As filed with the Securities and Exchange Commission on December 1, 2000
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 4
TO
FORM S-1
REGISTRATION STATEMENT
Under
The Securities Act of 1933
GARMIN LTD.
(exact name of registrant as specified in its charter)
CAYMAN ISLANDS 3812 98-0229227 (state or other (primary standard industrial (I.R.S. employer jurisdiction of classification code number) identification number) incorporation or organization) -------------- |
Queensgate House
P.O. Box 30464SMB
113 South Church Street, George Town,
Grand Cayman, Cayman Islands
(345) 946-5203* (address, including zip code, and telephone number, including area code, of registrant's principal executive offices)
Andrew R. Etkind, Esq.
c/o Garmin International, Inc.
1200 East 151st Street
Olathe, Kansas 66062
(913) 397-8200
(name, address, including zip code, and telephone number, including area code,
of agent for service)
*Garmin Ltd. maintains its registered office at Ugland House, South Church Street, George Town, Grand Cayman, Cayman Islands, and its principal executive offices at Queensgate House, P.O. Box 30464SMB, 113 South Church Street, George Town, Grand Cayman, Cayman Islands. The executive offices of Garmin Ltd.'s principal United States subsidiary are located at 1200 East 151st Street, Olathe, Kansas 66062. The telephone number there is (913) 397-8200.
Copies to:
JOHN F. MARVIN, ESQ. VINCENT PAGANO, JR., ESQ. Sonnenschein Nath & Rosenthal Simpson Thacher & Bartlett 4520 Main Street 425 Lexington Avenue Kansas City, Missouri 64111 New York, New York 10017-3954 -------------- |
Approximate date of commencement of sale to the public: As soon as practicable after the effective date of this registration statement.
If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, please check the following box. [_]
If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [_]
Proposed Maximum Aggregate Title of Each Class of Offering Proceeds Amount of Securities to be Registered (1)(2) Registration Fee ------------------------------------------------------------------------------- Common shares, par value US$0.01 per share..................................... US$230,000,000 US$60,720(3) ------------------------------------------------------------------------------- |
The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this
registration statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the registration statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
EXPLANATORY NOTE
The sole purpose of this amendment is to file certain exhibits not previously filed and to refile an exhibit previously filed to include the relevant appendix to such exhibit. Accordingly, this Amendment consists only of the facing page, this note and Part II of the registration statement. The prospectus and financial statement schedules are unchanged and have been omitted.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution
The following table sets forth the estimated expenses, other than the underwriting discounts and commissions, payable by the registrant in connection with the offering described in the Registration Statement (all amounts are estimated except the SEC registration fee):
Securities and Exchange Commission registration fee................. $ 60,720 NASD filing fee..................................................... 6,000 Nasdaq National Market listing fee.................................. 76,625 Printing and engraving expenses..................................... 150,000 Legal fees and expenses............................................. 450,000 Accounting fees and expenses........................................ 300,000 Transfer agent fees................................................. 15,000 Miscellaneous....................................................... 41,655 ---------- Total............................................................. $1,100,000 ========== |
Item 14. Indemnification of Directors and Officers
Cayman Islands law does not limit the extent to which a company's articles of association may provide for indemnification of officers and directors, except to the extent any such provision may be held by the Cayman Islands courts to be contrary to public policy, such as to provide indemnification against civil fraud or the consequences of committing a crime. Article 152 of our Articles of Association provides for indemnification, to the fullest extent permitted by law, of officers and directors for expenses, judgments, fines and amounts paid in settlement actually and reasonably incurred in their capacities as such, and advancement of expenses of defending any such action, suit or proceeding.
Item 15. Recent Sales of Unregistered Securities
As part of the restructuring of the registrant, on September 22, 2000, substantially all the shareholders of Garmin Corporation exchanged their common shares of Garmin Corporation for 100,000,000 shares (post split) of the registrant. These shares were not registered under the Securities Act of 1933. Certain of these shares were issued to U.S. shareholders pursuant to an exemption from the registration requirements of the Securities Act of 1933 pursuant to Section 4(2) of, and Rule 506 of Regulation D under, the Securities Act of 1933. The remainder of the shares were offered and issued outside the United States to individuals who are not citizens or residents of the United States. Accordingly, the offering and issuance of these shares were not subject to the registration requirements of the Securities Act of 1933 pursuant to Regulation S under the Securities Act of 1933.
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Item 16. Exhibits and Financial Statement Schedules
(a) Exhibits Description 1.1* Form of U.S. Purchase Agreement. 1.2* Form of International Purchase Agreement. 3.1** Memorandum of Association. 3.2** Articles of Association (as amended). 4.1** Specimen share certificate. 4.2 Form of Shareholders' Rights Agreement. 5.1 Opinion of Maples and Calder, Cayman Islands counsel to the Issuer, as to the legality of the shares. 8.1 Opinion of Sonnenschein Nath & Rosenthal regarding United States tax matters. 8.2 Opinion of Maples and Calder regarding Cayman Islands tax matters (included in Exhibit 5.1). 10.1 Garmin Ltd. 2000 Equity Incentive Plan. 10.2** Garmin Ltd. 2000 Non-Employee Directors' Option Plan. 10.3** Garmin Ltd. Employee Stock Purchase Plan. 21.1** List of Subsidiaries. 23.1** Consent of Ernst & Young LLP. 23.2 Consent of Maples and Calder (included in Exhibit 5.1). Consent of Sonnenschein Nath & Rosenthal (included in Exhibit 23.3 8.1). 24.1** Powers of Attorney (included on signature page). 27.1** Financial Data Schedule. |
(b) Financial Statement Schedules
Schedule II Valuation and qualifying accounts
All other schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instructions or are inapplicable and therefore have been omitted.
Item 17. Undertakings
(a) The undersigned registrant hereby undertakes to provide to the underwriters at the closing specified in the underwriting agreement, certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.
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(b) Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the provisions described in item 14, or otherwise, we have been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than payment by a registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue.
(c) The undersigned registrant hereby undertakes that:
(i) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act of 1933 shall be deemed to be part of this registration statement as of the time it was declared effective.
(ii) For the purposes of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this Amendment No. 4 to the registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Olathe, County of Johnson, State of Kansas on December 1, 2000.
Garmin Ltd.
/s/ Gary L. Burrell By: _________________________________ Gary L. Burrell Co-Chief Executive Officer |
Pursuant to the requirements of the Securities Act of 1933, this Amendment No. 4 to the registration statement has been signed on December 1, 2000 by the following persons in the capacities indicated:
Signature Title Min H. Kao* Co-Chairman; Co-Chief Executive Officer ___________________________________________ (Co-Principal Executive Officer) Min H. Kao /s/ Gary L. Burrell Co-Chairman; Co-Chief Executive Officer ___________________________________________ (Co-Principal Executive Officer) Gary L. Burrell Kevin Rauckman* Chief Financial Officer ___________________________________________ (Principal Financial Officer and Principal Kevin Rauckman Accounting Officer) Ruey-Jeng Kao* Director ___________________________________________ Ruey-Jeng Kao |
/s/ Andrew R. Etkind *By:_________________________________ Andrew R. Etkind Attorney-in-fact Garmin International, Inc. Authorized Representative in the U.S. /s/ Gary L. Burrell By: _________________________________ Gary L. Burrell, its President |
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EXHIBIT INDEX
Exhibits Description 1.1* Form of U.S. Purchase Agreement. 1.2* Form of International Purchase Agreement. 3.1** Memorandum of Association. 3.2** Articles of Association (as amended). 4.1** Specimen share certificate. 4.2 Form of Shareholders' Rights Agreement. 5.1 Opinion of Maples and Calder, Cayman Islands counsel to the Issuer, as to the legality of the shares. Opinion of Sonnenschein Nath & Rosenthal regarding United States tax 8.1 matters. 8.2 Opinion of Maples and Calder regarding Cayman Islands tax matters (included in Exhibit 5.1). 10.1 Garmin Ltd. 2000 Equity Incentive Plan. 10.2** Garmin Ltd. 2000 Non-Employee Directors' Option Plan. 10.3** Garmin Ltd. Employee Stock Purchase Plan. 21.1** List of Subsidiaries. 23.1** Consent of Ernst & Young LLP. 23.2 Consent of Maples and Calder (included in Exhibit 5.1). 23.3 Consent of Sonnenschein Nath & Rosenthal (included in Exhibit 8.1). 24.1** Powers of Attorney (included on signature page). 27.1** Financial Data Schedule. |
** Previously filed
EXHIBIT 4.2
Form of
GARMIN LTD.
and
UMB Bank, N.A.,
Rights Agent
RIGHTS AGREEMENT
Dated as of
_______________, 2000
GARMIN LTD. RIGHTS AGREEMENT
Table of Contents
Section 1. Certain Definitions................................................................................ 1 Section 2. Appointment of a Rights Agent...................................................................... 4 Section 3. Certificates and Transfer of Rights................................................................ 4 Section 4. Form of Rights Certificates........................................................................ 7 Section 5. Countersignature and Registration.................................................................. 8 Section 6. Transfer, Split Up, Combination and Exchange of Rights Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates......................................................................... 8 Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights...................................... 9 Section 8. Cancellation and Destruction of Rights Certificates................................................ 11 Section 9. Reservation and Availability of Capital Shares..................................................... 11 Section 10. Preferred Share Record Date........................................................................ 13 Section 11. Adjustment of Purchase Price, Number and Kind of Shares or Number of Rights........................ 13 Section 12. Certificate of Adjusted Purchase Price or Number of Shares......................................... 20 Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power............................... 21 Section 14. Fractional Rights and Fractional Shares............................................................ 23 Section 15. Rights of Action................................................................................... 24 Section 16. Agreement of Right Holders......................................................................... 24 Section 17. Rights Certificate Holder Not Deemed a Shareholder................................................. 25 Section 18. Concerning the Rights Agent........................................................................ 25 Section 19. Merger or Consolidation or Change of Name of Rights Agent.......................................... 26 Section 20. Duties of Rights Agent............................................................................. 27 Section 21. Change of Rights Agent............................................................................. 29 Section 22. Issuance of New Rights Certificates................................................................ 30 Section 23. Redemption and Termination......................................................................... 30 Section 24. Notice of Certain Events........................................................................... 31 Section 25. Notices............................................................................................ 32 Section 26. Supplements and Amendments......................................................................... 33 Section 27. Successors......................................................................................... 33 Section 28. Determination and Actions by the Board of Directors, etc........................................... 33 Section 29. Benefits of this Agreement......................................................................... 34 Section 30. Severability....................................................................................... 34 Section 31. Governing Law...................................................................................... 34 Section 32. Counterparts....................................................................................... 35 Section 33. Descriptive Headings............................................................................... 35 Exhibit A Form of Resolutions of the Board of Directors Exhibit B Form of Rights Certificate Form of Assignment Certificate Notice Form of Election to Purchase Certificate Notice Exhibit C Summary of Rights to Purchase Preferred Shares |
W I T N E S S E T H
NOW, THEREFORE, in consideration of the premises and the mutual agreements herein set forth, and other good and valuable consideration, the receipt of which is hereby acknowledged, the Company and the Rights Agent hereby agree as follows.
SECTION 1. Certain Definitions.
For purposes of this Agreement, the following terms have the meanings indicated.
(i) Such Person, or any of such Person's Affiliates or Associates, beneficially owns, directly or indirectly (as determined pursuant to Rule 13d-3 of the Exchange Act);
(iii) Are beneficially owned, directly or indirectly, by any other Person with which such former Person or any of such Person's Affiliates or Associates has any agreement, arrangement or understanding (whether or not in writing) for the purpose of acquiring, holding, voting (except pursuant to a revocable proxy as described in clause (B) of subparagraph (ii) of this paragraph (e)) or disposing of any securities of the Company;
SECTION 2. Appointment of a Rights Agent.
SECTION 3. Certificates and Transfer of Rights.
(a) Common Shares Outstanding on the Record Date. Until the earlier of (unless extended by the Board of Directors of the Company) (i) the Share Acquisition Date or (ii) the close of business on the tenth calendar day (or such later date as may be determined by action of the Board of Directors prior to such time as any Person becomes an Acquiring Person) after the date of the commencement of, or first public announcement of the intent of any Person (other
(c) Issuance of Additional Common Shares and Rights. Rights shall be issued in respect of all Common Shares of the Company issued (whether originally issued or later issued) after the Record Date but prior to the earlier of the Distribution Date or the Expiration Date.
Certificates representing such Common Shares shall be deemed to be impressed on, printed on, written on or otherwise affixed to them the following legend:
This certificate also evidences and entitles the holder hereof to certain Rights as set forth in a Rights Agreement between Garmin Ltd. and UMB Bank, N.A., as Rights Agent (the "Rights Agreement"), the terms of which are hereby incorporated herein by reference and a copy of which is on file at the principal executive offices of Garmin Ltd Inc. Under certain circumstances, as set forth in the Rights Agreement, such Rights may be redeemed, may expire or may be evidenced by separate certificates and will no longer be evidenced by this certificate. Under certain circumstances, Rights issued to, or which are or were beneficially owned by, Acquiring Persons or their Affiliates or Associates (as such terms are defined in the Rights Agreement) and any subsequent holder of such Rights may become null and void. In addition, Rights held by Persons other than an Acquiring Person may not be transferred to an Acquiring Person or certain other Persons.
Until the earlier of the Distribution Date or the Expiration Date, the Rights associated with the Common Shares of the Company represented by certificates containing the foregoing legend shall be evidenced by such certificates alone, and the surrender for transfer of any of such certificates shall also constitute the transfer of the Rights associated with the Common Shares represented by such certificate.
(e) Restriction on Transfers to Acquiring Persons. Notwithstanding anything in this Agreement to the contrary, no Right shall at any time be transferable or transferred, in one transaction or in a series of related transactions (including a tender offer or exchange offer), directly or indirectly (i) to any Person who is an Acquiring Person, (ii) to any Person in connection with a transaction or series of related transactions in which such Person becomes an Acquiring Person, (iii) to any Person who, as a result of such transfer, would beneficially own 15 percent or more of the Rights, or (iv) to any Affiliate or Associate of a Person referred to in any one or more of the foregoing clauses (i), (ii), or (iii). Any purported or attempted transfer of a Right on or after the Record Date in violation of the foregoing provisions (regardless whether such purported or attempted transfer shall be recorded on any transfer ledger) shall be null and void as of the date of the purported or attempted transfer without any further action on the part of the Company or the Rights Agent, and any Right that has been the subject of any such purported or attempted transfer shall for purposes of this Agreement and the Right Certificate be deemed to be held beneficially by the Person who attempted to make such purported or attempted transfer and, thereafter, shall continue to be exercisable by such Person or, in the case of a transfer not prohibited by this Agreement, such Person's transferee, for a like number of 1/l,000ths of a Preferred Share (or other securities, cash or other assets, as the case may be) pursuant to this
SECTION 4. Form of Rights Certificates.
The Rights represented by this Rights Certificate are or were beneficially owned by a Person who was or became an Acquiring Person or an Affiliate or an Associate of an Acquiring Person (as such terms are defined in the Rights Agreement). Accordingly, this Rights Certificate and the Rights represented
SECTION 5. Countersignature and Registration.
