UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2006
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_ OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________________ to _________________
Commission file number 0-565
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ALEXANDER & BALDWIN, INC.
-------------------------
(Exact name of registrant as specified in its charter)
Hawaii 99-0032630
------ ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
P. O. Box 3440, Honolulu, Hawaii 9680l
822 Bishop Street, Honolulu, Hawaii 96813
----------------------------------- -----
(Address of principal executive offices) (Zip Code)
(808) 525-6611
--------------
(Registrant's telephone number, including area code)
N/A
---
(Former name, former address, and former
fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes [X] No [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of accelerated
filer and large accelerated filer in Rule 12b-2 of the Exchange Act.
(Check one): Large accelerated filer [X] Accelerated filer [ ]
Non-accelerated filer [ ]
Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
Number of shares of common stock outstanding as of
June 30, 2006: 43,067,453
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
- -----------------------------
The unaudited, condensed financial statements and notes for the second quarter
and first six months of 2006 are presented below, with comparative figures from
the 2005 financial statements.
ALEXANDER & BALDWIN, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(In millions, except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
2006 2005 2006 2005
---- ---- ---- ----
Revenue:
Operating revenue $ 418.2 $ 391.2 $ 779.5 $ 755.0
---------- ---------- ----------- -----------
Costs and Expenses:
Costs of goods sold, services and rentals 347.7 308.1 641.4 585.5
Loss on investment -- 2.2 -- 2.2
Selling, general and administrative 36.3 33.4 72.1 65.5
---------- ---------- ----------- -----------
Operating costs and expenses 384.0 343.7 713.5 653.2
---------- ---------- ----------- -----------
Operating Income 34.2 47.5 66.0 101.8
Other Income and (Expense):
Equity in (loss) income of real estate
affiliates (1.7) 0.8 12.2 1.8
Interest income 2.7 1.2 4.9 2.1
Interest expense (3.0) (3.0) (6.2) (5.8)
---------- ---------- ----------- -----------
Income Before Taxes 32.2 46.5 76.9 99.9
Income taxes 11.7 17.7 28.7 38.0
---------- ---------- ----------- -----------
Income From Continuing Operations 20.5 28.8 48.2 61.9
Discontinued Operations (net of income taxes) 9.7 0.6 19.4 5.2
---------- ---------- ----------- -----------
Net Income $ 30.2 $ 29.4 $ 67.6 $ 67.1
========== ========== =========== ===========
Basic Earnings Per Share:
Continuing operations $ 0.47 $ 0.66 $ 1.10 $ 1.42
Discontinued operations 0.22 0.01 0.44 0.12
---------- ---------- ----------- -----------
Net income $ 0.69 $ 0.67 $ 1.54 $ 1.54
========== ========== =========== ===========
Diluted Earnings Per Share:
Continuing operations $ 0.46 $ 0.65 $ 1.09 $ 1.40
Discontinued operations 0.22 0.01 0.44 0.12
---------- ---------- ----------- -----------
Net income $ 0.68 $ 0.66 $ 1.53 $ 1.52
========== ========== =========== ===========
Average Number of Shares Outstanding 44.0 43.6 43.9 43.5
Average Number of Dilutive Shares Outstanding 44.3 44.2 44.3 44.1
See Notes to Condensed Consolidated Financial Statements.
ALEXANDER & BALDWIN, INC. AND SUBSIDIARIES
Industry Segment Data, Net Income
(In millions)
Three Months Ended Six Months Ended
June 30, June 30,
2006 2005 2006 2005
---- ---- ---- ----
Revenue:
Transportation:
Ocean transportation $ 243.6 $ 221.0 $ 462.9 $ 427.2
Logistics services 116.4 106.6 224.8 202.7
Real Estate:
Leasing 24.4 21.3 49.0 43.2
Sales 36.8 14.6 60.6 60.5
Less amounts reported in discontinued
operations (37.5) (2.6) (61.7) (29.8)
Food Products 37.8 32.2 53.3 54.6
Reconciling Items (3.3) (1.9) (9.4) (3.4)
---------- ---------- ----------- -----------
Total revenue $ 418.2 $ 391.2 $ 779.5 $ 755.0
========== ========== =========== ===========
Operating Profit, Net Income:
Transportation:
Ocean transportation $ 24.4 $ 38.7 $ 42.7 $ 68.4
Logistics services 5.3 3.6 10.0 6.6
Real Estate:
Leasing 12.2 10.5 24.3 21.2
Sales 10.9 4.8 38.0 21.3
Less amounts reported in discontinued
operations (15.6) (1.0) (31.2) (8.4)
Food Products 3.1 0.3 9.6 9.3
---------- ---------- ----------- -----------
Total operating profit 40.3 56.9 93.4 118.4
Loss on Investment -- (2.2) -- (2.2)
Interest Expense (3.0) (3.0) (6.2) (5.8)
General Corporate Expenses (5.1) (5.2) (10.3) (10.5)
---------- ---------- ----------- -----------
Income From Continuing Operations Before
Income Taxes 32.2 46.5 76.9 99.9
Income Taxes (11.7) (17.7) (28.7) (38.0)
---------- ---------- ----------- -----------
Income From Continuing Operations 20.5 28.8 48.2 61.9
Discontinued Operations (net of income taxes) 9.7 0.6 19.4 5.2
---------- ---------- ----------- -----------
Net Income $ 30.2 $ 29.4 $ 67.6 $ 67.1
========== ========== =========== ===========
See Notes to Condensed Consolidated Financial Statements.
ALEXANDER & BALDWIN, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In millions)
June 30, December 31,
2006 2005
---- ----
ASSETS
Current Assets:
Cash and cash equivalents $ 34 $ 57
Accounts and notes receivable, net 187 177
Inventories 32 18
Real estate held for sale 2 9
Deferred income taxes 16 16
Prepaid expenses and other assets 25 25
Accrued withdrawals, net to Capital Construction Fund -- 1
--------- ---------
Total current assets 296 303
--------- ---------
Investments 124 154
--------- ---------
Real Estate Developments 105 71
--------- ---------
Property, at cost 2,292 2,222
Less accumulated depreciation and amortization 951 933
--------- ---------
Property - net 1,341 1,289
--------- ---------
Capital Construction Fund 112 93
--------- ---------
Other Assets 179 161
--------- ---------
Total $ 2,157 $ 2,071
========= =========
LIABILITIES AND
SHAREHOLDERS' EQUITY
Current Liabilities:
Notes payable and current portion of long-term debt $ 54 $ 31
Accounts payable 135 134
Other 78 89
--------- ---------
Total current liabilities 267 254
--------- ---------
Long-term Liabilities:
Long-term debt 353 296
Deferred income taxes 437 415
Post-retirement benefit obligations 48 47
Other 64 45
--------- ---------
Total long-term liabilities 902 803
--------- ---------
Commitments and Contingencies
Shareholders' Equity:
Capital stock 35 36
Additional capital 174 175
Deferred compensation -- (6)
Accumulated other comprehensive loss (7) (7)
Retained earnings 797 827
Cost of treasury stock (11) (11)
--------- ---------
Total shareholders' equity 988 1,014
--------- ---------
Total $ 2,157 $ 2,071
========= =========
See Notes to Condensed Consolidated Financial Statements.
ALEXANDER & BALDWIN, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(In millions)
Six Months Ended
June 30,
2006 2005
---- ----
Cash Flows from Operating Activities $ 40 $ 129
--------- ---------
Cash Flows from Investing Activities:
Capital expenditures (87) (174)
Proceeds from disposal of property and other assets 31 19
Deposits into Capital Construction Fund (22) (158)
Withdrawals from Capital Construction Fund 4 146
Sales (purchases) of investments, net 21 (13)
--------- ---------
Net cash used in investing activities (53) (180)
--------- ---------
Cash Flows from Financing Activities:
Proceeds from issuances of long-term debt 70 105
Payments of long-term debt (13) (10)
Proceeds (payments) from short-term borrowings, net 23 (5)
Proceeds from issuances of capital stock, including
excess tax benefit 3 8
Repurchase of capital stock (72) --
Dividends paid (21) (20)
--------- ---------
Net cash provided by (used in) financing activities (10) 78
--------- ---------
Net (Decrease) Increase in Cash and Cash Equivalents $ (23) $ 27
========= =========
Other Cash Flow Information:
Interest paid, net of amounts capitalized $ (6) $ (7)
Income taxes refunded (paid) (32) 22
Other Non-cash Information:
Depreciation expense 41 41
Tax-deferred real estate sales 58 28
Tax-deferred property purchases (33) (28)
Debt assumed in real estate acquisition -- 11
Common stock dividends declared but not yet paid 11 10
See Notes to Condensed Consolidated Financial Statements.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(1) The Condensed Consolidated Financial Statements are unaudited. Because
of the nature of the Company's operations, the results for interim
periods are not necessarily indicative of results to be expected for
the year. While these statements reflect all normal recurring
adjustments that are, in the opinion of management, necessary for fair
presentation of the results of the interim period, they do not include
all of the information and footnotes required by U.S. generally
accepted accounting principles for complete financial statements.
Therefore, the interim Condensed Consolidated Financial Statements
should be read in conjunction with the Consolidated Financial
Statements and Notes thereto included in the Company's annual report
filed on Form 10-K for the year ended December 31, 2005.
(2) On July 13, 2006, the Financial Accounting Standards Board (FASB)
issued FASB Interpretation No. 48, "Accounting for Uncertainty in
Income Taxes--an interpretation of FASB Statement No. 109" (FIN 48).
This Interpretation prescribes a recognition threshold and measurement
attribute for the financial statement recognition and measurement of a
tax position taken or expected to be taken in a tax return. This
Interpretation also provides guidance on derecognition, classification,
interest and penalties, accounting in interim periods, disclosure, and
transition. The new rules will be effective for the Company in 2007. At
this time, the Company has not completed its review and assessment of
the impact of adoption of FIN 48.
(3) The 2006 estimated effective income tax rate of 37.5 percent differs
from the statutory rate, due primarily to a land donation and tax
credits.
(4) Commitments and Contingencies: Commitments and financial arrangements
that are not recorded on the Company's balance sheet at June 30, 2006,
other than operating lease obligations, included the following (in
millions):
Vessel purchase (a) $ 147
Guarantee of HS&TC debt (b) $ --
Standby letters of credit (c) $ 20
Bonds (d) $ 8
Benefit plan withdrawal obligations (e) $ 65
These amounts are not recorded on the Company's balance sheet and, with
the exception of item (a), it is not expected that the Company or its
subsidiaries will be called upon to advance funds under these
commitments.
(a) In February 2005, Matson Navigation Company, Inc.
("Matson") entered into an agreement with Kvaerner
Philadelphia Shipyard Inc. to purchase two
containerships. The first of these two ships, the MV
Manulani, was delivered during the second quarter of
2005, and the second ship, the MV Maunalei, was
delivered in July 2006, as further described in
footnote 11. The purchase price for the MV Maunalei
was approximately $147 million. The purchase of the
MV Maunalei was funded with the Capital Construction
Fund ("CCF"), cash from operations and draws on a
revolving credit facility with DnB NOR Bank ASA and
ING Bank N.V. Payment in full was made upon the
delivery of the containership and no further
obligations exist after the date of the delivery. As
of June 30, 2006, no obligation was recorded on the
financial statements for the MV Maunalei because
conditions necessary to record either a liability or
an asset were not met.
(b) The Company has guaranteed up to $21.5 million of a
$30 million Hawaiian Sugar & Transportation Cooperative
("HS&TC") revolving credit line. HS&TC is a raw-sugar
marketing and transportation cooperative that is used
to market and transport the Company's raw sugar to
C&H Sugar Company, Inc. ("C&H"). The Company is a
member of HS&TC. Under normal circumstances, the
guarantee would not exceed $15 million. The amount
would only increase to $21.5 million if the amounts
owed by C&H are outstanding beyond normal 10-day terms.
No amounts were borrowed under the facility at the end
of the second quarter.
(c) At June 30, 2006, the Company has arranged for standby
letters of credit totaling $20 million. This includes
letters of credit, totaling approximately $14 million,
which enable the Company to qualify as a self-insurer
for state and federal workers' compensation
liabilities. This balance also includes approximately
$6 million for performance guarantees related to real
estate projects.
(d) Consists of $6 million in U.S. customs bonds, $1
million relates to real estate construction projects in
Hawaii, and $1 million relates to ocean transportation
matters.
(e) The withdrawal liabilities for multiemployer pension
plans, in which Matson is a participant, aggregated
approximately $65 million as of the most recent
valuation dates. Management has no present intention of
withdrawing from and does not anticipate termination of
any of the aforementioned plans.
Other Contingencies: On June 14, 2006, the Company, Kukui'ula
Development Company (Hawaii), LLC ("Kukui'ula"), and various DMB
entities ("DMB") entered into a General Contract of Indemnity
("Indemnity") in favor of Travelers Casualty and Surety Company of
America ("Travelers"). The Indemnity was described in the Company's
Form 8-K dated June 14, 2006 and filed with the Securities and Exchange
Commission on June 16, 2006. The Indemnity was entered into in
connection with Travelers' execution of an agreement with the Kukui'ula
joint venture for the delivery of one or more bonds. The bonds are
being issued to secure final subdivision approvals, which will allow
for closing of the Kukui'ula lots to take place, and will cover various
construction activities at Kukui'ula, such as project amenities, roads,
utilities and other infrastructure, and subdivision improvements.
Under the Indemnity, the Company, Kukui'ula, and DMB, jointly and
severally, agree to indemnify and exonerate Travelers from all loss
which Travelers incurs in connection with any of the bond(s) issued. In
connection with the Indemnity, the Company, Kukui'ula, and DMB have
separately entered into a Mutual Indemnification Agreement
("Agreement") under which the parties agree that they shall each be
proportionately liable (60% for DMB and 40% for the Company) for all
payments required to be made under the Indemnity.
The Company accounts for guarantees in accordance with FASB
Interpretation No. 45 (" FIN 45"), "Guarantor's Accounting and
Disclosure Requirements for Guarantees, Including Indirect Guarantees
of Indebtedness of Others." Under the provisions of FIN 45, the Company
recorded a liability for the Indemnity based on its fair value. The
fair value of the liability recorded by the Company in connection with
the Indemnity was not material.
Financing Agreement: On April 20, 2006, the Company entered into a
three-year unsecured note purchase and private shelf agreement with
Prudential Investment Management, Inc. and its affiliates
(collectively, "Prudential") under which the Company may issue notes in
an aggregate amount up to $400 million less the sum of all principal
amounts then outstanding on any notes issued by the Company or any of
its subsidiaries to Prudential and the amount of any such notes then
committed to be purchased by Prudential. The Agreement also provides
for the commitment by Prudential to purchase and, subject to a right of
cancellation by the Company, the commitment by the Company to issue
three new series of senior promissory notes totaling $125 million. The
note purchase and shelf agreement is more fully described in a Form 8-K
filed on April 21, 2006.
Litigation: The Company and certain subsidiaries are parties to various
legal actions and are contingently liable in connection with claims and
contracts arising in the normal course of business, the outcome of
which, in the opinion of management after consultation with legal
counsel, will not have a material adverse effect on the Company's
financial position or results of operations.
(5) Earnings Per Share: The denominator used to compute basic and diluted
earnings per share is as follows (in millions):
Three Months Ended Six Months Ended
June 30, June 30,
2006 2005 2006 2005
---- ---- ---- ----
Denominator for basic EPS - weighted average shares
Effect of dilutive securities: 44.0 43.6 43.9 43.5
Employee/director stock options and
non-vested restricted stock 0.3 0.6 0.4 0.6
------ ------ ------ ------
Denominator for diluted earnings per share 44.3 44.2 44.3 44.1
====== ====== ====== ======
(6) Share-Based Compensation: The Company may grant incentive and
non-qualified options to purchase shares of the Company's stock at an
exercise price equal to the fair market value at the grant date, as
determined by the Compensation Committee of the Board of Directors. The
options vest ratably over three years and, if not exercised, expire 10
years after grant. Shares issued as a result of stock option exercises
are funded with the issuance of new shares. Shares tendered to the
Company in connection with stock option exercises are retired.
The Company may also issue shares of the Company's common stock, in
connection with the stock option plans, as a reward for past service
rendered or as an incentive for future service. Service-based
restricted shares generally vest over three years. The Company may also
issue performance-based restricted shares that vest one year after
grant, with the number of shares earned based on the achievement of
annual financial targets established at the beginning of the fiscal
year.
The Company's various stock option plans are more fully described in
its most recent Form 10-K and in other filings with the Securities and
Exchange Commission. As of June 30, 2006, 1,463,588 shares have been
authorized for issuance under the equity compensation plans but had not
been granted.
On January 1, 2006, the Company adopted Statement of Financial
Accounting Standards No. 123 (revised 2004), "Share-Based Payment"
(SFAS No. 123R), which requires the measurement and recognition of
compensation expense for all share-based payment awards made to
employees and directors. Prior to January 1, 2006, the Company
accounted for share-based compensation under Accounting Principles
Board ("APB") Opinion No. 25, which required recognition of
compensation expense based on the intrinsic value of the equity
instrument awarded. Consequently, no share-based compensation expense
for stock option grants was reflected in net income since all options
granted had an exercise price equal to the market value of the
underlying common stock on the date of grant. If the Company had
applied the fair value recognition provisions of SFAS No. 123, as
amended by SFAS No. 148, "Accounting for Stock-Based Compensation -
Transition and Disclosure," the effect on net income and earnings per
share for the three and six month periods ended June 30, 2005 would
have been as follows (in millions, except per-share amounts):
2005
---------------------------------------
Quarter Six Months
Ended Ended
June 30 June 30
------- -------
Net Income:
As reported $ 29.4 $ 67.1
Stock-based compensation expense determined under
fair value based method for all awards, net of related
tax effects (0.4) (0.8)
--------- --------
Pro forma $ 29.0 $ 66.3
========= ========
Net Income Per Share:
Basic, as reported $ 0.67 $ 1.54
Basic, pro forma $ 0.66 $ 1.52
Diluted, as reported $ 0.66 $ 1.52
Diluted, pro forma $ 0.65 $ 1.50
--------------------------------------------------------------------------------------------------------
SFAS No. 123R requires companies to estimate the fair value of
share-based payment awards on the date of grant using an option-pricing
model. The Company estimates the grant-date fair value of its stock
options using a Black-Scholes valuation model, consistent with the
provisions of SFAS No. 123R and Securities and Exchange Commission
("SEC") Staff Accounting Bulletin No. 107, "Share-Based Payment," using
the range of assumptions provided in the table below:
2006 2005
---- ----
Expected volatility 22.1%-22.7% 22.2%-22.3%
Expected term (in years) 6.3-8.1 6.4
Risk-free interest rate 4.5%-5.1% 3.9%-4.0%
Dividend yield 1.7%-2.4% 1.9%-2.2%
Fair value of options granted $10.56-$14.86 $9.70-$10.36
o Expected volatility was primarily determined using the
historical volatility of A&B common stock over a 6-year
period, but the Company may also consider future events
that it reasonably concludes marketplace participants
might consider. Accordingly, the Company believes that the
expected volatility estimate is representative of the
stock's future volatility over the expected term of its
employee share options. An increase in the expected
volatility assumption will increase stock compensation
expense.
o The expected term of the awards represents expectations of
future employee exercise and post-vesting termination
behavior and was primarily based on historical experience.
The Company analyzed various groups of employees and
considered expected or unusual trends that would likely
affect this assumption and determined that the historical
term of 6.7 years was reasonable for 2006. An increase in
the expected term assumption will increase stock
compensation expense.
o The risk free interest rate was based on U.S. Government
treasury yields for periods equal to the expected term of
the option on the grant date. An increase in the risk-free
interest rate will increase stock compensation expense.
o The expected dividend yield is based on the Company's
current and historical dividend policy. An increase in the
dividend yield will decrease stock compensation expense.
Application of alternative assumptions could produce significantly
different estimates of the fair value of stock-based compensation, and
consequently, the related amounts recognized in the Condensed
Consolidated Statements of Income.
Activity in the Company's stock option plans for the first two quarters
of 2006 was as follows (in thousands, except exercise price amounts):
Employee Plans Directors' Plans
------------------------- ------------------------ Weighted
1998 1989 Average
1998 1989 Directors' Directors' Total Exercise
Plan Plan Plan Plan Shares Price
---- ---- ---------- ---------- ------ ---------
December 31, 2005 1,190.1 38.2 215.8 42.0 1,486.1 $ 31.16
Granted 174.1 -- 56.0 -- 230.1 $ 51.54
Exercised (62.6) (11.2) (6.0) (12.0) (91.8) $ 26.72
Forfeited & Expired (20.1) -- -- -- (20.1) $ 40.92
---------- ---------- -------- ------- -----------
June 30, 2006 1,281.5 27.0 265.8 30.0 1,604.3 $ 34.21
========== ========== ======== ======== ===========
Exercisable 872.4 27.0 140.6 30.0 1,070.0 $ 29.19
---------- ---------- -------- -------- -----------
The following table summarizes stock option information as of June 30,
2006 (excludes restricted stock, in thousands, except exercise
price amounts):
Weighted Weighted
Options Average Weighted Options Average
Range of Outstanding Remaining Average Exercisable Price of
Exercise as of Contractual Life Exercise as of Exercisable
Prices 6/30/2006 (in Years) Price 6/30/2006 Options
------------------- --------- ------------- ------------ --------- -------
$20.00 - 24.00 95.9 3.3 $ 21.39 95.9 $ 21.39
$24.01 - 28.00 453.3 5.5 $ 26.29 453.3 $ 26.29
$28.01 - 32.00 211.5 4.3 $ 28.54 209.4 $ 28.51
$32.01 - 36.00 355.5 7.4 $ 33.48 223.0 $ 33.48
$36.01 - 40.00 0.2 5.1 $ 37.98 -- --
$40.01 - 44.00 74.8 7.5 $ 40.46 24.0 $ 40.38
$44.01 - 48.00 191.2 8.5 $ 44.45 64.4 $ 44.45
$48.01 - 53.00 221.9 9.6 $ 51.59 -- --
------- -------
$20.00 - 53.00 1,604.3 6.7 $ 34.21 1,070.0 $ 29.19
======= =======
A summary of the compensation cost and other measures related to
share-based payments is as follows (in millions):
Three Months Ended Six Months Ended
June 30, June 30,
2006 2005 2006 2005
---- ---- ---- ----
Share-based expense (net of estimated
forfeitures):
Stock options $ 0.7 $ -- $ 1.4 $ --
Restricted stock 1.4 0.6 2.6 1.0
---------- ---------- ----------- -----------
Total share-based expense $ 2.1 $ 0.6 $ 4.0 $ 1.0
========== ========== =========== ===========
Income tax benefit realized $ 0.2 $ 0.4 $ 1.9 $ 2.5
Intrinsic value of options exercised $ 0.5 $ 0.9 $ 2.1 $ 5.9
Fair value of stock vested $ -- $ -- $ 3.0 $ 0.6
As of June 30, 2006, there was $4.9 million of total unrecognized
compensation cost related to unvested stock options. That cost is
expected to be recognized over a weighted average period of
approximately 1.6 years.
The following table summarizes restricted stock information as of June
30, 2006 (in thousands, except weighted-average, grant-date fair value
amounts):
Weighted
Restricted Average
Stock Grant-Date
Shares Fair Value
------ ----------
December 31, 2005 184.3 $ 41.38
Granted 128.4 $ 52.37
Vested (57.1) $ 41.97
Forfeited (8.0) $ 38.06
-------
June 30, 2006 247.6 $ 46.73
=======
Unrecognized compensation cost related to unvested restricted stock was
$9.2 million, with the cost expected to be recognized over a weighted
average period of 1.4 years.
(7) Accounting for and Classification of Discontinued Operations: As
required by Statement of Financial Accounting Standards No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets" (SFAS
No. 144), the sales of certain income-producing assets are classified
as discontinued operations if (i) the operations and cash flows of the
assets can be clearly distinguished from the remaining assets of the
Company, (ii) the cash flows that are specific to the assets sold have
been, or will be, eliminated from the ongoing operations of the
Company, (iii) the Company will not have a significant continuing
involvement in the operations of the assets sold, and (iv) the amount
is considered material. Certain assets that are "held for sale," based
on the likelihood and intention of selling the property within 12
months, are also treated as discontinued operations. Depreciation on
these assets is discontinued upon reclassification. Sales of land,
residential houses, and office condominium units are generally
considered inventory and are not included in discontinued operations.
Discontinued operations were as follows (in millions):
Quarter Ended Six Months Ended
June 30, June 30,
-------- --------
2006 2005 2006 2005
---- ---- ---- ----
Discontinued Operations (net of tax)
Sales of Assets $ 9.4 $ -- $ 18.7 $ 3.9
Leasing Operations 0.3 0.6 0.7 1.3
-------- -------- -------- --------
Total $ 9.7 $ 0.6 $ 19.4 $ 5.2
======== ======== ======== ========
(8) Other Comprehensive Income for the three and six months ended June 30,
2006 and 2005 was as follows (in millions):
Quarter Ended Six Months Ended
June 30, June 30,
-------- --------
2006 2005 2006 2005
---- ---- ---- ----
Net Income $ 30.2 $ 29.4 $ 67.6 $ 67.1
Company's share of investee's
minimum pension liability
adjustment -- (0.4) 0.1 (0.4)
Change in valuation of derivative (0.1) -- (0.1) 0.1
-------- -------- -------- --------
Comprehensive Income $ 30.1 $ 29.0 $ 67.6 $ 66.8
======== ======== ======== ========
(9) Pension and Post-retirement Plans: The Company has defined benefit
pension plans that cover substantially all non-bargaining unit and
certain bargaining unit employees. The Company also has unfunded
non-qualified plans that provide benefits in excess of the amounts
permitted to be paid under the provisions of the tax law to
participants in qualified plans. The assumptions related to discount
rates, expected long-term rates of return on invested plan assets,
salary increases, age, mortality and health care cost trend rates,
along with other factors, are used in determining the assets,
liabilities and expenses associated with pension benefits. Management
reviews the assumptions annually with its independent actuaries, taking
into consideration existing and future economic conditions and the
Company's intentions with respect to these plans. Management believes
that its assumptions and estimates for 2006 are reasonable. Different
assumptions, however, could result in material changes to the assets,
obligations and costs associated with benefit plans.
The Components of Net Periodic Benefit Cost for the second quarter of
2006 and 2005 were as follows (in millions):
Pension Benefits Post-retirement Benefits
---------------- ------------------------
2006 2005 2006 2005
---- ---- ---- ----
Service Cost $ 1.9 $ 1.6 $ 0.2 $ 0.2
Interest Cost 4.1 4.0 0.8 0.8
Expected Return on Plan Assets (6.5) (6.1) -- --
Amortization of Prior Service Cost 0.1 0.1 -- --
Amortization of Net (Gain) Loss 0.4 0.4 0.3 0.3
-------- -------- -------- --------
Net Periodic Benefit Cost $ -- $ -- $ 1.3 $ 1.3
======== ======== ======== ========
The Components of Net Periodic Benefit Cost for the first half of 2006
and 2005 were as follows (in millions):
Pension Benefits Post-retirement Benefits
---------------- ------------------------
2006 2005 2006 2005
---- ---- ---- ----
Service Cost $ 3.7 $ 3.0 $ 0.5 $ 0.5
Interest Cost 8.2 8.0 1.6 1.6
Expected Return on Plan Assets (13.0) (12.2) -- --
Amortization of Prior Service Cost 0.2 0.2 -- --
Amortization of Net (Gain) Loss 0.8 0.8 0.5 0.6
-------- -------- -------- --------
Net Periodic Benefit Cost (Credit) $ (0.1) $ (0.2) $ 2.6 $ 2.7
======== ======== ======== ========
The 2006 return on plan assets is expected to be nearly the same as the
sum of the service cost, interest cost and amortization components,
resulting in an expected net periodic pension credit of approximately
$0.2 million for 2006. No contributions to the Company's pension plans
are expected to be required during 2006.
(10) Accelerated Share Repurchase Program: On December 9, 2004, A&B's Board
of Directors authorized A&B to repurchase up to two million shares of
its common stock through December 31, 2006. In June 2006, A&B purchased
200,000 shares on the open market at an average price of $42.35.
