Exhibit 10.9
COMMON STOCK PURCHASE AGREEMENT
COMMON STOCK PURCHASE AGREEMENT (the "Agreement") entered into as of
____________________, 19___ (the "Purchase Date") between KSL RECREATION
CORPORATION, a Delaware corporation ("KSL"), and ____________________ (the
"Recipient") (KSL and the Recipient being hereinafter collectively referred to
as the "Parties").
RECITALS
KSL has granted to the Recipient an option or options (the
"Options") to purchase _____ shares of its common stock, par value $.01 per
share (the "Common Stock") at a purchase price of $500 per share, pursuant to
the terms of the KSL Recreation Corporation 1995 Stock Purchase and Option Plan
(the "Option Plan") and the Non-Qualified Stock Option Agreement attached hereto
as Exhibit A.
This Agreement is one of several agreements ("Other Recipients'
Agreements") which have been, or which in the future will be, entered into
between KSL and other individuals who are or will be key employees of KSL or one
of its subsidiaries (collectively, the "Other Recipients"). In addition, KSL has
entered into, or may in the future enter into, agreements (the "Investors'
Agreements") with certain institutional investors and other purchasers
(collectively, the "Investors") pursuant to which the Investors purchased or
will purchase shares of Common Stock.
AGREEMENT
To implement the foregoing and in consideration of the mutual
agreements contained herein, the Parties agree as follows:
1. Trigger Date.
(a) For purposes solely of determining whether the time periods set
forth herein have expired, the "Trigger Date" will be deemed to be
_______________, 19___.
2. Recipient's Representations, Warranties and Agreements.
(a) The Recipient represents and warrants that he is acquiring the
Common Stock issuable upon exercise of the Options (sometimes referred to herein
as the "Stock," which term also includes the shares of Common Stock issuable
upon the exercise of options provided for in Section 8(a) of this Agreement) for
investment for his own account and not with a view to, or for resale in
connection with, the distribution or other disposition thereof. The Recipient
agrees and acknowledges that he will not, directly or indirectly, offer,
transfer, sell, assign, pledge, hypothecate or otherwise dispose of any shares
of the Stock (any
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such act being herein referred to as a "transfer") unless such transfer complies
with Section 3 of this Agreement and (i) the transfer is pursuant to an
effective registration statement under the Securities Act of 1933 as amended,
and the rules and regulations in effect thereunder (the "Act"), and in
compliance with applicable provisions of state securities laws or (ii) (A)
counsel for the Recipient (which counsel shall be reasonably acceptable to KSL)
shall have furnished KSL with an opinion, reasonably satisfactory in form and
substance to KSL, that no such registration is required because of the
availability of an exemption from registration under the Act and (B) if the
Recipient is a citizen or resident of any country other than the United States,
or the Recipient desires to effect any transfer in any such country, counsel for
the Recipient (which counsel shall be reasonably satisfactory to KSL) shall have
furnished KSL with an opinion or other advice reasonably satisfactory in form
and substance to KSL to the effect that such transfer will comply with the
securities laws of such jurisdiction. Notwithstanding the foregoing, KSL
acknowledges and agrees that any of the following transfers are deemed to be in
compliance with the Act and this Agreement and no opinion of counsel is required
in connection therewith: (w) a transfer made pursuant to Sections 4, 5 or 6
hereof, (x) a transfer upon the death of the Recipient to his executors,
administrators, testamentary trustees, legatees or beneficiaries (the
"Recipient's Estate") or a transfer to the executors, administrators,
testamentary trustee, legatees or beneficiaries of a person who has become a
holder of Stock in accordance with the terms of this Agreement, provided that it
is expressly understood that any such transferee shall be bound by the
provisions of this Agreement as if such transferee were the Recipient, (y) a
transfer made after the Trigger Date in compliance with the federal securities
laws to a trust or custodianship the beneficiaries of which may include only the
Recipient, his spouse or his lineal descendants by blood or adoption (a
"Recipient's Trust") or a transfer made after the third anniversary of the
Trigger Date to such a trust by a person who has become a holder of Stock in
accordance with the terms of this Agreement, provided that such transfer is made
expressly subject to this Agreement and that the transferee agrees in writing to
be bound by the terms and conditions hereof as if such transferee were the
Recipient and (z) a pledge or hypothecation by the Recipient or the Recipient's
Trust, as the case may be, of the Stock or his or its interest therein to KSL, a
bank or other financial institution or other entity ("Pledgee") reasonably
satisfactory to KSL to secure a loan by KSL, such bank or financial institution
or such other entity to the Recipient or the Recipient's Trust, as the case may
be, for the purchase of Stock, or refinancing of any indebtedness incurred to
purchase Stock; provided that (A) such bank or financial institution or other
entity (other than KSL) agrees in writing to accept the Stock or interest
therein subject to all of the terms and conditions of this Agreement as if such
institution were the Recipient and to notify KSL upon the happening of any
default or event of default under the terms of its agreement with the
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Recipient or the Recipient's Trust, as the case may be, relating to such pledge
or hypothecation, and (B) the Recipient or the Recipient's Trust, as the case
may be, delivers to KSL a copy of all proposed documentation relating to such
pledge or hypothecation at least ten days before the scheduled date of such
pledge or hypothecation, and prior to such scheduled date KSL has confirmed that
such documentation is reasonably satisfactory in form and substance to it.
