EXHIBIT 10.2
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RESTRICTED SHARE AGREEMENT
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THIS AGREEMENT (the "Agreement"), entered into on April 15, 2008 (the
"Grant Date"), by and between the Xxxxxxx X. Xxxxxxxxx (the "Participant")
and Kaanapali Land, LLC, a Delaware limited liability company (the
"Company");
WITNESSETH THAT:
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WHEREAS, the Company and the Participant wish to have 52,000 Class C
Shares of the Company (the "Covered Shares") issued to the Participant
subject to the restrictions and limitations as set forth in this Agreement,
and the parties hereto have reached agreement to the terms of this Award on
the Grant Date;
NOW, THEREFORE, IT IS AGREED, by and between the Company and the
Participant, as follows:
1. AWARD. The Participant is hereby granted and issued the
Covered Shares, subject to the terms of this Agreement, including, but not
limited to, the vesting provisions set forth in Section 4 below, effective
as of the Grant Date.
2. DISTRIBUTION RIGHTS. The Participant's distribution rights shall
be subject to the following:
(a) The Participant shall be entitled to receive any distributions with
respect to the Covered Shares (as described in Section 3 of the
Class C Rights Description, and referred to as "Distributions") with
respect to record dates occurring while the share are vested. If
Distributions are made with respect to Covered Shares comprising one
or more Installments (as defined in Section 4 hereof) prior to the
vesting of such Installment or Installments, the amount of such
Distributions (or the property included in such Distributions) will
be credited to an account maintained by the Company for the benefit
of the Participant.
(b) As soon as practicable after the date, if any, on which an
Installment becomes vested, the Distributions held in the Account
with respect to the vested shares shall be transferred to the
Participant. Cash credited to the Participant's account with respect
to Distributions attributable to any Installment will earn no
interest for the period prior to vesting of that Installment.
However, for the period between the vesting date and the date of
payment with respect to Distributions attributable to that
Installment, interest shall be paid at the applicable federal rate
for short term loans in effect on the date of vesting, as amended,
compounded semi-annually on December 31 and June 30 of each calendar
year. To the extent that property is credited to the account, any
Distributions with respect to such property that occur after being
credited but before being transferred to the Participant shall also
be credited to the account, and shall be transferred to the
Participant at the time at which the Installment to which the
property is attributable is transferred to the Participant. Amounts
credited to the account are intended to satisfy the short-term
deferral exception from Code section 409A and, accordingly, in no
event will amounts distributable from the account be paid later than
the fifteenth day of the third calendar month following the calendar
year in which payment is due.
(c) The Participant shall have only a contractual right to the amounts,
if any, payable under this Agreement with respect to the account,
unsecured by any assets of the Company or the Affiliates.
(d) No Distributions shall be payable to or for the benefit of the
Participant for Covered Shares with respect to Distribution record
dates occurring prior to the Grant Date, or with respect to
Distribution record dates occurring on or after the date, if any, on
which the Participant has forfeited those Covered Shares.
3. VOTING RIGHTS. The Participant shall be entitled to vote both
vested and unvested Covered Shares (as described in Section 9 of the Class
C Rights Description); provided, however, that the Participant shall not be
entitled to vote the shares with respect to voting record dates arising
prior to the Grant Date, or with respect to voting record dates occurring
on or after the date, if any, on which the Participant has forfeited those
Covered Shares.
4. TRANSFER AND FORFEITURE OF SHARES. If the Date of Termination
does not occur during the Restricted Period with respect to any Installment
of the Covered Shares, then, at the end of the Restricted Period for such
Installment, the Participant shall become vested in the Installment of
Covered Shares, and shall own those shares free of all restrictions
otherwise imposed by this Agreement. Except as otherwise provided in this
paragraph 4, the Participant shall not be vested in any Installment of
Covered Shares prior to the end of the Restricted Period. With respect to
all Covered Shares, the "Restricted Period" shall begin on the Grant Date.