(a) The Rights Certificates shall be executed on behalf of the Company by one of its authorized officers, either manually or by facsimile signature. The Rights Certificates shall be countersigned by the Rights Agent, either manually or by facsimile, and shall not be valid for any purpose unless so countersigned. In case any officer of the Company who shall have signed any of the Rights Certificates shall cease to be such officer of the Company before countersignature by the Rights Agent and issuance and delivery by the Company, such Rights Certificates, nevertheless, may be countersigned by the Rights Agent, issued and delivered with the same force and effect as though the person who signed such Rights Certificate had not ceased to be such officer of the Company; and any Rights Certificate may be signed on behalf of the Company by any person who, at the actual date of the execution of such Rights Certificate, shall be a proper officer of the Company to sign such Rights Certificate, although at the date of the execution of this Rights Agreement any such person was not such an officer. In case any authorized signatory of the Rights Agent who shall have countersigned any of the Right Certificates shall cease to be such signatory before delivery by the Company, such Rights Certificates, nevertheless, may be issued and delivered by the Company with the same force and effect as though the person who countersigned such Right Certificates had not ceased to be such signatory; and any Right Certificates may be countersigned on behalf of the Rights Agent by any person who, at the actual date of the countersignature of such Right Certificate, shall be a proper signatory of the Rights Agent to countersign such Right Certificate, although at the date of the execution of this Rights Agreement any such person was not such a signatory.
(b) Following the Distribution Date, the Rights Agent will keep or cause to be kept, at its principal office or offices designated as the appropriate place for surrender of the Rights Certificates upon exercise or transfer, books for registration and transfer of the Rights Certificates issued hereunder. Such books shall show the names and addresses of the respective holders of the Rights Certificates, the number of Rights evidenced on its face by each of the Rights Certificates and the date of each of the Rights Certificates, and such other information as the Rights Agent deems appropriate in the circumstances.
SECTION 6. Transfer, Split Up, Combination and Exchange of Rights Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates.
Upon receipt by the Rights Agent of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of a Rights Certificate, and in case of loss, theft or destruction, of indemnity or security of the Company and the Rights Agent reasonably satisfactory to the Rights Agent, and reimbursement to the Company and the Rights Agent of all reasonable expenses incidental thereto, and upon surrender to the Rights Agent and cancellation of the Rights Certificate if mutilated, the Rights Agent will make and deliver a new Rights Certificate of like tenor for delivery to the registered owner in lieu of the Rights Certificates so lost, stolen, destroyed or mutilated.
SECTION 7. Exercise of Rights; Purchase Price; Expiration Date of Rights.
(i) (A) requisition from any transfer agent of the Preferred Shares (or make available, if the Rights Agent is serving in its separate capacity as the transfer agent for such Preferred Shares) a certificate for the total number of 1/1,000ths of a Preferred Share to be purchased, and the Company hereby irrevocably authorizes its transfer agent to comply with all such requests, or (B) if the Company shall have elected to deposit the total number of Preferred Shares issuable upon exercise of the Rights hereunder with a depositary agent, requisition from the depositary agent a depositary receipt representing such number of 1/1,000ths of a Preferred Share as are to be purchased (in which case certificates for the Preferred Shares represented by such receipts shall be deposited by the transfer agent with the depositary agent), and the Company hereby irrevocably authorizes the depositary agent to comply with such request;
(iii) promptly after receipt of such certificate or depositary receipt, cause the same to be delivered to or upon the order of the registered holder of such Rights Certificates, registered in such name or names as may be designated by such holder; and
(iv) when appropriate, after receipt promptly deliver such cash, if any, to or upon the order of the registered holder of such Rights Certificate.
SECTION 8. Cancellation and Destruction of Rights Certificates.
All Rights Certificates surrendered for the purpose of exercise, transfer, split up, combination or exchange, if surrendered to the Company or to any of its agents, shall be delivered to the Rights Agent for cancellation or in canceled form, or if surrendered to the Rights Agent, then shall be canceled by it, and no Rights Certificates shall be issued in lieu thereof except as expressly permitted by any of the provisions of this Rights Agreement. The Company shall deliver to the Rights Agent for cancellation and retirement, and the Rights Agent shall so cancel and retire, any other Rights Certificate purchased or acquired by the Company otherwise than upon the exercise thereof. The Rights Agent shall deliver a certificate of destruction thereof to the Company and shall destroy such canceled Rights Certificates in accordance with applicable laws and regulations.
SECTION 9. Reservation and Availability of Capital Shares.
The Company covenants and agrees that it will:
(a) Cause to be reserved, through a statement of intention by the Board of Directors that such securities will be issued in relevant circumstances, out of its authorized and unissued Preferred Shares (and following the occurrence of a Triggering Event, out of its authorized and unissued Common Shares, other securities as provided herein or some combination thereof) the number of Preferred Shares or other securities as provided herein or some combination of such
securities that will be sufficient to permit the exercise in full of all outstanding Rights whenever issued.
(b) If the Preferred Shares (and following the occurrence of a Triggering Event, Common Shares and/or other securities) issuable upon the exercise of Rights are listed on any national securities exchange, use its best efforts to cause, from and after such time as the Rights become exercisable, all unissued shares reserved for such issuance to be listed on such exchange upon official notice of issuance upon such exercise.
(c) Use its best efforts to: (i) file, as soon as practicable following the first occurrence of the Distribution Date, a registration statement under the Securities Act with respect to the securities purchasable upon exercise of the Rights on an appropriate form; (ii) cause such registration statement to become effective as soon as practicable after such filing; (iii) cause such registration statement to remain effective (with a prospectus at all times meeting the requirements of the Securities Act) until the date of the expiration of the Rights; (iv) to otherwise comply with all requirements of the Securities Act and the Exchange Act applicable to the exercise of the Rights and issuance of the securities upon such exercise; and (v) take promptly such action as may be appropriate under the blue sky or securities laws of the States such laws of which would be applicable to the Rights and the exercise thereof in order for the securities issuable upon exercise of the Rights to be offered, sold and delivered in accordance with such laws. Notwithstanding any provision of this Agreement to the contrary, the Rights shall not be exercisable in any jurisdiction unless the requisite qualifications in such jurisdiction shall have been obtained.
(d) Take all such action as may be necessary to ensure that all 1/1,000ths of the Preferred Shares (and following the occurrence of a Triggering Event, the other securities as permitted herein) delivered upon exercise of Rights shall, at the time of delivery of the certificates for such shares (subject to payment of the Purchase Price), be duly and validly authorized and issued and fully paid and non-assessable.
(f) The Company agrees to provide to the Rights Agent, immediately
following the later to occur of an event described in Section 11(a)(i)(B) or
Section 13 hereof or the Distribution Date, an opinion of counsel reasonably
acceptable to the Rights Agent that the Common Shares
underlying the Rights have been or are being properly registered under the Securities Act and all securities or "blue sky" laws of the various states, as applicable, or in the alternative, the Rights are not subject to registration under the Securities Act and/or any securities or "blue sky" laws of the various states.
SECTION 10. Preferred Share Record Date.
SECTION 11. Adjustment of Purchase Price, Number and Kind of Shares or Number of Rights.
(a) In the event that:
(d) Determination of Current Market Price. For the purpose of any computation hereunder:
(g) All Rights originally issued by the Company subsequent to any adjustment made to the Purchase Price hereunder shall evidence the right to purchase, at the adjusted Purchase Price, the number of 1/1,000ths of a Preferred Share purchasable from time to time hereunder upon exercise of the Rights, all subject to further adjustment as provided herein.
(j) Irrespective of any adjustment or change in the Purchase Price or the number of 1/1,000ths of a Preferred Share issuable upon the exercise of the Rights, the Rights Certificates theretofore and thereafter issued may continue to express the Purchase Price per 1/1,000ths of a share and the number of 1/l,000ths of a share that were expressed in the initial Rights Certificates issued hereunder and if so, shall not affect in any way the adjustments or changes required under this Agreement.
(k) Before taking any action that would cause an adjustment reducing the Purchase Price below the then stated value, if any, of the number of 1/1,000ths of a Preferred Share issuable upon exercise of the Rights, the Company shall take any corporate action that may, in the opinion of its counsel, be necessary in order that the Company may validly and legally issue fully paid and non- assessable such number of 1/1,000ths of such Preferred Share at such adjusted Purchase Price.
subsidiaries (taken as a whole) to any other Person if at the time of or immediately after such consolidation, merger or sale there are any rights, warrants, other instruments or securities outstanding or agreements in effect which would substantially diminish or otherwise eliminate the benefits intended to be afforded by the Rights.
(p) Notwithstanding anything in this Agreement to the contrary, in the event that the Company shall at any time after the Record Date and prior to the Distribution Date: (i) declare a dividend on the outstanding Common Shares of the Company payable in shares of Common Shares of the Company, (ii) subdivide the outstanding Common Shares of the Company, or (iii) combine the outstanding Common Shares of the Company into a smaller number of shares, then the number of Rights associated with each Common Share of the Company then outstanding, or issued or delivered thereafter but prior to the Distribution Date, shall be proportionately adjusted so that the number of Rights thereafter associated with each Common Share of the Company following any such event shall equal the result obtained by multiplying the number of Rights associated with each Common Share of the Company immediately prior to such event by a fraction, the numerator of which shall be the total number of Common Shares of the Company outstanding immediately prior to the occurrence of the event and the denominator of which shall be the total number of Common Shares of the Company outstanding immediately following the occurrence of such event.
SECTION 12. Certificate of Adjusted Purchase Price or Number of Shares.
SECTION 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power.
(i) prepare and file a registration statement under the Securities Act, with respect to the Rights and the securities purchasable upon exercise of the Rights on an appropriate form, will use its best efforts to cause such registration statement to (A) become effective as soon as practicable after such filing, and (B) will use its best efforts to cause such registration statement to remain effective (with a prospectus at all times meeting the requirements of the Securities Act) until the date of expiration of the Rights and will use its best efforts to comply with all applicable State blue sky and other securities laws; and
(ii) deliver to holders of the Rights historical financial statements for the Principal Party and each of its Affiliates which comply in all respects with the requirements for registration under the Exchange Act.
SECTION 14. Fractional Rights and Fractional Shares.
SECTION 15. Rights of Action.
All rights of action in respect of this Agreement are vested in the respective registered holders of the Rights Certificates (and, prior to the Distribution Date, the registered holders of the Common Shares); and any registered holder of any Rights Certificate (or, prior to the Distribution Date, of the Common Shares), may, in his own behalf and for his own benefit, enforce, and may institute and maintain any suit, action or proceeding against the Company to enforce, or otherwise act in respect of, his right to exercise the Rights evidenced by such Rights Certificate in the manner provided in such Rights Certificate and in this Agreement. Without limiting the foregoing or any remedies available to the holders of Rights, it is specifically acknowledged that the holders of Rights would not have an adequate remedy at law for any breach of this Agreement and will be entitled to specific performance of the obligations under, and injunctive relief against actual or threatened violations of, the obligations of any Person subject to this Agreement.
SECTION 16. Agreement of Right Holders.
Every holder of a Right by accepting the same consents and agrees with the Company and the Rights Agents and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable only in connection with the transfer of the Common Shares;
(b) after the Distribution Date, the Rights Certificates are transferable only on the registry books of the Rights Agent if surrendered at the principal office of the Rights Agent, duly endorsed or accompanied by a proper instrument of transfer and with the appropriate forms and certificates fully executed;
SECTION 17. Rights Certificate Holder Not Deemed a Shareholder.
SECTION 18. Concerning the Rights Agent.
(a) The Company agrees to pay to the Rights Agent reasonable compensation for all services rendered by it hereunder and, from time to time, on demand of the Rights Agent, its reasonable expenses and counsel fees and other disbursements incurred in the administration and
execution of this Agreement and the exercise and performance of its duties hereunder. The Company also agrees to indemnify the Rights Agent for, and to hold it harmless against, any loss, liability or expense incurred without gross negligence, bad faith or willful misconduct on the part of the Rights Agent, for anything done or omitted by the Rights Agent in connection with the acceptance and administration of this Agreement, including the cost and expenses of defending against any claim of liability in the premises and reasonable counsel fees and expenses. The indemnification provided herein shall survive the expiration of the Rights and the termination of this Agreement.
(b) The Rights Agent shall be protected and shall incur no liability for or in respect of any action taken, suffered or omitted by it in connection with its administration of this Agreement in reliance upon any Rights Certificate or certificate for the Common Shares or for other securities of the Company, instrument of assignment or transfer, power of attorney, endorsement, affidavit, letter, notice, direction, consent, certificate, statement, or other paper or document believed by it to be genuine and to be signed, executed and, where necessary, verified or acknowledged, by the proper Person or Persons or otherwise upon the advice of counsel as set forth in Section 20 hereof.
(c) Anything in this Agreement to the contrary notwithstanding, in no event shall the Rights Agent be liable for special, indirect or consequential loss or damage of any kind whatsoever (including but not limited to lost profits), even if the Rights Agent has been advised of the likelihood of such loss or damage and regardless of the form of action.
SECTION 19. Merger or Consolidation or Change of Name of Rights Agent.
(b) In case at any time the name of the Rights Agent shall be changed and at such time any of the Rights Certificates shall have been countersigned but not delivered, the Rights Agent may adopt the countersignature under its prior name and deliver Rights Certificates so countersigned; and in case at that time any of the Rights Certificates shall not have been countersigned, the Rights Agent may countersign such Rights Certificates either in its prior name
or in its changed name; and in all such cases such Rights Certificates shall have the full force provided in the Rights Certificates and in this Agreement.
SECTION 20. Duties of Rights Agent.
The Rights Agent undertakes only the duties and obligations imposed by this Agreement upon the following terms and conditions, by all of which the Company and the holders of Rights Certificates, by their acceptance thereof, shall be bound and no implied duties shall be read into this Agreement against the Rights Agent:
(a) The Rights Agent may consult with the legal counsel (who may be legal counsel for the Company), and the opinion of such counsel shall be full and complete authorization and protection to the Rights Agent as to any action taken or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement the Rights Agent shall deem it necessary or desirable that any fact or matter be proved or established by the Company prior to taking or suffering any action hereunder, such fact or matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by a certificate signed by any one of the Chairman of the Board, the President, any Vice President, the Treasurer, any assistant Treasurer, the Secretary, or any assistant Secretary of the Company and delivered to the Rights Agent; and such certificate shall be full authorization to the Rights Agent for any action taken or suffered in good faith by it under the provisions of this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its own gross negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for, or by reason of, any of the statements of fact or recitals contained in this Agreement or in the Rights Certificates (except as to its countersignature thereof) or be required to verify the same, but all such statements and recitals are and shall be deemed to have been made by the Company only.
(f) The Company agrees that it will perform, execute, acknowledge and deliver or cause to be performed, executed, acknowledged and delivered all such further and other acts, instruments and assurances as may be reasonably required by the Rights Agent for the carrying out or performing by the Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept instructions with respect to the performance of its duties hereunder from any one of the Chairman of the Board, the President, the Chief Financial Officer, any Vice President, the Treasurer, any assistant Treasurer, the Secretary, or any assistant Secretary of the Company, and to apply to such officers for advice or instructions in connection with its duties, and it shall not be liable for any action taken or suffered to be taken by it in good faith in accordance with instructions of any such officer. Any application by the Rights Agent for written instructions from the Company with respect to any matter about which the Rights Agent is reasonably uncertain as to its responsibilities hereunder, may, at the option of the Rights Agent, set forth in writing any action proposed to be taken or omitted by the Rights Agent under this Agreement and the date on and/or after which such action shall be taken or such omission shall be effective. The Rights Agent shall not be liable for any action taken by, or omission of, the Rights Agent in accordance with a proposal included in any such application on or after the date specified in such application (which date shall not be less than five Business Days after the date any such officer of the Company actually receives such application, unless any such officer shall have consented in writing to an earlier date) unless, prior to taking any such action (or the effective date in the case of an omission), the Rights Agent shall have received written instructions in response to such application specifying the action to be taken or omitted.
(h) The Rights Agent and any shareholder, director, officer or employee of the Rights Agent may buy, sell or deal in any of the Rights or other securities of the Company or become pecuniarily interested in any transaction in which the Company may be interested, or contract with or lend money to the Company or otherwise act as fully and freely as though it were not Rights Agent under this Agreement. Nothing herein shall preclude the Rights Agent from acting in any other capacity for the Company or for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or powers hereby vested in it or perform any duty hereunder either itself or by or through its attorneys or agents, and the Rights Agent shall not be answerable or accountable for any act, default, neglect or misconduct of any such attorneys or agents or for any loss to the Company resulting from any such act, default, neglect or misconduct provided that reasonable care was exercised in the selection and continued employment thereof.
