STOCK OPTION SETTLEMENT AGREEMENT
This Agreement ("Agreement") dated this 14 day of April, 1998, is
made between X. XXXXXX HOMES, INC., a Delaware corporation ("Homes"), and
XXXXXXX X. XXXXXXXXX ("Optionee").
R E C I T A L S:
1. Homes maintains the X. Xxxxxx Homes, Inc. 1993 Stock Option/Stock
Issuance Plan ("Homes Option Plan") under which Optionee has been issued certain
outstanding in-the-money options.
2. Pursuant to the Amended and Restated Agreement and Plan of Merger
effective as of December 18, 1997, by and between Mauna Loa Macadamia Partners,
L.P. ("Partnership") and Homes ("Merger Agreement") which provides for the
merger of Homes into the Partnership ("Merger"), no outstanding options under
the Homes Option Plan shall be assumed by the Partnership or otherwise converted
into a right to receive any interest in the Partnership and, further, Homes
shall be permitted to enter into agreements with holders of each unexercised in-
the-money-option providing for the cancellation and cash settlement of the
option immediately prior to the date of consummation of the Merger ("Effective
Time" as defined in the Merger Agreement).
3. After the Effective Time, Optionee will not be a director,
officer, or employee of the Partnership or Mauna Loa Resources, Inc., the
Partnership's general partner, who could be entitled to any continuing options
or replacement options and, in accordance with the Merger Agreement, the parties
desire to enter into this Agreement in order to provide for the cancellation of
the Optionee's in-the-money options as of immediately prior to the Effective
Time and to provide for a cash payment to the Optionee in settlement thereof.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants herein contained, and for other good and valuable
consideration, the adequacy of which are hereby acknowledged, the parties,
intending to be legally bound, agree and covenant as follows:
1. NONEXERCISE AND CANCELLATION OF OPTION.
The Optionee is currently the holder of a certain unexercised
in-the-money stock option granted under the Homes Option Plan ("Option") as
follows:
a. Date of Grant: August 29, 1997
b. Expiration Date: August 28, 2007
c. Aggregate Number of Shares of Homes
Common Stock Subject to the Option: 5,000
d. Per Share Exercise Price for the Option: $2.4375
e. Aggregate Exercise Price for the Option: $12,187.50
The Optionee hereby agrees not to exercise the Option prior to the Effective
Time and, pursuant to the terms of the Homes Option Plan and this Agreement, the
Option shall be canceled and shall be null and void as of the Effective Time.
2. SETTLEMENT OF OPTION.
Contingent on and immediately prior to the consummation of the Merger,
Homes shall make a cash or cash equivalent payment ("Option Settlement Amount")
to the Optionee, in settlement of the cancellation of the Option, in an amount
(if any) equal to: (a) the aggregate number of shares of Homes common stock
that are subject to the canceled Option, (b) multiplied by the average of the
closing selling price per share of such common stock as reported on the NASDAQ
National Market System for the 20 consecutive trading days ending on the third
trading day immediately prior to the Effective Time, and (c) less the aggregate
option exercise price for the Option. For this purpose, if the Homes common
stock is not traded on an applicable trading date, the closing price on that
date shall be equal to the closing selling price per share on the last preceding
date for which such quotation exists. The Option Settlement Amount as described
in this paragraph shall be paid to Optionee by Homes as of immediately prior to
the Effective Time.
3. WITHHOLDING TAXES. Optionee acknowledges that withholding may be
required with respect to federal and state income and payroll taxes arising from
payment to Optionee of the Option Settlement Amount. Optionee agrees that Homes
may withhold from the Option Settlement Amount such portion thereof as Homes
determines, in its sole discretion, is necessary or advisable with respect to
any such withholding obligations.
4. TERMINATION. This Agreement shall terminate automatically without
further action in the event that the Merger is not consummated by August 31,
1998. Upon such
termination of this Agreement, the respective obligations of the parties hereto
shall immediately become void and have no further force and effect.
5. NO RELIANCE. Optionee acknowledges that Homes has not provided
Optionee with advice, warranties or representations regarding any of the legal
or tax effects of this Agreement or the transactions contemplated hereby.
Optionee represents that he has obtained such legal and tax advice with respect
thereto from Optionee's own legal and tax advisors as Optionee has deemed
appropriate.