(b) The certificate (or certificates) representing the Stock shall
bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED, SOLD,
ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS SUCH TRANSFER,
SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION COMPLIES WITH THE
PROVISIONS OF THE COMMON STOCK PURCHASE AGREEMENT DATED AS OF _______________,
19___ BETWEEN KSL RECREATION CORPORATION ("KSL") AND THE Recipient NAMED ON THE
FACE HEREOF (A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF KSL). EXCEPT AS
OTHERWISE PROVIDED IN SUCH AGREEMENT, NO TRANSFER, SALE, ASSIGNMENT, PLEDGE,
HYPOTHECATION OR OTHER DISPOSITION OF THE SHARES REPRESENTED BY THIS CERTIFICATE
MAY BE MADE EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND IN COMPLIANCE WITH
APPLICABLE PROVISIONS OF STATE SECURITIES LAWS OR (B) IF (I) KSL HAS BEEN
FURNISHED WITH A REASONABLY SATISFACTORY OPINION OF COUNSEL FOR THE HOLDER THAT
SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION IS
EXEMPT FROM THE PROVISIONS OF SECTION 5 OF THE ACT OR THE RULES AND REGULATIONS
IN EFFECT THEREUNDER, AND IN COMPLIANCE WITH APPLICABLE PROVISIONS OF STATE
SECURITIES LAWS, AND (II) IF THE HOLDER IS A CITIZEN OR RESIDENT OF ANY COUNTRY
OTHER THAN THE UNITED STATES, OR THE HOLDER DESIRES TO EFFECT ANY SUCH
TRANSACTION IN ANY SUCH COUNTRY, KSL HAS BEEN FURNISHED WITH A REASONABLY
SATISFACTORY OPINION OR OTHER ADVICE OF COUNSEL FOR THE HOLDER THAT SUCH
TRANSACTION WILL NOT VIOLATE THE LAWS OF SUCH COUNTRY."
(c) The Recipient acknowledges that he has been advised that (i) the
Stock has not been registered under the Act, (ii) the Stock must be held
indefinitely and the Recipient must continue to bear the economic risk of the
investment in the Stock unless subsequently registered under the Act or an
exemption from such registration is available, (iii) it is not anticipated that
there will be any public market for the Stock, (iv) Rule 144 promulgated under
the Act is not currently available with respect to the sales of any securities
of KSL, and KSL has made no covenant to make such Rule available (except as
provided in Section 9 hereof), (v) when and if Stock may be disposed of without
registration in reliance on Rule 144, such disposition can be made only in
limited amounts in accordance with the terms and conditions of such Rule, (vi)
if the Rule 144 exemption is not available, public sale without registration
will require compliance with Regulation A or some other exemption under the
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Act, (vii) a restrictive legend in the form heretofore set forth shall be placed
on the certificates representing the Stock and (viii) a notation shall be made
in the appropriate records of KSL indicating that the Stock is subject to
restriction on transfer and, if KSL should at some time in the future engage the
services of a transfer agent, appropriate stop transfer restrictions will be
issued to such transfer agent with respect to the Stock.
(d) If any shares of the Stock are to be disposed of in accordance
with Rule 144 under the Act or otherwise, the Recipient shall promptly notify
KSL of such intended disposition and shall deliver to KSL at or prior to the
time of such disposition such documentation as KSL may reasonably request in
connection with such sale and, in the case of a disposition pursuant to Rule
144, shall deliver to KSL an executed copy of any notice on Form 144 required to
be filed with the Securities and Exchange Commission ("SEC").
(e) The Recipient agrees that, if any shares of capital stock of KSL
are offered to the public pursuant to an effective registration statement under
the Act, the Recipient will not effect any public sale or public distribution of
any shares of Stock not covered by such registration statement within 7 days
prior to, or within 180 days (or in an underwritten public offering, any such
lesser period as the underwriters may agree to) after, the effective date of
such registration statement, unless otherwise agreed to in writing by KSL.
(f) The Recipient represents and warrants that (i) his net worth is
not less than the amount set forth in the questionnaire previously delivered by
him to KSL and his financial condition is such that he can afford to bear the
economic risk of holding the Stock for an indefinite period of time and has
adequate means for providing for his current needs and personal contingencies,
(ii) he can afford to suffer a complete loss of his investment in the Stock,
(iii) all information which he has provided to KSL concerning himself and his
financial position is correct and complete as of the date of this Agreement,
(iv) he understands and has taken cognizance of all risk factors related to the
purchase of the Stock, and (v) his knowledge and experience in financial and
business matters are such that he is capable of evaluating the merits and risks
of his purchase of the Stock as contemplated by this Agreement.
