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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
[X]ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended January 1, 1994
OR
[_]TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
Commission File Number 1-4455
DOLE FOOD COMPANY, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
HAWAII 99-0035300
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
31355 OAK CREST DRIVE
WESTLAKE VILLAGE, CALIFORNIA 91361
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (818) 879-6600
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
NAME OF EACH EXCHANGE ON
TITLE OF EACH CLASS WHICH REGISTERED
------------------- ----------------
Common Stock, No Par Value New York Stock Exchange
Pacific Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
NONE
Indicate by check mark whether 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 if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrants's knowledge, in definitive Proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendments to this Form 10-K. [X]
The aggregate market value of the voting stock held by non-affiliates of the
registrant asMarch 16, 1994 was approximately $1,608,744,271.
The number of shares of Common Stock outstanding as of March 16, 1994 was
59,466,535.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's 1993 Annual Report to Stockholders for the year
ended January 1, 1994 are incorporated by reference into Parts I, II and IV.
Portions of the registrant's definitive Proxy Statement for its 1994 Annual
Meeting of Stockholders are incorporated by reference into Part III.
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DOLE FOOD COMPANY, INC.
FORM 10-K
FISCAL YEAR ENDED JANUARY 1, 1994
TABLE OF CONTENTS
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ITEM
NUMBER IN
FORM 10-K PAGE
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PART I
1. Business................................................... 1
2. Properties................................................. 9
3. Legal Proceedings.......................................... 12
4. Submission of Matters to a Vote of Security Holders........ 12
Executive Officers of the Registrant....................... 12
PART II
5. Market for the Registrant's Common Equity and Related
Stockholder Matters....................................... 13
6. Selected Financial Data.................................... 13
7. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 14
8. Financial Statements and Supplementary Data................ 14
9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.................................. 14
PART III
10. Directors and Executive Officers of the Registrant......... 14
11. Executive Compensation..................................... 14
12. Security Ownership of Certain Beneficial Owners and
Management................................................ 14
13. Certain Relationships and Related Transactions............. 14
PART IV
14. Exhibits, Financial Statement Schedules and Reports on Form
8-K....................................................... 15
(a)1. Index to Financial Statements........................ 15
2. Index to Financial Statement Schedules.................. 15
3. Index to Exhibits....................................... 15
(b)Reports on Form 8-K..................................... 17
Signatures............................................................ 18
Financial Statements and Financial Statement Schedules................ F-1-F-7
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PART I
ITEM 1. BUSINESS
Dole Food Company, Inc. was founded in Hawaii in 1851 and was incorporated
under the laws of Hawaii in 1894. Unless the context otherwise requires, Dole
Food Company, Inc. and its consolidated subsidiaries are referred to herein as
the "Company". The Company's principal executive offices are located at 31355
Oak Crest Drive, Westlake Village, California 91361, telephone (818) 879-6600.
At January 1, 1994, the Company had approximately 45,300 full-time employees
worldwide.
The Company is engaged in three principal businesses: food production and
distribution, real estate development and resorts. The Company is one of the
largest companies engaged in the worldwide sourcing, processing, distributing
and marketing of high quality, branded food products. The Company's food
operations are conducted through the Company's food group ("Dole"), which
procures, grows, processes and markets fruits, vegetables and nuts in the
following locations: North America; Latin America, principally Chile, Colombia,
Costa Rica, Ecuador, Honduras and Panama; Asia, principally Japan, the
Philippines and Thailand; and Europe, principally Germany, France and Italy.
The Company's food business includes beverage operations which produce and
distribute products in a number of markets throughout the world.
The Company's real estate operations are conducted under the "Castle & Cooke"
name through the Company's real estate group which develops residential,
commercial, industrial and retail properties in Hawaii, California and Arizona.
In March, 1993, the Company's homebuilding and residential development
subsidiary, Castle & Cooke Homes, Inc., completed the initial public offering
of 5,400,000 shares of its common stock. The Company retains an approximate 82%
interest in Castle & Cooke Homes, Inc., which is listed on the New York Stock
Exchange under the symbol "CKI".
The Company's resort operations are located on the Hawaiian Island of Lana'i
and include two luxury resorts: The Lodge at Koele and The Manele Bay Hotel.
The Company's food, real estate development and resort operations are
described below. For detailed financial information with respect to the
revenue, operating income and assets of the Company's food products, real
estate and resort segments, and its operations in various geographic areas, see
the Company's Consolidated Financial Statements and the related Notes to
Consolidated Financial Statements, which are included in its 1993 Annual Report
for the fiscal year ended January 1, 1994 (the "Dole Annual Report") and
incorporated by reference in Part II of this report.
FOOD
General
Dole is engaged in the worldwide sourcing, processing, distributing and
marketing of high quality branded food products. Dole provides retail and
institutional customers and other food product companies with high quality
products bearing the DOLE(R) name which are produced and improved through
research, agricultural assistance and advanced harvesting, processing, packing,
cooling, shipping and marketing techniques.
Dole is one of the world's largest producers of bananas and pineapples. Dole
is also a major marketer of citrus and table grapes worldwide and an industry
leader in iceberg lettuce, celery, cauliflower and broccoli, and, to a lesser
extent, in carrots. Dole is the second largest processor of California raisins
and processes significant amounts of California's almond, pistachio and date
crops. It is a major participant in the chilled, shelf-stable and frozen juice
markets with DOLE(R) 100% pineapple juice and 100% blended juice varieties.
Dole's fresh food products are produced both directly on Company-owned or
leased land and through associated producer and independent grower arrangements
pursuant to which Dole provides varying degrees of farming, harvesting,
packing, storing, shipping, stevedoring and marketing services, as well as
financing
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through advances to growers of certain products. Fresh fruit and vegetable
products, dried fruit and nuts and processed pineapple products are, for the
most part, packed and/or processed directly by Dole. Other processed foods,
such as fruit juices, are obtained through co-production arrangements with
independent manufacturers. Co-producers manufacture these products pursuant to
strict specifications and under Company supervision designed to ensure
consistently high product quality.
Dole utilizes product quality, brand recognition, competitive pricing,
effective customer service and consumer marketing programs to enhance its
position within the highly competitive food industry. Consumer and
institutional recognition of DOLE(R) and related brands and the association of
these brands with high quality food products contribute significantly to Dole's
ability to compete in the markets for fresh fruit and vegetables, packaged
foods and dried fruits and nuts. The Company owns these trademarks in the
United States, Canada and in other countries in which it conducts business and
regards them as important corporate assets with high recognition and
acceptance.
The markets for all of Dole's products are highly competitive. In order to
compete successfully, Dole sources products of high quality and seeks to
distribute them in worldwide markets on a timely basis. Dole's competitors in
the fresh fruit business include a limited number of large international food
distribution companies, as well as a large number of smaller independent
distributors, including grower cooperatives and foreign government-sponsored
producers which have intensified competition in recent years. With respect to
vegetables, a limited number of grower-shippers in the United States and Mexico
supply a significant portion of the domestic fresh produce market. However,
numerous smaller independent distributors also compete with Dole in the market
for fresh vegetables. With respect to packaged products, Dole competes against
a number of large U.S. companies, as well as a substantial number of smaller
independent canners; Dole's processed pineapple also competes against a
significant volume of product processed abroad by foreign competitors. Dole's
citrus and dried fruit and nut products compete primarily against large grower
cooperatives with strong brand recognition.
Dole's earnings from its fresh fruit, vegetable and dried fruit and nut
operations, and its packaged foods operations are sensitive to fluctuations in
the volatile market prices for these products. Excess supplies often cause
severe price competition. Growing conditions in various parts of the world,
particularly weather conditions such as floods, droughts and freezes, and
diseases and pests are primary factors affecting market prices because of their
influence on supply and quality of product. Other factors affecting Dole's
operations include the seasonality of its supplies, the ability to process
products during critical harvest periods, the timing and effects of ripening,
the degree of perishability, the effectiveness of worldwide distribution
systems, the terms of various federal and state marketing orders (particularly
for dried fruit, nuts and citrus), total worldwide industry volumes, the
seasonality of consumer demand, foreign currency exchange fluctuations and
foreign political risks.
Products
Dole sources, distributes and markets fresh fruit products including bananas,
pineapples, table grapes, apples, pears, plums, oranges, grapefruit, lemons,
mangos, tangelos, melons, cherries, strawberries, raspberries and other
deciduous, tropical and citrus fruits.
Dole sources, harvests, cools, distributes and markets approximately 25
different types of fresh vegetable products, including iceberg lettuce, red and
green leaf lettuce, romaine lettuce, butter lettuce, celery, cauliflower, green
cauliflower, broccoli, carrots, brussels sprouts, spinach, red and green
onions, asparagus, cucumbers, snow peas, artichokes, strawberries and
raspberries. Dole also markets value-added products such as complete salad
packs, fresh-cut salad mix, red and green cabbage, carrots, iceberg lettuce,
coleslaw and broccoli and cauliflower florets.
Dole sources, processes and markets almonds, pistachios, dates, raisins,
prunes and trail mixes.
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Dole's fresh fruit and vegetable products and its consumer dried fruit and
nut products are marketed under the DOLE(R) brand, under other brand names
owned by the Company, and, in the some cases, under private labels.
Dole produces and markets processed food products including sliced, chunk,
tidbit and crushed pineapple in cans, as well as tropical fruit salad, and
markets mandarin oranges. Dole also markets DOLE(R) juice drinks and
DOLEWHIP(R) soft-serve, non-dairy dessert.
Dole's products are marketed through 24 direct selling offices in North
America, nine in Europe, four in Japan, one in Hong Kong, one in Korea, one in
the Middle East, one in the Philippines, one in Singapore and one in Taiwan, as
well as through independent brokers.
In September 1993, Dole announced a new management initiative for its
worldwide food company operations. In each of Dole's major world markets --
North America, Latin America, Asia and Europe -- Dole's internal management
structure was reorganized to integrate responsibility for all food operations
and marketing in each region.
Dole North America
DOLE NORTH AMERICA sources, distributes and markets DOLE(R) fresh fruits and
vegetables, dried fruit and nuts and other processed food products, including
processed pineapple, juices and juice concentrates, in North America.
Dole North America markets bananas grown in Latin America, table grapes grown
in the United States, Chile and Mexico, apples and pears grown in the United
States and Chile, melons grown in Ecuador and citrus fruit grown in the United
States and Honduras, as well as other deciduous and tropical fruit grown in the
United States, Chile, Costa Rica, Mexico and New Zealand. Fresh pineapple
destined for North America and Western Europe is grown by Dole North America in
Hawaii. Deciduous and citrus fruit products are sold primarily to wholesalers
and retail chains, which in turn resell or distribute them to retail food
stores.
Fresh vegetables marketed by Dole are generally grown by independent growers
in California, Arizona, Colorado and northern and central Mexico. The
vegetables are generally field packed and transported to Dole's central cooling
and distribution facilities. The products are sold to customers in North
America, Asia and Western Europe.
Dole has an agreement with Nestle Dairy Systems, Inc., a subsidiary of Nestle
USA, Inc., in which Dole has licensed to Nestle its rights to market and
manufacture processed products in key segments of the frozen novelty business
in the United States and Canada, including FRUIT 'N JUICE(R), SUNTOPS(TM),
FRESH LITES(R), FRUIT 'N YOGURT(TM) AND FRUIT 'N CREAM(TM) bars and, in the
premium novelty category, Fruit Sorbet.
Dried fruit and nut products are sourced from independent growers and, to a
lesser extent, produced by Dole North America. They are packaged for the retail
consumer and in bulk for cereal, confectionery and other food processors and
for food service use. Raisins are acquired from growers and dehydrators located
in the San Joaquin Valley of California. These products are marketed
domestically and overseas, primarily in Western Europe and Asia. Approximately
60% of all production is sold to other food processors for eventual use in
other food products. Raisins account for the largest portion of dried fruit and
nut sales.
Dole Latin America
DOLE LATIN AMERICA sources and transports bananas grown in Honduras, Costa
Rica, Colombia, Ecuador, Nicaragua and Panama for markets principally in North
America and Europe and the Mediterranean.
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Fresh pineapples destined for the North American and Western European markets
are grown by Dole Latin America on plantations in Honduras, the Dominican
Republic and Costa Rica.
Dole Latin America sources table grapes, apples, pears and other deciduous
and tropical fruit grown in Chile, melons grown in Ecuador and citrus fruit
grown in Honduras and Argentina for markets in North America, Western Europe
and Asia.
Dole operates a fleet of approximately 35 refrigerated vessels, of which 8
are Company-owned and the remainder are chartered. From time to time, excess
capacity may be chartered or subchartered to others.
Dole Latin America conducts other food and beverage operations in Honduras,
including an approximately 71% interest in a beer and soft drink bottling
operation, a bottle crown and carton facility for beverage-related products, a
plastic injection facility used primarily for the manufacture of beer and soft
drink plastic cases, a sugar mill, as well as a majority interest in an edible
oils refinery, a laundry soap factory and a palm oil plantation. The beer and
soft drink bottling operation, which sells its products primarily in Honduras,
competes against other local soft drink bottlers. Competition focuses on
product quality, consumer marketing programs and the effectiveness of the
distribution system.
Dole Asia
Bananas and pineapples grown in the Philippines are transported to markets
principally in Asia and the Middle East. DOLE ASIA also sources DOLE(R) and
Mountain(R) asparagus from the Philippines and distributes and markets these
products in Japan and other Asian countries.
