Document:

EX-4.1

 EXHIBIT 4.1 

PERMIAN BASIN 
 AMENDED AND
RESTATED 
 ROYALTY TRUST INDENTURE 

This Amended and Restated Royalty Trust Indenture (“Indenture”) shall be effective as of June 20, 2014, the original
Royalty Trust Indenture having been entered into as of November 1, 1980 between Southland Royalty Company, a Delaware corporation with its principal office in Fort Worth, Texas (the “Company”), as Trustor, and The First
National Bank of Fort Worth, a banking association organized under the laws of the United States with its principal place of business in Fort Worth, Texas (the “Bank”), as Trustee, evidences that the Company has for many years been
engaged in the business of exploring for, producing and marketing oil and gas, and now owns fee mineral interests, royalty and overriding royalty interests in lands located primarily in the Permian Basin area in Texas which contain proven reserves
and are currently producing oil and gas; that the Company has determined that it would be in the best interest of its shareholders to carve out and distribute to such shareholders certain net overriding royalties in such mineral and royalty
interests (the “Royalties”) by means of the conveyances attached hereto as Exhibits 1 and 2 to this Indenture (the “Conveyances”); that since it would be impractical to distribute legal title to undivided interests
in the Royalties to each shareholder, and the shareholders have approved the transfer by Company by means of the Conveyances of the Royalties to the Bank, to be held in trust for the benefit of the shareholders on the date of execution hereof, and
their respective heirs, personal representatives, successors and assigns, as more particularly provided herein, and the Bank has agreed to accept the Conveyances on such terms; that the Company is contemporaneously executing the Conveyances to the
Bank; and that accordingly, the Company, by delivery of the Conveyances, grants, bargains, assigns and delivers the Royalties to the Bank, as trustee in trust and the Bank accepts the Conveyances and the Royalties and the Company and the Bank agree
that such assets and all other assets received by the Bank pursuant to this Indenture in trust shall be held, administered, paid and delivered for the purposes and subject to the terms and conditions hereafter provided. 

ARTICLE I 
 DEFINITIONS 

As used herein, the following terms are used with the meanings indicated: 

“Business Day” means any day which is not a Saturday, Sunday or other day on which national banking institutions in the City
of Fort Worth, Texas, are closed as authorized or required by law. 
 “Beneficial Interest” means the equitable interest of
the Unit Holders in the Trust Estate as expressly set out in this Trust Indenture and all other rights of beneficiaries of express trusts created under the Texas Trust Code, subject to the limitations set forth in this Trust Indenture. 

“Certificate” means a certificate issued by the Trustee pursuant to Article IV evidencing the ownership of one or more Units.

 “Code” means the Internal Revenue Code of 1986 as amended. 

“Distribution Date” means the date of any distribution, which shall be on or before ten (10) Business Days after a
Monthly Record Date. 

 “Indenture” means this instrument, as originally executed, or, if amended or
supplemented, as so amended or supplemented. 
 “Monthly Distribution Amount” for any Monthly Period means the sum of
(a) the cash received by the Trustee during the Monthly Period attributable to the Royalties, (b) any cash available for distribution as a result of the reduction or elimination during the Monthly Period of any existing cash reserve
created pursuant to Section 3.08 hereof to provide for the payment of liabilities of the Trust, and (c) any other cash receipts of the Trust during the Monthly Period, including without limitation any cash received from interest earned
pursuant to Section 3.04 reduced by the sum of (d) the liabilities of the Trust paid during the Monthly Period and (e) the amount of any cash used pursuant to Section 3.08 hereof in the Monthly Period to establish or increase a
cash reserve for the payment of any accrued, future or contingent liabilities of the Trust. If the Monthly Distribution Amount determined in accordance with the preceding sentence shall for any Monthly Period be a negative amount, then the Monthly
Distribution Amount shall be zero, and such negative amount shall reduce the next Monthly Distribution Amount. 
 Notwithstanding the
foregoing, the Monthly Distribution Amount for any Monthly Period shall not include any amount which would have been required to be reported to any stock exchange on which the Units are listed in connection with the establishment of an
‘ex’ date in order to be distributed to Unit Holders who were such on the Monthly Record Date for such Monthly Period but was not so reported unless the stock exchange agrees to such amount being a part of that Monthly Period’s
Monthly Distribution Amount or the Trustee receives an opinion of counsel stating that none of the Trust, the Trustee or any owner of Units will be adversely affected by such inclusion. An amount which pursuant to the preceding sentence is not
included in the Monthly Distribution Amount for that Monthly Period shall be included in the Monthly Distribution Amount for the next Monthly Period (unless it is reserved pursuant to Section 3.08 hereof). 

“Monthly Period” means the period which commences on the day after the date of creation of the Trust or a Monthly Record Date
and continues through and includes the next succeeding Monthly Record Date, which shall be the Monthly Record Date for such Monthly Period. 

“Monthly Record Date” for each month means the close of business on the last Business Day of such month unless the Trustee
determines that a later date is required to comply with applicable law or the rules of any exchange on which the Units may be listed, in which event it means such later date. 

“Person” means an individual, a corporation, partnership, trust, estate or other organization. 

“Royalties” means the net overriding royalty interests conveyed to the Trustee pursuant to the Conveyances. 

“Transferee”, as to any Unit Holder or former Unit Holder, means any person succeeding to the interest of such Unit Holder or
former Unit Holder in one or more Units of the Trust, whether as purchaser, donee, legatee or otherwise. 
 “Trust” means
the express trust created hereby which shall be held and administered as provided herein and in accordance with the terms and provisions (not inconsistent with any terms and provisions hereof) of the Texas Trust Code. 

“Trust Estate” means the assets held by the Trustee under this Indenture, and shall include both income and principal if
separate accounts or records are kept therefor. 

 “Trustee” means the initial Trustee under this instrument, or any successor,
during the period it is so serving in such capacity. 
 “Unit” means an undivided fractional interest in the Beneficial
Interest, determined as hereinafter provided. A Unit may be evidenced by a Certificate or a book-entry position entered in compliance with the procedures the Trustee establishes for uncertificated Units pursuant to Article IV. 

“Unit Holder” means the owner of one or more Units as reflected on the books of the Trustee pursuant to Article IV. 

ARTICLE II 
 NAME AND PURPOSE OF
THE TRUST 
 2.01. Name. The Trust shall be known as the Permian Basin Royalty Trust, and the Trustee may transact the affairs of the
Trust in that name. 
 2.02. Purposes. The purposes of the Trust are: 

(a) to convert the Royalties to cash either (1) by retaining them and collecting the proceeds from production until
production has ceased or the Royalties have otherwise terminated or (2) by selling or otherwise disposing of the Royalties (within the limits stated herein); and 

(b) to distribute such cash, net of amounts for payment of liabilities of the Trust, to the Unit Holders pro rata. 

It is the intention and agreement of the Company and the Trustee to create an express trust within the meaning of Section 111.004(4) of
the Texas Trust Code, for the benefit of the owners of Units, and a grantor trust for federal income tax purposes of which the owners of Units are the grantors. As set forth above and amplified herein, the Trust is intended to be limited to the
receipt of revenues attributable to the Royalties and the distribution of such revenues, after payment of or provision for Trust expenses and liabilities, to the Unit Holders. It is neither the purpose nor the intention of the parties hereto to
create, and nothing in this Trust Indenture shall be construed as creating, a partnership, joint venture, joint stock company or business association between or among Unit Holders, present or future, or among or between Unit Holders, or any of them,
and the Trustee or the Company. 
 ARTICLE III 

ADMINISTRATION OF THE TRUST 

3.01. General. Subject to the limitations set forth in this Indenture, the Trustee is authorized to take such action as in its judgment
is necessary or advisable best to achieve the purposes of the Trust, including the authority to agree to modifications or settlements of the terms of the Conveyances or to settle disputes with respect thereto, so long as such modifications or
settlements do not alter the nature of the Royalties as rights to receive a share of the proceeds of oil and gas produced from the properties presently burdened by such Royalties which are free of any obligation for operating expenses and as rights
which do not possess any operating rights or obligations. The Trustee may not dispose of all or any portion of the Royalties except as provided in Sections 3.02, 3.09 and 9.03. 

 The Trustee will cause the Trust to file any registration statement, report or other materials
required by law (including the Securities Exchange Act of 1934 and the rules thereunder) or by any securities exchange on which the Units are at any time registered. 

3.02. Limited Power to Dispose of Royalties. 

In the event the Trustee determines it to be in the best interest of the Unit Holders the Trustee may sell at any time and from time to time
all or any part of any of the Royalties for cash in such a manner as it deems in the best interest of the Unit Holders if approved by the Unit Holders present or represented at a meeting held in accordance with the requirements of Article VIII but
without such approval it may not sell or otherwise dispose of all or any part of the Royalties. This Section 3.02 shall not be construed to require approval of the Unit Holders for any sale or other disposition of all or any part of the
Royalties pursuant to Sections 3.09 or 9.03. The Trustee is authorized to retain any of the Royalties in the form in which such property was transferred to the Trustee without regard to any requirement to diversify investments or other requirements.

