Document:

DOCSOC_1563612v1-Exhibit101toForm8-K2006Plan

ENDOLOGIX, INC. 
2006 STOCK INCENTIVE PLAN
     The 2006 STOCK INCENTIVE PLAN (the “Plan”), originally established and adopted March 31, 2006 (the “Effective Date”) by Endologix, Inc., a Delaware Corporation (the “Company”), is hereby amended and restated effective April 11, 2012.
ARTICLE 1. 
PURPOSES OF THE PLAN
     1.1 Purposes. The purposes of the Plan are (a) to enhance the Company’s ability to attract and retain the services of qualified employees, officers, directors, consultants and other service providers upon whose judgment, initiative and efforts the successful conduct and development of the Company’s business largely depends, and (b) to provide additional incentives to such persons or entities to devote their utmost effort and skill to the advancement and betterment of the Company, by providing them an opportunity to participate in the ownership of the Company and thereby have an interest in the success and increased value of the Company.
ARTICLE 2. 
DEFINITIONS
     For purposes of this Plan, the following terms shall have the meanings indicated:
     2.1 Administrator. “Administrator” means the Board or, if the Board delegates responsibility for any matter to the Committee, the term Administrator shall mean the Committee.
     2.2 Affiliated Company. “Affiliated Company” means:
          (a) with respect to Incentive Options, any “parent corporation” or “subsidiary corporation” of the Company, whether now existing or hereafter created or acquired, as those terms are defined in Sections 424(e) and 424(f) of the Code, respectively; and
          (b) with respect to Awards other than Incentive Options, any entity described in paragraph (a) of this Section 2.2 above, plus any other corporation, limited liability company (“LLC”), partnership or joint venture, whether now existing or hereafter created or acquired, with respect to which the Company beneficially owns more than fifty percent (50%) of: (1) the total combined voting power of all outstanding voting securities or (2) the capital or profits interests of an LLC, partnership or joint venture.
     2.3 Award. “Award” means an Option, a Restricted Stock award, a Stock Appreciation Right award, a Dividend Equivalents award, a Stock Payment award or a Restricted Stock Unit award granted to a Participant pursuant to the Plan.
     2.4 Award Agreement. “Award Agreement” means a written or electronic agreement entered into between the Company and a Participant setting forth the terms and conditions of an Award granted to a Participant.
     2.5 Board. “Board” means the Board of Directors of the Company.
     2.6 Change in Control. “Change in Control” shall mean:
          (a) The acquisition, directly or indirectly, in one transaction or a series of related transactions, by any person or group (within the meaning of Section 13(d)(3) of the Exchange Act) of the beneficial ownership of securities of the Company possessing more than fifty percent (50%) of the total combined voting power of all outstanding securities of the Company;
          (b) A merger or consolidation in which the Company is not the surviving entity, except for a transaction in which the holders of the outstanding voting securities of the Company immediately prior to such merger or consolidation hold as a result of holding Company securities prior to such transaction, in the aggregate, securities possessing more than fifty percent (50%) of the total combined voting power of all outstanding voting securities of 

the surviving entity (or the parent of the surviving entity) immediately after such merger or consolidation;
          (c) A reverse merger in which the Company is the surviving entity but in which the holders of the outstanding voting securities of the Company immediately prior to such merger hold, in the aggregate, securities possessing less than fifty percent (50%) of the total combined voting power of all outstanding voting securities of the Company or of the acquiring entity immediately after such merger;
          (d) The sale, transfer or other disposition (in one transaction or a series of related transactions) of all or substantially all of the assets of the Company, except for a transaction in which the holders of the outstanding voting securities of the Company immediately prior to such transaction(s) receive as a distribution with respect to securities of the Company, in the aggregate, securities possessing more than fifty percent (50%) of the total combined voting power of all outstanding voting securities of the acquiring entity immediately after such transaction(s); or
          (e) The approval by the stockholders of a plan or proposal for the liquidation or dissolution of the Company.
     2.7 Code. “Code” means the Internal Revenue Code of 1986, as amended from time to time.
     2.8 Committee. “Committee” means a committee of two or more members of the Board appointed to administer the Plan, as set forth in Section 10.1 hereof.
     2.9 Common Stock. “Common Stock” means the Common Stock of the Company, subject to adjustment pursuant to Section 4.2 hereof.
     2.10 Covered Employee. “Covered Employee” means the Chief Executive Officer of the Company (or the individual acting in a similar capacity) and the four (4) other individuals that are the highest compensated executive officers of the Company for the relevant taxable year for whom total compensation is required to be reported to stockholders under the Exchange Act.
     2.11 Disability. “Disability” means permanent and total disability as defined in Section 22(e)(3) of the Code. The Administrator’s determination of a Disability or the absence thereof shall be conclusive and binding on all interested parties.
     2.12 Dividend Equivalent. “Dividend Equivalent” means a right to receive payments equivalent to the amount of dividends paid by the Company to holders of shares of Common Stock with respect to the number of Dividend Equivalents held by the Participant. The Dividend Equivalent may provide for payment in Common Stock or in cash, or a fixed combination of Common Stock or cash, or the Administrator may reserve the right to determine the manner of payment at the time the Dividend Equivalent is payable. Dividend Equivalents may be granted only in connection with a grant of Restricted Stock Units and shall be subject to the vesting conditions that govern Restricted Stock Units as set forth in the applicable Restricted Stock Award Agreement.
     2.13 DRO. “DRO” means a domestic relations order as defined in the Code or Title I of the Employee Retirement Income Security Act of 1974, as amended, or the regulations thereunder.
     2.14 Effective Date. “Effective Date” means the date on which the Plan was originally adopted by the Board, as set forth on the first page hereof.
     2.15 Exchange Act. “Exchange Act” means the Securities and Exchange Act of 1934, as amended.
     2.16 Exercise Price. “Exercise Price” means the purchase price per share of Common Stock payable upon exercise of an Option.
     2.17 Fair Market Value. “Fair Market Value” on any given date means the value of one share of Common Stock, determined as follows:
          (a) If the Common Stock is then listed or admitted to trading on a Nasdaq market system or a stock exchange which reports closing sale prices, the Fair Market Value shall be the closing sale price on the date of valuation on such Nasdaq market system or principal stock exchange on which the Common Stock is then listed or admitted to 

trading, or, if no closing sale price is quoted on such day, then the Fair Market Value shall be the closing sale price of the Common Stock on such Nasdaq market system or such exchange on the next preceding day on which a closing sale price is reported.
          (b) If the Common Stock is not then listed or admitted to trading on a Nasdaq market system or a stock exchange which reports closing sale prices, the Fair Market Value shall be the average of the closing bid and asked prices of the Common Stock in the over-the-counter market on the date of valuation.
          (c) If neither (a) nor (b) is applicable as of the date of valuation, then the Fair Market Value shall be determined by the Administrator in good faith using any reasonable method of evaluation, which determination shall be conclusive and binding on all interested parties.
     2.18 Incentive Option. “Incentive Option” means any Option designated and qualified as an “incentive stock option” as defined in Section 422 of the Code.
     2.19 Incentive Option Agreement. “Incentive Option Agreement” means an Option Agreement with respect to an Incentive Option.
     2.20 NASD Dealer. “NASD Dealer” means a broker-dealer that is a member of the National Association of Securities Dealers, Inc.
     2.21 Non-Employee Director. “Non-Employee Director” shall have the meaning given in Section 5.11 below.
     2.22 Nonqualified Option. “Nonqualified Option” means any Option that is not an Incentive Option. To the extent that any Option designated as an Incentive Option fails in whole or in part to qualify as an Incentive Option, including, without limitation, for failure to meet the limitations applicable to a 10% Stockholder or because it exceeds the annual limit provided for in Section 5.7 below, it shall to that extent constitute a Nonqualified Option.
     2.23 Nonqualified Option Agreement. “Nonqualified Option Agreement” means an Option Agreement with respect to a Nonqualified Option.
     2.24 Option. “Option” means any option to purchase Common Stock granted pursuant to the Plan.
     2.25 Option Agreement. “Option Agreement” means the written agreement entered into between the Company and the Optionee with respect to an Option granted under the Plan.
     2.26 Optionee. “Optionee” means any Participant who holds an Option.
     2.27 Participant. “Participant” means an individual or entity that holds an Option, Stock Appreciation Right, shares of Stock, Restricted Stock, Restricted Stock Units, Stock Payment or Dividend Equivalents under the Plan.
     2.28 Performance Criteria. “Performance Criteria” means one or more of the following as established by the Administrator, which may be stated as a target percentage or dollar amount, a percentage increase over a base period percentage or dollar amount or the occurrence of a specific event or events:
          (a) Sales;
          (b) Operating income;
          (c) Pre-tax income;
          (d) Earnings before interest, taxes, depreciation and amortization;
          (e) Earnings per share of Common Stock on a fully-diluted basis;
          (f) Consolidated net income of the Company divided by the average consolidated common stockholders equity;

          (g) Cash and cash equivalents derived from either (i) net cash flow from operations, or (ii) net cash flow from operations, financings and investing activities;
          (h) Adjusted operating cash flow return on income;
          (i) Cost containment or reduction;
          (j) The percentage increase in the market price of the Common Stock over a stated period; 
          (k) Return on assets; 
          (l) New Company product introductions; 
          (m) Obtaining regulatory approvals for new or existing products; and 
          (n) Individual business objectives.
     2.29 Purchase Price. “Purchase Price” means the purchase price payable to purchase a share of Restricted Stock, or a Restricted Stock Unit, which, in the sole discretion of the Administrator, may be zero (0), subject to limitations under applicable law.
     2.30 Repurchase Right. “Repurchase Right” means the right of the Company to repurchase either unvested shares of Restricted Stock pursuant to Section 6.6 or to cancel unvested Restricted Stock Units pursuant to Section 7.6.
     2.31 Restricted Stock. “Restricted Stock” means shares of Common Stock issued pursuant to Article 6 hereof, subject to any restrictions and conditions as are established pursuant to such Article 6.
     2.32 Restricted Stock Award. “Restricted Stock Award” means either the issuance of Restricted Stock or the grant of Restricted Stock Units or Dividend Equivalents under the Plan.
     2.33 Restricted Stock Award Agreement. “Restricted Stock Award Agreement” means the written agreement entered into between the Company and a Participant evidencing the issuance of Restricted Stock or the grant of Restricted Stock Units or Dividend Equivalents under the Plan.
     2.34 Restricted Stock Unit. “Restricted Stock Unit” means the right to receive one share of Common Stock issued pursuant to Article 7 hereof, subject to any restrictions and conditions as are established pursuant to such Article 7.
     2.35 Service Provider. “Service Provider” means a consultant or other person or entity the Administrator authorizes to become a Participant in the Plan and who provides services to (i) the Company, (ii) an Affiliated Company, or (iii) any other business venture designated by the Administrator in which the Company or an Affiliated Company has a significant ownership interest.
     2.36 Stock Appreciation Right. “Stock Appreciation Right” means a contractual right granted to a Participant under Article 8 hereof entitling such Participant to receive a payment representing the difference between the base price per share of the right and the Fair Market Value of a share of Common Stock, payable either in cash or in shares of the Company’s Common Stock, at such time, and subject to such conditions, as are set forth in this Plan and the applicable Stock Appreciation Rights Award agreement.
     2.37 Stock Appreciation Rights Holder. “Stock Appreciation Rights Holder” means any Participant who holds a Stock Appreciation Right.
     2.38 Stock Payment. “Stock Payment” means a payment in the form of shares of Common Stock.
     2.39 10% Stockholder. “10% Stockholder” means a person who, as of a relevant date, owns or is deemed to own (by reason of the attribution rules applicable under Section 424(d) of the Code) stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or of an Affiliated Company.