(j) No provision of this Agreement shall require the Rights Agent to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or in the exercise of its rights if there shall be reasonable grounds for believing that repayment of such funds or adequate indemnification against such risk or liability is not reasonably assured to it.
(k) If, with respect to any Rights Certificate surrendered to the Rights Agent for exercise or transfer, the certificate attached to the form of assignment or form of election to purchase, as the case may be, has either not been completed or indicated an affirmative response
to clause 1 and/or 2 thereof, the Rights Agent shall not take any further action with respect to such requested exercise of transfer without receiving written instructions of the Company.
(l) The Rights Agent shall have no responsibility to the Company, holders of Rights, any holders of Common Shares or any holders of Preferred Shares for interest or earnings or any monies held by the Rights Agent pursuant to and in compliance with this Agreement.
(m) The Rights Agent shall not be required to take notice or been deemed to have notice of any fact, event or determination (including, without limitation, any dates or events defined in this Agreement or the designation of any Person as an Acquiring Person, Affiliate or Associate) under this Agreement unless and until the Rights Agent shall be specifically notified in writing by the Company of such fact, event or determination, and all notices shall be effective if given in accordance with Section 25 hereof, and in the absence of such notice the Rights Agent may conclusively assume that no such event or condition exists.
SECTION 21. Change of Rights Agent.
The Rights Agent or any successor Rights Agent may resign and be discharged from its duties under this Agreement and upon 30 days notice in writing mailed to the Company and to each transfer agent of the Preferred Shares and the Common Shares by registered or certified mail, and to the holders of the Rights Certificates by first class mail. The Company may remove the Rights Agent or any successor Rights Agent upon 30 days' notice in writing, mailed to the Rights Agent or successor Rights Agent, as the case may be, and to each transfer agent of the Preferred Shares and the Common Shares by registered or certified mail, and to the holders of the Rights Certificates by first-class mail. If the Rights Agent shall resign or be removed or shall otherwise become incapable of acting, the Company shall appoint a successor Rights Agent. If the Company shall fail to make such appointment within a period of 30 days after giving notice of such removal or after it has been notified in writing of such resignation or incapacity by the resigning or incapacitated Rights Agent or by the holder of a Rights Certificate (who shall, with such notice, submit his Rights Certificate for inspection by the Company), then the registered holder of any Rights Certificate or the resigning Rights Agent may apply to any court of competent jurisdiction for the appointment of a new Rights Agent. Any successor Rights Agent, whether appointed by the Company or by such a court, shall be: (i) a corporation organized, existing and doing business under the laws of the United States or of any state of the United States, in good standing, which is authorized under such laws to exercise corporate trust or stock transfer powers and is subject to supervision or examination by federal or state authority and which has at the time of its appointment as Rights Agent a combined capital and surplus of at least $50 million; or (ii) an Affiliate of a corporation described in clause (i) of this sentence. After appointment, the successor Rights Agent shall be vested with the same powers, rights, duties and responsibilities as if it had been originally named as Rights Agent without further act or deed and the duties and obligations of the resigning Rights Agent shall cease and terminate; but the predecessor Rights Agent shall deliver and transfer to the successor Rights Agent any property at the time held by it hereunder, and execute and deliver any further assurance, conveyance, act or deed necessary for the purpose. Not later than the effective date of any such appointment the Company shall file notice thereof in writing with the predecessor Rights Agent and each transfer agent of the Preferred Shares and the Common Shares, and mail a notice thereof in writing to the registered holders of the Rights Certificates. Failure to give any notice
SECTION 22. Issuance of New Rights Certificates.
SECTION 23. Redemption and Termination.
SECTION 24. Notice of Certain Events.
fixed, and such notice shall be so given in the case of any action covered by clause (i) or (ii) above at least twenty days prior to the record date for determining holders of Preferred Shares for purposes of such action, and in the case of any such other action, at least twenty days prior to the date of the taking of such proposed action or the date of participation therein by the holders of the Preferred Shares, whichever shall be earlier.
SECTION 25. Notices.
Notices or demands authorized by this Agreement to be given or made by the Rights Agent or by the holder of any Rights Certificate to or on the Company shall be sufficiently given or made if sent by first-class mail, postage prepaid, addressed (until another address is filed in writing with the Rights Agent) as follows:
Garmin Ltd.
Attn: Co-Chief Executive Officer
Queensgate House
P.O. Box 30464SMB
113 South Church Street, George Town,
Grand Cayman, Cayman Islands
(345) 946-5203
With Copies to:
Garmin International, Inc.
Attn.: President
1200 East 151st Street
Olathe, Kansas 66062
UMB Bank, N.A., as Rights Agent
Attn.: Corporate Trust Department
P.O. Box 417015
Kansas City, Missouri 64141-7015
Notices or demands authorized by this Agreement to be given or made by the Company or the Rights Agent to the holder of any Rights Certificate shall be sufficiently given or made if sent by first-class mail, postage prepaid, addressed to such holder at the address of such holder as shown on the register of members of the Company.
SECTION 26. Supplements and Amendments.
SECTION 27. Successors.
All the covenants and provisions of this Agreement by or for the benefit of the Company or the Rights Agent shall bind and inure to the benefit of their respective successors and assigns hereunder.
SECTION 28. Determination and Actions by the Board of Directors, etc.
For all purposes of this Agreement, any calculation of the number of Common Shares of the Company outstanding at any particular time, including for purposes of determining the particular percentage of such outstanding Common Shares of the Company of which any Person
is the Beneficial Owner, shall be made in accordance with the provisions of Rule 13d-3(d)(l)(i) of the General Rules and Regulations under the Exchange Act. The Board of Directors of the Company shall have the exclusive power and authority to administer this Agreement and to exercise all rights and powers specifically granted to the Board or the Company, or as may be necessary or advisable in the administration of this Agreement, including, without limitation, the right and power to (i) interpret the provisions of this Agreement, and (ii) make all determinations deemed necessary or advisable for the administration of this Agreement (including a determination to redeem or not redeem the Rights or to amend the Agreement). All such actions, calculations, interpretations and determinations (including, for the purpose of clause (ii) below, all omissions with respect to the foregoing which are done or made by the Board) in good faith, shall (i) be final, conclusive and binding on the Company, the Rights Agent, the holders of the Rights Certificates and all other parties, and (ii) not subject to the Board to any liability to the holders of the Rights Certificates.
SECTION 29. Benefits of this Agreement.
Nothing in this Agreement shall be construed to give any Person other than the Company, the Rights Agent and the registered holders of the Rights Certificates any legal or equitable right, remedy or claim under this Agreement; and this Agreement shall be for the sole and exclusive benefit of the Company, the Rights Agent and the registered holders of the Rights Certificates.
SECTION 30. Severability.
SECTION 31. Governing Law.
SECTION 32. Counterparts.
This Agreement may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument.
SECTION 33. Descriptive Headings.
Descriptive headings of the several Sections of this Agreement are inserted for convenience only and shall not control or affect the meaning or construction of any of the provisions hereof.
IN WITNESS HEREOF, the parties hereto have caused this Agreement to be duly executed and attested all as of the day and year first above written.
GARMIN LTD.
Attest:
By:__________________________________ By:__________________________________ Name: Andrew R. Etkind Name: Min H. Kao Title: General Counsel and Secretary Title: Co-Chief Executive Officer |
UMB BANK, N.A., AS RIGHTS AGENT
Attest:
By:__________________________________ By:__________________________________ Name:_____________________________ Name:_____________________________ Title:____________________________ Title:____________________________ 35 |
Exhibit A |
FORM OF
RESOLUTIONS
OF
GARMIN LTD.
SERIES A PREFERRED SHARES
RESOLVED, that pursuant to the authority granted to and vested in the Board of Directors of this Company in accordance with the provisions of the Memorandum of Association and Articles of Association, a series of Series A Preferred Shares of the Company be, and it hereby is created, and the designation and amount thereof and the voting powers, preferences and relative, participating, optional and other special rights of such series, and the qualifications, limitations or restrictions thereof (in addition to the provisions set forth in the Memorandum of Association and Articles of Association, which are applicable to the Preferred Shares) are as follows:
numerator of which is the number of Common Shares that were outstanding immediately after such event and the denominator of which is the number of Common Shares outstanding immediately prior to such event. Such adjustment shall be made successively whenever such a dividend or change in the Common Shares is consummated.
(C) Dividends shall begin to accrue and be cumulative on outstanding shares of Series A Preferred Shares from the Quarterly Dividend Payment Date next preceding the date of issue of such shares of Series A Preferred Shares, unless the date of issue of such shares is prior to the record date for the first Quarterly Dividend Payment Date, in which case dividends on such shares shall begin to accrue from the date of issue of such shares, or unless the date of issue is a Quarterly Dividend Payment Date or is a date after the record date for the determination of holders of shares of Series A Preferred Shares entitled to receive a quarterly dividend and before such Quarterly Dividend Payment Date, in either of which events such dividends shall begin to accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends paid on the shares of Series A Preferred Shares in an amount less than the total amount of such dividends at the time accrued ant payable on such shares shall be allocated pro rata on a share-by-share basis among all such shares at the time outstanding. The Board of Directors may fix a record date for the determination of holders of shares of Series A Preferred Shares entitled to receive payment of a dividend or distribution declared thereon, which record date shall be no more than 30 days prior to the date fixed for the payment thereof.
(A) Subject to the provision for adjustment hereinafter set forth, each 1/1,000th share of Series A Preferred Shares shall entitle the holder thereof to one vote on all matters voted on at a meeting of the shareholders of the Company. In the event the Company shall at any time after the Rights Declaration Date (i) declare any dividend on Common Shares payable in Common Shares, or (ii) subdivide the outstanding Common Shares, or (iii) combine the outstanding Common Shares into a smaller number of shares, then in each such case the number of votes per share to which holders of shares of Series A Preferred Shares were entitled immediately prior to such event shall be adjusted by multiplying such number by a fraction the numerator of which is the number of Common Shares outstanding immediately after such event and the denominator of which is the number of Common Shares that were outstanding immediately prior to such event. Such adjustment shall be made successively whenever such a dividend or change in the Common Shares is consummated.
(B) Except as otherwise provided herein or by law, the holders of shares of Series A Preferred Shares and the holders of Common Shares shall vote together as one class on all matters voted on at a meeting of shareholders of the Company.
(C) Except as set forth herein, holders of Series A Preferred Shares shall have no special voting rights and their consent shall not be required (except to the extent they are entitled to vote with holders of Common Shares as set forth herein) for taking any corporate action.
(i) declare or pay dividends on, make any other distributions on, or redeem or purchase or otherwise acquire for consideration any capital shares of the Company ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Preferred Shares;
(ii) declare or pay dividends on or make any other distributions on any capital shares of the Company ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A Preferred Shares, except dividends paid ratably on the Series A Preferred Shares and all such parity shares on which dividends are payable or in arrears in proportion to the total amounts to which the holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for consideration shares of any capital shares of the Company ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A Preferred Shares; provided that the Company may at any time redeem, purchase or otherwise acquire shares of any such parity shares in exchange for shares of any capital shares of the Company ranking junior (either as to dividends or upon dissolution, liquidation or winding up) to the Series A Preferred Shares; or
(iv) purchase or otherwise acquire for consideration any shares of Series A Preferred Shares or any shares ranking on a parity with the Series A Preferred Shares, except in accordance with a purchase offer made in writing or by publication (as determined by the Board of Directors) to all holders of such shares upon such terms as the Board of Directors, after consideration of the respective annual dividend rates and other relative rights and preferences of the respective series and classes, shall determine in good faith will result in fair and equitable treatment among the respective series or classes.
promptly after the acquisition thereof. All such shares shall upon their cancellation become authorized but unissued Preferred Shares and may be reissued as part of a new series of Preferred Shares to be created by resolution or resolutions of the Board of Directors, subject to the conditions and restrictions on issuance set forth herein.
(A) In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company, no distribution shall be made on any capital shares of the Company that rank junior (whether as to dividends or upon liquidation, dissolution or winding up) to Series A Preferred unless prior thereto the holders of Series A Preferred Shares shall have received an amount equal to 1,000 times the aggregate amount to be distributed per share to holders of the common shares.
(B) In the event, however, that there are not sufficient assets available to permit payment in full of the Series A liquidation preference and the liquidation preferences of all other series of preferred shares, if any, which rank on a parity with the Series A Preferred Shares, then such remaining assets shall be distributed ratably to the holders of such parity shares in proportion to their respective liquidation preferences.
(C) In the event the Company shall at any time after the Rights Declaration Date (i) declare any dividend on Common Shares payable in Common Shares, (ii) subdivide the outstanding Common Shares, or (iii) combine the outstanding Common Shares into a smaller number of shares, then in each such case the amount that the holders of the Series A Preferred Shares were entitled to receive upon liquidation, dissolution or winding up of the Company immediately prior to such event shall be adjusted by multiplying such number by a fraction the numerator of which is the number of Common Shares that were outstanding immediately after such event and the denominator of which is the number of Common Shares outstanding immediately prior to such event. Such adjustment shall be made successively whenever such a dividend or change in the Common Shares is consummated.
AND BE IT FURTHER RESOLVED , that any documents heretofore executed or lawful actions heretofore taken by any of the officers of the Company in connection with the transactions herein described are hereby ratified, confirmed and approved in all respects.
EXHIBIT B
FORM OF RIGHTS CERTIFICATE
Certificate No. A- [___________] Rights
NOT EXERCISABLE AFTER [_____________] OR EARLIER IF REDEEMED BY THE COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT $[__________________] PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON (AS SUCH TERM IS DEFINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID. [THE RIGHTS PRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN ASSOCIATE OR AFFILIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT). ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF THE RIGHTS AGREEMENT.]*
Acquiring Person or an Affiliate or Associate of any such Acquiring Person (as such terms are defined in the Rights Agreement), (ii) a transferee of any such Acquiring Person, Associate or Affiliate, or (iii) under certain circumstances specified in the Rights Agreement, a transferee of a person who after such transfer, became an Acquiring Person, or an Affiliate or Associate of an Acquiring Person, such Rights shall become null and void and no holder hereof shall have any right with respect to such Rights from and after the occurrence of such Section 11(a)(ii) Event.
As provided in the Rights Agreement, the Purchase Price and the number and kind of shares of Preferred Shares or other securities which may be purchased upon the exercise of the Rights evidenced by this Rights Certificate are subject to modification and adjustment upon the happening of certain events.
This Rights Certificate is subject to all of the terms, provisions and conditions of the Rights Agreement, which terms, provisions and conditions are hereby incorporated herein by reference and made a part hereof and to which Rights Agreement reference is hereby made for a full description of the rights, limitations of rights, obligations, duties and immunities hereunder of the Rights Agent, the Company and the holders of the Rights Certificates, which limitation of rights include the temporary suspension of the exercisability of such Rights under the specific circumstances set forth in the Rights Agreement. Copies of the Rights Agreement are on file at the above-mentioned office of the Rights Agent and are also available upon written request to the Rights Agent.
This Rights Certificate, with or without other Rights Certificates, upon surrender at the office or offices the Rights Agent designated for such purpose, may be exchanged for another Rights Certificate or Rights Certificates of like tenor and date evidencing Rights entitling the holder to purchase a like aggregate number of 1/1,000ths of a share of Preferred Shares as the Rights evidenced by the Rights Certificate or Rights Certificates surrendered shall have entitled such holder to purchase. If this Rights Certificate shall be exercised in part, the holder shall be entitled to receive upon surrender hereof another Rights Certificate or Rights Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced by this Certificate may be redeemed by the Company at its options at a redemption price of $0.01 per Right.