Additionally, the Company also entered into an accelerated share
repurchase agreement ("ASR") with Goldman, Sachs & Co. on June 27, 2006
to repurchase shares of A&B's common stock for an aggregate purchase
price of approximately $63 million, which is more fully described in a
Form 8-K filed on July 11, 2006. The maximum average price per share
that will be paid under the ASR is $46.83, which is based on 984,000
and 361,342 shares delivered on June 30 and July 12, 2006,
respectively. The average price per share paid to date under the ASR
may not be representative of the final average repurchase price per
share because A&B may receive additional shares for no additional
consideration. Under the terms of the ASR, the Company may receive up
to an additional 184,099 shares upon termination of the agreement in a
third installment based on the volume weighted average price of A&B's
common stock from July 8, 2006 through to the end of the termination
period, which may be determined by Goldman in its discretion from
September 8, 2006 through November 10, 2006. A&B has no further
obligation to provide additional cash or to issue additional shares
under the agreement, and consequently, any additional shares received
would reduce the final average price paid per share. The final average
repurchase price per share under the ASR will range from $41.19 to
$46.83 based on the collar established by the agreement. Through July
28, 2006, our total share repurchases totaled 1,545,342 shares for
$71.5 million at an average price of $46.25 per share. Upon completion
of the ASR, A&B will have repurchased between 1,545,342 and 1,729,441
shares of its stock during 2006 and will have between 270,559 and
454,658 shares remaining under its existing share repurchase
authorization.
(11) Subsequent Events: On July 12, 2006, Matson took delivery of its newest
ship, the MV Maunalei. The purchase price for the MV Maunalei was $147
million. The purchase of the MV Maunalei was funded with the CCF, cash
from operations, and borrowings under the DnB NOR revolving credit
facility. The amount drawn under the DnB NOR revolving credit facility
upon delivery of the ship totaled approximately $70 million, of which
$36 million was applied to the purchase price of the ship and the
remainder was used for other general corporate purposes.
On July 12, 2006, a bill prohibiting residential development and the
sale of the State's fee simple interest in the Kaka'ako Waterfront
project was enacted into law. Consequently, the Company has terminated
its development activities related to the Kaka'ako Waterfront project.
The incurred costs related to the project were immaterial and were
expensed.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
- ------------------------------------------------
The following analysis of the consolidated financial condition and results of
operations of Alexander & Baldwin, Inc. and its subsidiaries (collectively, the
"Company") should be read in conjunction with the condensed consolidated
financial statements and related notes thereto included in Item 1 of this Form
10-Q.
FORWARD-LOOKING STATEMENTS
The Company, from time to time, may make or may have made certain
forward-looking statements, whether orally or in writing, such as forecasts and
projections of the Company's future performance or statements of management's
plans and objectives. These statements are "forward-looking" statements as that
term is defined in the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements may be contained in, among other things, Securities
and Exchange Commission ("SEC") filings, such as the Forms 10-K, 10-Q and 8-K,
press releases made by the Company, the Company's Internet Web sites (including
Web sites of its subsidiaries), and oral statements made by the officers of the
Company. Except for historical information contained in these written or oral
communications, such communications contain forward-looking statements. These
forward-looking statements are not guarantees of future performance, and involve
a number of risks and uncertainties that could cause actual results to differ
materially from those projected in the statements, including, but not limited to
those matters discussed in Item 1A of the Company's 2005 10-K.
CONSOLIDATED REVENUE & NET INCOME
Consolidated - Second quarter of 2006 compared with 2005
- -------------------------------------------------------------------------------------------
Quarter Ended June 30,
- -------------------------------------------------------------------------------------------
(dollars in millions) 2006 2005 Change
- -------------------------------------------------------------------------------------------
Revenue $ 418.2 $ 391.2 7%
Cost of goods sold, services and rentals $ 347.7 $ 308.1 13%
Selling, general and administrative $ 36.3 $ 33.4 9%
Loss on investment $ -- $ 2.2 -100%
Income taxes $ 11.7 $ 17.7 -34%
- -------------------------------------------------------------------------------------------
Net income $ 30.2 $ 29.4 3%
- -------------------------------------------------------------------------------------------
Consolidated revenue for the second quarter of 2006 increased $27.0 million, or
7 percent, compared with the second quarter of 2005. This increase was due
principally to $22.6 million higher revenue for ocean transportation, $9.8
million growth in logistics services revenue, $5.6 million higher revenue for
food products and $5.0 million higher revenue from real estate leasing (after
excluding leasing revenue from assets classified as discontinued operations),
partially offset by $14.5 million in lower revenue from real estate sales (after
excluding revenue from discontinued operations). The reasons for the revenue
growth are described below, by business segment, in the Analysis of Operating
Revenue and Profit.
Costs of goods sold, services and rentals for the second quarter of 2006
increased $39.6 million, or 13 percent, compared with the second quarter of 2005
due to $36.7 million higher costs for ocean transportation, $7.9 million in
higher purchased transportation costs at the Matson Integrated Logistics
business, $3.1 million in higher costs for the food products segment (primarily
as a result of higher sugar sales volume), partially offset by $9.1 million
lower cost of real estate sales (after excluding real estate sales classified as
discontinued operations).
Selling, general and administrative costs for the second quarter of 2006 were
$2.9 million, or 9 percent, higher than the second quarter of 2005 due
principally to higher professional service fees, salaries, and related employee
benefit costs.
Income taxes were lower than the second quarter of 2005, on a percentage basis,
due to a change in the effective income tax rate. The effective tax rate for
2006 was reduced from 38% to 37.5% as a result of a land donation and tax
credits.
Consolidated - First half of 2006 compared with 2005
- -------------------------------------------------------------------------------------------
Six Months Ended June 30,
- -------------------------------------------------------------------------------------------
(dollars in millions) 2006 2005 Change
- -------------------------------------------------------------------------------------------
Revenue $ 779.5 $ 755.0 3%
Cost of goods sold, services and rentals $ 641.4 $ 585.5 10%
Selling, general and administrative $ 72.1 $ 65.5 10%
Loss on investment $ -- $ 2.2 -100%
Income taxes $ 28.7 $ 38.0 -24%
- -------------------------------------------------------------------------------------------
Net income $ 67.6 $ 67.1 1%
- -------------------------------------------------------------------------------------------
Consolidated revenue for the first half of 2006 increased $24.5 million, or 3
percent, compared with the first half of 2005. This increase was due principally
to $35.7 million higher revenue for ocean transportation, $22.1 million growth
in logistics services revenue, and $9.0 million higher revenue from
real estate leasing (after excluding leasing revenue from assets classified as
discontinued operations), partially offset by $34.9 million in lower revenue
from real estate sales (after excluding revenue from discontinued operations).
The reasons for the revenue growth are described below, by business segment, in
the Analysis of Operating Revenue and Profit.
Costs of goods sold, services and rentals for the first half of 2006 increased
$55.9 million, or 10 percent, compared with the first half of 2005 due to $58.7
million in higher costs for ocean transportation, $17.8 million in higher
purchased transportation costs for the logistics business, partially offset by
$19.0 million in lower cost of real estate sales (after excluding real estate
sales classified as discontinued operations) and $3.3 million gain on the sale
of two surplus and obsolete vessels.
Selling, general and administrative costs for the first half of 2006 were $6.6
million, or 10 percent, higher than the first half of 2005 due to the same
factors cited for the second quarter increase.
Income taxes were lower than the first half of 2005 due primarily to the same
factors cited for the second quarter decrease.
ANALYSIS OF OPERATING REVENUE AND PROFIT
TRANSPORTATION INDUSTRY
Ocean Transportation - Second quarter of 2006 compared with 2005
- --------------------------------------------------------------------------------
Quarter Ended June 30,
- --------------------------------------------------------------------------------
(dollars in millions) 2006 2005 Change
- --------------------------------------------------------------------------------
Revenue $ 243.6 $ 221.0 10%
Operating profit $ 24.4 $ 38.7 -37%
- --------------------------------------------------------------------------------
Volume (Units)
Hawaii containers 44,600 44,700 --
Hawaii automobiles 33,800 43,300 -22%
Guam containers 3,900 4,200 -7%
China containers 7,500 -- NM
- --------------------------------------------------------------------------------
Ocean Transportation revenue for the second quarter of 2006 was $22.6 million,
or 10 percent, higher than the second quarter of 2005. Of this increase,
approximately $16.3 million was due to overall container volume increases for
Matson's services, $13.3 million was due to increases in fuel surcharge
revenues, and $4.6 million was due to improved yields and cargo mix. These
increases were partially offset by approximately $8.9 million from the loss of
vessel charter revenue resulting from the expiration of the APL Alliance in the
first quarter of 2006. Matson's Hawaii automobile volume for the quarter was 22
percent lower than the first quarter of last year, due primarily to the impact
of reduced auto manufacturer incentives for rental car agencies, which resulted
in lower rental car turnover, as well as competitive pressures. Total Hawaii
container volume was down slightly from the second quarter of 2005, reflecting
primarily a reduction in eastbound volumes, including lower shipments of
agricultural products and lower military-related household good movements. Guam
container volume was down slightly from the second quarter of 2005, primarily
due to the transition in vessel schedules.
Operating profit was $14.3 million, or 37 percent, lower than the second quarter
of 2005. This decrease was primarily the result of the following operating
expense changes, which offset revenue increases. Direct fuel costs increased by
$15.9 million, vessel operating and overhead expenses increased $5.6 million
primarily due to the China service startup, and terminal handling costs
increased $3.8 million due to increased rates. Outside transportation costs,
which include barge and trucking expenses paid to third parties, increased $2.4
million and G&A expense increased $2.1 million. Earnings from Matson's SSAT
joint venture contributed $0.7 million more than the second quarter of 2005.
Earnings from joint ventures are not included in revenue, but are included in
operating profit.
Ocean Transportation - First half of 2006 compared with 2005
- --------------------------------------------------------------------------------
Six Months Ended June 30,
- --------------------------------------------------------------------------------
(dollars in millions) 2006 2005 Change
- --------------------------------------------------------------------------------
Revenue $ 462.9 $ 427.2 8%
Operating profit $ 42.7 $ 68.4 -38%
- --------------------------------------------------------------------------------
Volume (Units)
Hawaii containers 86,400 86,100 --
Hawaii automobiles 65,600 78,900 -17%
Guam containers 7,700 8,200 -6%
China containers 9,500 -- NM
- --------------------------------------------------------------------------------
Ocean Transportation revenue for the first half of 2006 was $35.7 million, or 8
percent, higher than the first half of 2005. Of this increase, approximately
$21.0 million was due to increases in fuel surcharge revenues, $17.9 million was
due to overall container volume increases for Matson's services, and $7.2
million was due to improved yields and cargo mix. These increases were partially
offset by $11.4 million of lower vessel charter revenue, resulting from the
expiration of the APL Alliance. Total Hawaii automobile volume was 17 percent
lower, due primarily to competitive pressures and reduced shipments to rental
agencies as noted previously. Guam container volume was 6 percent lower than in
the first half of 2005, due primarily to changes in vessel schedules.
Operating profit was $25.7 million, or 38 percent, lower than the first half of
2005. This decrease was primarily the result of the following operating expense
changes, which offset revenue increases. Direct fuel costs increased $28.2
million, vessel operating and overhead expenses increased $5.6 million primarily
due to the China service startup, and terminal handling costs increased $7.4
million due to increased rates. Outside transportation costs increased $3.8
million and G&A expense increased $3.3 million. Matson's SSAT joint venture
contributed $3.6 million less than the first half of 2005, due primarily to a
favorable adjustment made during the first half of 2005. Earnings from this
venture are not included in revenue, but are included in operating profit. These
decreases were partially offset by a $3.3 million gain on the sale of two
surplus and obsolete vessels.
Logistics Services - Second quarter of 2006 compared with 2005
- --------------------------------------------------------------------------------
Quarter Ended June 30,
- --------------------------------------------------------------------------------
(dollars in millions) 2006 2005 Change
- --------------------------------------------------------------------------------
Revenue $ 116.4 $ 106.6 9%
Operating profit $ 5.3 $ 3.6 47%
- --------------------------------------------------------------------------------
Integrated logistics revenue increased by $9.8 million, or 9 percent, for the
second quarter of 2006 compared with the second quarter of 2005. This growth was
the result of continued improvements in yields and an 11 percent increase in
highway and less-than-truckload volumes, partially offset by lower volumes in
domestic and international intermodal services.
Integrated logistics operating profit increased by $1.7 million, or 47 percent,
for the second quarter of 2006 compared with the second quarter of 2005. The
increased operating profit was the result of higher yields in all service
categories and lower general and administrative costs as a percentage of
revenue.
The revenue for integrated logistics services includes the total amount billed
to customers for transportation services. The primary costs include purchased
transportation services. As a result, the operating profit margins for this
business are narrower than other A&B businesses. The primary operating profit
and investment risk for this business is the quality of receivables, which is
monitored closely.
Logistics Services - First half of 2006 compared with 2005
- --------------------------------------------------------------------------------
Six Months Ended June 30,
- --------------------------------------------------------------------------------
(dollars in millions) 2006 2005 Change
- --------------------------------------------------------------------------------
Revenue $ 224.8 $ 202.7 11%
Operating profit $ 10.0 $ 6.6 52%
- --------------------------------------------------------------------------------
Integrated logistics revenue increased by $22.1 million, or 11 percent, for the
first half of 2006 compared with the first half of 2005. This growth was the
result of continued improvements in mix of business and rates, and a 15 percent
increase in highway and less-than-truckload volumes, partially offset by a 22
percent decrease in international intermodal volume.
Integrated logistics operating profit increased by $3.4 million, or 52 percent,
for the first half of 2006 compared with the first half of 2005. The operating
profit improvement was the result of higher yields in all service categories and
lower general and administrative costs as a percentage of revenue.
REAL ESTATE INDUSTRY
Real estate leasing and sales revenue and operating profit are analyzed before
subtracting amounts related to discontinued operations. This is consistent with
how the Company's management evaluates and makes decisions for the Company's
real estate businesses. A discussion of discontinued operations for the real
estate business is included separately.
Leasing- Second quarter of 2006 compared with 2005
- --------------------------------------------------------------------------------
Quarter Ended June 30,
- --------------------------------------------------------------------------------
(dollars in millions) 2006 2005 Change
- --------------------------------------------------------------------------------
Revenue $ 24.4 $ 21.3 15%
Operating profit $ 12.2 $ 10.5 16%
- --------------------------------------------------------------------------------
Occupancy Rates:
Mainland 98% 95% 3%
Hawaii 98% 92% 6%
- --------------------------------------------------------------------------------
Leasable Space (million sq. ft.):
Mainland 3.7 3.5 6%
Hawaii 1.5 1.7 -12%
- --------------------------------------------------------------------------------
Real estate leasing revenue and operating profit for the second quarter of 2006
were 15 percent and 16 percent higher, respectively, than the amounts reported
for the second quarter of 2005. These increases were due principally to $2.8
million of revenue and $1.4 million of contribution margin from four properties
acquired subsequent to the second quarter of 2005, the results from the
completion of a new Oahu commercial development during the second half of 2005,
and higher interest income earned on 1031 escrow funds. The higher occupancy
rate for the Hawaii commercial leasing portfolio was principally due to the
addition of Kunia Shopping Center, a new Oahu commercial development that was
fully leased upon completion, the addition of Lanihau Shopping Center, a
fully-leased retail center in Kailua-Kona on the island of Hawaii subsequent to
the first half of 2005, and higher leasing activity at existing properties.
Leasing- First half of 2006 compared with 2005
- --------------------------------------------------------------------------------
Six Months Ended June 30,
- --------------------------------------------------------------------------------
(dollars in millions) 2006 2005 Change
- --------------------------------------------------------------------------------
Revenue $ 49.0 $ 43.2 13%
Operating profit $ 24.3 $ 21.2 15%
- --------------------------------------------------------------------------------
Occupancy Rates:
Mainland 97% 95% 2%
Hawaii 98% 91% 7%
- --------------------------------------------------------------------------------
Real estate leasing revenue and operating profit for the first half of 2006 were
13 percent and 15 percent higher, respectively, than the amounts reported for
the first half of 2005. Additionally, the Hawaii commercial leasing portfolio's
occupancy rate increased by 7 percent. These increases were due to the same
reasons as cited for the quarter.
Real Estate Sales - Second quarter and first half of 2006 compared with 2005
- --------------------------------------------------------------------------------
Quarter Ended June 30,
- --------------------------------------------------------------------------------
(dollars in millions) 2006 2005 Change
- --------------------------------------------------------------------------------
Revenue $ 36.8 $ 14.6 2.5x
Operating profit $ 10.9 $ 4.8 2.3x
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Six Months Ended June 30,
- --------------------------------------------------------------------------------
(dollars in millions) 2006 2005 Change
- --------------------------------------------------------------------------------
Revenue $ 60.6 $ 60.5 --
Operating profit $ 38.0 $ 21.3 78%
- --------------------------------------------------------------------------------
2006 Second Quarter: Real estate sales revenue, before subtracting amounts
treated as discontinued operations, was $36.8 million and was principally
comprised of the sale of two retail centers in Phoenix, Arizona and one
commercial parcel on Maui. Operating profit for the second quarter of 2006
included the Company's share of $1.7 million in marketing and other operating
expenses of its real estate joint ventures.
2006 First Half: Revenue for the first half of 2006 also included first quarter
revenue of $23.8 million, principally related to the sales of a Maui office
building, four commercial parcels on Maui, a commercial property on Oahu and a
vacant parcel on Kauai. Operating profit for the first half of 2006 also
included $12.2 million for the Company's earnings from its real estate joint
ventures (which are not included in revenue for the segment). The $12.2
million in joint venture earnings principally relates to a portion of the
Company's earnings from its Hokua joint venture, which completed sales of all
247 residential condominium units in the first quarter.
2005 Second Quarter: Revenue for the second quarter of 2005, before subtracting
amounts treated as discontinued operations, was principally due to the receipt
of the final 80-percent installment payment of $14.1 million for a 30-acre
development parcel at Wailea. In addition to the profit contribution from that
sale, 2005 second quarter operating profit included $0.8 million for the
Company's share of earnings from its real estate joint ventures.
2005 First Half: Real estate sales for the first half of 2005 also included
first quarter sales revenue from the sale of a warehouse/distribution complex in
Ontario, California for $17.8 million, seven Maui and Oahu commercial properties
for $7.6 million, a residential development parcel and three residential
properties for $7.5 million, a service center/warehouse complex comprised of
three buildings in San Antonio, Texas for $6.3 million, and 5.5 office
condominium floors for $5.5 million. In addition to the profit contribution from
these sales, 2005 first half operating profit included approximately $1.8
million for the Company's share of earnings from its real estate joint ventures.
The mix of real estate sales in any year or quarter can be diverse. Sales can
include developed residential real estate, commercial properties, developable
subdivision lots, undeveloped land, and property sold under threat of
condemnation. The sale of undeveloped land and vacant parcels in Hawaii
generally provides a greater contribution to earnings than does the sale of
developed and commercial property, due to the low historical-cost basis of the
Company's Hawaii land. Consequently, real estate sales revenue trends, cash
flows from the sales of real estate and the amount of real estate held for sale
on the balance sheets do not necessarily indicate future profitability trends
for this segment. Additionally, the operating profit reported in each quarter
does not necessarily follow a percentage of sales trends because the cost basis
of property sold can differ significantly between transactions. The reporting of
real estate sales is also affected by the classification of certain real estate
sales as discontinued operations.
Real Estate Discontinued Operations - 2006 compared with 2005
The revenue and operating profit on real estate discontinued operations for the
second quarter and first half of 2006 and 2005 were as follows:
- ------------------------------------------------------------------------------------------------------------
Quarter Ended June 30, Six Months Ended June 30,
- ------------------------------------------------------------------------------------------------------------
(dollars in millions, before tax) 2006 2005 2006 2005
- ------------------------------------------------------------------------------------------------------------
Sales revenue $ 36.7 -- $ 59.6 $ 24.5
Leasing revenue $ 0.8 $ 2.6 $ 2.1 $ 5.3
Sales operating profit $ 15.0 -- $ 30.0 $ 6.3
Leasing operating profit $ 0.6 $ 1.0 $ 1.2 $ 2.1
- ------------------------------------------------------------------------------------------------------------
2006: The sales of two retail centers in Phoenix, Arizona for $35.6 million, an
office building on Maui for $15.7, and several commercial parcels in Hawaii.
Additionally, the revenue and expenses of a commercial parcel on Maui have been
classified as discontinued operations because of the Company's plan to sell this
property.
2005: The sales of one warehouse/distribution complex in Ontario, California,
for $17.8 million, one service center/warehouse complex, consisting of three
buildings in San Antonio, Texas, for $6.3 million, an office building in
Wailuku, Maui, two office buildings in downtown Honolulu, and the fee interest
in a parcel in Maui were included in discontinued operations.
The leasing revenue and operating profit noted above includes the results for
properties that were sold through June 30, 2006 and the operating results of a
commercial parcel on Maui that the Company intends to sell within the next 12
months. The leasing revenue and operating profit for the second quarter of 2005
have been restated to reflect property that was classified as discontinued
operations subsequent to June 30, 2005.
FOOD PRODUCTS INDUSTRY
Food Products - Second quarter of 2006 compared with 2005
- --------------------------------------------------------------------------------
Quarter Ended June 30,
- --------------------------------------------------------------------------------
(dollars in millions) 2006 2005 Change
- --------------------------------------------------------------------------------
Revenue $ 37.8 $ 32.2 17%
Operating profit $ 3.1 $ 0.3 10.3x
- --------------------------------------------------------------------------------
Tons sugar produced 61,400 58,400 5%
- --------------------------------------------------------------------------------
Food products revenue increased 17 percent for the second quarter of 2006
compared with 2005 due mainly to $2.1 million in equipment rentals, repair
services and trucking, $1.6 million from higher bulk raw sugar sales stemming
from higher sugar prices and increased sales volume, $1.5 million from higher
power sales prices and volume, and $0.6 million in higher molasses sales prices.
Operating profit increased tenfold from the second quarter of 2005 due
principally to $1.5 million in higher power sales, $0.8 million in higher
equipment rentals, and $0.8 million in higher molasses and specialty sugar
sales.
Food Products - First half of 2006 compared with 2005
- --------------------------------------------------------------------------------
Six Months Ended June 30,
- --------------------------------------------------------------------------------
(dollars in millions) 2006 2005 Change
- --------------------------------------------------------------------------------
Revenue $ 53.3 $ 54.6 -2%
Operating profit $ 9.6 $ 9.3 3%
- --------------------------------------------------------------------------------
Tons sugar produced 62,200 77,900 -20%
- --------------------------------------------------------------------------------
Food products revenue decreased 2 percent for the first half of 2006 compared
with 2005. Excluding the $5.5 million disaster relief payment received in 2005,
revenue increased 9 percent due mainly to $2.9 million from higher power sales,
$2.1 million in higher repair services and trucking revenue, $1.6 million in
higher specialty sugar and molasses sales, and $1.1 million in higher equipment
rentals and soil sales. Lower revenue of $4.2 million from lower sugar sales
partially offset the previously noted increases.
Operating profit was 3 percent higher than the first half of 2005. However,
excluding the $5.5 million disaster relief payment received in 2005, operating
profit improved more than 150 percent, primarily due to $2.9 million in higher
power sales, $1.5 million in higher equipment rentals, soil sales, repair
services and trucking, $0.9 million in higher sugar sales margin as a result of
higher sugar prices, and $0.4 in higher molasses sales.
Sugar production was 20 percent lower in 2006 than in 2005 because operations
commenced one month later, as planned by the Company, than in the prior year.
While the Company expects to make up the difference in production, any future
impacts to the harvesting schedule, or unanticipated impacts to yields, could
affect total year production.
As reported by national media, the island of Kauai experienced the heaviest
rainfall in its recent history during March. Based on preliminary inspections of
Company-owned reservoirs by both the Company and the State of Hawaii, it is
believed that the facilities are sound, although certain remedial action will
have to be taken. The Company is currently evaluating both the Kauai and the
Maui reservoirs for any necessary follow-up action; the ultimate cost of the
reservoir studies and remediation activities is not known at this time.
2006 OUTLOOK
The statements included herein contain forward looking information. The
economic, operating results, trends and expectations noted below may be
different from actual events; those differences might be significant and might
affect, among other measures and trends, revenues, expenses, assets,
liabilities, shareholders' equity and cash flows.
Although expectations for statewide economic growth in 2006 and beyond remain
favorable, they are below the high rates of growth experienced in 2004 and 2005.
However, the Company believes that the current economic outlook will continue to
support its earnings growth expectations for 2006.
The first half's financial results were accompanied by favorable progress on
major initiatives in both our ocean transportation and real estate segments.
Based on the encouraging results of the strong start in 2006, the Company
remains confident that progress on major real estate development projects and
Matson's trans-Pacific expansion will position the Company for even stronger
performance in the years to come.
Starting in the third quarter, revenue from the China Service should
increasingly offset the fixed operating costs of the Guam and China services and
the loss of charter revenue from the APL Alliance. As a result, the Company
anticipates comparisons in the second half of 2006 will be much more favorable,
with second half earnings to approach or perhaps match second half 2005. China
volumes in the second quarter continued to ramp up nicely, offsetting lower than
planned rates. In the Hawaii trade, cost increases will continue to be an
important factor, with negotiated wage increases effective July 1, 2006 and an
expectation of continued, but moderate, fuel cost increases. Matson Integrated
Logistics produced an outstanding quarter, with positive year-over-year
comparisons forecast for the remainder of 2006. The logistics segment is poised
for continued growth, though margins may moderate somewhat from very high second
quarter levels.
Real estate industry results for the second quarter reaffirm the expectation of
full year growth that meets or exceeds the company's long-term annual growth
target of 13-15%. For real estate sales, the majority of the Company's
remaining property sales for 2006 are likely to take place in the fourth
quarter. While the Hawaii residential market appears to be in transition, with
lower sales volumes, and prices that appear to be leveling off, the Company's
development projects and joint venture investments continue to perform well.
At the Company's Kukui'ula project, which is being developed in a partnership
with an affiliate of DMB Associates, Inc., 123 lots in the first two phases are
being offered to members of the Founders program. As of late July 2006,
approximately 70 non-binding letters of intent to purchase have been signed,
and an additional 30 letters of intent are pending. Remaining lots are now
being offered to members of Kukui'ula's Discoverers program, which consists of
approximately 120 potential buyers. As reported in the Company's April 2006
quarterly earnings call, the Founders program had approximately 260
subscriptions. As of late July 2006, besides the 100 executed or pending
letters of intent described above, approximately 40 Founders have cancelled
their subscriptions, and the remaining 120 Founders will be making their
decision on whether to purchase a lot in 2007. Sales contracts will be issued
to buyers in the third quarter, with closings scheduled for the fourth quarter.
The Company projects that only a negligible amount of the Company's projected
2006 operating profit, and between 10% to 15% of its 2007 projected operating
profit, both as a percentage of consolidated operating profit, is expected to be
generated from residential sales that are not currently under binding contracts.
The real estate industry segment outlook is reinforced by continuing robust
commercial real estate conditions that are reflected in particularly strong
leased properties portfolio occupancy rates which reached a Company record 98%
occupancy across its Hawaii and Mainland U.S. properties.
Should current market prices for sugar, power and molasses hold throughout the
year, the food products segment should be modestly profitable for the balance of
the year. Despite the absence of the one-time payment of $5.5 million received
in 2005, the Company anticipates profitability at or near 2005 levels.
FINANCIAL CONDITION, LIQUIDITY, FINANCING ARRANGEMENTS AND CASH FLOWS
Liquid Resources: The Company's principal liquid resources, comprising cash and
cash equivalents, receivables, sugar and coffee inventories and unused borrowing
capacity on revolving credit and private placement shelf facilities, less
accrued deposits to the CCF, totaled approximately $665 million at June 30,
2006, an increase of $45 million from December 31, 2005. The increase was due
primarily to $44 million in higher available balances on revolving credit and
private placement shelf facilities, $15 million in higher sugar and coffee
inventories and $10 million in higher receivables balances, partially offset by
$23 million of lower cash balances.
Balance Sheet: Working capital was $29 million at June 30, 2006, a decrease of
$20 million from the balance carried at the end of 2005. The decrease in working
capital was due primarily to lower cash balances, lower balances for real estate
held for sale, and higher balances on revolving credit facilities. These factors
were partially offset by higher balances for accounts receivable and higher
inventory balances.
Cash and cash equivalents totaled $34 million at the end of the second quarter
compared with $57 million at the beginning of the year. The lower balance is due
principally to share repurchases, net deposits into the CCF, and capital
expenditures.