ARTICLE 3.  
ELIGIBILITY
     3.1 Incentive Options. Only employees of the Company or of an Affiliated Company (including members of the Board if they are employees of the Company or of an Affiliated Company) are eligible to receive Incentive Options under the Plan.
     3.2 Nonqualified Options, Stock Appreciation Rights, Stock Payments and Restricted Stock Awards. Employees of the Company or of an Affiliated Company, members of the Board (whether or not employed by the Company or an Affiliated Company), and Service Providers are eligible to receive Nonqualified Options, Stock Appreciation Rights, Stock Payments or Restricted Stock Awards under the Plan.
     3.3 Section 162(m) Limitation. In no event shall any Participant be granted Options or Stock Appreciation Rights in any one calendar year pursuant to which the aggregate number of shares of Common Stock that may be acquired thereunder exceeds 200,000 shares, subject to adjustment as to the number and kind of shares pursuant to Section 4.2 hereof. Notwithstanding the foregoing, in connection with his or her initial service to the Company, the aggregate number of shares of Common Stock with respect to which Options or Stock Appreciation Rights may be granted to any Participant shall not exceed 300,000 shares of Common Stock during the calendar year which includes such individual’s initial service to the Company. The foregoing limitations shall be applied on an aggregate basis taking into account Awards granted to a Participant under the Plan as well as awards of the same type granted to a Participant under any other equity-based compensation plan of the Company or any Affiliated Company.
ARTICLE 4.  
PLAN SHARES
     4.1 Shares Subject to the Plan.
          (a) The number of shares of Common Stock that may be issued pursuant to Awards under the Plan shall be 8,514,478. The foregoing shall be subject to adjustment as to the number and kind of shares pursuant to Section 4.2 hereof. In the event that (a) all or any portion of any Option granted under the Plan can no longer under any circumstances be exercised, or (b) any shares of Common Stock subject to an Award Agreement are reacquired by the Company, the shares of Common Stock allocable to the unexercised portion of such Option or the shares so reacquired shall again be available for grant or issuance under the Plan.
          (b) The maximum number of shares of Common Stock that may be issued under the Plan as Incentive Options shall be 8,514,478 shares, subject to adjustment as to the number and kind of shares pursuant to Section 4.2 hereof.
          (c) The maximum number of shares of Common Stock that may be issued as Restricted Stock, Stock Payment awards, or subject to Restricted Stock Units shall be 1,250,000, subject to adjustment as to the number and kind of shares pursuant to Section 4.2 hereof.
     4.2 Changes in Capital Structure. In the event that the outstanding shares of Common Stock are hereafter increased or decreased or changed into or exchanged for a different number or kind of shares or other securities of the Company by reason of a recapitalization, stock split, reverse stock split, reclassification, stock dividend, or other change in the capital structure of the Company, then appropriate adjustments shall be made by the Administrator to the aggregate number and kind of shares subject to this Plan, the number and kind of shares and the price per share subject to outstanding Award Agreements and the limit on the number of shares under Section 3.3, all in order to preserve, as nearly as practical, but not to increase, the benefits to Participants.
ARTICLE 5.  
OPTIONS
     5.1 Grant of Stock Options. The Administrator shall have the right to grant, pursuant to this Plan, Options subject to such terms, restrictions and conditions as the Administrator may determine at the time of grant. Such conditions may include, but are not limited to, continued employment or the achievement of specified performance goals or objectives established by the Administrator with respect to one or more Performance Criteria.

     5.2 Option Agreements. Each Option granted pursuant to this Plan shall be evidenced by an Option Agreement which shall specify the number of shares subject thereto, vesting provisions relating to such Option, the Exercise Price per share, and whether the Option is an Incentive Option or Nonqualified Option. As soon as is practical following the grant of an Option, an Option Agreement shall be duly executed and delivered by or on behalf of the Company to the Optionee to whom such Option was granted. Each Option Agreement shall be in such form and contain such additional terms and conditions, not inconsistent with the provisions of this Plan, as the Administrator shall, from time to time, deem desirable.
     5.3 Exercise Price. The Exercise Price per share of Common Stock covered by each Option shall be determined by the Administrator, subject to the following: (a) the Exercise Price of an Incentive Option shall not be less than 100% of Fair Market Value on the date the Incentive Option is granted, (b) the Exercise Price of a Nonqualified Option shall not be less than 100% of Fair Market Value on the date the Nonqualified Option is granted, and (c) if the person to whom an Incentive Option is granted is a 10% Stockholder on the date of grant, the Exercise Price shall not be less than 110% of Fair Market Value on the date the Incentive Option is granted.
     However, an Option may be granted with an exercise price lower than that set forth in the preceding sentence if such Option is granted pursuant to an assumption or substitution for another option in a manner satisfying the provisions of Section 424 of the Code.
     5.4 Payment of Exercise Price. Payment of the Exercise Price shall be made upon exercise of an Option and may be made, in the discretion of the Administrator, subject to any legal restrictions, by: (a) cash; (b) check; (c) the surrender of shares of Common Stock owned by the Optionee (provided that shares acquired pursuant to the exercise of options granted by the Company must have been held by the Optionee for the requisite period necessary to avoid a charge to the Company’s earnings for financial reporting purposes), which surrendered shares shall be valued at Fair Market Value as of the date of such exercise; (d) the cancellation of indebtedness of the Company to the Optionee; (e) the waiver of compensation due or accrued to the Optionee for services rendered; (f) provided that a public market for the Common Stock exists, a “same day sale” commitment from the Optionee and an NASD Dealer whereby the Optionee irrevocably elects to exercise the Option and to sell a portion of the shares so purchased to pay for the Exercise Price and whereby the NASD Dealer irrevocably commits upon receipt of such shares to forward the Exercise Price directly to the Company; (g) provided that a public market for the Common Stock exists, a “margin” commitment from the Optionee and an NASD Dealer whereby the Optionee irrevocably elects to exercise the Option and to pledge the shares so purchased to the NASD Dealer in a margin account as security for a loan from the NASD Dealer in the amount of the Exercise Price, and whereby the NASD Dealer irrevocably commits upon receipt of such shares to forward the Exercise Price directly to the Company; or (h) any combination of the foregoing methods of payment or any other consideration or method of payment as shall be permitted by applicable law.
     5.5 Term and Termination of Options. The term and provisions for termination of each Option shall be as fixed by the Administrator, but no Option may be exercisable more than ten (10) years after the date it is granted.
     5.6 Vesting and Exercise of Options. Each Option shall vest and become exercisable in one or more installments, at such time or times and subject to such conditions, including without limitation the achievement of specified performance goals or objectives established with respect to one or more Performance Criteria, as shall be determined by the Administrator.
     5.7 Annual Limit on Incentive Options. To the extent required for “incentive stock option” treatment under Section 422 of the Code, the aggregate Fair Market Value (determined as of the time of grant) of the Common Stock with respect to which Incentive Options granted under this Plan and any other plan of the Company or any Affiliated Company become exercisable for the first time by an Optionee during any calendar year shall not exceed $100,000.
     5.8 Nontransferability of Options. Except as otherwise provided in this Section 5.8, Options shall not be assignable or transferable except by will, the laws of descent and distribution or pursuant to a DRO entered by a court in settlement of marital property rights, and during the life of the Optionee, Options shall be exercisable only by the Optionee. At the discretion of the Administrator and in accordance with rules it establishes from time to time, Optionees may be permitted to transfer some or all of their Nonqualified Options to one or more “family members,” 

which is not a “prohibited transfer for value,” provided that (i) the Optionee (or such Optionee’s estate or representative) shall remain obligated to satisfy all income or other tax withholding obligations associated with the exercise of such Nonqualified Option; (ii) the Optionee shall notify the Company in writing that such transfer has occurred and disclose to the Company the name and address of the “family member” or “family members” and their relationship to the Optionee, and (iii) such transfer shall be effected pursuant to transfer documents in a form approved by the Administrator. For purposes of the foregoing, the terms “family members” and “prohibited transfer for value” have the meaning ascribed to them in the General Instructions to Form S-8 (or any successor form) promulgated under the Securities Act of 1933, as amended.
     5.9 Repricing Prohibited. Subject to Section 4.2 hereof, without the prior approval of the Company’s stockholders, evidenced by a majority of votes cast, the Administrator shall not cause the cancellation, substitution or amendment of an Option Agreement that would have the effect of reducing the exercise price of such an Option previously granted under the Plan, or otherwise approve any modification to such an Option that would be treated as a “repricing” under the then applicable rules, regulations or listing requirements adopted by the Nasdaq Stock Market.
     5.10 Rights as a Stockholder. An Optionee or permitted transferee of an Option shall have no rights or privileges as a stockholder with respect to any shares covered by an Option until such Option has been duly exercised and certificates representing shares purchased upon such exercise have been issued to such person.
     5.11 Unvested Shares. The Administrator shall have the discretion to grant Options which are exercisable for unvested shares of Common Stock. Should the Optionee cease being an employee, officer or director of the Company while owning such unvested shares, the Company shall have the right to repurchase, at the exercise price paid per share, any or all of those unvested shares. The terms upon which such repurchase right shall be exercisable (including the period and procedure for exercise and the appropriate vesting schedule for the purchased shares) shall be established by the Administrator and set forth in the document evidencing such repurchase right.
     5.12 Option Grants to Non-Employee Directors.
          (a) Automatic Grants. Each director of the Company who is not an employee or executive officer of the Company (a “Non-Employee Director”) shall automatically be granted (i) a Nonqualified Option to purchase 50,000 shares of the Common Stock upon commencement of service as a director of the Company, and (ii) a Nonqualified Option to purchase 25,000 shares of Common Stock at each annual meeting of the Company’s stockholders (provided such individual has served as a Non-Employee Director for at least six (6) months prior to such meeting); provided, however, that the Chairman of the Board shall automatically be granted a Nonqualified Option to purchase a maximum of 35,000 shares of Common Stock at each annual meeting of the Company’s stockholders, with the exact amount determined by the Administrator. All such Non-Qualified Options shall be subject to the terms and conditions of this Plan, including Section 5.11 above.
          (b) Vesting of Options Granted to Non-Employee Directors. Each initial Nonqualified Option granted to a newly-elected or appointed Non-Employee Director shall vest, in a series of four (4) successive equal annual installments over the Non-Employee Director’s period of continued service as a director, with the first such installment to vest upon the Non-Employee Director’s completion of one (1) year of service as a Non-Employee Director measured from the Nonqualified Option grant date. Each annual Nonqualified Option granted to continuing Non-Employee Directors shall vest, upon the Non-Employee Director’s completion of one (1) year of service as a Non-Employee Director measured from the Nonqualified Option grant date.
ARTICLE 6.  
RESTRICTED STOCK
     6.1 Issuance of Restricted Stock. The Administrator shall have the right to issue pursuant to this Plan and at a Purchase Price determined by the Administrator, shares of Common Stock subject to such terms, restrictions and conditions as the Administrator may determine at the time of grant. Such conditions may include, but are not limited to, continued employment or the achievement of specified performance goals or objectives established by the Administrator with respect to one or more Performance Criteria, which require the Administrator to certify in writing whether and the extent to which such performance goals were achieved before such restrictions are 