Snow Dole Co., Ltd., a joint venture of Dole and Snow Brand Milk Products
Co., Ltd. of Japan, processes and distributes a full line of 100% fruit juices,
frozen desserts and canned pineapple in Japan. Pineapples used for processed
products are grown primarily in Thailand and the Philippines, and, to a lesser
extent, in the Dominican Republic and Honduras.
Dole Asia, with joint venture partners, is developing citrus orchards and
juice processing facilities on mainland China.
Dole Asia also produces leather-leaf ferns, anthuriums and other tropical
flowers in the Philippines for export to Japan. Dole recently announced its
intention to close its shrimp farming operation in the Philippines.
Dole Europe
In January 1993, DOLE EUROPE acquired a French dried fruit and nut business
which sources products from around the world for processing, packaging and
distribution in France and to other European markets. This business complements
the Company's current California operations by expanding the line of dried
fruit and nut products sold throughout Europe.
In early 1993, Dole Europe acquired three regional banana ripening and
distribution companies in France, which complement the Company's investment in
another French banana importer and ripening company. In 1993, the Company's
designer and builder of banana ripening facilities and equipment established a
European division.
At the end of 1993, the Company acquired affiliated fruit juice businesses
which produce and distribute juice products in Europe and the United States
under the Looza(R), Fruvita(R) and Juice Bowl(R) brands. Looza(R) is a leader
in shelf-stable juices and nectars in its market sector. Fruvita(R) is the
leader in the chilled fruit juice category in continental Europe. Juice Bowl(R)
brand juice products are distributed in the United States.
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Research and Development
Dole's research and development programs concentrate on the development of
new value-added products and new uses for existing products, as well as
agricultural research and packaging design for improving product quality. New
product development and packaging research activities are conducted primarily
at Dole's research technical center in San Jose, California.
Agricultural research is directed toward improving product yields and product
quality by examining and improving agricultural practices in all phases of
production (such as development of specifically adapted plant varieties, land
preparation, fertilization, cultural practices, pest and disease control, and
post-harvesting, packing, and shipping procedures), and includes on-site
technical services and the implementation and monitoring of recommended
agricultural practices. Specialized machinery is also developed for various
phases of agricultural production and packaging which reduces labor, improves
productivity and efficiency and increases product quality. Agricultural
research is conducted at field facilities primarily in California, Hawaii,
Latin America and Asia.
Foreign Operations
Dole has significant food sourcing and related operations in Chile, Colombia,
Costa Rica, the Dominican Republic, Ecuador, Honduras, Nicaragua, the
Philippines and Thailand. Dole also sources food products in Algeria,
Argentina, Australia, Cameroon, China, Greece, Italy, Ivory Coast, Mexico, New
Zealand, Panama, Peru, Spain, Syria, Tunisia, Turkey and Venezuela. Significant
volumes of Dole's fresh fruit and packaged products are marketed in Canada,
Western Europe and Japan, with lesser volumes marketed in New Zealand, Hong
Kong, South Korea, Australia and certain countries in Asia, Eastern Europe,
Scandinavia, the Middle East and Central and South America. Exports of Dole's
products to these countries, particularly Japan, South Korea and Taiwan, are
subject to various restrictions which may be increased or reduced in response
to international political pressures, thus affecting Dole's ability to compete
in these markets. Significant volumes of Dole's dried fruit and nut products
are marketed to Asia and Western Europe. The new European Community ("EC")
banana regulations which impose quotas on bananas exported from Latin America
were implemented on July 1, 1993. These regulations disrupted traditional
trading patterns causing banana volumes displaced by the EC restrictions to be
shipped into North America and non-EC European banana markets, resulting in
lower prices in the affected markets. Present and proposed agricultural
subsidies to Western European growers and processors, and phytosanitary
restrictions on imported products could also affect Dole's ability to market
its products in Western Europe. A small portion of Dole's vegetable products is
exported to markets outside the United States and Canada, primarily to Asia and
Western Europe.
Dole's foreign operations are subject to risks of expropriation, civil
disturbances, political unrest, increases in taxes and other restrictive
governmental policies, such as import quotas. Loss of one or more of its
foreign operations could have a material adverse effect on Dole's operating
results. Dole attempts to maintain a cordial working relationship in each
country where it operates. Because Dole's operations are a significant factor
in the economies of certain countries, its activities are subject to intense
public and governmental scrutiny, and may be affected by changes in the status
of the host economies, the makeup of the government or even public opinion in a
particular country. Dole's international sales are usually transacted in U.S.
dollars and major European and Asian currencies, while many of its costs are
incurred in currencies different from those that are received from the sale of
the product. Results of operations may be significantly affected by
fluctuations in currency exchange rates in both the sourcing and selling
locations.
Environmental and Regulatory Matters
Dole's agricultural operations are subject to a broad range of evolving
environmental laws and regulations in each country in which it operates. In the
United States, these laws and regulations include the Clean Air Act, the Clean
Water Act, the Resource Conservation and Recovery Act, the Federal Insecticide,
Fungicide and Rodenticide Act and the Comprehensive Environmental Response,
Compensation and Liability Act.
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Compliance with these foreign and domestic laws and related regulations is an
ongoing process which is not currently expected to have a material effect on
Dole's capital expenditures, earnings or competitive position. Environmental
concerns are, however, inherent in most major agricultural operations,
including those conducted by Dole, and there can be no assurance that the cost
of compliance with environmental laws and regulations will not be material.
Moreover, it is possible that future developments, such as increasingly strict
environmental laws and enforcement policies thereunder, and further
restrictions on the use of agricultural chemicals could result in increased
compliance costs.
Dole's food operations are also subject to regulations enforced by, among
others, the U.S. Food and Drug Administration and state, local and foreign
equivalents and to inspection by the U.S. Department of Agriculture and other
federal, state, local and foreign environmental and health authorities. Among
other things, the U.S. Food and Drug Administration enforces statutory
standards regarding the branding and safety of food products, establishes
ingredients and manufacturing procedures for certain foods, establishes
standards of identity for foods and determines the safety of food substances in
the United States. Similar functions are performed by state, local and foreign
governmental entities with respect to food products produced or distributed in
their respective jurisdictions.
Several of Dole's products, including but not limited to dried fruit, nuts
and citrus fruit, are or in the future may be subject to, federal and state
marketing orders which may affect the quantities of such products that can be
sold at any one time, the amount of such products that must be held in reserve,
the manner in which such products can be processed, quality standards for such
products and various other matters relating to the marketing and sale of such
products.
Sources and Availability of Raw Materials
The major raw material and operating supplies used by Dole are seed and other
planting materials, fuels for transportation, agricultural chemicals, packaging
materials and tinplate. Generally, all of these items are readily available
from a number of sources; however, operations would be affected by any
substantial reductions in supply.
REAL ESTATE
The Company conducts real estate activities, including residential,
commercial and/or industrial real estate projects, in Hawaii, California,
Arizona, North Carolina, Georgia and Mississippi. The Company generally
competes against a number of large, well-capitalized real estate developers for
residential, commercial and industrial projects. The Company competes for
residential sales with other developers, homebuilders and individuals reselling
existing residential housing in the greater metropolitan areas in which it
conducts business. The Company competes primarily on the basis of location,
prices, quality and design. The Company also competes with other developers and
homebuilders for desirable properties, financing, raw materials and skilled
labor. The Company's real estate's operations are subject to a variety of risks
including increases in mortgage interest rates, shifts in population, real
estate market fluctuations, changes in the desirability and preferences for
residential, commercial and industrial areas, and the effects of changes in tax
laws. Land use planning, management and development are also subject to local
zoning, economic and political constraints.
Residential Real Estate Operations
All of the Company's residential real estate activities, except on the Island
of Lana'i, are currently conducted through Castle & Cooke Homes, Inc. ("CKI").
In March 1993, the Company's homebuilding and residential development
subsidiary, CKI, completed the initial public offering of 5,400,000 shares of
its common stock. Dole retains approximately an 82% interest in CKI, which is
listed on the New York Stock Exchange under the symbol "CKI".
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In connection with the initial public offering, the Company entered into an
Exclusive Residential Development Agreement with CKI, which provides, subject
to certain exceptions, that until March 4, 2043, the Company will conduct all
of its residential real estate development business in the United States
through CKI, other than such activities on the Island of Lana'i. The Company
also granted to CKI the right of first refusal to purchase up to 12,500 acres
in Hawaii, California and Arizona. The right of first refusal expires March 4,
2013.
In Hawaii, Mililani Town, located in central Oahu, is being developed as a
3,500-acre master-planned community, complete with homes, parks, recreation
centers, schools, shopping centers and a library. In Mililani Makai, the first
section of the community to be developed, approximately 9,300 units on
approximately 2,300 acres of land have been sold. Mililani Mauka is the
section of Mililani Town now undergoing development; current plans call for
the development of approximately 6,600 units on 1,200 acres over the next ten
years. The necessary land use and zoning approvals for the first phase of
4,500 units on approximately 790 acres in Mililani Mauka have been received,
and 1,496 units have been sold through January 1, 1994.
Other active Hawaii developments include Royal Kunia and The Crowne at
Wailuna. During 1993, the Company substantially completed Sunset Pointe at
Waikele, a residential development on approximately 35 acres in central Oahu.
This development consists of 251 single-family detached homes and two
homesites. Deliveries of finished homes began in May 1992 and as of January 1,
1994, only two homes remain to be sold.
Royal Kunia is a 270-acre master-planned community to be built on the Ewa
Plain in central Oahu. Royal Kunia is owned by a limited partnership in which
a wholly-owned subsidiary of CKI is the sole general partner and holds a 50%
interest. The development, when completed in accordance with the master plan,
will offer single-family and multi-family housing adjacent to commercial
properties, parks and recreational facilities. The master plan provides for
1,748 units, and the first homes are currently expected to be delivered in the
second half of 1994.
The Crowne at Wailuna is the fourth and final phase of a planned residential
community above Pearl City on the Island of Oahu. This 26-acre parcel was
purchased by the Company in 1993. It is planned to include 158 detached homes
developed under condominium ownership. The first homes are currently expected
to be delivered in late 1994.
Na Pu'u Nani at Waikoloa is a proposed 640 unit residential development on
approximately 255 acres of land in south Kohala on the Island of Hawaii. Site
development and construction of infrastructure have not yet begun. Na Pu'u
Nani is owned by a joint venture in which a subsidiary of CKI is the managing
general partner and holds a 30% interest. The joint venture has filed suit
against the third party which owned the property prior to the joint venture,
seeking various remedies, including recision of the purchase of the property.
If an adequate remedy is not granted, the project could be postponed or
cancelled.
In Bakersfield, California, planned residential communities are being
developed on approximately 5,070 acres. The property was in various stages of
development when acquired in late 1987. Approximately 1,535 acres are
currently zoned for development, portions of which have been master-planned
and subdivided, with roadways and utilities constructed to each subdivision.
In Bakersfield, lots are sold to independent builders for single family
projects, and in 1992, CKI began building homes.
Current residential development activities in Bakersfield include Silver
Creek, Seven Oaks and Brimhall. Silver Creek is a master-planned community
encompassing approximately 600 acres. Homes and homesites are offered at three
price levels. Approximately 1,350 homes and homesites remain to be developed
on approximately 430 acres.
Seven Oaks is a master-planned community on approximately 1,000 acres and is
designed to be the premier residential development in Bakersfield. Seven Oaks
surrounds an 18 hole golf course and country club developed by the Company,
which will be contributed to a nonprofit mutual benefit corporation. The
Company sells homesites in Seven Oaks and began building homes in 1993.
Approximately 1,320 home and homesites on approximately 510 acres remain to be
developed.
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Brimhall is a 285-acre residential community designed to attract entry-level
and middle-market homebuyers. Development commenced in 1991. The Company sells
homesites to builders and builds its own homes in Brimhall. An additional 940
acres are currently being master-planned to complete the Brimhall community.
The Company currently plans to develop approximately 4,040 homes and homesites
on the approximately 1,195 remaining acres.
Other developments include Camarillo Springs and Sierra Vista. Construction
of the final phase of 57 townhomes at the Camarillo Springs project, located in
the City of Camarillo in Ventura County, California was completed in 1992 and
as of January 1, 1994, only nine units remain to be sold. The Sierra Vista,
Arizona project contains single-family and multi-family homesites for sale to
builders and individuals. Approximately 3,845 homesites remain to be developed
on approximately 1,390 acres.
The Company also operates a 320-unit apartment complex in Bakersfield.
Commercial, Industrial and Retail Real Estate Operations
The Company's commercial, industrial and retail real estate operations are
conducted through wholly-owned subsidiaries of the Company, and not through
CKI.
In Hawaii, the Company is constructing a shopping center in Mililani Town on
approximately 45 acres, of which approximately 180,000 square feet have been
completed. Construction has commenced on the next phase of the shopping center,
which includes approximately 70,000 square feet. In addition, the Company is
developing Mililani Technology Park, a 256-acre, campus-like business/research
office park currently zoned and designed primarily for high technology
companies and technology-related companies. The first phase of 35 acres is
complete and construction of the second phase of 38 acres is in progress.
The Company also operates a Company-owned mixed-use complex at Dole's former
cannery facility in Honolulu and a tourist attraction at Dole's pineapple
plantation in central Oahu.
