Exhibit 10.10
NON-QUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT, dated as of _______________, 19___ is made by and
between KSL Recreation Corporation, a Delaware corporation hereinafter referred
to as "KSL", and _________, an employee of KSL or a Subsidiary (as defined
below) or Affiliate (as defined below) of KSL, hereinafter referred to as
"Optionee".
WHEREAS, KSL wishes to afford the Optionee the opportunity to
purchase shares of its $.01 par value Common Stock; and
WHEREAS, KSL wishes to carry out the Plan (as hereinafter defined),
the terms of which are hereby incorporated by reference and made a part of this
Agreement; and
WHEREAS, the Compensation Committee (as hereinafter defined),
appointed to administer the Plan, has determined that it would be to the
advantage and best interest of KSL and its stockholders to grant the
Non-Qualified Option provided for herein to the Optionee as an incentive for
increased efforts during his term of office with KSL or its subsidiaries, and
has advised KSL thereof and instructed the undersigned officers to issue said
Option;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, receipt of which is hereby
acknowledged, the parties hereto do hereby agree as follows:
ARTICLE I
DEFINITIONS
Whenever the following terms are used in this Agreement, they shall
have the meaning specified in the Plan or below unless the context clearly
indicates to the contrary.
Section 1.1 - Affiliate
"Affiliate" shall mean, with respect to KSL, any corporation
directly or indirectly controlling, controlled by, or under common control with,
KSL or any other entity designated by the Board of Directors of KSL in which KSL
or an Affiliate has an interest.
Section 1.2 - Cause
"Cause" means criminal conduct (other than traffic violations).
Section 1.3 - Code
"Code" shall mean the Internal Revenue Code of 1986, as amended.
2
Section 1.4 - Committee
"Committee" shall mean the Compensation Committee of KSL.
Section 1.5 - Grant Date
"Grant Date" shall mean the date on which the Option provided for in
this Agreement was granted.
Section 1.6 - Option
"Option" shall mean the non-qualified option to purchase common
stock of KSL granted under this Agreement.
Section 1.7 - Permanent Disability
The Employee shall be deemed to have a "Permanent Disability" if the
Employee is unable to perform the services required by the Employee's job by
reason of any medically determined physical or mental impairment which can be
expected to result in death or which has lasted or can be expected to last for a
continuous period of not less than 12 months.
Section 1.8 - Plan
"Plan" shall mean the KSL Recreation Corporation 1995 Stock Purchase
and Option Plan.
Section 1.9 - Pronouns
The masculine pronoun shall include the feminine and neuter, and the
singular the plural, where the context so indicates.
Section 1.10 - Purchase Agreement
"Purchase Agreement" shall mean the Common Stock Purchase Agreement
dated as of _______________, 19___, between KSL and the Optionee.
Section 1.11 - Retirement
"Retirement" shall mean retirement at age 65 or over (or such other
age as may be approved by the Board of Directors of KSL) after having been
employed by KSL or a Subsidiary for at least three years after the Trigger Date.
Section 1.12 - Secretary
"Secretary" shall mean the Secretary of KSL.
3
Section 1.13 - Subsidiary
"Subsidiary" shall mean any corporation in an unbroken chain of
corporations beginning with KSL if each of the corporations, or group of
commonly controlled corporations, tether than the last corporation in the
unbroken chain then owns stock possessing 50% or more of the total combined
voting power of all classes of stock in one of the other corporations in such
chain.
Section 1.14 - Trigger Date
"Trigger Date" shall mean _______________, 19___.
ARTICLE II
GRANT OF OPTION
Section 2.1 - Grant of Option
For good and valuable consideration, on and as of the date hereof
KSL irrevocably grants to the Employee the option to purchase any part or all of
an aggregate of the number of shares set forth on the signature page hereof of
its $.01 par value Common Stock upon the terms and conditions set forth in this
Agreement.
Section 2.2 - Exercise Price
The exercise price of the shares of stock covered by the Option
shall be $500 per share without commission or other charge.
Section 2.3 - Consideration to KSL
In consideration of the granting of this Option by KSL, the Optionee
agrees to render faithful and efficient services to KSL or a Subsidiary or
Affiliate, with such duties and responsibilities as KSL shall from time to time
prescribe. Nothing in this Agreement or in the Plan shall confer upon the
Optionee any right to continue in the employ of KSL or any Subsidiary or
Affiliate or shall interfere with or restrict in any way the rights of KSL and
its Subsidiaries or Affiliates, which are hereby expressly reserved, to
terminate the employment of the Optionee at any time for any reason whatsoever,
with or without cause.