3. Restriction on Transfer.
Except for transfers permitted by clauses (w), (x), (y) and (z) of
Section 2(a) or a sale of shares of Stock pursuant to an effective registration
statement under the Act filed by KSL, the Recipient agrees that he will not
transfer, sell, assign, pledge, hypothecate or otherwise dispose of any shares
of Stock (any such act being herein referred to as a "transfer") at any time
prior to the fifth anniversary of the Trigger Date; provided that after the
closing of a Qualified Public Offering (as defined
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in Section 7), the restriction on the transfer provided in this Section 3 shall
not apply as of any date (a "Calculation Date") to a number of shares of Stock
(the "Unrestricted Shares") held in the aggregate by the Recipient, the
Recipient's Trust, the Recipient's Estate and/or any Pledgee equal to (i) that
number of shares of Stock acquired by the Recipient through the exercise of
Options which does not exceed the product of the total number of shares of Stock
covered by the options issued on the Trigger Date times the Unrestricted
Percentage less (ii) the total number of shares of Stock transferred by the
Recipient, the Recipient's Trust, the Recipient's Estate or a Pledgee after the
date hereof, other than through transfers permitted by clauses (x), (y) and (z)
of Section 2(a) or a sale of Stock pursuant to an effective registration
statement filed by KSL. No transfer of any such shares of Stock in violation
hereof shall be made or recorded on the books of KSL and any such transfer shall
be void and of no effect. The Unrestricted Percentage shall be determined as
follows:
Unrestricted
Calculation Date Percentage
---------------- ----------
Trigger Date through and including the -0-
first anniversary of the Trigger Date
After the first anniversary of the 20%
Trigger Date through and including the
second anniversary of the Trigger Date
After the second anniversary of the 40%
Trigger Date through and including the
third anniversary of the Trigger Date
After the third anniversary of the 60%
Trigger Date through and including the
fourth anniversary of the Trigger Date
After the fourth anniversary of the 80%
Trigger Date through and including the
fifth anniversary of the Trigger Date
After the fifth anniversary of the 100%
Trigger Date
4. Right of First Refusal.
If prior to a Public Offering, the Recipient receives a bona fide
offer to purchase any or all of his shares of Stock (the "Offer") from a third
party (the "Offeror") which the Recipient wishes to accept, the Recipient shall
cause the Offer to be reduced to writing and shall notify KSL in writing of his
wish to accept the Offer. The Recipient's notice shall contain an irrevocable
offer to sell such shares of Stock to KSL (in the manner set forth below) at a
purchase price equal to the price
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contained in, and on the same terms and conditions of the Offer, and shall be
accompanied by a true copy of the Offer (which shall identify the Offeror). At
any time within 45 days after the date of the receipt by KSL of the Recipient's
notice, KSL shall have the right and option to purchase, or to arrange for a
third party to purchase, all of the shares of Stock covered by the Offer either
(i) at the same price and on the same terms and conditions as the Offer or (ii)
if the Offer includes any consideration other than cash, at the equivalent all
cash price, determined in good faith by the Board of Directors of KSL, by
delivering a certified bank check or checks in the appropriate amount (and any
such non-cash consideration to be paid) to the Recipient at the principal office
of KSL against delivery of certificates or other instruments representing the
shares of Stock so purchased, appropriately endorsed by the Recipient. If at the
end of such 45-day period, KSL or such third party has not tendered the purchase
price for such shares of Stock in the manner set forth above, the Recipient may
during the succeeding 30-day period sell not less than all of the shares of
Stock covered by the Offer to the Offeror at a price and on terms no less
favorable to Recipient than those contained in the offer. No sale may be made to
any Offeror unless the Offeror agrees in writing with KSL to be bound by the
provisions of this Section 4 in connection with any resale by the Offeror.
Promptly after such sale, the Recipient shall notify KSL of the consummation
thereof and shall furnish such evidence of the completion and time of completion
of such sale and of the terms thereof as may reasonably be requested by KSL. If,
at the end of 30 days following the expiration of the 45-day period for KSL to
purchase the shares of Stock, the Recipient has not completed the sale of such
shares of Stock as aforesaid, all the restrictions on sale, transfer or
assignment contained in this Agreement shall again be in effect with respect to
such shares of Stock.
5. Recipient's Resale of Shares of Stock and Options to KSL upon
Recipient's Death Disability or Retirement.
(a) Except as otherwise provided herein, if (i)(X) the Recipient
either dies or becomes Permanently Disabled and (Y) the Recipient was, at the
time of death or disability, still in the employ of KSL or any subsidiary of
KSL, or had retired from KSL and its subsidiaries 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 and its subsidiaries for at least three years after the Trigger
Date or (ii) with the prior consent of the Board of Directors of KSL (such
consent not to be withheld unless the Board of Directors reasonably determines
that KSL would be financially impaired by reason of the purchase described
herein), the Recipient retires from KSL and its subsidiaries at age 65 or over
after having been employed by KSL and its subsidiaries for at least three years
after the Trigger Date, then the Recipient, the Recipient's Estate or a
Recipient's Trust, as the case may be, shall have the right, for six months
following the date of
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death, Permanent Disability or retirement, to (A) sell to KSL, and KSL shall be
required to purchase, on one occasion, all or any portion of the shares of Stock
then held by the Recipient, the Recipient's Trust and/or the Recipient's Estate,
as the case may be, at an aggregate purchase price equal to the Section 5
Repurchase Price per Share, as determined in accordance with Section 7 and (B)
to require KSL to pay to the Recipient, the Recipient's Estate or the
Recipient's Trust, as the case may be, an additional amount equal to the Option
Excess Price determined on the basis of the excess, if any, of the Section 5
Repurchase Price per Share over the Option Price multiplied by the applicable
number of shares of Stock covered by then exercisable Options as provided in
Section 8 with respect to the termination of outstanding Options held by the
Recipient, the Recipient's Estate or the Recipient's Trust. The Recipient, the
Recipient's Estate and/or the Recipient's Trust, as the case may be, shall send
written notice to KSL of his or its intention to sell,shares of Stock and to
terminate such Options in exchange for the payments referred to in the preceding
sentence (the "Redemption Notice"). The completion of the purchase shall take
place at the principal office of KSL on the 15th business day after the giving
of the Redemption Notice. The Section 5 Repurchase Price per Share shall be paid
by delivery to the Recipient, the Recipient's Estate or the Recipient's Trust,
as the case may be, of a certified bank check or checks in the appropriate
amount payable to the order of the Recipient, the Recipient's Estate or the
Recipient's Trust, as the case may be, against delivery of certificates or other
instruments representing the shares of Stock so purchased and appropriate
documents canceling the Options so terminated appropriately endorsed or executed
by the Recipient, the Recipient's Estate or the Recipient's Trust, or his or its
duly authorized representative. For purposes of this Agreement, the Recipient
shall be deemed to have a "Permanent Disability" if the Recipient is unable to
engage in the activities required by the Recipient's job by reason of any
medically determinable 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.