In Bakersfield, California, the Company has three industrial parks in various
stages of development. The Company also owns two office buildings, a 150,000
square foot industrial warehouse and a 50% general partnership interest in a
partnership owning a shopping center.
The Company also owns and operates four office buildings located in North
Carolina and Georgia and four apartment complexes located in Arizona,
Mississippi and North Carolina.
The construction work conducted by the Company's residential, commercial,
industrial and retail real estate operations is largely performed by
independent contractors, subcontractors and suppliers, and the materials and
supplies are secured by these contractors, subcontractors and suppliers from
customary trade sources. Although certain products are subject to supply
limitations from time to time, such limitations have not significantly impaired
the Company's ability to conduct its business in the past.
RESORTS
The Company owns and operates two luxury hotels on the Hawaiian island of
Lana'i. The Lodge at Koele is a two story 102-room luxury lodge set in the
wooded highlands of Koele, Lana'i. It includes an18-hole golf course called The
Experience at Koele. The Manele Bay Hotel is a luxury, oceanfront hotel with
245 guest rooms and suites. A conference center for The Manele Bay Hotel was
completed in 1992. The Challenge at Manele, an 18-hole golf course immediately
adjacent to The Manele Bay Hotel, was completed in 1993. The Company is also
planning to develop the property contiguous to the Lodge and golf course sites
on Lana'i as residential homesites. The Company anticipates marketing golf
course frontage townhomes and single family lots at Koele by mid 1994.
Development of homesites at Manele is awaiting final land use and zoning
approvals. The Company's resort operations are subject to the risks of changes
in the desirability and preference for resort areas and economic and local
political constraints.
8
<PAGE>
Environmental and Regulatory Matters
The Company's real estate and resort operations are subject to a broad range
of evolving federal, state and local environmental laws and regulations.
Management is not currently aware of any environmental compliance issues that
are expected to have a material effect on the Company's capital expenditures,
earnings or competitive position.
ITEM 2. PROPERTIES
The Company maintains executive offices in Westlake Village, California and
auxiliary executive offices in Los Angeles, California and New York, New York,
each of which is leased from third parties. Dole's various divisions also
maintain headquarters offices in the following California cities: Westlake
Village, Salinas, and Fresno, which are leased from third parties, and in
Wahiawa, Hawaii, Wenatchee, Washington and on the Island of Lana'i, which are
owned by the Company. Dole has closed leased offices in San Francisco and
Ontario, California to consolidate these operations with other Company
operations. The Company owns the headquarters building of Dole Fresh Fruit
International, Limited in Costa Rica. In addition, the Company's Hawaii
commercial real estate operations and CKI's Hawaii real estate operations both
maintain offices in Honolulu, Hawaii in a building which is owned by the
Company. The Company's California commercial real estate operations, California
fresh fruit and citrus operations and CKI's California operations are
headquartered in Bakersfield, California in a building owned by the Company.
The inability to renew any of the above office leases by the Company would not
have a material adverse effect on the Company's operating results. The Company
and each of its subsidiaries believe that their property and equipment are
generally well maintained, in good operating condition and adequate for their
present needs.
The following is a description of the food and real estate operations'
significant properties.
DOLE
Dole North America
Dole's Hawaiian pineapple operations for the fresh produce market are located
on the Island of Oahu and total approximately 6,500 acres.
Dole produces citrus on approximately 9,500 acres in the San Joaquin and
Coachella Valleys of California owned directly or through agricultural
partnerships as well as through independent growing arrangements. Citrus is
packed in eight Company-owned or leased packing houses--five in California, two
in Florida and one in Arizona. Dole, through a joint venture, operates a
175,000 square foot packing house in southwest Florida with two multi-variety
production lines.
Domestic table grapes are sourced from approximately 6,000 acres on four
Company-owned vineyards, one located in the Coachella Valley and three located
in the San Joaquin Valley. Domestic table grapes are fumigated and cooled in
three Company-owned facilities, two are located in the San Joaquin Valley and
one is located in the Coachella Valley. Dole produces wine grapes on
approximately 2,000 acres of vineyards, and stone fruit on approximately 800
acres of Company-owned property in the San Joaquin Valley. Dole also produces
grapes on approximately 300 acres of Company-owned property in Chile. The
Company owns a cherry packing and processing facility in Victor, California.
Dole produces apples and pears directly from seven Company-owned orchards on
approximately 1,800 productive acres in Wenatchee and Chelan, Washington as
well as through independent growing arrangements. The Company also owns apple
and pear storage, processing and packing facilities in Wenatchee and Chelan.
The Company owns approximately 1,175 acres of farmland in California and
Arizona, and leases approximately 10,600 acres of farmland in California and
another 5,500 acres in Arizona in connection with Dole's vegetable operations.
The majority of this acreage is farmed under joint growing arrangements with
9
<PAGE>
independent growers, while the remainder is farmed by Dole. The Company owns
cooling, packing and shipping facilities in Yuma, Arizona and the following
California cities: Marina, Holtville, Guadalupe, Gonzales and Huron.
Additionally, the Company has partnership interests in facilities in Yuma,
Arizona and Mexico, and leases facilities in Oxnard, California. The Company
owns a state-of-the-art, value-added processing plant in Yuma, Arizona. A
similar plant in Soledad, California is under construction and is currently
scheduled to open in April 1994.
Dole produces almonds from approximately 5,300 acres and pistachios from
approximately 2,900 acres of orchards in the San Joaquin Valley, owned directly
or through agricultural partnerships or leased. The Company leases
approximately 260 acres of date gardens in the Coachella Valley.
The Company owns and operates one almond and pistachio processing and packing
plant, three almond receiving and storage facilities, one pistachio processing
plant and two raisin and prune processing plants, all of which are located in
the San Joaquin and Sacramento Valleys. The Company owns and operates two date
processing plants in the Coachella Valley, and leases a prune processing
facility in Morgan Hill, California.
Hawaiian sugar operations include a mill which produces raw sugar and a
plantation on the Island of Oahu comprising approximately 12,100 acres
(approximately 6,100 acres of which are owned and the remainder of which are
leased). Dole recently announced its plan to close its Hawaiian sugar
operation. As previously announced, over the past few years Dole has phased out
its processed pineapple operations on the Island of Lana'i in Hawaii and its
cannery in Honolulu.
Portions of the Company's fresh fruit and vegetable farm properties are
irrigated by surface water supplied by local government agencies using
facilities financed by federal or state agencies, as well as from underground
sources. Water received through federal facilities is subject to acreage
limitations under the 1982 Reclamation Reform Act. The quantity and quality of
these water supplies varies depending on weather conditions and government
regulations. The Company believes that under normal conditions these water
supplies are adequate for current production needs.
Dole Latin America
Dole produces bananas directly from Company-owned plantations in Costa Rica,
Colombia and Honduras as well as through associated producers or independent
growing arrangements in those countries and in Ecuador, Panama and Nicaragua.
The Company owns approximately 40,400 acres in Honduras, 32,400 acres in Costa
Rica and 3,600 acres in Colombia.
Dole also grows pineapple on approximately 6,000 acres of owned land in
Honduras, primarily for the fresh produce market, and operates a juice
concentrate plant in Honduras for pineapple and citrus. Dole grows pineapple on
approximately 11,000 acres of leased land in the Dominican Republic and owns
and operates a juice concentrate plant located adjacent to the leased acreage.
Dole produces citrus on approximately 650 acres of Company-owned land and 175
acres of leased land in Honduras. Dole also operates a grapefruit packing house
in Honduras.
Dole operates Company-owned corrugated box plants in Honduras, Costa Rica,
Colombia and Chile and participates in the operation of a 49% Company-owned
corrugated box plant in Ecuador.
The Company has an interest in the following properties in Honduras: an
approximately 71% interest in a beer and soft drink bottling operation, a
bottle crown and carton facility for beverage-related products, a plastic
injection facility used primarily for the manufacture of beer and soft drink
plastic cases and a sugar mill, as well as a majority interest in an edible
oils refinery, a laundry soap factory, a palm oil plantation and 3,000 acres of
coconut palm growing area.
10
<PAGE>
Dole operates a fleet of approximately 35 refrigerated vessels, of which 8
are Company-owned and the remainder are chartered. From time to time, excess
capacity may be chartered or subchartered to others. Dole enters into spot
charters as necessary to supplement its transportation resources. Dole has
entered into an agreement with a Polish ship builder to construct refrigerated
vessels for Dole at an aggregate purchase price of approximately $120 million.
The first vessel is currently scheduled for delivery in the second quarter of
1994.
Dole Asia
Dole operates a pineapple plantation of approximately 30,200 acres in the
Philippines. Originally covered by a grower agreement between Dole and a
government-owned and controlled corporation, approximately 22,100 acres of the
plantation have been transferred to a cooperative of Dole employees that will
acquire the land pursuant to an agrarian reform law. The remaining acreage in
the Philippines is farmed pursuant to farm management contracts. A cannery,
chillroom, juice concentrate plant, corrugated box plant and can manufacturing
plant, each owned by Dole, are proximately located to the plantation.
Through a subsidiary in Thailand controlled by Dole, Dole grows pineapple on
approximately 5,000 acres of leased land and purchases additional supplies of
pineapple in Thailand on the open market. Dole's Thailand subsidiary owns and
operates a cannery, can plant and juice concentrate plant located adjacent to
the leased acreage in central Thailand, and a second multi-fruit cannery in
southern Thailand.
Dole also produces bananas through associated producers or independent
growing arrangements in the Philippines, and, with a joint venture partner, is
developing approximately 6,400 acres of citrus orchards in China.
Dole Europe
At the end of 1993, Dole acquired two affiliated fruit juice companies which
have production facilities in Belgium, France and Florida.
In France, the Company owns a dried fruit and nut processing, packaging and
warehousing facility in Vitrolles and a date processing and packaging plant in
Marseille. The Company also owns banana ripening facilities in Lille, Rouen and
Bourges, France.
REAL ESTATE AND RESORTS
The Company owns an aggregate of approximately 128,900 acres of land in
Hawaii. Of that total, approximately 40,300 acres are located on the Island of
Oahu, of which approximately 13,100 acres currently are used for the
cultivation of pineapple and sugar, approximately 12,100 acres are leased or
rented to approximately 98 tenants and approximately 5,660 acres are owned by
CKI. Additionally, the Company has granted CKI a right of first refusal to
purchase approximately 5,300 acres of its 40,300 acres on Oahu. Approximately
88,600 acres are located on the Island of Lana'i, of which the Company uses
approximately 1,300 acres for resort and residential development. In addition,
approximately 15,100 acres on Lana'i are being used or are available for
diversified agricultural operations, including pasture land for livestock.
In California, the Company owns approximately 11,000 acres, including
approximately 3,200 acres near San Jose, 7,700 acres near Bakersfield (of which
5,070 acres are owned by CKI and 1,280 are subject to CKI's right of first
refusal) and 100 acres at the Mountaingate development in West Los Angeles. The
Company also owns approximately 7,300 acres in Cochise County, Arizona, of
which CKI owns approximately 1,390 acres and approximately 5,920 acres of which
are subject to CKI's right of first refusal.
The Company also owns and operates four office buildings located in North
Carolina and Georgia and four apartment complexes located in Arizona,
Mississippi and North Carolina.
11
<PAGE>
ITEM 3. LEGAL PROCEEDINGS
Lawsuits have been filed in Texas against the manufacturers of a formerly
widely used agricultural chemical called DBCP and against the Company.
Plaintiffs are foreign nationals who claim they were employees of Company
subsidiaries during the 1970's. Damages are claimed for alleged personal
injuries caused by contact with DBCP approximately 15 to 20 years ago. The
Company has denied liability and asserted substantial defenses. In 1992,
similar lawsuits with a different group of plaintiffs were settled. The portion
paid by the Company was covered by insurance and immaterial to the Company. In
the opinion of management, after consultation with legal counsel, these pending
lawsuits are not expected to have a material adverse effect on the Company.
The Company is involved from time to time in other various claims and legal
actions incident to its operations, both as plaintiff and defendant. In the
opinion of management, after consultation with outside counsel, none of the
claims or actions to which the Company is a party is expected to have a
material adverse effect on the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during the
quarter ended January 1, 1994.
EXECUTIVE OFFICERS OF THE REGISTRANT
Below is a list of the names and ages of all executive officers of the
Company as of March 10, 1994 indicating their positions with the Company and
their principal occupations during the past five years. The current terms of
the executive officers will expire at the next organizational meeting of the
Company's Board of Directors or at such time as their successors are elected.
<TABLE>
<CAPTION>
POSITIONS WITH THE COMPANY AND
SUBSIDIARIES
NAME AND AGE AND FIVE-YEAR EMPLOYMENT HISTORY
------------ --------------------------------
<C> <S>
David H. Murdock (70)............... Chairman of the Board, Chief Executive
Officer and Director of the Company since
July 1985. Chairman of the Board, Chief
Executive Officer and Director of Castle
& Cooke Homes, Inc. since September 1992.
Since June 1982, Chairman of the Board
and Chief Executive Officer of Flexi-Van
Corporation, a Delaware corporation
wholly owned by Mr. Murdock. Sole owner
and developer of the Sherwood Country
Club in Ventura County, California, and
numerous other real estate developments;
also sole stockholder of numerous
corporations engaged in a variety of
business ventures and in the manufacture
of textiles and industrial and building
products.
David A. DeLorenzo (47)............. President of Dole Food Company--
International since September 1993 and
Executive Vice President and Member of
the Office of the Chairman of the Company
since July 1990. Director of the Company
since February 1991. President of Dole
Fresh Fruit Company from September 1986
to June 1992.
