STOCK OPTION AWARD AGREEMENT Standard Terms And Conditions
Exhibit
10.38
Standard
Terms And Conditions
Fossil,
Inc., a Delaware corporation
(the “Company”) has adopted the 2004 Long-Term Incentive Plan of Fossil, Inc.
(the “Long-Term Incentive Plan”) effective as of the Effective Date (as defined
in the Long-Term Incentive Plan) with the objective of retaining key executives
and other selected employees and of rewarding them for making major
contributions to the success of the Company and its Subsidiaries (as defined
in
the Long-Term Incentive Plan).
The
Long-Term Incentive Plan provides
that an employee of the Company or its Subsidiaries (the “Optionee”) may be
granted an Award (as defined in the Long-Term Incentive Plan), which may consist
of right to purchase a specified number of shares of common stock, par value
$.01 per share (“Common Stock”), of the Company at a specified price, including
rights in the form of nonqualified stock options.
In
consideration of the premises, the
terms and conditions set forth herein, the terms of the Stock Option Award
Letter Agreement (the “Award Letter”) between the Company and
Optionee, the mutual benefits to be gained by the performance thereof
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
1.
Grant of
Award; Nonqualified Stock Options. Subject to the terms and
conditions set forth herein, the Company hereby grants to the Optionee an Award
consisting of options (the “Options”) to purchase an aggregate of up to but not
exceeding the number of shares of Common Stock (the “Option Shares”)
from the Company and at a price per share as set forth in the Award Letter
(which is equal to or greater than the fair market value of the Common Stock
on
the date of grant of the Options), such number of shares and such price per
share being subject to adjustment from time to time as provided in Paragraph
14
of the Long-Term Incentive Plan. The Options are intended to
be comply with the requirements of Section 409A of the Internal
Revenue Code of 1986, as amended (the “Code”) and the regulations and other
guidance issued thereunder, so that the Options shall be exempt from such
requirements and this Agreement shall be interpreted to give effect to such
intention; provided, however, that nothing contained herein shall be construed
as a representation, guarantee or other undertaking on the part of the Company
that the Options are or will be found to be exempt from and not subject to
the
requirements of Section 409A or any other regulations or guidance issued
thereunder. The Options shall not be treated as “incentive stock
options” under Section 422 of the Code.
The
grant of this Award to the Optionee
shall not confer any right to such Optionee (or any other Optionee) to be
granted any Option or Award in the future under the Long-Term Incentive Plan,
even if options have been granted in the past.
2.
Option Period
and Vesting. The Options granted pursuant to this agreement (the
“Agreement”) may be exercised by the Optionee at any time during the ten-year
period beginning on the Grant Date specified in the Award Letter (“Option
Period”), subject to the limitation that such Options shall vest and become
exercisable in accordance with the Vesting Schedule set forth in the Award
Letter (it being understood that the right to purchase the Option Shares shall
be cumulative, so that the Optionee may purchase on or after any anniversary
and
during the remainder of the Option Period that number of Option Shares which
the
Optionee was entitled to purchase but did not purchase during any preceding
period or periods).
Notwithstanding
the Vesting Schedule set forth in the Award Letter: (i) the Committee may in
its
discretion at any time accelerate the vesting of the Options; and (ii) all
of
the Options granted hereunder shall vest upon a Change in Control of the
Company.
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3. Method
of Exercise. The Options granted pursuant to this Agreement may
be exercised by the Optionee by giving written notice of exercise to the
Secretary of the Company, which notice shall (i) state the number of Option
Shares with respect to which such Options are being exercised and (ii) be
accompanied by a check, cash or money order payable to the Company in the full
amount of the exercise price for such Options or, at the option of the Company,
by means of a cashless exercise procedure through the use of a brokerage
arrangement approved by the Company (or any combination of cash, check, money
order or cashless exercise procedure). Any shares of Common Stock
delivered in satisfaction of all or a portion of the exercise price shall be
appropriately endorsed for transfer to the Company or shall be accompanied
by
appropriate stock powers duly executed for transfer to the
Company. As promptly as practicable following the receipt of such
written notification and payment, the Company shall deliver to the Optionee
a
certificate or certificates for the number of Option Shares with respect to
which the Options have been exercised.