(b) Notwithstanding any other provision of this Section 5 and
subject to Section 11, KSL shall not be obligated to repurchase any of the
shares of Stock or the Options from the Recipient, the Recipient's Estate, or
the Recipient's Trust, as the case may be, if there exists and is continuing a
default or any event which after notice or lapse of time or both would cause a
default under any loan, guarantee or other agreement under which KSL or any
subsidiary of KSL has borrowed money or such repurchase would result in a
default or any event which after notice or lapse of time or both would cause a
default under any such agreement or if the capital of KSL or any such subsidiary
is then impaired or such purchase would cause an impairment of the capital of
KSL or such subsidiary or would otherwise violate the Delaware General
Corporation Law, 8 Del. C. ss.1-101 et seq., as
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amended from time to time (each such occurrence being an "Event"); provided,
however, that if there are two or more unsatisfied Redemption Notices pending
and satisfaction of such Redemption Notices would result in the occurrence of an
Event, KSL shall repurchase Stock and Options pursuant to such pending
Redemption Notices pro rata to the extent that no Event has occurred and
continues and such repurchase would not result in the occurrence of an Event;
provided, further, that the Recipient, the Recipient's Estate or the Recipient's
Trust, as the case may be, shall have the right to withdraw any Redemption
Notice which has been pending for 120 or more days and which has remained
unsatisfied in whole or in part because of the provisions of this Section 5(b).
6. KSL's Option to Repurchase Stock and Options of Recipient.
(a) If (i) the Recipient's active employment with KSL and its
subsidiaries is involuntarily terminated with Cause (as defined in Section
7(g)), (ii) prior to the fifth anniversary of the Trigger Date the Recipient
voluntarily terminates his employment with KSL for any reason other than death,
Permanent Disability or retirement at age 65 or over, (iii) subsequent to a
transfer permitted by clause (y) of Section 2(a), the beneficiaries of a
Recipient's Trust shall include any person or entity other than the Recipient,
his spouse or his lineal descendants, or (iv) the Recipient shall effect a
transfer of any of the shares of Stock other than as permitted in this
Agreement, then KSL shall have an option to purchase all, but not less than all,
of the shares of Stock then held by the Recipient, the Recipient's Estate, a
Recipient's Trust or any Pledgee at the Section 6 Repurchase Price per Share
determined in accordance with Section 7 hereof, provided, however, that the
Section 5 Repurchase Price per Share shall apply to shares repurchased as a
result of an event set forth in clause (ii) of this Section 6(a). The Section 5
Repurchase Price per Share and the Section 6 Repurchase Price per Share are
sometimes referred to herein as the "Repurchase Price". KSL shall have a period
of 75 days from the date of any event described in (i) hereof, or 75 days after
KSL has knowledge of any event described in clauses (ii), (iii) or (iv) hereof,
in which to give notice in writing to the Recipient of the exercise of such
option. In the case of any of the events set forth in clauses (i), (iii) or (iv)
of this Section 6(a), KSL may also pay the Recipient, the Recipient's Estate or
the Recipient's Trust as the case may be, an amount equal to the Option Excess
Price, if any, determined on the basis of the Section 6 Repurchase Price per
Share in respect of exercisable Options, as provided in Section 8, with respect
to the termination of outstanding Options held by the Recipient. In the case of
an event set forth in clause (ii) of this Section 6(a), exercisable Options held
by Recipient shall be forfeited and no payment of any nature whatsoever shall be
made to Recipient therefor.
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(b) Subject to Section 11 hereof, the completion of the purchases
pursuant to the foregoing shall take place at the principal office of KSL on the
15th business day after the giving of notice of the exercise of the option to
purchase. The Repurchase Price for the shares of Stock and any payment with
respect to the Options as described above shall be paid by delivery to the
Recipient, the Recipient's Estate or the Recipient's Trust of a certified bank
check or checks in the appropriate amount payable to the order of the Recipient,
the Recipient's Estate or the Recipient's Trust against delivery of certificates
or other instruments representing the shares of Stock so purchased and
appropriate documents canceling the Options so terminated, appropriately
endorsed or executed by the Recipient, the Recipient's Estate, the Recipient's
Trust, the Pledgee or his or its duly authorized representative.
7. Determination of Repurchase Price.
(a) The Repurchase Price for the Stock pursuant to Section 5 or
Section 6 shall be calculated on the basis of the Section 5 Repurchase Price per
Share (as determined in accordance with Section 7(b)) or the Section 6
Repurchase Price per Share (as determined in accordance with Section 7(c)), as
the case may be, as of the last day of the fiscal month preceding the fiscal
month in which the event giving rise to the repurchase occurs (the "Repurchase
Calculation Date"). For all purposes of this Agreement, the event giving rise to
the repurchase shall be the death, Permanent Disability or retirement of the
Recipient or the happening of any event set forth in Sections 6(a)(i), (ii) or
(iii) above, not the giving of any notice required pursuant to Section 5 or 6.