considered to have lapsed.
     6.2 Restricted Stock Award Agreements. A Participant shall have no rights with respect to the shares of Restricted Stock covered by a Restricted Stock Award Agreement until the Participant has paid the full Purchase Price, if any, to the Company in the manner set forth in Section 6.3(b) hereof and has executed and delivered to the Company the applicable Restricted Stock Award Agreement. Each Restricted Stock Award Agreement shall be in such form, and shall set forth the Purchase Price, if any, and such other terms, conditions and restrictions of the Restricted Stock Award Agreement, not inconsistent with the provisions of this Plan, as the Administrator shall, from time to time, deem desirable. Each such Restricted Stock Award Agreement may be different from each other Restricted Stock Award Agreement.
     6.3 Purchase Price.
          (a) Amount. Restricted Stock may be issued to Participants for such consideration as is determined by the Administrator in its sole discretion, including no consideration or such minimum consideration as may be required by applicable law.
          (b) Payment. Payment of the Purchase Price, if any, may be made, in the discretion of the Administrator, subject to any legal restrictions, by: (a) cash; (b) check; (c) the surrender of shares of Common Stock owned by the Participant (provided that shares acquired pursuant to the exercise of options granted by the Company shall have been held by the Participant for the requisite period necessary to avoid a charge to the Company’s earnings for financial reporting purposes), which surrendered shares shall be valued at Fair Market Value as of the date of such acceptance; (d) the cancellation of indebtedness of the Company to the Participant; (e) the waiver of compensation due or accrued to the Participant for services rendered; or (f) any combination of the foregoing methods of payment or any other consideration or method of payment as shall be permitted by applicable law. If payment for shares of Restricted Stock is made by promissory note, any cash dividends paid with respect to the Restricted Stock may be applied, in the discretion of the Administrator, to repayment of such note.
     6.4 Vesting of Restricted Stock. The Restricted Stock Award Agreement shall specify the date or dates, the performance goals, if any, established by the Administrator with respect to one or more Performance Criteria that must be achieved, and any other conditions on which the Restricted Stock may vest.
     6.5 Rights as a Stockholder. Upon complying with the provisions of Sections 6.2 and 6.3 hereof, a Participant shall have the rights of a stockholder with respect to the Restricted Stock acquired pursuant to a Restricted Stock Award Agreement, including voting and dividend rights, subject to the terms, restrictions and conditions as are set forth in such Restricted Stock Award Agreement. Unless the Administrator shall determine otherwise, certificates evidencing shares of Restricted Stock shall remain in the possession of the Company until such shares have vested in accordance with the terms of the Restricted Stock Award Agreement.
     6.6 Restrictions. Shares of Restricted Stock may not be sold, pledged or otherwise encumbered or disposed of and shall not be assignable or transferable except by will, the laws of descent and distribution or pursuant to a DRO entered by a court in settlement of marital property rights, except as specifically provided in the Restricted Stock Award Agreement or as authorized by the Administrator. In the event of termination of a Participant’s employment, service as a director of the Company or Service Provider status for any reason whatsoever (including death or disability), the Restricted Stock Award Agreement may provide, in the discretion of the Administrator, that the Company may, at the discretion of the Administrator, exercise a Repurchase Right to repurchase at the original Purchase Price the shares of Restricted Stock that have not vested as of the date of termination.
ARTICLE 7. 
RESTRICTED STOCK UNITS
     7.1 Grants of Restricted Stock Units and Dividend Equivalents. The Administrator shall have the right to grant, pursuant to this Plan, Restricted Stock Units and Dividend Equivalents, subject to such terms, restrictions and conditions as the Administrator may determine at the time of grant. Such conditions may include, but are not limited to, continued employment or the achievement of specified performance goals or objectives established by the Administrator with respect to one or more Performance Criteria, which require the Administrator to certify in 

writing whether and the extent to which such performance goals were achieved before such restrictions are considered to have lapsed.
     7.2 Restricted Stock Unit Agreements. A Participant shall have no rights with respect to the Restricted Stock Units or Dividend Equivalents covered by a Restricted Stock Award Agreement until the Participant has executed and delivered to the Company the applicable Restricted Stock Award Agreement. Each Restricted Stock Award Agreement shall be in such form, and shall set forth the Purchase Price, if any, and such other terms, conditions and restrictions of the Restricted Stock Award Agreement, not inconsistent with the provisions of this Plan, as the Administrator shall, from time to time, deem desirable. Each such Restricted Stock Award Agreement may be different from each other Restricted Stock Award Agreement.
     7.3 Purchase Price.
          (a) Amount. Restricted Stock Units may be issued to Participants for such consideration as is determined by the Administrator in its sole discretion, including no consideration or such minimum consideration as may be required by applicable law.
          (b) Payment. Payment of the Purchase Price, if any, may be made, in the discretion of the Administrator, subject to any legal restrictions, by: (a) cash; (b) check; (c) the surrender of shares of Common Stock owned by the Participant (provided that shares acquired pursuant to the exercise of options granted by the Company shall have been held by the Participant for the requisite period necessary to avoid a charge to the Company’s earnings for financial reporting purposes), which surrendered shares shall be valued at Fair Market Value as of the date of such acceptance; (d) the cancellation of indebtedness of the Company to the Participant; (e) the waiver of compensation due or accrued to the Participant for services rendered; or (f) any combination of the foregoing methods of payment or any other consideration or method of payment as shall be permitted by applicable law.
     7.4 Vesting of Restricted Stock Units and Dividend Equivalents. The Restricted Stock Award Agreement shall specify the date or dates, the performance goals, if any, established by the Administrator with respect to one or more Performance Criteria that must be achieved, and any other conditions on which the Restricted Stock Units and Dividend Equivalents may vest.
     7.5 Rights as a Stockholder. Holders of Restricted Stock Units shall not be entitled to vote or to receive dividends unless or until they become owners of the shares of Common Stock pursuant to their Restricted Stock Award Agreement and the terms and conditions of the Plan.
     7.6 Restrictions. Restricted Stock Units and Dividend Equivalents may not be sold, pledged or otherwise encumbered or disposed of and shall not be assignable or transferable except by will, the laws of descent and distribution or pursuant to a DRO entered by a court in settlement of marital property rights, except as specifically provided in the Restricted Stock Award Agreement or as authorized by the Administrator. In the event of termination of a Participant’s employment, service as a director of the Company or Service Provider status for any reason whatsoever (including death or disability), the Restricted Stock Award Agreement may provide that all Restricted Stock Units and Dividend Equivalents that have not vested as of such date shall be automatically forfeited by the Participant. However, if, with respect to such unvested Restricted Stock Units the Participant paid a Purchase Price, the Administrator shall have the right, exercisable at the discretion of the Administrator, to exercise a Repurchase Right to cancel such unvested Restricted Stock Units upon payment to the Participant of the original Purchase Price. The Participant shall forfeit such unvested Restricted Stock Units upon the Administrator’s exercise of such right.
ARTICLE 8. 
STOCK APPRECIATION RIGHTS
     8.1 Grant of Stock Appreciation Rights. A Stock Appreciation Right may be granted to any Participant selected by the Administrator. Stock Appreciation Rights may be granted on a basis that allows for the exercise of the right by the Participant or that provides for the automatic payment of the right upon a specified date or event. Stock Appreciation Rights shall be exercisable or payable at such time or times and upon conditions as may be approved by the Administrator, provided that the Administrator may accelerate the exercisability or payment of a Stock Appreciation Right at any time.

     8.2 Vesting of Stock Appreciation Rights. Each Stock Appreciation Right shall vest and become exercisable in one or more installments at such time or times and subject to such conditions, including without limitation the achievement of specified performance goals or objectives established with respect to one or more Performance Criteria, as shall be determined by the Administrator. A Stock Appreciation Right will be exercisable or payable at such time or times as determined by the Administrator, provided that the maximum term of a Stock Appreciation Right shall be ten (10) years from the date of grant. The base price of a Stock Appreciation Right shall be determined by the Administrator in its sole discretion; provided, however, that the base price per share of any Stock Appreciation Right shall not be less than one hundred percent (100%) of the Fair Market Value of the shares of Common Stock on the date of grant.
     8.3 Payment of Stock Appreciation Rights. A Stock Appreciation Right will entitle the holder, upon exercise or other payment of the Stock Appreciation Right, as applicable, to receive an amount determined by multiplying: (i) the excess of the Fair Market Value of a share of Common Stock on the date of exercise or payment of the Stock Appreciation Right over the base price of such Stock Appreciation Right, by (ii) the number of shares as to which such Stock Appreciation Right is exercised or paid. Payment of the amount determined under the foregoing shall be made either in cash or in shares of Common Stock, as determined by the Administrator in its discretion. If payment is made in shares of Common Stock, such shares shall be valued at their Fair Market Value on the date of exercise or payment, subject to applicable tax withholding requirements and to such conditions, as are set forth in this Plan and the applicable Stock Appreciation Rights Award Agreement.
     8.4 Nontransferability of Stock Appreciation Rights. Except as otherwise provided in this Section 8.4, Stock Appreciation Rights shall not be assignable or transferable except by will, the laws of descent and distribution or pursuant to a DRO entered by a court in settlement of marital property rights, and during the life of the Stock Appreciation Rights Holder, Stock Appreciation Rights shall be exercisable only by the Stock Appreciation Rights Holder. At the discretion of the Administrator and in accordance with rules it establishes from time to time, Stock Appreciation Rights Holders may be permitted to transfer some or all of their Stock Appreciation Rights to one or more “family members,” which is not a “prohibited transfer for value,” provided that (i) the Stock Appreciation Rights Holder (or such holder’s estate or representative) shall remain obligated to satisfy all income or other tax withholding obligations associated with the exercise of such Stock Appreciation Right; (ii) the Stock Appreciation Rights Holder shall notify the Company in writing that such transfer has occurred and disclose to the Company the name and address of the “family member” or “family members” and their relationship to the holder, and (iii) such transfer shall be effected pursuant to transfer documents in a form approved by the Administrator. For purposes of the foregoing, the terms “family members” and “prohibited transfer for value” have the meaning ascribed to them in the General Instructions to Form S-8 (or any successor form) promulgated under the Securities Act of 1933, as amended.
ARTICLE 9. 
STOCK PAYMENT AWARDS
     9.1 Grant of Stock Payment Awards. A Stock Payment award may be granted to any Participant selected by the Administrator. A Stock Payment award may be granted for past services, in lieu of bonus or other cash compensation, as directors’ compensation or for any other valid purpose as determined by the Administrator. A Stock Payment award granted to a Participant represents shares of Common Stock that are issued without restrictions on transfer and other incidents of ownership and free of forfeiture conditions, except as otherwise provided in the Plan and the Award Agreement. The Administrator may, in connection with any Stock Payment award, provide that no payment is required, or require the payment by the Participant of a specified purchase price.
     9.2 Rights as Stockholder. Subject to the foregoing provisions of this Article 9 and the applicable Award Agreement, upon the issuance of the Common Stock under a Stock Payment award the Participant shall have all rights of a stockholder with respect to the shares of Common Stock, including the right to vote the shares and receive all dividends and other distributions paid or made with respect thereto.
ARTICLE 10. 
ADMINISTRATION OF THE PLAN
     10.1 Administrator. Authority to control and manage the operation and administration of the Plan shall be 

