Exhibit 10.3


 


MAUI LAND
& PINEAPPLE COMPANY, INC.




2006 EQUITY AND INCENTIVE AWARD PLAN




STOCK OPTION GRANT NOTICE


 


Maui Land & Pineapple
Company, Inc., a Hawaii corporation (the “Company”), pursuant
to its 2006 Equity and Incentive Award Plan (the “Plan”) and the terms of
that employment agreement by and between the Company and David C. Cole (“Participant”)
effective as of October 15, 2003 (“Employment Agreement”), hereby grants
to Participant,
an option to purchase the number of shares of the Company’s common
stock, no par value (“Stock”),
set forth below (the “Option”). This
Option is subject to all of the terms and conditions set forth herein and in
the Stock Option Agreement attached hereto as Exhibit A (the “Stock Option Agreement”) and the
Plan, which are incorporated herein by reference. Unless otherwise defined
herein, the terms defined in the Plan shall have the same defined meanings in
this Grant Notice.


 


	
  Participant:

  	
   

  	
  David C. Cole

  
	
   

  	
   

  	
   

  
	
  Grant
  Date:

  	
   

  	
  May 8, 2006

  
	
   

  	
   

  	
   

  
	
  Exercise
  Price per Share:

  	
   

  	
  $38.04

  
	
   

  	
   

  	
   

  
	
  Total
  Exercise Price:

  	
   

  	
  $7,608,000

  
	
   

  	
   

  	
   

  
	
  Total
  Number of Shares Subject to the Option:

  	
   

  	
  200,000

  
	
   

  	
   

  	
   

  
	
  Expiration
  Date:

  	
   

  	
  May 8, 2006

  
	
   

  	
   

  	
   

  
	
  Type of Option:

  	
   

  	
  o Incentive Stock
  Option

  	
  ý Non-Qualified Stock
  Option

  
	
   

  	
   

  	
   

  
	
  Vesting
  Schedule:

  	
   

  	
  Subject to
  the terms and conditions of the Plan, the Employment Agreement, this Grant
  Notice and the Stock Option Agreement, the Option shall be exercisable as
  follows: one-twelfth (1/12th) of the Option in the aggregate shall
  be exercisable on the completion of each quarter (i.e. three-month period,
  which need not begin or end at the beginning or end of calendar months)
  beginning January 15, 2007 and ending October 15, 2009, such that 100% of the
  shares are exercisable on October 15, 2009.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Subject to the Stock Option Agreement, in no event shall this Option
  vest and become exercisable for any additional shares of Stock following
  Participant’s Termination of Employment, Termination of Consultancy, or
  Termination of Directorship, as applicable.

  



 


Remainder
of page intentionally left blank.


 


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By his or her signature, Participant
agrees to be bound by the terms and conditions of the Plan, the Stock Option
Agreement and this Grant Notice. Participant has reviewed the Stock Option
Agreement, the Plan and this Grant Notice in their entirety, has had an
opportunity to obtain the advice of counsel prior to executing this Grant
Notice and fully understands all provisions of this Grant Notice, the Stock
Option Agreement and the Plan. Participant hereby agrees to accept as binding,
conclusive and final all decisions or interpretations of the Administrator upon
any questions arising under or relating to the Plan, this Grant Notice or the
Stock Option Agreement.


 


	
  MAUI LAND & PINEAPPLE COMPANY, INC.:

  	
   

  	
  PARTICIPANT: DAVID C. DOLE

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   /S/
  ROBERT I. WEBBER

  	
   

  	
  By:

  	
   

  	
   /S/
  DAVID C. COLE

  
	
  Print
  Name:

  	
   

  	
   Robert
  I. Webber

  	
   

  	
  Print
  Name:

  	
   

  	
   David
  C. Cole

  
	
  Title:

  	
   

  	
  Senior Vice President

  	
   

  	
   

  	
   

  	
   

  
	
  Address:

  	
   

  	
  P.O.
  Box 187

  	
   

  	
  Address:

  	
   

  	
   

  
	
   

  	
   

  	
  Kahului,
  Maui, Hawaii 96733

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Dated:

  	
   

  	
  August
  4, 2006

  	
   

  	
   

  	
   

  	
   

  



 


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STOCK OPTION
AGREEMENT


 


Pursuant to the Stock Option
Grant Notice (the “Grant Notice”) to which
this Stock Option Agreement (this “Agreement”) is attached
and the Employment Agreement, Maui Land & Pineapple Company, Inc., a Hawaii
corporation (the “Company”), has
granted to Participant an option under the Company’s 2006 Equity and Incentive
Award Plan (the “Plan”) to purchase the number of shares of the
Company’s common stock, no par value (“Stock”), indicated
in the Grant Notice.


