall be exercisable by the
Permitted Transferee only to the extent, and for the periods, specified in the
Plan and the applicable Award agreement.
(l) RELIANCE ON REPORTS. Each member of the Committee and each
member of the Board shall be fully justified in relying, acting or failing to
act, and shall not be liable for having so relied, acted or failed to act in
good faith, upon any report made by the independent public accountant of the
Company and its Affiliates and upon any other information furnished in
connection with the Plan by any person or persons other than himself.
(m) RELATIONSHIP TO OTHER BENEFITS. No payment under the Plan
shall be taken into account in determining any benefits under any pension,
retirement, profit sharing, group insurance or other benefit plan of the Company
or any Subsidiary except as otherwise specifically provided in such other plan.
(n) EXPENSES. The expenses of administering the Plan shall be
borne by the Company and its Affiliates.
(o) PRONOUNS. Masculine pronouns and other words of masculine
gender shall refer to both men and women.
(p) TITLES AND HEADINGS. The titles and headings of the
sections in the Plan are for convenience of reference only, and in the event of
any conflict, the text of the Plan, rather than such titles or headings shall
control.
(q) TERMINATION OF EMPLOYMENT. Unless an applicable Award
agreement provides otherwise, for purposes of the Plan a person who transfers
from employment or service with the Company to employment or service with a
Subsidiary or an Affiliate or vice versa shall not be deemed to have terminated
employment or service with the Company, a Subsidiary or an Affiliate.
(r) SEVERABILITY. If any provision of the Plan or any Award
agreement is or becomes or is deemed to be invalid, illegal, or unenforceable in
any jurisdiction or as to any person or Award, or would disqualify the Plan or
any Award under any law deemed applicable by the Committee, such provision shall
be construed or deemed amended to conform to the applicable laws, or if it
cannot be construed or deemed amended without, in the determination of the
Committee, materially altering the intent of the Plan or the Award, such
provision shall be stricken as to such jurisdiction, person or Award and the
remainder of the Plan and any such Award shall remain in full force and effect.
13. Changes in Capital Structure
Awards granted under the Plan and any agreements evidencing such
Awards, the maximum number of shares of Stock subject to all Awards stated in
Section 5(a) and the maximum number of shares of Stock with respect to which any
one person may be granted Awards during any period stated in Sections 5(d) or
5(e) shall be subject to adjustment or substitution, as determined by the
Committee in its sole discretion, as to the number, price or kind of a share of
Stock or other consideration subject to such
17
Awards or as otherwise determined by the Committee to be equitable (i) in the
event of changes in the outstanding Stock or in the capital structure of the
Company by reason of stock or extraordinary cash dividends, stock splits,
reverse stock splits, recapitalization, reorganizations, mergers,
consolidations, combinations, exchanges, or other relevant changes in
capitalization occurring after the Date of Grant of any such Award or (ii) in
the event of any change in applicable laws or any change in circumstances which
results in or would result in any substantial dilution or enlargement of the
rights granted to, or available for, Participants, or which otherwise warrants
equitable adjustment because it interferes with the intended operation of the
Plan. Any adjustment in Incentive Stock Options under this Section 13 shall be
made only to the extent not constituting a "modification" within the meaning of
Section 424(h)(3) of the Code, and any adjustments under this Section 13 shall
be made in a manner which does not adversely affect the exemption provided
pursuant to Rule 16b-3 under the Exchange Act. Further, with respect to Awards
intended to qualify as "performance-based compensation" under Section 162(m) of
the Code, such adjustments or substitutions shall be made only to the extent
that the Committee determines that such adjustments or substitutions may be made
without causing the Company to be denied a tax deduction on account of Section
162(m) of the Code. The Company shall give each Participant notice of an
adjustment hereunder and, upon notice, such adjustment shall be conclusive and
binding for all purposes.
Notwithstanding the above, in the event of any of the following:
A. The Company is merged or consolidated with another corporation or
entity and, in connection therewith, consideration is received by shareholders
of the Company in a form other than stock or other equity interests of the
surviving entity;
B. All or substantially all of the assets of the Company are
acquired by another person;
C. The reorganization or liquidation of the Company; or
D. The Company shall enter into a written agreement to undergo an
event described in clauses A, B or C above,
then the Committee may, in its discretion and upon at least 10 days advance
notice to the affected persons, cancel any outstanding Awards and pay to the
holders thereof, in cash or stock, or any combination thereof, the value of such
Awards based upon the price per share of Stock received or to be received by
other shareholders of the Company in the event. The terms of this Section 13 may
be varied by the Committee in any particular Award agreement.