vested in the Board, which may delegate such responsibilities in whole or in part to a Committee. Members of the Committee may be appointed from time to time by, and shall serve at the pleasure of, the Board. The Board may limit the composition of the Committee to those persons necessary to comply with the requirements of Section 162(m) of the Code and Section 16 of the Exchange Act.
     10.2 Powers of the Administrator. In addition to any other powers or authority conferred upon the Administrator elsewhere in the Plan or by law, the Administrator shall have full power and authority: (a) to determine the persons to whom, and the time or times at which, Awards shall be granted, the number of shares to be represented by each Award, and the consideration to be received by the Company upon the exercise and/or vesting of such Awards; (b) to interpret the Plan; (c) to create, amend or rescind rules and regulations relating to the Plan; (d) to determine the terms, conditions and restrictions contained in, and the form of, Award Agreements; (e) to determine the identity or capacity of any persons who may be entitled to exercise a Participant’s rights under any Award Agreement under the Plan; (f) to correct any defect or supply any omission or reconcile any inconsistency in the Plan or in any Award Agreement; (g) to accelerate the vesting of any Award or release or waive any repurchase rights of the Company with respect to Restricted Stock Awards; (h) to extend the expiration date of any Option; (i) to amend outstanding Award Agreements to provide for, among other things, any change or modification which the Administrator could have included in the original Agreement or in furtherance of the powers provided for herein; and (j) to make all other determinations necessary or advisable for the administration of the Plan, but only to the extent not contrary to the express provisions of the Plan. Any action, decision, interpretation or determination made in good faith by the Administrator in the exercise of its authority conferred upon it under the Plan shall be final and binding on the Company and all Participants. To the extent permitted by applicable law, the Administrator may from time to time delegate to one or more members of the Board or one or more officers of the Company the authority to grant or amend Awards to Participants other than (a) senior executives of the Company who are subject to Section 16 of the Exchange Act, (b) Covered Employees, or (c) officers of the Company (or members of the Board) to whom authority to grant or amend Awards has been delegated hereunder. Any delegation hereunder shall be subject to the restrictions and limits that the Administrator specifies at the time of such delegation, and the Administrator may at any time rescind the authority so delegated or appoint a new delegatee.
     10.3 Limitation on Liability. No employee of the Company or member of the Board or Administrator shall be subject to any liability with respect to duties under the Plan unless the person acts fraudulently or in bad faith. To the extent permitted by law, the Company shall indemnify each member of the Board or Administrator, and any employee of the Company with duties under the Plan, who was or is a party, or is threatened to be made a party, to any threatened, pending or completed proceeding, whether civil, criminal, administrative or investigative, by reason of such person’s conduct in the performance of duties under the Plan.
ARTICLE 11.  
CHANGE IN CONTROL
     11.1 Impact of Change in Control on Awards Under Plan. In order to preserve a Participant’s rights in the event of a Change in Control of the Company:
          (a) The Administrator shall have the discretion to provide in each Award Agreement the terms and conditions that relate to (i) vesting of such Award in the event of a Change in Control, and (ii) assumption of such Awards or issuance of comparable securities under an incentive program in the event of a Change in Control. The aforementioned terms and conditions may vary in each Award Agreement.
          (b) If the terms of an outstanding Option provide for accelerated vesting in the event of a Change in Control, or to the extent that a Option is vested and not yet exercised, the Administrator in its discretion may provide, in connection with the Change in Control transaction, for the purchase or exchange of each Option for an amount of cash or other property having a value equal to the difference (or “spread”) between: (x) the value of the cash or other property that the Participant would have received pursuant to the Change in Control transaction in exchange for the shares issuable upon exercise of the Option had the Option been exercised immediately prior to the Change in Control, and (y) the Exercise Price of the Option.
          (c) If the terms of an outstanding Stock Appreciation Right provide for accelerated vesting in the event of a 

Change in Control, or to the extent that a Stock Appreciation Right is vested and not yet exercised, the Administrator in its discretion may provide, in connection with the Change in Control transaction, for the purchase or exchange of each Stock Appreciation Right for an amount of cash or other property having a value equal to the value of the cash or other property that the Participant would have received pursuant to the Change in Control transaction in exchange for the shares issuable upon exercise of the Stock Appreciation Right had the Stock Appreciation Right been exercised immediately prior to the Change in Control.
          (d) Outstanding Options and Stock Appreciation Rights shall terminate and cease to be exercisable upon consummation of a Change in Control except to the extent that the Options or Stock Appreciation Rights are assumed by the successor entity (or parent thereof) pursuant to the terms of the Change in Control transaction.
          (e) The Administrator shall cause written notice of a proposed Change in Control transaction to be given to Participants not less than fifteen (15) days prior to the anticipated effective date of the proposed transaction.
ARTICLE 12. 
AMENDMENT AND TERMINATION OF THE PLAN
     12.1 Amendments. The Board may from time to time alter, amend, suspend or terminate the Plan in such respects as the Board may deem advisable. No such alteration, amendment, suspension or termination shall be made which shall substantially affect or impair the rights of any Participant under an outstanding Award Agreement without such Participant’s consent. The Board may alter or amend the Plan to comply with requirements under the Code relating to Incentive Options or other types of options which give Optionees more favorable tax treatment than that applicable to Options granted under this Plan as of the date of its adoption. Upon any such alteration or amendment, any outstanding Option granted hereunder may, if the Administrator so determines and if permitted by applicable law, be subject to the more favorable tax treatment afforded to an Optionee pursuant to such terms and conditions.
     12.2 Plan Termination. Unless the Plan shall theretofore have been terminated, the Plan shall terminate on the tenth (10th) anniversary of the Effective Date and no Awards may be granted under the Plan thereafter, but Awards and Award Agreements then outstanding shall continue in effect in accordance with their respective terms.
ARTICLE 13.  
TAX WITHHOLDING
     13.1 Tax Withholding. The Participant shall be responsible for payment of any taxes or similar charges required by law to be withheld from an Award or an amount paid in satisfaction of an Award, which shall be paid by the Participant on or prior to the payment or other event that results in taxable income in respect of an Award. The Award Agreement may specify the manner in which the withholding obligation shall be satisfied with respect to the particular type of Award.
ARTICLE 14.  
MISCELLANEOUS
     14.1 Benefits Not Alienable. Other than as provided above, benefits under the Plan may not be assigned or alienated, whether voluntarily or involuntarily. Any unauthorized attempt at assignment, transfer, pledge or other disposition shall be without effect.
     14.2 Awards subject to Code Section 409A. Any Award that constitutes, or provides for, a deferral of compensation subject to Section 409A of the Code (a “Section 409A Award”) shall satisfy the requirements of Section 409A of the Code, to the extent applicable as determined by the Administrator. The Award Agreement with respect to a Section 409A Award shall incorporate the terms and conditions required by Section 409A of the Code. If any deferral of compensation is to be permitted in connection with a 409A Award, the Administrator shall establish rules and procedures relating to such deferral in a manner intended to comply with the requirements of Section 409A of the Code, including, without limitation, the time when an election to defer may be made, the time period of the deferral and the events that would result in payment of the deferred amount, the interest or other earnings attributable to the deferral and the method of funding, if any, attributable to the deferred amount.

     14.3 No Enlargement of Employee Rights. This Plan is strictly a voluntary undertaking on the part of the Company and shall not be deemed to constitute a contract between the Company and any Participant to be consideration for, or an inducement to, or a condition of, the employment of any Participant. Nothing contained in the Plan shall be deemed to give the right to any Participant to be retained as an employee of the Company or any Affiliated Company or to interfere with the right of the Company or any Affiliated Company to discharge any Participant at any time.
     14.4 Application of Funds. The proceeds received by the Company from the sale of Common Stock pursuant to Option Agreements and Restricted Stock Award Agreements, except as otherwise provided herein, will be used for general corporate purposes.
     14.5 Unfunded Plan. The adoption of the Plan and any reservation of shares of Common Stock or cash amounts by the Company to discharge its obligations hereunder shall not be deemed to create a trust or other funded arrangement. Except upon the issuance of Common Stock pursuant to an Award, any rights of a Participant under the Plan shall be those of a general unsecured creditor of the Company, and neither a Participant nor the Participant’s permitted transferees or estate shall have any other interest in any assets of the Company by virtue of the Plan.
     14.6 Annual Reports. During the term of this Plan, the Company will furnish to each Participant who does not otherwise receive such materials, copies of all reports, proxy statements and other communications that the Company distributes generally to its stockholders.Exhibit 10.1

 

FORM OF TRANSITION SERVICES AGREEMENT

 

by and between

 

ALEXANDER & BALDWIN HOLDINGS, INC.

 

and

 

A & B II, INC.

 

dated as of

 

June [  ], 2012

 

 

TABLE OF CONTENTS

 

ARTICLE I

 

DEFINITIONS

 

	
Section 1.1
    	
Certain Definitions
    	
1
    
	
Section 1.2
    	
Interpretation
    	
2
    
	
 
    	
 
    	
 
    
	
ARTICLE II
    
	
 
    
	
SERVICES
    
	
 
    	
 
    	
 
    
	
Section 2.1
    	
A&B Services
    	
3
    
	
Section 2.2
    	
Matson Services
    	
4
    
	
Section 2.3
    	
Additional Service
    	
4
    
	
Section 2.4
    	
Modifications to Services
    	
4
    
	
Section 2.5
    	
No Violations
    	
4
    
	
Section 2.6
    	
Third-Party Providers
    	
5
    
	
Section 2.7
    	
Independent Contractor
    	
5
    
	
Section 2.8
    	
Employees and Representatives
    	
5
    
	
Section 2.9
    	
Access
    	
5
    
	
Section 2.10
    	
Service Coordinators; Disputes
    	
5
    
	
 
    	
 
    	
 
    
	
ARTICLE III
    
	
 
    
	
PAYMENT
    
	
 
    	
 
    	
 
    
	
Section 3.1
    	
Pricing
    	
6
    
	
Section 3.2
    	
Taxes
    	
6
    
	
Section 3.3
    	
Billing and Payment
    	
6
    
	
Section 3.4
    	
Budgeting and Accounting
    	
6
    
	
 
    	
 
    	
 
    
	
ARTICLE IV
    
	
 
    
	
DISCLAIMER OF REPRESENTATIONS AND WARRANTIES
    
	
 
    	
 
    	
 
    
	
Section 4.1
    	
DISCLAIMER
    	
6
    
	
Section 4.2
    	
AS IS; WHERE IS
    	
7
    
	
 
    	
 
    	
 
    
	
ARTICLE V
    
	
 
    
	
RELEASE AND INDEMNIFICATION
    
	
 
    	
 
    	
 
    
	
Section 5.1
    	
Release and Indemnification by New A&B
    	
7
    
	
Section 5.2
    	
Release and Indemnification by Holdings
    	
7
    
	
Section 5.3
    	
Indemnification Procedure; Other Rights and Limitations
    	
7
    

 

i

 

	
ARTICLE VI
    
	
 
    
	
FORCE MAJEURE
    
	
 
    	
 
    	
 
    
	
Section 6.1
    	
General
    	
7
    
	
Section 6.2
    	
Notice
    	
8
    
	
Section 6.3
    	
Subcontractors; Fees
    	
8
    
	
Section 6.4
    	
Limitations
    	
8
    
	
 
    	
 
    	
 
    
	
ARTICLE VII
    
	
 
    
	
TERM
    
	
 
    	
 
    	
 
    
	
Section 7.1
    	
Term of Services
    	
8
    
	
Section 7.2
    	
Term of Agreement
    	
9
    
	
 
    	
 
    	
 
    
	
ARTICLE VIII
    
	
 
    
	
CONFIDENTIALITY
    
	
 
    	
 
    	
 
    
	
Section 8.1
    	
Confidentiality
    	
9
    
	
Section 8.2
    	
System Security
    	
9
    
	
 
    	
 
    	
 
    
	
ARTICLE IX
    
	
 
    
	
MISCELLANEOUS
    
	
 
    	
 
    	
 
    
	
Section 9.1
    	
Further Assurances
    	
10
    
	
Section 9.2
    	
Amendments and Waivers
    	
10
    
	
Section 9.3
    	
Late Payments
    	
10
    
	
Section 9.4
    	
Entire Agreement
    	
10
    
	
Section 9.5
    	
Third-Party Beneficiaries
    	
11
    
	
Section 9.6
    	
Notices
    	
11
    
	
Section 9.7
    	
Counterparts; Electronic Delivery
    	
11
    
	
Section 9.8
    	
Severability
    	
12
    
	
Section 9.9
    	
Assignability; Binding Effect
    	
12
    
	
Section 9.10
    	
Governing Law
    	
12
    
	
Section 9.11
    	
Construction
    	
12
    
	
Section 9.12
    	
Performance
    	
12
    
	
Section 9.13
    	
Title and Headings
    	
12
    
	
Section 9.14
    	
Exhibits
    	
13
    
	
 
    	
 
    	
 
    
	
Exhibit A — A&B Services
    	
 
    
	
Exhibit B — Matson Services
    	
 
    

 

ii

 

TRANSITION SERVICES AGREEMENT

 

THIS TRANSITION SERVICES AGREEMENT (this “Agreement”) is entered into as of June [  ], 2012, by and between Alexander & Baldwin Holdings, Inc., a Hawaii corporation (“Holdings”), and A & B II, Inc., a Hawaii corporation and a direct, wholly owned subsidiary of Holdings (“New A&B”).  Holdings and New A&B are sometimes referred to herein individually as a “Party,” and collectively as the “Parties.”