Long-term Debt, including current portion, totaled $407 million at June 30, 2006
compared with a balance of $327 million at December 31, 2005. This $80 million
increase was due mainly to capital expenditure financing and share repurchases.
The Company's net deferred tax obligation was $421 million at June 30, 2006
compared with $399 million at December 31, 2005. This $22 million increase was
due principally to CCF deposits, and to a lesser extent, tax-deferred real
estate sales.
Cash Flows and Capital Expenditures: Cash Flows from Operating Activities
totaled $40 million for the first half of 2006, compared with $129 million for
the first half of 2005. This decrease was principally the result of gains on the
sale of properties that are classified as either investing cash flows or
non-cash transactions, changes in current and deferred income tax and accounts
receivable balances, and lower Matson earnings.
Capital expenditures for the first half of 2006 totaled $87 million compared
with $174 million for the first half of 2005. The expenditures for the first
half of 2006 relate primarily to equipment purchases for the ocean
transportation segment and expenditures related to property development
activities. The $174 million for the first half of 2005 relates primarily to the
purchase of the MV Manulani for $144 million. The amounts reported in Capital
Expenditures on the Statement of Cash Flows for the first half of 2006 exclude
$33 million of tax-deferred purchases since the Company did not actually take
control of the cash during the exchange period.
On July 12, 2006, the Company took delivery of the MV Maunalei. The purchase
price for the MV Maunalei was $147 million. The purchase of the MV Maunalei was
funded with the CCF, cash from operations, and borrowings under the DnB NOR
revolving credit facility. The amount drawn under the DnB NOR revolving credit
facility upon delivery of the ship totaled approximately $70 million and, in
addition to providing partial financing for the ship, was used for other general
corporate purposes.
On April 27, 2006, the Company announced a joint venture partnership with Gentry
Investment Properties to develop Phase I of the Waiawa master-planned community
in Central Oahu. The joint venture will act as the master developer for Phase I,
selling development parcels to homebuilders. Phase I is planned and entitled for
approximately 5,000 residential units, to be developed over a 10-year time
frame. The Company's total equity contribution is expected to be approximately
$50 million. Equity contributions will be made over the course of development,
commencing upon the satisfaction of certain conditions that are expected to be
met in the third quarter of 2006.
Tax-Deferred Real Estate Exchanges: Sales - During the first half of 2006, sales
and condemnations proceeds which qualified for potential tax-deferral treatment
under the Internal Revenue Code Sections 1031 and 1033 totaled approximately $58
million. The proceeds included the sales of two retail centers in Phoenix,
Arizona, a Maui office building, three commercial parcels on Maui, and a vacant
parcel on Kauai.
Purchases - During the first half of 2006, the Company acquired, using the
proceeds from tax-deferred sales (including reverse 1031 transactions), property
totaling approximately $66 million. The properties acquired with tax-deferred
proceeds principally included a two-building office property in Salt Lake City,
Utah, a two-building office complex in Plano, Texas, and a two-story office
building in Sacramento, California.
The proceeds from 1031 tax-deferred sales are held in escrow pending future use
to purchase new real estate assets. The proceeds from 1033 condemnations are
held by the Company until the funds are redeployed.
The funds related to 1031 transactions are not included in the Statement of Cash
Flows but are included as non-cash information below the Statement. For "reverse
1031" transactions, the Company purchases a property in anticipation of
receiving funds in a future property sale. Funds used for reverse 1031 purchases
are included as capital expenditures on the Statement of Cash Flows and the
related sales of property, for which the proceeds are linked, are included as
real estate sales in the Statement.
Commitments, Contingencies and Environmental Matters: A description of
commitments and contingencies at June 30, 2006 is described in Note 3 to the
financial statements of Item 1.
OTHER MATTERS
Investments: The Company's joint ventures are described in Item 8 of the
Company's most recently filed Form 10-K.
Dividends: On April 27, 2006, A&B announced an increase in the second quarter
2006 dividend to 25 cents per share. The previous dividend was 22.5 cents per
share. On June 22, 2006, the Company's Board of Directors announced a
third-quarter 2006 dividend of 25 cents per share, payable on September 7, 2006
to shareholders of record as of the close of business on August 3, 2006.
Significant Accounting Policies: The Company's significant accounting policies
are described in Note 1 of the consolidated financial statements included in
Item 8 of the Company's most recently filed Form 10-K.
Critical Accounting Estimates: The preparation of financial statements in
conformity with accounting principles generally accepted in the United States of
America, upon which the Management's Discussion and Analysis is based, requires
that Management exercise judgment when making estimates and assumptions about
future events that affect the amounts reported in the financial statements and
accompanying notes. Future events and their effects cannot be determined with
absolute certainty and actual results will, inevitably, differ from those
estimates. These differences could be material. The most significant accounting
estimates inherent in the preparation of A&B's financial statements were
described in Item 7 of the Company's 2005 Form 10-K.
New Accounting Standards: On July 13, 2006, the Financial Accounting Standards
Board (FASB) issued FASB Interpretation No. 48, "Accounting for Uncertainty in
Income Taxes--an interpretation of FASB Statement No. 109" (FIN 48). This
Interpretation prescribes a recognition threshold and measurement attribute for
the financial statement recognition and measurement of a tax position taken or
expected to be taken in a tax return. This Interpretation also provides guidance
on derecognition, classification, interest and penalties, accounting in interim
periods, disclosure, and transition. The new rules will be effective for the
Company in 2007. At this time, the Company has not completed its review and
assessment of the impact of adoption of FIN 48.
Information about the impacts of other newly issued accounting standards are
discussed in the Company's most recently filed Form 10-K.
Economic Conditions: Two primary sources of periodic economic forecasts for the
state are the University of Hawaii Economic Research Organization (UHERO) and
the state's Department of Business, Economic Development & Tourism (DBEDT).
Forecasts from these independent organizations suggest that the economic outlook
is moderating but sustainable for the next few years. For more information
please go to the websites of these organizations at www.uhero.hawaii.edu and
--------------------
www.hawaii.gov/dbedt/info/economic, respectively.
- ----------------------------------
Officer and Management Changes: The following management changes occurred
between April 1, 2006 and July 28, 2006.
Christopher J. Benjamin was named treasurer of A&B effective May 1,
2006. Mr. Benjamin was also named treasurer of A&B Properties, Inc, and
continues in the positions of senior vice president and chief financial
officer of A&B.
W. Allen Doane was named chairman of the boards of A&B and Matson
effective April 28, 2006. Mr. Doane is also president and chief
executive officer of A&B.
Paul K. Ito was promoted to controller of A&B effective May 1, 2006.
Charles M. Stockholm retired as chairman of the boards of A&B and
Matson effective April 27, 2006.
Thomas A. Wellman resigned as vice president, treasurer and controller
of A&B effective May 1, 2006. He also resigned from other subsidiaries
in which he held officer positions.
Ruthann S. Yamanaka resigned as vice president human resources of A&B,
effective May 13, 2006.
John B. Kelley, vice president investor relations of A&B, passed away
on May 24, 2006.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
- -------------------------------------------------------------------
Information concerning market risk is incorporated herein by reference to Item
7A of the Company's Form 10-K for the fiscal year ended December 31, 2005. There
has been no material change in the quantitative and qualitative disclosure about
market risk since December 31, 2005.
ITEM 4. CONTROLS AND PROCEDURES
- --------------------------------
(a) Disclosure Controls and Procedures. The Company's management, with
the participation of the Company's Chief Executive Officer and Chief
Financial Officer, has evaluated the effectiveness of the Company's
disclosure controls and procedures (as such term is defined in Rules
13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934,
as amended (the "Exchange Act")) as of the end of the period covered
by this report. Based on such evaluation, the Company's Chief
Executive Officer and Chief Financial Officer have concluded that,
as of the end of such period, the Company's disclosure controls and
procedures are effective in recording, processing, summarizing and
reporting, on a timely basis, information required to be disclosed by
the Company in the reports that it files or submits under the
Exchange Act.
(b) Internal Control Over Financial Reporting. There have not been any
changes in the Company's internal control over financial reporting
(as such term is defined in Rules 13a-15(f) and 15d-15(f) under the
Exchange Act) during the fiscal quarter to which this report relates
that have materially affected, or are reasonably likely to materially
affect, the Company's internal control over financial reporting.
PART II. OTHER INFORMATION
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
- --------------------------------------------------------------------
Issuer Purchases of Equity Securities
- -------------------------------------------------------------------------------------------------------------------------------
Total Number of Maximum Number
Shares Purchased as of Shares that
Part of Publicly May Yet Be Purchased
Total Number of Average Price Announced Plans Under the Plans
Period Shares Purchased Paid per Share or Programs or Programs
- -------------------------------------------------------------------------------------------------------------------------------
Apr 1 - 30, 2006 -- -- -- --
- -------------------------------------------------------------------------------------------------------------------------------
May 1 - 31, 2006 -- -- -- --
- -------------------------------------------------------------------------------------------------------------------------------
Jun 1 - 30, 2006 1,184,000 $46.25 (1) 1,184,000 816,000
- -------------------------------------------------------------------------------------------------------------------------------
(1) On December 9, 2004, A&B's Board of Directors authorized A&B to
repurchase up to two million shares of its common stock through
December 31, 2006. In June 2006, A&B purchased 200,000 shares on the
open market at an average price of $42.35. Additionally, the Company
also entered into an accelerated share repurchase agreement ("ASR")
with Goldman, Sachs & Co. ("Goldman") on June 27, 2006 to repurchase
shares of A&B's common stock for an aggregate purchase price of
approximately $63 million. The maximum average price paid per share
that will be paid under the ASR is $46.83, which is based on 984,000
and 361,342 shares delivered on June 30, 2006 and July 12, 2006,
respectively. The average price per share paid to date under the ASR
may not be representative of the final average repurchase price per
share because A&B may receive additional shares for no additional
consideration. Under the terms of the ASR, the Company may receive up
to an additional 184,099 shares upon termination of the agreement in a
third installment based on the volume weighted average price of A&B's
common stock from July 8, 2006 through to the end of the termination
period, which may be determined by Goldman in its discretion from
September 8, 2006 through November 10, 2006. A&B has no further
obligation to provide additional cash or to issue additional shares
under the agreement, and consequently, any additional shares received
would reduce the final average price paid per share. The final average
repurchase price per share under the ASR is expected to range from
$41.19 to $46.83. Through July 28, 2006, our total share repurchases
totaled 1,545,342 shares for $71.5 million at an average price of
$46.25 per share.
ITEM 6. EXHIBITS
- -----------------
10.a.(lv) Amendment No. 3 dated July 7, 2006, to Shipbuilding Contract
(Hull BN460) between Aker Philadelphia Shipyard, Inc. and Matson
Navigation Company, Inc., dated February 14, 2005.
10.b.1.(xiv) Amendment No. 4 to the Alexander & Baldwin, Inc. 1998
Stock Option/Stock Incentive Plan, effective June 22, 2006.
10.b.1.(xv) Form of Restricted Stock Issuance Agreement pursuant to the
Alexander & Baldwin, Inc. 1998 Stock Option/Stock Incentive Plan.
10.b.1.(xvi) Form of Non-Qualified Stock Option Agreement pursuant to
the Alexander & Baldwin, Inc. 1998 Stock Option/Stock Incentive Plan.
10.b.1.(xxiv) A&B Deferred Compensation Plan for Outside Directors,
amended and restated effective January 1, 2005.
10.b.1.(xxv) A&B Excess Benefit Plan, amended and restated effective
January 1, 2005.
10.b.1.(xxvi) A&B Executive Survivor/Retirement Benefit Plan, amended
and restated effective January 1, 2005.
10.b.1.(xxvii) A&B 1985 Supplemental Executive Retirement Plan, amended
and restated effective January 1, 2005.
10.b.1.(xlii) Alexander & Baldwin, Inc. Deferred Compensation Plan,
amended and restated effective January 1, 2005.
31.1 Certification of Chief Executive Officer, as Adopted Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
31.2 Certification of Chief Financial Officer, as Adopted Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
32 Certification of Chief Executive Officer and Chief Financial
Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ALEXANDER & BALDWIN, INC.
--------------------------------------
(Registrant)
Date: July 28, 2006 /s/ Christopher J. Benjamin
--------------------------------------
Christopher J. Benjamin
Senior Vice President,
Chief Financial Officer and
Treasurer
Date: July 28, 2006 /s/ Paul K. Ito
--------------------------------------
Paul K. Ito
Controller
EXHIBIT INDEX
10.a.(lv) Amendment No. 3 dated July 7, 2006, to Shipbuilding Contract
(Hull BN460) between Aker Philadelphia Shipyard, Inc. and Matson Navigation
Company, Inc., dated February 14, 2005.
10.b.1.(xiv) Amendment No. 4 to the Alexander & Baldwin, Inc. 1998
Stock Option/Stock Incentive Plan, effective June 22, 2006.
10.b.1.(xv) Form of Restricted Stock Issuance Agreement pursuant to the
Alexander & Baldwin, Inc. 1998 Stock Option/Stock Incentive Plan.
10.b.1.(xvi) Form of Non-Qualified Stock Option Agreement pursuant to
the Alexander & Baldwin, Inc. 1998 Stock Option/Stock Incentive Plan.
10.b.1.(xxiv) A&B Deferred Compensation Plan for Outside Directors,
amended and restated effective January 1, 2005.
10.b.1.(xxv) A&B Excess Benefit Plan, amended and restated effective
January 1, 2005.
10.b.1.(xxvi) A&B Executive Survivor/Retirement Benefit Plan, amended
and restated effective January 1, 2005.
10.b.1.(xxvii) A&B 1985 Supplemental Executive Retirement Plan, amended
and restated effective January 1, 2005.
10.b.1.(xlii) Alexander & Baldwin, Inc. Deferred Compensation Plan,
amended and restated effective January 1, 2005.
31.1 Certification of Chief Executive Officer, as Adopted Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
31.2 Certification of Chief Financial Officer, as Adopted Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
32 Certification of Chief Executive Officer and Chief Financial
Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.
ALEXANDER & BALDWIN, INC.
1998 STOCK OPTION/STOCK INCENTIVE PLAN
AMENDMENT NO. 4
---------------
The Alexander & Baldwin, Inc. 1998 Stock Option/Stock Incentive Plan,
as previously amended (the "Plan"), is hereby further amended, effective as of
June 22, 2006, as follows:
1. Section I.B of Article Five of the Plan is hereby amended in its
entirety to read as follows:
B. The Plan Administrator may, in its discretion, provide any
or all holders of options, restricted stock awards or any other share right
awards pursuant to which shares of Common Stock are to be issued under the Plan
with the right to use shares of Common Stock in satisfaction of all or part of
the Withholding Taxes to which such holders may become subject in connection
with the exercise of their options, the issuance to them of vested shares or the
subsequent vesting of shares of restricted stock issued to them. Such right may
be provided to any such holder in either or both of the following formats and
shall be subject to such terms, procedures and conditions governing its exercise
as the Plan Administrator may establish at the time such right is granted:
Stock Withholding: The election to have the Corporation withhold,
-----------------
from the shares of Common Stock otherwise issuable upon the exercise of stock
options or the direct issuance of fully-vested shares, a portion of those
shares with an aggregate Fair Market Value equal to the percentage of the
Withholding Taxes (not to exceed one hundred percent (100%)) designated by the
holder.
Stock Delivery: The election to deliver to the Corporation, at
--------------
the time the option is exercised, the vested shares are issued or the unvested
shares of restricted stock subsequently vest, one or more shares of Common
Stock previously acquired by such holder (including the shares subject to the
restricted stock award which subsequently vests and triggers the Withholding
Taxes) with an aggregate Fair Market Value equal to the percentage of the
Withholding Taxes (not to exceed one hundred percent (100%)) designated by the
holder.
The following limitations shall be in effect for restricted
stock awards and other share right awards (other than stock options):
(i) The right to use shares of Common Stock in satisfaction of
all or part of the Withholding Taxes which become due upon the issuance of
vested shares pursuant to a share right award or the subsequent vesting of a
restricted stock award shall apply to share right awards or restricted stock
awards outstanding on June 22, 2006 or made at any time on or after that date.
(ii) The shares of Common Stock withheld in satisfaction of
all or part of the Withholding Taxes which become due upon the issuance of
vested shares pursuant to a share right award or the vesting of a restricted
stock award shall reduce on a share-for-share basis the number of shares of
Common Stock authorized for issuance under the Plan. Accordingly, the share
reserve under Section V of Article One shall be reduced by the gross number of
shares of Common Stock which vest under such share right award or restricted
stock award, and not by the net number of shares actually issued after the
applicable Withholding Taxes have been collected.
(iii) The shares of Common Stock delivered in satisfaction of
all or part of the Withholding Taxes which become due upon the subsequent
vesting of restricted stock awards shall not be added to the shares of Common
Stock authorized for issuance under the Plan and, accordingly, shall not
increase the share reserve under Section V of Article One.
For purposes of this Section I.B, the term Withholding Taxes
shall mean the minimum federal, state and local income taxes and the employee
portion of the federal, state and local employment taxes required to be withheld
by the Corporation in connection with the issuance of shares of Common Stock
under the Plan, whether pursuant to a stock option exercise or the vesting of
any restricted stock or other stock-based award.
2. Except as modified by this Amendment No. 4, all the terms and
provisions of the Plan as currently in effect shall continue in full force and
effect.
IN WITNESS WHEREOF, Alexander & Baldwin, Inc. has caused this Amendment
No. 4 to be executed on its behalf by its duly-authorized office as of the date
first written above.
ALEXANDER & BALDWIN, INC.
By /s/ Nelson N. S. Chun
------------------------------
Its Senior Vice President
By /s/ Alyson J. Nakamura
------------------------------
Its Secretary
A&B DEFERRED COMPENSATION PLAN
FOR OUTSIDE DIRECTORS
(Amended and Restated Effective as of January 1, 2005)
Alexander & Baldwin, Inc. ("A&B") hereby provides Directors of A&B who
are not A&B employees ("Outside Directors") the opportunity to defer payment of
retainer and meeting fees in accordance with the following:
1. Amount Which May Be Deferred. An Outside Director may elect to defer
----------------------------
all or a portion of his/her fees in accordance with the options set forth on the
deferral election form shown as Attachment 1.
2. Period of Deferral. All deferrals shall be until retirement or until
------------------
other termination as a Director of A&B. Once specified, the date(s) for payment
of deferred fees may not be changed.
3. Election to Defer. Election to defer may be made within 30 days
-----------------
following the date an individual first becomes an Outside Director of A&B or
thereafter in December of each year. In December of each year, the Human
Relations Department will send to each Outside Director a deferral election form
as shown by Attachment 1. Elections to defer will remain in effect from one
calendar year to the next until terminated or modified. For an election to be
effective for any calendar year, the form must be executed by the Outside
Director, returned to A&B, and accepted and approved by the Human Relations
Department before the beginning of the calendar year for which the election is
to be effective. An election to defer may be terminated at any time by written
notice to the A&B Human Relations Department.
4. Payout of Deferred Fees. Except as provided otherwise in this
-----------------------
paragraph, deferred fees will be paid to Outside Directors in accordance with
the schedule of payments specified in the deferral election form. Payments will
be made on or about January 15 of the year in which payments are scheduled.
Notwithstanding the foregoing, upon the occurrence of a Change in Control, as
defined hereafter, the Plan shall automatically terminate, and the present value
of the benefit to which each Participant is entitled shall be paid to the
Participant in a single lump sum within thirty (30) days following the Change in
Control. For purposes of this Plan, a "Change in Control" of the Company shall
mean a "Change in Control Event" as defined in Internal Revenue Service Notice
2005-1 or any successor guidance issued by the Internal Revenue Service.
5. Interest on Account Balance. Deferred fees will be credited with
---------------------------
interest, compounded annually, at a per annum rate equal to 1% above the New
York Federal Reserve Bank discount rate in effect on December 31 of each
calendar year.
6. Funding the Deferral Account. Deferred fee accounts will not be
----------------------------
funded. The accounts will be maintained by A&B only as book accounts, and no
trust account, fiduciary relationship, or other security arrangement will be
established, other than, at the option of the Company, an escrow account the
amounts in which remain subject to the claims of the Company's general creditors
in the event of insolvency or bankruptcy. Outside Directors must rely solely on
the general credit of A&B for payment of deferred fees. However, if A&B shall
adopt a funding arrangement for deferred compensation and/or unfunded retirement
benefits, the Company may include this Plan in such arrangement.
7. Designation of Beneficiaries. Each participating Outside Director may
----------------------------
file with A&B a written designation of one or more primary beneficiaries and one
or more contingent beneficiaries to whom payments otherwise due the Outside
Director at the date of his/her death shall be made after the death of the
Outside Director. Such payments will be made in such amounts and at such times
as would have been made to the Outside Director had he/she lived. Such payments
will be divided among the primary beneficiaries who survive the Outside Director
in such proportion as directed in the written designation. If no primary
beneficiary survives the Outside Director, such payment will be divided among
the contingent beneficiaries who survive the Outside Director in such proportion
as directed in the written designation. If no primary or contingent beneficiary
survives the Outside Director or is designated by the Outside Director, such
payments will be made to the estate of the Outside Director. At the discretion
of the Compensation Committee, payments to the estate of the Outside Director
may be made in a lump-sum equal to the full amount of the Outside Director's
deferred fee account. The form of beneficiary designation is shown as
Attachment 2.
8. Inalienability. No Outside Director or beneficiary, or any other
--------------
person having or claiming to have any interest of any kind or character in or
under this Plan or in any of the deferred fees or any part thereof or payment
therefrom shall have the right to sell, assign, transfer, convey, hypothecate,
anticipate, pledge or otherwise dispose of such interest; and to the extent
permitted by law, such interest shall not be subject to any liabilities or
obligations of the Outside Director or to any bankruptcy proceedings, creditor
claims, attachment, garnishments, execution, levy or other legal process against
such Outside Director or his/her property.
IN WITNESS WHEREOF, Alexander & Baldwin, Inc. has caused this plan to be
executed and its seal to be affixed hereunder by its officers thereunto duly
authorized, effective as of January 1, 2005.
ALEXANDER & BALDWIN, INC.
By /s/ Nelson N. S. Chun
------------------------------
Its Senior Vice President
By /s/ Alyson J. Nakamura
------------------------------
Its Secretary
Attachment 1
------------
A&B DEFERRED COMPENSATION PLAN FOR OUTSIDE DIRECTORS
DEFERRAL ELECTION
-----------------
(Hawaii)
As a participant in the A&B Deferred Compensation Plan For Outside Directors, I
make the following elections with respect to deferral of director's fees. I
understand that my elections will apply to all future director's fees I may earn
and that my elections will remain in effect until changed or revoked in writing.
1. No Deferral
-----------
[ ] I elect not to defer any of my director's fees.
2. Deferral (for those who did not mark "No Deferral") I elect to defer
payment of all or a portion of my director's fees as indicated below:
Board and Committee
Annual Retainer Fee Meeting Attendance Fees
------------------- -----------------------
50% [ ] [ ]
l00% [ ] [ ]
3. Schedule of Payments (for those who elected "Deferral" above)
--------------------
Please pay me the amount I have elected to defer as follows: In ____
annual installment(s) beginning in the ____ year following my retirement
or other termination.
I understand that all deferred payments are expected to be made on or
about January 15 of the year in which they are scheduled to be made.
I acknowledge that all deferred amounts will be subject to the terms of
the A&B Deferred Compensation Plan For Outside Directors, a copy of
which I have received.
--------------------------------------
Outside Director
State of Hawaii )
) SS:
City and County of Honolulu )
On this _____ day of ________________, 20____, before me appeared
______________________________________, to me known to be the person described
in and who executed the foregoing instrument and acknowledged that he/she
executed the foregoing instrument and acknowledged that he/she executed the same
as his/her free act and deed.
----------------------------------------
Notary Public, State of Hawaii
My Commission Expires: ____________________
Accepted and approved this
_____ day of _____________, 20____
ALEXANDER & BALDWIN, INC.
By _______________________________
Attachment 1 (cont'd.)
A&B DEFERRED COMPENSATION PLAN FOR OUTSIDE DIRECTORS
DEFERRAL ELECTION
-----------------
(California)
As a participant in the A&B Deferred Compensation Plan For Outside Directors, I
make the following elections with respect to deferral of director's fees. I
understand that my elections will apply to all future director's fees I may earn
and that my elections will remain in effect until changed or revoked in writing.
1. No Deferral
-----------
[ ] I elect not to defer any of my director's fees.
2. Deferral (for those who did not mark "No Deferral") I elect to defer
payment of all or a portion of my director's fees as indicated below:
Board and Committee
Annual Retainer Fee Meeting Attendance Fees
------------------- -----------------------
50% [ ] [ ]
l00% [ ] [ ]
3. Schedule of Payments (for those who elected "Deferral" above)
--------------------
Please pay me the amount I have elected to defer as follows: In ____
annual installment(s) beginning in the ____ year following my retirement
or other termination.
I understand that all deferred payments are expected to be made on or
about January 15 of the year in which they are scheduled to be made.
I acknowledge that all deferred amounts will be subject to the terms of
the A&B Deferred Compensation Plan For Outside Directors, a copy of
which I have received.
--------------------------------------
Outside Director
State of California )
) SS:
County of _________________ )
On this _____ day of ________________, 20____, before me, a Notary
Public in and for the State of California, personally appeared
___________________________, personally known to me (or proved to me on the
basis of satisfactory evidence) to be the person whose name is subscribed to
this instrument, and acknowledged that such person executed it.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal in the County of _________________ the day and year in this certificate
first above written.
----------------------------------------
Notary Public
Accepted and approved this
_____ day of _____________, 20____
ALEXANDER & BALDWIN, INC.
By _______________________________
Attachment 2
------------
A&B DEFERRED COMPENSATION PLAN FOR OUTSIDE DIRECTORS
BENEFICIARY DESIGNATION
-----------------------
(please type or print)
________________________________________ _________________________
Outside Director Social Security No.
Last Name, First Name, Middle Initial
Check appropriate box:
[ ] Initial Designation [ ] Beneficiary Change
I hereby designate the following beneficiaries to receive after my death all
payments otherwise due me under the A&B Deferred Compensation Plan For Outside
Directors after the date of my death, in such amounts and at such times as such
payments would have been made to me had I lived (one or more beneficiaries may
be designated):
Primary Beneficiary
- -------------------
Name ______________________________ Relationship _________________
Address ___________________________
___________________________
Contingent Beneficiary
- ----------------------
Name ______________________________ Relationship _________________
Address ___________________________
___________________________
Payment under the Plan shall be made to my Primary Beneficiary unless my Primary
Beneficiary does not survive me for thirty (30) days, in which event payment
shall be made to my Contingent Beneficiary, provided that he or she survives me
for thirty (30) days. This designation shall supersede all previous designations
made by me under the Plan. I reserve the right to change this designation at any
time.
___________________________________ ________________________________
Date Signature of Outside Director
Forward this form to the A&B Human Relations Department, 822 Bishop Street,
Honolulu, Hawaii 96813.
Acknowledged by ______________________________ Date ___________________
A&B Human Relations Dept.
A&B EXCESS BENEFITS PLAN
Amended and Restated Effective January 1, 2005
ARTICLE I
ESTABLISHMENT AND PURPOSE
1.01. Establishment of Plan. Alexander & Baldwin, Inc. hereby
---------------------
establishes an excess benefits/top hat plan for certain eligible executives.
1.02. Purpose of Plan. It is the purpose of this Plan to
---------------
provide certain eligible executives with benefits equal to the benefits they
would receive under the A&B Retirement Plan and the A&B Profit Sharing Plan if
certain changes had been made to those plans. The Plan is intended to be exempt
from the participation, vesting, funding, and fiduciary requirements of Title I
of the Employee Retirement Income Security Act of 1974, pursuant to Sections
201(2), 301(3) and 401(1) of that Act.
ARTICLE II
DEFINITIONS
The following terms have the meanings indicated:
2.00. "Actuarial Equivalent" means a form of benefit differing
in time period, or manner of payment from a specified benefit provided in the
Plan, but having the same present value when determined in accordance with
generally accepted actuarial practice and the rules contained in Appendix C of
this Plan.
2.01. "A&B" means Alexander & Baldwin, Inc. and its affiliates
and their successors.
2.02. "A&B Master Trust Agreement" means the Alexander &
Baldwin, Inc. Retirement and Pension Trust Agreement, as amended from time to
time.
2.03. "A&B Retirement Plan" means the A&B Retirement Plan for
Salaried Employees.