No fractional shares of Preferred Shares will be issued upon the exercise of any Right or Rights evidenced hereby (other than fractions which are integral multiples of 1/1,000ths of a share of Preferred Shares), but in lieu thereof a cash payment will be made, as provided in the Rights Agreement.
No holder of this Rights Certificate shall be entitled to vote or receive dividends or be deemed for any purpose the holder of Preferred Shares or of any other securities of the Company which may at any time be issuable on the exercise hereof, nor shall anything contained in the Rights Agreement or herein be construed to confer upon the holder hereof, as such, any of the rights of a shareholder of the Company or any right to vote for the election of directors or upon any matter submitted to shareholders at any meeting thereof, or to give or withhold consent to any corporate action, or, to receive notice of meetings or other action affecting shareholders
(except as provided in the Rights Agreement), or to receive dividends or subscription rights, or otherwise, until the Right or Right evidenced by this Rights Certificate shall have been exercised as provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company and its corporate seal. Dated as of this [______] day of [________________], 2000.
[SEAL] GARMIN LTD. By:______________________________________ Title: Co-Chief Executive Officer ATTEST: ___________________________ Title: Secretary |
Countersigned:
[RIGHTS AGENT]
By:_____________________________
Authorized Signature
[Form of Reverse Side of Rights Certificate]
(To be executed by the registered holder if such holder desires to transfer the Rights Certificates.)
this Rights Certificate, together with all right, title and interest therein, and does hereby irrevocably constitute and appoint ________________________ Attorney, to transfer the within Rights Certificate on the books of the within- named Company, with full power of substitution.
Dated:___________________________
Signature Guaranteed:
The undersigned hereby certifies by checking the appropriate boxes that:
(1) this Rights Certificate (TM) is (TM) is not being sold, assigned and transferred by or on behalf of a Person who is or was an Acquiring Person or an Affiliate or Associate of any such Acquiring Person (as such terms are defined pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, the undersigned (TM) did (TM) did not acquire the Rights evidenced by this Rights Certificate from any Person who is, was or subsequently became an Acquiring Person or an Affiliate or Associate of an Acquiring Person.
Dated:_________________________
Signature Guaranteed:
The signature to the foregoing Assignment and Certificate must correspond to the name as written upon the face of this Rights Certificate in every particular, without alteration or enlargement or any change whatsoever.
(To be executed if holder desires to exercise Rights represented by the Rights Certificate)
To:___________________________________
The undersigned hereby irrevocably elects to exercise ______ Rights represented by this Rights Certificate to purchase the shares of Preferred Shares issuable upon the exercise of the Rights (or such other securities of the Company or of any other person which may be issuable upon the exercise of the Rights) and requests that certificates for such shares be issued in the name of and delivered to:
Please insert social security
or other identifying number
If such number of Rights shall not be all the Rights evidenced by this Rights Certificate, a new Rights Certificate for the balance remaining of such Rights shall be registered in the name of and delivered to:
Please insert social security
or other identifying number
Signature Guaranteed:
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Rights Certificate (TM) are (TM) are not being exercised by or on behalf of a Person who is or was an Acquiring Person or an Affiliate or Associate of any such Acquiring Person (as such terms are defined pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, the undersigned (TM) did (TM) did not acquire the Rights evidenced by this Rights Certificate from any Person who is, was or became an Acquiring Person or an Affiliate or Associate of an Acquiring Person.
Dated:_______________, 2000
Signature Guaranteed:
The signature to the foregoing Election to Purchase and Certificate must correspond to the name as written upon the face of this Rights Certificate in every particular, without alteration or enlargement or any change whatsoever.
EXHIBIT C
DETAILED SUMMARY OF RIGHTS TO PURCHASE
SERIES A PREFERRED SHARES
On ____________, 2000, the Board of Directors of Garmin Ltd. (the "Company") declared a dividend distribution of one Right for each outstanding share of the Company's Common Shares, $0.01 par value per share (the "Common Shares") of the Company to the shareholders of record on __________, 2000 (the "Record Date"). Each Right entitles the registered holder to purchase from the Company 1/1,000ths of a share of Series A Preferred Shares (the "Preferred Shares") or in some circumstances, Common Shares, other securities, cash or other assets as summarized below at a price of $_________ per share (the "Purchase Price"), (both shares and price are subject to adjustment as described below). The complete terms and conditions of the Rights are set forth in a Rights Agreement (the "Rights Agreement") between the Company and UMB Bank, N.A., as rights agent, dated as of ____________, 2000, as may be amended from time to time. Capitalized terms not defined herein are defined in the Rights Agreement.
Each share outstanding on the Record Date will receive one Right. Until the Distribution Date (or the earlier redemption or expiration of the Rights), Common Shares issued (whether newly issued or later issued) will have the Rights automatically attached.
In the event that a Person or group of affiliated or associated persons (an "Acquiring Person") becomes the beneficial owner of or announces a tender or exchange offer for 15 percent or more of the outstanding Common Shares of the Company, proper provision shall be made so that each holder of a Right, other than of Rights that are or were beneficially owned by the Acquiring Person (which will thereafter be null and void), will thereafter have the right to receive upon exercise that number of shares of the Preferred Shares (or in certain circumstances, Common Shares or assets or other securities of the Company) having a market value of two times the exercise price of the Right. In the event that the Company were acquired in a merger or other business combination transaction (other than pursuant to a Permitted Offer) or more than 50 percent of the Company's (together with its subsidiaries) assets or earning power were sold, proper provision shall be made so that each holder of a Right, other than of Rights that are or were beneficially owned by an Acquiring Person (which will thereafter be null and void) shall thereafter have the right to receive, upon the exercise thereof at the then current exercise price of the Right, that number of shares of the highest priority voting securities of the acquiring company (or certain of its affiliates) that at the time of such transaction would have a market value of two times the exercise price of the Right. If the Rights are exercised to acquire the Preferred Shares, then the Rights will not be exercisable to acquire the securities of any Acquiring Person.
Until ten calendar days following the earlier to occur of (unless extended by the Board of Directors and subject to the earlier redemption or expiration of the Rights): (i) the date of a public announcement that an Acquiring Person acquired, or obtained the right to acquire, beneficial ownership of 15 percent or more of the outstanding shares of the Common Shares of the Company, or (ii) the commencement or announcement of an intention to make a tender offer or exchange offer that would result in an Acquiring Person beneficially owning 15 percent or more of such outstanding Common Shares of the Company (the earlier of such dates being called
the "Distribution Date"), the Rights will be evidenced, with respect to any of the Company's Common Shares certificates outstanding as of the Record Date, by such Common Shares certificate. The certificates for Common Shares issued after the Record Date, but prior to the Distribution Date will have a notation referencing the Rights Agreement. The Rights Agreement provides that, until the Distribution Date, the Rights will be transferred with and only with the Company's Common Shares, and until the Distribution Date (or earlier redemption or expiration of the Rights), the surrender for transfer of any of the Company's Common Shares certificates outstanding as of the Record Date, will also constitute the transfer of the Rights associated with the Common Shares represented by such certificate. As soon as practicable following the Distribution Date, separate certificates evidencing the Rights ("Rights Certificates") will be mailed to holders of record of the Company's Common Shares as of the close of business on the Distribution Date and such separate Rights Certificates alone will evidence the Rights.
Permitted Offer is defined in the Rights Agreement as a tender offer that is for all outstanding Common Shares of the Company at a price and on terms determined to be adequate prior to the purchase of shares under such tender or exchange offer, by at least 70% of the members of the Board of Directors of the Company, taking into account all factors that such directors deem relevant including, without limitation, prices that could reasonably be achieved if the Company or its assets were sold on an orderly basis designed to realize maximum value and otherwise in the best interests of the Company and its shareholders (other than the Person or any Affiliate or Associate thereof for whose benefit the offer is being made).
The Purchase Price payable, and the number of shares of Preferred Shares (or Common Shares, other securities, cash or other assets, as the case may be) issuable upon exercise of the Rights are subject to adjustment from time to time to prevent dilution (i) in the event of a shares dividend on, or a subdivision, combination or reclassification of the Preferred Shares, (ii) upon the grant to holders of the Preferred Shares of certain rights or warrants to subscribe for shares of the Preferred Shares or convertible securities at less than the current market price of the Preferred Shares or (iii) upon the distribution to holders of the Preferred Shares of evidences of indebtedness or assets (excluding regular periodic cash dividends out of earnings or retained earnings or dividends payable in the Preferred Shares) or of subscription rights or warrants (other than those referred to above).
With certain exceptions, no adjustment in the Purchase Price will be required until cumulative adjustments require an adjustment of at least 1 percent in such Purchase Price. No fractional shares will be issued (other than fractional shares which are integral multiples of 1/1,000ths of a share of Preferred Shares) and, in lieu thereof, an adjustment in cash will be made based on the market price of the Preferred Shares on the last Trading Date prior to the date of exercise.
The Rights are not exercisable until the Distribution Date. The Rights will expire on _________, 2010, unless earlier redeemed by the Company as described below.
At any time prior to 5:00 p.m. New York, New York time on the tenth calendar day after the first date after the public announcement that an Acquiring Person has acquired beneficial ownership of 15 percent or more of the outstanding shares of the Common Shares of the Company (the "Share Acquisition Date"), the Company may redeem the Rights in whole, but not in part, at a price of $0.01 per Right (the "Redemption Price"). Following the Share Acquisition
Date, but prior to an event listed in Section 13(a) of the Rights Agreement (i.e. a merger, consolidation or sale of more than 50 percent of the assets or earnings power of the Company and its subsidiaries), the Company may redeem the Rights in connection with any event specified in Section 13(a) in which all shareholders are treated alike and which does not include the Acquiring Person or its Affiliates or Associates. In addition, the Company's right of redemption may be reinstated following an inadvertent trigger of the Rights (as determined by the Board) if an Acquiring Person reduces its beneficial ownership to 10 percent or less of the outstanding Common Shares of the Company in a transaction or series of transactions not involving the Company. Immediately upon the action of the Board of Directors of the Company electing to redeem the Rights, the Company shall make announcement thereof, and upon such election, the right to exercise the Rights will terminate and the only right of the holders of Rights will be to receive the Redemption Price.
Until a Right is exercised, the holder thereof, as such, will have no rights as a shareholder of the Company, including, without limitation, the right to vote or to receive dividends. While the distribution of the Rights will not be taxable to shareholders of the Company, shareholders may, depending on the circumstances, recognize taxable income in the event that the Rights become exercisable for the Preferred Shares (or other securities, as the case may be) of the Company.
Prior to the Distribution Date the Company may amend or supplement any provision of the Rights Agreement without the consent of the holders of the Rights. Following the Distribution Date, the Company may amend the provisions of the Rights Agreement in order to cure any ambiguity, to correct any defect or inconsistency, to make changes deemed necessary or desirable so long as such changes do not adversely affect the interests of the holders of the Rights (excluding the interests of any Acquiring Person and its affiliates and associates). In either case, however, the Company may not amend or supplement the Rights Agreement to change or supplement the Redemption Price, Final Expiration Date, the Purchase Price or the number of 1/1,000ths of a share of Preferred Shares for which a Right is exercisable.
The Rights may have the effect of impeding a change in control of the Company without the prior consent of the Company's Board of Directors, and the Rights could cause substantial dilution to a person that attempts to acquire the Company without conditioning the offer on redemption of the Rights by the Company's Board of Directors or on the acquisition by such person of a substantial number of Rights.
A copy of the Rights Agreement has been filed with the Securities and Exchange Commission as an Exhibit to a Registration Statement on Form S-1 dated _________, 2000. A copy of the Rights Agreement is available free of charge from the Company by written request to Garmin Ltd., c/o Garmin International, Inc., 1200 E. 151st Street, Olathe, Kansas 66062. This summary description of the Rights does not purport to be complete and is qualified in its entirety by reference to the Rights Agreement, which is hereby incorporated herein by reference. In the event of a conflict between this summary and the Rights Agreement, the Rights Agreement will prevail.
EXHIBIT 5.1
[Maples and Calder Letterhead]
29th November, 2000
Garmin Ltd.
P.O. Box 309
George Town
Grand Cayman
Cayman Islands
Dear Sirs:
At your request, we have examined the Registration Statement on Form S-1 initially submitted by Garmin Ltd., a Cayman Islands company (the "Company"), with the Securities and Exchange Commission on 11th September, 2000, (the "Registration Statement"), relating to the registration under the Securities Act of 1933, as amended, of (i) up to 7,875,000 of the Company's Common Shares, US$0.01 par value per share (the "Firm Shares"), being offered by the Company, plus up to 184,210 shares that may be issued upon exercise of the underwriters' over-allotment option (the "Additional Shares", together with the Firm Shares, the "Shares") and (ii) up to 2,625,000 shares of the Company's Common Shares (the "Firm Outstanding Shares") being offered by certain selling shareholders specified therein (the "Selling Shareholders") plus up to 1,390,780 shares that may be purchased upon exercise of the underwriters over-allotment option to purchase additional shares from the Selling Shareholders (the "Additional Outstanding Shares" together with the Firm Outstanding Shares, the "Outstanding Shares").
As counsel to the Company, we have examined the corporate authorisations taken by the Company in connection with the sale of the Shares by the Company and have assumed that the Outstanding Shares have been paid for in accordance with the resolutions authorising their issue.
It is our opinion that:
(i) the Shares to be offered and sold by the Company have been duly and validly authorized, and when issued, sold and paid for in the manner described in the Registration Statement and in accordance with the resolutions adopted by the Board of Directors of the Company and when appropriate entries have been made in the Register of Members of the Company, will be legally issued, fully paid and nonassessable;
(ii) the Outstanding Shares to be offered and sold by the Selling Shareholders have been legally and validly issued, and are fully paid and nonassessable; and
(iii) the information in the Registration Statement under "Tax Considerations - Cayman Islands Tax Considerations" to the extent it constitutes matters of law, summaries of legal matters or legal conclusions, has been reviewed by us and is correct in all material respects, and our opinion set forth under "Cayman Islands Tax Considerations" is confirmed.
We consent to the use of this opinion as an exhibit to the Registration Statement and further consent to all references to us in the Registration Statement, the prospectus constituting a part thereof and any amendments thereto.
Yours faithfully,
/s/ Maples and Calder Maples and Calder |
EXHIBIT 8.1
[Sonnenschein Nath & Rosenthal Letterhead]
November 30, 2000
Garmin Ltd.
Queensgate House
P.O. Box 30464SMB
113 South Church Street, George Town,
Grand Cayman, Cayman Islands
Ladies and Gentlemen:
We are acting as your United States tax counsel in connection with the Registration Statement on Form S-1 (the "Registration Statement") to be filed by the Company with the Securities and Exchange Commission under the Securities Act of 1933, as amended (the "Act"), for the registration of a maximum of 10,500,000 common shares of the Company, with a par value $0.01 per share (the "Common Shares").
We have advised the Company in connection with the description of the material United States federal income tax consequences to holders of Common Shares of the Company. We are of the opinion that the section of the prospectus forming a part of the Registration Statement entitled "United States Federal Income Tax Considerations", insofar as it relates to United States federal income tax matters applicable to holders of Common Shares discussed therein, accurately reflects the material United States federal income tax consequences that may be relevant with respect to the acquisition, ownership and disposition of Common Shares, but such section does not purport to discuss all United States income tax consequences that may be relevant to a particular United States Common Shareholder in light of its particular circumstances.
We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the reference to us in the prospectus forming a part of the Registration Statement. This consent is not to be construed as an admission that we are a person whose consent is required to be filed with the Registration Statement under the provisions of the Act.