 

RECITALS

 

WHEREAS, Holdings, acting through its direct and indirect Subsidiaries, owns and conducts the A&B Businesses and the Matson Businesses;

 

WHEREAS, Holdings and New A&B entered into a Separation and Distribution Agreement, dated as of the date hereof (the “Separation Agreement”), pursuant to which Holdings will be separated into two independent publicly traded companies: (a) New A&B which, following consummation of the transactions contemplated by the Separation Agreement, will own and conduct the A&B Businesses and (b) Holdings which, following the consummation of the transactions contemplated by the Separation Agreement, will own and conduct the Matson Businesses;

 

WHEREAS, the execution of this Agreement by the Parties is a condition precedent to the consummation of the transactions contemplated by the Separation Agreement; and

 

WHEREAS, except as otherwise defined herein, capitalized terms used in this Agreement shall have the same meanings given to such terms in the Separation Agreement.

 

NOW, THEREFORE, in consideration of the forgoing and the mutual agreements contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:

 

ARTICLE I

 

DEFINITIONS

 

Section 1.1                                      Certain Definitions.  As used in this Agreement (including in the Exhibits to this Agreement):

 

“A&B Services” means the Services identified on Exhibit A.

 

“Additional A&B Services” has the meaning set forth in Section 2.3(b).

 

“Additional Matson Services” has the meaning set forth in Section 2.3(a).

 

 

“Additional Third-Party Providers” has the meaning set forth in Section 2.6(b).

 

“Adjusted Hourly Rate” for an employee means such employee’s Hourly Rate multiplied by 1.10.

 

“Agreement” has the meaning set forth in the preamble to this Agreement.

 

“GET” has the meaning set forth in Section 3.2.

 

“Hourly Rate” for an employee during a given pay period means such employee’s salary and fully burdened benefits for such pay period divided by the number of hours in such pay period assuming no holidays or other work absences occur during such pay period.

 

“Known Third-Party Providers” has the meaning set forth in Section 2.6(b).

 

“Matson Services” means the Services identified on Exhibit B.

 

“Party” or “Parties” has the meaning set forth in the preamble to this Agreement.

 

“Providing Party” means, with respect to a Service, the Party providing such Service pursuant to this Agreement.

 

“Receiving Party” means, with respect to a Service, the Party receiving such Service pursuant to this Agreement.

 

“Security Regulations” has the meaning set forth in Section 8.2(a).

 

“Service Coordinator” has the meaning set forth in Section 2.10.

 

“Services” means the A&B Services or the Matson Services, individually, or the A&B Services and the Matson Services, collectively, as the context may require.

 

“Systems” has the meaning set forth in Section 8.2(a).

 

“Term” has the meaning set forth in Section 7.2.

 

“Third-Party Products and Services” has the meaning set forth in Section 2.6(a).

 

“Third-Party Providers” has the meaning set forth in Section 2.6(a).

 

Section 1.2                                      Interpretation.  In this Agreement, unless the context clearly indicates otherwise:

 

(a)                        words used in the singular include the plural and words used in the plural include the singular;

 

(b)                        the words “include,” “includes” and “including” shall be deemed to be followed by the words “without limitation”;

 

2

 

(c)                        the word “or” shall have the inclusive meaning represented by the phrase “and/or”;

 

(d)                       relative to the determination of any period of time, “from” means “from and including,” “to” means “to but excluding” and “through” means “through and including”;

 

(e)                        accounting terms used herein shall have the meanings historically ascribed to them by Holdings and its Subsidiaries, including A&B and Matson, in its and their internal accounting and financial policies and procedures in effect immediately prior to the date of this Agreement;

 

(f)                          reference to any agreement, instrument or other document means such agreement, instrument or other document as amended, supplemented and modified from time to time to the extent permitted by the provisions thereof and by this Agreement;

 

(g)                       reference to any Law means such Law (including any and all rules and regulations promulgated thereunder) as amended, modified, codified or reenacted, in whole or in part, and in effect at the time of determining compliance or applicability;

 

(h)                       references to any Person include such Person’s successors and assigns but, if applicable, only if such successors and assigns are permitted by this Agreement; a reference to such Person’s “Subsidiaries” shall be deemed to mean such Person’s Subsidiaries following the Distribution and any reference to a third party shall be deemed to mean a Person who is not a Party or a Subsidiary of a Party;

 

(i)                           if there is any conflict between the provisions of the main body of this Agreement and the Exhibits hereto, the provisions of the main body of this Agreement shall control unless explicitly stated otherwise in such Exhibit;

 

(j)                           if there is any conflict between the provisions of this Agreement and the Separation Agreement, the provisions of this Agreement shall control (but only with respect to the subject matter hereof) unless explicitly stated otherwise herein; and

 

(k)                        any portion of this Agreement obligating a Party to take any action or refrain from taking any action, as the case may be, shall mean that such Party shall also be obligated to cause its relevant Subsidiaries to take such action or refrain from taking such action, as the case may be.

 

ARTICLE II

 

SERVICES

 

Section 2.1                                      A&B Services.  New A&B shall use reasonable best efforts to provide (or to cause another applicable member of the A&B Group to provide) to Holdings (or another applicable member of the Matson Group) each A&B Service in a manner consistent with the manner in which such A&B Service (a) was provided to Holdings (or such other applicable 

 

3

 

member of the Matson Group) prior to the Distribution Date by (i) New A&B (or such other applicable member of the A&B Group) or (ii) any Person who was an employee of Holdings prior to the Distribution Date who becomes an employee of New A&B (or another member of the A&B Group) after the Distribution Date and (b) is provided after the Distribution Date by New A&B (or such other applicable member of the A&B Group) for its own business.

 

Section 2.2                                      Matson Services.  Holdings shall use reasonable best efforts to provide (or to cause another applicable member of the Matson Group to provide) to New A&B (or another applicable member of the A&B Group) each Matson Service in a manner consistent with the manner in which such Matson Service (a) was provided to New A&B (or such other applicable member of the A&B Group)  prior to the Distribution Date by Holdings (or such other applicable member of the Matson Group) and (b) is provided after the Distribution Date by Holdings (or such other applicable member of the Matson Group) for its own business.

 

Section 2.3                                      Additional Service.

 

(a)                        If New A&B reasonably determines that additional transition services (not listed on Exhibit B) are necessary to conduct the A&B Businesses after the Distribution Date, then New A&B shall provide written notice thereof to Holdings.  If any member of the Matson Group (including any employee of any member of the Matson Group) performed such services for Holdings prior to the Distribution Date (“Additional Matson Services”), the Parties will negotiate in good faith an amendment to Exhibit B setting forth the Additional Matson Services and the terms and conditions (including the fees payable by New A&B) for such Additional Matson Services unless such member of the Matson Group is not reasonably able to perform such Additional Matson Services.

 

(b)                       If Holdings reasonably determines that additional transition services (not listed on Exhibit A) are necessary to conduct the Matson Businesses after the Distribution Date, then Holdings shall provide written notice thereof to New A&B.  If any member of the A&B Group (or any employee of any member of the A&B Group) performed such services for Holdings prior to the Distribution Date (“Additional A&B Services”), the Parties will negotiate in good faith an amendment to Exhibit A setting forth the Additional A&B Services and the terms and conditions (including the fees payable by Holdings) for such Additional A&B Services unless such member of the A&B Group is not reasonably able to perform such Additional A&B Services.

 

Section 2.4                                      Modifications to Services.  Either Party, in its capacity as the Providing Party or the Receiving Party, may provide written notice of proposed modifications to the A&B Services or Matson Services, as applicable, to the other Party.  Upon receipt of such notice, the Parties will negotiate in good faith an amendment to Exhibit A or Exhibit B, as applicable, setting forth such modifications to the Services.

 

Section 2.5                                      No Violations.  Notwithstanding anything to the contrary in this Agreement, neither Party (nor any member of its respective Group) shall be required to perform Services hereunder or to take any actions relating thereto that conflict with or violate any applicable Law or any material contract, license, sublicense, authorization, certification or permit.

 

4

 

Section 2.6                                      Third-Party Providers.

 

(a)                        Each Party shall use reasonable best efforts to obtain any required consents of the providers (“Third-Party Providers”) of any products or services required to be used in providing any Services pursuant to this Agreement (“Third-Party Products and Services”).  The Parties understand and agree that provision of any Services requiring the use of any Third-Party Products and Services shall be subject to receipt of any required consents of the applicable Third-Party Providers.

 

(b)                       With respect to each Service, (i) the Receiving Party hereby consents to the Providing Party’s use of any Third-Party Provider(s) named in Exhibit A or Exhibit B, as applicable, with respect to such Service (“Known Third-Party Providers”) and (ii) if, after the date of this Agreement, a Providing Party reasonably determines that it requires the use of Third-Party Providers in addition to the Known Third-Party Providers (“Additional Third-Party Providers”) in providing such Service, the use of such Additional Third-Party Providers shall require the written consent of the Receiving Party’s Service Coordinator, such consent not to be unreasonably withheld or delayed.

 

Section 2.7                                      Independent Contractor.  A Providing Party (and each applicable member of the Providing Party’s Group) shall act under this Agreement solely as an independent contractor, and not as an agent, of the Receiving Party (and each applicable member of the Receiving Party’s Group).

 

Section 2.8                                      Employees and Representatives.  Unless otherwise agreed in writing, each employee and representative of a Providing Party (or a member of the Providing Party’s Group) that provides Services to the Receiving Party (or a member of the Receiving Party’s Group) pursuant to this Agreement shall (a) be deemed for all purposes to be an employee or representative of the Providing Party (or such member of the Providing Party’s Group) and not an employee or representative of the Receiving Party (or such member of the Receiving Party’s Group) and (b) be under the direction, control and supervision of the Providing Party (or such member of the Providing Party’s Group) and such Providing Party (or such member of the Providing Party’s Group) shall have the sole right to exercise all authority with respect to the employment (including termination of employment), assignment and compensation of such employee or representative.