4. Termination
in
Event of Nonemployment. In the event that the Optionee ceases to be
employed by the Company or any of its Subsidiaries during the Option Period
for
any reason other than death, the Options granted pursuant to this Agreement
shall terminate, except to the extent that they are exercisable on the date
the
Optionee ceases to be so employed. To the extent that such Options
are exercisable on the date that the Optionee ceases to be employed by the
Company or any of its Subsidiaries for any reason other than death, such Options
may be exercised by the Optionee during the three-month period beginning on
such
date but shall terminate and be of no further force or effect at the end of
such
period.
5.
Acceleration
in Event of Death. In the event that the Optionee ceases to be
employed by the Company or any of its Subsidiaries during the Option Period
by
reason of death at a time when the Options granted pursuant hereto are still
in
force and unexpired, such unmatured Options shall be
accelerated. Such acceleration shall be effective as of the date of
death of the Optionee, and each Option so accelerated may be exercised by the
person or persons to whom the Optionee’s rights shall pass pursuant to Paragraph
13 of the Long-Term Incentive Plan during the 12-month period beginning on
such
date but shall terminate at the end of such period.
6. Assignability. The
Options granted pursuant hereto shall not be assignable or transferable by
the
Optionee other than by will or the laws of descent and distribution or pursuant
to a qualified domestic relations order as defined by Code or Title I of the
Employee Retirement Income Security Act of 1974, as amended. Any
attempt to do so contrary to the provisions hereof shall be null and
void. No
assignment of the Options herein granted shall be effective to bind the Company
unless the Company shall have been furnished with written notice thereof and
a
copy of such documents and evidence as the Company may deem necessary to
establish the validity of the assignment and the acceptance by the assignee
or
assignees of the terms and conditions hereof.
7.
No Stockholder
Rights. The Optionee shall have no rights as a stockholder of
the Company with respect to the Option Shares unless and until certificates
evidencing such Option Shares shall have been issued by the Company to the
Optionee. Until such time, the Optionee shall not be entitled to
dividends or distributions in respect of any Option Shares or to vote such
shares on any matter submitted to the stockholders of the Company. In
addition, except as to adjustments that may from time to time be made by the
Committee in accordance with the Long-Term Incentive Plan (and Paragraph 14
below), no adjustment shall be made or required to be made in respect of
dividends (ordinary or extraordinary, whether in cash, securities or any other
property) or distributions paid or made by the Company or any other rights
granted in respect of any Option Shares for which the record date for such
payment, distribution or grant is prior to the date upon which certificates
evidencing such Option Shares shall have been issued by the
Company.
8. Administration. The
Committee shall have the power to interpret the Long-Term Incentive Plan, the
Notice of Grant and this Award, and to adopt such rules for the administration,
interpretation, and application of the Long-Term Incentive Plan as are
consistent therewith and to interpret or revoke any such rules. All
actions taken and all interpretations and determinations made by the Committee
shall be final and binding upon the Optionee, the Company, and all other
interested persons. No member of the Committee shall be personally
liable for any action, determination, or interpretation made in good faith
with
respect to the Long-Term Incentive Plan or this Award.
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9.
Tax Withholding. The Company may make such provision as it
may deem appropriate for the withholding of any taxes that it determines is
required in connection with the Options granted pursuant to this
Agreement. However, the Optionee may pay all or any portion of the
taxes required to be withheld by the Company or paid by the Optionee in
connection with the exercise of all or any portion of such Options by electing
to have the Company withhold a portion of the Option Shares or by delivering
shares of Common Stock theretofore owned by the Optionee having a Fair Market
Value on the date of exercise, as determined in accordance with Paragraphs
2 and
9 of the Long-Term Incentive Plan, equal to the amount required to be withheld
or paid. The Optionee must make the foregoing election on or before
the date upon which the amount of the taxes to be withheld is determined. If
the
Optionee is subject to the short-swing profits recapture provisions of Section
16(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”),
any such election shall be subject to such additional restrictions as may be
imposed by the Committee to ensure that the satisfaction of withholding
requirements by the withholding of a portion of the Option Shares or by delivery
of shares of Common Stock theretofore owned by the Optionee shall be exempt
from
the short-swing profits recapture provisions of Section 16(b) of the Exchange
Act.