2.04. "A&B Profit Sharing Plan" means the Alexander & Baldwin,
Inc. Profit Sharing Retirement Plan, as amended from time to time.
2.05. "Administrator" means the person specified in Section
5.01.
2.06. "Beneficiary" means the person or persons designated by
the Participant as such in accordance with the provisions of Section 4.01(f) and
to whom the benefit, if any, provided for in Section 4.01(e) is payable.
2.07. "Board of Directors" means the Board of Directors of
Alexander & Baldwin, Inc.
2.08. "Fair Market Value" shall, with respect to the per share
valuation of A&B common stock on any relevant date, be the mean between the
highest and lowest selling prices per share of A&B common stock on such date, as
quoted on the NASDAQ National Market (or any successor system). Should A&B
common stock become traded on a national securities exchange, then the Fair
Market Value per share shall be the mean between the highest and lowest selling
prices on such exchange on the date in question, as such prices are quoted on
the composite tape of transactions on such exchange. If there is no reported
sale of A&B common stock on the NASDAQ National Market (or national securities
exchange) on the date in question, then the Fair Market Value shall be the mean
between the highest and lowest selling prices on the NASDAQ National Market (or
such securities exchange) on the last preceding date for which such quotation
exists.
2.09. "Participant" means an eligible employee selected by the
Administrator pursuant to Section 3.02.
2.10. "Plan" means the plan set forth in this document, as
amended from time to time.
2.11. "Section 16 Insider" shall mean any Participant who is,
at the time of the relevant determination or was at any time within the
immediately preceding six (6) months, an officer or director of A&B subject to
the short-swing profit restrictions of Section 16(b) of the Securities Exchange
Act of 1934, as amended.
ARTICLE III
ELIGIBILITY AND PARTICIPATION
3.01. Eligibility. Any employee of A&B who is a participant in
-----------
either the A&B Retirement Plan or the A&B Profit Sharing Plan and who is highly
compensated or who is one of a select group of management employees shall be
eligible to participate in this Plan.
3.02. Participation. Participants in this Plan shall be any
-------------
eligible employees who have been assigned at least three hundred and fifty (350)
accountability points under A&B's job evaluation program. In addition, the
Administrator shall have the exclusive and unfettered discretion to select
additional Plan Participants from among eligible employees. A Participant in
this Plan shall remain as such until the date he/she ceases to satisfy the
participation requirements in the first sentence of this Section 3.02, until the
date upon which the Participant's employment terminates for any reason or until
such earlier time as may be specified by the Administrator.
3.03. Transfers of Employment to and from A&B Subsidiaries.
----------------------------------------------------
The following transfers of employment shall not be deemed terminations of
employment under Section 3.02 if the A&B subsidiary or subsidiaries involved
have adopted this Plan and either the A&B Retirement Plan or the A&B Profit
Sharing Plan, or both such plans:
(a) transfer from Alexander & Baldwin, Inc. to a
subsidiary of Alexander & Baldwin, Inc.;
(b) transfer from a subsidiary of Alexander &
Baldwin, Inc. to Alexander & Baldwin, Inc.; and
(c) transfer from one subsidiary of Alexander &
Baldwin, Inc. to another subsidiary of Alexander & Baldwin, Inc. Beginning with
such transfer, and for the period of employment with the new employer, the new
employer shall be obligated for all payments to the Participant required by
Article IV of this Plan. The prior employer shall remain responsible for any
payments to be made that pertain to the period of the Participant's
participation while employed by that prior employer.
ARTICLE IV
BENEFITS
4.01. Pension Benefits.
----------------
(a) Entitlement to Pension Benefits. Except as provided
-------------------------------
in Section 4.01(e) below, a Participant's pension benefit under this Plan shall
equal one hundred percent of the difference between the benefit to which the
Participant is entitled under the A&B Retirement Plan determined without regard
to limitations imposed by the Internal Revenue Code (and, with respect to
Participants listed in Appendix A to this Plan, without regard to amendments in
the benefit formula after December 31, 1988, unless such amendment would produce
a higher benefit) and the benefit to which the Participant is entitled under
such plan determined after giving effect to those limitations. For the purpose
of this Plan, the benefit to which the Participant is entitled under the A&B
Retirement Plan shall be determined by including as part of the Participant's
monthly compensation all deferred base salary and all deferred incentive
awards under A&B's One-Year Performance Improvement Incentive Plan.
(b) Former Employees of California and Hawaiian Sugar
-------------------------------------------------
Company. Notwithstanding the terms of Section 4.01(a) above and Section 4.01(e)
- -------
below, the benefit payable to a Participant (or Participant's Beneficiary) under
this Plan shall be reduced by the amount of any benefit payable to such
Participant (or Beneficiary) under the California and Hawaiian Sugar Company
Supplemental Retirement Plan.
(c) Payment of Pension Benefits Other Than Death
--------------------------------------------
Benefits. A Participant's pension benefit under this Plan, other than the
- --------
benefits described in Sections 4.01(d) or (e) below, shall be a lump sum
payment, payable upon the earlier of termination of employment or retirement,
which equals the greater of the amounts determined under paragraph (1) and
paragraph (2):
(1) An amount which is the Actuarial Equivalent of
the benefit described in paragraphs (a) and (b) above.
(2) An amount which is the before-tax equivalent of
the lower of two quotations obtained by the Administrator from insurance
companies for the cost of a lifetime annuity that provides after-tax monthly
benefits equivalent to those that a Participant would receive under this Plan if
this Plan allowed monthly payments of the pension benefits hereunder.
Notwithstanding the foregoing, payment of any benefit
described in this Section 4.01(c) may only be made following the Participant's
"separation from service" within the meaning of section 409A of the Internal
Revenue Code. In the case of a Participant who is a "key employee" (as defined
in section 416(i) of the Internal Revenue Code without regard to paragraph (5)
thereof), payment of any benefit described in this Section 4.01(c) may not be
made until at least six months following the Participant's "separation from
service" within the meaning of section 409A of the Internal Revenue Code.
(d) Select Benefits Provided to Retired Former
------------------------------------------
Employees of California and Hawaiian Sugar Company.
- --------------------------------------------------
(1) Prior to the closing of the transactions
contemplated by the Asset Purchase Agreement by and among California and
Hawaiian Sugar Company, Inc., A&B-Hawaii, Inc., McBryde Sugar Company, Limited,
and Sugar Acquisition Corporation, and the Stock Sale Agreement by and between
California and Hawaiian Sugar Company, Inc. and Citicorp Venture Capital, Ltd.
(the "Closing Date"), all other provisions of the Plan notwithstanding, the
retired former employees of California and Hawaiian Sugar Company who are listed
in Appendix B of this Plan shall be eligible to receive the benefits shown in
Appendix B, and no other benefits shall be paid to such retired former employees
under the provisions of this Plan. Payment of these benefits shall be according
to the terms shown in Appendix B, and no other provisions of this Plan shall
affect the amount or the form of payment of these benefits.
(2) As of the Closing Date, all other provisions of
this Plan notwithstanding, the obligation of this Plan to pay any benefit shown
in Appendix B to the retired former employees of California and Hawaiian Sugar
Company, Inc. listed in Appendix B shall cease, and the obligation to pay such
benefits, with respect to any period on and after such date, is assumed by Sugar
Acquisition Company.
(e) Entitlement to Alternate Death Benefits. In the
event that a Participant dies prior to retirement, or prior to termination of
employment, such Participant's Beneficiary shall be entitled to a death benefit
determined as provided in Sections 4.01(e)(1), (2) and (3) in lieu of any other
benefit provided by this Plan.
(1) The amount of the benefit provided by this
Section 4.01(e) shall equal the lump sum payment, if any, to which the
Participant would have been eligible if he/she had retired, or
terminated employment, immediately prior to his/her death.
(2) The amount in Section 4.01(e)(1) above shall be
determined by assuming the Participant did not elect any optional form
of payment under the A&B Retirement Plan.
(3) Payment of this benefit shall be made in a lump
sum payment to the Beneficiary as soon as practicable after the death
of the Participant.
(f) Beneficiary Designation. Each Participant shall,
at the time he/she becomes a Participant, designate one or more persons as
his/her Beneficiary for purposes of Section 4.01(e). The designation shall be
made in the form prescribed by the Administrator and shall become effective when
filed with the Administrator. A Participant may from time to time change his/her
Beneficiary by filing a new designation form with the Administrator. Should the
Participant die without having any effectively-designated surviving Beneficiary,
then the Beneficiary shall be the spouse of the Participant, if then living.
If there is no surviving spouse, then the Beneficiary shall be the Participant's
children then living. If there are no living children, then the Beneficiary
shall be the estate of the Participant.
4.02. Defined Contribution Benefits.
-----------------------------
(a) Entitlement to Defined Contribution Benefits. A
--------------------------------------------
Participant's defined contribution benefit under this Plan shall equal the
balance to the Participant's credit in the account maintained under Section
4.03.
No amount shall be credited to a Participant's
account for a year unless the Participant is a participant in the A&B Profit
Sharing Plan for that year.
(b) Payment of Defined Contribution Benefits. Except
----------------------------------------
as provided in the next sentence, a Participant's Defined Contribution Benefits
shall be paid in a lump sum as soon as practicable following the Participant's
"separation from service" within the meaning of section 409A of the Internal
Revenue Code. In the case of a Participant who is a "key employee" (as defined
in section 416(i) of the Internal Revenue Code without regard to paragraph (5)
thereof), the Participant's Defined Contribution Benefits shall be paid in a
lump sum no earlier than six months following the Participant's "separation from
service" within the meaning of section 409A of the Internal Revenue Code.
4.03. Maintenance of Accounts. The Administrator shall
-----------------------
establish and maintain an individual account for each Participant. The
Administrator shall annually credit to a Participant's account as of the end of
each year an amount equal to the difference between (i) the employer
contribution and forfeitures that would have been allocated to such
Participant's account under the A&B Profit Sharing Plan with respect to such
year were such allocation to be made without regard to the limitations of the
Internal Revenue Code and (ii) the amount actually allocated to such
Participant's account after having taken such limitations into account. For the
purposes of this Plan, the benefit to which the Participant is entitled under
the A&B Profit Sharing Plan shall be determined by including as part of the
Participant's compensation all deferred base salary. Subject to the provisions
stated below, and pursuant to procedures determined by the Compensation and
Stock Option Committee of the Board of Directors, or by the committee or
individual(s) to which such authority is delegated, the Participant may make an
election ("Conversion Election") to have all or any portion of the amount that
is credited to his/her account, converted into common stock-equivalent units
which will be valued from time to time on the basis of the Fair Market Value of
A&B common stock.
From time to time, the value of each account shall be adjusted
to reflect an investment return on the balance credited to such account, and
such value and adjustments periodically shall be communicated to each
Participant. Such periodic valuation shall be made as follows:
(a) Cash Balance. The portion of the Participant's
------------
account valued in cash shall be credited with interest, compounded
annually, at an annual rate equal to 1% above the New York Federal
Reserve Bank discount rate in effect as of the date interest is
computed and credited. Interest shall be computed and credited as of
such date and on such account balance as specified by the
Administrator. In the absence of such specifications, interest shall be
credited and computed as of January 1 of each year on the balance of
the account on the preceding January 1 or, if payments have been made
out of an account during the preceding year, on the average balance of
that account during the preceding year.
(b) Common Stock-Equivalent Units.
-----------------------------
(1) The common stock-equivalent units will
be credited, at the time dividends are paid on outstanding shares of
A&B common stock, with an amount ("dividend-equivalent credits") equal
to the dividends which otherwise would be paid if the number of common
stock-equivalent units in the Participant's account were actually
outstanding shares of A&B Common Stock.
(2) Dividend-equivalent credits will be
applied in the manner of a dividend reinvestment plan to purchase
additional common stock-equivalent units valued at Fair Market Value on
the applicable dividend payment date.
(3) Pursuant to procedures determined by the
Compensation and Stock Option Committee of the Board of Directors, or
by the committee or individual(s) to which such authority is delegated,
a Participant may elect to have all or a portion of the Participant's
common stock-equivalent units converted into cash on the basis of the
Fair Market Value (at date of conversion) of the shares of A&B common
stock represented by such units; provided, however, that Participants
may not make such an election if they are Section 16 Insiders at the
time of such election. Any portion so converted to cash shall begin to
earn interest in accordance with paragraph (a) above, and shall stop
earning dividend-equivalent credits.
(4) Any common stock-equivalent units credited to a
Participant's account shall automatically be converted into cash, on
the basis of the Fair Market Value (at the date of conversion) of the
shares of A&B common stock represented by such units, upon the
Participant's termination of employment with A&B for any reason. Any
amounts so converted to cash shall begin to earn interest in accordance
with paragraph (a) above.
The account of each Participant shall be entered on the
employer's books as a liability, payable when due out of general assets.
Participant accounts shall not be funded by any trust or insurance contract; nor
shall any assets be segregated or identified with any such account; nor shall
any property or assets be pledged, encumbered, or otherwise subjected to a lien
or security interest for payment of benefits.
4.04. Vesting of Benefits. Except as otherwise provided in
-------------------
Section 6.02(a), all pension benefits under this Plan shall be contingent and
forfeitable unless and until they vest in accordance with the vesting provisions
of the A&B Retirement Plan, and all defined contribution benefits under this
Plan shall be contingent and forfeitable unless and until they vest in
accordance with the vesting provisions of the A&B Profit Sharing Plan that are
applicable to the Participant's profit sharing account.
ARTICLE V
ADMINISTRATION OF THE PLAN
5.01. Administrator. The plan administrator of the A&B
-------------
Retirement Plan shall be the Administrator of this Plan. The Administrator shall
have full authority to administer the Plan. The Administrator shall have all of
the powers granted by the A&B Retirement Plan or the A&B Master Trust Agreement
to the plan administrator of the A&B Retirement Plan, and shall be subject to
the same selection procedures and limitations of authority.
5.02. Claims Procedures. The Administrator shall employ the
-----------------
claims procedures applicable under the A&B Retirement Plan.
ARTICLE VI
AMENDMENT AND TERMINATION
6.01. Authority of Compensation and Stock Option Committee.
----------------------------------------------------
The right to amend, modify, partially terminate, or completely terminate this
Plan shall be reserved to the Compensation and Stock Option Committee of the
Board of Directors. However, no amendment, modification or termination shall
reduce retroactively the benefits of any Participant under this Plan.
6.02. Change in Control.
-----------------
(a) Termination, Vesting and Payment. Upon the
--------------------------------
occurrence of a Change in Control, as defined in Section 6.02(b), with respect
to the company employing a Participant, the Plan shall immediately and
automatically terminate with respect to such company. Upon such a termination,
the interest of each Participant employed by the company or companies with
respect to which the Plan has been terminated shall become non-forfeitable and
immediately due and payable. Each such Participant shall receive, within thirty
days of such termination, a lump sum payment in an amount equal to the sum of
(i) the balance of his or her individual account as described in Sections 4.02
and 4.03 and (ii) an amount which is the Actuarial Equivalent of the benefits
defined in Sections 4.01 of this Plan determined as of the date of the Change in
Control. If the terms of such Change in Control provide, as a prerequisite to
the consummation of the Change in Control, that the employer responsibilities
under this Plan are to be assumed by the successor organization, then the Plan
shall not terminate and no lump sum payment shall be made to any Participant.
In any such case, however, the interest of each Participant employed by the
company or companies with respect to which the Change in Control occurs shall
become non-forfeitable at the date of such Change in Control.
(b) Definition of Change in Control. For purposes of
-------------------------------
this Section 6.02, a "Change in Control" means a "Change in Control Event" as
defined in Internal Revenue Service Notice 2005-1 or any successor guidance
issued by the Internal Revenue Service. If a Change in Control shall take place
with respect to any company, a Change in Control shall be deemed to have taken
place with respect to any subsidiary of such company.
ARTICLE VII
MISCELLANEOUS PROVISIONS
7.01. Benefits Non-Assignable. No right or interest of a
-----------------------
Participant in this Plan shall be assignable or transferable, in whole or in
part, either directly or by operation of law or otherwise, including but not by
way of limitation, execution, levy, garnishment, attachment, pledge, bankruptcy,
assignments for the benefit or creditors, receiverships, or in any other manner,
excluding transfer by operation of law as a result solely of mental
incompetency.
7.02. Controlling Law. This Plan shall be construed,
---------------
administered, and governed in all respects in accordance with the laws of the
State of Hawaii.
7.03. Not an Employment Contract. The adoption and maintenance
--------------------------
of this Plan shall not be deemed to confer on any Participant any right to
continue in the employ of A&B, and shall not be deemed to interfere with the
right of A&B to discharge any person or treat any person without regard to the
effect that such treatment might have on the person as a Plan Participant.
7.04. Gender and Number. Any masculine pronouns used herein
-----------------
shall refer to both men and women, and the use of any term herein in the
singular may also include the plural unless otherwise indicated by context.
7.05. Severability. If any provision of this Plan is held
------------
invalid or unenforceable by a court of competent jurisdiction, all remaining
provisions shall continue to be fully effective.
ARTICLE VIII
ADOPTION BY SUBSIDIARIES
Any subsidiary of Alexander & Baldwin, Inc. that has adopted either the A&B
Retirement Plan or the A&B Profit Sharing Plan may adopt this Plan for the
benefit of its employees when one of its employees has been selected as a
participant by the Administrator. Such adoption shall be authorized by a
resolution of the Board of Directors of such subsidiary. In the event of such
adoption of the Plan by a subsidiary of Alexander & Baldwin, Inc., the
Administrator shall serve as agent of the subsidiary in administering the Plan.
All power to amend, modify, or terminate the Plan shall continue as the
unfettered prerogative of the Compensation and Stock Option Committee of the
Board of Directors.
IN WITNESS WHEREOF, Alexander & Baldwin, Inc. has caused this Restatement to be
executed on its behalf by its duly authorized officers, effective as of January
1, 2005.
ALEXANDER & BALDWIN, INC.
By /s/ Nelson N. S. Chun
------------------------------
Its Senior Vice President
By /s/ Alyson J. Nakamura
------------------------------
Its Secretary
APPENDIX A
Participants Referred to in
Section 4.01(a)
---------------
1. R. F. Cameron
2. J. C. Couch
3. R. J. Donohue
4. F. L. Fleischmann
5. A. J. Haskell
6. G. S. Holaday
7. J. B. Kelley
8. M. J. Marks
9. C. B. Mulholland
10. G. Y. Nakamatsu
11. G. J. North
12. R. J. Pfeiffer
13. G. R. Rogers
14. R. H. Rothman
15. R. K. Sasaki
16. D. P. Scott
APPENDIX B
Participant's Name Fixed Spouse's Name
- ---------------------------- Date of Monthly Variable --------------------------- Date of Monthly
First MI Last Birth Benefit* Units First MI Last Birth Benefit**
- ----- -- ---- ------- -------- -------- ----- -- ---- ------- ---------
Paul A. Cooper 7/15/05 437.67 None
Edwin R. Duncan 4/08/20 396.36 Jean K. Duncan 4/02/19 66 2/3%
Harry J. Fitzgerald 10/26/19 358.58 Kathryn T. Fitzgerald 5/16/26 50%
Donald W. Hare 5/14/19 748.20 Dorothy P. Hare 5/21/19 66 2/3%
Lawrence A. Lindsay 2/25/25 786.04 Rita A. Lindsay 4/05/25 66 2/3%
Neil L. Pennington 5/12/23 613.16 Frances M. Pennington 5/28/25 66 2/3%
Frederick W. Schwer 4/26/19 228.40 Christine W. Schwer 8/14/18 66 2/3%
Lawson U. Williams 1/01/19 350.33 Mildred A. Williams 7/03/20 66 2/3%
Emmett V. Donovan (d) 11/06/18 304.05 June Donovan 6/10/22 66 2/3%
Edward F. Harder (d) 1/07/19 605.28 Bette Harder 3/02/20 66 2/3%
Robert O. Nagle (Note 1) 2/10/29 1333.50 658.85 Louise H. Nagle 2/06/28 100%
Robert O. Nagle (Note 2) 2/10/29 222.53 658.85 Louise H. Nagle 2/06/28 100%
Harold R. Somerset 9/25/35 801.30 190.69 Jean M. Somerset 10/26/36 66 2/3%
William H. Stewart 9/01/29 156.51 Margaret C. Stewart 5/23/29 66 2/3%
Deferred Vested Participant
- ---------------------------
Raymond L. Knecht 4/19/48 48.43
* The fixed monthly benefit payable plus the current value of the
variable units are payable to the participant during the
participant's lifetime except if payment option is a 66-2/3% (last
survivor). In such case, if either participant or spouse dies, the
survivor will receive 66-2/3% of the fixed monthly benefit or the
current value of the variable units. The current value of the
variable units shall be determined in the same way such value is
determined under the provisions of the C and H Pension Plan for
Salaried Employees.
** The monthly benefit equal to the percentage shown multiplied times
the participant's monthly benefit is payable to the spouse named
above after the death of the participant during the spouse's
lifetime.
(d) Deceased.
Note 1: The preceding footnotes notwithstanding, this benefit shall not be
payable to Mr. Nagle or his surviving spouse on or after March 1, 1994.
Note 2: The preceding footnotes notwithstanding, this benefit shall only
be payable to Mr. Nagle or his surviving spouse on or after March 1,
1994.
APPENDIX C
Rules For Determining Lump Sum Benefits
---------------------------------------
When the terms of this Plan require the determination of a lump sum payment
which is the Actuarial Equivalent of any other benefit provided by this Plan,
the following rules shall apply to the calculation of such lump sum payment:
1. The mortality table used shall be the mortality table then in use by
the A&B Retirement Plan for the purpose of determining lump sum
payments to participants of such plan who are entitled to such
payments.
2. The discount rate shall be the after-tax equivalent of the discount
rate then in use by the A&B Retirement Plan for the purpose of
determining lump sum payments to participants of such plan who are
entitled to such payments. The after-tax equivalent rate shall be
determined by multiplying discount rate in use by the A&B Retirement
Plan by the excess of 100% over the tax effected marginal tax rate
declared by the Committee.
3. The Committee shall declare the tax effected marginal tax rate at the
beginning of each calendar year.
4. The tax effected marginal tax rate shall apply to lump sum payments
made at any time during such calendar year and may not be changed
during the year.
5. The value of the benefit to a Surviving Spouse which is included in a
Participant's Retirement Income shall be included in the calculation
of the lump sum payment to which the Participant is entitled. Unless
stated otherwise, the benefit to the Surviving Spouse shall be deemed
to apply only if the death of the Participant occurs on or after the
date the Retirement Income is deemed to commence under the terms of
the provision giving rise to the Participant's right to a lump sum
payment.
6. If the terms of the Plan provide for a benefit such that if it were
paid as a monthly benefit it could have commenced at more that one
future date, then for purposes of calculating the lump sum that is
the Actuarial Equivalent of such benefit, it shall be deemed that the
benefit would have commenced at the earliest possible date.
7. The early retirement reduction factors, if any, used to calculate the
lump sum which is the Actuarial Equivalent of the benefit provided by
the provisions of paragraph 6.02(a) as a result of a Change in
Control, shall be the factors applicable to Participants of the A&B
Retirement Plan who terminate employment after attaining eligibility
for early retirement regardless of the Participant's age as of the
Change in Control date.
A&B EXECUTIVE SURVIVOR/RETIREMENT BENEFIT PLAN
Amended and Restated Effective January 1, 2005
ARTICLE I
ESTABLISHMENT AND PURPOSE
-------------------------
l.0l Establishment of Plan. Alexander & Baldwin, Inc. established the A&B
---------------------
Executive Survivor/Retirement Benefit Plan (the "Plan"), effective
January 1, 1986.
l.02 Purpose of Plan. It is the purpose of the Plan to provide supplemental
---------------
retirement benefits and an optional supplemental death benefit for
certain designated executives of A&B. The Plan is intended to be exempt
from the participation, vesting, funding and fiduciary requirements of
Title I of the Employee Retirement Income Security Act of 1974 because
it provides benefits for a select group of highly compensated
management employees.
ARTICLE II
DEFINITIONS
-----------
2.0l "Actuarial Equivalent" means a form of benefit differing in time,
period, or manner of payment from a specified benefit provided in the
Plan, but having the same present value when determined in accordance
with generally accepted actuarial practices, as more particularly
specified by the definition of the same term in the A&B Retirement
Plan.
2.02 "A&B" means Alexander & Baldwin, Inc., its affiliates, and their
successors.
2.03 "A&B Retirement Plan" means the A&B Retirement Plan for Salaried
Employees, as amended from time to time.
2.04 "Approved Early Retirement Date" means a date which meets each of the
following requirements:
(a) The Participant has attained age 55,
(b) The Participant has at least five Years of Service,
(c) The date has been approved by the Chief Executive Officer of A&B.
2.05 "Base Compensation" means base salary, including amounts deferred under
any deferral plan or arrangement with A&B, but excluding incentive
compensation and all other plans or forms of remuneration.
2.06 "Beneficiary" means the person, persons or entity designated pursuant
to Section 4.10.
2.07 "Board" means the Board of Directors of A&B.
2.08 "Change in Control" means a "Change in Control Event" as defined in
Internal Revenue Service Notice 2005-1 or any successor guidance issued
by the Internal Revenue Service. If a Change in Control shall take
place with respect to any company, a Change in Control shall be deemed
to have taken place with respect to any subsidiary of such company.
2.09 "Code" means the Internal Revenue Code of 1986, as amended.
2.10 "Committee" means the Compensation Committee of the Board.
2.11 "Disabled Participant." "Disabled" means a Participant who is unable to
perform substantially all of the material and substantial duties of her
or his regular position because of accidental bodily injury sustained
or disease originating after the date of such person's designation as a
Participant under this Plan. Notwithstanding the foregoing:
(i) if a Participant has been Disabled for a continuous period of
24 months, the Participant will cease to be considered
Disabled unless he or she is unable to perform any occupation
for which the Participant is or becomes reasonably qualified
by education, training or experience because of such bodily
injury or sickness; and
(ii) a Participant is not Disabled at any time that the Participant
is working for pay or profit at any occupation.
2.12 "Early Retirement Factor" means the reduction factors used to calculate
early retirement benefits under the A&B Retirement Plan for
participants of such plan who retire from active service at or after
attaining age 55.
2.13 "Final Base Compensation" means a Participant's Base Compensation in
effect at the time of the Participant's retirement, termination of
employment, termination of participation, death or disability,
whichever is applicable, computed as an annual amount by multiplying
the then applicable monthly Base Compensation in effect by 12.
2.14 "Immediate Change in Control Benefit" means the benefit described in
subsection 4.08(a).
2.15 "Involuntary Termination Benefit" means the benefit described in
Section 4.05.
2.16 "Normal Retirement Benefit" means ten annual amounts, each equal to the
percentage (which shall be not less than 5% nor greater than 35%) of
the Participant's Final Base Compensation as specified in such
Participant's individual Participating Agreement, payable in monthly
installments.
2.l7 "Normal Retirement Date" means the first day of the month coincident
with or next following the date the Participant attains age 65.
2.18 "Normal Survivor Benefit" means ten annual amounts, each equal to 50%
of the Participant's Final Base Compensation, payable in monthly
installments.
2.19 "Participant" means an employee who meets the conditions set forth in
Section 3.0l.
2.20 "Participation Termination Benefit" means the benefit described in
Section 4.06.
2.21 "Plan" means the plan set forth in this document, as amended from time
to time.
2.22 "Plan Termination Benefit" means the benefit described in Section 4.07.
2.23 "Pre-Retirement Survivor Benefit" means the benefit described in
Section 4.02.
2.24 "Prorated Retirement Benefit" means Normal Retirement Benefit
multiplied by the Proration Factor.
2.25 "Prorated Survivor Benefit" means Normal Survivor Benefit multiplied
by the Proration Factor.
2.26 "Proration Factor" means:
(a) In the case of a Participant who is a Participant in the A&B
1985 Supplemental Executive Retirement Plan, or who was a
former Participant in such plan, the ratio of (i) 300 minus
the number of completed months between the date of calculation
and the Participant's Normal Retirement Date, to (ii) 300.
(b) In the case of all other Participants, the ratio of (i) the
Participant's Years of Service as of the calculation date, to
(ii) the Years of Service the Participant would have earned at
his or her Normal Retirement Date had he or she remained in
employment status until such date.
2.27 "Vested Change in Control Benefit" means the benefit described in
Section 4.08(b).