The "Restricted Period" with respect to each Installment shown on the
following schedule shall end on the vesting date (each a "Vesting Date")
applicable to such Installment (but only if the Date of Termination has not
occurred before such Vesting Date):
VESTING DATE
APPLICABLE
INSTALLMENT TO INSTALLMENT
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26,000 shares Grant Date
13,000 shares December 31, 2008
13,000 shares December 31, 2009
Notwithstanding the foregoing provisions of this paragraph 4, the
Participant shall become vested in the Covered Shares, and become owner of
the shares free of all restrictions otherwise imposed by this Agreement,
prior to the end of the Restricted Period, as follows:
(a) The Participant shall become vested in the Covered Shares as of the
Date of Termination before the date the Covered Shares would
otherwise become vested, if the Date of Termination occurs by reason
of the Participant's termination by the Company without Cause, the
Participant's Constructive Discharge, the Participant's death, or the
Participant's Permanent Disability.
(b) The Participant shall become vested in the Covered Shares upon a
Change in Control that occurs on or before the Date of Termination
and before the date the Covered Shares would otherwise become vested.
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Covered Shares may not be sold, assigned, transferred, pledged or otherwise
encumbered until the expiration of the Restricted Period or, if earlier,
until the Participant is vested in the shares, subject to all events to
paragraph 7 hereof. Except as otherwise provided in this paragraph 4, the
Participant shall forfeit the unvested Installment or Installments of
Covered Shares as of a Date of Termination that occurs during the
Restricted Period with respect to such Installment or Installments.
5. LEGEND ON CERTIFICATES FOR COVERED SHARES. Each certificate
(if any) issued in respect of the Covered Shares granted under this
Agreement shall be registered in the name of the Participant and, in the
discretion of the Manager, may be held by the Company or an Affiliate or
deposited in a bank designated by the Manager. During the Restricted
Period, certificates (if any) evidencing the Covered Shares may be
imprinted with the following legend: "The securities evidenced by this
certificate are subject to the transfer restrictions, forfeiture
restrictions and other provisions of the Restricted Share Agreement dated
April 15, 2008 between Kaanapali Land, LLC, a Delaware limited liability
company, and Xxxxxxx X. Xxxxxxxxx."
6. WITHHOLDING. The grant and vesting of shares of Covered Shares
under this Agreement are subject to withholding of all applicable taxes, to
be settled by the Participant's delivery, prior to the date such amounts
are required to be paid by the Company to the applicable revenue
authorities, a cash payment (including a check) for the entire amount then
due. The grant of the Covered Shares under this Agreement is contingent on
the Participant making timely payment of such amounts.
7. AGREEMENTS REGARDING SUBJECT SHARES.
(a) GENERAL TRANSFER PROVISIONS. The Covered Shares shall be subject to
the terms and conditions of this Agreement, and no sale, transfer,
pledge, mortgage or other disposition or encumbrance of the Covered
Shares (each a "Transfer"), whether voluntary or involuntary, shall
be valid unless the terms and conditions of this Agreement and the
terms and conditions of the LLC Agreement with respect to such
Transfer have been satisfied to the extent applicable. All
references herein to the Company shall be deemed to be references to
(and shall be applicable to) any surviving entity resulting from any
merger or acquisition to which the Company is a party. Any Transfer
made except in accordance with this Agreement shall be null and void
and the Company shall refuse to recognize such Transfer or the
purported rights of any Transferee in the Covered Shares.
Participant agrees to indemnify and hold harmless the Company and the
Manager for and against any damage, liability, claim, cost, expense
or loss incurred by the Company or Manager as a consequence of a
Transfer made or attempted in violation hereof.
(b) NO TRANSFER WHILE EMPLOYED BY THE COMPANY OR AFFILIATE. In addition
to any restrictions set forth in the LLC Agreement, without the prior
written consent of the Company except in the case of a Permitted
Family Transfer, the Participant shall not cause or permit any
Transfer respecting the Covered Shares to occur while Participant
continues to be employed by the Company and its Affiliates and any
such Transfer in violation of this section shall be null and void.