 3.03. No Power to Engage in Business or Make Investments. The Trustee shall not, in its capacity as Trustee under the Trust,
engage in any business or commercial activity of any kind whatsoever and shall not, under any circumstances, use any portion of the Trust Estate to acquire any oil and gas lease, royalty or other mineral interest other than the Royalties, or, except
as permitted in Sections 3.04 and 3.15, acquire any other asset. The Trustee shall not accept contributions to the Trust other than the Royalties. 

3.04. Interest on Cash on Hand. Cash being held by the Trustee as a reserve for liabilities or for distribution at the next
Distribution Date shall be placed (in the Trustee’s discretion) in: 
 (a) obligations issued by (or unconditionally
guaranteed by) the United States or any agency or instrumentality thereof (provided such agency’s or instrumentality’s such obligations are secured by the full faith and credit of the United States); or 

(b) repurchase agreements secured by obligations qualifying under subparagraph (a) above; 

(c) certificates of deposit of any bank having a capital, surplus and undivided profits in excess of $50,000,000; or 

(d) other interest bearing accounts in FDIC-insured state or national banks, including the Trustee, so long as the entire
amount in such accounts is at all times fully insured by the Federal Deposit Insurance Corporation; 
 provided such
repurchase agreements, certificates or accounts shall bear interest at a rate which is the greater of (i) the interest rate which the Bank or its successor pays in the normal course of business on amounts placed with it, taking into account the
amounts involved, the period held and other relevant factors, or (ii) the rate of interest paid on obligations qualifying under subparagraph (a) above. Any such obligations, repurchase agreements or certificates must mature on or before
the next succeeding Distribution Date and must be held to maturity. To the extent not prohibited by Section 113.057 of the Texas Trust Code any such cash may be placed with Bank or any successor bank serving as Trustee. 

3.05. Power to Settle Claims. The Trustee is authorized to prosecute or defend, or to settle by arbitration or otherwise, any claim of
or against the Trustee, the Trust or the Trust Estate, to waive or release rights of any kind and to pay or satisfy any debt, tax or claim upon any evidence by it deemed sufficient. 

 3.06. Power to Contract for Services. In the administration of the Trust, the Trustee is
empowered to employ oil and gas consultants, accountants, attorneys, transfer agents and other professional and expert persons and to employ or contract for clerical and other administrative assistance and to make payments of all fees for services
or expenses in any manner thus incurred out of the Trust Estate. 
 3.07. Payment of Liabilities of Trust. The Trustee shall, to the
extent that funds of the Trust are available therefor, make payment of all liabilities of the Trust, including, but without limiting the generality of the foregoing, all expenses, taxes, liabilities incurred of all kinds, compensation to it for its
services hereunder, and compensation to such parties as may be consulted as provided for in Section 3.06 hereof. 
 3.08.
Establishment of Reserves. With respect to any liability which is contingent or uncertain in amount or which otherwise is not currently due and payable, the Trustee in its sole discretion may, but is not obligated to, establish a cash reserve
for the payment of such liability. 
 3.09. Limited Power to Borrow. If at any time the cash on hand and to be received by the
Trustee is not, or will not, in the judgment of the Trustee, be sufficient to pay liabilities of the Trust as they become due, the Trustee is authorized to borrow the funds required to pay such liabilities. In such event, no further distributions
will be made to Unit Holders until the indebtedness created by such borrowing has been paid in full. Such funds may be borrowed from any Person, including, without limitation, the Bank or any other fiduciary hereunder. To secure payment of such
indebtedness, the Trustee is authorized to mortgage, pledge, grant security interests in or otherwise encumber (and to include as a part thereof any and all terms, powers, remedies, covenants and provisions deemed necessary or advisable in the
Trustee’s discretion, including, without limitation, the power of sale with or without judicial proceedings) the Trust Estate, or any portion thereof, including the Royalties, and to carve out and convey production payments. 

3.10. Income and Principal. The Trustee shall not be required to keep separate accounts or records for income and principal or maintain
any reserves for depletion of the Royalties. However, if the Trustee does keep such separate accounts or records, then the Trustee is authorized to treat all or any part of the yield from the Royalties as income or principal, and in general to
determine all questions as between income and principal and to credit or charge to income or principal or to apportion between them any receipt or gain and any charge, disbursement or loss as is deemed advisable under the circumstances of each case.

 3.11. Term of Contracts. In exercising the rights and powers granted hereunder, the Trustee is authorized to make the term of any
transaction or contract or other instrument extend beyond the term of the Trust. 
 3.12. Transactions between Related Parties. The
Trustee shall not be prohibited in any way in exercising its powers from making contracts or having dealings with itself in any other capacity (fiduciary or otherwise) or with the Company. 

3.13. No Bond Required. The Trustee shall not be required to furnish any bond or security of any kind. 

 3.14. Timing of Trust Income and Expenses. The Trustee will use all reasonable efforts to
cause the Trust and the Unit Holders to recognize income (including any income from interest earned on reserves established pursuant to Section 3.08 hereof) and expenses on Monthly Record Dates. The Trustee will invoice the Trust for services
rendered by the Trustee only on a Monthly Record Date and shall cause the Trust to pay any such invoices only on the Monthly Record Date on which an invoice is rendered and will use all reasonable efforts to cause all persons to whom the Trust
becomes liable to invoice the Trust for such liability on a Monthly Record Date and to cause the Trust to pay any such liabilities on the Monthly Record Date on which such liability is invoiced. In connection with the requirements of any stock
exchange on which the Units are listed, the Trustee will, if required by such stock exchange, use all reasonable efforts to determine the Monthly Distribution Amount and report such amount to the exchange at such time as may be required by such
stock exchange. Nothing in this Section shall be construed as requiring the Trustee to cause payment to be made for Trust liabilities on any date other than on such date as in its sole discretion it shall deem to be in the best interest of the Unit
Holders. 
 3.15. Divestiture of Units. If at any time the Trust or the Trustee is named a party in any judicial or administrative
proceeding which seeks the cancellation or forfeiture of any property in which the Trust has an interest because of the nationality, or any other status, of any one or more Unit Holders, the following procedures will be applicable: 

(a) The Trustee will promptly give written notice (“Notice”) to each holder (“Ineligible
Holder”) whose nationality or other status is an issue in the proceeding as to the existence of such controversy. The Notice will contain a reasonable summary of such controversy and will constitute a demand to each Ineligible Holder that
he dispose of his Units, to a party which would not be an Ineligible Holder, within 30 days after the date of the Notice. 

(b) If any Ineligible Holder fails to dispose of his Units as required by the Notice, the Trustee will have the preemptive
right to purchase, and will purchase, any such Units at any time during the 90 days after the expiration of the 30-day period specified in the Notice. The purchase price on a per Unit basis will be determined as of the last business day
(“determination day”) preceding the end of the 30-day period specified in the Notice and will equal the following per Unit amount: (i) if the Units are then listed on a stock exchange, the price will equal the closing price of
the Units on such exchange (or, if the Units are then listed on more than one exchange, on the largest such exchange in terms of the volume of Units traded thereon during the preceding twelve months) on the determination day if any Units were sold
on such exchange on such day or, if not, on the last preceding day on which any Units were sold on such exchange or (ii) if the Units are not then listed on any stock exchange, the price will equal the mean between the closing bid and asked
prices for the Units in the over-the-counter market on the determination day if quotations for such prices on such day are available or, if not, on the last preceding day for which such quotations are available. Such purchase will be accomplished by
tender of the above cash price to the Ineligible Holder at his address as shown on the records of the Trustee, either in person or by mail as provided in Section 11.06, accompanied by notice of cancellation. Concurrently with such tender the
Trustee shall cancel or cause to be cancelled all Certificates representing units then owned by such Ineligible Holder and for which tender has been made, and the Trustee shall issue or cause to be issued to itself a Certificate or Certificates
representing the same number of Units as were so cancelled. In the event the tender is refused by the Ineligible Holder or if he cannot be located after reasonable efforts to do so, the tendered sum shall be held by the Trustee in an interest
bearing account for the benefit of such Ineligible Holder, until proper claim for same (together with interest accrued thereon) has been made by such Holder, but subject to applicable laws concerning unclaimed property. 

 (c) The Trustee may, in its sole discretion, cancel any Units acquired in
accordance with the foregoing procedures or may sell such Units, either publicly or privately, in accordance with all applicable laws. The proceeds of any such sale of Units, less the expenses of such sale, will constitute revenues of the Trust.