 

Section 2.9                                      Access.  A Receiving Party shall provide (or cause any applicable member of the Receiving Party’s Group to provide) reasonable access to the Providing Party (or any applicable member of the Providing Party’s Group) to the employees, representatives, facilities and books and records of the Receiving Party (or such member of the Receiving Party’s Group) as the Providing Party (or such member of such Providing Party’s Group) shall reasonably request in order to enable the Providing Party (or such member of the Providing Party’s Group) to provide any Service required under this Agreement.

 

Section 2.10                                Service Coordinators; Disputes.  Each Party shall appoint a representative to act as the primary contact with respect to the provision of the Services (each such person, a “Service Coordinator”).  The initial Service Coordinator for New A&B shall be Paul K. Ito and the initial Service Coordinator for Holdings shall be Joel Wine.  The Service 

 

5

 

Coordinators shall meet as expeditiously as possible to resolve any dispute under this Agreement (including, but not limited to, any disputes relating to payments under Article III) and any dispute that is not resolved by the Service Coordinators within twenty (20) days shall be deemed an Agreement Dispute under the Separation Agreement and shall be resolved in accordance with the dispute resolution procedures set forth in Article X of the Separation Agreement.  Each Party may treat an act of the other Party’s Service Coordinator as being authorized by such other Party without inquiring whether such Service Coordinator had authority to so act; provided, however, that no Service Coordinator shall have authority to amend this Agreement.  Each Party shall advise the other Party promptly in writing of any change in its respective Service Coordinator, setting forth the name of the replacement, and stating that the replacement Service Coordinator is authorized to act for such Party in accordance with this Section 2.10.

 

ARTICLE III

 

PAYMENT

 

Section 3.1                                      Pricing.  Each A&B Service provided by New A&B (or another applicable member of the A&B Group) shall be charged to and payable by Holdings at the fees for such A&B Service determined in accordance with Exhibit A.  Each Matson Service provided by Holdings (or another applicable member of the Matson Group) shall be charged to and payable by New A&B at the fees for such Matson Service determined in accordance with Exhibit B.

 

Section 3.2                                      Taxes.  The Parties acknowledge that fees charged for Services may be subject to the Hawaii General Excise Tax (“GET”) or other applicable sales or equivalent taxes.  With respect to each Service provided under this Agreement (a) the Providing Party shall be liable for reporting and paying the GET or any other applicable taxes imposed on fees received for providing such Service and (b) the Receiving Party shall reimburse the Providing Party for the amount of such taxes paid on fees received for providing such Service. Each Receiving Party shall be liable for any applicable use taxes imposed on Services received.

 

Section 3.3                                      Billing and Payment.  Charges for each Service provided shall be billed on a monthly basis and shall be payable within thirty (30) calendar days after receipt of such monthly billing charge.  The Parties may mutually agree to aggregate and offset invoices on a monthly basis.

 

Section 3.4                                      Budgeting and Accounting.  Upon reasonable request, each Party will cooperate with the other Party with respect to budgeting and accounting matters relating to the A&B Services and the Matson Services, as applicable.

 

ARTICLE IV

 

DISCLAIMER OF REPRESENTATIONS AND WARRANTIES

 

Section 4.1                                      DISCLAIMER.  EXCEPT AS EXPRESSLY PROVIDED IN SECTION 2.1 AND SECTION 2.2 (AS APPLICABLE), EACH PARTY ACKNOWLEDGES 

 

6

 

AND AGREES THAT THE OTHER PARTY (AND EACH APPLICABLE MEMBER OF SUCH OTHER PARTY’S GROUP) MAKES NO REPRESENTATIONS OR WARRANTIES (INCLUDING WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE) OR GUARANTIES OF ANY KIND, EXPRESS OR IMPLIED, WITH RESPECT TO ANY SERVICES PROVIDED HEREUNDER.

 

Section 4.2                                      AS IS; WHERE IS.  Except as expressly set forth in this Agreement, the Services (and any related products) to be provided under this Agreement are furnished as is, where is, with all faults.

 

ARTICLE V

 

RELEASE AND INDEMNIFICATION

 

Section 5.1                                      Release and Indemnification by New A&B.  New A&B (on behalf of itself and each other member of the A&B Group) hereby releases the Matson Indemnitees and agrees, to the fullest extent permitted by Law, to indemnify, defend and hold harmless the Matson Indemnitees from and against all Losses relating to, arising out of or resulting from the provision or use of any Matson Services hereunder to the extent not arising from the gross negligence or willful misconduct of any member of the Matson Group.

 

Section 5.2                                      Release and Indemnification by Holdings.  Holdings (on behalf of itself and each other member of the Matson Group) hereby releases the A&B Indemnitees and agrees, to the fullest extent permitted by Law, to indemnify, defend and hold harmless the A&B Indemnitees from and against all Losses relating to, arising out of or resulting from the provision or use of any A&B Services hereunder to the extent not arising from the gross negligence or willful misconduct of any member of the A&B Group.

 

Section 5.3                                      Indemnification Procedure; Other Rights and Limitations.  All claims for indemnification pursuant to Section 5.1 or Section 5.2 shall be made in accordance with the procedures set forth in Section 9.4 of the Separation Agreement and shall be subject to Sections 9.5 through 9.10 of the Separation Agreement.

 

ARTICLE VI

 

FORCE MAJEURE

 

Section 6.1                                      General.  If a Providing Party (or any member of the Providing Party’s Group) is prevented from or delayed in complying, in whole or in part, with any of the terms or provisions of this Agreement by reason of fire, flood, storm, earthquake, strike, walkout, lockout or other labor trouble or shortage, delays by unaffiliated suppliers or carriers, shortages of fuel, power, raw materials or components, equipment failure, any law, order, proclamation, regulation, ordinance, demand, seizure or requirement of any Governmental Authority, riot, civil commotion, war, rebellion, act of terrorism, nuclear or other accident, explosion, casualty, pandemic, act of God, or act, omission or delay in acting by any Governmental Authority or by the Receiving Party (or any member of the Receiving Party’s Group) or any other cause, whether

 

7

 

or not of a class or kind listed in this sentence, which is beyond the reasonable control of the Providing Party (or any other applicable member of the Providing Party’s Group), then upon notice to the Receiving Party pursuant to Section 6.2, the affected provisions and/or other requirements of this Agreement shall be suspended during the period of such disability and, unless otherwise set forth herein to the contrary, the Providing Party (and any applicable member of the Providing Party’s Group) shall have no liability to the Receiving Party (or any member of the Receiving Party’s Group) in connection therewith.

 

Section 6.2                                      Notice.  Upon becoming aware of a disability causing a delay in the performance or preventing performance of any Services to be provided by a Providing Party (or another member of the Providing Party’s Group) under this Agreement, the Providing Party shall promptly notify the Receiving Party in writing of the existence of such disability and the anticipated duration of the disability.

 

Section 6.3                                      Subcontractors; Fees.  A Receiving Party shall have the right, but not the obligation, to engage subcontractors to perform the Services affected by the disability for the duration of the period during which such disability delays or prevents the performance of such Services by the Providing Party, it being agreed that the fees paid or payable under this Agreement with respect to the Services affected by the disability shall be reduced (or refunded, if applicable) on a dollar-for-dollar basis for all amounts paid by the Receiving Party to such subcontractors, provided, that the Providing Party shall not be responsible for the amount of fees charged by any such subcontractors to perform such Services to the extent they exceed the fees payable under this Agreement for such Services.

 

Section 6.4                                      Limitations.  Each Party shall use reasonable best efforts to promptly remove any disability under Section 6.1 as soon as possible; provided, however, that nothing in this Article VI will be construed to require the settlement of any lawsuit or other legal proceeding, strike, walkout, lockout or other labor dispute on terms which, in the reasonable judgment of the affected Party, are contrary to its interest.  It is understood that the settlement of a lawsuit or other legal proceeding, strike, walkout, lockout or other labor dispute will be entirely within the discretion of the affected Party.

 

ARTICLE VII

 

TERM

 

Section 7.1                                      Term of Services.  Subject to the penultimate sentence of Section 7.2, (a) each A&B Service shall be provided for the term specified in Exhibit A and (b) each Matson Service shall be provided for the term specified in Exhibit B; provided, however, a Receiving Party shall have the right to terminate one or more of the Services that such Party receives under this Agreement at the end of a designated month by giving the Providing Party at least thirty (30) days’ prior written notice of such termination. Except as otherwise agreed, each Service may only be terminated in whole, and partial termination of a Service shall not be permitted without the prior approval of the Providing Party, such approval not to be unreasonably withheld or delayed.  The Parties shall cooperate with each other in good faith in their efforts to reasonably effect early termination of Services, including, where applicable, partial termination, and to agree in good faith upon appropriate reduction of the charges hereunder in connection with such early termination.

 

8

 

Section 7.2                                      Term of Agreement.  This Agreement shall terminate upon the earlier of (a) the cessation of all Services pursuant to Section 7.1 or (b) the second anniversary of the Distribution Date; provided, however, that Articles III, IV, V and VIII shall survive the termination of this Agreement and any such termination shall not affect any obligation for payment for Services rendered prior to termination.  Notwithstanding the foregoing, the Parties each reserve the right to immediately terminate this Agreement by written notice to the other Party in the event that such other Party shall have (a) applied for or consented to the appointment of a receiver, trustee or liquidator; (b) admitted in writing an inability to pay debts as they mature; (c) made a general assignment for the benefit of creditors; or (d) filed a voluntary petition, or have filed against it a petition, for an order of relief under the Federal Bankruptcy Code (as amended).  The period from the Distribution Date to the date of termination of this Agreement in accordance with this Section 7.2 is referred to as the “Term.”

 

ARTICLE VIII

 

CONFIDENTIALITY

 

Section 8.1                                      Confidentiality.  Each Party agrees that the specific terms and conditions of this Agreement and any information conveyed or otherwise received by or on behalf of a Party in conjunction herewith shall be Confidential Information subject to the confidentiality provisions (and exceptions thereto) set forth in Section 8.7 of the Separation Agreement.

 

Section 8.2                                      System Security.

 

(a)                        If a Providing Party (or a member of the Providing Party’s Group) is given access to the computer systems or software (collectively, “Systems”) of the Receiving Party (or a member of the Receiving Party’s Group) in connection with the provision of a Service, the Providing Party shall comply (or cause such member of the Providing Party’s Group to comply) with all of the system security policies, procedures and requirements (collectively, “Security Regulations”) of the Receiving Party (or such member of the Receiving Party’s Group), and shall not (or shall cause such member the Providing Party’s Group not to) tamper with, compromise or circumvent any security or audit measures employed by the Receiving Party (or such member of the Receiving Party’s Group).  The Providing Party shall (or shall cause such member of the Providing Party’s Group) to access and use only those Systems of the Receiving Party (or such member of the Receiving Party’s Group) for which it has been granted the right to access and use.

 

(b)                       The Providing Party shall use reasonable best efforts to ensure that only those of its personnel (or the personnel of such member of the Providing Party’s Group) who are specifically authorized to have access to the Systems of the Receiving Party (or such member of the Receiving Party’s Group) gain such access, and use reasonable best efforts to prevent unauthorized access, use, destruction, alteration or loss of information contained therein, including notifying its personnel (or the personnel of such member of its Group) of the restrictions set forth in this Agreement and of the Security Regulations.