14. Effect of Change in Control
Except to the extent reflected in a particular Award agreement:
(a) In the event of a Change in Control, notwithstanding any
provision of the Plan to the contrary, all Options and SARs shall become
immediately exercisable with respect to 100 percent of the shares subject to
such Option or SAR, and the Restricted Period shall expire immediately with
respect to 100 percent of such Phantom Stock Units or shares of Restricted Stock
(including a waiver of any applicable Performance Goals) and, to the extent
practicable, such acceleration of exercisability and expiration of the
Restricted Period (as applicable) shall occur in a manner and at a time which
allows affected Participants the ability to participate in the Change in Control
transaction with respect to the Stock subject to their Awards.
18
(b) In the event of a Change in Control, all incomplete Award
Periods in effect on the date the Change in Control occurs shall end on the date
of such change, and the Committee shall (i) determine the extent to which
Performance Goals with respect to each such Award Period have been met based
upon such audited or unaudited financial information then available as it deems
relevant, (ii) cause to be paid to each Participant partial or full Awards with
respect to Performance Goals for each such Award Period based upon the
Committee's determination of the degree of attainment of Performance Goals, and
(iii) cause all previously deferred Awards to be settled in full as soon as
possible.
(c) In addition, in the event of a Change in Control, the
Committee may in its discretion and upon at least 10 days' advance notice to the
affected persons, cancel any outstanding Awards and pay to the holders thereof,
in cash or stock, or any combination thereof, the value of such Awards based
upon the price per share of Stock received or to be received by other
shareholders of the Company in the event.
(d) The obligations of the Company under the Plan shall be
binding upon any successor corporation or organization resulting from the
merger, consolidation or other reorganization of the Company, or upon any
successor corporation or organization succeeding to substantially all of the
assets and business of the Company. The Company agrees that it will make
appropriate provisions for the preservation of Participants' rights under the
Plan in any agreement or plan which it may enter into or adopt to effect any
such merger, consolidation, reorganization or transfer of assets.
15. Nonexclusivity of the Plan
Neither the adoption of this Plan by the Board nor the submission of
this Plan to the stockholders of the Company for approval shall be construed as
creating any limitations on the power of the Board to adopt such other incentive
arrangements as it may deem desirable, including, without limitation, the
granting of stock options otherwise than under this Plan, and such arrangements
may be either applicable generally or only in specific cases.
16. Amendments and Termination
(a) AMENDMENT AND TERMINATION OF THE PLAN. The Board may amend,
alter, suspend, discontinue, or terminate the Plan or any portion thereof at any
time; provided that no such amendment, alteration, suspension, discontinuation
or termination shall be made without shareholder approval if such approval is
necessary to comply with any tax or regulatory requirement applicable to the
Plan (including as necessary to comply with any applicable stock exchange
listing requirement or to prevent the Company from being denied a tax deduction
on account of Section 162(m) of the Code); and provided further that any such
amendment, alteration, suspension, discontinuance or termination that would
impair the rights of any Participant or any holder or beneficiary of any Award
theretofore granted shall not to that extent be effective without the consent of
the affected Participant, holder or beneficiary.
(b) AMENDMENT OF AWARD AGREEMENTS. The Committee may, to the extent
consistent with the terms of any applicable Award agreement, waive any
conditions or rights under, amend any terms of, or alter, suspend, discontinue,
cancel or terminate, any Award theretofore granted or the associated Award
agreement, prospectively or retroactively; provided that any such waiver,
amendment, alteration, suspension, discontinuance, cancellation or termination
that would impair the rights of any Participant or any holder or beneficiary of
any Option theretofore granted shall not to that extent be effective without the
consent of the affected Participant, holder or beneficiary; and provided further
that, without stockholder approval, (i) no amendment or modification may reduce
the exercise price of any Option, (ii) the Committee may not cancel any
outstanding Option and replace it with a new Option (with a
19
lower exercise price) in a manner which would either (A) be reportable on the
Company's proxy statement as Options which have been "repriced" (as such term is
used in Item 402 of Regulation S-K promulgated under the Exchange Act), or (B)
result in any Option being accounted for under the "variable" method for
financial statement reporting purposes and (iii) the Committee may not take any
other action which is considered a "repricing" for purposes of the shareholder
approval rules of any applicable stock exchange.
* * *
As amended and restated by the Board of
Directors of Movado Group, Inc. at a meeting
held on April 8, 2004