(b) Prior to a Public Offering (as hereinafter defined) the Section
5 Repurchase Price per Share shall be equal to the Book Value Per Share (as
defined in Section 7(d)) as of the Repurchase Calculation Date. After a Public
Offering, the Section 5 Repurchase Price per Share shall be equal to the Market
Value per Share (as defined in Section 7(d)) as of the Repurchase Calculation
Date.
(c) Prior to a Public Offering, the Section 6 Repurchase Price per
Share, as of any Repurchase Calculation Date, shall be equal to the lesser of
(i) the Book Value Per Share and (ii) $500. After a Public Offering, the Section
6 Repurchase Price per Share shall be a equal to the lesser of (i) Market Value
Per Share and (ii) $500.
(d) For purposes of this Agreement, "Book Value Per Share", as of
any calculation date, shall be (i)(a) the difference between (1) $28,000,000
plus the net income (or loss) determined in accordance with generally accepted
accounting principles applied on a basis consistent with any prior periods (a
"GAAP Basis") for the period from June 28, 1993, through the last day of the
last full calendar month preceding such
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calculation date (the "Period"), plus depreciation and amortization determined
on a GAAP Basis for the Period, plus income tax expense determined on a GAAP
Basis for the Period, plus capital contributions for the Period, and (2) cash
capital expenditures (excluding amounts allocated to capital expenditures in any
purchase accounting transaction) for the Period determined on a GAAP Basis, plus
income taxes currently paid or payable during the Period, plus dividends for the
Period, plus (b) the aggregate exercise prices of all outstanding options and
other rights to acquire shares of Common Stock, divided by (ii) the sum of (a)
the number of shares of Common Stock then outstanding, (b) the number of shares
of Common Stock issuable upon the exercise of all outstanding options and other
rights to acquire shares of Common Stock and (c) the number of share equivalents
issuable pursuant to any equity appreciation rights or other "phantom" equity
plans of KSL, appropriately reduced to reflect the base price provided in the
relevant plan and any book accruals actually made in respect of the relevant
plan; provided that any options and rights, and all such share equivalents (to
the extent not reflected in any such book accruals), shall be excluded from the
foregoing formula (together with the exercise, conversion or base prices
thereof) to the extent that the exercise, conversion or base prices thereof
would be greater than the Book Value Per Share if calculated without reference
to such options, rights and share equivalents.
(e) As used herein the term "Public Offering" shall mean the sale of
shares of Common Stock to the public pursuant to a registration statement under
the Act which has been declared effective by the SEC (other than a registration
statement on Form S-8 or any other similar form or any other form utilized in
offering these or other securities of KSL to the officers or employees of KSL or
its subsidiaries) which results in an active trading market in the shares of
Common Stock; provided that an active trading market in the shares of Common
Stock shall be deemed to exist if the shares of Common Stock are listed on the
New York Stock Exchange, the American Stock Exchange or the NASDAQ National
Market System, but the failure of the shares of Common Stock to be so listed
shall not per se be determinative as to whether an active trading market does
not exist. A "Qualified Public Offering" shall mean either (i) a Public Offering
pursuant to an effective registration statement relating to the sale of shares
of the Common Stock held by any or all of Golf Associates, L.P., Resort
Associates, L.P., KKR Partners II, L.P. or any other investment partnership
affiliated with Kohlberg Kravis Xxxxxxx & Co. or (ii) any Public Offering
resulting in an active trading market in 40% or more of the Common Stock or
(iii) any Public Offering after there already exists an active trading market in
40% or more of the Common Stock.
(f) As used herein the term "Market Price Per Share" shall mean the
price per share equal to the average of the last sales price of the shares of
Common Stock on each of the ten trading days prior to the Repurchase Calculation
Date on the
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principal exchange on which the shares of Common Stock may at the time be listed
or, if there shall have been no sales on such exchange on any such trading day,
the average of the closing bid and asked prices on such exchange at the end of
such trading day or if there is no such bid and asked price on such trading day
on the next preceding date when such bid and asked price occurred or, if the
shares of Common Stock shall not be so listed, the average of the closing sales
prices as reported by NASDAQ at the end of each of the ten trading days prior to
the Repurchase Calculation Date in the over-the-counter market. If the shares of
Common Stock are not so listed or reported by NASDAQ, then the Market Price Per
Share shall be the Book Value Per Share.
(g) For purposes of this Agreement, a Recipient's employment shall
be deemed to have been terminated for "Cause" if the termination results from
the Recipient's: (i) criminal conduct (other than traffic violations), (ii)
after notice from KSL and failure of the Recipient to cure within 10 days of
receipt of such notice, deliberate misconduct which could be materially damaging
to KSL or any of its business operations without a reasonable good faith belief
by the Recipient that such conduct was in the best interests of KSL and its
subsidiaries taken as a whole or (iii) willful and continued failure to perform
Recipient's duties with respect to the Company or its subsidiaries. A
termination of the Recipient's employment shall not be deemed to be for "Cause"
hereunder unless the board of directors of KSL shall confirm that any such
termination is for "Cause" as defined hereunder. Any voluntary termination by
Recipient in anticipation of an involuntary termination of the Recipient's
employment for "Cause" shall be deemed to be a termination of the Recipient's
employment for "Cause".
(h) In determining the Repurchase Price, appropriate adjustments, if
any, shall be made for any future issuances of rights to acquire and securities
convertible into shares of Stock and any dividends, splits, combinations,
recapitalizations or any other similar adjustment in the number of shares
outstanding.
8. Shares Issued to Recipient upon Exercise of Options;
Termination of Options.
