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EXHIBIT 10.2
Garmin Ltd.
2000 Non-Employee Directors'
Option Plan
Effective November 1, 2000
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Garmin Ltd.
2000 Non-Employee Directors' Option Plan
Article 1. Establishment, Objectives and Duration
1.1. Establishment of the Plan. Garmin Ltd., a Cayman Islands corporation
(the "Company") hereby establishes the Garmin Ltd. 2000 Non-Employee Directors'
Option Plan (the "Plan"), effective November 1, 2000 (the "Effective Date")
which was duly approved by the Board of Directors of the Company (the "Board")
on October 20, 2000 and approved by the Company's shareholders on October 24,
2000.
1.2. Objectives of the Plan. The Plan is intended to allow Eligible
Directors of the Company to acquire or increase equity ownership in the Company,
thereby strengthening their commitment to the success of the Company, aligning
their interests with those of the shareholders of the Company, and to assist the
Company in attracting and retaining experienced and knowledgeable individuals to
serve as directors.
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 8 hereof, until the earlier
of (a) the 10 year anniversary of the Effective Date and (b) the date all Shares
subject to the Plan shall have been delivered according to the Plan's
provisions; provided that the Plan shall remain in effect with respect to and
shall govern any grants made hereunder including any amounts deferred in
connection with such grants.
Article 2. Definitions
Whenever used in the Plan, the following terms shall have the meanings set
forth below:
2.1. "Annual Meeting of Shareholders" means the regularly scheduled annual
meeting of the Company's shareholders.
2.2. "Annual Option Grant" shall mean that portion of the Retainer payable
to an Eligible Director in Options.
2.3. "Article" means an Article of the Plan.
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. "Cause" means, (i) an Eligible Director's conviction of a felony or
other crime involving fraud, dishonesty or moral turpitude; (ii) willful or
reckless material misconduct in an Eligible Director's performance of his or her
duties as a Director; or (iii) an Eligible Director's habitual neglect of
duties; provided, that an Eligible Director who agrees to resign his position on
the Board in lieu of being removed for Cause, may be deemed to have been removed
for Cause for purposes of this Plan.
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2.7. "Change of Control" means, unless otherwise defined in an Option
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 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 stock 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
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 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 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 shareholders 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 in order to prevent an event or transaction
from being 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 person holding an
option. Notwithstanding the occurrence of any of the foregoing events, (a) a
Change of Control shall not occur with respect to an Eligible Director if, in
advance of such event, the Eligible Director agrees in writing that such event
shall not constitute a Change of Control, and (b) an IPO shall not be a Change
of Control.
2.8. "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.
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2.9. "Committee" has the meaning set forth in Article 3.
2.10. "Company" has the meaning set forth in Section 1.1.
2.11. "Disability" means a physical or mental condition which, with or
without reasonable accommodations and as determined by the Committee in good
faith, upon receipt of such medical advice as the Committee deems appropriate,
renders an individual unable or incompetent to perform the duties or
responsibilities of a director which condition has existed for 180 days and
which is expected to be permanent or of indefinite duration.
2.12. "Effective Date" has the meaning set forth in Section 1.1.
2.13. "Eligible Director" means (i) any individual serving as a director
on the Board immediately following the Annual Meeting of Shareholders of the
Company and (ii) any individual elected or appointed to serve as a director on
the Board at some time other than the Annual Meeting of Shareholders; provided,
that a director who is an officer of the Company or a Subsidiary or otherwise
employed by the Company or a Subsidiary shall not be an Eligible Director.
2.14. "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.
2.15. "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.
2.16. "Exempt Reorganization Transaction" means a Reorganization
Transaction which results in the Persons who were the direct or indirect owners
of the outstanding 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 stock 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 Shares and Voting Securities of
the Company immediately before such Reorganization Transaction.
2.17. "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 Committee, and
(b) with respect to Shares, as of any date other than the IPO Date, (i) the
average of the high and low trading prices of the Shares 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), (ii)
if the Shares are not listed on the NASDAQ NMS, 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; or (iii) in the
event that there shall be no public market for the Shares, the fair market value
of the Shares as
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determined by the Committee. 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.
2.18. "Grant Date" has the meaning set forth in Section 5.1.
2.19. "including" or "includes" mean "including, without limitation," or
"includes, without limitation," respectively.