 

9

 

ARTICLE IX

 

MISCELLANEOUS

 

Section 9.1                                      Further Assurances.  Subject to the limitations or other provisions of this Agreement, (a) each Party shall, and shall cause the other members of its Group to, use reasonable best efforts (subject to, and in accordance with applicable Law) to take promptly, or cause to be taken promptly, all actions, and to do promptly, or cause to be done promptly, and to assist and cooperate with the other Party in doing, all things reasonably necessary, proper or advisable to carry out the intent and purposes of this Agreement, including using reasonable best efforts to perform all covenants and agreements herein applicable to such Party or any member of its Group and (b) neither Party will, nor will either Party allow any other member of its Group to, without the prior written consent of the other Party, take any action which would reasonably be expected to prevent or materially impede, interfere with or delay the provision of any Services hereunder during the Term.  Without limiting the generality of the foregoing, where the cooperation of third parties would be necessary in order for a Party to completely fulfill its obligations under this Agreement, such Party shall use reasonable best efforts to cause such third parties to provide such cooperation.

 

Section 9.2                                      Amendments and Waivers.

 

(a)                        This Agreement may not be amended except by an agreement in writing signed by both Parties.

 

(b)                       Any term or provision of this Agreement may be waived, or the time for its performance may be extended, by the Party entitled to the benefit thereof and any such waiver shall be validly and sufficiently given for the purposes of this Agreement if it is in writing signed by an authorized representative of such Party.  No delay or failure in exercising any right, power or remedy hereunder shall affect or operate as a waiver thereof; nor shall any single or partial exercise thereof or any abandonment or discontinuance of steps to enforce such a right, power or remedy preclude any further exercise thereof or of any other right, power or remedy.  The rights and remedies hereunder are cumulative and not exclusive of any rights or remedies that either Party would otherwise have.

 

Section 9.3                                      Late Payments.  Except as expressly provided to the contrary in this Agreement, any amount not paid when due pursuant to this Agreement shall accrue interest at a rate per annum equal to 12%.

 

Section 9.4                                      Entire Agreement.  This Agreement, the Separation Agreement and the Exhibits referenced herein and therein and attached hereto or thereto, constitute the entire agreement and understanding between the Parties with respect to the subject matter hereof and supersede all prior negotiations, agreements, commitments, writings, courses of dealing and understandings with respect to the subject matter hereof.

 

10

 

Section 9.5                                      Third-Party Beneficiaries.  Except as provided in Article V relating to Indemnitees, this Agreement is solely for the benefit of the Parties and shall not be deemed to confer upon third parties any remedy, claim, liability, reimbursement, cause of action or other right in excess of those existing without reference to this Agreement.

 

Section 9.6                                      Notices.  All notices, requests, permissions, waivers and other communications hereunder shall be in writing and shall be deemed to have been duly given (a) five (5) Business Days following sending by registered or certified mail, postage prepaid, (b) when sent, if sent by facsimile, provided, that the facsimile transmission is promptly confirmed and any facsimile transmission received after 5:00 p.m. Hawaii-Aleutian Standard time shall be deemed received at 9:00 a.m. Hawaii-Aleutian Standard time on the following Business Day, (c) when delivered, if delivered personally to the intended recipient and (d) one (1) Business Day following sending by overnight delivery via a national courier service and, in each case, addressed to a Party at the following address for such Party:

 

(a)                                  If to Holdings:

 

Matson, Inc.
 1411 Sand Island Parkway
 Honolulu, HI 96803
 Attention: General Counsel
 Fax: 808-842-6048

 

and

 

Matson, Inc.
 555 12th Street
 Oakland, CA 94607

Attention: General Counsel
 Fax: 510-628-7331

 

(b)                                 If to New A&B:

 

Alexander & Baldwin, Inc.

822 Bishop Street

Honolulu, HI 96813

Attention: Chief Legal Officer

Fax: 808-525-6652

 

Section 9.7                                      Counterparts; Electronic Delivery.  This Agreement may be executed in multiple counterparts, each of which when executed shall be deemed to be an original, but all of which together shall constitute one and the same agreement.  Execution and delivery of this Agreement or any other documents pursuant to this Agreement by facsimile or other electronic means shall be deemed to be, and shall have the same legal effect as, execution by an original signature and delivery in person.

 

11

 

Section 9.8                                      Severability.  If any term or other provision of this Agreement or the Exhibits attached hereto is determined by a nonappealable decision by a court, administrative agency or arbitrator to be invalid, illegal or incapable of being enforced by any rule of law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to either Party.  Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the court, administrative agency or arbitrator shall interpret this Agreement so as to effect the original intent of the Parties as closely as possible in an acceptable manner to the end that transactions contemplated hereby are fulfilled to the fullest extent possible.  If any sentence in this Agreement is so broad as to be unenforceable, the provision shall be interpreted to be only so broad as is enforceable.

 

Section 9.9                                      Assignability; Binding Effect.  This Agreement is not assignable by either Party without the prior written consent of the other Party and any attempt to assign this Agreement without such consent shall be void and of no effect.  This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns.

 

Section 9.10                                Governing Law.  This Agreement shall be governed by, and construed and enforced in accordance with, the substantive laws of the State of Hawaii, without regard to any conflicts of law provisions thereof that would result in the application of the laws of any other jurisdiction.

 

Section 9.11                                Construction.  This Agreement shall be construed as if jointly drafted by the Parties and no rule of construction or strict interpretation shall be applied against either Party.  The Parties represent that this Agreement is entered into with full consideration of any and all rights which the Parties may have.  The Parties have relied upon their own knowledge and judgment and upon the advice of the attorneys of their choosing.  The Parties have had access to independent legal advice, have conducted such investigations they and their counsel thought appropriate, and have consulted with such other independent advisors as they and their counsel deemed appropriate regarding this Agreement and their rights and asserted rights in connection therewith.  The Parties are not relying upon any representations or statements made by the other Party, or such other Party’s employees, agents, representatives or attorneys, regarding this Agreement, except to the extent such representations are expressly set forth or incorporated in this Agreement.  The Parties are not relying upon a legal duty, if one exists, on the part of the other Party (or such other Party’s employees, agents, representatives or attorneys) to disclose any information in connection with the execution of this Agreement or its preparation, it being expressly understood that neither Party shall ever assert any failure to disclose information on the part of the other Party as a ground for challenging this Agreement.

 

Section 9.12                                Performance.   Each Party shall cause to be performed, and hereby guarantees the performance of, all actions, agreements and obligations set forth herein to be performed by any Subsidiary or Affiliate of such Party.

 

Section 9.13                                Title and Headings.  Titles and headings to Sections and Articles are inserted for the convenience of reference only and are not intended to be a part of or to affect the meaning or interpretation of this Agreement.

 

12

 

Section 9.14                                Exhibits.  The Exhibits attached hereto are incorporated herein by reference and shall be construed with and as an integral part of this Agreement to the same extent as if the same had been set forth verbatim herein.

 

[Signature Page Follows]

 

13

 

IN WITNESS WHEREOF, the Parties have caused this Agreement to be signed by their authorized representatives as of the date first above written.

 

 

	
 
    	
ALEXANDER & BALDWIN HOLDINGS, INC.
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
A & B II, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

[Signature Page to Transition Services Agreement]

 

 

EXHIBIT A

 

A&B SERVICES

 

New A&B agrees to provide (or to cause another applicable member of the A&B Group to provide) to Holdings (or another applicable member of the Matson Group) the following services (the “A&B Services”).

 

A-1

 

Human Resource Services

 

1.               Services.  The human resource services to be provided by New A&B to Holdings (the “HR Services”) are as follows:

 

a.               Administer the existing contract with Hawaii Medical Service Association (the “HMSA Contract”).

 

b.              Administer the existing contract with Hawaii Dental Service (the “HDS Contract”).

 

c.               Administer open enrollment using the Aliquant system (the “Aliquant Services”).

 

d.              Provide defined benefit administration, including support of regulatory filings, annual funding notices via Buck Consultants for distribution to Matson, audit support, review of forms and pension calculations and interfacing with Trucker Huss and Buck Consultants (the “DB Services”).

 

e.               Prepare Medicare Part D filing, including allocating rebates to New A&B and Holdings and year-end reconciliations (the “Medicare Services”) for the 2012 plan year, pursuant to Item 2.e. below.  For the avoidance of doubt, any rebates with respect to New A&B employees will be allocated to New A&B and any rebates with respect to Holdings employees will be allocated to Holdings.

 

f.                 Additional training and knowledge transfer in connection with the services listed above in paragraphs a. through e., and such Other Services (as defined below) as the Parties shall mutually agree.

 

2.               Term.

 

a.               New A&B will administer the HMSA Contract through December 31, 2012 and New A&B will, if requested by Holdings, continue premium reporting on a monthly basis on behalf of Holdings through December 31, 2013.

 

b.              New A&B will administer the HDS Contract until a 30-day termination notice can be provided following the Distribution Date and New A&B will, if requested by Holdings, continue administration and premium reporting on a monthly basis on behalf of Holdings through December 31, 2013.

 

c.               The Aliquant Services are expected to continue until mid-2013.  New A&B will administer open enrollment on behalf of New A&B and Holdings for 2013.  It is anticipated that the Parties will identify an alternative solution to Aliquant in time for the 2014 open enrollment.  However, if Holdings informs New A&B on or before March 31, 2013 that Holdings needs to extend the Aliquant Services for open enrollment for 2014 New A&B will administer open enrollment on behalf of Holdings for 2014.

 

d.              New A&B will provide the DB Services to Holdings through December 31, 2013.

 

A-2

 

e.               New A&B will provide the Medicare Services to Holdings through December 31, 2012. Mid-2012, New A&B will apply for its own RDS number.  Holdings must file its own application in 2013 (if it elects to continue to do so) in September/October 2012.

 

3.               Fees and Expenses.

 

a.               HR Services.  Holdings shall pay to New A&B a fixed “lump sum” for the HR Services.  The lump sum is calculated by using the time allocated by each New A&B human resources staff member to the scope of services provided and using actual benefit loaded salaries, plus 10%, totaling an annualized rate of $181,801.  New A&B shall invoice Holdings on a monthly basis.

 

Both Parties agree to review the lump sum charge formula on a quarterly basis (first review at the beginning of October, 2012 for Q3 2012) to ensure the level of the charge reflects actual time spent, and both Parties agree to adjust such lump sum as necessary (retrospectively and prospectively), based on experience.

 

b.              Other Services.  In addition, there may be assistance provided on other items not specifically included in the HR Services (“Other Services”).  Other Services will be reimbursed based on time spent by New A&B employees on such Services at each such employee’s Adjusted Hourly Rate.  New A&B shall invoice Holdings on a monthly basis for Other Services, with a breakdown of the amount of time spent by the New A&B human resources staff member.

 

c.               Any expenses related to the HR Services or the Other Services will be reimbursed (without a premium).

 

4.               Special Requirements.  New A&B and Holdings have agreed to the following special requirements concerning the HR Services:

 

a.               No “feeds” (intercompany IT feeds) will be cut or altered as a result of the separation until such time that is mutually agreed upon by the Parties, but such time shall in no event extend beyond the second anniversary of the Distribution Date.  New A&B will require ongoing information on Holdings employees in order to provide the HR Services.

 

b.              The planned provision of the HR Services is based on current facts and circumstances and what New A&B knows about Holdings’ employees, programs, and policies today.  The HR Services do not take into account any changes/modifications such as (but not limited to) new pay programs, designs, benefits, acquisitions, dispositions, collectively bargained changes, and changes to eligible compensation.  Any changes that are implemented should be communicated to New A&B’s Human Resources Department as soon as possible (and in advance if possible).

 

A-3

 

5.               Third Party Contractors.

 

a.               For any services provided in conjunction with vendors (such as, but not limited to, Towers Watson, Buck, Trucker Huss, Morgan Lewis, and Mercer), vendor charges will be directly invoiced to Holdings.  Any change in vendor should be communicated to New A&B’s Human Resources Department as soon as possible and although changes to vendors are within Holdings’ discretion, the fee paid by Holdings to New A&B, as described in Item 3 above, will be adjusted to reflect any changes relating to the transition to a new vendor or the implementation of a new process.  If any such third party contractor shall invoice New A&B for services for Holdings’ benefit, New A&B shall invoice Holdings for such amounts.