 (d) The Trustee may, in its sole discretion, borrow any amounts required to purchase Units in accordance with the
procedures described above. 
 3.16. Miscellaneous. Except as otherwise provided in this Indenture, this Indenture and the Trust
shall be governed, construed, administered and controlled by and under the laws of the State of Texas, and the rights, powers, duties and liabilities of the Trustee shall be in accordance with and governed by the terms and provisions of the Texas
Trust Code and other applicable laws of the State of Texas in effect at any applicable time. 
 ARTICLE IV 

BENEFICIAL SHARES AND CERTIFICATES 

4.01. Creation and Distribution. The entire Beneficial Interest shall be divided into that number of Units which is equal to the number
of whole shares of common stock of the Company issued and outstanding on the record date for determination of stockholders of the Company entitled to receive Units. The ownership of the Units shall be evidenced by (i) Certificates in
substantially the form set forth on Schedule 1 hereto, containing such changes or alterations of form, but not substance, as the Trustee shall from time to time, in its discretion, deem necessary or desirable, (ii) a book-entry position in
Units maintained as part of a direct registration system, or (iii) any other manner required or permitted by United States securities laws or regulations promulgated by the Securities and Exchange Commission thereunder or regulations of any
stock exchange on which the Units are listed. Initially, the Company shall own all of the Units. However, the Company intends to distribute to each of its stockholders of record as of the close of business on the date fixed for determining
stockholders of the Company entitled to receive Units one Unit for each share of the common stock of the Company so owned of record by such stockholder. The Trustee shall forthwith issue Certificates to such person evidencing the number of Units
distributed to such person. Thereafter, Units shall be represented by Certificates or shall be uncertificated as provided in this Section 4.01. 

4.02. Rights of Unit Holders. The Unit Holders shall own pro rata the Beneficial Interest and shall be entitled to participate pro rata
in the rights and benefits of the Unit Holders under this Indenture. A Unit Holder by assignment or otherwise takes and holds the same subject to all the terms and provisions of this Indenture and the Conveyances, which shall be binding upon and
inure to the benefit of the heirs, personal representatives, successors and assigns of the Unit Holder. By an assignment or transfer of one or more Units, the assignor thereby shall, effective as of the close of business on the date of transfer and
with respect to such assigned or transferred Unit or Units, part with, except as provided in Section 4.04 in the case of a transfer after a Monthly Record Date and prior to the corresponding payment date, (i) all his Beneficial Interest
attributable thereto; (ii) all his rights in, to and under such Certificate (if such Units are certificated); and (iii) all interests, rights and benefits under this Trust of a Unit Holder which are attributable to such Unit or Units as
against all other Unit Holders and the Trustee. The Certificates, the Units and the rights, benefits and interests evidenced by either or both (including, without limiting the foregoing, the entire Beneficial Interest) are and shall be held and
construed to be in all respects intangible personal property, and the Units and the Certificates evidencing such Units (if such Units are certificated) shall be bequeathed, assigned, disposed of and distributed as intangible personal property. No
Unit Holder as such shall have any legal title in or to any real property interest which is a part of the Trust Estate, including, without limiting the foregoing, the Royalties or any part thereof, but

 
the sole interest of each Unit Holder shall be such Unit Holder’s Beneficial Interest and the obligation of the Trustee to hold, manage and dispose of the Trust Estate and to account for the
same as in this Indenture provided. No Unit Holder shall have the right to call for or demand or secure any partition or distribution of the Royalties during the continuance of the Trust or during the period of liquidation and winding up under
Section 9.03. 
 4.03. Execution of Certificates. All Certificates shall be signed by a duly authorized officer of the Trustee.
Certificates may be signed and sealed on behalf of the Trustee by such persons as at the actual date of the signing and sealing of such Certificates shall be the proper officers of the Trustee, although at the nominal date of such Certificates any
such person shall not have been such officer of the Trustee. Any such signature may be the manual or facsimile signature of such officers and may be affixed, imprinted or otherwise reproduced on the Certificate. 

4.04. Registration and Transfer of Units. The Units shall be transferable as against the Trustee only on the records of the Trustee
upon the surrender of Certificates or in compliance with the Trustee’s procedures for uncertificated Units, and in either case, compliance with such reasonable regulations as the Trustee may prescribe. No service charge shall be made to Unit
Holders or Transferee for any transfer of a Unit, but the Trustee may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto. Until any such transfer the Trustee may treat the owner
of any Certificate as shown by its records, or the Unit Holder of record in accordance with the Trustee’s procedures for uncertificated Units, as the owner of the Units evidenced thereby and shall not be charged with notice by any other party
of any claim or demand respecting such Unit or the interest represented thereby. A transfer of a Unit after any Monthly Record Date shall not transfer to the Transferee the right of the transferor to any sum payable to such transferor as the Unit
Holder of record on said day. As to matters affecting the title, ownership, warranty or transfer of Units, Article 8 of the Uniform Commercial Code and other statutes and rules with respect to the transfer of securities, as adopted and then in force
in the State of Texas, shall govern and apply. The death of any Unit Holder shall not entitle the Transferee to an account or valuation for any purpose, but such Transferee shall succeed to all rights of the deceased Unit Holder under this Indenture
upon proper proof of title satisfactory to the Trustee. 
 4.05. Mutilated, Lost, Stolen and Destroyed Certificates. If any
Certificate is lost, stolen, destroyed or mutilated, the Trustee, in its discretion and upon proof satisfactory to the Trustee, together with a surety bond sufficient in the opinion of the Trustee to indemnify the Trustee against all loss or
expenses in the premises (if deemed advisable by the Trustee), and surrender of the mutilated Certificate, will issue, at the discretion of the holder of such lost, stolen, destroyed or mutilated Certificate as shown by the records of the Trustee
and upon payment of a reasonable charge of the Trustee and any reasonable expenses incurred by it in connection therewith, either a new Certificate or evidence of Unit ownership compliant with the Trustee’s procedures for uncertificated Units.

 4.06. Protection of Trustee. The Trustee shall be protected in acting upon any notice, credential, certificate, assignment or
other document or instrument believed by the Trustee to be genuine and to be signed by the proper party or parties. The Trustee is specifically authorized to rely upon the application of Article 8 of the Uniform Commercial Code, and the application
of other statutes and rules with respect to the transfer of securities, as adopted and then in force in the State of Texas, as to all matters affecting title, ownership, warranty or transfer of either the Certificates and the Units represented
thereby, or of uncertificated Units, without any personal liability for such reliance, and the indemnity granted under Section 6.02 shall specifically extend to any matters arising as a result thereof. 

4.07. Determination of Ownership of Units. In the event of any disagreement between persons claiming to be Transferees of any Unit
Holder, the Trustee shall be entitled at its option to refuse to recognize any such claims so long as such disagreement shall continue. In so refusing, the Trustee may 

 
elect to make no delivery or other disposition of the interest represented by the Unit involved, or any part thereof, or of any sum or sums of money, accrued or accruing thereunder, and, in so
doing, the Trustee shall not be or become liable to any Person for the failure or refusal of the Trustee to comply with such conflicting claims, and the Trustee shall be entitled to continue so to refrain and refuse so to act, until 

(a) the rights of the adverse claimants have been adjudicated by a final judgment of a court assuming and having jurisdiction
of the parties and the interest and money involved, or 
 (b) all differences have been adjusted by valid agreement between
said parties and the Trustee shall have been notified thereof in writing signed by all of the interested parties. 
 ARTICLE V 

ACCOUNTING AND DISTRIBUTIONS 

5.01. Fiscal Year and Accounting Method. The fiscal year of the Trust shall be the calendar year. The Trustee shall maintain its books
in accordance with generally accepted accounting principles or such other method as will provide appropriate financial data responsive to the needs of the Unit Holders. 

5.02. Distributions. On the Distribution Date of each month, the Trustee will distribute pro rata to the Unit Holders of record on the
Monthly Record Date for such month the Monthly Distribution Amount for that month. 
 5.03. Federal Income Tax Reporting. For federal
income tax purposes, the Trustee shall file such returns and statements as in its judgment are required to comply with applicable provisions of the Code and regulations and to permit each Unit Holder correctly to report such Unit Holder’s share
of the income and deductions of the Trust. The Trustee will treat all income and deductions of the Trust for each month as having been realized on the Monthly Record Date for such month unless otherwise advised by its counsel or the Internal Revenue
Service. If prior to the due date for filing a corporate federal income tax return for 1980 there has not been received from the Internal Revenue Service a ruling confirming that the Trust will not, for purpose of such tax, be treated as an
association taxable as a corporation, the Trustee will, upon advice of tax counsel, (i) file a corporate tax return and pay the tax shown thereby on income earned during 1980 and (ii) forthwith institute, and diligently prosecute to the
court of last resort, a claim for refund of such tax. In all future years, the Trustee will report as a grantor trust until and unless the foregoing claim is finally decided adversely to the Trust. 

5.04. Reports to Unit Holders. As promptly as practicable following the end of each calendar quarter, the Trustee shall mail to each
Person who was a Unit Holder of record on a Monthly Record Date during such quarter a report which shall show in reasonable detail such information as is necessary to permit holders of units to make all calculations necessary for tax purposes
including depletion, and which shall show the assets and liabilities and receipts and disbursements of the Trust for such quarter and for each month in such quarter. Within 90 days following the end of each fiscal year, the Trustee shall mail, to
each Person of record on a date to be selected by the Trustee, an annual report containing financial statements audited by a nationally recognized firm of independent public accountants selected by the Trustee. Notwithstanding the foregoing, the
Trustee will furnish to the Unit Holders such reports, in such manner, as are at any time required by law or by regulations of any stock exchange on which the Units are listed. 

