EXHIBIT 10(c)
G&K SERVICES, INC.
1996 DIRECTOR STOCK OPTION PLAN
(AS AMENDED ON MARCH 10, 2004)
1. PURPOSE. The purpose of the G&K Services, Inc. 1996 Director Stock
Option Plan (the "Plan") is to advance the interests of G&K Services, Inc. (the
"Company") and its shareholders by encouraging increased share ownership by
members of the Board of Directors of the Company (the "Board") who are not
employees of the Company or any of its subsidiaries, in order to promote
long-term shareholder value through continuing ownership of the Company's common
stock.
2. ADMINISTRATION. The Plan shall be administered by the Board. The
Board shall have all the powers vested in it by the terms of the Plan, such
powers to include authority (within the limitations described herein) to
prescribe the form of the agreement embodying awards of nonqualified stock
options made under the Plan ("Options"). The Board shall, subject to the
provisions of the Plan, grant Options under the Plan and shall have the power to
construe the Plan, to determine all questions arising thereunder and to adopt
and amend such rules and regulations for the administration of the Plan as it
may deem desirable. Any decisions of the Board in the administration of the
Plan, as described herein, shall be final and conclusive. The Board may act only
by a majority of its members in office, except that the members thereof may
authorize any one or more of their number or any other officer of the Company to
execute and deliver documents on behalf of the Board. No member of the Board
shall be liable for anything done or omitted to be done by him or by any other
member of the Board in connection with the Plan, except for his own willful
misconduct or as expressly provided by statute.
3. PARTICIPATION. Each member of the Board who is not an employee of
the Company or any of its subsidiaries (a "Non-Employee Director") shall be
eligible to receive an Option in accordance with Paragraph 5 below.
4. AWARDS UNDER THE PLAN.
(a) Awards under the Plan shall include only Options, which are
rights to purchase Class A common stock of the Company having a par value
of $0.50 per share (the "Common Stock"). Such Options are subject to the
terms, conditions and restrictions specified in Paragraph 5 below.
(b) There may be issued under the Plan pursuant to the exercise of
Options an aggregate of not more than 100,000 shares of Common Stock,
subject to adjustment as provided in Paragraph 6 below. If any Option is
cancelled, terminates or expires unexercised, in whole or in part, any
shares of Common Stock that would otherwise have been issuable pursuant
thereto will be available for issuance under new Options.
(c) A Non-Employee Director to whom an Option is granted (and any
person succeeding to such a Non-Employee Director's rights pursuant to the
Plan) shall have no rights as a shareholder with respect to any Common
Stock issuable pursuant to any such
Option until the date of the issuance of a stock certificate to him for
such shares. Except as provided in Paragraph 6 below, no adjustment shall
be made for dividends, distributions or other rights (whether ordinary or
extraordinary, and whether in cash, securities or other property) for
which the record date is prior to the date such stock certificate is
issued.
5. NONQUALIFIED STOCK OPTIONS. Each Option granted under the Plan shall
be evidenced by an agreement in such form as the Board shall prescribe from time
to time in accordance with the Plan and shall comply with the following terms
and conditions:
(a) The Option exercise price shall be the Average Market Value
(as herein defined) of the Common Stock subject to such Option on the date
the Option is granted. For purposes hereof, "Average Market Value" shall
be defined as the average of the closing prices of the Company's Common
Stock, as reported on the Nasdaq National Market, during the ten business
days preceding the date on which the Option is granted.
(b) Each Non-Employee Director shall receive, as of the date of
initial adoption of the Plan by the shareholders, or upon such
Non-Employee Director=s initial election or appointment to the Board, a
one-time only Option for 3,000 shares of Common Stock (the "One-Time
Option"). In addition, for each year beginning in 1996, on the date of the
annual meeting of shareholders of the Company, each Non-Employee Director
shall automatically receive an Option for 1,000 shares of Common Stock
(the "Annual Option"), subject to adjustment as set forth in Section 6
below.
