EXHIBIT 10.4
GARMIN LTD.
2000 EQUITY INCENTIVE PLAN
STOCK APPRECIATION RIGHTS AGREEMENT
(Freestanding Stock-Settled SAR only)
To: _______________________ ("you" or the "Grantee")
NOTICE OF GRANT:
You have been granted freestanding stock appreciation rights ("SARs")
related to the common shares, $0.01 par value per share, of Garmin Ltd.
("Shares"), subject to the terms and conditions of the Garmin Ltd. 2000 Equity
Incentive Plan (the "Plan") and the SARs Award Agreement between you and Garmin
Ltd. (the "Company"), attached as Exhibit A, as follows:
Grant Date: _________________________
Total Number of Shares Subject to SARs ________________ (_______)
Strike Price per Share ($): $___.___
Expiration Date: __________________________
In order to fully understand your rights under the Plan (a copy of which is
attached) and the SARs 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 these SARs, 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 SAR Award
Agreement. By accepting these SARs, you are also agreeing to be bound by Exhibit
A, including the restrictive covenants in Section 10 of Exhibit A.
GARMIN LTD.
By: /s/ Min X. Xxx
----------------
Name: Min X. Xxx
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 Stock Appreciation Rights
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
and privilege to receive compensation equal to the appreciation on each of the
Shares identified above opposite the heading "Total Number of Shares Subject to
SARs", from the Grant Date to the date the SAR with respect to such Shares is
exercised.
Section 3. Exercisability of SAR
(a) Except to the extent the SAR is permitted to be transferred to a
person set forth in Section 9(b) of this Award Agreement, during the
Grantee's lifetime, this SAR may be exercised only by the Grantee.
This SAR, except as specifically provided elsewhere under the terms of
the Plan, shall become exercisable as follows:
Years Elapsed from Grant Date Percentage of SAR 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 SAR shall become fully exercisable. If the Grantee dies
or becomes Disabled following the Grantee's Termination of
Affiliation, the exercisability of the SAR 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.
2
Section 4. Method of Exercise
Provided this SAR has not expired, been terminated or cancelled in
accordance with the terms of the Plan, that percentage of the SAR 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 SAR is to be
exercised (such number must be in a minimum amount of 50 Shares); and
(b) if the person exercising this SAR is not the Grantee, be accompanied
by satisfactory evidence of such person's right to exercise this SAR.
Section 5. Payment of SAR
Upon the SAR Exercise Date, the Grantee shall be entitled to receive
payment from the Company in an amount determined by multiplying (i) the excess
of the Fair Market Value of a Share on the date of exercise over the Strike
Price (as set forth at the beginning of this Award Agreement) by (ii) the number
of Shares with respect to which the SAR is exercised. The payment upon a SAR
exercise shall be solely in whole Shares equal in value to the amount of payment
calculated immediately above. Fractional Shares shall be rounded down to the
nearest whole Share with no cash consideration being paid upon exercise.
Section 6. Expiration of SAR
Unless terminated earlier in accordance with the terms of this Award
Agreement or the Plan, the SAR 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"). If 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
SAR granted herein shall expire, unless earlier terminated in 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 7. 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 SAR is as provided below. Notwithstanding anything below to the
contrary, in no event may the SAR be exercised after the Expiration Date.
(a) If the Grantee has a Termination of Affiliation within the SAR Term
for Cause, the SAR shall thereafter be void for all purposes upon such
Termination of Affiliation. The effect of this Section 7(a) shall be
limited to determining the conditions under which a SAR may be
rendered null and void, and nothing in this Section 7(a) shall
restrict or otherwise interfere with the Company's discretion with
respect to the termination of any employee's employment with the
Company.
3
(b) If the Grantee has a Termination of Affiliation within the SAR Term
due to the Grantee's voluntary resignation or termination by the
Company other than for Cause, the SAR may be exercised by the Grantee
at any time prior to 5:00 P.M., U.S. Central Time, on the last day of
the three (3) month period that begins on the day of the Grantee's
Termination of Affiliation (but in no event later than the Expiration
Date). If the last day of such three month period shall not be a
Business Day, then the SAR shall expire at 5:00 P.M., U.S. Central
Time, on the first (1st) Business Day immediately following the end of
such three month period. In any such case, the SAR may be exercised
only as to the Shares as to which the SAR had become exercisable on or
before the date of the Termination of Affiliation.
(c) If the Grantee dies or becomes Disabled within the SAR Term (A) while
he or she is an employee, or (B) within the ninety-day period referred
to in clause (b) above, the SAR 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). If such 365th day is not a Business Day, then the
SAR 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 SAR may be exercised only as to the Shares as to which the SAR 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) If 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 SARs shall immediately become
exercisable and may be exercised, in whole or in part, by the Grantee
at any time prior to 5:00 P.M., U.S. Central Time, on the last day of
the three (3) month period that begins on the day of the Grantee's
Termination of Affiliation (but in no event later than the Expiration
Date).
Section 8. Investment Intent
The Grantee agrees that the Shares acquired on exercise of this SAR 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 SAR 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 SAR 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
4
compliance with the 1933 Act and other applicable state or federal securities
laws. If this SAR, or the Shares subject to this SAR, 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 9. Nontransferability of SAR
(a) Except as provided above in Section 7(c) (in the event of the
Grantee's death) and below in Section 9(b), no portion of the SAR
granted hereunder may be sold, transferred, pledged, assigned, or
otherwise alienated or hypothecated, other than by will, by the laws
of descent and distribution. All rights with respect to the SAR
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 SAR 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 10. Restrictive Covenants
As a condition of this SAR 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 SAR 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 SAR
except (i) as required by law, or (ii) to a permitted transferee
listed in Section 9 who agrees to be bound by this Paragraph 10(a), or
(iii) to the Grantee's legal and financial advisors who agree to be
bound by this Paragraph 10(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
5
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 10(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
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 10(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
6
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 10) 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, if 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 SAR shall terminate
immediately the first date on which the Grantee engages in such
activity and the Board shall be entitled on or after 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 SAR 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 SAR (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 SAR and recovering such
Shares and proceeds.
Section 11. 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 SAR, except to the extent that such Shares
shall have been issued to him or her. The Company shall not be required to issue
or transfer any certificates for Shares otherwise required to be transferred
upon exercise of this SAR 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 12. No Effect on Capital Structure
This SAR 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 13. 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 SAR and the exercise price of this SAR shall be automatically adjusted
to accurately and equitably reflect the effect thereon of such change; provided,
7
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 14. 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 15. Board Authority
Any questions concerning the interpretation of this Award Agreement, any
adjustments required to be made under Sections 13 or 14 of this Award Agreement,
and any controversy which arises under this Award Agreement shall be settled by
the Board in its sole discretion.
Section 16. Withholding
The Company shall withhold from any payment to the Grantee upon the
Grantee's exercise of this SAR all applicable Federal, state or local income tax
or payroll tax withholding amounts required by law to be withheld.
Section 17. Freestanding SAR
This SAR is freestanding and has been granted independently of any stock
option issued by the Company.
Section 18. 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, 0000 Xxxx 000xx Xxxxxx, Xxxxxx, XX 00000. 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 18.
8
Section 19. 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 10 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 20. 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.
Section 21. 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.
9