 


ARTICLE I



GENERAL


 


1.1           Defined Terms. Wherever the
following terms are used in this Agreement they shall have the meanings
specified below, unless the context clearly indicates otherwise. Capitalized
terms not specifically defined herein shall have the meanings specified in the
Grant Notice or, if not defined therein, the Plan.


 


“Cause”
shall have the meaning described in Section 8(f) of the Employment Agreement.


 


“Good Reason” shall have the meaning described in Sections
8(g), except as in Section 8(g)(iii), of the Employment Agreement.


 


1.2           Incorporation of Terms of Plan.
The Option is subject to the terms and conditions of the Plan which are
incorporated herein by reference.


 


ARTICLE II



GRANT OF OPTION


 


2.1           Grant of Option. In
consideration of Participant’s past and/or continued employment with or service
to the Company or a Parent or Subsidiary and for other good and valuable
consideration, effective as of the Grant Date set forth in the Grant Notice
(the “Grant Date”), the
Company irrevocably grants to Participant the Option to purchase any part or
all of an aggregate of the number of shares of Stock set forth in the Grant
Notice, upon the terms and conditions set forth in the Plan and this Agreement.
Unless designated as a Non-Qualified Stock Option in the Grant Notice, the
Option shall be an Incentive Stock Option to the maximum extent permitted by
law.


 


2.2           Exercise Price. The exercise price
of the shares of Stock subject to the Option shall be as set forth in the Grant
Notice, without commission or other charge; provided,
however, that the exercise price
per share of Stock subject to the Option shall not be less than 100% of the
Fair Market Value of a share of Stock on the Grant Date. Notwithstanding the
foregoing, if this Option is designated as an Incentive Stock Option and Participant
owns (within the meaning of Section 424(d) of the Code) more than 10% of the
total combined voting power of all classes of stock of the Company or any “subsidiary
corporation” of the Company or any “parent corporation” of the Company (each
within the meaning of Section 424 of the Code), the exercise price per share of
Stock subject to the Option shall not be less than 110% of the Fair Market
Value of a share of Stock on the Grant Date.


 


2.3           Consideration to the Company; No
Employment Rights. In consideration of the grant of the Option by the
Company, Participant agrees to render faithful and efficient services to the
Company or any Parent or Subsidiary. Nothing in the Plan or this Agreement
shall confer upon Participant any right to


 


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continue in the employ or service of the
Company or any Parent or Subsidiary or shall interfere with or restrict in any
way the rights of the Company and its Parents and Subsidiaries, which rights are
hereby expressly reserved, to discharge or terminate the services of Participant
at any time for any reason whatsoever, with or without cause, except to the extent
expressly provided otherwise in a written agreement between the Company, a
Parent or a Subsidiary and Participant.


 


ARTICLE III



PERIOD OF EXERCISABILITY


 


3.1           Commencement of Exercisability.


 


(a)           Subject to Sections 3.2, 3.3, and 5.8
hereof, the Option shall become vested and exercisable in such amounts and at
such times as are set forth in the Grant Notice.


 


(b)           Subject to subsection (c) below, no
portion of the Option which has not become vested and exercisable at the date
of Participant’s Termination of Employment, Termination of Directorship or
Termination of Consultancy shall thereafter become vested and exercisable,
except as may be otherwise provided by the Administrator or as set forth in a
written agreement between the Company and Participant. For these purposes, the
Participant’s employment shall not be treated as terminated in the case of a
transfer of employment within or between the Company and its subsidiaries or in
the case of sick leave or other approved leaves of absence.


 


(c)           The Option shall become fully
exercisable upon: (i) the termination by Company of Participant’s employment
without Cause or (ii) Participant’s resignation for Good Reason.


 


3.2           Duration of Exercisability. The
installments provided for in the vesting schedule set forth in the Grant Notice
are cumulative. Each such installment which becomes vested and exercisable
pursuant to the vesting schedule set forth in the Grant Notice shall remain
vested and exercisable until it becomes unexercisable under Section 3.3.