(c) The Option shall not be transferable by the optionee otherwise
than by will or the laws of descent and distribution, and shall be
exercisable during his lifetime only by him.
(d) Options shall not be exercisable:
(i) before the expiration of one year from the date it is
granted and after the expiration of ten years from the date it is
granted, and (A) the One-Time Option may be exercised during such
period as follows: one-third (33-1/3 %) of the total number of
shares covered by the One-Time Option shall become exercisable each
year beginning with the first anniversary of the date it is granted,
and (B) the Annual Option shall become exercisable in full upon the
first anniversary of the date it is granted; provided that a
Non-Employee Director who does not stand for re-election to the
Board may exercise any otherwise unexercisable Annual Options
beginning on the date such director's successor is elected and
qualified, subject to all of the other terms and conditions of such
Annual Options. Notwithstanding anything to the contrary herein, an
Option shall automatically become immediately exercisable in full
upon the death of a Non-Employee Director;
(ii) unless payment in full is made for the shares of Common
Stock being acquired thereunder at the time of exercise; such
payment shall be made in United States dollars by cash or check, or
in lieu thereof, by tendering to the Company
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Common Stock owned by the person exercising the Option and having a
fair market value (as evidenced by the closing sales price of a
share of Common Stock on the Nasdaq National Market or, if the
Nasdaq National Market is closed on that date, on the last preceding
date on which the Nasdaq National Market was open for trading) equal
to the cash exercise price applicable to such Option, or by a
combination of United States dollars and Common Stock as aforesaid;
and
(iii) unless the person exercising the Option has been at all
times during the period beginning with the date of grant of the
Option and ending on the date of such exercise, a Non-Employee
Director of the Company, except that if such person shall cease to
be such a Non-Employee Director for any reason, including death,
while holding an Option that has not expired and has not been fully
exercised, such person may, at any time within one year of the date
he ceased to be a Non-Employee Director (but in no event after the
Option has expired under the provisions of subparagraph 5(d)(i)
above), exercise the Option with respect to any Common Stock as to
which he could have exercised on the date he ceased to be such a
Non-Employee Director.
(e) If, on any date on which Options are automatically
granted, the number of shares of Common Stock remaining available
under the Plan is insufficient for the grant to each Non-Employee
Director of Options to purchase 1,000 shares of Common Stock, then
Options to purchase a proportionate amount of such available number
of shares of Common Stock (rounded to the nearest whole share) shall
be granted to each Non-Employee Director.
6. DILUTION AND OTHER ADJUSTMENTS. In the event of any change in the
outstanding Common Stock of the Company by reason of any stock split, stock
dividend, split-up, split-off, spin-off, recapitalization, merger,
consolidation, rights offering, reorganization, combination or exchange of
shares, a sale by the Company of all or part of its assets, any distribution to
shareholders other than a normal cash dividend, or other extraordinary or
unusual event, the number or kind of shares that may be issued under the Plan
pursuant to subparagraph 4(b) above (specifically including the number of shares
thereafter subject to the One-Time and Annual Options), the number or kind of
shares subject to, and the Option price per share under, all outstanding Options
shall be automatically adjusted so that the proportionate interest of the
participant shall be maintained as before the occurrence of such event; such
adjustment in outstanding Options shall be made without change in the total
Option exercise price applicable to the unexercised portion of such Options and
with a corresponding adjustment in the Option exercise price per share, and such
adjustment shall be conclusive and binding for all purposes of the Plan.
7. MISCELLANEOUS PROVISIONS.
(a) Except as expressly provided for in the Plan, no Non-Employee
Director or other person shall have any claim or right to be granted an
Option under the Plan. Neither the Plan nor any action taken hereunder
shall be construed as giving any Non-Employee Director any right to be
retained in the service of the Company.