 ARTICLE VI 

LIABILITY OF TRUSTEE AND METHOD OF SUCCESSION 

6.01. Liability of Trustee. 

(a) Except as otherwise provided herein and specifically except as provided in paragraph (b) below, the Trustee, in
carrying out its powers and performing its duties, may act in its discretion and shall be personally or individually liable only for fraud or for acts or omissions in bad faith and shall not individually or personally be liable for any act or
omission of any agent or employee of the Trustee unless the Trustee has acted in bad faith in the selection and retention of such agent or employee. 

(b) If the Trustee enters into a contract on behalf of the Trust Estate without ensuring that any liability arising out of such
contract shall be satisfiable only out of the Trust Estate and shall not in any event, including the exhaustion of the Trust Estate, be satisfiable out of amounts at any time distributed to any Unit Holder or out of any other assets owned by any
Unit Holder, then Trustee, vis-a-vis the Unit Holders, shall be fully and exclusively liable for such liability, but shall have the right to be indemnified and reimbursed from the Trust Estate to the extent provided in Section 6.02. 

6.02. Indemnification of Trustee. The Trustee shall be indemnified by, and receive reimbursement from, the Trust Estate against and
from any and all liability, expense, claims, damages or loss incurred by it individually or as Trustee in the administration of the Trust and the Trust Estate or any part or parts thereof, or in the doing of any act done or performed or omission
occurring on account of its being Trustee, except such liability, expense, claims, damages or loss as to which it is liable under Section 6.01(a). Trustee shall have a lien upon the Trust Estate to secure it for such indemnification and
reimbursement and for compensation to be paid to Trustee. Except as provided in Section 4.05, neither the Trustee nor any agent or employee of the Trustee shall be entitled to any reimbursement or indemnification from any Unit Holder for any
liability, expense, claims, damages or loss incurred by the Trustee or any such agent or employee, their right of reimbursement and indemnification, if any, being limited solely to the Trust Estate, whether or not the Trust Estate without full
reimbursement or indemnification of the Trustee or any such agent or employee. 
 6.03. Resignation of Trustee. The Trustee may
resign, with or without cause, at any time by written notice to each of the then Unit Holders, given by registered mail addressed to each such holder at such holder’s last known post office address as shown by the records of the Trustee at the
time such notice is given. Such notice shall specify a date when such resignation shall take effect, which shall be a Business Day not less than ninety (90) days after the date such notice is mailed. In case of such resignation, the Trustee
will use its best efforts to nominate a successor, to call a meeting of Unit Holders for the purpose of appointing a successor, and to solicit proxies for such meeting. 

6.04. Removal of Trustee. The Trustee may be removed, with or without cause, at a meeting held in accordance with the requirements of
Article VIII by the affirmative vote of the holders of a majority of all the Units then outstanding. 
 6.05. Appointment of Successor
Trustee. In the event of a vacancy in the position of Trustee or if a Trustee has given notice of its intention to resign, the Unit Holders present or represented at a meeting held in accordance with the requirements of Article VIII may appoint
a successor Trustee. Nominees for appointment may be made by (i) the resigned or removed Trustee and (ii) any Unit Holder or Unit Holders owning at least 15% of the Units. Any such successor Trustee shall be a bank or trust

 
company having a capital, surplus and undivided profits (as of the end of its last fiscal year prior to its appointment) of at least $50,000,000. In the event that a vacancy in the position of
Trustee continues for sixty (60) days, a successor Trustee may be appointed by any State or Federal District Court holding terms in Tarrant County, Texas, upon the application of any Unit Holder, and in the event any such application is filed,
such court may appoint a temporary Trustee at any time after such application is filed with it which shall, pending the final appointment of a Trustee, have such powers and duties as the court appointing such temporary Trustee shall provide in its
order of appointment, consistent with the provisions of this Indenture. 
 Immediately upon the appointment of any successor Trustee, all
rights, titles, duties, powers and authority of the succeeded Trustee hereunder shall be vested in and undertaken by the successor Trustee which shall be entitled to receive from the Trustee which it succeeds all of the Trust Estate held by it
hereunder and all records and files in connection therewith. No successor Trustee shall be obligated to examine or seek alteration of any account of any preceding Trustee, nor shall any successor Trustee be liable personally for failing to do so or
for any act or omission of any preceding Trustee. The preceding sentence shall not prevent any successor Trustee or anyone else from taking any action otherwise permissible in connection with any such account. 

ARTICLE VII 
 COMPENSATION OF THE
TRUSTEE 
 7.01. Compensation of Trustee. The Trustee shall receive compensation for its services as Trustee hereunder and as
transfer agent as set forth in Schedule 2 attached hereto. 
 7.02. Expenses. The out-of-pocket costs incurred by the Trustee for
long distance telephone calls, overtime necessitated by rush orders, travel, legal services, stationery, binders, envelopes, ledger sheets, transfer sheets, checks, Unit Holder list sheets, postage and insurance will be reimbursed to the Trustee at
actual cost. 
 7.03. Other Services. The Trustee shall be reimbursed for actual expenditures made on account of any unusual duties
in connection with matters pertaining to the Trust. In the event of litigation involving the Trust, audits or inspection of the records of the Trust pertaining to the transactions affecting the Trust or any other unusual or extraordinary services
rendered in connection with the administration of the Trust, Trustee shall be entitled to receive reasonable compensation for the services rendered. 

7.04. Source of Funds. All compensation, reimbursements and other charges owing to the Trustee will be payable by the Trust out of the
Trust Estate. 
 ARTICLE VIII 

MEETINGS OF UNIT HOLDERS 
 8.01.
Purpose of Meetings. A meeting of the Unit Holders may be called at any time and from time to time pursuant to the provisions of this Article to transact any matter that the Unit Holders may be authorized to transact. 

8.02. Call and Notice of Meetings. Any such meeting of the Unit Holders may be called by the Trustee in its discretion and will be
called by the Trustee at the written request of Unit Holders owning not less than 15% of the then outstanding Units. All such meetings shall be held at such time and at such place in Fort Worth, Texas, as the notice of any such meeting may
designate. Written notice of every 

 
meeting of the Unit Holders signed by the Trustee setting forth the time and place of the meeting and in general terms the matters proposed to be acted upon at such meeting shall be given in
person or by mail not more than 60 nor less than 20 days before such meeting is to be held to all of the Unit Holders of record not more than 60 days before the date of such mailing. No matter other than that stated in the notice shall be acted upon
at any meeting. 
 8.03. Voting. Each Unit Holder shall be entitled to one vote for each Unit owned by such Unit Holder, and any Unit
Holder may vote in person or by duly executed written proxy. At any such meeting the presence in person or by proxy of Unit Holders holding a majority of the Units at the time outstanding shall constitute a quorum, and, except as otherwise
specifically provided herein, any matter shall be deemed to have been approved by the Unit Holders if it is approved by the vote of a majority in interest of such Unit Holders constituting a quorum, although, less than a majority of all of the Units
at the time outstanding, except that the affirmative vote by the Unit Holders of at least 75% of all the Units then outstanding shall be required to: 

(a) approve or authorize any sale of all or any part of the assets of the Trust, or 

(b) terminate the Trust pursuant to Section 9.02(b), or 

(c) approve any amendment to or affecting this Section 8.03. 

8.04. Conduct of Meetings. The Trustee may make such reasonable regulations consistent with the provisions hereof as it may deem
advisable for any meeting of the Unit Holders, including regulations covering the closing of the transfer books of the Trustee for purposes of determining Unit Holders entitled to notice of or to vote at any meeting, the appointment of proxies, the
appointment and duties of inspectors of votes, the submission and examination of proxies, certificates and other evidence of the right to vote, the preparation and use at the meeting of a list authenticated by or on behalf of the Trustee of the Unit
Holders entitled to vote at the meeting and such other matters concerning the calling and conduct of the meeting as it shall deem advisable. 

ARTICLE IX 
 DURATION, REVOCATION
AND TERMINATION OF TRUST 
 9.01. Revocation. The Trust is and shall be irrevocable and Company retains no power to alter, amend or
terminate the Trust. The Trust shall be terminable only as provided in Section 9.02, and shall continue until so terminated. 
 9.02.
Termination. The Trust shall terminate upon the first to occur of the following events: 
 (a) at such time as its
gross revenue for each of two successive years after the year 1980 is less than $1,000,000 per year, 
 (b) a vote in favor
of termination by the Unit Holders present or represented at a meeting held in accordance with the requirements of Article VIII, or 

(c) the expiration of twenty-one years after the death of the last survivor of the lawful descendants of any degree of the
signers of the Declaration of Independence in being on the date of execution hereof. 