2.28 "Years of Service" means the number of years and fractions of years
which qualify as Years of Credited Vesting Service as that term is
defined in the A&B Retirement Plan.
ARTICLE III
PARTICIPATION
-------------
3.0l Participation. Participants shall be management or highly compensated
-------------
employees who have been specifically designated as Participants by the
Chief Executive Officer of A&B, who have demonstrated insurability to
the satisfaction of A&B, and who have executed a Participation
Agreement (including a waiver of group life insurance coverage over
$50,000). Participation will begin on the date specified in the
Participation Agreement and shall continue until the earlier of
termination of the Participant's employee status or until a
determination by the Chief Executive Officer of A&B that the
Participant no longer is eligible to participate.
ARTICLE IV
BENEFITS
--------
4.01 Plan Benefits. A Participant shall be entitled to whichever of the
-------------
benefits provided by Sections 4.02 to 4.09 provides the greatest
benefit. Under no circumstance shall a Participant be entitled to
benefits provided by more than one such Section.
4.02 Pre-Retirement Survivor Benefit. The Beneficiary of a Participant who
-------------------------------
dies before termination of employment shall be entitled to receive a
Pre-Retirement Survivor Benefit consisting of the Normal Survivor
Benefit commencing as soon as practicable after the Participant's
death.
4.03 Normal Retirement Benefit.
-------------------------
(a) Eligibility. A Participant who meets the following
-----------
requirements shall be entitled to the Normal Retirement
Benefit described in subsection (b) below:
(1) The Participant has completed three years of participation
in the Plan; and
(2) The Participant separates from service on or after his or
her Normal Retirement Date.
(b) Benefit. A Participant's Normal Retirement Benefit shall be
-------
the benefit in paragraph (2) below unless prior to retirement,
the Participant has applied in writing to receive the benefit
in paragraph (1) below in lieu of the benefit in paragraph (2)
and the Committee has approved such request; provided that no
such request shall become effective until 12 months after the
date it is received by the Committee. If the Participant
should die before the request becomes effective, the benefit
in paragraph (2) below shall be payable. If the Participant
survives until the request becomes effective, the
Participant's Normal Retirement Benefit shall be the benefit
in paragraph (1) below.
(1) The Participant's Normal Survivor Benefit commencing
as soon as practicable after the Participant's death;
provided that no benefit shall be paid before the
Participant's request for this benefit becomes
effective 12 months after it is received by the
Committee as described above.
(2) The Participant's Normal Retirement Benefit
commencing as of the first day of the month following
his or her retirement; provided that in the case of a
Participant who is a "key employee" (as defined in
section 416(i) of the Internal Revenue Code without
regard to paragraph (5) thereof), the Participant's
Normal Retirement Benefit shall be paid no earlier
than six months following the Participant's
separation from service.
4.04 Approved Early Retirement Benefit.
---------------------------------
(a) Eligibility. A Participant who meets the following
-----------
requirements shall be entitled to the Approved Early
Retirement Benefit described in subsection (b) below:
(1) The Participant has completed three years of
participation in the Plan, and
(2) The Participant separates from service on or after
his or her Approved Early Retirement Date and before
his or her Normal Retirement Date.
(b) Benefit. A Participant's Approved Early Retirement Benefit
-------
shall be the benefit in paragraph (2) below unless prior to
retirement, the Participant has applied in writing to receive
the benefit in paragraph (1) below in lieu of the benefit in
paragraph (2) below and the Committee has approved such
request; provided that no such request shall become effective
until 12 months after the date it is received by the
Committee. If the Participant should die before the request
becomes effective, the benefit in paragraph (2) below shall be
payable. If the Participant survives until the request becomes
effective, the Participant's Approved Early Retirement Benefit
shall be the benefit in paragraph (1) below.
(1) The Participant's Normal Survivor Benefit commencing
as soon as practicable after the Participant's death;
provided that no benefit shall be paid before the
Participant's request for this benefit becomes
effective 12 months after it is received by the
Committee as described above.
(2) The Participant's Normal Retirement Benefit
multiplied by the Early Retirement Factor applicable
at the Participant's age as of his or her Approved
Early Retirement Date and commencing as of the first
day of the month following his or her retirement;
provided that in the case of a Participant who is a
"key employee" (as defined in section 416(i) of the
Internal Revenue Code without regard to paragraph (5)
thereof), the Participant's Approved Early Retirement
Benefit shall be paid no earlier than six months
following the Participant's separation from service.
4.05 Involuntary Termination Benefit.
-------------------------------
(a) Eligibility. A Participant who meets the requirements in
-----------
paragraph (1) and paragraph (2) shall be entitled to the
Involuntary Termination Benefit described in subsection
(b) below:
(1) The Participant has completed three years of
participation in the Plan, and
(2) The Participant separates from service due to
involuntary termination of employment.
(b) Benefit. A Participant's Involuntary Termination Benefit shall
-------
be a lump sum payment which is the greater of the Actuarial
Equivalent of the benefits defined in paragraph (1) below or
the Actuarial Equivalent of the benefits defined in paragraph
(2) below. The Involuntary Termination Benefit shall be paid
as soon as practicable after the date of the Participant's
involuntary termination; provided that in the case of a
Participant who is a "key employee" (as defined in section
416(i) of the Internal Revenue Code without regard to
paragraph (5) thereof), the Participant's Involuntary
Termination Benefit shall be paid no earlier than six months
following the Participant's separation from service.
(1) The Participant's Prorated Survivor Benefit
determined as of the involuntary termination date and
commencing as soon as practicable after the
Participant's death.
(2) The Participant's Prorated Retirement Benefit
commencing on the Participant's Normal Retirement
Date.
4.06 Participation Termination Benefit.
---------------------------------
(a) Eligibility. A Participant who meets the following
-----------
requirements shall be entitled to the Participation
Termination Benefit described in subsection (b) below:
(1) The Participant has completed three years of
participation in the Plan, and
(2) The Participant's participation in the Plan is
terminated prior to the Participant's termination of
employment or retirement as a result of the
determination by the Chief Executive Officer that the
Participant is no longer eligible to participate in
the Plan.
(b) Benefit. A Participant's Participation Termination Benefit
-------
shall be the benefit in paragraph (2) below during the
continuation of the Participant's employment. Upon the
Participant's subsequent (voluntary or involuntary) separation
from service, it shall be the benefit in paragraph (2) below
unless the Participant has applied in writing to receive the
benefit in paragraph (1) below in lieu of the benefit in
paragraph (2) below and the Committee has approved such
request; provided that no such request shall become effective
until 12 months after the date it is received by the
Committee. If the Participant should die before the request
becomes effective, the benefit in paragraph (2) below shall
be payable. If the Participant survives until the request
becomes effective, the Participant's Participation Termination
Benefit shall be the benefit in paragraph (1) below.
(1) The Participant's Prorated Survivor Benefit
determined as of the participation termination date
and commencing as soon as practicable after the
Participant's death.
(2) The Participant's Prorated Retirement Benefit
commencing on the Participant's Normal Retirement
Date or Approved Early Retirement Date, provided that
if the benefit commences on an Approved Early
Retirement Date it shall be reduced by the Early
Retirement Factor applicable to the Participant's age
as of his or her Approved Early Retirement Date, and
provided further that in the case of a Participant
who is a "key employee" (as defined in section 416(i)
of the Internal Revenue Code without regard to
paragraph (5) thereof), the Participant's
Participation Termination Benefit shall be paid no
earlier than six months following the Participant's
separation from service.
4.07 Plan Termination Benefit.
------------------------
(a) Eligibility. A Participant of the Plan as of the date the Plan
-----------
is terminated by the Committee shall be entitled to the Plan
Termination Benefit described in subsection (b) below.
(b) Benefit. A Participant's Plan Termination Benefit shall be
-------
the benefit in paragraph (2) below during the continuation
of employment. Upon the Participant's separation from
service, it shall be the benefit in paragraph (2) below
unless prior to separation from service, the Participant has
applied in writing to receive the benefit in paragraph
(1) below in lieu of the benefit in paragraph (2) below and
the Committee has approved such request; provided that no
such request shall become effective until 12 months after the
date it is received by the Committee. If the Participant
should die before the request becomes effective, the benefit
in paragraph (2) below shall be payable. If the Participant
survives until the request becomes effective, the
Participant's Plan Termination Benefit shall be the benefit
in paragraph (1) below.
(1) The Participant's Prorated Survivor Benefit
commencing as soon as practicable after the
Participant's death.
(2) The Participant's Prorated Retirement Benefit
commencing on the first day of the first month that
would have qualified as the Participant's Approved
Early Retirement Date if he or she had remained
employed as a Participant until such date and then
received approval from the CEO for such early
retirement reduced by the Early Retirement Factor
Applicable to the Participant's age as of such
Approved Early Retirement Date; provided that in the
case of a Participant who is a "key employee" (as
defined in section 416(i) of the Internal Revenue
Code without regard to paragraph (5) thereof), the
Participant's Plan Termination Benefit shall be paid
no earlier than six months following the
Participant's separation from service.
4.08 Change in Control Benefits.
--------------------------
(a) Change in Control of Alexander & Baldwin, Inc. Upon the
---------------------------------------------
occurrence of a Change in Control, as defined in Section 2.08,
with respect to Alexander & Baldwin, Inc., the provisions of
paragraph (1) below shall apply unless the terms of such
Change in Control provide, as a prerequisite to the
consummation of the Change in Control, that the employer
responsibilities under this Plan are to be assumed by the
successor organization. In such later case, the provisions of
paragraph (2) below shall apply.
(1) The Plan shall immediately and automatically
terminate and each Participant shall become entitled
to an Immediate Change in Control Benefit. The
Immediate Change in Control Benefit shall be a lump
sum payment which is the greater of the Actuarial
Equivalent of the benefits defined in paragraph
(b)(1) below or the Actuarial Equivalent of the
benefits defined in (b)(2). The Immediate Change in
Control Benefit shall be immediately due and shall be
paid within thirty days of such Plan termination.
(2) Each Participant, as defined in this paragraph (2),
shall become entitled to a Vested Change in Control
Benefit. Upon future termination of employment or
retirement, the Participant shall be entitled to the
greater of his or her Vested Change in Control
Benefit or the benefits otherwise provided by any
other benefit section of this Plan. During the
Participant's continuation of employment, a
Participant's Vested Change in Control Benefit shall
be the benefit in paragraph (b)(1) below. Upon the
Participant's termination (voluntary or involuntary)
of employment or retirement, however, the
Participant's Vested Change in Control Benefit shall
be a lump sum payment which is the greater of the
Actuarial Equivalent of benefits defined in paragraph
(b)(1) below, the Actuarial Equivalent of the
benefits defined in paragraph (b)(2) below, and the
Actuarial Equivalent of the benefits defined in
paragraph (b)(3) below.
(b) Benefits.
--------
(1) The Participant's Normal Survivor Benefit determined
as of the date of the Change in Control commencing as
soon as practicable after the Participant's death.
(2) The Participant's Normal Retirement Benefit
determined as of the date of the Change in Control:
(i) commencing on the first day of the first
month that would have qualified as the
Participant's Approved Early Retirement Date
if he or she had remained employed as a
Participant until such date and then
received approval from the CEO for such
early retirement, and
(ii) reduced by the Early Retirement Factor
Applicable to the Participant's age at the
date the benefit commences.
(3) Benefits provided by any other Section of this Plan.
4.09 Benefits Upon Change in Control of a Subsidiary. Upon the occurrence of
-----------------------------------------------
a Change in Control, as defined in Section 2.08, with respect to a
subsidiary of Alexander & Baldwin, Inc., (i) a Participant who is an
employee of such subsidiary shall be entitled to the lump-sum
equivalent of a Plan Termination Benefit, determined as if the Plan
terminated as of the date of the Change in Control, which shall be
immediately due and shall be paid within thirty days of the Change in
Control, and (ii) the Plan shall immediately and automatically
terminate with respect to such subsidiary unless the terms of such
Change in Control provide, as a prerequisite to the consummation of the
Change in Control, that the employer responsibilities under this Plan
are to be assumed by the successor organization.
4.10 Designation of Beneficiaries. A Participant may file with the
----------------------------
Administrator on forms provided by the Administrator a written
designation of one or more primary beneficiaries and one or more
contingent beneficiaries to whom benefits otherwise due the Participant
shall be made after the death of the Participant. Such payments will be
divided among the primary beneficiaries who survive the Participant in
such proportion as directed in the written designation. If no primary
beneficiary survives the Participant for 30 days, such payment will be
divided among the contingent beneficiaries who survive the Participant
for 30 days in such proportion as directed in the written designation.
If no primary or contingent beneficiary survives the Participant for 30
days, or if no beneficiary has been designated by the Participant, such
payments will be made to the estate of the Participant.
4.11 Additional Benefits Provisions
------------------------------
(a) Benefit Agreement. The Administrator shall provide to each
-----------------
Participant a form of Participation Agreement which shall set
forth the Participant's acceptance of the benefits provided
under the Plan and the Participant's agreement to be bound by
the terms of the Plan.
(b) Exclusion for Suicide or Self-Inflicted Injury.
----------------------------------------------
Not-withstanding any other provision of the Plan, no benefits
shall be paid to any Participant or Beneficiary in the event
of the death of the Participant as the result of suicide or
self-inflicted injury within two years of the later of the
date he or she first became a Participant or the date the
Participant executed the Participation Agreement referred to
in subsection 4.05(a).
(c) Leave of Absence. A Participant who is on an approved leave
----------------
of absence with salary, or on an approved leave of absence
without salary for a period of not more than 90 days, shall
be deemed to be a Participant employed by A&B during such
leave of absence. A Participant who is on an approved leave
of absence with salary for a period in excess of six months
shall be deemed to have voluntarily terminated his or her
employment as of the end of the first six months of such leave
of absence, if the Participant does not have a contractual or
statutory right to reemployment. A Participant who is on an
approved leave of absence without salary for a period in
excess of 90 days shall be deemed to have voluntarily
terminated his or her employment as of the end of such 90-day
period, if the Participant does not have a contractual or
statutory right to reemployment.
(d) Disability. A Disabled Participant shall continue to be
----------
eligible for retirement benefits under the Plan, regardless of
the nonperformance of services for A&B. Failure to return to
employee status at the termination of the Participant's
disabled status shall be deemed a voluntary termination of
employment if the Participant is offered employment in a
position substantially equivalent to the position held by the
Participant at the time his or her disabled status began.
Otherwise, such failure to return to employee status shall be
deemed an involuntary termination of employment.
(e) Termination for Good Cause. Notwithstanding any other
--------------------------
provision of this Plan, all rights of the Participant, any
Beneficiary, or the rights of their executors or
administrators, or any other person, to receive benefits
under this Plan shall be forfeited if the Participant's
employment with A&B is terminated for Good Cause. For
purposes of this subsection, "Good Cause" means (a) the
willful and continued failure by a Participant to
substantially perform his or her duties with A&B (other than
any such failure resulting from a Participant's incapacity
due to physical or mental illness) or (b) the willful
engaging by the Participant in conduct which is demonstrably
and materially injurious to A&B, monetarily or otherwise.
For purposes of this definition, no act, or failure to act,
shall be considered "willful" unless done, or omitted to be
done, not in good faith and without reasonable belief that
the action or omission was in the best interest of A&B.
(f) Alternative Forms of Benefit. The Board of Directors or the
----------------------------
Committee in its sole discretion may elect to pay a
Participant's spouse or Beneficiary a lump-sum Actuarial
Equivalent or other form of benefit that it deems appropriate
in lieu of the benefit form otherwise provided.
(g) Withholding. Benefit payments hereunder shall be subject to
-----------
applicable federal, state and local withholding for taxes.
4.12 Group Life Insurance. A&B will maintain for each Participant,
--------------------
throughout each Participant's lifetime, group life insurance coverage
in the amount of $50,000. The life insurance benefits payable under
such group life insurance will be in addition to the benefits payable
under the provisions of this plan, and will be in lieu of any life
insurance benefits to which a Participant may otherwise be entitled
under the Alexander & Baldwin, Inc. Retiree Health and Welfare Benefit
Plan.
ARTICLE V
SOURCE OF PAYMENTS
------------------
5.0l Source of Payments. All benefits payable under this Plan shall be
------------------
paid in cash from the general funds of A&B, and no trust account,
escrow, fiduciary relationship or other security arrangement shall be
established to assure payment. No Participant or Beneficiary shall
have any right, title or interest whatsoever in any investments which
A&B may make to aid it in meeting its obligations hereunder. Nothing
contained in this Plan, and no action taken pursuant to its provisions,
shall create or be construed to create a trust of any kind, or a
fiduciary relationship, between A&B and any Participant, any
Beneficiary or a Participant, or any other person. Any amounts
payable under the Plan shall continue for all purposes to be part of
the general assets of A&B and, thus, subject to the claims of A&B's
creditors. A&B shall in no way be restricted with regard to the
control, investment and use of such amounts. To the extent that any
person acquires a right to receive benefits from A&B under this Plan,
such right shall be no greater than, nor different from, the right of
an unsecured general creditor of A&B.
ARTICLE VI
ADMINISTRATION OF THE PLAN
--------------------------
6.0l Administrator. The Administrator of the A&B Retirement Plan shall be
-------------
the Administrator of this Plan. The Administrator shall have full
authority to administer the Plan. The Administrator shall have all of
the powers granted by the A&B Retirement Plan to the Administrator of
such plan and shall be subject to the same procedures and limitations
of authority.
6.02 Claims Procedure. The Administrator shall employ the claims procedures
----------------
as are applicable under the A&B Retirement Plan.
ARTICLE VII
AMENDMENT AND TERMINATION
-------------------------
7.0l The right to amend, modify, partially terminate, or completely
terminate this Plan is reserved to the Committee. However, no
amendment, modification or termination shall adversely affect the right
of any Participant or Beneficiary who is receiving benefits under the
Plan at the time of such amendment, modification or termination or who
is entitled to benefits under the provisions of Section 4.06 as a
former Participant of the Plan. The rights of other Participants as of
the date the Plan is terminated shall be determined under the
provisions of Section 4.07.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
------------------------
8.01 Benefits Not Assignable. No Participant or Beneficiary, or any other
-----------------------
person having or claiming to have any interest of any kind or character
in or under this Plan or in any payment therefrom shall have the right
to sell, assign, transfer, convey, hypothecate, anticipate, pledge or
otherwise dispose of such interest; and to the extent permitted by law,
such interest shall not be subject to any liabilities or obligations of
the Participant or to any bankruptcy proceedings, creditor claims,
attachment, garnishments, execution, levy or other legal process
against such Participant or his or her property.
8.02 Controlling Law. This Plan shall be construed, administered, and
---------------
governed in all respects in accordance with the laws of the State of
Hawaii.
8.03 Not an Employment Contract. The adoption and maintenance of this Plan
--------------------------
shall not be deemed to confer on any Participant any right to continue
in the employ of A&B, and shall not be deemed to interfere with the
right of A&B to discharge any person with or without cause or treat any
person without regard to the effect that such treatment might have on
the person as a Participant.
8.04 Binding Agreement. This Plan shall be binding upon and inure to the
-----------------
benefit of A&B, its successors and assigns, and the Participants and
their Beneficiaries, heirs, executors, administrators and legal
representatives.
IN WITNESS WHEREOF, Alexander & Baldwin, Inc. has caused this Restatement to be
executed on its behalf by its duly authorized officers this 21st day of June,
2006.
ALEXANDER & BALDWIN, INC.
By /s/ Nelson N. S. Chun
------------------------------
Its Senior Vice President
By /s/ Alyson J. Nakamura
------------------------------
Its Secretary
A&B 1985 SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
-----------------------------------------------
Amended and Restated Effective January 1, 2005
ARTICLE I
ESTABLISHMENT AND PURPOSE
-------------------------
1.01. Establishment of Plan. Alexander & Baldwin, Inc.
---------------------
established the A&B 1985 Supplemental Executive Retirement Plan (the "Plan")
effective January 1, 1986.
1.02. Purpose of Plan. It is the purpose of this Plan to
---------------
enhance the Company's ability to hire and retain executives by providing a means
for the Company to provide executives selected as participants with retirement
benefits and health and welfare benefits equal to the benefits which they would
receive under the Alexander & Baldwin, Inc. Retirement Plan for Salaried
Employees and the Alexander & Baldwin, Inc. Retiree Health and Welfare Benefit
Plan, if certain changes had been made to those plans. This Plan is intended to
be a nonqualified supplemental retirement plan for a select group of highly
compensated management executives and is exempt from the participation, vesting,
funding and fiduciary requirements of Title I of the Employee Retirement Income
Security Act of 1974.
ARTICLE II
DEFINITIONS
-----------
2.01. "Actuarial Equivalent" means a form of benefit differing
in time period, or manner of payment from a specified benefit provided in the
Plan, but having the same present value when determined in accordance with
generally accepted actuarial practice and the rules contained in Appendix B of
this Plan.
2.02. "Approved Early Retirement Date" means the first day of
any month after the Participant has attained age 55 and prior to his or her
Normal Retirement Date on which the Participant retires with the approval of the
Committee.
2.03. "A&B" and "Company" mean Alexander & Baldwin, Inc. and
its affiliates and their successors.
2.04. "A&B Retiree Plan" means the Alexander & Baldwin, Inc.
Retiree Health and Welfare Benefit Plan, as amended from time to time.
2.05. "A&B Retirement Plan" means the A&B Retirement Plan for
Salaried Employees, as amended from time to time.
2.06. "Beneficiary" means the person or persons designated by
the Participant as such in accordance with the provisions of Section 4.07 and to
whom the benefit, if any, provided for in Section 4.07 is payable.
2.07. "Benefit Commencement Age" means the greater of age 55
and the Participant's age at the date of determination.
2.08. "Board" means the Board of Directors of Alexander &
Baldwin, Inc.
2.09. "Change in Control" means a "Change in Control Event" as
defined in Internal Revenue Service Notice 2005-1 or any successor guidance
issued by the Internal Revenue Service. If a Change in Control shall take place
with respect to any company, a Change in Control shall be deemed to have taken
place with respect to any subsidiary of such company.
2.10. "Committee" means the Compensation Committee of the
Board.
2.11. "Early Retirement Factor" means the reduction defined in
Section 4.02(e).
2.12. "Eligible Position" means any employee position that is
highly compensated or that is one of a select group of management employee
positions. Exceptions to the eligibility requirements of this section may be
made by the Chief Executive Officer of Alexander & Baldwin, Inc., with the
approval of the Committee.
2.13. "Health Care Contributions" means the contributions paid
by the Company, under Article IV of the A&B Retiree Plan, towards the cost of
premiums for health care insurance coverage.
2.14. "Immediate Change in Control Benefit" means the benefit
described in subsection 4.06(a).
2.15. "Involuntary Termination Benefit" means the benefit
described in Section 4.03.
2.16. "Normal Retirement Benefit" means the benefit described
in Section 4.01.
2.17. "Normal Retirement Date" means the first day of the
month coincident with or next following the date the Participant attains age 65.
2.18. "Other Benefits" means the sum of:
(1) The benefit payable under the A&B Retirement
Plan;
(2) The benefit payable under the defined
benefit provisions of the A&B Excess Benefits Plan; and
(3) Any benefit which the Participant is eligible
to receive or has received from the qualified defined benefit pension plan of
another employer excluding benefits attributable to the Participant's own
contributions.
2.19. "Participant" means an executive in an Eligible Position
selected by the Committee pursuant to Section 3.01.
2.20. "Participation Termination Benefit" means the benefit
described in Section 4.04.
2.21. "Plan" means the plan set forth in this document, as
amended from time to time.
2.22. "Plan Termination Benefit" means the benefit described
in Section 4.05.
2.23. "Preretirement Death Benefit" means the benefit
described in Section 4.07.
2.24. "Prorated Retirement Income" means Retirement Income, as
defined in Section 2.25 multiplied by a fraction, the numerator of which shall
be 300 minus the number of months between the date of determination and the
Participant's Normal Retirement Date, and the denominator of which shall be 300.
2.25. "Retirement Income" means the amount determined in (a)
below paid in accordance with the provisions of (b) or (c), whichever is
applicable below:
(a) The amount of Retirement Income shall equal the
amount to which the Participant would be entitled as a single life annuity at
his or her Normal Retirement Date under the A&B Retirement Plan determined (i)
without regard to limitations imposed by the Internal Revenue Code, (ii) as if
the Participant had 25 years of credited benefit service, (iii) as if "Monthly
Compensation" as defined in Section 1.20 of the A&B Retirement Plan included in
the year earned the deferred portion of base salary and each bonus awarded under
the Company's One-Year Performance Improvement Incentive Plan and (iv) with
respect to Participants listed in Appendix A to this Plan, as if the benefit
formula in effect on December 31, 1988 under the A&B Retirement Plan for
Salaried Employees had continued in effect (provided such benefit formula
produces a higher benefit than the formula subsequently in effect).
(b) In the case of a Participant who is not married
at the time a lump sum payment described in Article IV is paid, Retirement
Income shall be deemed payable for the life of the Participant.
(c) In the case of a Participant who is married at
the time a lump sum payment described in Article IV is paid, 100% of Retirement
Income shall be deemed payable for the life of the Participant and 50% of
Retirement Income shall be deemed payable to his or her Surviving Spouse for
life following the death of the Participant.
2.26. "Surviving Spouse" means the spouse of a Participant who
survives the Participant and to whom the Participant was married on the
Participant's retirement date or (if earlier) date of death.
2.27. "Vested Change in Control Benefit" means the benefit
described in subsection 4.06(b).
2.28. "Years of Service" means the number of years and
fractions of years which qualify as Years of Credited Vesting Service as that
term is defined in the A&B Retirement Plan.
ARTICLE III
ELIGIBILITY AND PARTICIPATION
-----------------------------
3.01. Participation. A Participant is an employee who holds an
-------------
Eligible Position or who is being hired or promoted into an Eligible Position,
and who is selected by the Chief Executive Officer of Alexander & Baldwin, Inc.,
with the approval of the Committee, to be a Participant. An employee selected by
the Chief Executive Officer of Alexander & Baldwin, Inc., with the approval of
the Committee, shall become a Participant as of the date specified by the
Committee and shall remain a Participant until the date upon which the
Participant's employment in an Eligible Position terminates for any reason.
ARTICLE IV
BENEFITS
--------
4.00. Payment of Benefits. All benefits provided by Sections
-------------------
4.01 to 4.07 shall be paid in the form of a lump sum payment which is the
greater of the amounts determined under paragraph (1) and paragraph (2) below:
(1) An amount which is the Actuarial Equivalent
of the benefit otherwise defined by such Sections.
(2) An amount which is the before-tax equivalent
of the lower of two quotations obtained by the Company from insurance companies
for the cost of a lifetime annuity that provides after-tax monthly benefits
equivalent to those that a Participant would receive under the Plan if the Plan
allowed monthly payments of the benefits hereunder.
A Participant shall be entitled to whichever of
the benefits provided by Sections 4.01 to 4.06 provides the greatest benefit,
and under no circumstances shall a Participant be entitled to benefits provided
by more than one such Section.
4.01. Normal Retirement.
-----------------
(a) Eligibility. A Participant who separates from
-----------
service (i) after completing three years of participation in the Plan and (ii)
on or after his or her Normal Retirement Date shall be entitled to a Normal
Retirement Benefit as described in (b) below.
(b) Amount of Benefit. A Participant's Normal Retirement
-----------------
Benefit shall equal his or her Retirement Income, reduced by the Participant's
Other Benefits in accordance with rules contained in Appendix C.
(c) Monthly Benefit Commencement Date. A Participant's
---------------------------------
Normal Retirement Benefit shall be deemed to commence as of the Participant's
retirement date.
(d) Lump Sum Payment Date. The lump sum payment of
---------------------
the Normal Retirement Benefit shall be paid as soon as practicable after the
Participant's retirement date; provided, however, that in the case of a
Participant who is a "key employee" (as defined in section 416(i) of the
Internal Revenue Code without regard to paragraph (5) thereof), the
Participant's Normal Retirement Benefit shall be paid no earlier than six months
following the Participant's retirement date.
4.02. Approved Early Retirement
-------------------------
(a) Eligibility. A Participant who separates from
-----------
active service (i) after completing at least three years of participation in the
Plan and (ii) on his or her Approved Early Retirement Date shall be entitled to
an Approved Early Retirement Benefit as described in (b) below.