Section 2.4 - Adjustments in Option
Subject to Section 9 of the Plan, in the event that the outstanding
shares of the stock subject to the Option are, from time to time, changed into
or exchanged for a different number or kind of shares of KSL or other securities
of KSL by reason of a
4
merger, consolidation, recapitalization, reclassification, stock split, stock
dividend, combination of shares, or otherwise, the Committee shall make an
appropriate and equitable adjustment in the number and kind of shares or other
consideration as to which the Option, or portions thereof then unexercised,
shall be exercisable. Any such adjustment made by the Committee shall be final
and binding upon the Optionee, KSL and all other interested persons.
ARTICLE III
PERIOD OF EXERCISABILITY
Section 3.1 - Commencement of Exercisability
The Option shall become exercisable as follows:
Number of Option Shares
Date Option Becomes As to Which Option Is
Exercisable Exercisable
------------------- -----------------------
Trigger Date through the
first anniversary of
the Trigger Date 0%
After the first anniversary
of the Trigger Date ____%
After the second anniversary
of the Trigger Date ____%
After the third anniversary
of the Trigger Date ____%
After the fourth anniversary
of the Trigger Date ____%
After the fifth anniversary
of the Trigger Date 100%
Notwithstanding the foregoing, the Option shall become (i)
immediately exercisable as to 100% of the shares of Common Stock subject to such
Option immediately prior to a Change of Control, (ii) immediately prior to a
Sale Participation Event, exercisable as to that number of shares which when
added to the number of shares as to which the Option is then exercisable will
equal the Sale Participation Share Amount and (iii) immediately exercisable as
to 100% of the shares of Common Stock subject to such Option immediately upon
termination of employment because of death, Permanent Disability or Retirement
of the Optionee (but in each case only to the extent such Option has not
otherwise terminated or become exercisable). A "Change of Control" means (i) a
sale of all or substantially all of the assets of KSL to a
5
Person who is not an affiliate of Kohlberg Kravis Xxxxxxx & Co., L.P. ("KKR"),
(ii) a sale of stock by KKR or any of its affiliates resulting in (x) more than
50% of the voting stock of KSL being held by a Person or Group that does not
include KKR or any of its affiliates and (y) individuals designated by KKR
ceasing to comprise a majority of the members of the KSL Board of Directors or
(iii) a merger or consolidation of KSL into another Person which is not an
affiliate of KKR. "Person" means an individual, partnership, corporation,
business trust, joint stock company, trust, unincorporated association, joint
venture, governmental authority or other entity of whatever nature. "Group"
means two or more Persons acting together as a partnership, limited partnership,
syndicate or other group for the purpose of acquiring, holding or disposing of
securities of KSL. A "Sale Participation Event" means any event giving rise to
the receipt by the Optionee of a notice under Section 1 of the Sale
Participation Agreement of even date herewith (the "Sale Participation
Agreement") among the Optionee and certain investment partnerships affiliated
with KKR. The "Sale Participation Share Amount" means the amount equal to (i)
the number of shares as to which the Option is exercisable assuming full vesting
of the Option multiplied by (ii) a fraction the numerator of which is the number
of shares being sold by the Fund Partnerships (as defined in the Sale
Participation Agreement) in the Sale Participation Event and the denominator of
which is the number of shares owned by the Fund Partnerships.
Notwithstanding the foregoing, the Option shall not become
exercisable as to any additional shares following the termination of employment
of the Optionee for any reason other than a termination of employment because of
death, Permanent Disability or Retirement of the Optionee.
Section 3.2 - Expiration of Option
The Option may not be exercised to any extent by Optionee after the
first to occur of the following events:
(a) June 30, 2005; or
(b) The date the Option is terminated pursuant to Section 5, 6 or
8(b) of the Purchase Agreement; or
(c) Immediately upon termination for Cause; or
(d) Prior to the fifth Anniversary of the Trigger Date, immediately
upon voluntary termination of employment for any reason other than death,
Permanent Disability, or retirement after age 65.
(e) If the Committee so determines pursuant to Section 9 of the
Plan, upon the merger or consolidation of KSL into another corporation, or
the exchange or acquisition by another corporation of all or substantially
all of KSL's
6
assets or 80% or more of its then outstanding voting stock, or the
recapitalization, reclassification, liquidation or dissolution of KSL. At
least ten (10) days prior to the effective date of such merger,
consolidation, exchange, acquisition, recapitalization, reclassification,
liquidation or dissolution, the Committee shall give the Employee notice
of such event if the Option has then neither been fully exercised nor
become unexercisable under this Section 3.2.