 9.03. Disposition and Distribution of Properties. For the purpose of liquidating and
winding up the affairs of the Trust at its termination, the Trustee shall continue to act as such and exercise each power until its duties have been fully performed and the Trust Estate finally distributed. Upon the termination of the Trust, the
Trustee shall sell for cash in one or more sales all the properties other than cash then constituting the Trust Estate. The Trustee may engage the services of one or more investment advisors or other parties deemed by the Trustee to be qualified as
experts on such matters to assist with such sales and shall be entitled to rely on the advice of such persons as contemplated by Section 11.02. The Trustee shall as promptly as possible distribute the proceeds of any such sales and any other
cash in the Trust Estate according to the respective interests and rights of the Unit Holders, after paying, satisfying and discharging all of the liabilities of the Trust, or, when necessary, setting up reserves in such amounts as Trustee in its
discretion deems appropriate for contingent liabilities. In the event that any property which the Trustee is required to sell is not sold by the Trustee within three years after the termination of the Trust, the Trustee shall cause such property to
be sold at public auction to the highest cash bidder. Notice of such sale by auction shall be mailed at least thirty days prior to such sale to each Unit Holder at such Unit Holder’s address as it appears upon the books of the Trustee. The
Trustee shall not be required to obtain approval of the Unit Holders prior to selling property pursuant to this Section. Upon making final distribution to the Unit Holders, the Trustee shall be under no further liability except as provided in
Section 6.01(b). 
 ARTICLE X 

AMENDMENTS 
 10.01.
Prohibited. No amendment may be made to any provision of the Indenture which would 
 (a) alter the purposes of the
Trust or permit the Trustee to engage in any business or investment activities substantially different from those specified herein; 

(b) alter the rights of the Unit Holders vis-a-vis each other; or 

(c) permit the Trustee to distribute the Royalties in kind either during the continuation of the Trust or during the period of
liquidation or winding up under Section 9.03. 
 10.02. Permitted. All other amendments to the provisions of the Indenture may
be made by a vote of the Unit Holders present or represented at a meeting held in accordance with the requirements of Article VIII; provided that no amendment shall be effective without the express written approval of the Trustee. 

ARTICLE XI 
 MISCELLANEOUS 

11.01. Inspection of Trustee’s Books. Each Unit Holder and such Unit Holder’s duly authorized agents, attorneys and auditors
shall have the right during reasonable business hours to examine, inspect and make audits of the Trust and records of the Trustee, including lists of Unit Holders for any proper purpose in reference thereto. 

11.02. Trustee’s Employment of Experts. The Trustee may, but shall not be required to, consult with counsel, who may be its own
counsel, accountants, geologists, engineers, investment advisors and other parties deemed by the Trustee to be qualified as experts on the matters submitted to them, and the opinion of any such parties on any matter submitted to them by the Trustee
shall be full and complete authorization and protection in respect of any action taken or suffered by it hereunder in good faith and in accordance with the opinion of any such party. 

 11.03. Merger or Consolidation of Trustee. Neither a change of name of the Trustee nor any
merger or consolidation of its corporate powers with another bank or with a trust company shall affect its right or capacity to act hereunder. 

11.04. Filing of this Indenture. Neither this Indenture nor any executed copy hereof need be filed in any county in which any of the
Trust Estate is located, but the same may be filed for record in any county by the Trustee. In order to avoid the necessity of filing this Indenture for record, the Trustee agrees that for the purpose of vesting the record title to the Royalties in
any successor to the Trustee, the retiring Trustee will, upon appointment of any successor Trustee, execute and deliver to such successor Trustee appropriate assignments or conveyances. 

11.05. Severability. If any provision of this Indenture or the application thereof to any Person or circumstances shall be finally
determined by a court of proper jurisdiction to be illegal, invalid or unenforceable to any extent, the remainder of this Indenture or the application of such provision to Persons or circumstances, other than those as to which it is held illegal,
invalid or unenforceable, shall not be affected thereby, and every provision of this Indenture shall be valid and enforced to the fullest extent permitted by law. 

11.06. Notices. Any notice or demand which by any provision of this Indenture is required or permitted to be given or served upon the
Trustee by any Unit Holder may be given or served by being deposited, postage prepaid and by registered or certified mail, in a post office or letter box addressed (until another address is designated by notice to the Unit Holders) to the Trustee at
Post Office Box 2260, Fort Worth, Texas 76113. Any notice or other communication by the Trustee to any Unit Holder shall be deemed to have been sufficiently given, for all purposes, when deposited, postage prepaid, in a post office or letter box
addressed to said Unit Holder at his address as shown on the records of the Trustee. 
 11.07. Counterparts. This Indenture may be
executed in a number of counterparts, each of which shall constitute an original, but such counterparts shall together constitute but one and the same instrument. 

 IN WITNESS WHEREOF, the undersigned has caused this Indenture to be duly executed as of the 20th
day of June, 2014. 
  

			
	BANK OF AMERICA, N.A. as Trustee
		
	By:	 	 /s/ RON E. HOOPER

		 	Ron E. Hooper,
		 	Senior Vice President and Trust Administrator
		 	Bank of America, N.A.

 PERMIAN BASIN AMENDED AND
RESTATED TRUST INDENTURE 
 SIGNATURE PAGE 

 SCHEDULE 2 

TRUSTEE COMPENSATION 
  

	A.	Administrative Fee. 

 For all administrative services, preparation of quarterly and annual
statements with attention to tax and legal matters: 
 1. 1/20 of 1% of the first $100 million of the annual gross revenue of
the Trust, and 1/30 of 1% of the annual gross revenue of the Trust in excess of $100 million. 
 2. Trustee’s standard
hourly rates for time in excess of 300 hours annually. 
  

	B.	Transfer Agency Fee. 

 1. $4.92 annually per Unit Holder account for maintaining computer
records of each Unit Holder, name and address of record, tax identification number, outstanding Unit balances, alternative payee, various coded fields of pertinent information; for processing change of address and tax identification numbers; posting
each Certificate cancelled or issued; issuance of 10,000 Certificates; processing request and documentation required for replacement of lost or destroyed Certificates; for placing and/or removing stop transfer orders; registering Certificates;
disbursing the Monthly Distribution Amounts; preparing and mailing required Internal Revenue Service forms; mailing of proxies and other related material; tabulation of proxies; and maintenance and printing of Unit Holder list. 

2. For Certificates issued, registered and posted in excess of 10,000 annually, $1.00 for each Certificate. 

3. The transfer agency fees stated above will be subject to escalation based upon the general rise in prices in the economy. The index used
will be the Producers Price Index as published by the United States Department of Labor, Bureau of Labor Statistics or such equivalent index as may be published from time to time. All transfer agency fees will be adjusted annually by the percentage
rise in this index on a December-to-December basis beginning December 31, 1981. 
  

	C.	Termination Fee. 

 A fee will be charged upon termination of the Trust commensurate with the
amount of work and responsibility involved which shall not exceed 10% of the proceeds received and distributed in connection with the termination liquidation; provided that termination is accomplished under Article 9.02(a) of the Trust Indenture.
Under any other method of termination, fees will be charged on an hourly basis only. 
  

	D.	Invested Funds. 

 To the extent consistent with the Trust Indenture and applicable statutes and
regulations, funds held by the Trustee will be invested after receipt thereof until the next succeeding Distribution Date in such investments as are permitted by the Trust Indenture and the income so earned will be disbursed to the Unit Holders in
accordance with the provisions of the Trust Indenture. 
 After funds are disbursed on the Distribution Date, an analysis will be made by
the Trustee of the disbursement account or accounts and a credit for funds as calculated under the practice as it exists in the Trustee bank at the time and, from time to time, will be applied to reduce the administrative fee described in paragraph
A above charged by the Trustee at the next administrative fee payment date. In no event shall the credit exceed the administrative fee.Exhibit101

Exhibit 10.1

SIXTEENTH AMENDMENT TO EMPLOYMENT AGREEMENT
This Sixteenth Amendment to Employment Agreement (this “Sixteenth Amendment”), is made effective as of August 6, 2014, by and between KENNEDY-WILSON, INC., a Delaware corporation (the “Company”), and William J. McMorrow, an individual (“Employee”) with respect to the following facts and circumstances:
RECITALS
WHEREAS, the Company has been employing Employee as the Chief Executive Officer and Chairman of the Board of Directors under an employment agreement dated as of August 14, 1992, as amended to date (the “Agreement”); 
WHEREAS, during the Term (as defined below), the Company desires to continue to engage Employee as the Chief Executive Officer and Chairman of the Board of the Company on the terms and conditions and for the consideration set forth herein; and
WHEREAS, the Company and Employee intend that the terms of the Agreement shall be modified as set forth below and that, except as modified, the Agreement shall remain in full force and effect.   
AMENDMENT TO AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants, terms and conditions set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which the Company and Employee hereby acknowledge, the Company and Employee hereby agree as follows:

1.    Effective Date.  All references in the Agreement to the term “Effective Date” are replaced with the meaning ascribed herein.  The “Effective Date” shall mean August 6, 2014. 

            2.         Section 1 of the Agreement is deleted as of the Effective Date and a new Section 1 is substituted as of the Effective Date, to read as follows: 

Services Provided to the Company. During the Term (as defined below), Employee shall devote substantially all of his working hours to the Company business, provided, however, that Employee may (i) serve on corporate, civic or charitable boards or committees; and (ii) manage personal investments, so long as such activities do not significantly interfere with the performance of Employee’s duties and obligations to the Company under this Agreement.  For the avoidance of doubt, Employee’s continued conduct with respect to activities prior to the Effective Date shall not be deemed to interfere with his duties and responsibilities under this Agreement.