6. REPRESENTATIONS OF OPTIONEE. Optionee represents that the above
Section 1 accurately sets forth, as to Optionee, the number of shares of Homes
common stock subject to the Option held by Optionee and the exercise price and
expiration date thereof. Optionee represents that Optionee is the sole legal
and beneficial owner, and has good title to, the Option indicated as owned by
Optionee, and that such Option is owned by Optionee free and clear of liens,
security interests, charges or other encumbrances. Optionee represents that
Optionee has the legal right, power, capacity and authority to execute, deliver
and perform this Agreement, and that this Agreement is the valid and binding
obligation of Optionee enforceable in accordance with its terms, except as the
enforcement thereof may be limited by general principles of equity. Optionee
represents that the execution, delivery and performance of this Agreement will
not (a) conflict with or result in the breach of, or default or actual or
potential loss of any benefit under, any provision of any agreement, instrument
or obligation to which the Optionee or the Optionee's spouse is a party or by
which any of Optionee's properties or the Optionee's spouse's properties are
bound, or give any other party to any such agreement, instrument or obligation a
right to terminate or modify any term thereof; (b) require the consent or
approval of any third party; (c) result in the creation or imposition of any
lien, mortgage or encumbrance on the Option or any other assets of the Optionee
or the Optionee's spouse; or (d) violate any law, rule or regulation to which
the Optionee or the Optionee's spouse is subject.
7. INTEGRATION. This Agreement constitutes the entire agreement
between the parties pertaining to the subject matter hereof and supersedes all
prior agreements and understandings of the parties in connection therewith.
8. HEADINGS. The descriptive headings of the Sections of this
Agreement are inserted for convenience only and do not constitute a part of this
Agreement.
9. NOTICES. Any notice or communication required or permitted
hereunder, shall be deemed to have been given if in writing and (a) delivered in
person, (b) delivered by confirmed facsimile transmission (c) sent by overnight
carrier, postage prepaid with return receipt
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requested or (d) mailed by certified or registered mail, postage prepaid with
return receipt requested, addressed as follows:
If to Homes, addressed to:
X. Xxxxxx Homes, Inc.
Attention: Xxxx X. Xxxxx
000-X Xxxx Xxxxx Xxxx
Xxxxxxx, Xxxxxx 00000
Fax No.: (000) 000-0000
If to Optionee, addressed to:
Xxxxxxx X. Xxxxxxxxx
x/x Xxxxx Xxxxxxxx Xxxxxx
0000 Xxxxxxxx Xxxxxxxxx
Xxxxxxx, Xxxxxx 00000
Fax No.: 000-0000
or at such other address and to the attention of such other person as a party
may notice to the others in accordance with this Section 9. Any such notice or
communication shall be deemed received on the date delivered personally or
delivered by confirmed facsimile transmission, on the first business day after
it was sent by overnight carrier, postage prepaid with return receipt requested,
or on the fourth business day after it was sent by certified or registered mail,
postage prepaid with return receipt requested.
10. GOVERNING LAW. This Agreement and the legal relations between the
parties shall be governed by and construed in accordance with the laws of the
State of Hawaii applicable to contracts between Hawaii parties made and
performed in such State.
11. EXPENSES. Each party hereto shall pay its own costs and
expenses, including, but not limited to, those of its attorneys, in connection
with this Agreement and transactions covered and contemplated hereby.
12. ATTORNEYS' FEES. In the event either of the parties to this
Agreement brings an action or suit against the other party by reason of any
breach of any covenant, agreement, representation, warranty or other provision
hereof, or any breach by such other party of any duty or obligation created
hereunder, the prevailing party in whose favor final judgment is entered
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shall be entitled to have and recover of and from the losing party all
reasonable costs and expenses incurred or sustained by such prevailing party in
connection with such suit or action, including without limitation, legal fees
and court costs (whether or not taxable as such).
13. NO ASSIGNMENT. Neither this Agreement nor any rights, duties or
obligations hereunder shall be assignable by Homes or Optionee, in whole or in
part, except that Homes may assign any of its rights, duties or obligations
hereunder to the Partnership. Any attempted assignment in violation of this
prohibition shall be null and void. Subject to the foregoing, all of the terms
and provisions hereof shall be binding upon, and inure to the benefit of, the
successors of the parties hereto.
14. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each
party hereto and delivered to the other party. Such delivery may be
accomplished by and be effective upon facsimile transmission to the other party,
provided an originally executed copy of this Agreement is subsequently furnished
to such party.
15. JURY WAIVER. The parties hereto agree to waive trial by jury in
any dispute over this Agreement or related thereto in any manner.
The undersigned agree to the terms of this Agreement and voluntarily
enter into it with the intent to be bound thereby.
X. XXXXXX HOMES, INC.
Dated: April 14, 1998 By /s/ Xxxx X. Xxxxx
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Its: President & CEO
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"Homes"
Dated: April 14, 1998 /s/ Xxxxxxx X. Xxxxxxxxx
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XXXXXXX X. XXXXXXXXX
"Optionee"
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