EXHIBIT 10.2
GARMIN LTD.
2005 EQUITY INCENTIVE PLAN
NONQUALIFIED STOCK OPTION AGREEMENT
To: ___________________________ ( "you" or the "Grantee")
NOTICE OF GRANT:
You have been granted an option (the "Option") to purchase common shares,
$0.01 par value per share, of Garmin Ltd. ("Shares"), subject to the terms and
conditions of the Garmin Ltd. 2005 Equity Incentive Plan (the "Plan") and the
Option Award Agreement between you and Garmin Ltd. (the "Company") attached as
Exhibit A as follows:
Grant Date: ________________________
Total Number of Shares Subject to Option ________________(______)
Option Price per Share ($): $___.___
Expiration Date: ________________________
In order to fully understand your rights under the Plan (a copy of which is
attached) and the Option Award Agreement attached as Exhibit A, you are
encouraged to read the Plan and this document carefully. Please refer to the
Plan document for the definition of capitalized terms used in this Agreement.
To properly accept this Option, you must enter your E*Trade password and
click the "Accept" button on the previous screen. Acceptances shall be made
electronically within ten (10) days of your receipt of this Notice and Award
Agreement. By accepting this Option, you are also agreeing to be bound by
Exhibit A, including the restrictive covenants in Section 9 of Exhibit A.
GARMIN LTD.
By: /s/ Min H. Kao
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Name: Min H. Kao
Title: Chairman and CEO
EXHIBIT A
AGREEMENT:
In consideration of the mutual promises and covenants contained herein and
other good and valuable consideration paid by the Grantee to the Company, the
Grantee and the Company agree as follows:
Section 1. Incorporation of Plan
All provisions of this Award Agreement and the rights of the Grantee
hereunder are subject in all respects to the provisions of the Plan and the
powers of the Board therein provided. Capitalized terms used in this Award
Agreement but not defined shall have the meaning set forth in the Plan.
Section 2. Grant of Nonqualified Stock Option
As of the Grant Date identified above, the Company grants to the Grantee,
subject to the terms and conditions set forth herein and in the Plan, the right,
privilege, and option (the "Option") to purchase that number of Shares
identified above opposite the heading "Total Number of Shares Subject to
Option", at the per Share price specified above opposite the heading "Option
Price per Share."
Section 3. Exercisability of Option
(a) Except to the extent the Option is permitted to be transferred to a
person set forth in Section 8(b) of this Award Agreement, during the
Grantee's lifetime, this Option may be exercised only by the Grantee.
This Option, except as specifically provided elsewhere under the terms
of the Plan, shall become exercisable as follows:
Years Elapsed from Grant Date Percentage of Option Exercisable
----------------------------- --------------------------------
1 Year 20%
2 Years 40%
3 Years 60%
4 Years 80%
5 Or More Years 100%
For purposes of this Section 3, a Year shall mean a period of 365 days
(or 366 days in the event of a leap year).
(b) In the event of the Grantee's death or Disability while the Grantee is
employed, the Option shall become fully exercisable. In the event that
the Grantee dies or becomes Disabled following the Grantee's
Termination of Affiliation, the exercisability of the Option shall not
accelerate due to such death or Disability and shall be exercisable
only to the extent it was exercisable on the date of the Grantee's
Termination of Affiliation.
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Section 4. Method of Exercise
Provided this Option has not expired, been terminated or cancelled in
accordance with the terms of the Plan, that percentage of the Option which is
exercisable in accordance with Section 3 above may be exercised, in whole or in
part and from time to time, by delivery to the Company or its designee a written
notice or such other electronic or telephonic notice as may be acceptable to the
Company or its designee which shall:
(a) set forth the number of Shares with respect to which the Option is to
be exercised (such number must be in a minimum amount of 50 Shares);
(b) if the person exercising this Option is not the Grantee, be
accompanied by satisfactory evidence of such person's right to
exercise this option; and
(c) be accompanied by payment in full of the Option Price in the form of
cash, personal or certified bank check or electronic wire transfer
payable to the order of the Company or any other means allowable under
the Plan which the Company in its sole discretion determines will
provide legal consideration for the Shares.