(a) KSL may from time to time grant to the Recipient, in addition to
the Options, options under the Option Plan or otherwise to purchase shares of
Common Stock at $500 per share or at a different option exercise price. The term
"Stock" as used in this Agreement shall include all shares of Common Stock of
KSL purchased by the Recipient by KSL upon exercise of the Options and of any
other options held by the Recipient and any other shares of Common Stock
otherwise acquired by the Recipient at any time when this Agreement is in
effect.
(b) All outstanding options granted to the Recipient under the
Option Plan or otherwise, whether or not then exercisable, will be automatically
terminated upon the payment by
12
KSL to the Recipient, pursuant to the provisions of Section 5 or 6 of this
Agreement, of an amount equal to the Option Excess Price. If the Option Excess
Price is zero or a negative number, all such outstanding options granted to the
Recipient under the Option Plan or otherwise, whether or not then exercisable
(except for Options which KSL does not have the option to repurchase pursuant to
Section 6 or is not then repurchasing pursuant to Section 5, as the case may
be), shall be automatically terminated upon the repurchase of shares of Stock
provided in Sections 5 or 6. The "Option Excess Price" is the excess, if any, of
the Section 5 Repurchase Price per Share or the Section 6 Repurchase Price per
Share, depending on which Repurchase Price is being used to repurchase the
remainder of the shares of Stock, over the Option Price (as defined in the
Option Plan) multiplied by the number of shares of Stock which, at the time of
determination of the Option Excess Price, could be purchased by the Recipient
upon exercise of his outstanding Options which are then exercisable.
Notwithstanding anything to the contrary in the foregoing, KSL may provide, in
the terms of the options or by decision of the Board of Directors, that
different terms are to be applicable to options which are not issued under the
Option Plan.
9. KSL's Representations and Warranties.
If KSL shall have filed a registration statement pursuant to the
requirements of Section 12 of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), or engaged in a Public Offering, KSL will file the reports
required to be filed by it under the Act and the Exchange Act and the rules and
regulations adopted by the SEC thereunder, to the extent required from time to
time to enable the Recipient to sell Options and the Stock without registration
under the Act within the limitations of the exemptions provided by (i) Rule 144
under the Act, as such Rule may be amended from time to time, or (ii) any
similar rule or regulation hereafter adopted by the SEC. Notwithstanding
anything contained in this Section 9, KSL may deregister under Section 12 of the
Exchange Act if it is then permitted to do so pursuant to the Exchange Act and
the rules and regulations thereunder. Nothing in this Section 9 shall be deemed
to limit in any manner the restrictions on sales of Stock contained in this
Agreement.
10. "Piggyback" Registration Rights.
(a) Until the later of the first occurrence of a Qualified Public
Offering or the fifth anniversary of the date hereof or the date when the
Recipient ceases to be an "affiliate" for purposes of Rule 144 under the Act,
the Recipient hereby agrees to be bound by all of the terms, conditions and
obligations of the Registration Rights Agreements among KSL and the Investors
(the "Registration Rights Agreements") and, in the case of a Qualified Public
Offering and subject to the limitations set forth in this Section 10, shall have
all of the rights and privileges of the Registration Rights Agreements, in
13
each case as if the Recipient were an original party (other than KSL) thereto;
provided, however, that the Recipient shall not have any rights to request
registration under Section 4 of the Registration Rights Agreements; and provided
further, that the Recipient shall not be bound by any amendments to the
Registration Rights Agreements unless Recipient consents thereto.
Notwithstanding anything to the contrary contained in the Registration Rights
Agreements, the Recipient's rights and obligations under the Registration Rights
Agreements shall be subject to the limitations and additional obligations set
forth in this Section 10. All shares of Stock purchased by the Recipient
pursuant to this Agreement and held by the Recipient, the Recipient's Trust or
the Recipient's Estate, including shares purchased upon the exercise of Options,
shall be deemed to be Registrable Securities as defined in the Registration
Rights Agreements.
(b) If KSL in connection with a Qualified Public Offering other than
a deemed Qualified Public Offering plans to register any shares of Common Stock
held by an Investor for public offering pursuant to the Act, KSL will promptly
notify the Recipient in writing (a "Notice") of such proposed registration (a
"Proposed Registration"). If within 15 days of the receipt by the Recipient of
such Notice, KSL receives from the Recipient, the Recipient's Trust or the
Recipient's Estate a written request (a "Request") to register shares of Stock
held by the Recipient, the Recipient's Estate or the Recipient's Trust (which
Request will be irrevocable unless otherwise mutually agreed to in writing by
the Recipient and KSL), shares of Stock will be so registered as provided in
this Section 10; provided, however, that for each such registration statement
only one Request, which shall be executed by the Recipient, the Recipient's
Trust or the Recipient's Estate, as the case may be, may be submitted for all
Registrable Securities held by the Recipient, the Recipient's Estate and the
Recipient's Trust.
(c) The maximum number of shares of Stock which will be registered
pursuant to a Request will be the lowest of (i) the number of shares of Stock
then held by the Recipient (which for purposes of this subparagraph (c) shall
include shares of Stock held by the Recipient's Estate or a Recipient's Trust),
including all shares of Stock which the Recipient is then entitled to acquire
under an unexercised Option to the extent then exercisable or (ii) the maximum
number of shares of Stock which the Recipient (pro rata based upon the aggregate
number of shares of Stock the Recipient and all Other Recipients have requested
to be registered) and all Other Recipients are permitted to register in the
offering under the Registration Rights Agreements or (iii) the maximum number of
shares of Stock which the Recipient can register in the offering without adverse
effect on the offering in the view of the managing underwriters (reduced pro
rata with all Other Recipients). The number of shares of Stock which will be
registered under this Section 10, however, shall not include shares of Stock for
which the Recipient no longer has
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registration rights pursuant to the first sentence of Section 10(a).