2.20. "Incumbent Directors" means, as of any date, individuals then
serving as members of the Board who were members of the Board as of the
Effective 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 at least 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.
2.21. "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.
2.22. "IPO Date" means the effective date of the underwriting agreement
between the Company and the underwriters of the IPO.
2.23. "Mandatory Retirement Age" means the age for mandatory retirement
according to the policy of the Board, if any, in place from time to time.
2.24. "Option" means an option to purchase Shares.
2.25. "Option Agreement" means a written agreement by which an Option is
evidenced.
2.26. "Option Price" means the price at which a Share may be purchased by
an Eligible Director pursuant to an Option.
2.27. "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
Option Agreement for such Option.
2.28. "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.
2.29. "Plan" has the meaning set forth in Section 1.1.
2.30. "Reorganization Transaction" has the meaning set forth in Section
2.8(c).
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2.31. "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.
2.32. "SEC" means the United States Securities and Exchange Commission, or
any successor thereto.
2.33. "Section" means, unless the context otherwise requires, a Section of
the Plan.
2.34. "Share" means a common share, $0.01 par value, of the Company.
2.35. "Subsidiary" means (a) any corporation of which more than 50% of
the Voting Securities are at the time, directly or indirectly, owned by the
Company, and (b) any partnership or limited liability company in which the
Company has a direct or indirect interest (whether in the form of voting power
or participation in profits or capital contribution) of more than 50%.
2.36. "Substitute Options" has the meaning set forth in Section 8.2.
2.37. "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.
2.38. "Termination of Affiliation" occurs on the first day on which an
individual is for any reason no longer serving as a Director of the Company.
2.39. "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. Committee. Subject to Article 9, 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"). The number of members of the Plan
Committee shall from time to time be increased or decreased, and shall be
subject to such conditions, in each case as the Board deems appropriate to
permit transactions in Shares pursuant to the Plan to satisfy such conditions of
applicable securities or other laws then in effect. Any references herein to
"Committee" are references to the Board or the Plan Committee, as applicable.
3.2. Powers of Committee. Subject to the express provisions of the Plan,
the Committee has full and final authority and sole discretion as follows:
(a) to determine the terms and conditions applicable to each Option,
including, but not limited to, the Option Price and the Option Term;
(b) to construe and interpret the Plan and to make all determinations
necessary or advisable for the administration of the Plan;
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(c) to make, amend, and rescind rules relating to the Plan, including
rules with respect to the exercisability and nonforfeitability of Options
upon the Termination of Affiliation of an Eligible Director;
(d) to determine the terms and conditions of all Option Agreements
and, with the consent of the Eligible Director, to amend any such Option
Agreement at any time, among other things, to permit transfers of Options
to the extent permitted by the Plan; provided that the consent of the
Eligible Director shall not be required for any amendment which (i) does
not materially adversely affect the rights of the Eligible Director, or
(ii) is necessary or advisable (as determined by the Committee) to carry
out the purpose of the grant Options as a result of any new or change in
existing applicable law;
(e) 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 Option or any group of other benefit hereunder for any reason and at
any time, including in connection with a Termination of Affiliation;
(f) subject to Sections 1.3 and 5.2, to extend the time during which
any Option or other benefit may be exercised;
(g) 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 to be
performed by the Committee;
(h) to impose such additional terms and conditions upon the grant,
exercise or retention of Options and other grants as the Committee may,
before or concurrently with the grant thereof, deem appropriate; and
(i) 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, any Option Agreement
or other agreement under the Plan may be made in the sole and absolute
discretion of the Committee, and all such determinations of the Committee shall
be final, conclusive and binding on all Persons. No member of the Committee
shall be liable for any action or determination made with respect to the Plan or
any Annual Option Grant.
3.3. Majority Rule. A majority of the members of the Committee shall
constitute a quorum, and any action taken by a majority present at a meeting at
which a quorum is present or any action taken without a meeting evidenced by a
writing executed by a majority of the whole Committee shall constitute the
action of the Committee.
3.4. Company Assistance. The Company shall supply full and timely
information to the Committee on all matters relating to Eligible Directors and
such pertinent facts related thereto as the Committee may require. The Company
shall furnish the Committee with such clerical and other assistance as is
necessary in the performance of its duties.