Section 5. Expiration of Option
Unless terminated earlier in accordance with the terms of this Award
Agreement or the Plan, the Option granted herein shall expire at 5:00 P.M., U.S.
Central Time, on the tenth (10th) Anniversary of the Grant Date (the "Expiration
Date"). In the event the Expiration Date is a Saturday, Sunday or any other day
which is a holiday of the United States Federal Government (a "Non-Business
Day"), then the Option granted herein shall expire, unless earlier terminated in
a accordance with the terms of this Award Agreement or the Plan, at 5:00 P.M.,
U.S. Central Time, on the first day that is not a Non-Business Day (a "Business
Day") following such Expiration Date.
Section 6. Effect of Termination of Affiliation
If the Grantee has a Termination of Affiliation for any reason, including
termination by the Company with or without Cause, voluntary resignation, death,
or Disability, the effect of such Termination of Affiliation on all or any
portion of this Option is as provided below. Notwithstanding anything below to
the contrary, in no event may the Option be exercised after the Expiration Date.
(a) If the Grantee has a Termination of Affiliation within the Option Term
for Cause, the Option shall thereafter be void for all purposes upon
such Termination of Affiliation. The effect of this Section 6(a) shall
be limited to determining the conditions under which an Option may be
rendered null and void, and nothing in this Section 6(a) shall
restrict or otherwise interfere with the Company's discretion with
respect to the termination of any employee's employment with the
Company.
(b) If the Grantee has a Termination of Affiliation within the Option Term
due to the Grantee's voluntary resignation or termination by the
Company other than for Cause, the Option may be exercised by the
Grantee at any time prior to 5:00 P.M., U.S. Central Time, on the
ninetieth (90th) calendar day following the Grantee's Termination of
Affiliation (but in no event later than the Expiration Date). In the
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event that such ninetieth (90th) day shall not be a Business Day, then
the Option shall expire at 5:00 P.M., U.S. Central Time, on the first
(1st) Business Day immediately following such ninetieth (90th) day. In
any such case, the Option may be exercised only as to the Shares as to
which the Option had become exercisable on or before the date of the
Termination of Affiliation.
(c) If the Grantee dies or becomes Disabled within the Option Term (A)
while he or she is an employee, or (B) within the ninety-day period
referred to in clause (b) above, the Option may be exercised by the
Grantee or the Grantee's Beneficiaries entitled to do so at any time
prior to 5:00 P.M., U.S. Central Time, on the 365th calendar day
following the date of the Grantee's death or Disability (but in no
event later than the Expiration Date). In the event that the 365th day
is not a Business Day, then the Option shall expire at 5:00 P.M., U.S.
Central Time, on the first (1st) Business Day immediately following
such 365th day. In any such case, the Option may be exercised only as
to the Shares as to which the Option had become exercisable on or
before the date of the Grantee's death or Disability, or at such time
as the Grantee ceased to be an employee, whichever is earlier.
(d) In the event the Grantee has a Termination of Affiliation during a
Change in Control Period (which is the one year period following a
Change of Control) and such Termination of Affiliation is initiated by
the Company or a Subsidiary other than for Cause or initiated by the
Grantee for Good Reason, then all Options shall immediately become
exercisable and may be exercised, in whole or in part, for ninety (90)
days following such Termination of Affiliation (but in no event later
than the Expiration Date).
Section 7. Investment Intent.