3.    Section 2 of the Agreement is deleted as of the Effective Date and a new Section 2 is substituted as of the Effective Date, to read as follows:

Term of Employment.  Employee shall be employed by the Company pursuant to this Agreement for a term beginning on the date of this Agreement and continuing through to, and terminating at the close of business on the seventh (7th) anniversary of the Effective Date (the “Term”) (unless earlier terminated pursuant to Section 9 hereof). 
 
4.    Section 3 of the Agreement is deleted as of the Effective Date and a new Section 3 is substituted as of the Effective Date, to read as follows:

Commitment to the Company.  During the Term of this Agreement, Employee shall not be involved, individually or as an employee, principal, officer, general partner, director or shareholder of any company, in any real estate development activities without first obtaining the consent and approval of a majority of the Company’s Board of Directors, provided, however that the foregoing restrictions shall not apply with respect to any real estate owned by Employee as of the Effective Date, or any development or other activities related thereto. 

5.    Section 4 of the Agreement is deleted as of the Effective Date and a new Section 4 is substituted as of the Effective Date, to read as follows:

Compensation to Employee. During the Term of this Agreement, the Company shall pay to Employee compensation (the “Compensation”) consisting of:
        
(a)    Salary. The Company shall pay a salary equal to one million five hundred thousand dollars ($1,500,000.00) per annum, payable on such basis as is the normal payment pattern of the Company, not to be less frequently than monthly (“Base Salary”). Employee’s Base Salary shall be reviewed on a bi-annual basis and adjusted upwards as appropriate; 

(b)    Performance Bonus. In addition to the Base Salary provided for above, Employee shall receive, with respect to each fiscal year (or portion thereof) during the Term of this Agreement, a bonus in an amount that is approved by the Company’s Compensation Committee, and, if required, approved by the Company’s Board of Directors (“Performance Bonus”); and

(c)    Restricted Stock Award. In addition to the Base Salary and Performance Bonus provided for above, Employee shall, with respect to each fiscal year (or portion thereof) during the Term of this Agreement, participate in all equity participation plans as approved by the Company’s Compensation Committee, and, if required, approved by the Company’s Board of Directors (“Restricted Stock Award”).

6.    Section 5 of the Agreement is deleted as of the Effective Date and a new Section 5 is substituted as of the Effective Date, to read as follows:

Expenses. The Company shall pay for any out-of-pocket expenses, including travel expenses, incurred by Employee in the ordinary course of providing his services, consistent with the Company’s current practice.      

7.    Section 6 of the Agreement is deleted as of the Effective Date and a new Section 6 is substituted as of the Effective Date, to read as follows:

Insurance Coverage and Benefits. During the Term of this Agreement, the Company will provide Employee, at the Company’s expense, with coverage under the major medical, hospitalization and other insurance programs maintained by the Company for its officers generally. In addition, Employee will receive during the Term of this Agreement, all other Company-provided benefits to which Employee was entitled immediately prior to the date hereof as an employee of the Company, and all other Company-provided benefits, which are, from time to time, made available by the Company to its officers. 

8.    Section 8 of the Agreement is deleted as of the Effective Date and a new Section 8 is substituted as of the Effective Date, to read as follows:

     Confidential and Proprietary Information. Employee recognizes that he has occupied and will occupy a position of trust with respect to business information of a confidential or proprietary nature which is the property of the Company and which has been and will be imparted to him from time to time in the course of the performance of his duties under this Agreement. Employee agrees that:

(a)    He shall not at any time, whether during the Term hereof or thereafter, use or disclose directly or indirectly any Confidential or Proprietary Information (as defined below) of the Company to any person, except that he may use and disclose to other Company personnel such confidential and proprietary information in the course of the performance of his duties hereunder or when legally required to do so in connection with any pending litigation or administrative inquiry; and 
    
(b)    He shall return promptly upon the termination of this Agreement or otherwise upon the request of the Company any and all copies of any documentation or materials containing any Confidential or Proprietary Information of the Company. 

(c)    For purposes of this Agreement, the term “Confidential or Proprietary Information” of the Company shall include all information of any nature and in any form which is owned by the Company and which is not at the time publicly available or generally known to persons engaged in businesses similar to that of the Company, including, but not limited to, practices, procedures and methods and other facts relating to the business of the Company; practices, procedures and methods and other facts related to sales, marketing, advertising, promotions, financial matters, clients, client lists of the Company and all other information of a confidential and proprietary nature. 

9.    Section 9 of the Agreement is deleted as of the Effective Date and a new Section 9 is substituted as of the Effective Date, to read as follows:

Termination.

(a)    Termination for Cause. The Company may terminate Employee’s employment at any time during the Term, for Cause (as defined below). The term “Cause” shall mean: (1) Employee is convicted of, after the exhaustion of all appeals, or pleads guilty or nolo contendere to a charge of the commission of a felony involving moral turpitude; (2) Employee has engaged in gross neglect or willful misconduct in carrying out his duties, which is reasonably expected to result in material economic or material reputational harm to the Company; or (3) Employee materially breaches any material provision of this Agreement which is reasonably expected to result in a material economic or material reputational harm to the Company.

(i)    No act or failure to act, on the part of Employee, shall be considered “willful” unless it is done, or omitted to be done, by Employee in bad faith or without reasonable belief that Employee’s action or omission was in the best interests of the Company. Any act, or failure to act, based upon authority given pursuant to a resolution adopted by the Board of Directors of the Company or upon the instructions of the Board of Directors of the Company, or based upon the advice of counsel for the Company, shall be conclusively presumed to be done, or omitted to be done, by Employee in good faith and in the best interests of the Company. 

(ii)    In order to invoke a termination for Cause on any of the grounds enumerated above, the Company must provide written notice to Employee of the existence of such grounds within thirty (30) days following the Company’s knowledge of the existence of such grounds, specifying in reasonable detail the grounds constituting Cause, and Employee shall have thirty (30) days following receipt of such written notice during which he may remedy the ground if such ground is reasonably subject to cure (the “Cure Period”). Notwithstanding the foregoing, in the event that Employee commences to cure the breach within the Cure Period, and the breach can be cured but cannot reasonably be cured within the Cure Period, the Cure Period shall continue for so long as the Employee diligently prosecutes the cure to completion, and Employee shall not be considered in breach.
 
(b)    Death or Disability. The Company may terminate Employee’s employment upon the date of the Employee’s disability. The term “Disability” shall mean physical or mental disability to the extent that Employee becomes disabled for more than one hundred twenty (120) consecutive days or one hundred eighty (180) days in the aggregate in any twelve (12) month period, provided however, that: (i) if Employee disputes that Disability has occurred, the Company and Employee shall jointly select a doctor to examine Employee, and if the Company and Employee cannot agree on a doctor, each party shall select one (1) doctor who shall jointly select a third (3rd) doctor to examine Employee; and (ii) the Company shall continue to pay Employee all Section 4 Compensation (as defined below), until a final determination has been made. For purposes of this Agreement, “Section 4 Compensation” shall mean Employee’s annual Base Salary, annual Performance Bonus and annual Restricted Stock Award. In addition, upon Employee’s death or a final determination of Disability, the unvested portion of any Restricted Stock Award granted to Employee pursuant to the Company’s Amended and Restated 2009 Equity Participation Plan (the “Plan”) as same may be amended from time to time during the Term, or any similar equity participation plan, shall immediately vest. Upon Employee’s death or final determination of Disability, Employee’s employment shall automatically terminate (the period of time between the date of Employee’s death or final determination of Disability, as applicable, and the date that the Term would have otherwise expired if death or final determination of Disability, as applicable, had not occurred shall be referred to as the “Covered Term”); provided, however, that upon such termination the Company shall pay to Employee (or Employee’s estate) an amount equal to the greater of: (1) the sum of (A) the Base Salary that otherwise would have been paid during the Covered Term, plus (B) the amount of the Performance Bonus paid to Employee for the most recent calendar year preceding Employee’s death; or (2) such other amount that the Compensation Committee of the Company may determine in its sole discretion from time to time during the Term (such greater amount of (1) and (2) shall be referred to as the “Final Payment”).  The Company shall pay or arrange for the Final Payment to be made either: (i) in cash, in a single lump sum, within ten (10) days of the date of termination; or (ii) at the sole discretion of the Compensation Committee of the Company, as proceeds from one (1) or more insurance policies, the premiums of which shall be paid by the Company. Employee acknowledges that in furtherance of the foregoing and in discharge of its obligation to make the Final Payment, the Company may purchase and pay the premiums for one (1) or more insurance policies (disability, life or otherwise), with the beneficiary being the Employee, and Employee hereby consents to such insurance and Employee agrees to submit to any medical examination and release of medical records required to obtain such insurance.