Any Permitted Family Transfer, in order to become effective, shall
further comply with the following conditions:
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(i) The Participant (or the executor or administrator of the
Participant's estate) must give written notice to the Company
of the intention to sell or gift (including by will or bequest)
such Covered Shares to a Related Person. Such notice shall
include the number of Covered Shares proposed to be sold gifted
or bequeathed, the name and address of the Related Person and,
if relevant, the name and address of the general partner,
manager or managing member (as applicable), trustee or
custodian and a copy of any trust or custodial documents or
limited liability company or partnership agreements (including
all amendments thereto) pursuant to which the Covered Shares
will be held.
(ii) The Participant shall not be permitted to make such sale or
gift, and the Related Person or any other person or entity
cannot become the holder or owner of any such Covered Shares or
succeed to any of the Partnership's rights with respect to such
Covered in any manner whatsoever, except in compliance with the
provisions of the LLC Agreement and this Agreement.
(iii) All of the Covered Shares received by the Related Person shall
continue after such sale or gift to constitute Class C Shares
subject to all of the provisions of this the provisions of the
LLC Agreement and this Agreement.
(iv) The Related Person (and any subsequent permitted holder of such
Covered Shares) shall be bound by all of the provisions of this
the LLC Agreement and this Agreement, and shall not be entitled
to effect any further Transfer of the Covered Shares, except in
accordance with all of the terms and conditions of the LLC
Agreement and this Agreement. No such further Transfer shall
be considered a Permitted Family Transfer hereunder without the
prior written consent of the Company, which the Company may
grant or withhold in its sole discretion.
(v) The Related Person shall, prior to such Permitted Family
Transfer being effective, enter into a written agreement in
form and substance satisfactory to the Company agreeing to and
acknowledging all of the matters set forth in subsections (i)-
(iv) above.
(c) FURTHER RIGHT TO TRANSFER SUBJECT TO RIGHT OF FIRST REFUSAL IN
COMPANY. Except for a Permitted Family Transfer or a Transfer of the
Covered Shares to an assignee without receipt of consideration as a
consequence of (i) the death of Participant or any permitted direct
or indirect successor or assign of Participant then entitled to the
applicable Covered Shares; (ii) the Participant or any permitted
direct or indirect successor or assign of Participant then entitled
to the applicable Covered Shares having been adjudged by a court of
competent jurisdiction as incompetent to manage the Participant's
person or property (in which case the provisions of paragraph 7(d)
hereof shall apply), or (iii) if any permitted successor in interest
to Participant then entitled to the applicable Covered Shares is an
entity, the dissolution or termination of such entity, then
Participant and such permitted successors and assigns, as applicable,
shall only have the right to transfer the Covered Shares or any
portion thereof subject to the right of first refusal to the Company
set forth in this paragraph 7(c). Upon the occurrence of any of the
events set forth in the immediately preceding sentence and the waiver
of the Company's purchase right under
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paragraph 7(d) below, the rights of the Participant or its permitted
successors or assigns, as applicable, with respect to the Covered Shares
may be so transferred without consideration, and any rights respecting such
shares shall be exercised prior to such transfer, as determined by the
executor, administrator, guardian, conservator or other legal
representative of Participant or such permitted successor in interest, for
the purpose of settling such person's estate or administering such person's
affairs, or in the case of an entity that has dissolved or terminated, by
the legal representative or legal successor of such entity. For any other
Transfer, the Participant or such permitted successor in interest, as
applicable (the "Selling Owner"), may only obtain a bona fide written offer
to purchase, or enter into a contract to sell, any Covered Shares that is
conditioned on the Company's waiver of its right of first refusal under
this paragraph 7(c) and the Selling Owner shall then furnish a copy of such
offer or contract to the Company (the "Refusal Right Notice"). The Company
shall have the right, within 60 days from the receipt of the Refusal Right
Notice, to elect by written notice to such Selling Owner (the "Refusal