(b) Benefit. A Participant's Approved Early Retirement
-------
Benefit shall equal his or her Prorated Retirement Income as of the
Participant's Approved Early Retirement Date reduced by (i) the Early Retirement
Factor applicable at the Participant's age at his or her Approved Early
Retirement Date and (ii) further reduced by Other Benefits as provided in
Appendix C.
(c) Monthly Benefit Commencement Date. A Participant's
---------------------------------
Approved Early Retirement Benefit shall be deemed to commence as of the
Participant's Approved Early Retirement Date.
(d) Lump Sum Payment Date. The lump sum payment of
---------------------
the Approved Early Retirement Benefit shall be paid as soon as practicable after
the Participant's Approved Early Retirement Date; provided, however, that in the
case of a Participant who is a "key employee" (as defined in section 416(i) of
the Internal Revenue Code without regard to paragraph (5) thereof), the
Participant's Approved Early Retirement Benefit shall be paid no earlier than
six months following the Participant's Approved Early Retirement Date.
(e) Early Retirement Factor. The "Early Retirement
-----------------------
Factor" shall be a reduction of .25% for each of the first 24 months between the
date of determination and the first day of the month coincident with or next
following the Participant's 62nd birthday, and an additional reduction of .50%
for each such month in excess of 24 months between such dates.
4.03. Involuntary Termination of Employment.
-------------------------------------
(a) Eligibility. A Participant who separates from
-----------
service due to involuntary termination of employment after completing at least
three years of participation in the Plan shall be entitled to a Involuntary
Termination Benefit.
(b) Benefit. A Participant's Involuntary Termination
-------
Benefit shall equal his or her Prorated Retirement Income determined as of the
date of the Participant's involuntary termination reduced by (i) the Early
Retirement Factor applicable at the Participant's age determined as of monthly
benefit commencement date determined under the provisions of subsection
(c) below and (ii) further reduced by Other Benefits as provided in Appendix C.
(c) Monthly Benefit Commencement Date. A Participant's
---------------------------------
Involuntary Termination Benefit shall be deemed to commence as of his or her
Normal Retirement Date unless an Approved Early Retirement Date is approved by
the Committee. In such latter case, it shall be deemed to commence as of the
Approved Early Retirement Date.
(d) Lump Sum Payment Date. The lump sum payment of
---------------------
the Involuntary Termination Benefit shall be paid as soon as practicable after
the involuntary termination of the Participant's employment; provided, however,
that in the case of a Participant who is a "key employee" (as defined in section
416(i) of the Internal Revenue Code without regard to paragraph (5) thereof),
the Participant's Involuntary Termination Benefit shall be paid no earlier than
six months following the Participant's termination date.
4.04. Termination of Participation.
----------------------------
(a) Eligibility. A Participant, with at least three
-----------
years of participation, whose position ceases to qualify as an Eligible Position
shall be entitled to a Participation Termination Benefit described in (b) below.
(b) Benefit. A Participant's Participation Termination
-------
Benefit shall equal his or her Prorated Retirement Income determined as of the
date his or her participation terminates reduced by (i) the Early Retirement
Factor applicable at the Participant's age determined as of the monthly benefit
commencement date determined under the provisions of subsection (c) below and
(ii) further reduced by Other Benefits as provided in Appendix C.
(c) Monthly Benefit Commencement Date. A Participant's
---------------------------------
Participation Termination Benefit shall be deemed to commence as of his or her
Normal Retirement Date unless an Approved Early Retirement Date is approved by
the Committee. In such latter case, it shall be deemed to commence as of the
Approved Early Retirement Date.
(d) Lump Sum Payment Date. The lump sum payment of
---------------------
the Participation Termination Benefit shall be paid as soon as practicable
after the Participant subsequently separates from service; provided, however,
that in the case of a Participant who is a "key employee" (as defined in
section 416(i) of the Internal Revenue Code without regard to paragraph (5)
thereof), the Participant's Participation Termination Benefit shall be paid no
earlier than six months following the Participant's separation from service.
4.05. Termination of the Plan.
-----------------------
(a) Eligibility. A Participant of the Plan at the
-----------
time it is terminated shall be entitled to a Plan Termination Benefit.
(b) Benefit. A Participant's Plan Termination Benefit
-------
shall equal his or her Prorated Retirement Income determined as of the date the
Plan is terminated reduced by (i) the Early Retirement Factor applicable at the
Participant's age determined as of the monthly benefit commencement date
determined under the provisions of subsection (c) below and (ii) further
reduced by Other Benefits as provided in Appendix C.
(c) Monthly Benefit Commencement Date. A Participant's
---------------------------------
Plan Termination Benefit shall be deemed to commence as of his or her Benefit
Commencement Age determined as of the date the Participant subsequently
terminates employment or retires.
(d) Lump Sum Payment Date. The lump sum payment of
---------------------
the Plan Termination Benefit shall be paid as soon as practicable after the
Participant separates from service; provided, however, that in the case of a
Participant who is a "key employee" (as defined in section 416(i) of the
Internal Revenue Code without regard to paragraph (5) thereof), the
Participant's Plan Termination Benefit shall be paid no earlier than six months
following the Participant's separation from service.
4.06. Change in Control. Upon the occurrence of a Change in
-----------------
Control, as defined in Section 2.09, with respect to a company employing a
Participant, the provisions of subsection (a) below shall apply unless the terms
of such Change in Control provide, as a prerequisite to the consummation of the
Change in Control, that the employer responsibilities under this Plan are to be
assumed by the successor organization. In the latter case, the provisions of
subsection (b) below shall apply:
(a) Immediate Change in Control Benefit.
-----------------------------------
(1) Eligibility. The Plan shall immediately
-----------
and automatically terminate with respect to such company and each Participant
employed by such company shall be entitled to an Immediate Change in Control
Benefit as described in (2) below.
(2) Benefit. A Participant's Immediate
-------
Change in Control Benefit shall equal his or her Prorated Retirement Income
determined as of the Change in Control date, reduced by (i) the Early Retirement
Factor applicable at the Participant's age determined as of the monthly benefit
commencement date determined under the provisions of paragraph (3) below, and
(ii) further reduced by Other Benefits as provided in Appendix C.
(3) Monthly Benefit Commencement Date. A
---------------------------------
Participant's Immediate Change in Control Benefit shall be deemed to commence
as of his or her Benefit Commencement Age determined as of the Change in Control
Date.
(4) Lump Sum Payment Date. The lump sum payment of
---------------------
the Immediate Change in Control Benefit shall be immediately due and shall be
paid within thirty days of such Plan termination.
(b) Vested Change in Control Benefit.
--------------------------------
(1) Eligibility. Each Participant employed
-----------
by such company as of the Change in Control date shall be entitled to a Vested
Change in Control Benefit as described in (2) below.
(2) Benefit. A Participant's Vested Change in
-------
Control Benefit shall equal his or her Prorated Retirement Income determined as
of the Change in Control date, reduced by (i) the Early Retirement Factor
applicable at the Participant's age determined as of the monthly benefit
commencement date determined under the provisions of paragraph (3) below, and
(ii) further reduced by Other Benefits as provided in Appendix C.
(3) Monthly Benefit Commencement Date. A
---------------------------------
Participant's Vested Change in Control Benefit shall be deemed to commence as
of his or her Benefit Commencement Age determined as of the date the Participant
subsequently terminates employment or retires.
(4) Lump Sum Payment Date. The lump sum payment of
---------------------
the Vested Change in Control Benefit shall be paid as soon as practicable after
the Participant terminates employment or retires.
4.07. Preretirement Death Benefit.
---------------------------
(a) Eligibility. In the event that a Participant dies
-----------
prior to retirement, or prior to termination of employment, such Participant's
Beneficiary shall be entitled to a Preretirement Death Benefit determined as
provided in this Section in lieu of any other benefit provided by this Plan.
(b) Benefit. The Preretirement Death Benefit provided
-------
by this Section shall equal the lump sum payment, if any, to which the
Participant would have been eligible under this Plan if he/she had retired, or
terminated employment, immediately prior to his/her death, determined without
regard to (i) any requirement for Committee approval of an Approved Early
Retirement Date, or (ii) any requirement for 3 years of participation. The
Preretirement Death Benefit shall be determined by assuming the Participant
did not elect any optional form of payment under the A&B Retirement Plan.
(c) Beneficiary Designation. Each Participant shall,
-----------------------
at the time he/she becomes a Participant, designate one or more persons as
his/her Beneficiary for purposes of this Section. The designation shall be made
in the form prescribed by the Company and shall become effective when filed with
the Company. A Participant may from time to time change his/her Beneficiary by
filing a new designation form with the Company. Should the Participant die
without having any effectively-designated surviving Beneficiary, then the
Beneficiary shall be the spouse of the Participant, if then living. If there is
no surviving spouse, then the Beneficiary shall be the Participant's children
then living. If there are no living children, then the Beneficiary shall be the
estate of the Participant.
(d) Lump Sum Payment Date. The lump sum payment of
---------------------
the Beneficiary's Preretirement Death Benefit shall be paid as soon as
practicable after the death of the Participant.
4.08. Retiree Health and Welfare Benefits. For purposes of the
-----------------------------------
A&B Retiree Plan:
(a) Normal Retirement Date. A Participant who is
----------------------
entitled to a Normal Retirement Benefit shall be deemed to have the greater of
(i) his or her actual Completed Years of Service, and (ii) twenty-five (25)
Completed Years of Service.
(b) Early Retirement Date. A Participant or former
---------------------
Participant who is entitled to one of the benefits described in paragraph
(1) below shall be deemed to have the rights described in paragraph (2) below.
(1) The benefits described by this paragraph are:
(A) an Approved Early Retirement Benefit,
(B) a Participation Termination Benefit if such
termination occurs at of after the Participant attained age 55,
(C) a Plan Termination Benefit if such
termination occurs at or after the Participant attained age 55,
(D) a Vested Change in Control Benefit or a
prior Immediate Change in Control Benefit if such Change in Control occurred at
or after the Participant attained age 55.
(2) A Participant who is subject to the provisions
of this paragraph shall automatically become a Participant under the A&B Retiree
Plan, without regard to the age and service requirements in Article III of the
A&B Retiree Plan. For purposes of determining such Participant's Health Care
Contributions under the A&B Retiree Plan, the number of Completed Years of
Service of such Participant shall be deemed to be equal to 25 years multiplied
by the fraction used to determine such Participant's or former Participant's
Prorated Retirement Income, provided however, that on or after such
Participant's Normal Retirement Date he or she shall be deemed to have
twenty-five (25) Completed Years of Service.
ARTICLE V
SOURCE OF PAYMENTS
------------------
5.01. Source of Payments. All benefits payable under this Plan
------------------
shall be paid in cash from the general funds of the Company, and no trust
account, escrow, fiduciary relationship or other security arrangement shall be
established to assure payment, other than, at the option of the Company, an
escrow account the amounts in which remain subject to the claims of the
Company's general creditors in the event of insolvency or bankruptcy. No
Participant or Participant's Surviving Spouse shall have any right, title or
interest whatsoever in any investments which the Company may make to aid the
Company in meeting its obligations hereunder. Nothing contained in this Plan,
and no action taken pursuant to its provisions, shall create or be construed to
create a trust of any kind, or a fiduciary relationship, between the Company and
any Participant, any Surviving Spouse, or any other person. To the extent that
any person acquires a right to receive benefits from the Company under this
Plan, such right shall be no greater than, nor different from the right of an
unsecured general creditor of the Company.
ARTICLE VI
FORFEITABILITY
--------------
6.01. Forfeitability of Benefits. Notwithstanding any other
--------------------------
provision of this Plan, no payment of unpaid benefits shall be made, and all
rights under the Plan of the Participant, Surviving Spouse, the Participant's
executors or administrators, or any other person, to receive benefits under this
Plan shall be forfeited if the Participant's employment with the Company is
terminated voluntarily or for Cause. For the purpose of this Plan, termination
for Cause shall mean termination upon (a) the willful and continued failure by a
Participant to substantially perform his or her duties with the Company (other
than any such failure resulting from a Participant's incapacity due to physical
or mental illness) or (b) the willful engaging by the Participant in conduct
which is demonstrably and materially injurious to the Company, monetarily or
otherwise. For purposes of this paragraph, no act, or failure to act, shall be
considered "willful" unless done, or omitted to be done, not in good faith and
without reasonable belief that the action or omission was in the best interest
of the Company.
ARTICLE VII
AMENDMENT AND TERMINATION
-------------------------
7.01. Amendment and Termination. The Committee reserves the
-------------------------
right to amend, modify, partially terminate, or completely terminate the Plan.
However, no amendment, modification or termination shall reduce retroactively
the benefits of any Participant or any Surviving Spouse under the Plan.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
------------------------
8.01. Benefits Not Assignable. No Participant or Surviving
-----------------------
Spouse, or any other person having or claiming to have any interest of any kind
or character in or under this Plan or in any payment therefrom shall have the
right to sell, assign, transfer, convey, hypothecate, anticipate, pledge or
otherwise dispose of such interest; and to the extent permitted by law, such
interest shall not be subject to any liabilities or obligations of the
Participant or to any bankruptcy proceedings, creditor claims, attachment,
garnishments, execution, levy or other legal process against such Participant or
his or her property.
8.02. Controlling Law. This Plan shall be construed,
---------------
administered, and governed in all respects in accordance with the laws of the
State of Hawaii.
8.03. Not an Employment Contract. The adoption and maintenance
--------------------------
of this Plan shall not be deemed to confer on any Participant any right to
continue in the employ of A&B, and shall not be deemed to interfere with the
right of A&B to discharge any person with or without cause or treat any person
without regard to the effect that such treatment might have on the person as a
Participant.
8.04. Severability. If any provision of this Plan is held
------------
invalid or unenforceable by a court of competent jurisdiction, all remaining
provisions shall continue to be fully effective.
8.05. Binding Agreement. This Plan shall be binding upon and
-----------------
inure to the benefit of the Company, its successors and assigns, and the
Participants and their heirs, executors, administrators and legal
representatives.
8.06. Administration of the Plan. The Plan shall be
--------------------------
administered by the Committee, under the authority of the Board. Subject to the
express provisions of the Plan, the Committee shall have complete authority to
interpret the Plan, to prescribe, amend and rescind regulations relating to its
administration, and to make all other determinations that are necessary in the
course of its administration. All decisions made by the Committee with respect
to the administration of the Plan shall be final and binding on all persons
having an interest in the Plan. The Committee may from time to time delegate any
right, power or duty concerning the operation or administration of the Plan to
one or more committees, individuals or entities.
8.07. Adoption by Subsidiaries. Any subsidiary of Alexander &
------------------------
Baldwin, Inc. that has adopted the A&B Retirement Plan may adopt this Plan for
the benefit of its employees when one of its employees has been selected as a
Participant by the Committee. Such adoption shall be authorized by a resolution
of the Board of Directors of such subsidiary. In the event of such adoption of
the Plan by a subsidiary of Alexander & Baldwin, Inc. the Committee shall serve
as agent of the subsidiary in administering the Plan. All power to amend,
modify, or terminate the Plan shall continue as the unfettered prerogative of
the Committee.
IN WITNESS WHEREOF, Alexander & Baldwin, Inc. has caused this Restatement to be
executed on its behalf by its duly authorized officers, effective as of January
1, 2005.
ALEXANDER & BALDWIN, INC.
By /s/ Nelson N. S. Chun
------------------------------
Its Senior Vice President
By /s/ Alyson J. Nakamura
------------------------------
Its Secretary
APPENDIX A
Participants Referred to in
Section 2.25
---------------------------
1. R. F. Cameron
2. R. J. Donohue
3. F. L. Fleischmann
4. G. Y. Nakamatsu
5. R. H. Rothman
APPENDIX B
Rules For Determining Actuarial Equivalent
------------------------------------------
When the terms of this Plan require the determination of a lump sum payment
which is the Actuarial Equivalent of any other benefit provided by this Plan,
the following rules shall apply to the calculation of such lump sum payment:
1. The mortality table used shall be the mortality table then in use by
the A&B Retirement Plan for the purpose of determining lump sum
payments to participants of such plan who are entitled to such
payments.
2. The discount rate shall be the after-tax equivalent of the discount
rate then in use by the A&B Retirement Plan for the purpose of
determining lump sum payments to participants of such plan who are
entitled to such payments. The after-tax equivalent rate shall be
determined by multiplying discount rate in use by the A&B Retirement
Plan by the excess of 100% over the tax effected marginal tax rate
declared by the Committee.
3. The Committee shall declare the tax effected marginal tax rate at the
beginning of each calendar year.
4. The tax effected marginal tax rate shall apply to lump sum payments
made at any time during such calendar year and may not be changed
during the year.
5. The value of the benefit to a Surviving Spouse which is included in a
Participant's Retirement Income shall be included in the calculation of
the lump sum payment to which the Participant is entitled. Unless
stated otherwise, the benefit to the Surviving Spouse shall be deemed
to apply only if the death of the Participant occurs on or after the
date the Retirement Income is deemed to commence under the terms of the
provision giving rise to the Participant's right to a lump sum payment.
6. If the terms of the Plan provide for a benefit such that if it were
paid as a monthly benefit it could have commenced at more that one
future date, then for purposes of calculating the lump sum that is the
Actuarial Equivalent of such benefit, it shall be deemed that the
benefit would have commenced at the earliest possible date.
7. The early retirement reduction factors, if any, used to calculate the
lump sum which is the Actuarial Equivalent of the benefit provided by
the provisions of Section 4.06 as a result of a Change of Control,
shall be the factors applicable to Participants of the A&B Retirement
Plan who terminate employment after attaining eligibility for early
retirement regardless of the Participant's age as of the Change of
Control date.
APPENDIX C
Rules for the Offset of Benefits Described in Article IV
--------------------------------------------------------
1. Any increase in Other Benefits which occur after termination of
employment or retirement shall not be taken into account.
2. In the case of a Participant who is not married at the time benefits
are deemed to commence under this Plan, Other Benefits shall be
determined as though such payments were made in the form of a straight
life annuity.
3. In the case of a Participant who is married at the time a lump sum
benefit is payable under this Plan, Other Benefits shall be determined
as though such payments were made in the form of joint and 50% survivor
form of payment with his or her spouse designated as the contingent
annuitant.
4. It shall be assumed that Other Benefit payments (whether or not in
payment status) commence under such other plans of the same date
benefits commence under this Plan. In all cases, the provisions of the
A&B Retirement Plan shall be used to determine the adjustment made to
the Other Benefits for commencement prior to a Participant' Normal
Retirement Date or to determine the equivalent joint and 50% survivor
amount.
ALEXANDER & BALDWIN, INC.
DEFERRED COMPENSATION PLAN
AMENDED AND RESTATED EFFECTIVE JANUARY 1, 2005
DEFERRED COMPENSATION PLAN
--------------------------
I. PURPOSE. Alexander & Baldwin, Inc. (the "Company") established
this Deferred Compensation Plan (the "Plan") effective August 25, 1994, to
provide participants in the Company's Three-Year Performance Improvement
Incentive Plan (the "Three-Year PIIP") with the opportunity to defer payment of
the awards made to them under such Plan and/or under the Company's One-Year
Performance Improvement Incentive Plan (the "One-Year PIIP") for a period
extending until their retirement or other termination of employment or until the
expiration of the specific term (at least one full year in duration) elected by
the participant.
II. DEFINITIONS. For purposes of this Plan, the following
definitions shall be in effect:
Board shall mean the Company's Board of Directors.
-----
Change in Control shall mean a "Change in Control Event" as
-----------------
defined in Internal Revenue Service Notice 2005-1 or any successor guidance
issued by the Internal Revenue Service..
Common Stock shall mean shares of the Company's common stock.
------------
Fair Market Value shall, with respect to the per share
-----------------
valuation of the Common Stock on any relevant date, be the mean between the
highest and lowest selling prices per share of Common Stock on such date, as
quoted on the Nasdaq National Market (or any successor system). Should the
Common Stock become traded on a national securities exchange, then the Fair
Market Value per share shall be the mean between the highest and lowest selling
prices on such exchange on the date in question, as such prices are quoted on
the composite tape of transactions on such exchange. If there is no reported
sale of Common Stock on the Nasdaq National Market (or national securities
exchange) on the date in question, then the Fair Market Value shall be the mean
between the highest and lowest selling prices on the Nasdaq National Market (or
such securities exchange) on the last preceding date for which such quotation
exists.
Plan Administrator shall mean the Compensation and Stock
------------------
Option Committee of the Board.
Section 16 Insider shall mean any participant who is, at the
----------
time of the relevant determination or was at any time within the immediately
preceding six (6) months, an officer or director of the Company subject to the
short-swing profit restrictions of Section 16(b) of the Securities Exchange Act
of 1934, as amended.
III. ADMINISTRATION. The Plan Administrator shall administer the
Plan and shall have full power and authority (subject to the provisions of the
Plan) to establish such rules and regulations as it may deem appropriate for
proper administration and to make such determinations under, and issue such
interpretations of, the Plan as it may deem necessary or advisable. Decisions of
the Plan Administrator shall be final and binding on all parties who have an
interest in the Plan.
IV. DEFERRAL ELECTION. An individual selected for participation in
the Three-Year PIIP may elect to defer, for the period of time described below
("Deferral Period"), all or part of his/her award(s) under the Three-Year PIIP
and/or One-Year PIIP. Any such election ("Deferral Election") must be made in
accordance with the following provisions:
1. Deferral Election Procedure. In December of each calendar
---------------------------
year, the Company will send to each individual selected for participation in the
upcoming performance cycle under the Three-Year PIIP an election form whereby
such individual may elect to defer the payment of all or part of any award made
to him/her for that three-year performance cycle or for the upcoming one-year
performance cycle under the One-Year PIIP. The Deferral Election form must be
executed by the participant and delivered to the Company before the beginning of
the particular performance cycle under the One-Year PIIP or Three-Year PIIP to
which such election relates.
2. Deferral Period. The Deferral Period shall extend until the
---------------
date the participant separates from service with the Company. At the time the
Deferral Election form is filed, the participant shall specify the date or dates
following his/her separation from service on which payments of the deferred
award are to be made. Once specified, such payment schedule cannot be changed.
Notwithstanding the foregoing, prior to January 1, 2005, participants could
elect a payment date preceding the participant's separation from service, and
any such election applicable to compensation that was earned and vested prior to
January 1, 2005, shall continue to be effective on and after January 1, 2005,
with respect to the compensation deferred under such election and all interest
or dividend equivalents credited to such compensation.
3. Minimum Deferral Amount. A participant may elect to defer
-----------------------
all or any portion of his/her award under the One-Year or Three-Year PIIP (with
the balance to be paid currently, i.e., on a non-deferred basis), provided the
amount to be so deferred is at least Two Thousand Dollars ($2,000.00). The
portion of each award which is to be deferred pursuant to such election shall be
credited to a separate account ("Deferred Compensation Account") maintained for
the participant on the Company's books. The credit to such book account shall be
made at the time the award otherwise would be payable to the participant under
the applicable PIIP in the absence of his/her Deferral Election.
V. CONVERSION ELECTION - COMMON STOCK-EQUIVALENT UNITS. Subject
to the provisions stated below and pursuant to procedures determined by the Plan
Administrator or by the committee or individual(s) to which such authority is
delegated, the participant may make an election ("Conversion Election") to have
all or any portion of his/her award under the One-Year or Three-Year PIIP that
is credited to his/her Deferred Compensation Account, converted into Common
Stock-equivalent units which will be valued from time to time during the
Deferral Period on the basis of the Fair Market Value of the Common Stock.
1. Timing of Conversion Election. Conversion Elections shall
-----------------------------
be made at the time the applicable PIIP awards are determined. Conversion
Elections by Section 16 Insiders, once made, shall be irrevocable.
2. Limitation on Conversion Election. The Conversion Election
---------------------------------
shall be subject to the following limitations:
(i) The portion of the award which may be converted
into Common Stock-equivalent units shall not exceed fifty percent (50%) of the
total dollar amount of such award, including the portion of such award payable
currently and the portion deferred under this Plan, and
(ii) The dollar value of the One-Year or Three-Year
PIIP award which may be converted into Common-Stock equivalent units under this
Plan shall not, when added to the Fair Market Value (at date of issuance) of any
shares of Common Stock issued under the Company's Restricted Stock Bonus Plan in
payment of all or part of the balance of such award (exclusive of any bonus
shares issued under the Restricted Stock Bonus Plan), exceed fifty percent (50%)
of the total dollar value of such PIIP award.
3. Approval of Plan Administrator. No Conversion Election
------------------------------
shall be effective, and no portion of the participant's Deferred Compensation
Account shall actually be converted into Common Stock-equivalent units, except
to the extent such Conversion Election is approved by the Plan Administrator.
4. Bonus Common Stock-Equivalent Units. The deferred portion
-----------------------------------
of any award converted into Common Stock-equivalent units may, in the Plan
Administrator's sole discretion, be credited, as a premium, with additional,
bonus Common Stock-equivalent units ("bonus units") equal to up to 50% of the
number of Common Stock-equivalent units into which such portion is initially
converted.
VI. VALUATION OF DEFERRED COMPENSATION ACCOUNTS. From time to time
during the Deferral Period, the value of each Deferred Compensation Account
shall be adjusted to reflect an investment return on the balance credited to
such account, and such value and adjustments periodically shall be communicated
to each participant. Such periodic valuation shall be made as follows:
1. Cash Balance. The deferred portion of any award valued in
------------
cash shall be credited with interest, compounded annually, for each
calendar year falling in whole or in part within the Deferral Period.
Such interest shall be at a per annum rate equal to the New York
Reserve Bank discount rate in effect as of January 15 of each calendar
year within the Deferral Period plus 1%.
2. Common Stock-Equivalent Units.
-----------------------------
(i) The Common Stock-equivalent units (including
bonus units) will be credited, at the time dividends are paid
on outstanding shares of Common Stock, with an amount
("dividend-equivalent credits") equal to the dividends which
otherwise would be paid if the number of Common
Stock-equivalent units in the participant's Deferred
Compensation Account were actually outstanding shares of
Common Stock.
(ii) Dividend-equivalent credits will be applied in
the manner of a dividend reinvestment plan to purchase
additional Common Stock-equivalent units valued at Fair Market
Value on the applicable dividend payment date.
(iii) If the employment of a participant terminates
for any reason, other than by reason of normal or approved
early retirement, death, or total and permanent disability,
then:
(a) such participant shall no longer have
any right, title or interest in any Common
Stock-equivalent units which were credited as bonus
units within three (3) years prior to the date of
such termination or discharge, and such participant
shall not be entitled to receive any payment with
respect to such bonus units, and
(b) the Company shall have the right,
exercisable at its discretion, to convert to cash any
or all non-bonus Common Stock-equivalent units which
were credited to the participant's account within
three (3) years prior to the date of such termination
or discharge, at an amount equal to the lesser of the
original award amount that was converted to these
non-bonus Common Stock-equivalent units, and, an
amount equal to the Fair Market Value per share of
Common Stock on the date of such termination or
discharge multiplied by the number of such Common
Stock-equivalent units.
(iv) After the Common Stock-equivalent units have
been credited to the participant's Deferred Compensation
Account for a period of at least three (3) years, that
participant may elect, pursuant to procedures determined by
the Plan Administrator or by the committee or individual(s) to
which such authority is delegated, to have all or a portion of
those units converted into cash on the basis of the Fair
Market Value (at date of conversion) of the shares of Common
Stock represented by such units; provided, however, that
participants may not make such an election if they are Section
16 Insiders at the time of such election. Any portion so
converted to cash shall begin to earn interest in accordance
with Section VI.1. above and shall stop earning
dividend-equivalent credits.
(v) Any Common Stock-equivalent units credited to a
participant's Deferred Compensation Account shall
automatically be converted into cash, on the basis of the Fair
Market Value (at the date of conversion) of the shares of
Common Stock represented by such units, upon the earlier of
(A) the participant's termination of employment with the
Company for any reason or (B) the expiration date of the
Deferral Period in effect for such account pursuant to the
participant's prior election. Any amounts so converted to cash
shall begin to earn interest in accordance with Section VI.1.
above.
VII. PAYMENT. Upon the participant's separation from service (or at
the time specified in the participant's pre-2005 election as described in the
last sentence of Section IV.2), each Deferred Compensation Account maintained
for the participant shall be paid out either in installments or in a lump sum in
accordance with the payment schedule irrevocably designated by the participant
for that account in the Deferral Election form executed and filed by him/her in
accordance with Section IV. above; provided, however, that in the case of a
participant who is a "key employee" (as defined in section 416(i) of the
Internal Revenue Code without regard to paragraph (5) thereof), except as
otherwise permitted under the last sentence of Section IV.2, the participant's
Deferred Compensation Account(s) shall be paid no earlier than six months
following the participant's separation from service.