(c)    Resignation for Good Reason. Employee may terminate his employment at any time during the Term, by resigning for Good Reason (as defined below). Any of the following shall be deemed “Good Reason:” (i) the Company instructs Employee to work full-time or substantially full-time at any location that is not acceptable to Employee (other than the Company’s current headquarters or any other Company headquarters within twenty (20) miles of Beverly Hills, California); (ii) the Company eliminates or materially reduces Employee’s responsibilities, authorities or duties as a Chief Executive Officer and Chairman of the Board of Directors; (iii) a Change in Control (as defined below) occurs; (iv) a material reduction in Employee’s base compensation; or (v) any other material breach of this Agreement by the Company. Notwithstanding the foregoing, a resignation under clauses (i), (ii) and (iv) of this Section 9(c) shall only be for Good Reason if Employee provides the Company with written notice within ninety (90) days after the initial occurrence of an event allegedly constituting Good Reason and the Company fails to cure within thirty (30) days of receipt of such notice and Employee’s resignation occurs within one (1) year of such occurrence.  

For purposes of this Section 9(c), a “Change in Control” shall be deemed to occur upon the first (1st) to occur of any of the following events: (i) any person becomes the beneficial owner of securities of the Company representing more than fifty percent (50%) of the combined voting power of the Company’s then outstanding securities; (ii) a merger, consolidation or other business combination as a result of which beneficial ownership of shares or securities representing more than fifty percent (50%) of the total fair market value or total voting power of the Company is acquired by any person; (iii) the sale or disposition of all or substantially all of the Company’s assets to any person; or (iv) within any twelve (12) month period, the incumbent directors of the Board of Directors shall cease to constitute at least a majority of the Board of Directors of the Company, or of any successor to the Company; provided, however, that any director elected to the Board of Directors, or nominated for election by a majority of the Board of Directors then still in office, shall be deemed to be an incumbent director for purposes of this Section 9(c), but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of any person other than the Board of Directors (including, but not limited to, any such assumption that results from subsections (i), (ii) or (iii) of this definition). For purposes of this definition, “person” means any individual, entity (including any employee benefit plan or any trust for an employee benefit plan) or group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Securities Exchange Act of 1934, or any successor provision). The unvested portion of any Restricted Stock Award granted to Employee pursuant to the Plan or any similar equity participation plan, shall immediately vest upon a Change in Control.

(d)    Payment upon Termination without Cause / Resignation for Good Reason.    In the event that Employee’s employment is terminated by the Company prior to the end of the Term without Cause, or if Employee resigns for Good Reason:

(i)     The Company shall (A) continue to pay to Employee the Base Salary (not taking into account any reduction in Base Salary that constituted Good Reason) for the remainder of the Term on the Company's regular payroll dates applicable to similarly situated employees of the Company; and (B) continue to provide or make available to Employee all other employee benefits (other than continued participation in the Company’s 401(k) plan) to which Employee was entitled as of the employment termination date throughout the remainder of the Term, provided such benefits can be provided or made available at no additional cost to the Company, unless Employee agrees to pay any excess cost;

(ii)   The Company shall pay to Employee an amount equal to the Severance Amount (as defined below), payable in one (1) lump sum cash payment within forty-five (45) days after the date of termination, provided that if such forty-five (45) day period begins in one (1) calendar year and ends in a second (2nd) calendar year, the Severance Amount shall be paid in the second (2nd) calendar year; and 

(iii)   The unvested portion of any Restricted Stock Award granted to Employee pursuant to the Plan or any similar equity participation plan, shall immediately vest. 

For the avoidance of doubt, Employee shall have no duty to mitigate damages and any compensation earned after the date of termination shall not reduce the Company’s obligations. The benefits described in clause (i)(B) of this Section 9(d) shall be provided or made available in accordance with the underlying plans, programs and policies, and subject to Section 11; provided that, with respect to group health insurance premiums, to the extent that the Company would be prohibited from or penalized for providing or making available such benefits under then-applicable law, the Company shall pay to Employee an amount in cash and/or reimburse to Employee, upon submission of proof of payment by Employee, an equivalent dollar amount.

For purposes of this Section 9(d), “Severance Amount” shall mean an amount equal to (A) three (3) times the average of the sum of: (i) Base Salary (not taking into account any reduction in Base Salary that constituted Good Reason); (ii) Performance Bonus; and (iii) value of the annual Restricted Stock Award granted to Employee, with (i), (ii) and (iii) based on the actual amounts of each of the foregoing, for the three (3) fiscal years prior to the fiscal year in which termination without Cause or resignation for Good Reason (as applicable) occurs, less (B) (x) an amount equal to Employee’s monthly Base Salary in effect as of the time of such termination (not taking into account any reduction in Base Salary that constituted Good Reason) multiplied by (y) the number of months remaining in the Term as of such date.  For purposes of calculating the Severance Amount, the value of the annual Restricted Stock Award shall be, with respect to each fiscal year, the greater of: (1) the grant date fair value of the award for such fiscal year, or (2) four million dollars ($4,000,000.00). 

(e)    Termination for Cause / Resignation without Good Reason. If the Company terminates Employee’s employment for Cause, or if Employee resigns without Good Reason, the Company shall pay to Employee all Compensation pursuant to Section 4 through the date of termination or resignation, provided however, that if Employee disputes the existence of Cause or if the Company disputes the existence of Good Reason, Employee shall receive Section 4 Compensation until the date of final determination.  

(f)    Obligations upon Termination. All rights and obligations of any party in Sections 4 through 9 of this Agreement not fully satisfied or performed, as applicable, on the date Employee’s employment is terminated, shall survive the termination of Employee’s employment and the expiration or termination of this Agreement; except that if, Employee is terminated without Cause or Employee resigns for Good Reason, then Employee shall be relieved of his obligations under Sections 7 and 8 hereof. 
        
10.    Section 10 of the Agreement is deleted as of the Effective Date and a new Section 10 is substituted as of the Effective Date, to read as follows:

Section 280G. 

(a)     Notwithstanding anything in this Agreement to the contrary, in the event that the Company’s independent public accountants (the “Accountants”) shall determine in good faith that receipt of all payments or benefits made or provided by the Company or its affiliated companies in the nature of compensation to or for Employee’s benefit (each, a “Payment”), whether payable or to be provided pursuant to this Agreement or otherwise, and including, without limitation, the post-termination payments and benefits provided pursuant to Section 9(d) and the Restricted Stock Award provided pursuant to Section 4, would, but for this sentence, subject Employee to the excise tax under Section 4999 (the “Excise Tax”) of the Internal Revenue Code of 1986, as amended (the “Code”), then the Company shall cause to be determined by the Accountants in good faith, before any Payments are made, which of the following two (2) alternative forms of payment would result in Employee’s receipt, on an after-tax basis, of the greater aggregate amount of Payments, notwithstanding that all or some portion of the Payments may be subject to the Excise Tax, and shall pay to Employee such greater amount: (1) payment in full of the entire amount of the Payments (a “Full Payment”), or (2) payment of only a part of the Payments so that Employee receives the largest amount of the Payments possible without the imposition of the Excise Tax (a “Reduced Payment”).

(b)     For purposes of determining whether to make a Full Payment or a Reduced Payment, the Company shall cause to be taken into account by the Accountants all applicable federal, state and local income and employment taxes and the Excise Tax (all computed at the highest applicable marginal rate, net of the maximum reduction in federal income taxes which could be obtained from a deduction of such state and local taxes). If the Accountants determine that aggregate Payments should be reduced to the Reduced Payment, the Company shall promptly give Employee notice to that effect and a copy of the detailed calculation thereof. If a Reduced Payment is made, (x) Employee shall have no rights to any additional payments and/or benefits constituting the Payment, and (y) any reduction of the Payments shall be made in accordance with Section 10(d) below.

(c)     As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accountants hereunder, it is possible that Payments will have been made by the Company to or for the benefit of Employee which should not have been so made (“Overpayment”), or that additional amounts which will have not been paid or distributed by the Company to or for the benefit of Employee could have been so paid or distributed (“Underpayment”), in each case, consistent with the calculation of the Full Payment or the Reduced Payment hereunder, as the case may be. In the event that the Accountants, based upon the assertion of a deficiency by the Internal Revenue Service against either the Company or Employee which the Accountants believe has a high probability of success, determine that an Overpayment has been made, Employee shall pay any such Overpayment to the Company together with interest at the applicable federal rate provided for in Section 7872(f)(2) of the Code; provided, however, that no amount shall be payable by Employee to the Company if and to the extent such payment would not either reduce the amount on which Employee is subject to tax under Section 1 and Section 4999 of the Code or generate a refund of such taxes. In the event that the Accountants determine that an Underpayment has occurred, any such Underpayment shall be promptly paid by the Company to or for the benefit of Employee together with interest at the applicable federal rate provided for in Section 7872(f)(2) of the Code.

(d)    Any reduction of Payments to the Reduced Payment shall occur in the following order: (i) any cash severance payable by reference to the Employee's Base Salary or Performance Bonus; (ii) any other cash amount payable to the Employee; (iii) any benefit valued as a "parachute payment" (within the meaning of Section 280G of the Code); and (iv) acceleration of vesting of any Restricted Stock Award.