The Grantee agrees that the Shares acquired on exercise of this Option
shall be acquired for his/her own account for investment only and not with a
view to, or for resale in connection with, any distribution or public offering
thereof within the meaning of the Securities Act of 1933 (the "1933 Act") or
other applicable securities laws. If the Board so determines, any share
certificates issued upon exercise of this Option shall bear a legend to the
effect that the Shares have been so acquired. The Company may, but in no event
shall be required to, bear any expenses of complying with the 1933 Act, other
applicable securities laws or the rules and regulations of any national
securities exchange or other regulatory authority in connection with the
registration, qualification, or transfer, as the case may be, of this Option or
any Shares acquired upon the exercise thereof. The foregoing restrictions on the
transfer of the Shares shall be inoperative if (a) the Company previously shall
have been furnished with an opinion of counsel, satisfactory to it, to the
effect that such transfer will not involve any violation of the 1933 Act and
other applicable securities laws or (b) the Shares shall have been duly
registered in compliance with the 1933 Act and other applicable state or federal
securities laws. If this Option, or the Shares subject to this Option, are so
registered under the 1933 Act, the Grantee agrees that he will not make a public
offering of the said Shares except on a national securities exchange on which
the common shares of the Company are then listed.
Section 8. Nontransferability of Option
(a) Except as provided above in Section 6(c) (in the event of the
Grantee's death) and below in Section 8(b), no portion of the Option
granted hereunder may be sold, transferred, pledged, assigned, or
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otherwise alienated or hypothecated, other than by will, by the laws
of descent and distribution. All rights with respect to the Option
granted to the Grantee shall be available during his or her lifetime
only to the Grantee.
(b) Pursuant to conditions and procedures established by the Board from
time to time, the Board may permit the Option to be transferred to,
exercised by and paid to (a) the Grantee's 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 (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
owns more than 50% of the voting interests; provided such transfer is
not for value. Any permitted transfer shall be subject to the
condition that the Board receive evidence satisfactory to it that the
transfer is being made for estate and/or tax planning purposes on a
gratuitous or donative basis and without consideration (other than
nominal consideration).
Section 9. Restrictive Covenants
As a condition of this Option and in addition to any restrictive agreements
the Grantee may have entered into with the Company, the Grantee accepts and
agrees to be bound as follows:
(a) Nondisclosure of Option Terms. The Grantee agrees not to disclose or
cause to be disclosed at any time, nor authorize anyone to disclose
any information concerning this Award Agreement or the Grantee's
Option except (i) as required by law, or (ii) to a permitted
transferee listed in Section 8 who agrees to be bound by this
Paragraph 9(a), or (iii) to the Grantee's legal and financial advisors
who agree to be bound by this Paragraph 9(a).
(b) Noncompetition. During the Grantee's employment and until one year
after the Grantee ceases being employed by or acting as a consultant
or independent contractor to the Company or any Subsidiary, the
Grantee will not perform services as an employee, director, officer,
consultant, independent contractor or advisor, or invest in, whether
in the form of equity or debt, or otherwise have an ownership interest
in any company, entity or person that directly competes anywhere in
the United States, the United Kingdom, Taiwan, or in any other
location outside the United States, the United Kingdom or Taiwan where
the Company or a Subsidiary conducts or (to the Grantee's knowledge)
plans to conduct business. Nothing in this Section 9(b) shall,
however, restrict the Grantee from making an investment in and owning
up to one-percent (1%) of the common stock of any company whose stock
is listed on a national securities exchange or actively traded in an
over-the-counter market; provided that such investment does not give
the Grantee the right or ability to control or influence the policy
decisions of any direct competitor of the Company or a Subsidiary.
(c) Noninterference. During the Grantee's employment and until one year
after the Grantee ceases being employed by or acting as a consultant
or independent contractor to the Company or any Subsidiary, the
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Grantee will not, either directly or indirectly through another
business or person, solicit, entice away, or otherwise interfere with
any employee, customer, prospective customer, vendor, prospective
vendor, supplier or other similar business relation or (to the
Grantee's knowledge) prospective business relation of the Company or
any Subsidiary.