Right Exercise Notice") to acquire such Covered Shares which is the subject
of such offer or contract from the Selling Owner for consideration equal
to, and payable upon the terms set forth in, such bona fide offer or
conditional contract. Such right shall be exercised or waived by the
Company in its sole and absolute discretion. If the Company does not
exercise such right of first refusal by timely delivery of the Refusal
Right Exercise Notice, such Selling Owner shall be entitled to transfer the
Covered Shares that are the subject of the Refusal Right Notice for a
period of 30 days following the Company's failure to exercise its right of
first refusal, but not otherwise. No failure of the Company to exercise
its right hereunder, nor any waiver or consent by the Company with respect
to the transfer of any interest in the Company under this paragraph 7(c)
shall constitute a waiver or consent for any subsequent transfer under this
paragraph 7(c). No person or entity that acquires such Covered Shares
shall be or become a successor or substitute member of except upon the
prior written consent of the Manager of the Company, which consent may be
given or withheld, conditioned or delayed in its sole and absolute
discretion, and any such person shall be subject to the terms and
conditions of this paragraph 7 with respect to any subsequent disposition
of the interest so acquired. The parties hereto acknowledge and agree that
the Company shall have such right of first refusal to purchase the Covered
Shares, notwithstanding any terms or provisions of the LLC Agreement to the
contrary and that the terms of this Agreement for the benefit of the
Company are a material consideration to the Company's agreement to join
herein.
(d) RIGHT OF COMPANY TO PURCHASE ECONOMIC INTEREST AFTER DISSOCIATION
EVENT.
(i) Upon the occurrence of the death, bankruptcy, dissolution,
insanity, incompetence, other legal incapacity of an owner of
Covered Shares or the occurrence of any other event that causes
such owner to cease to be a member of the Company (the
"Dissociated Owner") the occurrence of such event (a
"Dissociation Event") shall entitle the Company to purchase the
Covered Shares owned by the Dissociated Owner in accordance
with this paragraph 7(d).
(ii) At any time on or before ninety (90) days after the date of
determination of the purchase price for the Covered Shares
under paragraph 7(d)(iii) (the "Purchase Notice Period"), the
Company shall have a right of first refusal to purchase (or
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cause an Affiliate or designee to purchase) all of the Covered
Shares owned by the Dissociated Owner at a purchase price
determined as set forth in paragraph 7(d)(iii). The Company
may exercise its purchase right hereunder by delivering a
notice (the "Purchase Notice") to the Dissociated Owner prior
to the end of the Purchase Notice Period. Such right shall be
exercised or waived by the Company in its sole and absolute
discretion. If the Company delivers a timely Purchase Notice
exercising its right to purchase the Covered Shares, the
Dissociated Owner shall transfer such Covered Shares to the
Company (or its Affiliate or designee) on a date selected by
the Company on or before thirty (30) days after the end of the
Purchase Notice Period.
(iii) The purchase price for Dissociated Owner's Covered Shares shall
be the fair market value of such Covered Shares as of the date
of occurrence of the Dissociation Event, as agreed between the
Dissociated Owner (or such former member's legal
representative) and the Company, before the application of any
discounts to such fair market value that may be applicable due
to the illiquidity or minority status of the Covered Shares.
If the Dissociated Owner (or such Dissociated Owner's estate or
legal representative) and the Company are unable to agree on
the purchase price within thirty (30) days after the
Dissociation Event, then the purchase price shall be determined
by arbitration in Chicago, Illinois, in accordance with the
rules of the American Arbitration Association. The
determination of the arbitrators shall be final, conclusive and
binding upon the parties and the number of arbitrators shall be
three, with the Dissociated Owner (or such Dissociated Owner's
estate or legal representative) appointing one arbitrator, the
Company appointing one arbitrator, and the two arbitrators
appointed by the parties appointing the third (who shall be a
neutral arbitrator from a panel provided by the American
Arbitration Association). The Dissociated Owner shall pay the
fees and expenses of the arbitrator appointed by the
Dissociated Owner, the Company (or the Affiliate obtaining such
Covered Shares) shall pay the fees and expenses of the
arbitrator appointed by them, and each shall pay 50% of the
fees and expenses of the neutral arbitrator.