Sincerely,
/s/ Sonnenschein Nath & Rosenthal Sonnenschein Nath & Rosenthal |
EXHIBIT 10.1
Garmin Ltd.
2000 Equity Incentive Plan
Page ---- Table of Contents Article 1. Establishment, Objectives and Duration............................. 1 1.1. Establishment of the Plan............................................. 1 1.2. Objectives of the Plan................................................ 1 1.3. Duration of the Plan.................................................. 1 Article 2. Definitions........................................................ 1 Article 3. Administration..................................................... 7 3.1. Board and Committee................................................... 7 3.2. Powers of the Board................................................... 7 Article 4. Shares Subject to the Plan......................................... 9 4.1. Number of Shares Available............................................ 9 4.2. Adjustments in Authorized Shares......................................10 4.3. Newly Issued Shares or Treasury Shares................................10 Article 5. Eligibility and General Conditions of Awards.......................10 5.1. Eligibility...........................................................10 5.2. Grant Date............................................................10 5.3. Maximum Term..........................................................10 5.4. Award Agreement.......................................................10 5.5. Restrictions on Share Transferability.................................11 5.6. Termination of Affiliation............................................11 5.7. Nontransferability of Awards..........................................13 Article 6. Stock Options......................................................14 6.1. Grant of Options......................................................14 6.2. Award Agreement.......................................................14 6.3. Option Price..........................................................14 6.4. Grant of Incentive Stock Options......................................15 6.5. Exercise of Options...................................................16 Article 7. Stock Appreciation Rights..........................................16 7.1. Grant of SARs.........................................................16 7.2. Exercise of SARs......................................................17 7.3. Payment of SAR Benefit................................................17 Article 8. Restricted Shares..................................................17 8.1. Grant of Restricted Shares............................................17 8.2. Award Agreement.......................................................17 8.3. Consideration.........................................................17 8.4. Effect of Forfeiture..................................................17 8.5. Escrow; Legends.......................................................18 -i- |
Article 9. Performance Units and Performance Shares...........................18 9.1. Grant of Performance Units and Performance Shares.....................18 9.2. Value/Performance Goals...............................................18 9.3. Payment of Performance Units and Performance Shares...................18 9.4. Form and Timing of Payment of Performance Units and Performance Shares..............................................................18 Article 10. Bonus Shares and Deferred Shares..................................19 10.1. Bonus Shares..........................................................19 10.2. Deferred Shares.......................................................19 Article 11. Beneficiary Designation...........................................19 Article 12. Deferrals.........................................................19 Article 13. Rights of Employees...............................................20 13.1. Employment............................................................20 13.2. Participation.........................................................20 Article 14. Amendment, Modification, and Termination..........................20 14.1. Amendment, Modification, and Termination..............................20 14.2. Adjustments Upon Certain Unusual or Nonrecurring Events...............20 14.3. Awards Previously Granted.............................................20 Article 15. Withholding.......................................................20 15.1. Mandatory Tax Withholding.............................................20 15.2. Notification under Code Section 83(b).................................21 Article 16. Equity Incentive Plans of Foreign Subsidiaries....................21 Article 17. Additional Provisions.............................................21 17.1. Successors............................................................21 17.2. Gender and Number.....................................................21 17.3. Severability..........................................................21 17.4. Requirements of Law...................................................21 17.5. Securities Law Compliance.............................................22 17.6. No Rights as a Shareholder............................................22 17.7. Nature of Payments....................................................22 17.8. Governing Law.........................................................22 -ii- |
Garmin Ltd. 2000 Equity Incentive Plan |
Article 1. Establishment, Objectives and Duration
1.1. Establishment of the Plan. Garmin Ltd., a Cayman Islands corporation (the "Company"), hereby establishes an incentive compensation plan to be known as the Garmin Ltd. 2000 Equity Incentive Plan (the "Plan"). The Plan was adopted by the Board of Directors of the Company (the "Board"), on October 20, 2000, and was approved by the shareholders of the Company on October 24, 2000. The Plan is effective as of November 1, 2000 (the "Effective Date").
1.2. Objectives of the Plan. The Plan is intended to allow employees of the Company and its Subsidiaries to acquire or increase equity ownership in the Company, or to be compensated under the Plan based on growth in the Company's equity value, thereby strengthening their commitment to the success of the Company and stimulating their efforts on behalf of the Company, and to assist the Company and its Subsidiaries in attracting new employees and retaining existing employees. The Plan is also intended to optimize the profitability and growth of the Company through incentives which are consistent with the Company's goals; to provide incentives for excellence in individual performance; and to promote teamwork.
1.3. Duration of the Plan. The Plan shall commence on the Effective Date and shall remain in effect, subject to the right of the Board to amend or terminate the Plan at any time pursuant to Article 14 hereof, until all Shares subject to it shall have been purchased or acquired according to the Plan's provisions.
Article 2. Definitions
Whenever used in the Plan, the following terms shall have the meanings set forth below:
2.1. "Article" means an Article of the Plan.
2.2. "Award" means Options, Restricted Shares, Bonus Shares, Deferred Shares, SARs, Performance Units or Performance Shares granted under the Plan.
2.3. "Award Agreement" means a written agreement by which an Award is evidenced.
2.4. "Beneficial Owner" has the meaning specified in Rule 13d-3 of the SEC under the Exchange Act.
2.5. "Board" has the meaning set forth in Section 1.1.
2.6. "Bonus Shares" means Shares that are awarded to a Grantee without cost and without restrictions in recognition of past performance (whether determined by reference to another employee benefit plan of the Company or otherwise) or as an incentive to become an employee of the Company or a Subsidiary.
2.7. "Cause" means, unless otherwise defined in an Award Agreement,
(a) a Grantee's conviction of, plea of guilty to, or plea of nolo contendere to a felony or other crime that involves fraud, dishonesty or moral turpitude,
(b) any willful action or omission by a Grantee which would constitute grounds for immediate dismissal under the employment policies of the Company or the Subsidiary by which Grantee is employed, including but not limited to intoxication with alcohol or illegal drugs while on the premises of the Company or any Subsidiary, or violation of sexual harassment laws or the internal sexual harassment policy of the Company or the Subsidiary by which Grantee is employed,
(c) a Grantee's habitual neglect of duties, including but not limited to repeated absences from work without reasonable excuse, or
(d) a Grantee's willful and intentional material misconduct in the performance of his duties that results in financial detriment to the Company or any Subsidiary;
provided, however, that for purposes of clauses (b), (c) and (d), Cause shall not include any one or more of the following: bad judgment, negligence or any act or omission believed by the Grantee in good faith to have been in or not opposed to the interest of the Company (without intent of the Grantee to gain, directly or indirectly, a profit to which the Grantee was not legally entitled). A Grantee who agrees to resign his from affiliation with the Company or a Subsidiary in lieu of being terminated for Cause may be deemed to have been terminated for Cause for purposes of this Plan.
2.8. "Change of Control" means, unless otherwise defined in an Award Agreement, any one or more of the following:
(a) any Person other than (i) a Subsidiary, (ii) any employee benefit
plan (or any related trust) of the Company or any of its Subsidiaries or
(iii) any Excluded Person, becomes the Beneficial Owner of 25% or more of
the common shares of the Company or of Voting Securities representing 25%
or more of the combined voting power of the Company (such a person or
group, a "25% Owner"), except that (i) no Change of Control shall be deemed
to have occurred solely by reason of such beneficial ownership by a
corporation with respect to which both more than 70% of the common shares
of such corporation and Voting Securities representing more than 70% of the
aggregate voting power of such corporation are then owned, directly or
indirectly, by the persons who were the direct or indirect owners of the
common shares and Voting Securities of the Company immediately before such
acquisition in substantially the same proportions as their ownership,
immediately before such acquisition, of the common shares and Voting
Securities of the Company, as the case may be and (ii) such corporation
shall not be deemed a 25% Owner; or
(b) the Incumbent Directors (determined using the Effective Date as the baseline date) cease for any reason to constitute at least a majority of the directors of the Company then serving; or
(c) approval by the shareholders of the Company of a merger, reorganization, consolidation, or similar transaction, or a plan or agreement for the sale or other disposition of all or substantially all of the consolidated assets of the Company or a plan of liquidation of the Company (any of the foregoing transactions, a "Reorganization Transaction") which, based on information included in the proxy and other written materials distributed to the Company's stockholders in connection with the solicitation by the Company of such shareholder approval, is not expected to qualify as an Exempt Reorganization Transaction; or
(d) the consummation by the Company of a Reorganization Transaction that for any reason fails to qualify as an Exempt Reorganization Transaction as of the date of such consummation, notwithstanding the fact that such Reorganization Transaction was expected to so qualify as of the date of such shareholder approval.
The definition of "Change of Control" may be amended at any time prior to the occurrence of a Change of Control, and such amended definition shall be applied to all Awards granted under the Plan whether or not outstanding at the time such definition is amended, without requiring the consent of any Grantee. Notwithstanding the occurrence of any of the foregoing events, (a) a Change of Control shall be deemed not to have occurred with respect to any Section 16 Person if such Section 16 Person is, by agreement (written or otherwise), a participant on such Section 16 Person's own behalf in a transaction which causes the Change of Control to occur, (b) an IPO shall not be deemed to be a Change of Control, and (c) a Change of Control shall not occur with respect to a Grantee if, in advance of such event, the Grantee agrees in writing that such event shall not constitute a Change of Control.
2.9. "Change of Control Value" means the Fair Market Value of a Share on the date of a Change of Control.
2.10. "Code" means the Internal Revenue Code of 1986, as amended from time to time, and regulations and rulings thereunder. References to a particular section of the Code include references to successor provisions of the Code or any successor statute.
2.11. "Committee" has the meaning set forth in Article 3.
2.12. "Company" has the meaning set forth in Section 1.1.
2.13. "Deferred Shares" means Shares that are awarded to a Grantee on a deferred basis pursuant to Section 10.2.
2.14. "Disability" means a permanent and total disability, within the meaning of Code Section 22(e)(3), as determined by the Board in good faith, upon receipt of medical advice from one or more individuals, selected by the Board, who are qualified to give professional medical advice.
2.15. "Effective Date" has the meaning set forth in Section 1.1.
2.16. "Eligible Person" means any employee (including any officer) of the Company or any Subsidiary, including any such employee who is on an approved leave of absence or has been subject to a disability which does not qualify as a Disability.
2.17. "Exchange Act" means the Securities Exchange Act of 1934, as amended. References to a particular section of the Exchange Act include references to successor provisions.
2.18. "Excluded Person" means any Person who, along with such Person's Affiliates and Associates (as such terms are defined in Rule 12b-2 of the General Rules and Regulations under the Exchange Act) is the Beneficial Owner of 15% or more of the Shares outstanding as of the Effective Date.
2.19. "Exempt Reorganization Transaction" means a Reorganization Transaction which results in the Persons who were the direct or indirect owners of the outstanding common shares and Voting Securities of the Company immediately before such Reorganization Transaction becoming, immediately after the consummation of such Reorganization Transaction, the direct or indirect owners of both more than 70% of the then-outstanding common shares of the Surviving Corporation and Voting Securities representing more than 70% of the aggregate voting power of the Surviving Corporation, in substantially the same respective proportions as such Persons' ownership of the common shares and Voting Securities of the Company immediately before such Reorganization Transaction.
2.20. "Fair Market Value" means (A) with respect to any property other than Shares, the fair market value of such property determined by such methods or procedures as shall be established from time to time by the Board, and (B) with respect to Shares, as of any date other than the IPO Date, the average of the high and low trading prices on such date on the NASDAQ National Market System (or, if no sale of Shares was reported for such date, on the next preceding date on which a sale of Shares was reported), (i) if the Shares are not listed on the NASDAQ NMS, the average of the high and low trading prices of the Shares on such date on the New York Stock Exchange Composite Transactions Tape (or, if no sale of Shares was reported for such date, on the next preceding date on which a sale of Shares was reported), (ii) if the Shares are not listed on the NASDAQ NMS or the New York Stock Exchange, the average of the high and low trading prices of the Shares on such other national exchange on which the Shares are principally traded or as reported by the NASDAQ Stock Market, or similar organization, or if no such quotations are available, the average of the high bid and low asked quotations in the over-the-counter market; in either case for such date (or if no such transactions in Shares were reported for such date, on the next preceding date on which a sale of Shares was reported); or (iii) in the event that there shall be no public market for the Shares, the fair market value of the Shares as determined by the Board. Solely as of the IPO Date, Fair Market Value of a Share is the price to the public pursuant to the form of final prospectus used in connection with the IPO, as indicated on the cover page of such prospectus or otherwise.
2.21. "Freestanding SAR" means an SAR that is granted independently of any other Award.
2.22. "Good Reason" means any action by the Company or the Subsidiary employing a Grantee which results in any of the following without the Grantee's consent: (a) a material
diminution or other material adverse change in the Grantee's position, authority or duties, (b) requiring the Grantee to be based at any office or location more than 50 miles from the location where he or she was previously based; (c) a material diminution in the Grantee's compensation in the aggregate, other than a diminution applicable to all similarly situated employees.
2.23. "Grant Date" has the meaning set forth in Section 5.2.
2.24. "Grantee" means an individual who has been granted an Award.
2.25. "including" or "includes" mean "including, without limitation," or "includes, without limitation", respectively.
2.26. "Incumbent Directors" means, as of any specified baseline date,
individuals then serving as members of the Board who were members of the Board
as of the date immediately preceding such baseline date; provided that any
subsequently-appointed or elected member of the Board whose election, or
nomination for election by shareholders of the Company or the Surviving
Corporation, as applicable, was approved by a vote or written consent of a
majority of the directors then comprising the Incumbent Directors shall also
thereafter be considered an Incumbent Director, unless the initial assumption of
office of such subsequently-elected or appointed director was in connection with
(i) an actual or threatened election contest, including a consent solicitation,
relating to the election or removal of one or more members of the Board, (ii) a
"tender offer" (as such term is used in Section 14(d) of the Exchange Act), or
(iii) a proposed Reorganization Transaction.
2.27. "IPO" means an initial public offering of Shares as contemplated in the registration statement on Form S-1 filed by the Company with the Securities and Exchange Commission on September 11, 2000.
2.28. "IPO Date" means the effective date of the underwriting agreement between the Company and the underwriters of the IPO.
2.29. "Option" means an option granted under Article 6 of the Plan, including an incentive stock option.
2.30. "Option Price" means the price at which a Share may be purchased by a Grantee pursuant to an Option.
2.31. "Option Term" means the period beginning on the Grant Date of an Option and ending on the expiration date of such Option, as specified in the Award Agreement for such Option and as may, consistent with the provisions of the Plan, be extended from time to time by the Board prior to the expiration date of such Option then in effect.
2.32. "Performance Period" has the meaning set forth in Section 9.2.
2.33. "Performance Share" or "Performance Unit" has the meaning set forth in Article 9.
2.34. "Period of Restriction" means the period during which the transfer of Restricted Shares is limited in some way (based on the passage of time, the achievement of performance
goals, or upon the occurrence of other events as determined by the Board) or the Shares are subject to a substantial risk of forfeiture, as provided in Article 8.
2.35. "Person" shall have the meaning ascribed to such term in Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof, including a "group" as defined in Section 13(d) thereof.
2.36. "Plan" has the meaning set forth in Section 1.1.
2.37. "Reorganization Transaction" has the meaning set forth in Section 2.7(c).
2.38. "Required Withholding" has the meaning set forth in Article 15.
2.39. "Restricted Shares" means Shares that are subject to transfer restrictions and are subject to forfeiture if conditions specified in the Award Agreement applicable to such Shares are not satisfied.
2.40. "Rule 16b-3" means Rule 16b-3 promulgated by the SEC under the Exchange Act, together with any successor rule, as in effect from time to time.
2.41. "SAR" means a stock appreciation right.