VIII. FUNDING. Deferred Compensation Accounts shall not be funded
and shall be maintained by the Company only as book reserves. The Company's
obligation to pay such accounts as they become due and payable under the Plan
shall be at all times an unfunded and unsecured obligation of the Company, and
the participants only shall have the status of general creditors with respect to
the amounts credited to their accounts and shall look solely and exclusively to
the general assets of the Company for payment.
IX. CHANGE IN CONTROL. Notwithstanding any other provision of this
Agreement, upon the occurrence of a Change in Control, all Common
Stock-equivalent units which previously were credited as bonus units shall
immediately vest, the provisions of Section VI.2.(iii)(b) with respect to the
conversion rights of the Company applicable to non-bonus Common Stock-equivalent
units shall terminate, all outstanding Common Stock-equivalent units at the time
credited to outstanding Deferred Compensation Accounts shall immediately be
converted into cash on the basis of the higher of (i) the Fair Market Value of
the Common Stock at the time of such Change of Control or (ii) the highest price
paid per share of Common Stock in effecting the Change in Control, and the
amount outstanding in each Deferred Compensation Account after such conversion
shall be paid out in a single lump sum to the participants within thirty (30)
days after such Change in Control, whereupon the Plan shall terminate.
X. BENEFICIARY DESIGNATIONS. Each participant may file with the
Company a written designation of one or more primary beneficiaries and one or
more contingent beneficiaries to whom payments otherwise due the participant
under the Plan are to be made after his/her death, in such amounts and at such
times as would have been made to the participant had he/she lived. Such payments
shall be divided among the primary beneficiaries who survive the participant in
such proportion as the participant shall direct in his/her written designation.
If no primary beneficiary survives the participant, such payment shall be
divided among the contingent beneficiaries who survive the participant in such
proportion as the participant shall direct in his/her written designation. If no
primary or contingent beneficiary survives the participant or is named by the
participant, such payments shall be made to the participant's estate. At the
discretion of the Plan Administrator, payments to the participant's estate may
be made in a lump sum equal to the total value of the participant's account. The
participant may from time to time change his/her beneficiary designation by
filing a new written designation with the Company.
XI. INALIENABILITY. No participant or beneficiary, or any other
person having or claiming to have any interest of any kind or character in or
under this Plan or in any of the Deferred Compensation Accounts or any part
thereof or payment therefrom shall have the right to sell, assign, transfer,
convey, hypothecate, anticipate, pledge or otherwise dispose of such interest;
and to the extent permitted by law, such interest shall not be subject to any
liabilities or obligations of the participant or to any bankruptcy proceedings,
creditor claims, attachment, garnishments, execution, levy or other legal
process against such participant or his/her property.
XII. PLAN DURATION AND AMENDMENT. The Plan shall become effective
immediately upon adoption by the Board. The Board may amend, modify or terminate
the Plan at any time thereafter; provided, however, that no such action shall
adversely affect the rights of participants with respect to their outstanding
Deferral Elections under the Plan and the payment of their Deferred Compensation
Accounts in accordance with those elections.
XIII. NO EMPLOYMENT RIGHTS. Nothing in the Plan shall confer upon
any participant any right to continue in the Company's service for any period of
specific duration or interfere with or otherwise restrict in any way the rights
of the Company or of the participant, which rights are hereby expressly reserved
by each, to terminate the participant's employment at any time for any reason,
with or without cause, except to the extent such right is expressly limited by
any written employment in effect between the Company and such participant.
XIV. WITHHOLDING TAXES. All amounts which become payable under the
Plan shall be subject to the Company's collection of all applicable Federal,
state and local income and employment taxes required to be withheld therefrom.
XV. GOVERNING LAW. The provisions of the Plan shall, to the extent
not preempted by the Employee Retirement Income Security Act of 1974, as amended
(ERISA), be governed by and construed in accordance with the laws of the State
of Hawaii without resort to that State's conflict-of-laws rules.
XVI. MISCELLANEOUS.
A. The liabilities and obligations of the Company hereunder
shall be binding upon any successor corporation or entity which succeeds to all
or substantially all of the assets and business of the Company by merger,
purchase or other transaction.
B. All costs and expenses incurred in the administration of
the Plan shall be borne by the Company.
XVII. ARBITRATION. In the event that a participant should dispute
the decision of the Committee with respect to such participant's claimed benefit
entitlement under the Plan, such dispute shall be settled by arbitration
proceedings conducted in Honolulu, Hawaii in accordance with the applicable
rules of the American Arbitration Association. If the parties cannot agree upon
the individual to serve as arbitrator, then they shall request the American
Arbitration Association to submit a list of five (5) potential arbitrators, and
in the absence of any agreement as to which of the named individuals shall serve
as arbitrator, each party shall have the right to remove two (2) of the named
individuals from the list, and the last remaining individual on the list shall
accordingly serve as the arbitrator. Such arbitrator shall have full power and
authority to settle the dispute through interpretation and application of the
express provisions of the Plan, but shall have no authority to amend, revise or
supplement such provisions. The costs of such arbitration shall be shared
equally by the Company and the participant, and the decision of the arbitrator
shall be final and binding on them.
IN WITNESS WHEREOF, Alexander & Baldwin, Inc. has caused this Plan to
be executed by its duly authorized officers, effective January 1, 2005.
ALEXANDER & BALDWIN, INC.
By /s/ Nelson N. S. Chun
------------------------------
Its Senior Vice President
By /s/ Alyson J. Nakamura
------------------------------
Its Secretary
ALEXANDER & BALDWIN, INC.
1998 STOCK OPTION/STOCK INCENTIVE PLAN
NON-QUALIFIED STOCK OPTION AGREEMENT
Discretionary Option Grant Program
----------------------------------
AGREEMENT made as of _______________, by and between
ALEXANDER & BALDWIN, INC., a Hawaii corporation (the "Company"), and
______________ (the "Optionee").
W I T N E S S E T H:
-------------------
RECITALS
- --------
A. The Company has, with the approval of the shareholders, adopted the
Alexander & Baldwin, Inc. 1998 Stock Option/Stock Incentive Plan (the "Plan")
for the purpose of providing eligible persons with the opportunity to acquire a
proprietary interest, or otherwise increase their proprietary interest, in the
Company as an incentive for them to join and/or remain in the service of the
Company or its subsidiaries.
B. Optionee is an individual who is to render valuable services to the
Company or its subsidiaries, and this Agreement is executed pursuant to, and is
intended to carry out the purposes of, the Plan in connection with the Company's
grant of a stock option to Optionee.
C. The granted option is intended to be a non-qualified stock option
which does not satisfy the requirements of Section 422 of the Internal Revenue
---
Code.
D. For purposes of this Agreement, the following definitions shall be
in effect:
Common Stock: Common Stock shall mean the shares of the Company's
------------
common stock, without par value.
Employee: Optionee shall be considered to be an Employee for so
--------
long as such individual remains in the employ of the Company or one or more of
its Subsidiaries.
Parent: A corporation shall be deemed to be a Parent of the Company
------
if it is a corporation (other than the Company) in an unbroken chain of
corporations ending with the Company, provided each corporation in the unbroken
chain (other than the Company) owns, at the time of the determination, stock
possessing fifty percent (50%) or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain.
Section 16(b) Insider: Optionee shall be considered to be a Section
---------------------
16(b) Insider on any relevant date under this Agreement if Optionee is at the
time an officer or director of the Company subject to the short-swing profit
restrictions of Section 16(b) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act").
Service: Optionee shall be deemed to be in the Service of the
-------
Company for so long as Optionee rendered services on a periodic basis to the
Company (or any Parent or Subsidiary) in the capacity of an Employee. Optionee
shall be deemed to cease such Service immediately upon the occurrence of either
of the following events: (i) Optionee no longer performs services in such
capacity for the Company (or any Parent or Subsidiary) or (ii) the entity for
which Optionee performs such services ceases to remain a Parent or Subsidiary of
the Company, even though Optionee may subsequently continue to perform services
for that entity. Service shall not be deemed to cease during a period of
military leave, sick leave or other personal leave approved by the Company;
provided, however, that except to the extent otherwise required by law or
expressly authorized by the Plan Administrator or the Company's written leave of
absence policy, no Service credit shall be given for vesting purposes under
Paragraph 4 of this Agreement for any period Optionee is on a leave of absence.
Subsidiary: A corporation shall be deemed to be a Subsidiary of the
----------
Company if it is a member of an unbroken chain of corporations beginning with
the Company, provided each corporation in such chain (other than the last
corporation) owns, at the time of determination, stock possessing fifty percent
(50%) or more of the total combined voting power of all classes of stock in one
of the other corporations in such chain. The term "Subsidiary" shall also
include any partnership, joint venture or other business entity of which the
Company owns, directly or indirectly through another subsidiary corporation,
more than a fifty percent (50%) interest in voting power, capital or profits.
NOW, THEREFORE, it is hereby agreed as follows:
1. Grant of Option. Subject to and upon the terms and conditions
---------------
set forth in this Agreement, the Company hereby grants to Optionee, as of the
date of this Agreement (the "Grant Date"), a stock option to purchase up
to ________________ shares of Common Stock (the "Optioned Shares") at the
price of [the Fair Market Value on the date of this Agreement] per share (the
"Option Price").
2. Option Term. This option shall have a maximum term of ten years
-----------
measured from the Grant Date and shall accordingly expire at the close of
business on ___________ (the "Expiration Date"), unless sooner terminated in
accordance with Paragraph 5 or 7 of this Agreement.
3. Limited Transferability. During the Optionee's lifetime, this
-----------------------
option shall be exercisable only by Optionee and shall not be transferable or
assignable by Optionee except for a transfer of this option by will or by the
laws of descent and distribution following Optionee's death.
4. Exercisability. The option shall become exercisable for the
--------------
Optioned Shares in a series of three (3) successive equal annual installments,
as set forth in the Exercise Schedule below, with the first such installment to
become exercisable on the first anniversary of the Grant Date. As the option
becomes exercisable for one or more installments, those installments shall
accumulate, and the option shall remain exercisable for the accumulated
installments until the expiration or sooner termination of the option term.
Except as otherwise expressly provided in subparagraph 5(iv) below, the option
shall not become exercisable for any additional Optioned Shares following
Optionee's cessation of Service.
Exercise Schedule
-----------------
Number of
Optioned Shares Exercise Date
--------------- -------------
_______________ ________________
_______________ ________________
_______________ ________________
5. Cessation of Service; Termination of Options. The option term
--------------------------------------------
specified in Paragraph 2 shall terminate (and this option shall cease to be
exercisable) prior to the Expiration Date should one of the following provisions
become applicable:
(i) Except as otherwise provided in subparagraphs (ii)
through (vi) below, should Optionee cease to remain in the Service of the
Company at any time during the option term, then the period for exercising this
option shall be reduced to a three-month period commencing with the date of such
cessation of Service. During such three-month period, this option may not be
exercised for more than that number of Optioned Shares (if any) for which this
option is exercisable at the time of Optionee's cessation of Service. In no
event, however, shall this option be exercisable at any time after the
Expiration Date.
(ii) If Optionee is a Section 16(b) Insider at the time of
cessation of Service, then Optionee shall have a period of six months following
such cessation of Service in which to exercise this option for any or all of the
Optioned Shares for which this option is exercisable at the time of Optionee's
cessation of Service. In no event, however, shall this option be exercised at
any time after the specified Expiration Date.
(iii) Should Optionee die while this option is outstanding,
then (A) this option, to the extent it is not otherwise at the time fully
exercisable, shall automatically accelerate so that such option shall become
fully exercisable with respect to the total number of Optioned Shares at the
time subject to this option, and (B) the personal representative of Optionee's
estate (or the person or persons to whom the option is transferred pursuant to
Optionee's will or in accordance with the laws of descent and distribution)
shall have the right to exercise this option for any or all of the Optioned
Shares. Such right shall lapse, and this option shall cease to be exercisable,
upon the earlier of (A) the expiration of the twelve-month period measured from
the date of Optionee's death or (B) the Expiration Date.
(iv) Should Optionee retire on or after attaining age
fifty-five (55) in accordance with the terms of the Company's retirement plan,
or become disabled and cease by reason thereof to remain in the Service of the
Company, at any time while this option is outstanding, then Optionee shall have
a period of three years (commencing with the date of such retirement or
cessation of Service) to exercise this option for (i) any or all of the Optioned
Shares for which this option is exercisable at the time of Optionee's retirement
or cessation of Service and (ii) any additional Optioned Shares for which the
option becomes exercisable during the subsequent three-year period. In no event,
however, shall this option be exercised at any time after the Expiration Date.
For purposes of this Agreement, Optionee shall be deemed to be disabled if
Optionee is, by reason of any medically-determinable physical or mental
impairment (A) which is expected to result in death or (B) which is expected to
be, or is, of continuous duration of twelve consecutive months or more, unable
to perform his/her usual duties for the Company (or any Subsidiary or Parent)
employing his/her services.
(v) Should Optionee's Service be terminated for
Misconduct, or should Optionee (a) engage in any post-Service activity, whether
as an Employee, consultant, advisor, or otherwise, competitive with the business
operations of the Company (or any Subsidiary or Parent), or (b) engage in any
other conduct, while in Service or following cessation of Service, materially
detrimental to the business or affairs of the Company (or any Subsidiary or
Parent), as determined in the sole discretion of the Plan Administrator, then
this option shall terminate immediately and cease to be outstanding. Misconduct
shall mean the commission of any act of fraud, embezzlement or dishonesty by
Optionee, any unauthorized use or disclosure by such person of confidential
information or trade secrets of the Company (or any Subsidiary or Parent), or
any other intentional misconduct by such person adversely affecting the business
or affairs of the Company (or any Subsidiary or Parent) in a material manner.
The foregoing definition shall not be deemed to be inclusive of all the acts or
omissions which the Company (or any Subsidiary or Parent) may consider as
grounds for the dismissal or discharge of any Optionee or other person in the
Service of the Company (or any Subsidiary or Parent).
(vi) Except as otherwise expressly provided in
subparagraph 5(iv) above, upon Optionee's cessation of Service, this option
shall, to the extent it is not otherwise exercisable at the time, for one or
more Optioned Shares, immediately terminate and cease to be outstanding with
respect to those shares.
6. Adjustment in Optioned Shares.
-----------------------------
a. In the event any change is made to the Common Stock by
reason of any stock dividend, stock split, combination of shares or other change
affecting the outstanding Common Stock as a class without the Company's receipt
of consideration, the number and/or class of shares purchasable under this
option and the Option Price payable per share shall be adjusted appropriately to
prevent the dilution or enlargement of Optionee's benefits hereunder.
b. If this option remains outstanding following any merger or
other business combination involving the Company, then this option shall be
adjusted appropriately to apply and pertain to the number and class of
securities which would have been issuable, in the consummation of such merger
or business combination, to an actual holder of Common Stock for the same number
of shares as are subject to this option immediately prior to such merger or
business combination. Appropriate adjustments also shall be made to the Option
Price payable per share; provided, however, that the aggregate Option Price
shall remain the same.
7. Acceleration and Cancellation of Options. In the event there
----------------------------------------
should occur a Change in Control (defined below), then this option, to the
extent outstanding at the time, but not otherwise fully exercisable, shall
automatically accelerate so that such option shall, immediately prior to the
specified effective date of the Change in Control, become fully exercisable for
the total number of Optioned Shares at the time subject to this option and may
be exercised for all or any portion of such Optioned Shares. Immediately
following the consummation of the Change in Control, this option shall terminate
and cease to be outstanding, except to the extent assumed by the successor
corporation (or parent thereof) or otherwise expressly continued in full force
and effect pursuant to the terms of the Change in Control transaction.
"Change in Control" shall mean a change in control of a nature
that would be required to be reported in response to Item 6(e) of Schedule 14A
of Regulation 14A promulgated under the 1934 Act, whether or not the Company in
fact is required to comply with Regulation 14A thereunder; provided that,
without limitation, such a change in control shall be deemed to have occurred
if:
(i) any "person" (defined as such term is used in
Sections 13(d) and 14(d) of the 1934 Act) is or becomes the "beneficial owner"
(as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of
securities of the Company representing 35% or more of the combined voting power
of the Company's then outstanding securities;
(ii) at least a majority of the Company's Board of
Directors (the "Board") ceases to consist of (a) individuals who have served
continuously on the Board since January 1, 2001 and (b) new directors (other
than a director whose initial assumption of office is in connection with an
actual or threatened election contest, including but not limited to a consent
solicitation, relating to the election of directors of the Company) whose
election, or nomination for election by the Company's shareholders, was
approved by a vote of at least two-thirds of the directors then still in
office who shall at that time have served continuously on the Board since
January 1, 2001 or whose election or nomination was previously so approved;
(iii) there is consummated a merger or consolidation of the
Company or any direct or indirect subsidiary of the Company with any other
entity, other than (a) a merger or consolidation immediately following which the
individuals who comprise the Board immediately prior thereto constitute at least
a majority of the board of directors of the Company, the entity surviving such
merger or consolidation or any parent thereof or (b) a merger or consolidation
effected to implement a recapitalization of the Company (or similar transaction)
in which no person is or becomes the beneficial owner, directly or indirectly,
of securities of the Company (not including in the securities beneficially
owned by such person any securities acquired directly from the Company or its
affiliates) representing 35% or more of the combined voting power of the
Company's then outstanding securities; or
(iv) the shareholders of the Company approve a plan of
complete liquidation or dissolution of the Company or there is consummated an
agreement for the sale or disposition by the Company of all or substantially all
of the Company's assets, other than a sale or disposition by the Company of all
or substantially all of the Company's assets to an entity at least a majority of
the board of directors of which or of any parent thereof is comprised of
individuals who comprised the Board immediately prior to such sale or
disposition.
Notwithstanding the foregoing, a Change in Control of the Company shall not be
deemed to have occurred by virtue of the consummation of any transaction or
series of integrated transactions immediately following which the holders of the
common stock of the Company immediately prior to such transaction or series of
transactions continue to have substantially the same proportionate ownership in
an entity which owns all or substantially all of the assets of the Company
immediately following such transaction or series of transactions.
8. Shareholder Rights. The holder of this option shall have
------------------
none of the rights of a shareholder with respect to the Optioned Shares until
such individual shall have exercised the option, paid the Option Price and been
issued one or more stock certificates for the purchased shares.
9. Manner of Exercising Option.
---------------------------
a. In order to exercise this option for one or more of the
Optioned Shares, Optionee (or in the case of exercise after Optionee's death,
Optionee's legal representative, executor, administrator, heir or legatee, as
the case may be) must take the following actions:
(i) Deliver to the Secretary of the Company, or his/her
designee, a written notice of exercise (the "Exercise Notice") in which there
is specified the number of Optioned Shares for which the Option is being
exercised.
(ii) Pay the aggregate Option Price for the purchased
shares in one of the following alternative forms:
full payment in cash or cash equivalents, such as a
certified check, bank draft, personal check or postal or express money
order made payable to the Company's order; or
full payment in shares of Common Stock held by the
Optionee for the required period (if any) necessary to avoid a charge to
the Company's earnings for financial reporting purposes and valued at
Fair Market Value on the Exercise Date; or
full payment in a combination of the foregoing.
(iii) Furnish to the Company appropriate documentation that
the person or persons exercising the option, if other than Optionee, have the
right to exercise this option.
b. For purposes of this Agreement, the following definitions
shall be in effect:
Exercise Date: The Exercise Date shall be the first date on
-------------
which there shall have been delivered to the Company both (I) the Exercise
Notice and (II) the payment of the Option Price for the purchased shares.
Fair Market Value: The Fair Market Value of a share of Common
-----------------
Stock on any relevant date shall be the mean between the highest and lowest
selling prices per share of Common Stock on the date in question, as
quoted on the NASDAQ National Market (or any successor system). Should the
Common Stock become traded on a national securities exchange, then the Fair
Market Value per share shall be the mean between the highest and lowest
selling prices on such exchange on the date in question. If there is no
reported sale of Common Stock on the NASDAQ National Market (or national
securities exchange) on the date in question, then the Fair Market Value
shall be the mean between the highest and lowest selling prices on the
NASDAQ National Market (or such securities exchange) on the last preceding
date for which such quotations exist.
c. As soon as practicable after the Exercise Date, the Company
shall issue to Optionee (or to the other person or persons exercising this
option) a certificate or certificates representing the purchased shares.
d. In no event may this option be exercised for any fractional
shares.
10. Compliance with Laws and Regulations.
------------------------------------
a. The exercise of this option and the issuance of Optioned
Shares upon such exercise shall be subject to compliance by the Company and
Optionee with all applicable requirements of law relating thereto and with all
applicable regulations of any stock exchange on which shares of the Common Stock
may be listed at the time of such exercise and issuance.
b. In connection with the exercise of this option, Optionee
shall execute and deliver to the Company such representations in writing as may
be requested by the Company in order for it to comply with the applicable
requirements of federal and state securities laws.
11. Successors and Assigns. Except to the extent otherwise
----------------------
provided in Paragraph 3 or 7, the provisions of this Agreement shall inure to
the benefit of, and be binding upon, the successors, administrators, heirs,
legal representatives and assigns of Optionee and the successors and assigns of
the Company.
12. Non-Liability of Company.
------------------------
a. If the Optioned Shares covered by this Agreement exceed,
as of the Grant Date, the number of shares of Common Stock which may without
stockholder approval be issued under the Plan, then this option may not be
exercised with respect to any of those excess shares unless and until
stockholder approval of an amendment to the Plan sufficiently increasing the
number of shares of Common Stock issuable thereunder is obtained in accordance
with the provisions of the Plan and shall become void with respect to those
excess shares if such stockholder approval is not obtained.
b. The inability of the Company to obtain approval from any
regulatory body having authority deemed by the Company to be necessary to the
lawful issuance and sale of any Common Stock pursuant to this option shall
relieve the Company of any liability with respect to the non-issuance or sale of
the Common Stock as to which such approval shall not have been obtained.
However, the Company shall use reasonable efforts to obtain all such approvals.
13. No Impairment of Company's Rights. This Agreement shall not in
---------------------------------
any way affect the right of the Company to adjust, reclassify, reorganize or
otherwise make changes in its capital or business structure or to merge,
consolidate, dissolve, liquidate or sell or transfer all or any part of its
business or assets.
14. No Employment or Service Contract. Nothing in this Agreement or
---------------------------------
in the Plan shall confer upon Optionee any right to continue in the Service of
the Company (or any Subsidiary or Parent employing or retaining Optionee) for
any period of time or otherwise interfere with or restrict in any way the rights
of the Company (or such Subsidiary or Parent) or Optionee, which rights are
hereby expressly reserved by each, to terminate Optionee's Service at any time
for any reason whatsoever, with or without cause.
15. Notices. Any notice required to be given or delivered to the
-------
Company under the terms of this Agreement shall be in writing and addressed
to the Company in care of the Corporate Secretary or his/her designee at the
principal corporate offices at 822 Bishop Street, Honolulu, HI 96813. Any notice
required to be given or delivered to Optionee shall be in writing and addressed
to Optionee at the address indicated below Optionee's signature line on this
Agreement. All notices shall be deemed to have been given or delivered upon
personal delivery or upon deposit in the U.S. mail, postage prepaid and properly
addressed to the party to be notified.
16. Construction. This Agreement and the option evidenced hereby
------------
are made and granted pursuant to the Plan and are in all respects limited by and
subject to the express terms and provisions of the Plan. All decisions of the
Plan Administrator with respect to any question or issue arising under the Plan
or this Agreement shall be conclusive and binding on all persons having an
interest in this option.
17. Tax Withholding.
---------------
a. The Company's obligation to deliver shares of Common Stock
upon the exercise of this option shall be subject to the satisfaction of all
applicable Federal, State and local income and employment tax withholding
requirements.
b. Optionee may elect to have the Company withhold, at the
time this option is exercised, a portion of the shares purchased under the
option with an aggregate Fair Market Value equal to the designated percentage
(any multiple of 5% up to 100% as specified by Optionee) of the applicable
Federal and State income tax withholding liability incurred by Optionee in
connection with the option exercise (the "Withholding Taxes").
Any such exercise of the election must be effected in
accordance with the following terms and conditions:
(i) The election must be made on or before the date
the amount of the Withholding Taxes incurred by Optionee in connection with
the exercise of the option is determined (the "Tax Determination Date").
(ii) The election shall be irrevocable.
(iii) The election shall be subject to the approval of
the Plan Administrator, either at the time the election is made or at any
earlier time, and none of the shares purchased under the option actually
shall be withheld in satisfaction of the Withholding Taxes incurred in
connection with the exercise of the option, except to the extent the
election is so approved by the Plan Administrator.
(iv) The shares withheld pursuant to the election shall
be valued at Fair Market Value on the Tax Determination Date in accordance
with the valuation provisions of paragraph 9.b of this Agreement.
(v) In no event may the number of shares of Common
Stock requested to be withheld exceed in Fair Market Value the dollar
amount of the Withholding Taxes incurred by Optionee in connection with the
exercise of the option.
c. Optionee may elect to deliver to the Company, at the time
the option is exercised, shares of Common Stock previously acquired by such
individual (other than in connection with such option exercise) with an
aggregate Fair Market Value equal to the designated percentage (any multiple of
5% up to 100% as specified by Optionee) of the Withholding Taxes incurred by
Optionee in connection with the option exercise.
Any such exercise of the election must be effected in
accordance with the following terms and conditions:
(i) The election must be made on or before the Tax
Determination Date.
(ii) The election shall be irrevocable.
(iii) The election shall be subject to the approval of
the Plan Administrator, either at the time the election is made or at any
earlier time, and none of the delivered shares shall be accepted in
satisfaction of the Withholding Taxes, except to the extent the election
is so approved by the Plan Administrator.
(iv) The delivered shares shall be valued at Fair
Market Value on the Tax Determination Date in accordance with the valuation
provisions of paragraph 9.b of this Agreement.
(v) In no event may the number of delivered shares
exceed in Fair Market Value the dollar amount of the Withholding Taxes
incurred by the Optionee in connection with the exercise of the option.
18. Governing Law. The interpretation, performance, and enforcement
-------------
of this Agreement shall be governed by the laws of the State of Hawaii.
19. Counterparts. This Agreement may be executed in counterparts,
------------
each of which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the Company has caused this Agreement to
be executed in duplicate on its behalf by its duly authorized officer, and
Optionee also has executed this Agreement in duplicate, all as of the day and
year indicated above.
ALEXANDER & BALDWIN, INC.
By ________________________________
Its Vice President
___________________________________
Optionee
Address:
___________________________________
___________________________________
ALEXANDER & BALDWIN, INC.
RESTRICTED STOCK ISSUANCE AGREEMENT
-----------------------------------
AGREEMENT made as of ____________, by and between ALEXANDER & BALDWIN,
INC., a Hawaii corporation (the "Corporation"), and ____________ (the
"Participant").
All capitalized terms in this Agreement shall have the meaning assigned
to them in this Agreement or in the Corporation's 1998 Stock Option/Stock
Incentive Plan, as amended (the "Plan").
A. ISSUANCE OF SHARES
------------------
1. Issuance. In consideration for Services and as an incentive to
--------
remain in the Service of the Corporation (or any Parent or Subsidiary), the
Participant shall be issued ___________________ shares (the "Issued Shares") of
common stock of the Corporation (the "Common Stock") pursuant to the provisions
of the Stock Issuance Program of the Plan. The Issued Shares shall have an issue
price per share equal to the Fair Market Value per share of Common Stock on the
date of this Agreement, which is $______ per share. The Issued Shares shall be
unvested and shall be subject to cancellation under the terms described in
Paragraph C.2 hereof.
2. Stockholder Rights. Until such time as the Issued Shares vest
------------------
pursuant to the provisions of Paragraph C.1 hereof, the Participant shall have
all the rights of a stockholder (including voting, dividend and liquidation
rights) with respect to the Issued Shares, subject, however, to the restrictions
and conditions of this Agreement.
3. Escrow. The Corporation shall hold the Issued Shares in escrow
------
until those shares have vested in accordance with the vesting schedule described
in Paragraph C.1 hereof. The Issued Shares which so vest shall be released from
escrow upon the Participant's payment to the Corporation of the federal and
state income and employment withholding taxes to which the Participant becomes
subject by reason of the Participant's vesting in the Issued Shares.