(e) PAYMENT OF PURCHASE PRICE; CLOSING. Any purchase price payable
pursuant to paragraphs 7(c) and 7(d) hereof shall be paid in
immediately available United States Dollars at the closing of the
sale of the Covered Shares to the Company, which shall be held at
10:00 a.m. at the principal office of the Company no later than
thirty (30) days after the end of the Purchase Notice Period or the
Refusal Right Exercise Notice, as applicable, except that if the
closing date falls on a Saturday, Sunday or legal holiday, then the
closing shall be held on the next succeeding business day. At the
closing, the Selling Owner or Dissociated Owner, as applicable (or
such Selling Owner's or Dissociated Owner's estate or legal
representative) shall deliver to the Company (or the applicable
Affiliate or designee) an instrument of transfer (containing warrants
of title and of no encumbrances) conveying such Selling Owner's or
Dissociated Owner's Covered Shares consistent with the purchase
rights exercised hereunder. The Selling Owner or Dissociated Owner
(or such Dissociated Owner's estate or legal representative), and the
Company (or the applicable Affiliate or designee) shall do all things
and execute and deliver all papers as
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may be necessary fully to consummate such transfers in accordance
with the terms and provisions of this Agreement.
(f) TAG ALONG RIGHT. In the event that the holders of Common Shares of
the Company representing not less than a majority of the outstanding
membership interests in the Company determine to sell or contribute
their membership interests to a third party that is not an Affiliate
(as defined in the LLC Agreement) (a "Shareholder Control
Transaction"), the Company shall afford Participant the opportunity
to participate in such sale on the same basis as such majority
interest subject to adjustment for the preferences on distributions
to which the holders of Common Shares are entitled with respect to
the Covered Shares as set forth in the Class C Rights Description;
provided, however, that, in the event that the Company cannot
exercise rights sufficient to provide such opportunity to
Participant, Participant shall have the right to elect, upon written
notice given within sixty (60) days after the date Participant
receives notice of such transaction, to cause the Company to redeem
all of the Covered Shares (and not less than all of the Covered
Shares) from Participant at the same purchase price as would be
obtained had Participant participated directly in the Shareholder
Control Transaction; provided, further, that to the extent that
Participant would have received payment in kind in the Shareholder
Control Transaction on account of the Covered Shares, such payment
pursuant to the redemption by the Company shall be converted into
cash based upon the fair market value of the assets that would have
been so received in kind at the time of such payment.
(g) DRAG ALONG RIGHT. In the event that the holders of Common Shares of
the Company representing not less than a majority of the outstanding
membership interests in the Company determined to enter into
Shareholder Control Transaction, the Participant hereby agrees, for
the benefit of the Company and/or each such holder of Common Shares,
upon the written notice of the Company or holders of a majority of
such Common Shares, to participate in such Shareholder Control
Transaction on the same basis as such majority interest subject to
adjustment for the preferences on distributions to which the holders
of Common Shares are entitled with respect to the Covered Shares as
set forth in the Class C Rights Description.
8. HEIRS AND SUCCESSORS. This Agreement shall be binding upon,
and inure to the benefit of, the Company and its successors and assigns,
and upon any person acquiring, whether by merger, consolidation, purchase
of assets or otherwise, all or substantially all of the Company's assets
and business. If benefits distributable to the Participant under this
Agreement have not been distributed at the time of the Participant's death,
such benefits shall be distributed to the Designated Beneficiary, in
accordance with the provisions of this Agreement. The "Designated
Beneficiary" shall be the beneficiary or beneficiaries designated by the
Participant in a writing filed with the Manager in such form and at such
time as the Manager shall require. If a deceased Participant fails to
designate a beneficiary, or if the Designated Beneficiary does not survive
the Participant, any benefits distributable to the Participant shall be
distributed to the legal representative of the estate of the Participant.