2.42. "SEC" means the United States Securities and Exchange Commission, or any successor thereto.
2.43. "Section" means, unless the context otherwise requires, a Section of the Plan.
2.44. "Section 16 Person" means a person who is subject to obligations under Section 16 of the Exchange Act with respect to transactions involving equity securities of the Company.
2.45. "Share" means a common share, $0.01 par value, of the Company.
2.46. "Strike Price" of any SAR shall equal, for any Tandem SAR (whether granted at the same time as or after the grant of the related Option), the Option Price of such Option, or for any other SAR, 100% of the Fair Market Value of a Share on the Grant Date of such SAR; provided that the Board may specify a higher Strike Price in the Award Agreement.
2.47. "Subsidiary" means with respect to any Person (a) any corporation of which more than 50% of the Voting Securities are at the time, directly or indirectly, owned by such Person, and (b) any partnership or limited liability company in which such Person has a direct or indirect interest (whether in the form of voting power or participation in profits or capital contribution) of more than 50%.
2.48. "Substitute Option" has the meaning set forth in Section 6.3.
2.49. "Surviving Corporation" means the corporation resulting from a Reorganization Transaction or, if Voting Securities representing at least 50% of the aggregate voting power of
such resulting corporation are directly or indirectly owned by another corporation, such other corporation.
2.50. "Tandem SAR" means an SAR that is granted in connection with a related Option, the exercise of which shall require cancellation of the right to purchase a Share under the related Option (and when a Share is purchased under the related Option, the Tandem SAR shall similarly be canceled).
2.51. "Termination of Affiliation" occurs on the first day on which an individual is for any reason no longer providing services to the Company or any Subsidiary in the capacity of an employee, or with respect to an individual who is an employee of a Subsidiary, the first day on which such Subsidiary ceases to be a Subsidiary.
2.52. "Voting Securities" of a corporation means securities of such corporation that are entitled to vote generally in the election of directors, but not including any other class of securities of such corporation that may have voting power by reason of the occurrence of a contingency.
Article 3. Administration
3.1. Board and Committee. Subject to Article 14, and to Section 3.2, the
Plan shall be administered by the Board, or a committee of the Board appointed
by the Board to administer the Plan ("Plan Committee"). To the extent the Board
considers it desirable for transactions relating to Awards to be eligible to
qualify for an exemption under Rule 16b-3 after the IPO, the Plan Committee
shall consist of two or more directors of the Company, all of whom qualify as
"non-employee directors" within the meaning of Rule 16b-3. To the extent the
Board considers it desirable for compensation delivered pursuant to Awards to be
eligible to qualify for an exemption from the limit on tax deductibility of
compensation under Section 162(m) of the Code after the IPO, the Plan Committee
shall consist of two or more directors of the Company, all of whom shall qualify
as "outside directors" within the meaning of Code Section 162(m). The number of
members of the Plan Committee shall from time to time be increased or decreased,
and shall be subject to such conditions, including, but not limited to having
exclusive authority to make certain grants of Awards or to perform such other
acts, in each case as the Board deems appropriate to permit transactions in
Shares pursuant to the Plan to satisfy such conditions of Rule 16b-3 or Code
Section 162(m) as then in effect.
Any references herein to "Board" are, except as the context requires otherwise, references to the Board or the Plan Committee, as applicable.
3.2. Powers of the Board. Subject to the express provisions of the Plan, the Board has full and final authority and sole discretion as follows:
(a) taking into consideration the reasonable recommendations of management, to determine when, to whom and in what types and amounts Awards should be granted and the terms and conditions applicable to each Award, including the Option Price, the Option Term, the benefit payable under any SAR, Performance Unit or Performance Share, and whether or not specific Awards shall be granted in connection with other specific Awards,
and if so whether they shall be exercisable cumulatively with, or alternatively to, such other specific Awards;
(b) to determine the amount, if any, that a Grantee shall pay for Restricted Shares, whether and on what terms to permit or require the payment of cash dividends thereon to be deferred, when Restricted Shares (including Restricted Shares acquired upon the exercise of an Option) shall be forfeited and whether such shares shall be held in escrow;
(c) to construe and interpret the Plan and to make all determinations necessary or advisable for the administration of the Plan;
(d) to make, amend, and rescind rules relating to the Plan, including rules with respect to the exercisability and nonforfeitability of Awards upon the Termination of Affiliation of a Grantee;
(e) to determine the terms and conditions of all Award Agreements (which need not be identical) and, with the consent of the Grantee, to amend any such Award Agreement at any time, among other things, to permit transfers of such Awards to the extent permitted by the Plan; provided that the consent of the Grantee shall not be required for any amendment which (A) does not adversely affect the rights of the Grantee, or (B) is necessary or advisable (as determined by the Board) to carry out the purpose of the Award as a result of any new or change in existing applicable law;
(f) to cancel, with the consent of the Grantee, outstanding Awards and to grant new Awards in substitution therefor;
(g) to accelerate the exercisability (including exercisability within a period of less than six months after the Grant Date) of, and to accelerate or waive any or all of the terms and conditions applicable to, any Award or any group of Awards for any reason and at any time, including in connection with a Termination of Affiliation;
(h) subject to Section 5.3, to extend the time during which any Award or group of Awards may be exercised;
(i) to make such adjustments or modifications to Awards to Grantees who are working outside the United States as are advisable to fulfill the purposes of the Plan or to comply with applicable local law, and to authorize foreign Subsidiaries to adopt plans as provided in Article 16;
(j) to delegate to any member of the Board or committee of Board members such of its powers as it deems appropriate, including the power to sub-delegate, except that only a member of the Board of Directors of the Company (or a committee thereof) may grant Awards from time to time to specified categories of Eligible Persons in amounts and on terms to be specified by the Board; provided that after the IPO, no such grants shall be made other than by the Board of Directors of the Company or the Committee to individuals who are then Section 16 Persons or other than by the Committee to individuals who are then or are deemed likely to become a "covered employee" within the meaning of Code Section 162(m);
(k) to delegate to officers, employees or independent contractors of the Company matters involving the routine administration of the Plan and which are not specifically required by any provision of this Plan of to be performed by the Board of Directors of the Company;
(l) to delegate its duties and responsibilities under the Plan with respect to foreign Subsidiary plans, except its duties and responsibilities with respect to Section 16 Persons, and (A) the acts of such delegates shall be treated hereunder as acts of the Board and (B) such delegates shall report to the Board regarding the delegated duties and responsibilities;
(m) to impose such additional terms and conditions upon the grant, exercise or retention of Awards as the Board may, before or concurrently with the grant thereof, deem appropriate, including limiting the percentage of Awards which may from time to time be exercised by a Grantee; and
(n) to take any other action with respect to any matters relating to the Plan for which it is responsible.
All determinations on any matter relating to the Plan or any Award Agreement may be made in the sole and absolute discretion of the Board, and all such determinations of the Board shall be final, conclusive and binding on all Persons. No member of the Board shall be liable for any action or determination made with respect to the Plan or any Award.
Article 4. Shares Subject to the Plan
4.1. Number of Shares Available.
(a) Plan Limit. Subject to Section 4.3 and to adjustment as provided in
Section 4.2, the number of Shares hereby reserved for delivery under the Plan is
3,500,000. The number of Shares over which SARs may be granted is 350,000. The
number of Shares over which Performance Units may be granted is 175,000. The
maximum number of Shares that may be delivered as Restricted Shares is 35,000,
and the maximum number of Bonus Shares that may be awarded is 35,000. If any
Shares subject to an Award granted hereunder are forfeited or an Award or any
portion thereof otherwise terminates or is settled without the issuance of
Shares, or in the case of SARs and Performance Units, without the payment of
cash, the Shares subject to such Award, to the extent of any such forfeiture,
termination or settlement, shall again be available for grant under the Plan. If
any Shares are withheld for the payment of taxes related to an Award, such
Shares, to the extent of any such withholding, shall again be available or shall
increase the number of Shares available, as applicable, for grant under the
Plan. The Board may from time to time determine the appropriate methodology for
calculating the number of Shares issued pursuant to the Plan.
(b) Individual Limit. No Grantee may be granted Options, Restricted Shares, Bonus Stock or Deferred Shares, Performance Units or Performance Shares in Shares, or any combination thereof, an aggregate number of Shares under the Plan that exceeds 400,000 shares in any 5-year period. In any 5-year period, no Grantee may receive SARs, Performance Units or Performance
Shares relating to more than 100,000 Shares under the Plan. If a previously granted Option, SAR, Performance Unit or Performance Share is forfeited, canceled or repriced, such forfeited, canceled or repriced Option, SAR, Performance Share or Performance Unit, as the case may be, shall continue to be counted against the maximum number of Shares, SARs, Performance Units or Performance Shares that may be delivered to any Grantee over the life of the Plan.
4.2. Adjustments in Authorized Shares. In the event that the Board determines that any dividend or other distribution (whether in the form of cash, Shares, other securities, or other property), recapitalization, share split, reverse share split, subdivision, consolidation or reduction of capital, reorganization, merger, scheme of arrangement, split-up, spin-off or combination involving the Company or repurchase or exchange of Shares or other rights to purchase Shares or other securities of the Company, or other similar corporate transaction or event that occurs at any time after the IPO Date affects the Shares such that any adjustment is determined by the Board to be appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan, then the Board shall, in such manner as it may deem equitable, adjust any or all of (i) the number and type of Shares (or other securities or property of the Company or any Person that is a party to a Reorganization Transaction with the Company) with respect to which Awards may be granted, (ii) the number and type of Shares (or other securities or property of the Company or any Person that is a party to a Reorganization Transaction with the Company) subject to outstanding Awards, and (iii) the grant or exercise price with respect to any Award or, if deemed appropriate, make provision for a cash payment to the holder of an outstanding Award or the substitution of other property for Shares subject to an outstanding Award; provided, that the number of Shares subject to any Award denominated in Shares shall always be a whole number.
4.3. Newly Issued Shares or Treasury Shares. Shares delivered in connection with Awards may be newly issued or may be treasury shares.
Article 5. Eligibility and General Conditions of Awards
5.1. Eligibility. The Board may grant Awards to any Eligible Person, whether or not he or she has previously received an Award.
5.2. Grant Date. The Grant Date of an Award shall be the date on which the Board grants the Award or such later date as specified by the Board in the Award Agreement.
5.3. Maximum Term. Subject to the following proviso, the Option Term or other period during which an Award may be outstanding shall not extend more than 10 years after the Grant Date, and shall be subject to earlier termination as herein specified; provided, that any deferral of a cash payment or of the delivery of Shares that is permitted or required by the Board pursuant to Article 12 may, if so permitted or required by the Board, extend more than 10 years after the Grant Date of the Award to which the deferral relates.
5.4. Award Agreement. To the extent not set forth in the Plan, the terms and conditions of each Award (which need not be the same for each grant or for each Grantee) shall be set forth in an Award Agreement.
5.5. Restrictions on Share Transferability. The Board may include in the Award Agreement such restrictions on any Shares acquired pursuant to the exercise or vesting of an Award as it may deem advisable, including restrictions under applicable federal securities laws.
5.6. Termination of Affiliation. Except as otherwise provided in an Award
Agreement (including an Award Agreement as amended by the Board pursuant to
Section 3.2), and subject to the provisions of Section 14.1, the extent to which
the Grantee shall have the right to exercise, vest in, or receive payment in
respect of an Award following Termination of Affiliation shall be determined in
accordance with the following provisions of this Section 5.6.
(a) For Cause. If a Grantee has a Termination of Affiliation for Cause:
(i) the Grantee's Restricted Shares and Deferred Shares that are forfeitable immediately before such Termination of Affiliation shall automatically be forfeited on such date, subject in the case of Restricted Shares to the provisions of Section 8.4 regarding repayment of certain amounts to the Grantee;
(ii) the Grantee's Deferred Shares that were vested immediately before such Termination of Affiliation shall promptly be settled by delivery to such Grantee of a number of unrestricted Shares equal to the aggregate number of such vested Deferred Shares, and
(iii) any unexercised Option or SAR, and any Performance Share or Performance Unit with respect to which the Performance Period has not ended immediately before such Termination of Affiliation, shall terminate effective immediately upon such Termination of Affiliation.
(b) On Account of Death or Disability. If a Grantee has a Termination of Affiliation on account of death or Disability:
(i) the Grantee's Restricted Shares that were forfeitable immediately before such Termination of Affiliation shall thereupon become nonforfeitable;
(ii) the Grantee's Deferred Shares that were forfeitable immediately before such Termination of Affiliation shall thereupon become nonforfeitable and the Company shall, unless otherwise provided in an Award Agreement, promptly settle all Deferred Shares, whether or not forfeitable, by delivery to the Grantee (or, after his or her death, to his or her personal representative or beneficiary designated in accordance with Article 11) of a number of unrestricted Shares equal to the aggregate number of the Grantee's Deferred Shares;
(iii) any unexercised Option or SAR, whether or not exercisable immediately before such Termination of Affiliation, shall be fully exercisable and may be exercised, in whole or in part, at any time up to one year after such Termination of Affiliation (but only during the Option Term) by the Grantee or, after his or her death, by (A) his or her personal representative or the person to whom the Option or SAR, as applicable, is transferred by will or the applicable laws of descent and distribution, or (B) the Grantee's beneficiary designated in accordance with Article 11; and
(iv) the benefit payable with respect to any Performance Share or Performance Unit with respect to which the Performance Period has not ended immediately before such Termination of Affiliation on account of death or Disability shall be equal to the product of the Fair Market Value of a Share as of the date of such Termination of Affiliation or the value of the Performance Unit specified in the Award Agreement (determined as of the date of such Termination of Affiliation), as applicable, multiplied successively by each of the following:
(1) a fraction, the numerator of which is the number of months (including as a whole month any partial month) that have elapsed since the beginning of such Performance Period until the date of such Termination of Affiliation and the denominator of which is the number of months (including as a whole month any partial month) in the Performance Period; and
(2) a percentage determined by the Committee that would be earned under the terms of the applicable Award Agreement assuming that the rate at which the performance goals have been achieved as of the date of such Termination of Affiliation would continue until the end of the Performance Period, or, if the Board elects to compute the benefit after the end of the Performance Period, the Performance Percentage, as determined by the Board, attained during the Performance Period.
(c) Change of Control Period. If a Grantee has a Termination of Affiliation during the period ("Change of Control Period") commencing on a Change of Control and ending on the first anniversary of the Change of Control, which Termination of Affiliation is initiated by the Company or a Subsidiary other than for Cause, or initiated by the Grantee for Good Reason, then
(i) the Grantee's Restricted Shares that were forfeitable shall thereupon become nonforfeitable;
(ii) the Grantee's Deferred Shares that were forfeitable shall thereupon become nonforfeitable and the Company shall immediately settle all Deferred Shares, whether or not previously forfeitable, by delivery to such Grantee of a number of unrestricted Shares equal to the aggregate number of the Grantee's Deferred Shares;
(iii) any unexercised Option or SAR, whether or not exercisable on the date of such Termination of Affiliation, shall thereupon be fully exercisable and may be exercised, in whole or in part for three months following such Termination of Affiliation; and
(iv) the Company shall immediately pay to the Grantee, with respect to any Performance Share or Performance Unit with respect to which the Performance Period has not ended as of the date of such Termination of Affiliation, a cash payment equal to the product of (A) in the case of a Performance Share, the Change of Control Value or (B) in the case of a Performance Unit, the value of the Performance
Unit specified in the Award Agreement, as applicable, multiplied successively by each of the following:
(1) a fraction, the numerator of which is the number of whole and partial months that have elapsed between the beginning of such Performance Period and the date of such Termination of Affiliation and the denominator of which is the number of whole and partial months in the Performance Period; and
(2) a percentage equal to a greater of (x) the target percentage, if any, specified in the applicable Award Agreement or (y) the maximum percentage, if any, that would be earned under the terms of the applicable Award Agreement assuming that the rate at which the performance goals have been achieved as of the date of such Termination of Affiliation would continue until the end of the Performance Period.