(d) Nonsolicitation. During the Grantee's employment and until one year
after the Grantee ceases being employed by or acting as a consultant
or independent contractor to the Company or any Subsidiary, the
Grantee will not, either directly or indirectly through another
business or person, hire, recruit, employ, or attempt to hire, recruit
or employ, or facilitate any such acts by others, any person then
currently employed by the Company or any Subsidiary.
(e) Confidentiality. The Grantee acknowledges that it is the policy of the
Company and its subsidiaries to maintain as secret and confidential
all valuable and unique information and techniques acquired, developed
or used by the Company and its subsidiaries relating to their
businesses, operations, employees and customers ("Confidential
Information"). The Grantee recognizes that the Confidential
Information is the sole and exclusive property of the Company and its
subsidiaries, and that disclosure of Confidential Information would
cause damage to the Company and its subsidiaries. The Grantee shall
not at any time disclose or authorize anyone else to disclose any
Confidential Information or proprietary information that (A) is
disclosed to or known by the Grantee as a result or as a consequence
of or through the Grantee's performance of services for the Company or
any Subsidiary, (B) is not publicly or generally known outside the
Company and (C) relates in any manner to the Company's business. This
obligation will continue even though the Grantee's employment with the
Company or a Subsidiary may have terminated. This paragraph 9(e) shall
apply in addition to, and not in derogation of any other
confidentiality agreements that may exist, now or in the future,
between the Grantee and the Company or any Subsidiary.
(f) No Detrimental Communications. The Grantee agrees not to disclose or
cause to be disclosed at any time any untrue, negative, adverse or
derogatory comments or information about the Company or any
Subsidiary, about any product or service provided by the Company or
any Subsidiary, or about prospects for the future of the Company or
any Subsidiary.
(g) Remedy. The Grantee acknowledges the consideration provided herein
(absent the Grantee's agreement to this Section 9) is more than Garmin
is obligated to pay, and the Grantee further acknowledges that
irreparable harm would result from any breach of this Section and
monetary damages would not provide adequate relief or remedy.
Accordingly, the Grantee specifically agrees that, in the event that
the Grantee breaches any of the Grantee's obligations under this
Section 9, the Company and any Subsidiary shall be entitled to
injunctive relief therefor, and in particular, without limiting the
generality of the foregoing, neither the Company nor any Subsidiary
shall be precluded from pursuing any and all remedies they may have at
law or in equity for breach of such obligations. In addition, this
Option shall terminate immediately the first date on which the Grantee
engages in such activity and the Board shall be entitled on or after
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the first date on which the Grantee engages in such activity to
require the Grantee to return any Shares obtained by the Grantee's
exercise of this Option to the Company and to require the Grantee to
repay any proceeds received at any time from the sale of Shares
obtained by the Grantee's exercise of this Option (plus interest on
such amount from the date received at a rate equal to the prime
lending rate as announced from time to time in The Wall Street
Journal) and to recover all reasonable attorneys' fees and expenses
incurred in terminating this Option and recovering such Shares and
proceeds.
Section 10. Status of the Grantee
The Grantee shall not be deemed a shareholder of the Company with respect
to any of the Shares subject to this Option, except to the extent that such
Shares shall have been purchased and issued to him or her. The Company shall not
be required to issue or transfer any certificates for Shares purchased upon
exercise of this Option until all applicable requirements of law have been
complied with and such Shares shall have been duly listed on any securities
exchange on which the Shares may then be listed.
Section 11. No Effect on Capital Structure
This Option shall not affect the right of the Company to reclassify,
recapitalize or otherwise change its capital or debt structure or to merge,
consolidate, convey any or all of its assets, dissolve, liquidate, windup, or
otherwise reorganize.
Section 12. Adjustments
Notwithstanding any provision herein to the contrary, in the event of any
change in the number of outstanding Shares effected without receipt of
consideration therefor by the Company, by reason of a merger, reorganization,
consolidation, recapitalization, separation, liquidation, stock dividend, stock
split, share combination or other change in the corporate structure of the
Company affecting the Shares, the aggregate number and class of Shares subject
to this Option and the exercise price of this Option shall be automatically
adjusted to accurately and equitably reflect the effect thereon of such change;
provided, however, that any fractional share resulting from such adjustment
shall be eliminated. In the event of a dispute concerning such adjustment, the
decision of the Board shall be conclusive.