10.
Restrictions
and
Related Representations. Upon the acquisition of any Option Shares pursuant
to the exercise of the Options granted pursuant hereto, the Optionee may be
required to enter into such written representations, warranties and agreements
as the Company may reasonably request in order to comply with applicable
securities laws, the Long-Term Incentive Plan or with this
Agreement. In addition, the certificate or certificates representing
any Option Shares purchased upon the exercise of the Options will be stamped
or
otherwise imprinted with a legend in such form as the Company may require with
respect to any applicable restrictions on sale or transfer, and the stock
transfer records of the Company will reflect stop-transfer instructions, as
appropriate, with respect to such shares.
11. Notices
and
Electronic Delivery. Unless otherwise provided herein, any
notice or other communication hereunder shall be in writing and shall be given
by registered or certified mail unless the Company, in its sole discretion,
decides to deliver any documents relating to the Option or future options that
may be granted under the Long-Term Incentive Plan by electronic means to request
Optionee’s consent to participate in the Long-Term Incentive Plan by electronic
means. Optionee hereby consents to receive such documents by
electronic delivery and, if requested, to agree to participate in the Long-Term
Incentive Plan through an on-line or electronic system established and
maintained by the Company or another third party designated by the
Company. All notices of the exercise by the Optionee of the Options
granted pursuant hereto shall be directed to Fossil, Inc., Attention: Secretary,
at the Company’s then current address unless the Company, in writing or
electronically, directs Optionee otherwise. Any notice given by the
Company to the Optionee directed to him at his address on file with the Company,
and shall be effective to bind any other person who shall acquire rights
hereunder. The Company shall be under no obligation whatsoever to
advise or notify the Optionee of the existence, maturity or termination of
any
rights hereunder and the Optionee shall be deemed to have familiarized himself
with all matters contained herein and in the Long-Term Incentive Plan which
may
affect any of the Optionee’s rights or privileges hereunder.
12. Scope
of
Certain Terms. Whenever the term “Optionee” is used herein under
circumstances applicable to any other person or persons to whom this award
may
be assigned in accordance with the provisions of Paragraph 6 of this Agreement,
the term “Optionee” shall be deemed to include such person or
persons. The term “Long-Term Incentive Plan” as used herein shall be
deemed to include the 2004 Long-Term Incentive Plan of Fossil, Inc. and any
subsequent amendments thereto, together with any administrative interpretations
which have been adopted thereunder by the Committee pursuant to Paragraph 5
of
such plan.
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13. General
Restrictions. This Award is subject to the requirement that, if
at any time the Committee shall determine that (a) the listing, registration
or
qualification of the shares of Common Stock subject or related thereto upon
any
securities exchange or under any state or federal law; (b) the consent or
approval of any government regulatory body; or (c) an agreement by the recipient
of an Award with respect to the disposition of shares of Common Stock, is
necessary or desirable (in connection with any requirement or interpretation
of
any federal or state securities law, rule or regulation) as a condition of,
or
in connection with, the granting of such Award or the issuance, purchase or
delivery of shares of Common Stock thereunder, such Award may not be consummated
in whole or in part unless such listing, registration, qualification, consent,
approval or agreement shall have been effected or obtained free of any
conditions not acceptable to the Committee.
14.