 

A-4

 

Accounting Services

 

1.               Services.  The accounting services to be provided by New A&B to Holdings (the “Accounting Services”) are as follows:

 

a.               Assist with SEC reporting and filings post separation.

 

b.              Provide training on executive compensation and employee benefits accounting.

 

c.               Other services as mutually agreed upon by the parties.

 

2.               Term.  The Accounting Services will be provided from the Distribution Date to the date that Holdings files its Quarterly Report on Form 10-Q with respect to the quarter ended June 30, 2013.

 

3.               Fees and Expenses.  The Accounting Services will be reimbursed based on time spent by New A&B employees on such Services at each such employee’s Adjusted Hourly Rate.  Any expenses related to the Accounting Services will be reimbursed (without a premium).  All fees and expenses will be billed to Holdings on a monthly basis.

 

4.               Special Requirements.  None.

 

5.               Third Party Contractors.

 

a.               Edgarfilings (a subsidiary of Thomson Reuters). The scope of work includes providing edgarization software and XBRL preparation services.

 

A-5

 

Corporate Secretary and Corporate Governance Services

 

1.               Services.  The secretarial and corporate governance services to be provided by New A&B to Holdings (the “Corporate Advisory Services”) are as follows:

 

a.               Provide input regarding SEC reporting and filings post separation.

 

b.              Provide input regarding procedures and processes for public company board meetings, record keeping, and corporate governance.

 

c.               Other services as mutually agreed upon by the Parties.

 

2.               Term.  The Corporate Advisory Services will be provided from the Distribution Date to the date that Holdings files its Quarterly Report on Form 10-Q with respect to the quarter ending June 30, 2013.

 

3.               Fees and Expenses.  The Corporate Advisory Services will be reimbursed based on time spent by New A&B employees on such Services at each such employee’s Adjusted Hourly Rate.  Any expenses related to the Corporate Advisory Services will be reimbursed (without a premium).  All fees and expenses will be billed to Holdings on a monthly basis.

 

4.               Special Requirements.  None.

 

5.               Third Party Contractors.  New A&B shall not retain any law firms on behalf of Holdings.

 

A-6

 

Internal Audit Services

 

Post-separation, New A&B and Holdings will each have their own internal audit staff.  However, the New A&B staff may be required to assist Holdings with the following services:

 

1.               The internal audit services to be provided by New A&B to Holdings (the “New A&B Internal Audit Services”) are as follows:

 

a.               Planning and performing Sarbanes-Oxley Act of 2002 (“SOX”) section 404 compliance, employee benefit plans audits and operational audits.

 

b.              Supporting Deloitte & Touche LLP with financial statement audits.

 

c.               Supporting the Enterprise Risk Management program.

 

2.               Term.  The New A&B Internal Audit Services will be provided from the Distribution Date to the date that Holdings files its Annual Report on Form 10-K for the year ended December 31, 2012.

 

3.               Fees and Expenses.  The New A&B Internal Audit Services will be reimbursed based on time spent by New A&B employees on such Services at each such employee’s Adjusted Hourly Rate.  Any expenses related to the New A&B Internal Audit Services will be reimbursed (without a premium).  All fees and expenses will be billed to Holdings on a monthly basis.

 

4.               Special Requirements.  None.

 

5.               Third Party Contractors.

 

a.               Secure DNA Consultants, Inc.  The scope of work pertains to information technology general control (ITGC) testing as part of SOX section 404 compliance.

 

b.              For any New A&B Internal Audit Services provided by a vendor such as Secure DNA Consultants for Holdings’ benefit, vendor charges will be directly invoiced to Holdings.  If any such vendor shall invoice New A&B for services for Holdings’ benefit, New A&B shall invoice Holdings for such amounts.

 

A-7

 

EXHIBIT B

 

MATSON SERVICES

 

Holdings agrees to provide (or cause another applicable member of the Matson Group to provide) to New A&B (or another applicable member of the A&B Group) the following services (the “Matson Services”).

 

B-1

 

Tax Services

 

Holdings’ Tax Department is based in Oakland, where it carries out the vast majority of work for all the tax compliance, tax accounting and tax advisory needs of both the A&B Group and the Matson Group.  Post-separation, the Tax Department will remain with Holdings and will continue to provide tax work and services to New A&B.

 

1.               Services.  The tax services to be provided by Holdings to New A&B (the “Tax Services”) are as follows:

 

a.               Assist with planning, recruiting, hiring and training New A&B tax staff.

 

b.              Prepare required federal and state income tax returns and estimated tax payments.

 

c.               Prepare tax provisions and reconcile tax accounts, for internal and external reporting purposes.

 

d.              Prepare tax footnotes and other required tax disclosures.

 

e.               Respond to federal and state income tax audits as required.

 

f.                 Provide information and support to financial auditors in connection with taxes.

 

g.              Provide advice as needed regarding tax implications of business activities.

 

h.              Monitor and advise New A&B management about tax developments and legislation.

 

i.                  Provide tax forecasts and estimates as required for New A&B management decision making.

 

j.                  Provide support for separation activities, including the tax rulings, tax opinions, and special SEC filings.

 

k.               Perform tax research to support significant tax positions.

 

l.                  Coordinate with joint venture partners and outside tax advisors on tax information and issues as needed.

 

m.            Prepare or review other required tax filings, including Hawaii general excise taxes, HIPAC and New A&B Foundation, and Heavy Vehicle Use Tax.

 

n.              Provide other general tax advice and assistance as requested.

 

2.               Term.  The Tax Services will be provided until the earlier of (i) such time as New A&B staffs and trains its own stand-alone tax department or (ii) the second anniversary of the Distribution Date.

 

B-2

 

3.               Fees and Expenses.  The Tax Services will be reimbursed based on time spent by Holdings employees on such Services at each such employee’s Adjusted Hourly Rate.  Any expenses related to the Tax Services will be reimbursed (without a premium).  All fees and expenses will be billed to New A&B on a monthly basis.  For the avoidance of doubt, reimbursable expenses may include: approved travel, tax software license (allocated portion of payments made after Distribution Date), tax research materials (allocated portion of future online subscriptions) and other tax office supplies (allocated portion). Notwithstanding the foregoing, all tax software license will be reimbursed based on usage/benefit to be determined by mutual agreement between the Parties.

 

4.               Special Requirements.  None.

 

5.               Third Party Contractors.

 

a.               Third party contractors that will be used to provide the Tax Services are as follows: (i) Ernst & Young (“E&Y”), if needed, under the existing tax advisory agreement, dated January 6, 2011, by and between E&Y and Alexander & Baldwin, Inc. on behalf of itself and its affiliates and (ii) temporary employee Avery Chin under an existing agreement with an agency.

 

b.              For any Tax Services provided by a vendor (including but not limited to E&Y or Avery Chin), vendor charges will be directly invoiced to New A&B.  If any such third party contractor shall invoice Holdings for services for New A&B’s benefit, Holdings shall invoice New A&B for such amounts.

 

B-3

 

Risk Management Services

 

Holdings’ Risk Management Department is based in Oakland, where it carries out work for the insurance procurement, auto/general liability/property claims administration and related insurance accounting work in collaboration with the Finance Department.  These insurance services are provided for both the A&B Group and the Matson Group.  Post-separation, the Risk Management Department will remain with Holdings and will continue to provide risk management work and services to New A&B.

 

1.               Services.  The risk management services that may be provided by Holdings to New A&B (the “Risk Management Services”) include:

 

a.               Review of insurance binders, policies and premium invoices for policies placed as of separation and for policies that are purchased after the Distribution Date.

 

b.              Handle auto liability, general liability, property, boiler and machinery claims that were incurred prior to the Distribution Date.

 

c.               Provide guidance regarding auto liability, general liability, property, boiler and machinery claims incurred after the Distribution Date.

 

d.              Review of insurance provisions in contracts, issuance of certificates of insurance and review of third party certificates of insurance.

 

e.               Insurance accounting services provided by the Finance Department such as reconciliation of claims activity to the general ledger and premium allocations.

 

f.                 Negotiate with insurance broker on renewals and new placements after the Distribution Date which includes gathering underwriting information.

 

g.              Prepare monthly and semi annual reports to senior management at New A&B.

 

h.              Prepare annual budget.

 

i.                  Assist with recruiting, interviewing and training a risk manager.

 

j.                  Miscellaneous insurance project work such as internal insurance training and reviewing insurance for development projects, such as Kukui’ula and Waihonua, vendors, contractors, etc.

 

k.               Other services as mutually agreed upon by the Parties.

 

2.               Term.  The Risk Management Services will be provided until the earlier of (i) such time as New A&B staffs and trains its own stand-alone department or (ii) the second anniversary of the Distribution Date.

 

B-4

 

3.               Fees and Expenses.  The Risk Management Services will be reimbursed based on time spent by Holdings employees on such Services at each such employee’s Adjusted Hourly Rate.  Any expenses related to the Risk Management Services (including but not limited to approved travel, and fees and expenses of third party vendors if not directly billed to New A&B) will be reimbursed (without a premium). The STARS administration fee related to run-off claims will be allocated to each Party in proportion to each Party’s relative share of run-off claims.  All fees and expenses will be billed to New A&B on a monthly basis.

 

4.               Special Requirements.

 

a.               Retained loss expenses (deductibles, uninsured costs) for claims handled by Holdings shall be handled as provided in the Separation Agreement.

 

5.               Third Party Contractors: Third party contractors that will be used to provide the Risk Management Services are as follows:

 

a.               STARS

 

b.              Sedgwick (third party claims administrator).

 

c.               XL (auto/general liability insurer) and other insurance companies.

 

For any Risk Management Services provided by a vendor other than STARS, vendor charges will be directly invoiced to New A&B by such vendors.  If any such third party contractor shall invoice Holdings for services for New A&B’s benefit, Holdings shall invoice New A&B for such amounts.

 

B-5

 

Internal Audit Services

 

Post-separation, New A&B and Holdings will each have their own internal audit staff.  However, Holdings staff may be required to assist New A&B with the following services:

 

1.               The internal audit services to be provided by Holdings to New A&B (the “Holdings Internal Audit Services”) are as follows:

 

a.               Planning and performing SOX section 404 compliance, employee benefit plans audits and operational audits.

 

b.              Supporting Deloitte & Touche LLP with financial statement audits.

 

c.               Supporting the Enterprise Risk Management program.

 

2.               Term.  The Holdings Internal Audit Services will be provided from the Distribution Date to the date that New A&B files its Annual Report on Form 10-K for the year ended December 31, 2012.

 

3.               Fees and Expenses.  The Holdings Internal Audit Services will be reimbursed based on time spent by Holdings employees on such Services at each such employee’s Adjusted Hourly Rate.  Any expenses related to the Holdings Internal Audit Services will be reimbursed (without a premium).

 

4.               Special Requirements.  None.

 

5.               Third Party Contractors.

 

a.               Secure DNA Consultants, Inc.  The scope of work pertains to information technology general control (ITGC) testing as part of SOX section 404 compliance.

 

b.              For any Holdings Internal Audit Services provided by a vendor such as Secure DNA Consultants for New A&B’s benefit, vendor charges will be directly invoiced to New A&B.  If any such vendor shall invoice Holdings for services for New A&B’s benefit, Holdings shall invoice New A&B for such amounts.

 

B-6

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00204-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00204-of-00352.parquet"}]]