Gerald W. LaFleur (61).............. Executive Vice President and Member of
the Office of the Chairman of the Company
since April 1992. Executive Vice
President of Pacific Holding Company (a
sole proprietorship of Mr. Murdock) since
July 1991. Prior to July 1991, partner in
Arthur Andersen & Co.
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
POSITIONS WITH THE COMPANY AND
SUBSIDIARIES
NAME AND AGE AND FIVE-YEAR EMPLOYMENT HISTORY
------------ --------------------------------
<C> <S>
Alan B. Sellers (45)................ Executive Vice President and Member of
the Office of the Chairman of the Company
since January 1990. Chief Financial
Officer of the Company since March 1992
and Chief Administrative Officer of the
Company since July 1990. Senior Vice
President and General Counsel of the
Company from February 1988 to January
1990. Corporate Secretary of the Company
since February 1986. Vice President-Legal
Affairs of Flexi-Van Corporation (a
corporation wholly owned by Mr. Murdock)
from August 1987 to December 1993;
Corporate Secretary of Flexi-Van
Corporation and General Counsel of
Pacific Holding Company (a sole
proprietorship of Mr. Murdock) from
August 1986 to December 1992.
Ernest W. Townsend (48)............. Executive Vice President, Member of the
Office of the Chairman of the Company and
President of Dole Food Company--North
America since September 1993. President
of Dole Fresh Fruit and Vegetables (North
America) since June 1992. President and
Chief Executive Officer of the All-
American Gourmet division of
Kraft/General Foods from March 1989 to
May 1992. President of Frozen Food Group
of Kraft, Inc. from January 1988 to March
1989.
George R. Horne (57)................ Vice President of the Company since
October 1982. Vice President-Human
Resources of Dole since February 1986.
Michael S. Karsner (35)............. Vice President and Treasurer of the
Company since January 1994. Vice
President and Treasurer of The Black &
Decker Corporation from January 1990 to
January 1994. Vice President--Corporate
Development of The Black and Decker
Corporation from March 1989 to January
1990.
Thomas C. Leppert (39).............. Vice President of the Company and
President of Castle & Cooke Properties,
Inc. since March 1989. President--Hawaii
and Director of Castle & Cooke Homes,
Inc. since June 1992.
Patricia A. McKay (36).............. Vice President-Controller of the Company
since August 1991. Controller of Dole
Fresh Fruit Company since October 1988.
</TABLE>
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
As of March 16, 1994, there were approximately 16,691 holders of record of
the Company's Common Stock. Additional information required by Item 5 is
contained on pages 26, 27, 30, 35 and 37 of the Dole Annual Report. Such
information is incorporated herein by reference.
ITEM 6. SELECTED FINANCIAL DATA
There is hereby incorporated by reference the information appearing under the
caption "Results of Operations and Selected Financial Data" on page 35 of the
Dole Annual Report.
13
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
There is hereby incorporated by reference the information appearing under the
caption "Management's Discussion and Analysis of Results of Operations and
Financial Position" on pages 32, 33 and 34 of the Dole Annual Report.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
There is hereby incorporated by reference the information appearing on pages
19 through 31 of the Dole Annual Report. See also Item 14 of this report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
There have been no changes in the Company's independent auditors for the 1993
and 1992 fiscal years nor have there been any disagreements with the Company's
independent auditors on accounting principles or practices for financial
statement disclosures.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
There is hereby incorporated by reference the information regarding the
Company's directors to appear under the caption "Election of Directors" in the
Company's definitive proxy statement for its 1994 Annual Meeting of
Stockholders (the "1994 Proxy Statement"). See the list of the Company's
executive officers and related information under "Executive Officers of the
Registrant", which is set forth in Part I hereof.
ITEM 11. EXECUTIVE COMPENSATION
There is hereby incorporated by reference the information to appear under the
captions "Remuneration of Directors" and "Compensation of Executive Officers"
in the 1994 Proxy Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
There is hereby incorporated by reference the information with respect to
security ownership to appear under the captions "General Information",
"Beneficial Ownership of Certain Stockholders" and "Security Ownership of
Directors and Executive Officers" in the 1994 Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There is hereby incorporated by reference the information to appear under the
caption "Certain Transactions" in the 1994 Proxy Statement.
14
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) 1. FINANCIAL STATEMENTS:
The following consolidated financial statements are included in the Dole
Annual Report and are incorporated herein by reference:
<TABLE>
<CAPTION>
ANNUAL
REPORT
PAGES
------
<S> <C>
Consolidated Statement of Income--fiscal years ended January 1,
1994, January 2, 1993 and December 28, 1991..................... 19
Consolidated Balance Sheet--January 1, 1994 and January 2, 1993.. 20
Consolidated Statement of Cash Flow--fiscal years ended January
1, 1994, January 2, 1993, and December 28, 1991................. 21
Notes to Consolidated Financial Statements....................... 22-30
Independent Public Accountants' Report........................... 31
</TABLE>
2. FINANCIAL STATEMENT SCHEDULES:
<TABLE>
<CAPTION>
FORM 10-
K
PAGES
--------
<S> <C>
Independent Public Accountants' Report on Financial Statement
Schedules............................................................ F-1
Schedule II-Amounts receivable from related parties and underwriters,
promoters, and employees other than related parties.................. F-2
Schedule V-Property, plant and equipment.............................. F-3
Schedule VI-Accumulated depreciation and amortization of property,
plant and equipment.................................................. F-4
Schedule VIII-Valuation and qualifying accounts....................... F-5
Schedule IX-Short-term borrowings..................................... F-6
Schedule X-Supplementary income statement information................. F-7
</TABLE>
All other schedules are omitted because they are not applicable, not required
or the information is included elsewhere in the financial statements or notes
thereto.
3. EXHIBITS:
<TABLE>
<CAPTION>
EXHIBIT
NO.
-------
<C> <S>
3.1 The restated Articles of Association of the Company, as amended
through July 30, 1991. Incorporated by reference to Exhibit 3(a) to
the Company's Annual Report on Form 10-K for the fiscal year ended
December 28, 1991, File No. 1-4455.
3.2 By-Laws of the Company, as amended through March 25, 1993.
4.1 Credit Agreement dated as of November 15, 1993 among the Company,
Citicorp USA, Inc., as Agent and Lender and the financial
institutions which are Lenders thereunder, relating to the Company's
$400 million, 364-day revolving credit facility. Incorporated by
reference to Exhibit 4(d) to the Company's Quarterly Report on Form
10-Q for the quarter ended October 9, 1993, File No.1-4455.
4.2 Indenture dated as of April 15, 1993 between the Company and Chemical
Trust Company of California, relating to $300 million of the
Company's senior notes. Incorporated by reference to Exhibit 4.1 to
the Company's Current Report on Form 8-K, event date May 6, 1993,
File No. 1-4455.
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO.
-------
<C> <S>
4.3 Indenture dated as of July 15, 1993 between the Company and Chemical
Trust Company of California, relating to $400 million of the
Company's senior notes. Incorporated by reference to Exhibit 4 to the
Company's Current Report on Form 8-K, event date July 15, 1993,
File No. 1-4455.
4.4 Revolving Credit Agreement dated as of February 26, 1993 by and among
Castle & Cooke Homes, Inc. (a Hawaii corporation), Castle & Cooke
Residential, Inc., Castle & Cooke Development Corporation, Castle &
Cooke Kunia, Inc., Castle & Cooke Homes, Inc. (a California
corporation), Castle & Cooke Sierra Vista, Inc., Castle & Cooke
Silver Creek, Inc., and Prairie Vista, Inc. as Borrowers and Bank of
Hawaii as Agent and the financial institutions which are Lenders
thereunder. Incorporated by reference to Exhibit 10(a) to the
Company's Annual Report on Form 10-K for the year ended January 2,
1993, File No. 1-4455.
4.5 The Company agrees to furnish to the Securities and Exchange
Commission upon request a copy of each instrument with respect to
issues of long-term debt of the Company and its subsidiaries, the
authorized principal amount of which does not exceed 10% of the
consolidated assets of the Company and its subsidiaries.
10.1 Intercompany Agreement dated as of March 4, 1993 between the Company
and Castle & Cooke Homes, Inc. Incorporated by reference to Exhibit
10(a) to the Company's Annual Report on Form 10-K for the year ended
January 2, 1993, File No. 1-4455.
10.2 Tax Sharing Agreement dated as of March 4, 1993 between the Company
and Castle & Cooke Homes, Inc. Incorporated by reference to Exhibit
10(b) to the Company's Annual Report on Form 10-K for the year ended
January 2, 1993, File No. 1-4455.
10.3 Right of First Refusal Agreement dated as of March 4, 1993 among the
Company, Castle & Cooke Homes, Inc., Castle & Cooke Arizona, Inc. and
Castle & Cooke Communities, Inc. Incorporated by reference to Exhibit
10(c) to the Company's Annual Report on Form 10-K for the year ended
January 2, 1993, File No. 1-4455.
10.4 Exclusive Residential Development Agreement dated as of March 4, 1993
between the Company and Castle & Cooke Homes, Inc. Incorporated by
reference to Exhibit 10(d) to the Company's Annual Report on Form 10-
K for the year ended January 2, 1993, File No. 1-4455.
10.5 Stock Option Agreement dated as of March 4, 1993 between the Company
and Castle & Cooke Homes, Inc. Incorporated by reference to Exhibit
10(e) to the Company's Annual Report on Form 10-K for the year ended
January 2, 1993, File No. 1-4455.
Executive Compensation Plans and Arrangements--Exhibits 10.6--10.16:
10.6 The Company's 1991 Stock Option and Award Plan, as amended through
July 7, 1993.
10.7 The Company's 1982 Stock Option and Award Plan, as amended.
Incorporated by reference to Exhibit 28(a) to the Company's Report on
Form S-8 filed on May 22, 1989,
Registration No. 33-28782.
10.8 Description of Executive Incentive Plan for key employees of the
Company and its subsidiaries. Incorporated by reference to Exhibit
10(q) to the Company's Annual Report on Form 10-K for the fiscal year
ended January 3, 1987, File No. 1-4455.
10.9 Dole Food Company, Inc. Executive Supplementary Retirement Plan
(effective January 1, 1989), First Restatement. Incorporated by
reference to Exhibit 10(c) to Company's Annual Report on Form 10-K
for the fiscal year ended December 29, 1990, File No. 1-4455.
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO.
-------
<C> <S>
10.10 Bonus Agreement dated as of August 30, 1991 by and between the Company
and David A. DeLorenzo, with promissory note dated September 5, 1991
in the principal amount of $500,000 by David A. DeLorenzo in favor of
the Company. Incorporated by reference to Exhibit 10(e) to the
Company's Annual Report on Form 10-K for the fiscal year ended
December 28, 1991,
File No. 1-4455.
10.11 Employment Agreement between the Company and Gerald W. LaFleur.
Incorporated by reference to Exhibit 10(k) to the Company's Annual
Report on Form 10-K for the fiscal year ended January 2, 1993, File
No. 1-4455.
10.12 Board of Directors Deferred Compensation Plan.
10.13 1993 Stock Option and Award Plan of Castle & Cooke Homes, Inc., as
amended through September 1, 1993.
10.14 Castle & Cooke Homes, Inc. Executive Incentive Plan.
10.15 Dole Food Company, Inc. Annual Incentive Plan.
10.16 Dole Food Company, Inc. Long-Term Incentive Plan.
11 Computations of earnings per common share.
13 Dole Food Company, Inc. 1993 Annual Report for the fiscal year ended
January 1, 1994. (This Report is furnished for information of the
Commission and, except for those portions thereof which are expressly
incorporated by reference herein, is not "filed" as a part of this
Annual Report on Form 10-K.)
21 Subsidiaries of Dole Food Company, Inc.
23 Consent of Arthur Andersen & Co.
</TABLE>
(b) REPORTS ON FORM 8-K:
No current reports on Form 8-K were filed by the Company during the last
quarter of the year ended January 1, 1994.
17
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
DOLE FOOD COMPANY, INC.
Registrant
/s/ David H. Murdock
By: _________________________________
David H. Murdock Chairman of the
March 31, 1994 Board and Chief Executive Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
NAME TITLE DATE
---- ----- ----
<S> <C> <C>
/s/ David H. Murdock Chairman of the Board and March 31, 1994
- ------------------------------------ Chief Executive Officer and
David H. Murdock Director
/s/ David A. DeLorenzo Executive Vice President and March 31, 1994
- ------------------------------------ Director
David A. DeLorenzo
/s/ Alan B. Sellers Executive Vice President-- March 31, 1994
- ------------------------------------ Chief Financial and
Alan B. Sellers Administrative Officer
(Principal Financial
Officer)
/s/ Patricia A. McKay Vice President--Controller March 31, 1994
- ------------------------------------ (Principal Accounting
Patricia A. McKay Officer)
/s/ Elaine L. Chao Director March 31, 1994
- ------------------------------------
Elaine L. Chao
/s/ Mike Curb Director March 31, 1994
- ------------------------------------
Mike Curb
/s/ Richard M. Ferry Director March 31, 1994
- ------------------------------------
Richard M. Ferry
/s/ James F. Gary Director March 31, 1994
- ------------------------------------
James F. Gary
/s/ Frank J. Hata Director March 31, 1994
- ------------------------------------
Frank J. Hata
</TABLE>
18
<PAGE>
INDEPENDENT PUBLIC ACCOUNTANT'S REPORT ON
FINANCIAL STATEMENT SCHEDULES
To the Shareholders and Board of Directors
of Dole Food Company, Inc.:
We have audited in accordance with generally accepted auditing standards, the
consolidated financial statements included in Dole Food Company, Inc.'s annual
report to shareholders incorporated by reference in this Form 10-K, and have
issued our report thereon dated February 7, 1994. Our audit was made for the
purpose of forming an opinion on those statements taken as a whole. The
schedules listed in the preceding index are the responsibility of the Company's
management and are presented for purposes of complying with the Securities and
Exchange Commission's rules and are not part of the basic financial statements.