4. Compliance with Law. Under no circumstances shall shares of
-------------------
Common Stock be issued or delivered to the Participant pursuant to the
provisions of this Agreement unless there shall have been compliance with all
applicable requirements of Federal and state securities laws, all applicable
listing requirements of the Nasdaq National Market or any successor system and
all other requirements of law or of any regulatory bodies having jurisdiction
over such issuance and delivery.
B. TRANSFER RESTRICTIONS
---------------------
1. Restriction on Transfer. The Participant shall not transfer,
-----------------------
assign, encumber or otherwise dispose of any of the Issued Shares which are
subject to the cancellation provisions of Paragraph C.2 hereof.
2. Restrictive Legend. The stock certificate(s) for unvested
------------------
Issued Shares shall be endorsed with the following restrictive legend:
"THIS CERTIFICATE AND THE SHARES REPRESENTED HEREBY HAVE BEEN ISSUED
PURSUANT TO THE PROVISIONS OF THE STOCK ISSUANCE PROGRAM OF THE
ALEXANDER & BALDWIN, INC. 1998 STOCK OPTION/STOCK INCENTIVE PLAN, AS
AMENDED ("PLAN") AND ARE SUBJECT TO CANCELLATION BY THE CORPORATION,
UPON THE TERMS AND CONDITIONS SPECIFIED IN A WRITTEN AGREEMENT DATED AS
OF _____________ BETWEEN THE CORPORATION AND THE REGISTERED HOLDER OF
THE SHARES. A COPY OF SUCH AGREEMENT IS MAINTAINED AT THE CORPORATION'S
PRINCIPAL CORPORATE OFFICES. WHILE SUCH CANCELLATION RIGHT IS IN
EFFECT, THE CERTIFICATE AND THE SHARES REPRESENTED HEREBY MAY NOT BE
SOLD, TRANSFERRED, ASSIGNED OR PLEDGED."
C. VESTING/CANCELLATION OF THE ISSUED SHARES
-----------------------------------------
1. Vesting. The Issued Shares shall initially be unvested and
-------
subject to cancellation in accordance with the provisions of Paragraph C.2
hereof. The following vesting schedule shall be in effect for the Issued Shares:
One third (33.3%) of the Issued Shares shall vest in three (3)
successive equal annual installments upon Participant's completion of
each year of Service over a three-year period measured from the date of
this Agreement; provided, however, that any unvested shares shall
automatically vest upon the occurrence of:
(i) the Participant's normal retirement (age 65) or approved early
retirement (age 55 plus 5 years Service), or
(ii) the Participant's termination of Service by reason of death or
Permanent Disability.
Upon vesting, the Participant shall acquire a fully-vested interest
in, and the transfer restrictions of Paragraph B hereof and the
cancellation provisions of Paragraph C.2 hereof shall terminate with
respect to, the vested Issued Shares.
For purposes of the vesting provisions of this Paragraph C.1,
Service shall mean the Participant's performance of services for the
Corporation (or any Parent or Subsidiary) in the capacity of an
Employee or a non-employee member of the board of directors of any
Subsidiary. Participant shall be deemed to cease such Service
immediately upon the occurrence of either of the following events: (i)
Participant no longer performs services in any of the foregoing
capacities for the Corporation (or any Parent or Subsidiary) or (ii)
the entity for which Participant performs such services ceases to
remain a Parent or Subsidiary of the Corporation, even though
Participant may subsequently continue to perform services for that
entity. Service shall not be deemed to cease during a period of
military leave, sick leave or other personal leave approved by the
Corporation; provided, however, that except to the extent otherwise
required by law or expressly authorized by the Plan Administrator or
the Corporation's written leave of absence policy, no Service credit
shall be given for vesting purposes for any period the Participant is
on a leave of absence.
2. Cancellation of Issued Shares. Should the Participant cease
-----------------------------
Service for any reason prior to the completion of the vesting schedule described
in Paragraph C.1 hereof, then all of the unvested Issued Shares shall be
immediately cancelled, and the stock certificates for those Issued Shares shall
be immediately cancelled, without any cash or other payment due from the
Corporation with respect to the cancelled Issued Shares, and the Participant
shall no longer be entitled to any rights as a stockholder with respect to those
shares or to any other entitlement or interest with respect to such shares.
3. Recapitalization. Any new, substituted or additional securities
----------------
or other property (including cash paid other than as a regular cash dividend)
which the Participant might have the right to receive with respect to unvested
Issued Shares by reason of any stock dividend, stock split, recapitalization,
combination of shares, exchanges of shares or other change affecting the
outstanding Common Stock as a class without the Corporation's receipt of
consideration, shall be issued subject to the cancellation provisions and the
escrow requirements hereunder.
4. Change in Control. In the event of a Change in Control during
-----------------
the Participant's period of Service, then the cancellation provisions of
Paragraph C.2 hereof shall lapse in their entirety, and the Issued Shares shall
vest in full.
D. GENERAL PROVISIONS
------------------
1. At Will Employment. Nothing in this Agreement or in the Plan
------------------
shall confer upon the Participant any right to continue in Service for any
period of specific duration or interfere with or otherwise restrict in any way
the rights of the Corporation (or any Subsidiary employing or retaining the
Participant) or of the Participant, which rights are hereby expressly reserved
by each, to terminate the Participant's Service at any time for any reason, with
or without cause.
2. Notices. Any notice required to be given under this Agreement
-------
shall be in writing and shall be deemed effective upon personal delivery or upon
deposit in the U.S. mail, registered or certified, postage prepaid and properly
addressed to the party entitled to such notice at the address indicated below
such party's signature line on this Agreement or at such other address as such
party may designate by ten (10) days advance written notice under this paragraph
to all other parties to this Agreement.
3. No Waiver. No waiver of any breach or condition of this
---------
Agreement shall be deemed to be a waiver of any other or subsequent breach or
condition, whether of like or different nature.
4. Cancellation of Shares. Should the cancellation provision
----------------------
contained in Paragraph C.2 hereof become applicable in connection with the
Participant's termination of Service, then from and after that time, the person
from whom such shares are to be cancelled shall no longer have any rights as a
holder of such shares. Such shares shall be deemed cancelled in accordance with
the applicable provisions hereof, and the Corporation shall be deemed the owner
and holder of such shares, whether or not the certificates therefor have been
delivered to the Corporation.
5. Participant Undertaking. The Participant hereby agrees to take
-----------------------
whatever additional action and execute whatever additional documents the
Corporation may deem necessary or advisable in order to carry out or effect one
or more of the obligations or restrictions imposed on either the Participant or
the Issued Shares pursuant to the provisions of this Agreement.
6. Agreement and Plan Constitute Entire Contract. This Agreement
---------------------------------------------
and the Plan constitute the entire contract between the parties hereto with
regard to the subject matter hereof. This Agreement is made pursuant to the
provisions of the Plan and shall in all respects be construed in conformity with
the terms of the Plan.
7. Governing Law. This Agreement shall be governed by, and
-------------
construed in accordance with, the laws of the State of Hawaii without resort to
that State's choice of law rules.
8. Counterparts. This Agreement may be executed in counterparts,
------------
each of which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.
9. Successors and Assigns. The provisions of this Agreement shall
----------------------
inure to the benefit of, and be binding upon, the Corporation and its successors
and assigns.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first indicated above.
ALEXANDER & BALDWIN, INC.
By _______________________________
Its Vice President
__________________________________
Participant
Address:
__________________________________
__________________________________
Amendment No. 3 to Shipbuilding Contract
(Hull BN 460)
THIS AMENDMENT NO. 3 TO SHIPBUILDING CONTRACT is made as of July 7, 2006 by and
between AKER PHILADELPHIA SHIPYARD, INC., a corporation organized under the laws
of Pennsylvania, having its principal office at 2100 Kitty Hawk Avenue,
Philadelphia, PA 19112 (the "BUILDER") and MATSON NAVIGATION COMPANY, INC., a
corporation organization under the laws of Hawaii, having its principal office
at 555 12th Street, Oakland, CA 94607 (the "BUYER").
R E C I T A L S
WHEREAS, the parties entered into that certain Shipbuilding Contract
dated as of February, 14, 2005 for the purchase of one (1) CV 2500 type
container vessel, designated as Builder's Hull No. BN 460 (the "Shipbuilding
Contract"); and
WHEREAS, the parties wish to amend the Shipbuilding Contract to reflect
certain agreements as to priority work remaining to be performed on the Vessel
and their status upon delivery of the Vessel.
NOW, THEREFORE, in consideration of the foregoing premises, and for
other good and valuable consideration, the receipt and adequacy of which are
acknowledged, the parties hereby agree as follows:
1. ARTICLE VII, 2, second paragraph, of the Shipbuilding Contract
shall be deleted and the following paragraphs substituted therefor:
The BUYER shall take delivery of the VESSEL if it is substantially
complete. The VESSEL shall not be deemed to be "substantially complete"
if the aggregate value of the delivery deficiencies excluding those
items of work as provided in the next paragraph is in excess of ONE
MILLION DOLLARS ($1,000,000.00) or if any of the items identified as
required for delivery in Exhibit 1A are not completed.
2. The BUYER and the BUILDER also agree as follows:
a. The BUYER and the BUILDER have agreed that:
(i) The items of work listed in Exhibit 1B constitute
priority work items that must be completed by the BUILDER
before the VESSEL sails (the "Sailing Work"); and if the
VESSEL is delivered without any of such work items having been
completed delivery of the Vessel will proceed, but the
remaining items will be included in Exhibit 1 to the PROTOCOL
OF DELIVERY AND ACCEPTANCE and no funds will be released from
the related escrow fund holdback for any work until all
Exhibit 1B items are completed or the Vessel sails.
(ii) BUYER has prepared a list of deficiency items
and has identified among the deficiencies the work items that
BUYER desires to have completed prior to sailing. A list of
second priority items is attached as Exhibit 1C (the "Second
Priority Sailing Work"). If the VESSEL is delivered without
such work items having been completed, the remaining items
will be included in Exhibit 1 to the PROTOCOL OF DELIVERY AND
ACCEPTANCE and funds will be released as work on such items is
completed provided the precondition to payment in (i) above is
satisfied.
(iii) BUYER and BUILDER have entered into two change
orders for modifications to the galley area, COA-44 and 44b,
that were anticipated to be completed by BUILDER after
delivery but before sailing of the Vessel (the "Galley
Modifications"). BUYER has also provided BUILDER with a list
of additional items of work as described in Exhibit 1D (the
"Additional Work") that BUYER has requested that BUILDER
complete under the Agreement Concerning Post Delivery Work
prior to sailing.
(iv) BUYER's planned sailing of the Vessel is now
scheduled for August 5, 2006. BUILDER will provide BUYER by
July 11, 2006 with a Production Schedule detailing completion
of the Sailing Work, the Second Priority Sailing Work, the
Galley Modifications and the Additional Work prior August 5,
2006. The Production Schedule must include the following
details: estimated major milestones for galley completion,
estimated compartment completion of accommodations by deck,
estimated completion of open test memos by test memo and
estimated final completion date for Vessel departure. Except
as provided in (i) and (ii) above and in COA-44 and 44b,
payment for such work to be paid as completed. Additional
details regarding payment for such work, as well as other
matters relating to the Post Delivery availability period
contemplated herein shall be set forth in a separate Agreement
Concerning Post Delivery Work to be executed at delivery.
b. The BUYER will accept the BUILDER'S force majeure claim of 54
days relating to the late delivery of the main engine and to change
the Contract Delivery Date from May 7, 2006 to June 30, 2006.
c. For the purpose of calculating interest pursuant to ARTICLE
II, 1, c, the date for the "Float out of the Vessel" shall be May 10,
2006.
d. The BUYER will commit on July 7, 2006 with its lender to have
funds available for the planned Vessel delivery on July 12, 2006. If
the Vessel is not or cannot be delivered on July 12, 2006 either
because of the Vessel is not substantially complete in accordance with
the requirements of ARTICLE VII, 2 of the Shipbuilding Contract or
because of any other actions or failures of the BUILDER, then the
BUILDER will pay the breakage costs actually incurred by the BUYER to
its lender.
3. No Additional Changes Except as otherwise herein expressly
---------------------
provided, all other provisions of the Shipbuilding Contract shall remain in full
force and effect.
4. Counterparts. The Amendment may be executed in any number of
------------
counterparts, each of which shall be deemed to be an original and all of which
when taken together shall constitute one and the same instrument. Delivery of an
executed counterpart by facsimile or electronic transmission will be deemed as
effective as delivery of an originally executed counterpart.
IN WITNESS WHEREOF, the parties have duly executed this Amendment No. 3
to Shipbuilding Contract as of the date first set forth.
AKER PHILADELPHIA SHIPYARD, INC.
By: /s/ David E. Meehan
----------------------------
David E. Meehan
Title: President and CEO
MATSON NAVIGATION COMPANY, INC.
By: /s/ K. C. O'Rourke
----------------------------
K. C. O'Rourke
Title: Senior Vice President
Exhibit 1A
MAUNALEI - DELIVERY REQUIREMENTS
USCG WORKLIST ITEMS
7 JULY 2006
No. DESCRIPTION
--- -----------
1. Show proper operation of OWS, and post pollution placard.
2. Show proper operation of Water Mist system.
3. Ensure G/A alarm, enunciators, is working properly, non-volume
controlled.
WORKLIST ITEMS TO BE COMPLETED PRIOR TO DELIVERY
3 JULY 2006
REFERENCE DOC. ITEM # DESCRIPTION
-------------- ------ -----------
UNFINISHED WORK
4. ITEMS 178 Replace damaged monorail crane cable
UNFINISHED WORK
5. ITEMS 232 Ballast System TLE's Tks 1.04&1.05
UNFINISHED WORK
6. ITEMS 267 Prove Bilge Suctions to three valve nitches
TEST MEMO
7. STATUS #460 C1 ALFAL LAVAL SEPARATORS
TEST MEMO
8. STATUS #460 C18 FIXED WATER MIST FIRE EXTINGUISHING
TEST MEMO
9. STATUS #460 C21 BILGE WATER SEPARATOR
TEST MEMO
10. STATUS #460 C32 GA\PA SYSTEM
Exhibit 1B
MAUNALEI - SAILING REQUIREMENTS
USCG WORKLIST ITEMS
7 JULY 2006
1. Relocate lower level E/R hose reel closer to hydrant.
2. Provide G/A alarm and siren in #5 hold.
3. Install a red light/lens on SSDG room for the G/A alarm.
4. Provide adequate protective covering on the back of the main electrical
switch board.
5. Provide the following documents; Stability letter, ISM manuals, COFR,
COD, life raft certificates, loading manual, SOPEP, VRP.
6. Demonstrate proper operation of Emergency lighting in all cargo
holds. Correct discrepancies as indicated on inspection record DTD 26
Jun 1006.
GL WORKLIST ITEMS -
7 JULY 2006
No. DESCRIPTION
--- -----------
1. Water Mist System to complete and re-test outstanding items.
2. Outstanding certificates for Equipment to supply.
3. Inclining Experiment to undertake and Stability Booklet to compile and
have approved by GL.
4. Steam Lines and Flanges to complete insulation.
5. Completion of all outstanding Blue Marks to be undertaken.
6. Completion of all outstanding inspections, (especially electrical
cabling).
7. LT FW Pumps overheating and overloading, (140/142 Amp; 68C) to rectify.
8. ME LO Pump E-Motor Temp at 70C to advise or rectify.
9. SW P/Ps vibration to cure
10. LT P/Ps vibration to cure.
11. Boiler Gauge Glasses visibility from control stand to enhance.
12. Provide approved inclining results
13. Stbd Emergency exit hatch facing wrong way, to be refitted.
14. Drains condenser continuous water hammer to be cured.
15. Cabling installation to be completed, (properly secured, seperated,
laid).
16. Bridge wing consoles, gyro repeaters and aerials vibrations to cure.
17. Vibration and noise issues exceeding acceptable limits as per GL
Consultants report to rectify.
Exhibit 1C
MAUNALEI - SECOND PRIORITY SAILING ITEMS
No. DESCRIPTION
--- -----------
19 Cable splice FR 120
20 Cable splice FR 80
24 Cable temp sensor TK 8 no loop.
35 Cable Splices over LO purifiers
41 CH 4 No separtion of control & power cables
42 Armored cables feeding LTFW not grounded.
48 Loose Cables Purifier area.
55 Intrinsicly safe cables - traced in blue.
61 Install rudder post locking device properly.
65 Ballast Tks 1.06&1.07 burn marks in tk-coat
66 Lashing Rod for Monorail Crane
69 Missing PA/GA Horns in CH 5
77 Handrail on P&S platforms @ FR 211
78 SW Overboard Valve From LT Coolers
81 Cargo Hold 2 Cable Separation
82 Main Swbd Loose and Uninsulated Cable
83 Fuel Pipe Heat Trace System
84 Ungrounded Cable Shields Cargo Hold 2
86 Cables too close to heat trace lines.
90 Bridge Batteries
91 Bridge Battery Bank Wiring
94 230V Transformer Cables
97 Main LO Pump Cable - Deck Penetration
99 Electrical Cable Termination
104 Identify and Repair Exposed Cable
105 Properly Splice Cable
112 Remove Excessive Cable
128 Complete Insulation No. 4 Cargo Hold
139 Install Missing Handrail No. 1 Cargo Hold
146 Install missing handrails and caps No 2 CH
150 Install Missing Elec Receptacle
151 Install Missing Elec Receptacle
152 Install Missing Elec Receptacle
153 Install Missing Elec Receptacle
154 Install Missing Elec Receptacle
155 Install Missing Elec Receptacle
156 Install Missing Elec Receptacle
158 Install Missing Elec Receptacle
167 Bow Thruster Cable Chafing
168 Fan E33 Control Circuit Wiring
172 Escape Trunk PT100 Cable Installation
173 Escape Trunk Wiring Support
174 Electric Cable Termination
176 Replace borken hatch indicator switch
178 Replace damaged monorail crane cable
182 Cable Termination 5th deck E room
183 Cable Termination 5th deck E room
184 Cable Termination under Main Swbd
191 Securing of UPS Unit
193 Steering Gear Control Panel Wiring
196 MCT packing under main switchboard
214 Repair Navtex receiver
216 Install missing vessel name boards
218 Repair Gyro Failure Alarm
220 Steam Dump Condenser
221 Repair No. 1 and 2 LT Cooling Pumps
222 Repair Leak on No 1 HFO Separator
226 Replace seals on No. 1&2 Boiler Feed Pump
228 Scavenge Air Drain Tank Releif Valve Piping
229 Replace HVAC Gages
230 Main Engine Exhaust Leak
231 Boiler Exhaust Piping Vibration
232 Ballast System TLE's Tks 1.04&1.05
239 SW Coolers Inlet Thermometers
241 HT Cooling Pipe Support
248 DG Booster Pump Change Over Controls
250 Main SW Strainers
252 Main Engine Turning Gear Motor
254 Main Engine Cyl No.6 Ex. Valve Drain valve
256 Evap Fill Valve to Double Bottom
257 Main Engine CW Vent Piping Support
259 Diesel Gen No.1&2 Turbo outlet Thermometer
263 Main Engine Exhaust Line Supports
290 Steering Gear Flat Handrail
291 Steering Gear Flat Chafing
294 CO2 Piping Hanger
297 Fire Main Hanger
310 Main Deck Penetration
311 Exterior Main Deck Penetration
313 Exterior Main Deck Penetration
314 Exterior Main Deck Penetration
324 Exterior Main Deck Missing Locking Clips
327 Exterior Main Deck Hatch Cover Dogs
331 Exterior Main Deck Leak
353 Diesel Generator Control Cable Support
355 Rescue Boat Heater Indicator Lamp
360 Heeling Pump Junction Box
361 Bridge Control Console Chafing
362 Bridge Radio/GMDSS Console Chafing
377 Deck Containment and Funnel
381 Tank and Bilge Well Cleaning
382 Main & Emergency Fire Pump Controls
385 Securing of Cables on Open Decks
393 SLOPS Disposal 60 tons
398 Remove FO Manhole Cover Handles #4Cargo
399 Install Missing Handrail No. 4 Cargo Hold
400 Replace missing/broken term guardsDBC4
403 Presentation of Machinery Spart Parts for Ver
404 Cable Separation DB2 Platform Deck
405 Cable Separation DB2 Platform Deck
406 Repair Power On Light in Reefer Panel DBC4
408 Flying Bridge floodlight conduit support port
411 Bridge Control & GMDSS frame gounding
412 House Heads drains & vents/Sewage smell
413 Replace missing/broken term guardsDBC3
414 Properly Terminate cables in 5th deck Eroom
417 Cable Separation from heat source Fr 20 port
419 Cable Separation from heat source Fr 20 port
420 Correct Cable Chafing FR 18 Stbd Side
421 Properly Terninate cable in fire control room
425 Weekly Item List Feb16-2 Valve Niche Exh.
426 Weekly Item List Feb 16-8 Tank 1,05 Clean
428 Weekly Item List Mar30-5 Automation Wiring
431 Weekly Item List Apr13-7 Sun Awning
432 Weekly Item List Apr 27-7 Splice As builts
435 Weekly Item List May18-3 LO Pump Elec.
436 Correct Wiring Jumper on Circuit X15 in DB1
437 Correct Wiring for oil residue pump in DB1
438 Locate splice at FR 170 stbd side in J Box
439 Correct Chafing at FR81 stbd void in ovrhd
440 Properly pack MCT in room 513
442 Correct Chafing on foremast aft of breakwater
443 Properly terminate cables in EngRmEscape
444 Install explosion proof plug in Paint Locker
445 Weekly Item List May25-2 Purifier sensors
451 Fill Open Chicklet in lower ER
454 Fair warped 2nd deck of ER
455 Repair leaking flange FR 10 stbd
456 Repair leaking flange on top of cyl LO tank
457 Connect RTD FR22 stbd
461 Weld pipe hanger above Gen #4
464 Weld pipe hanger above Gen #2
465 Grind Weld seams on Gen flat trollies
466 Install missing pipe hanger above Gen #2
469 Refit lifting beam above inbd air compressor
470 Complete missing structural weld
472 Weld dosing unit at platform deck
474 Provide access or reach rod to sewage valve
476 Provide safe access to steam manifold valves
477 Degrease and clean purifier area
478 Replace cracked brass water valve HFO pur.
479 Clear blocked drain near MDO purifier
481 Clear blocked deck drain near air compressor
484 Install missing step in void FR 11
485 Reweld three CO2 hangers FR 14 stbd
487 Secure tachometer mount on main engine
489 Weld hanger to tank top in shaft alley
490 Weld hanger in shaft alley
492 Weld hanger in shaft alley
493 Add hanger to tubing in shft alley
494 Clear blocked drain near dirty oil pump
499 Repair leaking pneumatic valve
500 Weld 3 tubing hangers ER bilge
502 Repair leaking FO fitting ER bilge
503 Weld pipe hanger in ER bilge
504 Install hanger cap in ER bilge
505 Weld out pump and catwalk foundation ER
506 Provide access to valve on feed water fill pump
507 Weld cap on kick pipe ER bilge
510 Provide lint trap main laundry
512 Properly mount fire detector fwd of boiler
513 Replace missing watch duty reset button
516 Install missing handrail safety chain FR 211
517 Install missing handrail Cargo Hold No. 4
518 Weld Out Cable Tray Support in 1st dk eroom
519 Weld Out handrails near treatment rm 2nd dk
521 Replace and Demostrate Valve Niche Elec.
522 Repair Fire Fighting Pump off lights in console
523 Secure Microprocessor & UPS - Ship' office
524 Replace Temporary Choker on Compass
525 Properly terminate cable under DG4 alternator
526 Install hanger on boiler HFO return line
527 Install cable to PT100sensor for Tank 5.01
BLUE MARK INSPECTION DB 3629 FIRE DETECTION SYSTEM
BLUE MARK INSPECTION DB 3665 QUICK CLOSING VALVE\FIRE DAMPERS
Exhibit 1D
MAUNALEI - ADDITIONAL WORK ITEMS
Item
No. Description
- ---- -----------
1 Remove existing shelving, install foundations and Lista Cabinets
2 Prefabricate and install foundations, and install Lista cabinets
3 Prefabricate and install foundations, and install Lista cabinets
4 Wire in additional ME sensor points to monitoring system
5 Install 28 cylinder exhaust temperature sensors and rails, wire into
monitoring system
6 Install Kyma shaft horsepower meter
7 Marinfloc OWS piping requirements & wiring
8 Install PMI system on ME
9 Modify piping to connect into MDO system
10 Install sink and drinking fountain
11 Modify 28 lashing bar brackets Main deck
12 Furnish and install turnbuckle bins in bson store
13 Paint hatch cover sockets
14 Install accordion door between officer/duty mess
15 Hand rails on aft end of stack exhaust deck
16 2 Pilot ladder stowage boxes on main deck
17 Matson gangway platforms Port & Stbd
18 Cascade air bottle system
19 Remove/relocate deck ladders
20 Install lashing bar bins in-between hatches
21 Install 3 keyless entry security locks
22 Mounting bracket for Billy Pugh on house blkhd
23 Security bars on coaming openings
24 Lista cabinet foundations
25 Piping for livestock feed water
26 Install safety wire for port and stbd gangway
27 Upper Foremast safety cage on ladder
28 Door installation to "Suez Talley office"
29 Land line for cargo operations
EXHIBIT 31.1
------------
CERTIFICATION
I, W. Allen Doane, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Alexander &
Baldwin, Inc.;
2. Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible
for establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))
for the registrant and have:
(a) Designed such disclosure controls and procedures, or
caused such disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this report is being
prepared;
(b) Designed such internal control over financial reporting,
or caused such internal control over financial reporting to be designed under
our supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant's disclosure
controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant's
internal control over financial reporting that occurred during the registrant's
most recent fiscal quarter (the registrant's fourth fiscal quarter in the case
of an annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial reporting;
and
5. The registrant's other certifying officer(s) and I have disclosed,
based on our most recent evaluation of internal control over financial
reporting, to the registrant's auditors and the audit committee of the
registrant's board of directors (or persons performing the equivalent
functions):
(a) All significant deficiencies and material weaknesses in
the design or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to record,
process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves
management or other employees who have a significant role in the registrant's
internal control over financial reporting.
By /s/ W. Allen Doane
-----------------------------------
W. Allen Doane, Chairman and
Chief Executive Officer
Date: July 28, 2006
EXHIBIT 31.2
------------
CERTIFICATION
I, Christopher J. Benjamin, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Alexander &
Baldwin, Inc.;
2. Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible
for establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))
for the registrant and have:
(a) Designed such disclosure controls and procedures, or
caused such disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this report is being
prepared;
(b) Designed such internal control over financial reporting,
or caused such internal control over financial reporting to be designed under
our supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant's disclosure
controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant's
internal control over financial reporting that occurred during the registrant's
most recent fiscal quarter (the registrant's fourth fiscal quarter in the case
of an annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial reporting;
and
5. The registrant's other certifying officer(s) and I have disclosed,
based on our most recent evaluation of internal control over financial
reporting, to the registrant's auditors and the audit committee of the
registrant's board of directors (or persons performing the equivalent
functions):
(a) All significant deficiencies and material weaknesses in
the design or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to record,
process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves
management or other employees who have a significant role in the registrant's
internal control over financial reporting.
By /s/ Christopher J. Benjamin
-------------------------------------
Christopher J. Benjamin, Senior Vice President,
Chief Financial Officer and Treasurer
Date: July 28, 2006
EXHIBIT 32
----------
Certification of Chief Executive Officer and
Chief Financial Officer Pursuant to
18 U.S.C. Section 1350, As Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Quarterly Report on Form 10-Q of Alexander & Baldwin,
Inc. (the "Company") for the quarterly period ended June 30, 2006, as
filed with the Securities and Exchange Commission on the date hereof (the
"Report"), W. Allen Doane, as Chairman and Chief Executive Officer of the
Company, and Christopher J. Benjamin, as Senior Vice President, Chief
Financial Officer and Treasurer of the Company, each hereby certifies, pursuant
to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that to their knowledge:
(1) The Report fully complies with the requirements of Section
13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of the
Company.
/s/ W. Allen Doane
- -----------------------------------
Name: W. Allen Doane
Title: Chairman and Chief Executive Officer
Date: July 28, 2006
/s/ Christopher J. Benjamin
- -----------------------------------
Name: Christopher J. Benjamin
Title: Senior Vice President, Chief Financial Officer and Treasurer
Date: July 28, 2006