ALEXANDER & BALDWIN, INC.
1998 STOCK OPTION/STOCK INCENTIVE PLAN
NON-QUALIFIED STOCK OPTION AGREEMENT
Discretionary Option Grant Program
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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:
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RECITALS
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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
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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
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common stock, without par value.
Employee: Optionee shall be considered to be an Employee for so
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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
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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
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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
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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
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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
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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
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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
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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
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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
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Number of
Optioned Shares Exercise Date
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_______________ ________________
_______________ ________________
_______________ ________________
5. Cessation of Service; Termination of Options. The option term
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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.
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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
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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
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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.
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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
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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
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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.
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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
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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.
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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
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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
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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
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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
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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.
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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
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of this Agreement shall be governed by the laws of the State of Hawaii.
19. Counterparts. This Agreement may be executed in counterparts,
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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
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Optionee
Address:
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