These schedules have been subjected to the auditing procedures applied in the
audit of the basic financial statements, and in our opinion, fairly state in
all material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.
Our report on the consolidated financial statements includes an explanatory
paragraph with respect to the change in the method of accounting for
postretirement benefits other than pensions, effective December 29, 1991.
Arthur Andersen & Co.
Los Angeles, California
February 7, 1994
F-1
<PAGE>
SCHEDULE II
DOLE FOOD COMPANY, INC. AND SUBSIDIARIES
AMOUNTS RECEIVABLE FROM RELATED PARTIES AND UNDERWRITERS, PROMOTERS AND
EMPLOYEES OTHER THAN RELATED PARTIES
<TABLE>
<CAPTION>
BALANCE
DEDUCTIONS AT END OF YEAR
BALANCE AT --------------------- ---------------
BEGINNING AMOUNTS AMOUNTS NOT
NAME OF DEBTOR OF YEAR ADDITIONS COLLECTED WRITTEN OFF CURRENT CURRENT
-------------- ---------- --------- --------- ----------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Year Ended January 1,
1994
David A. DeLorenzo.... $400 $-- $100 $-- $100 $200
Glen T. Hierlmeier.... 317 2 100 3 212
Year Ended January 2,
1993
David A. DeLorenzo.... $500 $-- $100 $-- $100 $300
Glen T. Hierlmeier.... 318 -- 1 -- 317 --
Year Ended December 28,
1991
David A. DeLorenzo.... $-- $500 $-- $-- $100 $400
Glen T. Hierlmeier.... 321 -- 3 -- 1 317
</TABLE>
- --------
Notes:
The note receivable from David A. DeLorenzo is non-interest bearing and is
payable in five annual installments commencing September 1992.
On July 9, 1993, in connection with Mr. Hierlmeier's resignation, the terms
of the above note receivable were amended. Principal was reduced by $100,000
and the interest rate was reduced from 10.25% to 7.34% per annum. The maturity
date, at which time all remaining principal and accrued interest are due and
payable, was extended to September 30, 1995. The note is secured by real
property located in Bakersfield, California.
F-2
<PAGE>
SCHEDULE V
DOLE FOOD COMPANY, INC. AND SUBSIDIARIES
PROPERTY, PLANT AND EQUIPMENT
<TABLE>
<CAPTION>
BALANCE AT
BEGINNING OF ADDITIONS AT OTHER CHANGES BALANCE AT
YEAR COST RETIREMENTS ADD (DEDUCT) END OF YEAR
------------ ------------ ----------- ------------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Year Ended January 1,
1994
Land and land
improvements......... $ 609,036 $ 7,325 $ 4,714 $ 69,706 $ 681,353
Buildings and
improvements......... 460,415 7,052 7,179 39,392 499,680
Machinery and
equipment............ 768,387 29,706 19,054 141,992 921,031
Construction in
progress............. 114,693 174,576 135 (135,200) 153,934
---------- -------- ------- --------- ----------
Total............... $1,952,531 $218,659 $31,082 $ 115,890(A) $2,255,998
========== ======== ======= ========= ==========
Year Ended January 2,
1993 (B)
Land and land
improvements......... $ 489,584 $ 3,594 $ 2,878 $ 118,736 $ 609,036
Buildings and
improvements......... 497,058 15,348 5,499 (46,492) 460,415
Machinery and
equipment............ 655,514 47,844 22,397 87,426 768,387
Construction in
progress............. 124,183 124,959 1,141 (133,308) 114,693
---------- -------- ------- --------- ----------
Total............... $1,766,339 $191,745 $31,915 $ 26,362 $1,952,531
========== ======== ======= ========= ==========
Year Ended December 28,
1991 (C)
Land and land
improvements......... $ 436,058 $ 40,540 $ 3,275 $ 16,261 $ 489,584
Buildings and
improvements......... 289,826 58,169 2,317 151,380 497,058
Machinery and
equipment............ 463,460 27,822 18,460 182,692 655,514
Construction in
progress............. 261,031 198,629 425 (335,052) 124,183
---------- -------- ------- --------- ----------
Total............... $1,450,375 $325,160 $24,477 $ 15,281 $1,766,339
========== ======== ======= ========= ==========
</TABLE>
- --------
Notes:
(A) Additions for the year ended January 1, 1994 include property, plant and
equipment acquired in connection with the purchases of a dried fruit and
nut business and banana ripening and distribution companies in France, two
affiliated fruit juice businesses and five commercial real estate
properties, totaling approximately $111 million.
(B) Certain prior year amounts have been reclassified to conform to the 1993
presentation.
(C) During 1992, the Company implemented Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes" by applying the provisions
of the standard retroactively to 1989. Accordingly, amounts for year ended
December 28, 1991 have been restated to reflect the adoption of the
accounting change.
Depreciation is computed principally by the straight-line method over the
estimated useful lives of the assets as follows:
<TABLE>
<S> <C>
Land improvements............................................. 5-55 years
Buildings and improvements.................................... 10-45 years
Machinery and equipment....................................... 2-25 years
</TABLE>
F-3
<PAGE>
SCHEDULE VI
DOLE FOOD COMPANY, INC. AND SUBSIDIARIES
ACCUMULATED DEPRECIATION AND AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT
<TABLE>
<CAPTION>
ADDITIONS
BALANCE AT CHARGED TO
BEGINNING OF COSTS AND OTHER CHANGES BALANCE AT
YEAR EXPENSES RETIREMENTS ADD (DEDUCT) END OF YEAR
------------ ---------- ----------- ------------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Year Ended January 1,
1994
Land improvements..... $ 56,720 $ 19,754 $ 790 $ (171) $ 75,513
Buildings and
improvements......... 67,420 18,200 1,125 (8,887) 75,608
Machinery and
equipment............ 263,256 82,856 12,412 4,088 337,788
-------- -------- ------- ------- --------
Total............... $387,396 $120,810 $14,327 $(4,970) $488,909
======== ======== ======= ======= ========
Year Ended January 2,
1993
Land improvements..... $ 42,726 $ 12,803 $ 165 $ 1,356 $ 56,720
Buildings and
improvements......... 48,273 24,024 2,669 (2,208) 67,420
Machinery and
equipment............ 192,832 69,795 10,739 11,368 263,256
-------- -------- ------- ------- --------
Total............... $283,831 $106,622 $13,573 $10,516 $387,396
======== ======== ======= ======= ========
Year Ended December 28,
1991
Land improvements..... $ 31,048 $ 10,251 $ 2,632 $ 4,059 $ 42,726
Buildings and
improvements......... 33,287 17,172 1,533 (653) 48,273
Machinery and
equipment............ 154,436 55,700 15,585 (1,719) 192,832
-------- -------- ------- ------- --------
Total............... $218,771 $ 83,123 $19,750 $ 1,687 $283,831
======== ======== ======= ======= ========
</TABLE>
F-4
<PAGE>
SCHEDULE VIII
DOLE FOOD COMPANY, INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
ADDITIONS
BALANCE AT CHARGED TO
BEGINNING OF COSTS AND BALANCE AT
YEAR EXPENSES DEDUCTIONS(A) END OF YEAR
------------ ---------- ------------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Year Ended January 1, 1994
Allowance for doubtful
accounts
Trade receivables.......... $15,203 $7,733 $ 4,540 $18,396
Notes and other current
receivables............... 9,706 1,083 1,636 9,153
Long-term receivables...... 27,838 4,572 13,026 19,384
Year Ended January 2, 1993
Allowance for doubtful
accounts
Trade receivables.......... $13,681 $3,148 $ 1,626 $15,203
Notes and other current
receivables............... 11,974 3,031 5,299 9,706
Long-term receivables...... 22,401 6,633 1,196 27,838
Year Ended December 28, 1991
Allowance for doubtful
accounts
Trade receivables.......... $12,663 $2,964 $ 1,946 $13,681
Notes and other current
receivables............... 8,398 5,028 1,452 11,974
Long-term receivables...... 20,451 4,444 2,494 22,401
</TABLE>
- --------
Note:
(A) Write-off of uncollectible amounts.
F-5
<PAGE>
SCHEDULE IX
DOLE FOOD COMPANY, INC. AND SUBSIDIARIES
SHORT-TERM BORROWINGS
<TABLE>
<CAPTION>
WEIGHTED MAXIMUM AVERAGE WEIGHTED
AVERAGE AMOUNT AMOUNT AVERAGE
BALANCE INTEREST OUTSTANDING OUTSTANDING INTEREST
CATEGORY OF AGGREGATE AT END RATE AT END DURING THE DURING THE RATE DURING
SHORT-TERM BORROWINGS OF YEAR OF YEAR YEAR YEAR(A) THE YEAR(B)
--------------------- ------- ----------- ----------- ----------- -----------
(DOLLAR AMOUNTS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
January 1, 1994
Notes payable
Banks(C)........... $63,735 9.6% $93,370 $64,466 13.1%
Other.............. 315 7.0 603 443 7.0
January 2, 1993
Notes payable
Banks(C)........... $92,992 12.6% $92,992 $79,801 16.1%
Other.............. 521 7.5 1,316 818 8.9
December 28, 1991
Notes payable
Banks(C)........... $73,915 15.8% $92,013 $78,491 19.0%
Other.............. 1,118 9.8 2,006 1,043 9.9
</TABLE>
- --------
Notes:
(A) Represents an average of the period-end balances.
(B) Computed by dividing the actual short-term interest expense for the year by
the Average Amount Outstanding During the Year.
(C) Notes payable to banks include borrowings by foreign subsidiaries in local
currencies.
F-6
<PAGE>
SCHEDULE X
DOLE FOOD COMPANY, INC. AND SUBSIDIARIES
SUPPLEMENTARY INCOME STATEMENT INFORMATION
<TABLE>
<CAPTION>
CHARGED TO COSTS AND EXPENSES
----------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED
JANUARY 1, JANUARY 2, DECEMBER 28,
1994 1993 1991
---------- ---------- ------------
(IN THOUSANDS)
<S> <C> <C> <C>
Maintenance and repairs..................... $78,345 $94,213 $93,485
General excise taxes........................ 53,471 46,547 41,342
Taxes other than general excise, payroll and
income taxes............................... 42,459 47,721 46,016
Advertising................................. 57,058 51,419 54,615
</TABLE>
- --------
Note:
Amounts not presented are less than 1% of revenue.
F-7
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. PAGE
------- ----
<C> <S> <C>
3.1 The restated Articles of Association of the Company, as amended
through July 30, 1991. Incorporated by reference to Exhibit
3(a) to the Company's Annual Report on Form 10-K for the
fiscal year ended December 28, 1991, File No. 1-4455.
3.2 By-Laws of the Company, as amended through March 25, 1993.
4.1 Credit Agreement dated as of November 15, 1993 among the
Company, Citicorp USA, Inc., as Agent and Lender and the
financial institutions which are Lenders thereunder, relating
to the Company's $400 million, 364-day revolving credit
facility. Incorporated by reference to Exhibit 4(d) to the
Company's Quarterly Report on Form 10-Q for the quarter ended
October 9, 1993, File No.1-4455.
4.2 Indenture dated as of April 15, 1993 between the Company and
Chemical Trust Company of California, relating to $300 million
of the Company's senior notes. Incorporated by reference to
Exhibit 4.1 to the Company's Current Report on Form 8-K, event
date
May 6, 1993, File No. 1-4455.
4.3 Indenture dated as of July 15, 1993 between the Company and
Chemical Trust Company of California, relating to $400 million
of the Company's senior notes. Incorporated by reference to
Exhibit 4 to the Company's Current Report on Form 8-K, event
date July 15, 1993, File No. 1-4455.
4.4 Revolving Credit Agreement dated as of February 26, 1993 by and
among Castle & Cooke Homes, Inc. (a Hawaii corporation),
Castle & Cooke Residential, Inc., Castle & Cooke Development
Corporation, Castle & Cooke Kunia, Inc., Castle & Cooke Homes,
Inc. (a California corporation), Castle & Cooke Sierra Vista,
Inc., Castle & Cooke Silver Creek, Inc., and Prairie Vista,
Inc. as Borrowers and Bank of Hawaii as Agent and the
financial institutions which are Lenders thereunder.
Incorporated by reference to Exhibit 10(a) to the Company's
Annual Report on Form 10-K for the year ended January 2, 1993,
File No. 1-4455.
4.5 The Company agrees to furnish to the Securities and Exchange
Commission upon request a copy of each instrument with respect
to issues of long-term debt of the Company and its
subsidiaries, the authorized principal amount of which does
not exceed 10% of the consolidated assets of the Company and
its subsidiaries.