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3.5. Plan Operation in Compliance with Rule 16b-3 of the 1934 Act. The
Plan shall be interpreted and administered to comply with Rule 16b-3 promulgated
under the 1934 Act, as then applicable to the Company's employee benefit plans.
Article 4. Shares Subject to the Plan
4.1. Number of Shares Available. Subject to adjustment as provided in
Section 4.2, the number of Shares hereby reserved for delivery under the Plan is
50,000 Shares. Such Shares may be newly issued Shares or treasury shares. The
Committee may from time to time determine the appropriate methodology for
calculating the number of Shares issued pursuant to the Plan.
4.2. Adjustments in Authorized Shares. In the event that the Committee
determines that any dividend or other distribution (whether in the form of cash,
Shares, other securities, or other property), recapitalization, stock split,
reverse stock 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 Committee 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 Committee 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 Options or Shares 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 Options,
and (iii) the grant or exercise price with respect to any Option or, if deemed
appropriate, make provision for a cash payment to the holder of an outstanding
Option or the substitution of other property for Shares subject to an
outstanding Option; provided, that the number of Shares subject to any Option
denominated in Shares shall always be a whole number.
Article 5. General Conditions of Options
5.1. Grant Date. The Grant Date of Options received pursuant to an Annual
Option Grant shall be the date of the Annual Meeting of Shareholders in the
calendar year to which such grant relates or such later date as specified by the
Committee in the Option Agreement. In the case of an Eligible Director who is
initially appointed or elected on a date other than the date of an Annual
Meeting of Shareholders, the Grant Date of such initial (prorata) Annual Option
Grant shall be the first day such Eligible Director becomes an Eligible
Director.
5.2. Term. The Option Term shall be 10 years from the Grant Date, and shall
be subject to earlier termination as herein specified; provided, that any
deferral of the delivery of Shares with respect to an Option that is exercised
within 10 years of the Grant Date may, if so permitted, extend more than 10
years after the Grant Date of the Annual Option Grant to which the deferral
relates.
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5.3. Option Agreement. The terms and conditions of each Option shall be set
forth in an Option Agreement.
5.4. Option Price. The Option Price of an Option under this Plan shall be
100% of the Fair Market Value of a Share on the Grant Date; provided, however,
that any Option granted as a Substitute Option pursuant to Section 8.2 may be
granted at such Option Price as the Committee determines to be necessary to
achieve preservation of economic value as provided in Section 8.2.
5.5. Restrictions on Share Transferability. The Committee may include in
the Option Agreement such restrictions on any Shares acquired pursuant to the
exercise or vesting of an Option as it may deem advisable, including
restrictions under applicable federal securities laws.
5.6. Exercise. Unless otherwise specified in the Option Agreement, Options
shall become exercisable in accordance with the following table, or if sooner,
shall become fully exercisable on the earliest of the first to occur of the
Eligible Director's (a) death, (b) Termination of Affiliation on account of
Disability, (c) mandatory retirement upon attaining Mandatory Retirement Age,
(d) Termination of Affiliation after a Change of Control under the conditions
described in Section 8.1, and (e) involuntary Termination of Affiliation as
described in Section 5.8(c).
<TABLE>
<CAPTION>
Time Elapsed After Grant Date Percentage of Option Exercisable
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<S> <C>
Less than 1 year 0%
1 year but less than 2 years 33-1/3%
2 years but less than 3 years 66-2/3%
3 years or more 100%
</TABLE>
5.7. Payment. Options shall be exercised by the delivery of a written
notice of exercise to the Company, 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 Committee, pursuant to procedures approved by the Committee, (a)
through the sale of the Shares acquired on exercise of the Option through a
broker-dealer to whom the Eligible Director 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; (b) through
simultaneous sale through a broker of Shares acquired on exercise, as permitted
under Regulation T of the Federal Reserve Board.
5.8. Termination of Affiliation. Except as otherwise provided in an Option
Agreement (including an Option Agreement as amended by the Committee), and
subject to the provisions of Section 8.1, the extent to which the Eligible
Director shall have the right to exercise, an Option following Termination of
Affiliation shall be determined in accordance with this Section 5.8.
(a) For Cause. If an Eligible Director has a Termination of
Affiliation for Cause any unexercised Option shall terminate effective
immediately upon such Termination of Affiliation for Cause.