ARTICLE IV
EXERCISE OF OPTION
Section 4.1 - Person Eligible to Exercise
During the lifetime of the Optionee, only he may exercise the Option
or any portion thereof. After the death of the Optionee, any exercisable portion
of the Option may, prior to the time when the Option becomes unexercisable under
Section 3.2, be exercised by his personal representative or by any person
empowered to do so under the Optionee's will or under the then applicable laws
of descent and distribution.
Section 4.2 - Partial Exercise
Any exercisable portion of the Option or the entire Option, if then
wholly exercisable, may be exercised in whole or in part at any time prior to
the time when the Option or portion thereof becomes unexercisable under Section
3.2; provided, however, that any partial exercise shall be for whole shares
only.
Section 4.3 - Manner of Exercise
The Option, or any exercisable portion thereof, may be exercised
solely by delivering to the Secretary or his office all of the following prior
to the time when the Option or such portion becomes unexercisable under Section
3.2:
(a) Notice in writing signed by the Optionee or the other person
then entitled to exercise the Option or portion thereof, stating that the
Option or portion thereof is thereby exercised, such notice complying with
all applicable rules established by the Committee;
(b) Full payment (in cash, by check or by a combination thereof) for
the shares with respect to which such Option or portion thereof is
exercised, except (i) that to the extent that such exercise is in
connection with a merger and the per share consideration in such merger
exceeds the per share exercise price hereunder, no payment shall be
required under this Section 4.3(b) but the consideration to be received by
the Optionee in the merger for the shares underlying the Option shall be
reduced by the
7
amount which would have been paid under this Section 4.3(b) and (ii) to
the extent that such exercise is in connection with the exercise of
registration rights in Section 10 of the Purchase Agreement, KSL will use
its reasonable efforts to arrange with any underwriters for a "cashless"
exercise.
(c) A bona fide written representation and agreement, in a form
satisfactory to the Committee, signed by the Optionee or other person then
entitled to exercise such Option or portion thereof, stating that the
shares of stock are being acquired for his own account, for investment and
without any present intention of distributing or reselling said shares or
any of them except as may be permitted under the Securities Act of 1933,
as amended (the "Act"), and then applicable rules and regulations
thereunder, and that the Optionee or other person then entitled to
exercise such Option or portion thereof will indemnify KSL against and
hold it free and harmless from any loss, damage, expense or liability
resulting to KSL if any sale or distribution of the shares by such person
is contrary to the representation and agreement referred to above;
provided, however, that the Committee may, in its absolute discretion,
take whatever additional actions it deems appropriate to ensure the
observance and performance of such representation and agreement and to
effect compliance with the Act and any other federal or state securities
laws or regulations;
(d) Full payment to KSL of all amounts which, under federal, state
or local law, it is required to withhold upon exercise of the Option; and
(e) In the event the Option or portion thereof shall be exercised
pursuant to Section 4.1 by any person or persons other than the Optionee,
appropriate proof of the right of such person or persons to exercise the
option.
Without limiting the generality of the foregoing, the Committee may require an
opinion of counsel acceptable to it to the effect that any subsequent transfer
of shares acquired on exercise of an Option does not violate the Act, and may
issue stop-transfer orders covering such shares. Share certificates evidencing
stock issued on exercise of this Option shall bear an appropriate legend
referring to the provisions of subsection (c) above and the agreements herein.
The written representation and agreement referred to in subjection (c) above
shall, however, not be required if the shares to be issued pursuant to such
exercise have been registered under the Act, and such registration is then
effective in respect of such shares.
Section 4.4 - Conditions to Issuance of Stock Certificates
The shares of stock deliverable upon the exercise of the Option, or
any portion thereof, may be either previously authorized but unissued shares or
issued shares which have then
8
been reacquired by KSL. Such shares shall be fully paid and nonassessable. KSL
shall not be required to issue or deliver any certificate or certificates for
shares of stock purchased upon the exercise of the Option or portion thereof
prior to fulfillment of all of the following conditions:
(a) The obtaining of approval or other clearance from any state or
federal governmental agency which the Committee shall, in its absolute
discretion, determine to be necessary or advisable; and
(b) The lapse of such reasonable period of time following the
exercise of the Option as the Committee may from time to time establish
for reasons of administrative convenience.
Section 4.5 - Rights as Stockholder
The holder of the Option shall not be, nor have any of the rights or
privileges of, a stockholder of KSL in respect of any shares purchasable upon
the exercise of the Option or any portion thereof unless and until certificates
representing such shares shall have been issued by KSL to such holder.