If a deceased Participant designates a beneficiary and the Designated
Beneficiary survives the Participant but dies before the complete
distribution of benefits to the Designated Beneficiary under this
Agreement, then any benefits distributable to the Designated Beneficiary
shall be distributed to the legal representative of the estate of the
Designated Beneficiary.
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9. ADMINISTRATION. The authority to control and manage the
operation and administration of the Agreement shall be vested in the
Manager. The Manager will have the authority and discretion to interpret
the Agreement, and to make all other determinations that may be necessary
or advisable for the administration of the Agreement. Notwithstanding any
other provision of the Agreement, no benefit shall be distributed to any
person under the Agreement unless the Manager, in its sole discretion,
determines that such person is entitled to benefits under the Agreement.
The Manager may allocate all or any portion of its responsibilities and
powers to any one or more of its members and may delegate all or any part
of its responsibilities and powers to any person or persons selected by it.
Any such allocation or delegation may be revoked by the Manager at any
time.
10. EFFECT ON OTHER AGREEMENTS. Nothing in this Agreement shall be
construed to limit the requirements and restrictions otherwise applicable
to the Covered Shares (including, without limitation, the requirements and
restrictions of the LLC Agreement, including the Class C Rights
Description.
11. FRACTIONAL SHARES. In lieu of issuing a fraction of a share
resulting from an adjustment of this Award pursuant to the LLC Agreement or
otherwise, the Company will be entitled to pay to the Participant an amount
equal to the fair market value of such fractional share.
12. NOT AN EMPLOYMENT CONTRACT. This Award will not confer on the
Participant any right with respect to continuance of employment or other
service with the Company or any Affiliate, nor will it interfere in any way
with any right the Company or any Affiliate would otherwise have to
terminate or modify the terms of such Participant's employment or other
service at any time.
13. NOTICES. Any written notices provided for in this Agreement
shall be in writing and shall be deemed sufficiently given if either hand
delivered or if sent by fax or overnight courier, or by postage paid first
class mail. Notices sent by mail shall be deemed received three business
days after mailing but in no event later than the date of actual receipt.
Notices shall be directed, if to the Participant, at the Participant's
address indicated by the Company's records, or if to the Company, at the
Company's principal executive office.
14. AMENDMENT. This Agreement may be amended by written agreement
of the Participant and the Company without the consent of any other person.
15. APPLICABLE LAW. The provisions of this Agreement shall be
construed in accordance with the laws of the State of Delaware, without
regard to the conflict of law provisions of any jurisdiction.
16. AFFILIATE PURCHASE TRANSACTION. Notwithstanding the provisions
of the Class C Rights Description or any other provision of the LLC
Agreement, and notwithstanding any other provision of this Agreement, in
the event that the Company is a party to any Transaction with the Manager
or any Affiliate thereof as a result of which all or substantially all of
the Common Shares not held by the Manager or its Affiliates are converted
into the right to receive shares, securities or other property, the
Participant and the Company agree that the Covered Shares shall
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either: (i) continue to remain outstanding in the event the Company
survives such Transaction; or (ii) be converted into a security of the
surviving entity to the transaction having such right and terms
substantially identical to those of the Class C Shares (except for changes
that do not materially and adversely affect the holders of the Class C
Shares), including as to (a) the percentage equity ownership interest that
the Class C Shares represent in the surviving entity and (b) the cumulative
aggregate preference on distributions to which the Class C Shares are
subject; provided however, that to the extent any cash consideration paid
to the holders of Common Shares in such Transaction is provided by the
Company and not contributed by the Manager or one of its Affiliates, the
cumulative aggregate preference on distributions to which the Class C
Shares are subject shall be reduced by the amount of such cash
consideration. It is agreed that any Transaction effected in accordance
with the terms of this paragraph 16 shall not be deemed to materially and
adversely affect the voting rights or preferences of the holders of Class C
Shares.