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(b) On Account of Death, Disability, Retirement or Mandatory
Retirement. If an Eligible Director has a Termination of Affiliation on
account of death, Disability, or retirement upon attaining Mandatory
Retirement Age, any unexercised Option, whether or not exercisable
immediately before such Termination of Affiliation, may be exercised, in
whole or in part, for a period of one year after such Termination of
Affiliation (but only during the Option Term) by the Eligible Director or,
after his or her death, by (i) his or her personal representative or the
person to whom the Option is transferred by will or the applicable laws of
descent and distribution, or (ii) the Eligible Director's beneficiary
designated in accordance with Article 7.
(c) Involuntary Removal. If an Eligible Director is removed by the
Company other than for Cause including, but not limited to, the Company's
decision not to slate such Eligible Director for reelection, any
unexercised Option whether or not exercisable immediately before such
Termination of Affiliation, may be exercised in whole or in part, at any
time within the first twelve (12) months following such Termination of
Affiliation (but only during the Option Term) by the Eligible Director or,
after his death or her death, by (i) his or her personal representative or
the person to whom the Option is transferred by will or the applicable laws
of descent or distribution, or (ii) the Eligible Director's beneficiary
designated in accordance with Article 7.
(d) Any Other Reason. If an Eligible Director has a Termination of
Affiliation for any other reason including, but not limited to, failure to
be reelected to the Board or voluntary resignation including failure to run
for reelection, any unexercised Option to the extent exercisable
immediately before such Termination of Affiliation, shall remain
exercisable in whole or in part for six (6) months after such Termination
of Affiliation (but only during the Option Term) by the Eligible Director
or, after his or her death, by (i) his or her personal representative or
the person to whom the Option is transferred by will or the applicable laws
of descent and distribution, or (ii) the Eligible Director's beneficiary
designated in accordance with Article 7.
5.9. Nontransferability of Option Grants.
(a) Except as provided in Section 5.9(c) below, each Option shall be
exercisable only by the Eligible Director during the Eligible Director's
lifetime, or, if permissible under applicable law, by the Eligible
Director's guardian or legal representative.
(b) Except as provided in Section 5.9(c) below, no Option (prior to
the time Shares are issued) may be assigned, alienated, pledged, attached,
sold or otherwise transferred or encumbered by a Eligible Director
otherwise than by will or by the laws of descent and distribution, and any
such purported assignment, alienation, pledge, attachment, sale, transfer
or encumbrance shall be void and unenforceable against the Company 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 Committee, and
subject to such terms and conditions as may be prescribed by the Committee,
an Eligible Director may transfer an Option to (a) a child, stepchild,
grandchild, parent, stepparent, grandparent,
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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
Eligible Director, (including adoptive relationships), (b) any person
sharing the Eligible Director'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 Eligible Director 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 Eligible Director, in
exchange for an interest in that entity.
Article 6. Annual Option Grants
6.1. Subject to the terms and provisions of this Plan, commencing on the
Effective Date and thereafter immediately following the Annual Meeting of
Shareholders in each subsequent year, each Eligible Director shall automatically
receive an Option to purchase a number of Shares equal to (a) divided by (b)
where: (a) equals four (4) times the dollar amount of the Eligible Director's
annual retainer for service on the Board and (b) equals the Fair Market Value of
Shares as of the date of the Annual Meeting of Shareholders; provided, that
fractional Shares shall be rounded up to the next larger whole number of Shares.
An Eligible Director who is not initially elected at the Annual Meeting of
Shareholders (including any Eligible Director who is first elected or appointed
after the IPO and prior to the first Annual Meeting of Shareholders that occurs
after the IPO) shall, within ten (10) days of becoming an Eligible Director,
receive a pro rata Annual Option Grant for the year of such initial election or
appointment. Such pro rata Annual Option Grant shall be (a) for an Eligible
Director who is initially appointed after the first Annual Meeting of
Shareholders that occurs after the IPO, for a number of Shares equal to four (4)
times the dollar amount of the full annual retainer for an Eligible Director,
divided by the Fair Market Value of a Share as of the Grant Date multiplied by a
fraction, the numerator of which is 365 minus the number of days elapsed after
the most recent prior Annual Meeting of Shareholders and before the Eligible
Director's election or appointment and the denominator of which is 365 and (b)
for an Eligible Director who is initially appointed prior to the first Annual
Meeting of Shareholders after the IPO, for a number of Shares equal to four (4)
times the dollar amount of the retainer payable for the period from the date of
the initial appointment or election of the Eligible Director until (but not
including) the date on which the first Annual Meeting of Shareholders after the
IPO is expected to occur, divided by the Fair Market Value of a Share as of the
Grant Date; provided that in either case fractional Shares shall be rounded up
to the next larger whole number of Shares.