Section 13. Amendments
This Award Agreement may be amended only by a writing executed by the
Company and the Grantee which specifically states that it is amending this Award
Agreement; provided that this Award Agreement is subject to the power of the
Board to amend the Plan as provided therein. Except as otherwise provided in the
Plan, no such amendment shall materially adversely affect the Grantee's rights
under this Award Agreement without the Grantee's consent.
Section 14. Board Authority
Any questions concerning the interpretation of this Award Agreement, any
adjustments required to be made under Sections 12 or 13 of this Award Agreement,
and any controversy which arises under this Award Agreement shall be settled by
the Board in its sole discretion.
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Section 15. Withholding Taxes
The Grantee agrees to make appropriate arrangements with the Company for
satisfaction of any applicable Federal, state or local income tax or payroll tax
withholding amounts required by law to be withheld, including the payment to the
Company at the time of exercise of an Option of all such taxes and requirements.
The Company is not required to issue shares upon the exercise of this Option
unless the Grantee first pays in cash or by share withholding to the Company
such amount, if any, of tax withholding. The Company may, in its discretion,
accommodate the Grantee's request to have additional tax withholding taken at
the time of exercise.
Section 16. Nonqualified Stock Option
This Option is not intended to qualify as an "incentive stock option"
within the meaning of Section 422 of the Code, and shall not be so construed.
Section 17. Notice
Whenever any notice is required or permitted hereunder, such notice must be
given in writing by (a) personal delivery, or (b) expedited, recognized delivery
service with proof of delivery, or (c) United States Mail, postage prepaid,
certified mail, return receipt requested, or (d) telecopy or email (provided
that the telecopy or email is confirmed). Any notice required or permitted to be
delivered hereunder shall be deemed to be delivered on the date which it was
personally delivered, sent to the intended addressee, or, whether actually
received or not, on the third business day after it is deposited in the United
States mail, certified or registered, postage prepaid, addressed to the person
who is to receive it at the address which such person has theretofore specified
by written notice delivered in accordance herewith. The Company or the Grantee
may change, at any time and from time to time, by written notice to the other,
the address specified for receiving notices. Until changed in accordance
herewith, the Company's address for receiving notices shall be Garmin Ltd.,
Attention: General Counsel, 1200 East 151st Street, Olathe, KS 66062. Unless
changed, the Grantee's address for receiving notices shall be the last known
address of the Grantee on the Company's records. It shall be the Grantee's sole
responsibility to notify the Company as to any change in his or her address.
Such notification shall be made in accordance with this Section 17.
Section 18. Severability
If any part of this Award Agreement is declared by any court or
governmental authority to be unlawful or invalid, such unlawfulness or
invalidity shall not serve to invalidate any part of this Award Agreement not
declared to be unlawful or invalid. Any part so declared unlawful or invalid
shall, if possible, be construed in a manner which gives effect to the terms of
such part to the fullest extent possible while remaining lawful and valid.
Additionally, if any of the covenants in Section 9 are determined by a court to
be unenforceable in whole or in part because of such covenant's duration or
geographical or other scope, such court shall have the power to modify the
duration or scope of such provision as the case may be, so as to cause such
covenant, as so modified, to be enforceable.
Section 19. Binding Effect
This Award Agreement shall bind, and, except as specifically provided
herein, shall inure to the benefit of the respective heirs, legal
representatives, successors and assigns of the parties hereto.
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Section 20. Governing Law
This Award Agreement and the rights of all persons claiming hereunder shall
be construed and determined in accordance with the laws of the State of Kansas
without giving effect to the principles of the Conflict of Laws to the contrary.
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