Adjustments
for
Changes in Capitalization. In the event of any stock dividends,
stock splits, recapitalizations, combinations, exchanges of shares, mergers,
consolidations, liquidations, split-ups, split-offs, spin-offs or other similar
changes in capitalization, or any distributions to stockholders, including
a
rights offering, other than regular cash dividends, changes in the outstanding
stock of the Company by reason of any increase or decrease in the number of
issued shares of Common Stock resulting from a split-up or consolidation of
shares or any similar capital adjustment or the payment of any stock dividend,
any share repurchase at a price in excess of the market price of the Common
Stock at the time such repurchase is announced or other increase or decrease
in
the number of such shares, the Committee shall make appropriate adjustment
in
the number and kind of shares authorized by the Long-Term Incentive Plan, in
the
number, price or kind of shares covered by the Awards and in any outstanding
Awards under the Long-Term Incentive Plan. In the event of any
adjustment in the number of shares covered by any Award, any fractional shares
resulting from such adjustment shall be disregarded and each such Award shall
cover only the number of full shares resulting from such
adjustment.
15. Precondition
of
Legality. Notwithstanding anything to the contrary contained
herein, the Optionee agrees that he will not exercise the Options granted
pursuant hereto, and that the Company will not be obligated to issue any Option
Shares pursuant to this Agreement, if the exercise of the Options or the
issuance of such shares would constitute a violation by the Optionee or by
the
Company of any provision of any law or regulation of any governmental authority
or any national securities exchange or transaction quotation
system.
16. Governing
Law. The Option grant and the provisions of this Agreement are
governed by, and subject to, the laws of the State of Delaware, as provided
in
the Long-Term Incentive Plan.
17.
No Right of
Employment. Neither the granting of this Option, the exercise of any part
hereof, nor any provision of the Long-Term Incentive Plan or this Award shall
constitute or be evidence of any understanding, express or implied, on the
part
of the Company or any Subsidiary to employ the Participant for any specified
period.
18. Amendment. This
Award may be amended only by a writing executed by the Company and the
Participant which specifically states that it is amending this
Award. Notwithstanding the foregoing, this Award may be amended
solely by the Committee by a writing which specifically states that it is
amending this Award, so long as a copy of such amendment is delivered to the
Participant, and provided that no such amendment adversely affecting the rights
of the Participant hereunder may be made without the Participant’s written
consent. Without limiting the foregoing, the Committee reserves the
right to change, by written notice to the Participant, the provisions of the
Option or this Award in any way it may deem necessary or advisable to carry
out
the purpose of the grant as a result of any change in applicable laws or
regulations or any future law, regulation, ruling, or judicial decision,
provided that any such change shall be applicable only to Option which are
then
subject to restrictions as provided herein.
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19. Incorporation
of the Long-Term Incentive Plan. This Agreement is subject to the Long-Term
Incentive Plan, a copy of which has been furnished to the Optionee and for
which
the Optionee acknowledges receipt. The terms and provisions of the
Long-Term Incentive Plan are incorporated by reference herein. In the event
of a
conflict between any term or provision contained here in and a term or provision
of the Long-Term Incentive Plan, the applicable terms and provisions of the
Long-Term Incentive Plan shall govern and prevail.
20. Severability. If
one or more of the provisions of this Award shall be held invalid, illegal
or
unenforceable in any respect, the validity, legality and enforceability of
the
remaining provisions shall not in any way be affected or impaired thereby and
the invalid, illegal or unenforceable provisions shall be deemed null and void;
however, to the extent permissible by law, any provisions which could be deemed
null and void shall first be construed, interpreted or revised retroactively
to
permit this Award to be construed so as to first the intent of this Award and
the Long-Term Incentive Plan.
21. Construction. The
Option is being granted pursuant to Section 7 of the Long-Term Incentive Plan
and are subject to the terms of the Long-Term Incentive Plan. A copy
of the Long-Term Incentive Plan has been given to the Optionee, and additional
copies of the Long-Term Incentive Plan are available upon request during normal
business hours at the principal executive offices of the Company. To
the extent that any provision of this Award violates or is inconsistent with
an
express provision of the Long-Term Incentive Plan, the Long-Term Incentive
Plan
provision shall govern and any inconsistent provision in this Award shall be
of
no force or effect.
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