10.1 Intercompany Agreement dated as of March 4, 1993 between the
Company and Castle & Cooke Homes, Inc. Incorporated by
reference to Exhibit 10(a) to the Company's Annual Report on
Form 10-K for the year ended January 2, 1993, File No. 1-4455.
10.2 Tax Sharing Agreement dated as of March 4, 1993 between the
Company and Castle & Cooke Homes, Inc. Incorporated by
reference to Exhibit 10(b) to the Company's Annual Report on
Form 10-K for the year ended January 2, 1993, File No. 1-4455.
10.3 Right of First Refusal Agreement dated as of March 4, 1993
among the Company, Castle & Cooke Homes, Inc., Castle & Cooke
Arizona, Inc. and Castle & Cooke Communities, Inc.
Incorporated by reference to Exhibit 10(c) to the Company's
Annual Report on Form 10-K for the year ended January 2, 1993,
File No. 1-4455.
10.4 Exclusive Residential Development Agreement dated as of March
4, 1993 between the Company and Castle & Cooke Homes, Inc.
Incorporated by reference to Exhibit 10(d) to the Company's
Annual Report on Form 10-K for the year ended January 2, 1993,
File No. 1-4455.
10.5 Stock Option Agreement dated as of March 4, 1993 between the
Company and Castle & Cooke Homes, Inc. Incorporated by
reference to Exhibit 10(e) to the Company's Annual Report on
Form 10-K for the year ended January 2, 1993, File No. 1-4455.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. PAGE
------- ----
Executive Compensation Plans and Arrangements--Exhibits 10.6--10.16:
<C> <S> <C>
10.6 The Company's 1991 Stock Option and Award Plan, as amended
through July 7, 1993.
10.7 The Company's 1982 Stock Option and Award Plan, as amended.
Incorporated by reference to Exhibit 28(a) to the Company's
Report on Form S-8 filed on May 22, 1989, Registration No. 33-
28782.
10.8 Description of Executive Incentive Plan for key employees of
the Company and its subsidiaries. Incorporated by reference to
Exhibit 10(q) to the Company's Annual Report on Form 10-K for
the fiscal year ended January 3, 1987, File No. 1-4455.
10.9 Dole Food Company, Inc. Executive Supplementary Retirement Plan
(effective January 1, 1989), First Restatement. Incorporated
by reference to Exhibit 10(c) to Company's Annual Report on
Form 10-K for the fiscal year ended December 29, 1990, File
No. 1-4455.
10.10 Bonus Agreement dated as of August 30, 1991 by and between the
Company and David A. DeLorenzo, with promissory note dated
September 5, 1991 in the principal amount of $500,000 by David
A. DeLorenzo in favor of the Company. Incorporated by
reference to Exhibit 10(e) to the Company's Annual Report on
Form 10-K for the fiscal year ended December 28, 1991, File
No. 1-4455.
10.11 Employment Agreement between the Company and Gerald W. LaFleur.
Incorporated by reference to Exhibit 10(k) to the Company's
Annual Report on Form 10-K for the fiscal year ended January
2, 1993, File No. 1-4455.
10.12 Board of Directors Deferred Compensation Plan.
10.13 1993 Stock Option and Award Plan of Castle & Cooke Homes, Inc.,
as amended through September 1, 1993.
10.14 Castle & Cooke Homes, Inc. Executive Incentive Plan.
10.15 Dole Food Company, Inc. Annual Incentive Plan.
10.16 Dole Food Company, Inc. Long-Term Incentive Plan.
11 Computations of earnings per common share.
13 Dole Food Company, Inc. 1993 Annual Report for the fiscal year
ended January 1, 1994. (This Report is furnished for
information of the Commission and, except for those portions
thereof which are expressly incorporated by reference herein,
is not "filed" as a part of this Annual Report on Form 10-K.)
21 Subsidiaries of Dole Food Company, Inc.
23 Consent of Arthur Andersen & Co.
</TABLE>
<PAGE>
EXHIBIT 3.2
BY-LAWS
OF
DOLE FOOD COMPANY, INC.
(as amended through March 25, 1993)
ARTICLE I
Stockholders
(1) Meetings. An annual meeting of the stockholders shall be held each
---------
calendar year during such month and at such time and place as the president
shall direct for the purpose of electing directors and an auditor and for the
transaction of such other business as may be brought before the meeting.
Special meetings of the stockholders shall be called upon the request in writing
of the president, or in his absence, a vice president, or by a vote of a
majority of the board of directors, or upon the request in writing of
stockholders of the corporation representing not less than one-third of the
outstanding voting stock.
(2) Notices. Notices of all meetings, annual or special, shall specify the
--------
place, day and hour of the meeting, and shall be mailed at least fifteen days
before such meeting, postage prepaid and addressed to each holder of voting
stock at his address as it appears on the books of the corporation. Notice of
every special meeting shall indicate briefly its purposes.
(3) Quorum. The holders of a majority of the shares of the outstanding voting
-------
stock of the corporation, present in person or by proxy at any meeting of the
stockholders, shall constitute a quorum for the transaction of business, and any
decision of a majority of such quorum shall be valid and binding upon the
corporation, except as otherwise specifically provided by law, the articles of
association or these by-laws, or the resolution of the board of directors
creating any series of preferred stock.
If the holders of the amount of stock necessary to constitute a quorum shall
fail to attend in person or by proxy any meeting, annual or special, duly called
and noticed, holders of a majority of the shares present in person or by proxy
may adjourn from time to time without other notice than by announcement at the
meeting until a quorum shall attend. At any such adjourned meeting at which a
quorum shall be present any business may be transacted which could have been
transacted at the meeting as originally called.
(4) Voting. At each meeting of the stockholders each holder of voting stock
-------
shall be entitled to vote in person, or by proxy appointed by instrument in
writing subscribed by such stockholder or by his duly authorized attorney. Each
holder of voting stock shall have one vote for each full share of voting stock
registered in his name and a fraction of a vote equal to each fractional share
of voting stock so registered, subject, however, to
1
<PAGE>
the provisions of Section (4) of ARTICLE VII of these by-laws with respect to
the determination of stockholders entitled to vote. The holders of the
outstanding shares from time to time of the common stock and of any preferred
stock which has voting rights shall vote together on all matters referred to the
stockholders, including the election of directors; provided, however, that the
foregoing is subject to any provisions of law or the articles of association or
the resolution of the board of directors creating any series of preferred stock
requiring with respect to any matter the approval or consent of the holders of
any designated percentage of the outstanding shares of stock of any class or any
series of any class. All provisions of these by-laws which specify or relate to
the powers of the stockholder or to action which may be taken by the
stockholders at or in connection with the meeting thereof shall be interpreted
as referring to the holders of shares of voting stock of the corporation.
(5) Determination of Contested Elections. Prior to any meeting of the
-------------------------------------
stockholders called for the election of directors where there are more
candidates for election to the board of directors than there are directors to be
elected at such meeting (a "Contested Election"), the board of directors shall
appoint an inspector of election (the "Inspector"). No director or candidate
for the office of director shall be appointed as the Inspector. The corporation
shall enter into an agreement with the Inspector providing that the Inspector
shall determine the authenticity, validity and effect of proxies, votes and
ballots and shall certify to the corporation the results of each vote taken by
stockholders at such Contested Election on such date as the Inspector shall have
finally determined such results (the "Determination Date").
The nominees for election to the board of directors in a Contested Election who
are certified by the Inspector as having been elected shall be deemed to be duly
elected and qualified upon the expiration of three business days following the
Determination Date; provided, however, that in the event any court proceedings
are commenced which challenge or dispute the results of such Contested Election,
the nominees whose election is in dispute shall not be deemed to be duly elected
and qualified until all such court proceedings, including appeals, shall have
been fully concluded.
(6) No holder of shares of any stock of any class of the corporation shall be
entitled to cumulate his votes in the election of directors.
(7) Conduct of Meetings of Stockholders by Presiding Officer. The officer of
---------------------------------------------------------
the corporation who is the presiding officer at any meeting of the stockholders
of the corporation shall have the power (A) to determine the procedure to be
followed in presenting and voting upon all business that may be transacted at
the meeting and (B) to adjourn a meeting, duly called and noticed, at which a
quorum is present in person or by proxy if a matter to be considered and acted
upon at the meeting requires the affirmative vote of more than a majority of a
quorum at the meeting voting in person or by proxy and at the meeting as
originally duly called and noticed (i) the number of shares voted in person or
by proxy in favor of such matter is insufficient to approve it and (ii) the
number
2
<PAGE>
of shares voted in person or by proxy against such matter is insufficient to
disapprove it. Shares which are voted in person or by proxy as abstaining from
voting on any such matter shall be deemed not to have voted on such matter for
the purposes of this section. At any adjourned meeting which has been adjourned
by the presiding officer as approved in this section, any business may be
transacted which could have been transacted at the meeting as originally called
if a quorum is present.
ARTICLE II
Board of Directors
(1) General. The Management of all of the affairs, business and property of
--------
the corporation shall be vested in the board of directors. No director need be
a stockholder. The number of directors shall be seven.
Notwithstanding any other provision of these by-laws, each director shall
continue in office until his successor is duly elected and qualified or until
his earlier removal in the manner provided in Section (6) of this Article II,
resignation in the manner provided in Section (9) of this Article II or death.
In the event holders of any preferred stock or any series of preferred stock are
entitled to elect directors, such holders shall be entitled to elect the number
of directors provided for in the resolution authorizing the issuance of such
stock subject to and upon the terms and conditions of such resolution,
notwithstanding any limitation on the maximum number of directors provided for
in this Section or any other conflicting provisions of these by-laws.
(2) Vacancies. If any vacancy shall occur in the board of directors by reason
----------
of resignation, removal or death, increase in the number of directors or
otherwise, such vacancy may be filled by the affirmative vote of a majority of
the directors then in office, although less than a quorum, or by a sole
remaining director.
In the event that the resignation of any director shall specify that it shall
take effect at a future date, the vacancy resulting from such resignation may be
filled in the same manner as provided in the immediately preceding sentence.
(3) Meetings. The board of directors may hold meetings in such place as the
---------
board of directors from time to time may determine. A meeting of the board of
directors elected at the annual meeting of the stockholders shall be held at the
place of such annual meeting and as soon as practicable thereafter, and no
notice thereof shall be necessary.
(4) Notice. The secretary shall give notice, orally or in writing, of each
-------
meeting of the board of directors (except the meeting following the annual
meeting of stockholders) to each director at least one day before the meeting.
The failure to give notice shall not invalidate any action at a meeting of the
board of directors if a quorum is present. The presence of
3
<PAGE>
any director at a meeting shall be the equivalent of a waiver of the requirement
of the giving of notice of said meeting to such director.
(5) Quorum. At all meetings of the board of directors, the presence in person
-------
of a majority of the total number of directors then holding office shall be
necessary and sufficient to constitute a quorum for the transaction of business,
and, except as otherwise provided by law, by the articles of association or by
these by-laws, if a quorum shall be present, the act of a majority of the
directors present shall be the act of the board of directors.
(6) Removal. The stockholders of the corporation may at any special meeting of
--------
the stockholders remove from office any director or directors, for cause, and in
the case of any such removal the vacancies on the board of directors arising
from such removal shall be filled by the remaining directors in accordance with
the provisions of Section (2) of this Article II. In addition, the board of
directors of the corporation, by the affirmative vote of a majority of the whole
board, may remove from office any director or directors, for cause, and may fill
the vacancies arising from such removal in accordance with the provisions of
Section (2) of this Article II. "Cause" shall mean malfeasance in office,
harassment of other directors or the officers or employees of the corporation or
other conduct which, in the opinion of the stockholders or the majority of the
whole board of directors, is inimical or prejudicial to the interest of the
corporation.
(7) Action Without Meetings. Notwithstanding any other provisions of these by-
------------------------
laws relating to meetings of the board of directors, any action required or
permitted to be taken at any meeting of the board of directors, or of a
committee of the directors, may be taken without a meeting if all of the
directors or all of the members of the committee, as the case may be, sign a
written consent or written consents setting forth the action taken or to be
taken at any time before or after the intended effective date of such action.
Such consent or consents shall be filed with the minutes of the directors'
meetings or committee meetings, as the case may be, and shall have the same
effect as a unanimous vote.
(8) Nomination of Director Candidates. Nominations of candidates for election
----------------------------------
to the board of directors of the corporation at any meeting of the stockholders
called for election of directors (an "Election Meeting") may be made by the
board of directors or by any stockholder entitled to vote at such Election
Meeting.
Nominations made by the board of directors shall be made at a meeting of the
board of directors, or by written consent of directors in lieu of a meeting, not
less than 30 days prior to the date of the Election Meeting. At the request of
the secretary of the corporation, each person so nominated by the board of
directors shall provide the corporation with such information concerning himself
as is required, under the rules of the Securities and Exchange Commission, to be
included in the corporation's proxy statement soliciting proxies for his
election as a director.
4
<PAGE>
Not less than 30 days prior to the date of an Election Meeting, any stockholder
who intends to make a nomination of a candidate for election to the board of
directors of the corporation at such Election Meeting shall deliver a notice to
the secretary of the corporation setting forth (i) the name, age, business
address and residence address of each such intended nominee, (ii) the principal
occupation or employment of each such intended nominee, (iii) the number of
shares of capital stock of the corporation which are beneficially owned by each
such intended nominee and (iv) such other information concerning each such
intended nominee as would be required, under the rules of the Securities and
Exchange Commission, in a proxy statement soliciting proxies for the election of
each such nominee; provided, however, that any such notice of nomination for the
-------- -------
1984 annual meeting of stockholders may be delivered at any time prior to the
close of business on September 14, 1984. Such notice shall include a signed
consent of each such intended nominee to serve as a director of the corporation,
if elected.