 


3.3           Expiration of Option. The
Option may not be exercised to any extent by anyone after the first to occur of
the following events:


 


(a)                                  The expiration of ten years from the Grant
Date;


 


(b)           If this Option is designated as an
Incentive Stock Option and Participant owned (within the meaning of
Section 424(d) of the Code), at the time the Option was granted, more than
10% of the total combined voting power of all classes of stock of the Company
or any “subsidiary corporation” of the Company or any “parent corporation” of
the Company (each within the meaning of Section 424 of the Code), the
expiration of five years from the Grant Date;


 


(c)           The expiration of six months following
the date of Participant’s Termination of Employment, Termination of
Directorship or Termination of Consultancy unless such termination occurs by
reason of Participant’s death or Disability or Participant’s discharge for
Cause;


 


(d)           The expiration of twelve months following
the date of Participant’s Termination of Employment, Termination of Directorship
or Termination of Consultancy by reason of Participant’s death or Disability;
or


 


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(e)           The date of Participant’s Termination
of Employment, Termination of Directorship or Termination of Consultancy by the
Company or any Parent or Subsidiary by reason of Participant’s discharge for Cause.


 


3.4           Special Tax Consequences. Participant acknowledges
that, to the extent that the aggregate Fair Market Value (determined as of the
time the Option is granted) of all shares of Stock with respect to which
Incentive Stock Options, including the Option, are exercisable for the first
time by Participant in any calendar year exceeds $100,000, the Option and such
other options shall be Non-Qualified Stock Options to the extent necessary to
comply with the limitations imposed by Section 422(d) of the Code. Participant
further acknowledges that the rule set forth in the preceding sentence shall be
applied by taking the Option and other “incentive stock options” into account
in the order in which they were granted, as determined under Section 422(d) of
the Code and the Treasury Regulations thereunder.


 


ARTICLE IV



EXERCISE OF OPTION


 


4.1           Person Eligible to Exercise. Except
as provided in Section 5.2, during the lifetime of Participant, only Participant
may exercise the Option or any portion thereof. After the death of Participant,
any exercisable portion of the Option may, prior to the time when the Option
becomes unexercisable under Section 3.3, be exercised by Participant’s personal
representative or by any person empowered to do so under the deceased Participant’s
will or under the then applicable laws of descent and distribution.


 


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 3.3.


 


4.3           Manner of Exercise. The
Option, or any exercisable portion thereof, may be exercised solely by delivery
to the Secretary of the Company or the Secretary’s office of all of the
following prior to the time when the Option or such portion thereof becomes
unexercisable under Section 3.3:


 


(a)           An Exercise Notice in writing signed
by Participant or any 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
Administrator. Such notice shall be substantially in the form attached as Exhibit
B to the Grant Notice (or such other form as is prescribed by the
Administrator);


 


(b)           The receipt by the Company of full
payment for the shares with respect to which the Option or portion thereof is
exercised, including payment of any applicable withholding tax, which may be in
one or more of the forms of consideration permitted under Section 4.4;


 


(c)           A bona fide written representation
and agreement, in such form as is prescribed by the Administrator, signed by Participant
or the other person then entitled to exercise such Option or portion thereof,
stating that the shares of Stock are being acquired for Participant’s 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 and then applicable rules and regulations thereunder and any
other applicable law, and that Participant or other person then entitled to
exercise such Option or portion thereof will indemnify the Company against and
hold it free and harmless from any loss, damage, expense or liability resulting
to the Company if any sale or distribution of the shares by such person is
contrary to the representation and agreement referred to above. The Administrator
may, in its absolute discretion,


 


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take whatever additional actions it deems
appropriate to ensure the observance and performance of such representation and
agreement and to effect compliance with the Securities Act and any other
federal or state securities laws or regulations and any other applicable law. Without
limiting the generality of the foregoing, the Administrator may require an
opinion of counsel acceptable to it to the effect that any subsequent transfer
of shares acquired on an Option exercise does not violate the Securities Act,
and may issue stop-transfer orders covering such shares. Share certificates
evidencing Stock issued on exercise of the Option shall bear an appropriate
legend referring to the provisions of this subsection (c) and the agreements
herein. The written representation and agreement referred to in the first
sentence of this subsection (c) shall, however, not be required if the shares
to be issued pursuant to such exercise have been registered under the
Securities Act, and such registration is then effective in respect of such
shares; and


 


(d)           In the event the Option or portion
thereof shall be exercised pursuant to Section 4.1 by any person or persons
other than Participant, appropriate proof of the right of such person or
persons to exercise the Option.


 


(e)           The Company shall cooperate
reasonably with any exercise and the designated method or methods of payment of
the Exercise Price.