(d) Upon delivering a Request the Recipient will, if requested by
KSL, execute and deliver a custody agreement and power of attorney in form and
substance satisfactory to KSL with respect to the shares of Stock to be
registered pursuant to this Section 10 (a "Custody Agreement and Power of
Attorney"). The Custody Agreement and Power of Attorney will provide, among
other things, that the Recipient will deliver to and deposit in custody with the
custodian and attorney-in-fact named therein a certificate or certificates
representing such shares of Stock (duly endorsed in blank by the registered
owner or owners thereof or accompanied by duly executed transfer powers in
blank) and irrevocably appoint said custodian and attorney-in-fact as the
Recipient's agent and attorney-in-fact with full power and authority to act
under the Custody Agreement and Power of Attorney on the Recipient's behalf with
respect to the matters specified therein.
(e) The Recipient agrees that he will execute such other agreements
as KSL may reasonably request to further evidence the provisions of this Section
10.
11. Continued Exercisability of KSL's Right to Repurchase.
Notwithstanding anything to the contrary contained in Section 5, 6
or 7, if at the time of the exercise of a right of KSL to purchase shares of
Stock from the Recipient, a Recipient's Trust or Recipient's Estate or to pay
the Option Excess Price to the Recipient, Recipient's Trust or Recipient's
Estate or at the time the Recipient, the Recipient's Estate or a Recipient's
Trust exercises his or its rights to sell shares of Stock to, and receive
payment for Options from, KSL pursuant to such Sections, there is, or if as a
result of such purchase or payment there would be an Event, then the closing of
any such purchase and payment shall be deferred until the day that is five
business days after the first business day that it may occur without any Event
existing or resulting. If at any time consummation of all purchases and payments
to be made by KSL pursuant to this Agreement and the Other Recipient's
Agreements would result in an Event, then KSL shall make purchases from, and
payments to, the Recipient and Other Recipients pro rata (on the basis of the
proportion of the number of shares of Stock and the number of Options each such
Recipient and all Other Recipients have elected or are required to sell to KSL)
for the maximum number of shares of Stock and shall pay the Option Excess Price
for the maximum number of Options permitted without resulting in an Event;
provided, however, that the provisions of the first sentence of this Section 11
shall apply in respect of all shares of Stock and Options not purchased. Until
all of such shares of Stock and Options are purchased and paid for by KSL, the
Recipient and the Other Recipients whose shares of Stock and Options are not
15
purchased in accordance with this Section 11 shall have priority on a pro rata
basis, over other purchases of shares of Stock and Options by KSL pursuant to
this Agreement and Other Recipients' Agreements.
12. Rights to Negotiate Purchase Price.
Nothing in this Agreement shall be deemed to restrict or prohibit
KSL from purchasing shares of Stock or Options from the Recipient, at any time,
upon such terms and conditions, and for such price, as may be mutually agreed
upon between the Parties, whether or not at the time of such purchase
circumstances exist which specifically grant KSL the right to purchase, or the
Recipient the right to sell shares of Stock or KSL has the right to pay, or the
Recipient has the right to receive, the Option Excess Price under the terms of
this Agreement, and all such purchases shall be deemed to be in accordance with
the terms of this Agreement.
13. Covenant Regarding 83(b) Election.
Except as KSL may otherwise agree in writing, the Recipient hereby
covenants and agrees that he will make an election provided pursuant to Treasury
Regulation 1.83-2 with respect to the Stock to be acquired upon each exercise of
the Recipient's Options within 30 days of such exercise; and Recipient further
covenants and agrees that he will furnish KSL with copies of the forms of
election the Recipient files within 30 days after the date hereof, and with
evidence that each such election has been filed in a timely manner.
14. Notice of Change of Beneficiary.
Immediately prior to any transfer of Stock to a Recipient's Trust,
the Recipient shall provide KSL with a copy of the instruments creating the
Recipient's Trust and with the identity of the beneficiaries of the Recipient's
Trust. The Recipient shall notify KSL immediately prior to any change in the
identity of any beneficiary of the Recipient's Trust.
15. Expiration of Certain Provisions.
The provisions contained in Sections 4, 5 and 6 of this Agreement,
and the portion of any other provision of this Agreement which incorporates the
provisions of Sections 4, 5 and 6, shall terminate and be of no further force or
effect with respect to any shares of Stock sold by the Recipient pursuant to an
effective registration statement filed by KSL pursuant to Section 10 hereof.
The provisions contained in Sections 2(e), 3, 4, 5, 6 and 13 of this
Agreement, and the portion of any other provisions of this Agreement which
incorporates the provisions of Sections 2(e), 3, 4, 5, 6 and 13 shall terminate
and be of no further
16
force and effect upon the consummation of a merger, reorganization or
liquidation of KSL, or a sale of shares of Stock owned by the Investors if (but
only if) such transaction results in KKR Associates, a New York limited
partnership, and/or its affiliates neither owning a majority of the outstanding
voting securities of KSL nor having the power (i) to elect a majority of the
Board of Directors of KSL or the successor corporation to KSL's rights and
obligations pursuant to such transaction, or (ii) if the surviving entity of
such transaction is not a corporation, to select the general partner(s) or other
persons or entities controlling the operations and business of the surviving
entity.