(d) Any Other Reason. If a Grantee has a Termination of Affiliation for any reason other than for Cause, death or Disability, and other than under the circumstances described in Section 5.6(c), then:
(i) the Grantee's Restricted Shares and Deferred Shares, to the extent forfeitable immediately before such Termination of Affiliation, shall thereupon automatically be forfeited, subject in the case of Restricted Shares to the provisions of Section 8.4 regarding repayment of certain amounts to the Grantee;
(ii) the Grantee's Deferred Shares that were not forfeitable immediately before such Termination of Affiliation shall promptly be settled by delivery to the Grantee of a number of unrestricted Shares equal to the aggregate number of the Grantee's vested Deferred Shares;
(iii) any unexercised Option or SAR, to the extent exercisable immediately before such Termination of Affiliation, shall remain exercisable in whole or in part for three months after such Termination of Affiliation (but only during the Option Term) by the Grantee or, after his or her death, by (A) his or her personal representative or the person to whom the Option or SAR, as applicable, is transferred by will or the applicable laws of descent and distribution, or (B) the Grantee's beneficiary designated in accordance with Article 11; and
(iv) any Performance Shares or Performance Units with respect to which the Performance Period has not ended as of the date of such Termination of Affiliation shall terminate immediately upon such Termination of Affiliation.
5.7. Nontransferability of Awards.
(a) Except as provided in Section 5.7(c) below, each Award, and each right under any Award, shall be exercisable only by the Grantee during the Grantee's lifetime, or, if permissible under applicable law, by the Grantee's guardian or legal representative.
(b) Except as provided in Section 5.7(c) below, no Award (prior to the time, if applicable, Shares are issued in respect of such Award), and no right under any Award, may be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by a Grantee otherwise than by will or by the laws of descent and distribution (or in the case of Restricted Shares, to the Company) and any such purported assignment, alienation, pledge, attachment, sale, transfer or encumbrance shall be void and unenforceable against the Company or any Subsidiary; provided, that the designation of a beneficiary shall not constitute an assignment, alienation, pledge, attachment, sale, transfer or encumbrance.
(c) To the extent and in the manner permitted by the Board, and subject to such terms and conditions as may be prescribed by the Board, a Grantee may transfer an Award to (a) a child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother- in-law, or sister-in-law of the Grantee, (including adoptive relationships), (b) any person sharing the Grantee's household (other than a tenant or employee), (c) a trust in which persons described in (a) or (b) have more than 50% of the beneficial interest, (d) a foundation in which persons described in (a) or (b) or the Grantee own more than 50% of the voting interests; provided such transfer is not for value. The following shall not be considered transfers for value: (i) a transfer under a domestic relations order in settlement of marital property rights; and (ii) a transfer to an entity in which more than 50% of the voting interests are owned by persons described in (a) or (b) above or the Grantee, in exchange for an interest in that entity.
Article 6. Stock Options
6.1. Grant of Options. Subject to the terms and provisions of the Plan, Options may be granted to any Eligible Person in such number, and upon such terms, and at any time and from time to time as shall be determined by the Board. Without limiting the generality of the foregoing, the Board may grant to any Eligible Person, or permit any Eligible Person to elect to receive, an Option in lieu of or in substitution for any other compensation (whether payable currently or on a deferred basis, and whether payable under this Plan or otherwise) which such Eligible Person may be eligible to receive from the Company or a Subsidiary, which Option may have a value (as determined by the Board under Black-Scholes or any other option valuation method) that is equal to or greater than the amount of such other compensation.
6.2. Award Agreement. Each Option grant shall be evidenced by an Award Agreement that shall specify the Option Price, the Option Term, the number of shares to which the Option pertains, the time or times at which such Option shall be exercisable and such other provisions as the Board shall determine.
6.3. Option Price. The Option Price of an Option under this Plan shall be determined by the Board, and shall be no less than 100% of the Fair Market Value of a Share on the Grant Date; provided, however, that any Option ("Substitute Option") that is (x) granted to a Grantee in connection with the acquisition ("Acquisition"), however effected, by the Company of another corporation or entity ("Acquired Entity") or the assets thereof, (y) associated with an option to purchase shares of stock or other equity interest of the Acquired Entity or an affiliate thereof ("Acquired Entity Option") held by such Grantee immediately prior to such Acquisition, and
(z) intended to preserve for the Grantee the economic value of all or a portion of such Acquired Entity Option, may be granted with such Option Price as the Board determines to be necessary to achieve such preservation of economic value.
6.4. Grant of Incentive Stock Options.
(a) At the time of the grant of any Option to an Eligible Person who is an employee of the Company or a Subsidiary, the Board may designate that such option shall be made subject to additional restrictions to permit it to qualify as an "incentive stock option" under the requirements of Section 422 of the Code. Any option designated as an incentive stock option:
(i) shall not be granted to a person who owns shares (including shares treated as owned under Section 424(d) of the Code) possessing more than 10% of the total combined voting power of all classes of shares of the Company;
(ii) shall be for a term of not more than 10 years from the Grant Date, and shall be subject to earlier termination as provided herein or in the applicable Award Agreement;
(iii) shall not have an aggregate Fair Market Value (determined for
each incentive stock option at its Grant Date) of Shares with respect to
which incentive stock options are exercisable for the first time by such
Grantee during any calendar year (under the Plan and any other employee
stock option plan of the Grantee's employer or any parent or Subsidiary
thereof ("Other Plans")), determined in accordance with the provisions of
Section 422 of the Code, which exceeds $100,000 (the "$100,000 Limit");
(iv) shall, if the aggregate Fair Market Value of a Share (determined on the Grant Date) with respect to the portion of such grant which is exercisable for the first time during any calendar year ("Current Grant") and all incentive stock options previously granted under the Plan and any Other Plans which are exercisable for the first time during a calendar year ("Prior Grants") would exceed the $100,000 Limit, be exercisable as follows:
(A) the portion of the Current Grant which would, when added to any Prior Grants, be exercisable with respect to Shares which would have an aggregate Fair Market Value (determined as of the respective Grant Date for such options) in excess of the $100,000 Limit shall, notwithstanding the terms of the Current Grant, be exercisable for the first time by the Grantee in the first subsequent calendar year or years in which it could be exercisable for the first time by the Grantee when added to all Prior Grants without exceeding the $100,000 Limit; and
(B) if, viewed as of the date of the Current Grant, any portion of a Current Grant could not be exercised under the preceding provisions of this Subsection (iv) during any calendar year commencing with the calendar year in which it is first exercisable through and including the last calendar year in which it may by its terms be exercised, such portion of the Current Grant shall not be an incentive stock option, but shall be exercisable as a separate Option at such date or dates as are provided in the Current Grant;
(v) shall be granted within 10 years from the earlier of the date the Plan is adopted or the date the Plan is approved by the shareholders of the Company;
(vi) shall require the Grantee to notify the Board of any disposition of any Shares issued pursuant to the exercise of the incentive stock option under the circumstances described in Section 421(b) of the Code (relating to certain disqualifying dispositions), within 10 days of such disposition; and
(vii) shall by its terms not be assignable or transferable other than by will or the laws of descent and distribution and may be exercised, during the Grantee's lifetime, only by the Grantee; provided, however, that the Grantee may, to the extent provided in the Plan in any manner specified by the Board, designate in writing a beneficiary to exercise his incentive stock option after the Grantee's death.
Notwithstanding the foregoing, the Board may, without the consent of the Grantee, at any time before the exercise of an option (whether or not an incentive stock option), take any action necessary to prevent such option from being treated as an incentive stock option.
6.5. Exercise of Options. Options shall be exercised by the delivery of a written notice of exercise to the Manager of Benefits of the Company or the Subsidiary by whom the Grantee is or was most recently employed, setting forth the number of Shares with respect to which the Option is to be exercised, accompanied by full payment for the Shares made by cash, personal check or wire transfer or, subject to the approval of the Board pursuant to procedures approved by the Board, (i) through the sale of the Shares acquired on exercise of the Option through a broker-dealer to whom the Grantee has submitted an irrevocable notice of exercise and irrevocable instructions to deliver promptly to the Company the amount of sale or loan proceeds sufficient to pay for such Shares, together with, if requested by the Company, the amount of federal, state, local or foreign withholding taxes payable by Grantee by reason of such exercise, or (ii) through simultaneous sale through a broker of Shares acquired on exercise, as permitted under Regulation T of the Federal Reserve Board.
The exercise of an Option shall require cancellation of a number of related Tandem SARs equal to the number of Shares with respect to which the Option is exercised.
Article 7. Stock Appreciation Rights
7.1. Grant of SARs. Subject to the terms and conditions of the Plan, SARs may be granted to any Eligible Person at any time and from time to time as shall be determined by the Board. The Board may grant Freestanding SARs, Tandem SARs, or any combination thereof. Each grant of an SAR shall be evidenced by an Award Agreement, which shall specify the number of SARs granted to each Grantee (subject to Article 4), the Strike Price thereof, and, consistent with the other provisions of this Article 7 and of the Plan, such other terms and conditions pertaining to such SARs as the Board may determine. Tandem SARs shall expire no later than the expiration of the underlying Option.
7.2. Exercise of SARs. SARs shall be exercised by the delivery of a written notice of exercise to the Company, setting forth the number of Shares over which the SAR is to be exercised. Tandem SARs (a) may be exercised with respect to all or part of the Shares subject to the related Option upon the surrender of the right to exercise the equivalent portion of the related Option; (b) may be exercised only with respect to the Shares for which its related Option is then exercisable; and (c) may be exercised only when the Fair Market Value of the Shares subject to the Option exceeds the Option Price of the Option. The value of the payment with respect to the Tandem SAR may be no more than 100% of the difference between the Option Price of the underlying Option and the Fair Market Value of the Shares subject to the underlying Option at the time the Tandem SAR is exercised.
7.3. Payment of SAR Benefit. Upon exercise of an SAR, the Grantee shall be entitled to receive payment from the Company in an amount determined by multiplying:
(a) the excess of the Fair Market Value of a Share on the date of exercise over the Strike Price;
by
(b) the number of Shares with respect to which the SAR is exercised;
provided that the Board may provide in the Award Agreement that the benefit payable on exercise of an SAR shall not exceed such percentage of the Fair Market Value of a Share on the Grant Date as the Board shall specify. As determined by the Board, the payment upon SAR exercise may be in cash, in Shares which have an aggregate Fair Market Value (as of the date of exercise of the SAR) equal to the amount of the payment, or in some combination thereof, as set forth in the Award Agreement.
Article 8. Restricted Shares
8.1. Grant of Restricted Shares. Subject to the terms and provisions of the Plan, the Board, at any time and from time to time, may grant Restricted Shares to any Eligible Person in such amounts as the Board shall determine.
8.2. Award Agreement. Each grant of Restricted Shares shall be evidenced by an Award Agreement, which shall specify the Period(s) of Restriction, the number of Restricted Shares granted, and such other provisions as the Board shall determine. The Board may impose such conditions or restrictions on any Restricted Shares as it may deem advisable, including restrictions based upon the achievement of specific performance goals (Company-wide, divisional, Subsidiary or individual), time-based restrictions on vesting or restrictions under applicable securities laws.
8.3. Consideration. The Board shall determine the amount, if any, that a Grantee shall pay for Restricted Shares. Such payment shall be made in full by the Grantee before the delivery of the shares and in any event no later than 10 business days after the Grant Date for such shares.
8.4. Effect of Forfeiture. If Restricted Shares are forfeited, and if the Grantee was required to pay for such shares or acquired such Restricted Shares upon the exercise of an Option,
the Grantee shall be deemed to have resold such Restricted Shares to the Company at a price equal to the lesser of (x) the amount paid by the Grantee for such Restricted Shares, or (y) the Fair Market Value of a Share on the date of such forfeiture. The Company shall pay to the Grantee the required amount as soon as is administratively practical. Such Restricted Shares shall cease to be outstanding, and shall no longer confer on the Grantee thereof any rights as a shareholder of the Company, from and after the date of the event causing the forfeiture, whether or not the Grantee accepts the Company's tender of payment for such Restricted Shares.
8.5. Escrow; Legends. The Board may provide that the certificates for any Restricted Shares (x) shall be held (together with a stock power executed in blank by the Grantee) in escrow by the Secretary of the Company until such Restricted Shares become nonforfeitable or are forfeited or (y) shall bear an appropriate legend restricting the transfer of such Restricted Shares. If any Restricted Shares become nonforfeitable, the Company shall cause certificates for such shares to be issued without such legend.
Article 9. Performance Units and Performance Shares
9.1. Grant of Performance Units and Performance Shares. Subject to the terms of the Plan, Performance Units or Performance Shares may be granted to any Eligible Person in such amounts and upon such terms, and at any time and from time to time, as the Board shall determine. Each grant of Performance Units or Performance Shares shall be evidenced by an Award Agreement which shall specify the terms and conditions applicable to the Performance Units or Performance Shares, as the Board determines.
9.2. Value/Performance Goals. Each Performance Unit shall have an initial value that is established by the Board at the time of grant. Each Performance Share shall have an initial value equal to the Fair Market Value of a Share on the date of grant. The Board shall set performance goals which, depending on the extent to which they are met, will determine the number or value of Performance Units or Performance Shares that will be paid to the Grantee. For purposes of this Article 9, the time period during which the performance goals must be met shall be called a "Performance Period."
9.3. Payment of Performance Units and Performance Shares. Subject to the terms of this Plan, after the applicable Performance Period has ended, the holder of Performance Units or Performance Shares shall be entitled to receive a payment based on the number and value of Performance Units or Performance Shares earned by the Grantee over the Performance Period, determined as a function of the extent to which the corresponding performance goals have been achieved.
If a Grantee is promoted, demoted or transferred to a different business unit of the Company during a Performance Period, then, to the extent the Board determines appropriate, the Board may adjust, change or eliminate the performance goals or the applicable Performance Period as it deems appropriate in order to make them appropriate and comparable to the initial performance goals or Performance Period.
9.4. Form and Timing of Payment of Performance Units and Performance Shares. Payment of earned Performance Units or Performance Shares shall be made in a lump sum
following the close of the applicable Performance Period. The Board may cause earned Performance Units or Performance Shares to be paid in cash or in Shares (or in a combination thereof) which have an aggregate Fair Market Value equal to the value of the earned Performance Units or Performance Shares at the close of the applicable Performance Period. Such Shares may be granted subject to any restrictions deemed appropriate by the Board. The form of payout of such Awards shall be set forth in the Award Agreement pertaining to the grant of the Award.
As determined by the Board, a Grantee may be entitled to receive any dividends declared with respect to Shares which have been earned in connection with grants of Performance Units or Performance Shares but not yet distributed to the Grantee. In addition, a Grantee may, as determined by the Board, be entitled to exercise his or her voting rights with respect to such Shares.
Article 10. Bonus Shares and Deferred Shares
10.1. Bonus Shares. Subject to the terms of the Plan, the Board may grant Bonus Shares to any Eligible Person, in such amount and upon such terms and at any time and from time to time as shall be determined by the Board.
10.2. Deferred Shares. Subject to the terms and provisions of the Plan, Deferred Shares may be granted to any Eligible Person in such amounts and upon such terms, and at any time and from time to time, as shall be determined by the Board. The Board may impose such conditions or restrictions on any Deferred Shares as it may deem advisable, including time-vesting restrictions and deferred payment features. The Board may cause the Company to establish a grantor trust to hold Shares subject to Deferred Share Awards. Without limiting the generality of the foregoing, the Board may grant to any Eligible Person, or permit any Eligible Person to elect to receive, Deferred Shares in lieu of or in substitution for any other compensation (whether payable currently or on a deferred basis, and whether payable under this Plan or otherwise) which such Eligible Person may be eligible to receive from the Company or a Subsidiary.