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(b) A participant's rights and interest under the Plan may not be
assigned or transferred, hypothecated or encumbered in whole or in part
either directly or by operation of law or otherwise (except in the event
of a participant's death, by will or the laws of descent and
distribution), including, but not by way of limitation, execution, levy,
garnishment, attachment, pledge, bankruptcy or in any other manner, and no
such right or interest of any participant in the Plan shall be subject to
any obligation or liability of such participant.
(c) Common Stock shall not be issued hereunder unless counsel for
the Company shall be satisfied that such issuance will be in compliance
with applicable federal, state, local and foreign securities, securities
exchange and other applicable laws and requirements.
(d) It shall be a condition to the obligation of the Company to
issue Common Stock upon exercise of an Option, that the participant (or
any beneficiary or person entitled to act under subparagraph 5(d)(iii)(B)
above) pay to the Company, upon its demand, such amount as may be
requested by the Company for the purpose of satisfying any liability to
withhold federal, state, local or foreign income or other taxes. If the
amount requested is not paid, the Company may refuse to issue such Common
Stock.
(e) The expenses of the Plan shall be borne by the Company.
(f) By accepting any Option or other benefit under the Plan, each
participant and each person claiming under or through him shall be
conclusively deemed to have indicated his acceptance and ratification of,
and consent to, any action taken under the Plan by the Company or the
Board.
(g) The appropriate officers of the Company shall cause to be
filed any reports, returns or other information regarding Options
hereunder or any Common Stock issued pursuant hereto as may be required by
Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, or
any other applicable statute, rule or regulation.
8. AMENDMENT OR DISCONTINUANCE. The Plan may be amended at any time and
from time to time by the Board as the Board shall deem advisable; provided,
however, that no amendment shall become effective without shareholder approval
if such shareholder approval is required by law, rule or regulation. No
amendment of the Plan shall materially and adversely affect any right of any
participant with respect to any Option theretofore granted without such
participant's written consent.
9. TERMINATION. This Plan shall terminate upon the earlier of the
following dates or events to occur:
(a) upon the adoption of a resolution of the Board terminating the
Plan; or
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(b) ten years from the date the Plan is initially approved and
adopted by the shareholders of the Company.
No termination of the Plan shall materially and adversely affect any of
the rights or obligations of any person, without his consent, under any Option
theretofore granted under the Plan.
10. IMMEDIATE ACCELERATION OF OPTIONS. Notwithstanding any provision in
this Plan to the contrary, all outstanding options will become exercisable
immediately if any of the following events occur unless otherwise determined by
the Board of Directors and a majority of the Continuing Directors (as defined
below):
(a) any person or group of persons becomes the beneficial owner of
30% or more of any equity security of the Company entitled to vote for the
election of directors;
(b) a majority of the members of the Board of Directors of is
replaced within the period of less than two years by directors not
nominated and approved by the Board of Directors; or
(c) the stockholders of the Company approve an agreement to merge
or consolidate with or into another corporation or an agreement to sell or
otherwise dispose of all or substantially all of the Company's assets
(including a plan of liquidation).
For purposes of this Section 10, beneficial ownership by a person or group
of persons shall be determined in accordance with Regulation 13D (or any similar
successor regulation) promulgated by the Securities and Exchange Commission
pursuant to the Securities Exchange Act of 1934, as amended. Beneficial
ownership of more than 30% of an equity security may be established by any
reasonable method, but shall be presumed conclusively as to any person who files
a Schedule 13D report with the Securities and Exchange Commission reporting such
ownership.
For purposes of this Section 10 "Continuing Directors" are directors (i)
who were in office prior to the time any of provisions (a), (b) or (c) occurred
or any person publicly announced an intention to acquire 20% or more of any
equity security of the Company, (ii) directors in office for a period of more
than two years, and (iii) directors nominated and approved by the Continuing
Directors.
11. EFFECTIVE DATE OF PLAN. The Plan will become effective on the date
that it is approved by the affirmative vote of the holders of a majority of the
shares of Common Stock entitled to notice of and to vote at the Company's 1996
Annual Meeting of Stockholders.
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