16. Recapitalization. Etc.
Except to the extent otherwise provided by Section 15 hereof, the
provisions of this Agreement shall apply, to the full extent set forth herein
with respect to the Stock or Options, to any and all capital stock of KSL or any
capital stock, partnership units or any other security evidencing ownership
interests in any successor or assign of KSL (whether by merger, consolidation,
sale of assets or otherwise) which may be issued in respect of, in exchange for,
or in substitution of the Stock or the Options, by reason of any stock dividend,
split, reverse split, combination, recapitalization, liquidation,
reclassification, merger, consolidation or otherwise.
17. Recipient's Employment by KSL.
Nothing contained in this Agreement or in any other agreement
entered into by KSL and the Recipient contemporaneously with the execution of
this Agreement (i) obligates KSL or any subsidiary of KSL to employ the
Recipient in any capacity whatsoever or (ii) prohibits or restricts KSL (or any
such subsidiary) from terminating the employment, if any, of the Recipient at
any time or for any reason whatsoever, with or without Cause, and the Recipient
hereby acknowledges and agrees that neither KSL nor any other person has made
any representations or promises whatsoever to the Recipient concerning the
Recipient's employment or continued employment by KSL or any subsidiary of KSL.
18. State Securities Laws.
KSL hereby agrees to use its best efforts to comply with all state
securities or "blue sky" laws which might be applicable to the sale of the Stock
and the issuance of the Options to the Recipient.
19. Binding Effect.
The provisions of this Agreement shall be binding upon and accrue to
the benefit of the parties hereto and their respective heirs, legal
representatives, successors and assigns.
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In the case of a transferee permitted under Section 2(a) hereof, such transferee
shall be deemed the Recipient hereunder; provided, however, that no transferee
(including without limitation, transferees referred to in Section 2(a) hereof)
shall derive any rights under this Agreement unless and until such transferee
has delivered to KSL a valid undertaking and becomes bound by the terms of this
Agreement.
20. Amendment.
This Agreement may be amended only by a written instrument signed by
the Parties thereto.
21. Closing.
Except as otherwise provided herein, the closing of each purchase
and sale of the Stock and the payment of the Option Excess Price, if any,
pursuant to this Agreement shall take place at the principal office of KSL on
the 15th business day following delivery of the Notice by either Party to the
other of its exercise of the right to purchase or sell such Stock hereunder or
to cause the payment of the Option Excess Price, if any.
22. Applicable Law.
The laws of the State of Delaware shall govern the interpretation,
validity and performance of the terms of this Agreement, without reference to
rules relating to conflicts of law. Any suit, action, or proceeding against the
Recipient with respect to this Agreement, or any judgment entered by any court
in respect of any thereof, may be brought in any court of competent jurisdiction
in the State of Delaware or New York, as KSL may elect in its sole discretion,
and the Recipient hereby submits to the non-exclusive jurisdiction of such
courts for the purpose of any such suit, action proceeding or judgment. By the
execution and delivery of this Agreement, the Recipient appoints The Corporation
Trust Company, at its office in New York, New York or Wilmington, Delaware, as
the case may be, as his agent upon which process may be served in any such suit,
action or proceeding. Service of process upon such agent, together with notice
of such service given to the Recipient in the manner provided in Section 25
hereof, shall be deemed in every respect effective service of process upon his
in any suit, action or proceeding. Nothing herein shall in any way be deemed to
limit the ability of KSL to serve any such writs, process or summonses in any
other manner permitted by applicable law or to obtain jurisdiction over the
Recipient, in such other jurisdictions and in such manner, as may be permitted
by applicable law. The Recipient hereby irrevocably waives any objections 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 or
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
18
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 Recipient 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.
23. Assignability of Certain Rights by the Corporation.
KSL shall have the right to assign any or all of its rights
hereunder or to delegate any of its obligations hereunder to any affiliate
thereof; provided that KSL shall remain obligated hereunder notwithstanding such
assignment. The rights of the Optionee hereunder may not be assigned, and the
obligations of the Optionee hereunder may not be delegated, to another person.
24. Miscellaneous.
In this Agreement (i) all references to "dollars" or "$" are to
United States dollars and (ii) the word "or" is not exclusive. If any provision
of this Agreement shall be declared illegal, void or unenforceable by any court
of competent jurisdiction, the other provisions shall not be affected, but shall
remain in full force and effect.
25. Notices.
All notices and other communications provided for herein shall be in
writing and shall be deemed to have been duly given if delivered by hand
(whether by overnight courier or otherwise) or sent by registered or certified
mail, return receipt request, postage prepaid, to the Party to whom it is
directed:
(a) If to KSL, to it at the following address:
c/o KSL Recreation Corporation
00-000 XXX Xxxx.
Xx Xxxxxx, XX 00000
Attn: Xxxx X. Xxxx, Esq.
with copies to:
Kohlberg Kravis Xxxxxxx & Co.
0 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
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Attn: Xxxxxxx X. Xxxxxx
and
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx X. Xxxxxxxx, Esq.
(a) If to the Recipient, to his at the address set forth below
under his signature;
or at such other address as either party shall have specified
by notice in writing to the other.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of
the date first above written.
KSL RECREATION CORPORATION
By:_____________________________________
Name: Xxxxxxx X. Xxxxxxx
Title: President
_________________________________________
RECIPIENT
Address:_______________________________________
_______________________________________
_______________________________________
EXHIBIT A
Non-Qualified Stock Option Agreement
(Attached)