Article 11. Beneficiary Designation
Each Grantee under the Plan may, from time to time, name any beneficiary or beneficiaries (who may be named contingently or successively) to whom any benefit under the Plan is to be paid in case of the Grantee's death before he or she receives any or all of such benefit. Each such designation shall revoke all prior designations by the same Grantee, shall be in a form prescribed by the Company, and will be effective only when filed by the Grantee in writing with the Company during the Grantee's lifetime. In the absence of any such designation, benefits remaining unpaid at the Grantee's death shall be paid to the Grantee's estate.
Article 12. Deferrals
The Board may permit or require a Grantee to defer receipt of the payment of cash or the delivery of Shares that would otherwise be due by virtue of the exercise of an Option or SAR, the lapse or waiver of restrictions with respect to Restricted Shares, the satisfaction of any requirements or goals with respect to Performance Units or Performance Shares, the grant of
Bonus Shares or the expiration of the deferral period for Deferred Shares. If any such deferral is required or permitted, the Board shall establish rules and procedures for such deferrals.
Article 13. Rights of Employees
13.1. Employment. Nothing in the Plan shall interfere with or limit in any way the right of the Company to terminate any Grantee's employment at any time, nor confer upon any Grantee the right to continue in the employ of the Company.
13.2. Participation. No employee shall have the right to be selected to receive an Award, or, having been so selected, to be selected to receive a future Award.
Article 14. Amendment, Modification, and Termination
14.1. Amendment, Modification, and Termination. Subject to the terms of the Plan, the Board of Directors of the Company may at any time and from time to time, alter, amend, suspend or terminate the Plan in whole or in part without the approval of the Company's shareholders, except to the extent the Board of Directors of the Company determines it is desirable to obtain approval of the Company's shareholders, to retain eligibility for exemption from the limitations of Code Section 162(m), to have available the ability for Options to qualify as ISOs, to comply with the requirements for listing on any exchange where the Company's Shares are listed, or for any other purpose the Board of Directors of the Company deems appropriate.
14.2. Adjustments Upon Certain Unusual or Nonrecurring Events. The Board may make adjustments in the terms and conditions of Awards in recognition of unusual or nonrecurring events (including the events described in Section 4.2) affecting the Company or the financial statements of the Company or of changes in applicable laws, regulations, or accounting principles, whenever the Board determines that such adjustments are appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan.
14.3. Awards Previously Granted. Notwithstanding any other provision of the Plan to the contrary (but subject to Section 2.8 and Section 14.2), no termination, amendment or modification of the Plan shall adversely affect in any material way any Award previously granted under the Plan, without the written consent of the Grantee of such Award.
Article 15. Withholding
15.1. Mandatory Tax Withholding.
(a) Whenever under the Plan, Shares are to be delivered upon exercise or payment of an Award or upon Restricted Shares becoming nonforfeitable, or any other event with respect to rights and benefits hereunder, the Company shall be entitled to require (x) that the Grantee remit an amount in cash sufficient to satisfy all federal, state, local and foreign tax withholding requirements related thereto ("Required Withholding"), (y) the withholding of such Required Withholding from compensation otherwise due to the Grantee or from any Shares or other payment due to the Grantee under the Plan or (z) any combination of the foregoing.
(b) Any Grantee who makes a disqualifying disposition of an incentive stock option granted under the Plan or who makes an election under Section 83(b) of the Code shall remit to the Company an amount sufficient to satisfy all resulting Required Withholding; provided that, in lieu of or in addition to the foregoing, the Company shall have the right to withhold such Required Withholding from compensation otherwise due to the Grantee or from any Shares or other payment due to the Grantee under the Plan.
15.2. Notification under Code Section 83(b). If the Grantee, in connection with the exercise of any Option, or the grant of Restricted Shares, makes the election permitted under Section 83(b) of the Code to include in such Grantee's gross income in the year of transfer the amounts specified in Section 83(b) of the Code, then such Grantee shall notify the Company of such election within 10 days of filing the notice of the election with the Internal Revenue Service, in addition to any filing and notification required pursuant to regulations issued under Section 83(b) of the Code. The Board may, in connection with the grant of an Award or at any time thereafter prior to such an election being made, prohibit a Grantee from making the election described above.
Article 16. Equity Incentive Plans of Foreign Subsidiaries
The Board may authorize any foreign Subsidiary to adopt a plan for granting Awards ("Foreign Equity Incentive Plan"). All awards granted under such Foreign Equity Incentive Plans shall be treated as grants under the Plan. Such Foreign Equity Incentive Plans shall have such terms and provisions as the Board permits not inconsistent with the provisions of the Plan and which may be more restrictive than those contained in the Plan. Awards granted under such Foreign Equity Incentive Plans shall be governed by the terms of the Plan except to the extent that the provisions of the Foreign Equity Incentive Plans are more restrictive than the terms of the Plan, in which case such terms of the Foreign Equity Incentive Plans shall control.
Article 17. Additional Provisions
17.1. Successors. All obligations of the Company under the Plan with respect to Awards granted hereunder shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise of all or substantially all of the business or assets of the Company.
17.2. Gender and Number. Except where otherwise indicated by the context, any masculine term used herein also shall include the feminine; the plural shall include the singular and the singular shall include the plural.
17.3. Severability. If any part of the Plan is declared by any court or governmental authority to be unlawful or invalid, such unlawfulness or invalidity shall not invalidate any other part of the Plan. Any Section or part of a Section so declared to be unlawful or invalid shall, if possible, be construed in a manner which will give effect to the terms of such Section or part of a Section to the fullest extent possible while remaining lawful and valid.
17.4. Requirements of Law. The granting of Awards and the issuance of Shares under the Plan shall be subject to all applicable laws, rules, and regulations, and to such approvals by
any governmental agencies or stock exchanges as may be required. Notwithstanding any provision of the Plan or any Award, Grantees shall not be entitled to exercise, or receive benefits under, any Award, and the Company shall not be obligated to deliver any Shares or other benefits to a Grantee, if such exercise or delivery would constitute a violation by the Grantee or the Company of any applicable law or regulation.
17.5. Securities Law Compliance.
(a) If the Board deems it necessary to comply with any applicable securities law, or the requirements of any stock exchange upon which Shares may be listed, the Board may impose any restriction on Shares acquired pursuant to Awards under the Plan as it may deem advisable. All certificates for Shares delivered under the Plan pursuant to any Award or the exercise thereof shall be subject to such stop transfer orders and other restrictions as the Board may deem advisable under the rules, regulations and other requirements of the SEC, any stock exchange upon which Shares are then listed, any applicable securities law, and the Board may cause a legend or legends to be placed on any such certificates to refer to such restrictions. If so requested by the Company, the Grantee shall represent to the Company in writing that he or she will not sell or offer to sell any Shares unless a registration statement shall be in effect with respect to such Shares under the Securities Act of 1993 or unless he or she shall have furnished to the Company evidence satisfactory to the Company that such registration is not required.
(b) If the Board determines that the exercise of, or delivery of benefits pursuant to, any Award would violate any applicable provision of securities laws or the listing requirements of any stock exchange upon which any of the Company's equity securities are then listed, then the Board may postpone any such exercise or delivery, as applicable, but the Company shall use all reasonable efforts to cause such exercise or delivery to comply with all such provisions at the earliest practicable date.
17.6. No Rights as a Shareholder. A Grantee shall not have any rights as a shareholder with respect to the Shares (other than Restricted Shares) which may be deliverable upon exercise or payment of such Award until such shares have been delivered to him or her. Restricted Shares, whether held by a Grantee or in escrow by the Secretary of the Company, shall confer on the Grantee all rights of a shareholder of the Company, except as otherwise provided in the Plan or Award Agreement. Unless otherwise determined by the Board at the time of a grant of Restricted Shares, any cash dividends that become payable on Restricted Shares shall be deferred and, if the Board so determines, reinvested in additional Restricted Shares. Except as otherwise provided in an Award Agreement, any share dividends and deferred cash dividends issued with respect to Restricted Shares shall be subject to the same restrictions and other terms as apply to the Restricted Shares with respect to which such dividends are issued. The Board may provide for payment of interest on deferred cash dividends.
17.7. Nature of Payments. Awards shall be special incentive payments to the Grantee and shall not be taken into account in computing the amount of salary or compensation of the Grantee for purposes of determining any pension, retirement, death or other benefit under (a) any pension, retirement, profit- sharing, bonus, insurance or other employee benefit plan of the
Company or any Subsidiary or (b) any agreement between (i) the Company or any Subsidiary and (ii) the Grantee, except as such plan or agreement shall otherwise expressly provide.
17.8. Governing Law. The Plan shall be construed in accordance with and governed by the laws of the State of Kansas other than its laws respecting choice of law.
Garmin Ltd.
2000 Equity Incentive Plan (the "Plan")
UK Appendix (the "UK Appendix")
If the Board decides to grant an Option to an Eligible Person who is a resident of the United Kingdom within the meaning of the Double Taxation Treaty between the United Kingdom and the United States of America and whose emoluments are liable to be paid under deduction of tax pursuant to Section 203 of the United Kingdom Income and Corporation Taxes Act 1988 (the "Taxes Act") and designates the Option as a UK-approved Option, the rules of the Plan shall apply with the following modifications:
1 Delete all provisions in the Plan relating to Restricted Shares, Bonus Shares, Deferred Shares, SARs, Performance Units and Performance Shares. The definition of "Award" for the purposes of the Plan shall be a reference to "Options" only.
2 In Section 1.1, insert at the end of the paragraph "Provided however that no UK-approved Option may be granted prior to the day on which the UK Appendix is approved by the Inland Revenue."
3 Substitute the definition of "Eligible Person" in Section 2.16 with "means any employee of a Participating Company (who is not a director of a Participating Company) or any Full-Time Director who is not precluded by paragraph 8 of Schedule 9 (material interest in a close company) from participating in the UK Appendix."
4 In the definition of "Fair Market Value" in Section 2.20, substitute the definition with "means, for the purposes of the UK Appendix and any UK- approved Option granted thereunder, the closing price of Shares on the Grant Date (or on the last preceding trading date if Shares are not traded on such date) provided that the Shares are listed on the New York Stock Exchange; where otherwise, it shall be the market value of the Shares as determined in accordance with the provisions of Part VIII of the United Kingdom Taxation of Chargeable Gains Act 1992 and agreed in advance for the purposes of the UK Appendix with the Shares Valuation Division of the Inland Revenue."
5 Substitute the definition of "Share" in Section 2.45 with "means a common share, $0.01 par value, of the Company which complies with paragraphs 10 to 14 of Schedule 9."
6 Delete Sections 3.2(e), (f), (g), (h) and (i).
7 In Section 4.1(b), substitute with:
"Individual Limit for UK-approved Options. Any UK-approved Option shall be limited and take effect so that the aggregate Fair Market Value of the Shares which a Grantee may acquire by exercise of that Option and any Shares which he may acquire by exercise of any other options then held by him under any Approved Scheme shall not exceed (Pounds)30,000 or such other amount as may be the limit imposed from time to time pursuant to paragraph 28 of Schedule 9. For this purpose, the Fair Market Value of Shares shall be calculated as at the date each option was granted or such earlier date as may have been agreed in writing with the Inland Revenue."
8 In Section 4.2, insert at the end of the paragraph, "PROVIDED ALWAYS that no adjustment pursuant to this Section may be made to a UK-approved Option without the prior written approval of the Inland Revenue."
9 In Section 5.2, delete the words "or such later date as specified by the Board in the Award Agreement".
10 In Section 5.3, end the paragraph with "herein specified" in line 3 and delete all the words thereafter.
11 Delete Section 5.5.
12 Replace Section 5.7(a) with "No UK-approved Option may be assigned or transferred but following the death of a Grantee, a UK-approved Option may be exercised by his personal representatives, or a beneficiary designated by the personal representatives, if so provided in the relevant Award Agreement for such period as is stated therein but which shall not exceed one year from the date of death."
13 Delete Section 5.7(b) and (c).
14 Insert as new Section 5.8:
"Term of Exercise. No UK-approved Option may be exercised by a Grantee at any time when he is, or by the personal representatives of a Grantee who at the date of his death was, prohibited from such exercise by virtue of the provisions of paragraph 8 of Schedule 9 (material interest in a close company)."
15 Insert as new Section 5.9:
"Exchange of Options. Pursuant to the provisions of paragraph 15 of Schedule 9, it is hereby provided that if any company ("the Acquiring Company"):
(i) obtains Control (as defined for the purposes of the UK Appendix) of a company (whether or not the Company) whose shares are for the time being Shares for the purposes of the UK Appendix ("a Relevant Company") as a result of making such an offer as is referred to in sub-paragraph 15(1)(a) of Schedule 9; or
(ii) obtains Control (as defined for the purposes of the UK Appendix) of a Relevant Company in pursuance of a compromise or arrangement sanctioned by the Court under Section 425 of the United Kingdom Companies Act 1985; or
(iii) becomes bound or entitled to acquire shares in a Relevant Company under Sections 428 to 430F of the United Kingdom Companies Act 1985,
a Grantee may, within the appropriate period as defined in sub-paragraph 15(2) of Schedule 9, by agreement with the Acquiring Company, release his rights under the UK Appendix ("the Old Rights") in consideration of the grant to him of rights ("the New Rights") which are equivalent for the purposes of sub-paragraph 15(3) of Schedule 9 to the Old Rights but relate to shares in a different company ("the New Company") (whether the Acquiring Company itself or some other company falling within sub-paragraph (b) or (c) of paragraph 10 of Schedule 9). With respect to the New Rights, these rules shall be read and construed as though references to the Company and Shares were references to the New Company and to shares in the New Company."
16 In Section 6.3, end the paragraph with the words "Grant Date" in line 3 and delete all the words appearing thereafter.
17 Delete Section 6.4.
18 In Section 6.5, end the paragraph with the words "wire transfer" in line 5 and delete the rest of the words appearing thereafter. Add the following sentence:
"Within 30 days of receipt of a written notice of exercise and the appropriate remittance, the Board shall allot or procure the transfer of the Shares in respect of which the Option has been validly exercised and shall issue a definitive certificate in respect of the Shares allotted or transferred, unless the Board considers that such allotment or transfer would not be lawful in the relevant jurisdiction."
19 Delete Article 11.
20 Delete Article 12.
21 At the end of Section 14.1, insert "For as long as the Company wishes the UK Appendix to remain an Approved Scheme, no amendment to the UK Appendix shall take effect without the prior written approval of the Inland Revenue, and if the Board determines that the UK Appendix shall cease to be so approved, it shall notify the Inland Revenue immediately."
22 Delete Section 14.2.
23 Insert a new Article 18 as follows:
Definitions
Unless the context otherwise requires, the following words and expressions shall have the following meanings in the UK Appendix:
"Approved Scheme" means a share option scheme, not being a savings-related share option scheme, established by the Company or any Associated Company of the Company and approved by the Inland Revenue under Schedule 9;
"Associated Company" has the meaning given by Section 416 of the Taxes Act;
"Control" has the meaning given by Section 840 of the Taxes Act;
"Full-Time Director" means a director of a Participating company who is required to devote to his duties not less than 25 hours per week (excluding meal breaks);
"Inland Revenue" means the United Kingdom Board of Inland Revenue;
"Participating Company" means the Company and any other company under the Control of the Company;
"Schedule 9" means Schedule 9 to the Taxes Act;
"Taxes Act" means the United Kingdom Income and Corporation Taxes Act 1988;
"UK-approved Option" means an option to acquire Shares granted pursuant to the UK Appendix and, for the purposes of the UK Appendix, all references in the Plan to Options shall, unless the context otherwise requires, be taken as referring to UK-approved Options.