(e)     Subject to the last sentence of this subsection (e), all determinations made by the Accountants under this Section 10 shall be conclusive and binding upon the Company and Employee for all purposes. All fees and expenses of the Accountants shall be borne solely by the
Company. For purposes of making the calculations required by this Section 10, the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of Sections 280G and 4999 of the Code. The Company and Employee will furnish to the Accountants such information and documents as the Accountants may reasonably request in order to make determinations under this Section 10. In the event that Employee or the Company disagrees with the determination of the Accountants under this Section 10, either the Company or Employee can have such determination reviewed through the mechanism set forth in Section 12(e). If such mechanism is used, review shall be de novo and no presumption of correctness shall attach to the Accountants’ determination.

11.    Section 11 of the Agreement is deleted as of the Effective Date and a new Section 11 is substituted as of the Effective Date, to read as follows:

Section 409A.

(a)     The Company intends that the reimbursements, payments and benefits to which Employee could become entitled under this Agreement be exempt from or comply with Section 409A of the Code and the regulations and other guidance promulgated thereunder (“Section 409A”). The provisions of this Section 11 shall qualify and supersede all other provisions of this Agreement as necessary to fulfill the foregoing intention. If the Company believes, at any time, that any of such reimbursement, payment or benefit is not exempt or does not so comply, the Company will promptly advise the Employee and will reasonably and in good faith amend the terms of such arrangement such that it is exempt or complies (with the most limited possible economic effect on the Employee and on the Company) or to minimize any additional tax, interest and/or penalties that may apply under Section 409A if such exemption or compliance is not practicable. The Company agrees that it will not, without Employee’s prior written consent, knowingly take any action, or knowingly refrain from taking any action, other than as required by law, that would result in the imposition of tax, interest and/or penalties upon the Employee under Section 409A, unless such action or omission is pursuant to the Employee’s written request.

(b)     To the extent applicable, each and every payment to be made pursuant to this Agreement shall be treated as a separate payment and not as one (1) of a series of payments treated as a single payment for purposes of Treasury Regulation Section 1.409A-2(b)(2)(iii).

(c)    If Employee is a “specified employee” (determined by the Company in accordance with Section 409A and Treasury Regulation Section 1.409A-3(i)(2)) as of the date that the Employee experiences a separation from service, as defined in Treasury Regulations Section 1.409A-1(h)(1), from the Company (a “Separation from Service”) and if any reimbursement, payment or benefit to be paid or provided under this Agreement or otherwise both (i) constitutes a “deferral of compensation” within the meaning of and subject to Section 409A (“Nonqualified Deferred Compensation”) and (ii) cannot be paid or provided in a manner otherwise provided herein without subjecting the Employee to additional tax, interest and/or penalties under Section 409A, then any such reimbursement, payment or benefit that is payable during the first six (6) months following the Employee’s date of termination shall be paid or provided to the Employee in a lump sum cash payment to be made, with interest at the applicable federal rate, on the earlier of (x) Employee’s death and (y) the first (1st) business day of the seventh (7th) month immediately following Employee’s Separation from Service. To the extent available, all the exceptions of Treasury Regulations Section 1.409A-1(b)(9) shall apply in implementing the rules of this section.  To the extent that any payment or benefit described in this Agreement constitutes Nonqualified Deferred Compensation under Section 409A, and to the extent that such payment or benefit is payable upon Employee’s termination of employment, then such payments or benefits shall be payable only upon Employee’s Separation from Service.  

(d)    Except to the extent any reimbursement, payment or benefit to be paid or provided under this Agreement does not constitute Nonqualified Deferred Compensation, (i) the amount of expenses eligible for reimbursement or the provision of any in-kind benefit (as defined in Section 409A) to Employee during any calendar year will not affect the amount of expenses eligible for reimbursement or provided as in-kind benefits to the Employee in any other calendar year (subject to any lifetime and other annual limits provided under the Company’s health plans), (ii) the reimbursements for expenses for which Employee is entitled shall be made on or before the last day of the calendar year following the calendar year in which the applicable expense is incurred and (iii) the right to payment or reimbursement or in-kind benefits may not be liquidated or exchanged for any other benefit.

(e)     Any reimbursement, payment or benefit to be paid or provided under this Agreement due to a Separation from Service that is exempt from Section 409A pursuant to Treasury Regulation Section 1.409A-1(b)(9)(v) will be paid or provided to Employee only to the extent the expenses are not incurred or the benefits are not provided beyond the last day of the Employee’s second (2nd) taxable year following the Employee’s taxable year in which the Separation from Service occurs; provided, however, that the Company shall reimburse such expenses no later than the last day of the third (3rd) taxable year following Employee’s taxable year in which Employee’s Separation from Service occurs.

(f)     Any reimbursement, payment or benefit to be paid or provided under this Agreement that constitutes Nonqualified Deferred Compensation due upon a termination of employment shall be paid or provided to Employee only in the event of a Separation from Service.
(g)    Any reimbursement payment or benefit to be paid or provided under this Agreement that constitutes Nonqualified Deferred Compensation due upon Change in Control shall be paid or provided to Employee only if such Change in Control constitutes a change in the ownership or effective control of the Company or a change in the ownership of a substantial portion of the Company’s assets within the meaning of Section 409A.

12.    Section 12 of the Agreement is deleted as of the Effective Date and a new Section 12 is substituted as of the Effective Date, to read as follows:

General Provisions.

(a)    Notices. Any notice to be given pursuant to this Agreement shall be in writing and, in the absence of receipted hand delivery, shall be deemed duly given when mailed, if the same shall be sent by certified or registered mail, return receipt requested, or by a nationally recognized overnight courier, and the mailing date shall be deemed the date from which all time periods pertaining to a date of notice shall run. Notices shall be addressed to the parties at the following addresses:  

If to the Company, to:        Kennedy-Wilson, Inc.
9701 Wilshire Boulevard, Suite 700
Beverly Hills, CA 90212
Attention:  General Counsel

If to the Employee, to:    William J. McMorrow
Kennedy-Wilson, Inc.
9701 Wilshire Boulevard, Suite 700
Beverly Hills, CA 90212
                    
(b)    Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the Company and any successors whether by merger, consolidation, transfer of substantially all assets or similar transaction, and it shall be binding upon and shall inure to the benefit of Employee and his heirs and legal representatives. This Agreement is personal to Employee and shall not be assignable by Employee. 

(c)    Waiver of Breach. The waiver by the Company or Employee of a breach of any provision of this Agreement by the other shall not operate or be construed as a waiver of any subsequent breach by the other. 

(d)    Entire Agreement/Modification. This Agreement shall constitute the entire agreement between the parties hereto with respect to the subject matter hereof, and shall supersede all previous and contemporaneous oral and written negotiations, commitments, agreements and understandings related hereto. Any modification of this Agreement shall be effective only if it is in writing and signed by the parties to this Agreement. 

(e)    Applicable Law/ Jurisdiction.  The Agreement shall be governed by and interpreted in accordance with the laws of the State of California, excluding any laws or principles regarding conflict or choice of laws. Each party irrevocably agrees that any legal action, suit or proceeding in any way arising out of or in connection with this Agreement shall be submitted to the sole and exclusive jurisdiction of the state or federal courts of the State of California, County of Los Angeles, Central District. Each party waives, to the fullest extent it may effectively do so, any objection which it may now or hereafter have to the laying of venue of any such action, suit or proceeding and irrevocably waives any right to claim or assert forum non conveniens, and submits to the jurisdiction of such court in any action, suit or proceeding. 

(f)    Severability. Any provision of this Agreement which is deemed invalid, illegal or unenforceable in any jurisdiction shall, as to that jurisdiction and subject to this paragraph be ineffective to the extent of such invalidity, illegality or unenforceability, without affecting in any way the remaining provisions hereof in such jurisdiction or rendering that or any other provisions of this Agreement invalid, illegal, or unenforceable in any other jurisdiction. If any covenant should been deemed invalid, illegal or unenforceable because its scope is considered excessive, such covenant shall be modified so that the scope of the covenant is reduced only to the minimum extent necessary to render the modified covenant valid, legal and enforceable. 

(g)    Counterparts. This Agreement may be executed in a number of identical counterparts, each of which shall be deemed an original for all purposes. 

(h)    Interpretation. This Agreement has been jointly negotiated and prepared by the parties hereto, and any uncertainty or ambiguity in this Agreement shall not be interpreted against either party.

            (i)    Agreement Controlling. In the event of any conflict between a term or condition of this Agreement and a term or condition of any of the Company’s policies, policy guidelines, rules, procedures or directives, the term or condition of this Agreement shall control.

13.    Section 13 of the Agreement is deleted as of the Effective Date.

14.    Section 14 of the Agreement is deleted as of the Effective Date.

15.    Section 15 of the Agreement is deleted as of the Effective Date.

16.    Section 16 of the Agreement is deleted as of the Effective Date.

Subject to the foregoing, the Agreement remains in full force and effect, and the Company and Employee hereby ratify and affirm the Agreement in each and every respect.

[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties have executed this Sixteenth Amendment to be effective as of the date first above written.
	
		
	 
	 

	 
	 

	COMPANY:
KENNEDY-WILSON, INC.

	EMPLOYEE:
William J. McMorrow

	By:/s/Justin Enbody
Name: Justin Enbody
Title: Chief Financial Officer

	By: /s/ William J. McMorrow
Name: William J. McMorrow
Title: Chief Executive Officer

	 
	 

1

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