 


4.4           Method of Payment of Exercise
Price. The Option may be exercised from time to time with respect to all or
any portion of the number of Shares with respect to which the Option has become
exercisable, in whole or in part, by written notice to the Corporate Secretary
of the Company or other authorized personnel of the Company. Any notice of
exercise of the Option shall be accompanied by payment of the full amount of
the Exercise Price for the Shares being purchased. Payment of the exercise
price shall be by any of the following, or a combination thereof, at the
election of the Participant:


 


(a)           Cash in the currency of the United
States;


 


(b)           Delivery of a good check payable to
the order of the Company;


 


(c)           Delivery of a number of Shares
already owned by the Participant having a Fair Market Value equal to the
Exercise Price;


 


(d)           To the extent permitted under
applicable laws, delivery of a notice that the Participant has placed a market sell order with a
SEC-registered broker-dealer with respect to shares of stock then issuable upon
exercise of the Option, and that the broker-dealer has been directed to pay a
sufficient portion of the net proceeds of the sale to the Company in
satisfaction of the aggregate exercise price; provided, that payment of such proceeds
is then made to the Company upon settlement of such sale;


 


(e)           To the extent permitted under
applicable margin rules, via a customary “same-day-sale” or margin account
exercise arrangement with a SEC-registered broker-dealer; or


 


(f)            Any combination of the consideration
provided in the foregoing.


 


4.5           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 been reacquired
by the Company. Such shares shall be fully paid and nonassessable. The Company
shall not be required to issue or deliver any shares of Stock purchased upon the exercise of the Option
or portion thereof prior to fulfillment of all of the following conditions:


 


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(a)           The admission of such shares to
listing on all stock exchanges on which such Stock is then listed;


 


(b)           The completion of any registration or
other qualification of such shares under any state or federal law or under
rulings or regulations of the Securities and Exchange Commission or of any
other governmental regulatory body, which the Administrator shall, in its
absolute discretion, deem necessary or advisable;


 


(c)           The obtaining of any approval or
other clearance from any state or federal governmental agency which the
Administrator shall, in its absolute discretion, determine to be necessary or
advisable;


 


(d)           The receipt by the Company of full
payment for such shares, including payment of any applicable withholding tax,
which may be in one or more of the forms of consideration permitted under
Section 4.4; and


 


(e)           The lapse of such reasonable period
of time following the exercise of the Option as the Administrator may from time
to time establish for reasons of administrative convenience.


 


4.6           Rights as Stockholder. The holder
of the Option shall not be, nor have any of the rights or privileges of, a stockholder
of the Company in respect of any shares purchasable upon the exercise of any
part of the Option unless and until such shares shall have been issued by the
Company to such holder (as evidenced by the appropriate entry on the books of
the Company or of a duly authorized transfer agent of the Company). No
adjustment will be made for a dividend or other right for which the record date
is prior to the date the shares are issued, except as provided in Section 11.3
of the Plan.


 


ARTICLE V



OTHER PROVISIONS


 


5.1           Administration. The
Administrator 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, amend or revoke any such
rules. All actions taken and all interpretations and determinations made by the
Administrator in good faith shall be binding, conclusive and final upon Participant,
the Company and all other interested persons. No member of the Administrator
shall be personally liable for any action, determination or interpretation made
in good faith with respect to the Plan, this Agreement 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 Administrator under the Plan and this
Agreement.


 


5.2           Option Not Transferable.


 


(a)           Subject to Section 5.2(b), the Option
may not be sold, pledged, assigned or transferred in any manner other than by
will or the laws of descent and distribution, or to a family limited
partnership or other entity customarily used for estate planning purposes,
provided that the transferor agrees in writing in a form provided by the
Company to be bound by all provisions of this Agreement. Neither the Option nor
any interest or right therein shall be liable for the debts, contracts or
engagements of Participant or his or her 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


 


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equitable proceedings (including bankruptcy), and any attempted disposition
thereof shall be null and void and of no effect, except to the extent that such
disposition is permitted by the preceding sentence.


 


(b)           Notwithstanding any other provision
in this Agreement, with the consent of the Administrator and to the extent the
Option is not intended to qualify as an Incentive Stock Option, the Option may
be transferred to one or more Permitted Transferees, subject to the terms and
conditions set forth in Section 11.1(b) of the Plan.


 


(c)           Unless transferred to a Permitted
Transferee in accordance with Section 5.2(b), during the lifetime of Participant,
only Participant may exercise the Option or any portion thereof. Subject to
such conditions and procedures as the Administrator may require, a Permitted
Transferee may exercise the Option or any portion thereof during Participant’s
lifetime. After the death of Participant, any exercisable portion of the Option
may, prior to the time when the Option becomes unexercisable under Section 3.3,
be exercised by Participant’s personal representative or by any person
empowered to do so under the deceased Participant’s will or under the then
applicable laws of descent and distribution.