17. DEFINITIONS. Any capitalized terms that are not defined herein
shall have the meaning ascribed thereto in the LLC Agreement. The
following terms used in this Agreement shall have the meaning set forth
below:
(a) AFFILIATE. The term "Affiliate" means any corporation or other
entity that, directly or indirectly, controls or is controlled by the
Company, or that is under common control with the Company. For
purposes of this definition, the term "controlling," "controlled by"
or "under common control with" shall mean the possession, direct or
indirect, of the power to direct or cause the direction of the
management and policies of a corporation or other entity, whether
through ownership of voting securities, by contract or otherwise.
(b) CAUSE. The term "Cause" means:
(i) the willful and continued failure by the Participant to
substantially perform his duties with the Company (other than
any such failure resulting from the Participant being Disabled)
Within a reasonable period of time after a written demand for
substantial performance is delivered to the Participant by the
Manager, which demand specifically identifies the manner in
which the Manager believes that the Participant has not
substantially performed his duties;
(ii) the willful engaging by the Participant in conduct which is
demonstrably and materially injurious to the Company or the
Affiliates, monetarily or otherwise; or
(iii) the engaging by the Participant in egregious misconduct
involving serious moral turpitude to the extent that, in the
reasonable judgment of the Company's Manager, the Participant's
credibility and reputation no longer conform to the standard of
the Company's executives.
For purposes of this Agreement, no act, or failure to act, on the
Participant's part shall be deemed "willful" unless done, or omitted to be
done, by the Participant not in good faith and without reasonable belief
that the Participant's action or omission was in the best interest of the
Company.
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(c) CHANGE IN CONTROL. The term "Change in Control" means the occurrence
of any of the following:
(i) Any Person other than:
(A) The Manager or an Affiliate of the Manager;
(B) A corporation, trust or other entity owned, directly or
indirectly, by the shareholders of the Company on the
date of the transaction in substantially the same
proportions as their ownership of the Company;
(C) Any Person in which the Participant has a substantial
(10% or greater) direct or beneficial equity interest; or
(D) A Person that acquires Shares pursuant to a Business
Combination which complies with subparagraph (iii) of
this definition;
is or becomes a beneficial owner (as defined in Rule 13d-3 under the
Securities Exchange Act of 1934, as amended), directly or indirectly,
of Shares representing 50% or more of the total voting power of the
Company's then outstanding Shares;
(ii) A tender offer is made for the Shares and the Person making the
offer owns or has accepted for payment Shares representing 50%
or more of the total voting power of the Company's then
outstanding Shares; or
(iii) The Company consummates a reorganization, merger, consolidation
or sale of all or substantially all of the assets of the
Company (a "Business Combination") with or to any other Person
(other than the Manager, the Participant or their respective
Affiliates) other than a Business Combination which would not
result in any Person (other than the Manager, Participant or
their respective Affiliates) owning, directly or indirectly,
50% or more of the combined voting power of the Company or such
surviving entity's outstanding voting securities, immediately
after such Business Combination.
(d) CLASS C RIGHTS DESCRIPTION. The term "Class C Rights Description"
means the Rights and Terms of the Class C Common Shares set forth as
Exhibit C to the LLC Agreement.
(e) CODE. The term "Code" means the Internal Revenue Code of 1986, as
amended. A reference to any provision of the Code shall include
reference to any successor provision of the Code.
(f) CONSTRUCTIVE DISCHARGE. If (I) the Participant provides written
notice to the Company of the occurrence of Good Reason (as defined
below) within a reasonable period of time (not more than 30 days)
after the Participant has knowledge of the circumstances constituting
Good Reason, which notice specifically identifies the circumstances
which the Participant believes constitute Good Reason; (II) the
Company fails to notify the Participant of the Company's intended
method of correction within a reasonable period of time after the
Company receives the notice, or the Company fails to correct the
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circumstances within a reasonable period of time after such notice;
and (III) the Participant resigns by written notice to the Company
within a reasonable period of time after receiving the Company's
response, if such notice under clause (II) above does not indicate an
intention to correct such circumstances, or within a reasonable
period of time after the Company fails to correct such circumstances;
then the Participant shall be considered to have been subject to a
Constructive Discharge by the Company. For purposes of the foregoing
provisions of this paragraph (f), "within a reasonable period of
time" shall mean not more than 30 days. Notwithstanding the
foregoing provisions of this paragraph (f), the Participant shall not
be deemed to have been subject to a "Constructive Discharge" unless
the Participant remains in the employ of the Company (at the location
where he was employed immediately prior to the occurrence of the
events constituting Good Reason) for the period requested by the
Company (not to exceed 90 days after the Participant provides written
notice in accordance with clause (III) above). For purposes of this
Agreement, "Good Reason" shall mean, without the Participant's
express written consent (and except in consequence of a prior
termination of the Participant's employment), the occurrence of any
of the following circumstances:
(i) The assignment to the Participant of any duties materially
inconsistent with the Participant's position and status as
Executive Vice President, or a change in the Participant's
reporting relationship from the reporting relationship in
effect on the Grant Date.