In the event that a person is validly designated as a nominee in accordance with
the procedures specified above and shall thereafter become unable or unwilling
to stand for election to the board of directors, the board of directors or the
stockholder who proposed such nominee, as the case may be, may designate a
substitute nominee.
If the chairman of the Election Meeting determines that a nomination was not
made in accordance with the foregoing procedures, such nomination shall be void.
(9) Resignation. Any director may resign at any time by giving written notice
------------
to the board of directors, the president or the secretary. Such resignation
shall take effect upon such date as shall be stated therein or, if no effective
date is so stated, upon receipt thereof.
ARTICLE III
Executive Committee and Other Committees
(1) Executive Committee. There may be an executive committee consisting of the
--------------------
president, and not more than four other persons who shall be members of the
board of directors and who shall be appointed and may be removed by the board of
directors at any time.
During the intervals between meetings of the board of directors, the executive
committee shall possess and may exercise any powers of the board of directors
which are delegated to it by the board of directors, and shall meet at the call
of the president or any two members of the committee.
Vacancies or temporary vacancies in the executive committee shall be filled by
the board of directors. A majority of the committee shall constitute a quorum,
and in every case the affirmative vote of a majority of the members of the
committee shall be necessary to the validity of any act of the committee.
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Regular minutes of proceedings shall be kept in a book provided for that
purpose. All action by the executive committee, and its minutes, shall be
reported to the board of directors at its next succeeding meeting for such
action as the board of directors deems proper.
(2) Other Committees. The board of directors may create and appoint from its
-----------------
own membership or otherwise such general or special committee or committees as
it deems desirable.
ARTICLE IV
Officers
(1) Principal Officers. The principal officers of the corporation shall be a
-------------------
president, one or more vice presidents, a secretary, a treasurer, one or more
controllers, one of whom shall be designated as the principal accounting
officer, and in addition thereto, in the discretion of the board of directors, a
chairman of the board and a vice chairman of the board, all of whom shall be
elected annually by the board of directors at its first meeting after the annual
meeting of stockholders and shall serve for one year and/or until their
successors shall have been elected, provided, that the number of vice presidents
may be changed from time to time by the board of directors at any meeting of the
board and if increased at any time the additional vice president or vice
presidents shall be elected by the board of directors, and provided, further,
that the chairman of the board may be elected at any time by the board of
directors.
(2) Other Officers. The board of directors may elect such other officers as it
---------------
deems necessary, who shall have such authority and perform such duties as from
time to time may be prescribed by the board of directors. One person may hold
more than one office.
(3) Removal and Vacancies. All officers shall be subject to removal at any
----------------------
time by the affirmative vote of a majority of the whole board of directors. If
the office of any officer shall become vacant for any reason the board of
directors may elect a successor.
(4) Qualifications. The chairman of the board, if any, and the president shall
---------------
be elected from among the directors. The vice president(s), the secretary, the
treasurer, the controller(s) and such other officers as may be elected from time
to time need not be directors. No officer need be a stockholder.
(5) Chairman of the Board. Whenever there shall be a chairman of the board of
----------------------
directors he shall preside at all meetings of the board of directors. He shall
have such other powers and perform such other duties as may be assigned to him
by the board of directors.
(6) President. The president shall preside at all meetings of the
----------
stockholders. He shall preside at all meetings of the board of directors in the
absence of the chairman of the board.
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Subject to the board of directors, he shall have general charge of the business
of the corporation.
The president shall have the powers and perform the duties customarily
incidental to this office and such other powers and duties as may be assigned to
him by the board of directors.
(7) Vice Presidents. The board of directors may elect one or more vice
----------------
presidents, who shall in the order determined by the board of directors perform
the duties of the president during his absence or disability or whenever the
office is vacant. The board of directors may designate the vice president who
shall be first in order to perform the duties of the president, as the executive
vice president. The several vice presidents shall have such other powers and
perform such other duties as may be assigned to them by the board of directors.
(8) Treasurer. The treasurer shall be the financial officer of the
----------
corporation. Except insofar as some other officer or employee shall from time
to time be expressly authorized and instructed so to do, the treasurer shall
receive and receipt for, either personally or by an employee authorized by him
so to do, all checks and drafts of the corporation; pay all debts of the
corporation under direction of the board of directors; keep safely all notes,
stocks, bonds, deeds and all evidences of property belonging to the corporation,
have custody of all moneys either belonging to the corporation, or in its
charge, and properly care for the same; and shall have such other powers and
duties as assigned to him by the board of directors.
(9) Assistant Treasurers. The board of directors may elect one or more
---------------------
assistant treasurers who shall, in the order determined by the board of
directors, perform the duties of the treasurer during his absence or disability
or whenever the office is vacant. Each assistant treasurer shall have such
powers and perform such duties as may be assigned to him by the board of
directors.
(10) Secretary. The secretary shall keep the minutes of all meetings of the
----------
board of directors and the stockholders in books provided for that purpose; he
shall attend to the giving and serving of all notices of the corporation. The
secretary shall have the powers and perform the duties customarily incidental to
this office and such other powers and duties as may be assigned to him from time
to time by the board of directors.
(11) Assistant Secretaries. The board of directors may elect one or more
----------------------
assistant secretaries, who shall, in the order determined by the board of
directors, perform the duties of the secretary during his absence or disability
or whenever the office is vacant. Each assistant secretary shall have such
powers and perform such duties as may be assigned to him by the board of
directors.
(12) Controller-Accounting. The controller-accounting shall be the principal
----------------------
accounting officer of the corporation. Except insofar as some other officer or
employee shall from time to time be expressly authorized and instructed so to
do, the controller-accounting shall keep
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all financial books of the corporation; keep thorough and proper accounts of the
financial transactions of the corporation and render statements of the same in
such form and at such times as the board of directors shall require; maintain a
system of budgeting control; prepare and render to such governmental officials
having the right to so require, tax returns and all exhibits, reports and other
instruments required by law; and have such other powers and duties as may be
assigned to him by the board of directors.
(13) Assistant Controllers. The board of directors may elect one or more
----------------------
assistant controllers, who shall, in the order determined by the board of
directors, perform the duties of the controller during his absence or disability
or whenever the office is vacant. Each assistant controller shall have such
powers and perform such duties as may be assigned to him by the board of
directors.
(14) Stock in Other Corporations. Unless the board of directors otherwise
----------------------------
directs with respect to any meeting or meetings of the stockholders of any
corporation shares of the stock of which are owned by the corporation, whether
or not such corporation is a subsidiary of the corporation, the president or the
chairman of the board or a vice president shall have full authority to attend
any meeting of the stockholders of any such corporation and to vote at such
meeting the shares of stock of such corporation owned by the corporation; and
the president or the chairman of the board or a vice president shall have full
authority to execute on behalf of the corporation any proxy authorizing any
other person or persons to vote the shares of stock of any such corporation
owned by the corporation at any meeting or meetings of the stockholders of any
such corporation. Unless the board of directors otherwise directs, the presence
at any meeting of the stockholders of any such corporation of an officer above
listed of the corporation shall supersede as to such meeting any proxy.
ARTICLE V
Auditor
The auditor shall be elected by the stockholders at their annual meeting to
serve until the next annual meeting and thereafter until a successor is elected.
ARTICLE VI
Execution of Instruments
All checks, drafts, notes, bonds, acceptances, deeds, leases, contracts and all
other instruments, shall be signed by such person or persons as may be
designated by general or special resolution of the board of directors, and in
the absence of any such general or special resolution applicable to any such
instrument then such instrument shall be signed by the president or a vice
president and by the treasurer or the secretary or the controller or an
assistant secretary or an assistant treasurer or an assistant controller. The
board of directors
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may by resolution provide for the use of facsimile signatures on any instrument
and may also provide that any instrument may be sealed with the facsimile seal
of the corporation.
ARTICLE VII
Capital Stock
(1) Certificates. The certificates for shares of the capital stock of the
-------------
corporation shall be in such form and not inconsistent with the articles of
association as shall be approved by the board of directors. The certificates
shall be sealed with the corporate seal and signed by the president or a vice
president and countersigned by the treasurer or the secretary, provided,
however, that the board of directors may provide that certificates shall be
sealed with only the facsimile seal of the corporation and signed only with the
facsimile signature of the president or a vice president and countersigned only
with the facsimile signature of the treasurer or the secretary. The name of the
person owning the shares represented by each certificate, with the number of
such shares and the date of issue, shall be entered on the corporation's stock
books.
(2) Transfer of Shares. Transfer of shares of stock may be made by endorsement
-------------------
and delivery of the certificate. No such transaction shall be valid, except
between the parties thereto, until a new certificate shall have been obtained or
the transfer shall have been recorded on the books of the corporation so as to
show the date of transfer, the parties thereto, and the number and description
of the shares transferred. Upon the surrender of any certificate it shall be
cancelled.
(3) Regulations. The board of directors shall have power and authority to make
------------
all such rules and regulations as it deems expedient concerning the issue,
transfer and registration of certificates for shares of the capital stock of the
corporation.
(4) Fixing of Record Date. In lieu of closing the stock transfer books of the
----------------------
corporation, the board of directors may fix in advance a date, not more than
sixty days nor less than ten days preceding the date of any meeting of
stockholders and not more than sixty days preceding the date for the payment of
any dividend, or the date for the allotment of rights, or the date when any
change or conversion or exchange of capital stock shall go into effect or a date
in connection with obtaining the consent of stockholders for any purpose, as a
record date for the determination of the holders of capital stock of the
corporation entitled to notice of, and to vote at, any such meeting or to any
such allotment of rights, or to exercise the rights in respect of any such
change, conversion or exchange of capital stock, or to give such consent; and in
such case such stockholders and only such stockholders as shall be stockholders
of record on the date so fixed shall be entitled to such notice of, and vote at,
such meeting, or to receive payment of such dividend, or to receive such
allotment of rights, or to exercise such rights, or to give such consent, as the
case may be, notwithstanding any transfer of any stock on the books of the
corporation after any such record date fixed as aforesaid. A determination of
the stockholders of record entitled to notice of or to vote at a
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meeting of the stockholders shall apply to any adjournment of such meeting;
provided, however, that the board of directors may fix a new record date for the
adjourned meeting.
(5) Lost Certificates. The directors, subject to such rules and regulations as
------------------
they may from time to time adopt, may order a new certificate of stock to be
issued in the place of any certificate of the corporation alleged to have been
lost, destroyed or mutilated, but the board of directors may, in its discretion,
refuse to replace any lost certificate save upon the order of some court having
jurisdiction in such matters.
(6) Holders of Record. The corporation shall be entitled to treat the holder
------------------
of record of any share or shares of its capital stock as the holder in fact
thereof for any purpose whatsoever and shall not be bound to recognize any
equitable or other claim to or interest in such share or shares on the part of
any other claimant thereto.
(7) Seal. The corporation shall have a corporate seal of such form and device
-----
as the board of directors shall from time to time determine, which seal shall be
in the charge of the secretary. When directed by the board of directors, a
duplicate seal may be kept and used by such other officers or agents as the
board may direct.
ARTICLE VIII
Indemnification
(1) The corporation shall indemnify each person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he is or was a director, officer, employee or agent of the corporation
or of any division of the corporation, or is or was serving at the request of
the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of this
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction, or upon a
plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of this
corporation and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.
(2) The corporation shall indemnify each person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in its favor by
reason of the fact that he is or was a
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director, officer, employee or agent of the corporation or of any division of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of the corporation or of any division of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of this
corporation and except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable for negligence or misconduct in the performance of his duty to this
corporation unless and only to the extent that the court in which such action or
suit was brought or in any other court having jurisdiction in the premises shall
determine upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which such court shall deem proper.
(3) To the extent that a director, officer, employee or agent of the
corporation or of any division of the corporation, or a person serving at the
request of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise has been
successful on the merits or otherwise in defense of any action, suit or
proceeding referred to in Section 1 or Section 2 of this Article, or in defense
of any claim, issue or matter therein, he shall be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection therewith.
(4) Any indemnification under Section 1 or Section 2 of this Article (unless
ordered by a court) shall be made by the corporation only as authorized in the
specific case upon a determination that indemnification of the director,
officer, employee or agent is proper in the circumstances because he has met the
applicable standard of conduct set forth in Section 1 or Section 2. Such
determination shall be made (i) by the board of directors by a majority vote of
a quorum consisting of directors who were not parties to such action, suit or
proceeding, or (ii) if such a quorum is not obtainable or even if obtainable a
quorum of disinterested directors so directs, by independent legal counsel in a
written opinion to the corporation or (iii) by a majority vote of the
shareholders.
(5) Expenses incurred in defending a civil or criminal action, suit or
proceeding may be paid by the corporation in advance of the final disposition of
such action, suit or proceeding as authorized by the board of directors in a
particular case upon receipt of an undertaking by or on behalf of the director,
officer, employee or agent to repay such amount unless it shall ultimately be
determined that he is entitled to be indemnified by the corporation as
authorized in this Article.
(6) Any indemnification pursuant to this Article shall not be deemed exclusive
of any other rights to which those seeking indemnification may be entitled and
shall continue as to a person who has ceased to be a director, officer, employee
or agent and shall inure to the
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benefit of heirs, executors and administrators of such a person.