Article 7. Beneficiary Designation
Each Eligible Director 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 his or her death before
he or she receives any or all of such benefit. Each such designation shall
revoke all prior designations by the same Eligible Director, shall be in a form
prescribed by the Company, and will be effective only when filed by the Eligible
Director in writing with the Company during the Eligible Director's lifetime. In
the absence of
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any such designation, benefits remaining unpaid at the Eligible Director's death
shall be paid to the Eligible Director's estate.
Article 8. Change of Control and Certain Corporate Transactions
8.1. Change of Control. If an Eligible Director, upon a Change of Control
or within 1 year thereafter, (a) is removed by the Company other than for Cause,
or (b) fails to be reelected to the board after being slated for reelection, or
(c) is not slated for reelection, having expressed a willingness to be so
slated, and if such Eligible Director has not reached Mandatory Retirement Age
as of the date of such termination, and would not have reached Mandatory
Retirement Age during his or her ensuing term as a director if he or she were to
be elected, then any unexercised Option, whether or not exercisable on the date
of such termination, shall become fully exercisable and may be exercised, in
whole or in part for the balance of its original term.
8.2. Substituting Options in Certain Corporate Transactions. In connection
with the Company's acquisition, however effected, of another corporation or
entity (the "Acquired Entity") or the assets thereof, the Committee may, at its
discretion, grant Options ("Substitute Options") to a person who becomes an
Eligible Director in connection with such acquisition and who held options or
other equity interests in such Acquired Entity ("Acquired Entity Option")
immediately prior to such Acquisition in order to preserve for such Eligible
Director the economic value of all or a portion of such Acquired Entity Option
at such price as the Committee determines necessary to achieve preservation of
economic value. Any Shares delivered pursuant to substitute options under this
section shall be in addition to the Shares under Section 4.1 hereof.
Article 9. Amendment, Modification, and Termination
9.1. Amendment, Modification, and Termination. Subject to the terms of the
Plan, the Board 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.
9.2. Adjustments Upon Certain Unusual or Nonrecurring Events. The Committee
may make adjustments in the terms and conditions of Options 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
Committee 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.
9.3. Options Previously Granted. Notwithstanding any other provision of the
Plan to the contrary, no termination, amendment or modification of the Plan
shall adversely affect in any material way any Option previously granted under
the Plan, without the written consent of the Eligible Director who holds such
Option, provided that to the extent any Option shall be adversely affected by
any amendment or restatement to the Plan, the provisions of the Plan in effect
as of the Grant Date of such Option shall prevail.
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Article 10. Additional Provisions
10.1. Successors. All obligations of the Company under the Plan with
respect to benefits 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.
10.2. 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.
10.3. 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.
10.4. Requirements of Law. The granting of Options 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
Option Agreement, Eligible Directors shall not be entitled to exercise and the
Company shall not be obligated to deliver any Shares or other benefits to an
Eligible Director, if such exercise or delivery would constitute a violation by
the Eligible Director or the Company of any applicable law or regulation.
10.5. Securities Law Compliance.
(a) If the Committee deems it necessary to comply with any applicable
securities law, or the requirements of any stock exchange upon which Shares
may be listed, the Committee may impose any restriction on Shares acquired
pursuant to grants hereunder as it may deem advisable. All certificates
for Shares delivered under the Plan shall be subject to such stop transfer
orders and other restrictions as the Committee 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
Committee 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 Eligible Director 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 1933 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 Committee determines that the exercise of, or delivery of
Shares 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 Committee 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.
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10.6. No Rights as a Shareholder. An Eligible Director shall not have any
rights as a shareholder with respect to the Shares which may be deliverable
until such shares have been delivered to him or her.
10.7. 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.
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