(ii) A reduction by the Company in the Partnership's Salary to an
amount that the amount that is less than such rate on the Grant
Date.
(g) DATE OF TERMINATION. The term "Date of Termination" means the first
day occurring on or after the Grant Date on which the Participant is
not employed by the Company or any Affiliate, regardless of the
reason for the termination of employment; provided that a termination
of employment shall not be deemed to occur by reason of a transfer of
the Participant between the Company and an Affiliate or between two
Affiliates; and further provided that the Participant's employment
shall not be considered terminated while the Participant is on a
leave of absence from the Company or an Affiliate approved by the
Participant's employer. If, as a result of a sale or other
transaction, the Participant's employer ceases to be an Affiliate
(and the Participant's employer is or becomes an entity that is
separate from the Company), and the Participant is not, at the end of
the 30-day period following the transaction, employed by the Company
or an entity that is then an Affiliate, then the occurrence of such
transaction shall be treated as the Participant's Date of Termination
caused by the Participant being discharged by the employer.
(h) DISABILITY. The Participant shall be considered "Disabled" during
any period in which he has a physical or mental disability which
renders him incapable, after reasonable accommodation, or performing
his duties as Executive Vice President of the Company. The
Participant shall be considered "Permanently Disabled" during any
period in which he is Disabled; provided, however, that the
Participant shall not be considered to be "Permanently Disabled"
unless such Disability is reasonably expected by the Manager to
continue for at least 90 days.
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(i) LLC AGREEMENT. The term "LLC Agreement" means the Amended and
Restated Limited Liability Company Agreement dated as of November 14,
2002, as it may be amended from time to time. Except where the
context clearly implies or indicates the contrary, a word, term, or
phrase used in the LLC Agreement is similarly used in this Agreement.
(j) MANAGER. The term "Manager" means Pacific Trail Holdings, LLC.
(k) PERMITTED FAMILY TRANSFER. The term "Permitted Family Transfer"
means the sale or gift (including by will or bequest or comparable
disposition) of any of the Covered Shares (after such Covered Shares
have become vested under Section 4) by the Participant to: (i) the
Participant's spouse, or a descendant, ancestor or sibling of the
Participant; (ii) a trust for the primary benefit of any one or more
of the Participant or the spouse, descendants, ancestors or siblings
of the Partnership; or (iii) a partnership or limited liability
company whose partners or members consist of one or more of the
Participant, the spouse, descendants, ancestors or siblings of the
Participant, or a trust for the primary benefit of such persons (each
such person or entity being referred to herein as a "Related
Person"), in each case that complies with all the provisions of the
LLC Agreement and this Agreement, including, but not limited to
Section 7 hereof.
IN WITNESS WHEREOF, the Participant has executed this Agreement, and
the Company has caused these presents to be executed in its name and on its
behalf, all as of the Grant Date; provided that this Agreement shall not be
effective until executed by both the Participant and the Company.
Participant
/s/ Xxxxxxx X. Xxxxxxxxx
------------------------------
Xxxxxxx X. Xxxxxxxxx
Kaanapali Land, LLC
By: Pacific Trail Holdings, LLC
Its: Manager
By: /s/ Xxxx Xxxxxxx
--------------------
Name:President
--------------------
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