ARTICLE V
MISCELLANEOUS
Section 5.1 - Administration
The Committee shall have the power to interpret the Plan and this
Agreement and to adopt such rules for the administration, interpretation and
application of the Plan as are consistent therewith and to interpret or revoke
any such rules. All actions taken and all interpretations and determinations
made by the Committee shall be final and binding upon the Optionee, KSL and all
other interested persons. No member of the Committee shall be personally liable
for any action, determination or interpretation made in good faith with respect
to the Plan or the Option. In its absolute discretion, the Board may at any time
and from time to time exercise any and all rights and duties of the Committee
under the Plan and this Agreement.
Section 5.2 - Option Not Transferable
Neither the Option nor any interest or right therein or part thereof
shall be liable for the debts, contracts or engagements of the Optionee or his
successors in interest or shall be subject to disposition by transfer,
alienation, anticipation, pledge, encumbrance, assignment or any other means
whether such disposition be voluntary or involuntary or by operation of law by
judgment, levy, attachment, garnishment or any other legal or equitable
proceedings (including bankruptcy), and any attempted disposition thereof shall
be null and void and
9
of no effect; provided, however, that this Section 5.2 shall not prevent
transfers by will or by the applicable laws of descent and distribution.
Section 5.3 - Shares to Be Reserved
KSL shall at all times during the term of the Option reserve and
keep available such number of shares of stock as will be sufficient to satisfy
the requirements of this Agreement.
Section 5.4 - Notices
Any notice to be given under the terms of this Agreement to KSL
shall be addressed to KSL in care of its Secretary, and any notice to be given
to the Optionee shall be addressed to him at the address given beneath his
signature hereto. By a notice given pursuant to this Section 5.4, either party
may hereafter designate a different address for notices to be given to him. Any
notice which is required to be given to the Optionee shall, if the Optionee is
then deceased, be given to the Optionee's personal representative if such
representative has previously informed KSL of his status and address by written
notice under this Section 5.4. Any notice shall have been deemed duly given when
enclosed in a properly sealed envelope or wrapper addressed as aforesaid,
deposited (with postage prepaid) in a post office or branch post office
regularly maintained by the United States Postal Service.
Section 5.5 - Titles
Titles are provided herein for convenience only and are not to serve
as a basis for interpretation or construction of this Agreement.
Section 5.6 - Applicability of Plan and Purchase Agreement
This Option and the shares of KSL Common Stock issued to the
Optionee upon exercise of this Option shall be subject to all of the terms and
provisions of the Plan and the Purchase Agreement, to the extent applicable to
this Option and such shares. In the event of any conflict between this Agreement
and the Purchase Agreement, the terms of the Purchase Agreement shall control.
Section 5.7 - Amendment
This Agreement may be amended only by a writing executed by the
parties hereto which specifically states that it is amending this Agreement.
Section 5.8 - Governing Law
The laws of the State of Delaware shall govern the interpretation,
validity and performance of the terms of this
10
Agreement regardless of the law that might be applied under principles of
conflicts of laws.
Section 5.9 - Jurisdiction
Any suit, action or proceeding against the Employee with respect to
this Agreement, or any judgement entered by any court in respect of any thereof,
may be brought in any court of competent jurisdiction in the State of Delaware
of New York, as KSL may elect in its sole discretion, and the Optionee hereby
submits to the non-exclusive jurisdiction of such courts for the purpose of any
such suit, action, proceeding or judgment. The Optionee hereby irrevocably
waives any objection which he may now or hereafter have to the laying of the
venue of any suit, action or proceeding arising out of or relating to this
Agreement brought in any court of competent jurisdiction in the State of
Delaware or New York, and hereby further irrevocably waives any claim that any
such suit, action or proceeding brought in any such court has been brought in
any inconvenient forum. No suit, action or proceeding against KSL with respect
to this Agreement may be brought in any court, domestic or foreign, or before
any similar domestic or foreign authority other than in a court of competent
jurisdiction in the State of Delaware or New York, and the Optionee hereby
irrevocably waives any right which he may otherwise have had to bring such an
action in any other court, domestic or foreign, or before any similar domestic
or foreign authority. KSL hereby submits to the jurisdiction of such courts for
the purpose of any such suit, action or proceeding.
IN WITNESS WHEREOF, this Agreement has been executed and delivered
by the parties hereto.
KSL RECREATION CORPORATION
By_________________________
Its President
_________________________ Aggregate number of shares of Common
Optionee Stock for which this Option is
exercisable:
Optionee's Tax payer
Identification Number __________
(Social Security Number):
_________________________