 


5.3           Restrictive Legends and
Stop-Transfer Orders.


 


(a)           The share certificate or certificates
evidencing the shares of Stock purchased hereunder shall be endorsed with any
legends that may be required by state or federal securities laws.


 


(b)           Participant agrees that, in order to
ensure compliance with the restrictions referred to herein, the Company may
issue appropriate “stop transfer” instructions to its transfer agent, if any,
and that, if the Company transfers its own securities, it may make appropriate
notations to the same effect in its own records.


 


(c)           The Company shall not be required:
(i) to transfer on its books any shares of Stock that have been sold or
otherwise transferred in violation of any of the provisions of this Agreement,
or (ii) to treat as owner of such shares of Stock or to accord the right to
vote or pay dividends to any purchaser or other transferee to whom such shares
shall have been so transferred.


 


5.4           Shares to Be Reserved. The Company
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.


 


5.5           Notices. Any notice to be
given under the terms of this Agreement to the Company shall be addressed to
the Company in care of the Secretary of the Company at the address given
beneath the signature of the Company’s authorized officer on the Grant Notice,
and any notice to be given to Participant shall be addressed to Participant at
the address given beneath Participant’s signature on the Grant Notice. By a
notice given pursuant to this Section 5.5, either party may thereafter
designate a different address for notices to be given to that party. Any notice
which is required to be given to Participant shall, if Participant is then
deceased, be given to the person entitled to exercise his or her Option
pursuant to Section 4.1 by written notice under this Section 5.5. Any notice
shall be deemed duly given when sent via email or when sent by certified mail
(return receipt requested) and deposited (with postage prepaid) in a post
office or branch post office regularly maintained by the United States Postal
Service.


 


5.6           Titles. Titles are provided
herein for convenience only and are not to serve as a basis for interpretation
or construction of this Agreement.


 


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5.7           Governing Law; Severability. This
Agreement shall be administered, interpreted and enforced under the laws of the
State of Hawaii, without regard to the conflicts of law principles thereof. Should
any provision of this Agreement be determined by a court of law to be illegal
or unenforceable, the other provisions shall nevertheless remain effective and
shall remain enforceable.


 


5.8           Conformity to Securities Laws.
Participant acknowledges that the Plan is intended to conform to the extent
necessary with all provisions of the Securities Act and the Exchange Act and
any and all regulations and rules promulgated by the Securities and Exchange
Commission thereunder, and state securities laws and regulations. Notwithstanding
anything herein to the contrary, the Plan shall be administered, and the Option
is granted and may be exercised, only in such a manner as to conform to such
laws, rules and regulations. To the extent permitted by applicable law, the
Plan and this Agreement shall be deemed amended to the extent necessary to
conform to such laws, rules and regulations.


 


5.9           Amendments. This Agreement may
not be modified, amended or terminated except by an instrument in writing,
signed by Participant or such other person as may be permitted to exercise the
Option pursuant to Section 4.1 and by a duly authorized representative of the
Company.


 


5.10         Successors and Assigns. The
Company may assign any of its rights under this Agreement to single or multiple
assignees, and this Agreement shall inure to the benefit of the successors and
assigns of the Company. Subject to the restrictions on transfer herein set
forth in Section 5.2, this Agreement shall be binding upon Participant and his
or her heirs, executors, administrators, successors and assigns.


 


5.13         Notification of Disposition. If this Option is
designated as an Incentive Stock Option, Participant shall give prompt notice
to the Company of any disposition or other transfer of any shares of Stock
acquired under this Agreement if such disposition or transfer is made (a)
within two years from the Grant Date with respect to such shares or (b) within
one year after the transfer of such shares to him. Such notice shall specify
the date of such disposition or other transfer and the amount realized, in
cash, other property, assumption of indebtedness or other consideration, by Participant
in such disposition or other transfer.


 


5.14         Limitations Applicable to Section 16
Persons. Notwithstanding any other provision of the Plan or this Agreement,
if Participant is subject to Section 16 of the Exchange Act, the Plan, the Option
and this Agreement shall be subject to any additional limitations set forth in
any applicable exemptive rule under Section 16 of the Exchange Act (including
any amendment to Rule 16b-3 of the Exchange Act) that are requirements for the
application of such exemptive rule. To the extent permitted by applicable law,
this Agreement shall be deemed amended to the extent necessary to conform to
such applicable exemptive rule.


 


5.15         Entire Agreement. The Plan and
this Agreement (including all Exhibits hereto) constitute the entire agreement
of the parties and supersede in their entirety all prior undertakings and
agreements of the Company and Participant with respect to the subject matter
hereof.


 


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