(7) The corporation shall have the power to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of the
corporation or of any division of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against any
liability asserted against him and incurred by him in any such capacity or
arising out of his status as such, whether or not the corporation would have the
power to indemnify him against such liability under the provisions of this
Article.*
(8) This Article shall be effective with respect to any person who is a
director, officer, employee or agent of the corporation at any time on or after
June 8, 1973 with respect to any action, suit or proceeding pending on or after
that date, by reason of the fact that he is or was, before or after that date, a
director, officer, employee or agent of the corporation or is or was serving,
before or after that date, at the request of the corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise.
* Any such insurance may be procured from any insurance company designated by
the board of directors, including any insurance company in which the
corporation shall have an equity or other interest, through stock ownership
or otherwise.
ARTICLE IX
Limitation of Liability of Directors
The personal liability of directors of the corporation for monetary damages
shall be eliminated to the fullest extent permissible under Hawaii law,
including, without limitation, to the fullest extent permissible under Section
415-48.5 of the Hawaii Revised Statutes, as amended from time to time. No repeal
or amendment of this Article directly or by adoption of an inconsistent
provision of the Articles of Association or these by-laws will be effective with
respect to the liability of a director for acts or omissions occurring prior to
such repeal or amendment.
ARTICLE X
Amendment of By-Laws
These by-laws may be amended, altered, or repealed and new by-laws may be
adopted by the affirmative vote of a majority of the members of the board of
directors of the corporation, subject to repeal or change by action of the
stockholders.
Notwithstanding anything contained in the preceding paragraph of this Article to
the contrary, the affirmative vote of the holders of two-thirds of the shares of
the corporation represented
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and having voting power at a stockholders meeting (provided that the vote also
constitutes a majority of the outstanding shares having voting power) shall be
required to alter, amend or repeal, or adopt any provision inconsistent with
Article IX of these by-laws relating to the limitation of directors or to alter,
amend or repeal this paragraph.
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EXHIBIT 10.6
DOLE FOOD COMPANY, INC.
1991 STOCK OPTION AND AWARD PLAN
(As amended through July 7, 1993)
I. DEFINITIONS.
1.1 Definitions.
(a) "Award" shall mean an Option, which may be designated as a Nonqualified
Stock Option or an Incentive Stock Option, a Stock Appreciation Right, a
Restricted Stock Award or Performance Share Award, in each case granted under
this Plan.
(b) "Award Agreement" shall mean a written agreement setting forth the terms
of an Award.
(c) "Award Date" shall mean the date upon which the Committee took the action
granting an Award or such later date as is prescribed by the Committee.
(d) "Award Period" shall mean the period beginning on an Award Date and ending
on the expiration date of such Award.
(e) "Beneficiary" shall mean the person, persons, trust or trusts entitled by
will or the laws of descent and distribution to receive the benefits specified
under this Plan in the event of a Participant's death.
(f) "Board" shall mean the Board of Directors of the Corporation.
(g) "Change in Control" shall be deemed to have occurred if (a) any "person"
(as such term is used in Sections 13(d) and 14(d) of the Exchange Act) becomes
the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Corporation representing 20% or
more of the combined voting power of the Corporation's then outstanding
securities, unless such person was, on the effective date of the Plan, such a
beneficial owner of securities representing 20% or more of such voting power; or
(b) during any period of two consecutive years, individuals who at the beginning
of such period constitute the Board cease for any reason to constitute at least
a majority thereof, unless the election, or the nomination for election by the
Corporation's stockholders, of each new Board member was approved by a vote of
at least three-fourths of the Board members then still in office who were Board
members at the beginning of such period.
(h) "Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time.
(i) "Commission" shall mean the Securities and Exchange Commission.
(j) "Committee" shall mean the Corporate Compensation and Benefits Committee
appointed by the Board and consisting of two or more Board members, each of
whom, during such time as one or more Participants may be subject to Section 16
of the Exchange Act, shall be a Disinterested Director.
(k) "Common Stock" shall mean the Common Stock of the Corporation.
(1) "Company" shall mean the Corporation and/or its Subsidiaries.
(m) "Corporation" shall mean Dole Food Company Inc., a Hawaii corporation, and
its successors.
(n) "Deferred Effective Date" shall mean September 1, 1994 or the expiration
of the Rule 16b transition period, whichever is later, unless the Corporate
Compensation and Benefits Committee of the Board of Directors of the Company
decides otherwise.
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(o) "Disinterested Director" shall mean a member of the Board who was not,
during the year prior to being appointed to the Committee, or during the period
of service as an administrator hereunder, granted or awarded equity securities
pursuant to the Plan or pursuant to any other plan of the Corporation or its
affiliates, except to the extent consistent with the disinterested plan
administration requirements under Rule 16b-3.
(p) "Eligible Employee" shall mean an officer or key employee of the Company.
(q) "Event" shall mean any of the following:
(1) Approval by the stockholders of the Corporation of the dissolution or
liquidation of the Corporation;
(2) Approval by the stockholders of the Corporation of an agreement to
merge or consolidate, or otherwise reorganize, with or into one or more
entities which are not Subsidiaries, as a result of which less than 50% of the
outstanding voting securities of the surviving or resulting entity are, or are
to be, owned by former stockholders of the Corporation;
(3) Approval by the stockholders of the Corporation of the sale of
substantially all of the Corporation's business and/or assets to a person or
entity which is not a Subsidiary; or
(4) A Change in Control.
(r) "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended
from time to time.
(s) "Fair Market Value" shall mean the closing price of the stock on the
Composite Tape, as published in the Western Edition of The Wall Street Journal,
of the principal national securities exchange on which the stock is so listed or
admitted to trade, on such date, or, if there is no trading of the stock on such
date, then the closing price of the stock as quoted on such Composite Tape on
the next preceding date on which there was trading in such shares; provided,
however, that if the stock is not listed or admitted to trade on a national
securities exchange, the Committee may designate such other exchange, market or
source of data as it deems appropriate for determining such value for Plan
purposes.
(t) "Incentive Stock Option" shall mean an Option which is designated as an
incentive stock option within the meaning of Section 422 of the Code, the award
of which contains such provisions as are necessary to comply with that section.
(u) "Nonqualified Stock Option" shall mean an Option which is designated as a
Nonqualified Stock Option.
(v) "Option" shall mean an option to purchase Common Stock under this Plan. An
Option shall be designated by the Committee as a Nonqualified Stock Option or an
Incentive Stock Option.
(w) "Participant" shall mean an Eligible Employee who has been granted an
Award.
(x) "Performance Share Award" shall mean an award of shares of Common Stock,
issuance of which is contingent upon attainment of performance objectives
specified by the Committee.
(y) "Personal Representative" shall mean the person or persons who, upon the
disability or incompetence of a Participant, shall have acquired on behalf of
the Participant, by legal proceeding or otherwise, the power to exercise the
rights and receive the benefits specified in this Plan.
(z) "Plan" shall mean the Dole Food Company, Inc. 1991 Stock Option and Award
Plan.
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(aa) "QDRO" shall mean an order requiring the transfer of an Award or portion
thereof pursuant to a state domestic relations law to the spouse, former spouse,
child or other dependent of a Participant. Such order must be in a form
substantially identical to a qualified domestic relations order as defined by
Code or Title I of the Employee Retirement Income Security Act of 1974, as
amended.
(bb) "Restricted Stock" shall mean those shares of Common Stock issued
pursuant to a Restricted Stock Award which are subject to the restrictions set
forth in the related Award Agreement.
(cc) "Restricted Stock Award" shall mean an award of a fixed number of shares
of Common Stock to a Participant subject, however, to payment of such
consideration, if any, and such forfeiture provisions, as are set forth in the
Award Agreement.
(dd) "Retirement" shall mean retirement from active service as an employee or
officer of the Company on or after attaining age 55 with ten or more years of
service or age 65.
(ee) "Rule 16b-3" shall mean Rule 16b-3 promulgated by the Commission pursuant
to the Exchange Act in effect (a) prior to May 1, 1991 during the period prior
to the Deferred Effective Date and (b) on or after May 1, 1991 during the period
on and after the Deferred Effective Date.
(ff) "Securities Act" shall mean the Securities Act of 1933, as amended from
time to time.
(gg) "Stock Appreciation Right" shall mean a right to receive a number of
shares of Common Stock or an amount of cash, or a combination of shares and
cash, determined as provided in Section 4.3.
(hh) "Subsidiary" shall mean any corporation or other entity a majority or
more of whose outstanding voting stock or voting power is beneficially owned
directly or indirectly by the Corporation.
(ii) "Total Disability" shall mean a "permanent and total disability" within
the meaning of Section 22(e)(3) of the Code.
II. THIS PLAN.
2.1 Purpose.
The purpose of this Plan is to promote the success of the Company and its
stockholders by providing a means to attract and retain key employees by
providing them long-term incentives to improve the financial performance of the
Company.
2.2 Administration.
(a) This Plan shall be administered by the Committee. Action of the Committee
with respect to the administration of this Plan shall be taken pursuant to a
majority vote or the written consent of a majority of its members. In the event
action by the Committee is taken by written consent, the action shall be deemed
to have been taken at the time specified in the consent or, if none is
specified, at the time of the last signature. The Committee may delegate
administrative functions to individuals who are officers or employees of the
Company.
(b) Subject to the express provisions of this Plan, the Committee shall have
the authority to construe and interpret this Plan and any agreements defining
the rights and obligations of the Company and Participants under this Plan, to
further define the terms used in this Plan, to prescribe, amend and rescind
rules and regulations relating to the administration of this Plan, to determine
the duration and purposes of leaves of absence which may be granted to
Participants without constituting a termination of their employment for purposes
of this Plan and to make all other determinations necessary or advisable for the
administration of this Plan. The determinations of the Committee on the
foregoing matters shall be conclusive.
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(c) Any action taken by, or inaction of, the Corporation, any Subsidiary, the
Board or the Committee relating to this Plan shall be within the absolute
discretion of that entity or body and shall be conclusive and binding upon all
persons. No member of the Board or Committee, or officer of the Corporation or
any Subsidiary, shall be liable for any such action or inaction of the entity or
body, or of another person or, except in circumstances involving bad faith, of
himself or herself. Subject only to compliance with the express provisions
hereof, the Board and Committee may act in their absolute discretion in matters
related to this Plan.
(d) Subject to the requirements of Section l.l(j), the Board, at any time it
so desires, may increase or decrease the number of members of the Committee, may
remove from membership on the Committee all or any portion of its members, and
may appoint such person or persons as it desires to fill any vacancy existing on
the Committee, whether caused by removal, resignation or otherwise.
2.3 Participation.
Awards may be granted only to Eligible Employees. An Eligible Employee who has
been granted an Award may, if otherwise eligible, be granted additional Awards
if the Committee shall so determine. Members of the Board who are not officers
or employees of the Company, and members of the Committee, shall not be eligible
to receive Awards.
2.4 Stock Subject to this Plan.
The stock to be offered under this Plan shall be shares of the Corporation's
authorized but unissued Common Stock. The aggregate amount of Common Stock that
may be issued or transferred pursuant to Awards granted under this Plan shall
not exceed the sum of 2,500,000 shares subject to adjustment as set forth in
Section 7.2. If any Option and any related Stock Appreciation Right shall lapse
or terminate without having been exercised in full, or any Common Stock subject
to a Restricted Stock Award which does not vest or any Common Stock subject to a
Performance Share Award which has not been issued or become issuable, the
unpurchased shares subject thereto, to the extent consistent with Rule 16b-3
shall again be available for purposes of this Plan.
2.5 Grant of Awards.
Subject to the express provisions of this Plan, the Committee shall determine
those individuals who are Eligible Employees and to whom Awards under this Plan
shall be granted, the terms of Awards (which need not be identical) and the
number of shares of Common Stock subject to each Award. Each Award shall be
subject to the terms and conditions set forth in this Plan and such other terms
and conditions established by the Committee as are not inconsistent with the
purpose and provisions of this Plan. The grant of an Award is made on the Award
Date.
2.6 Exercise of Awards.
An Option or Stock Appreciation Right shall be deemed to be exercised when the
Corporation receives written notice of such exercise from the Participant,
together with payment of the purchase price made in accordance with Section 3.2,
except as may be necessary or advisable to be made following delivery of written
notice of exercise in accordance with Section 3.2. Notwithstanding any other
provision of this Plan, the Committee may impose, by rule and in Award
Agreements, such conditions upon the exercise of Awards (including, without
limitation, conditions limiting the time of exercise to specified periods)
necessary for those persons subject to the reporting and liability provisions of
Section 16 of the Exchange Act to avoid liability under Section 16 of the
Exchange Act or to secure the benefits otherwise available under any applicable
exemptive or other rule thereunder with respect to a "plan" or particular award
or action related thereto.
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III. OPTIONS.
3.1 Grants.
One or more Options may be granted to any Eligible Employee. Each Option so
granted shall be designated by the Committee as either a Nonqualified Stock
Option or an Incentive Stock Option.
3.2 Option Price.
(a) The purchase price per share of the Common Stock covered by each Option
shall be determined by the Committee, but in the case of Incentive Stock Options
shall not be less than 100% (110% in the case of a Participant who owns more
than 10% of the total combined voting power of all classes of stock of the
Company) of the Fair Market Value of the Common Stock on the date the Incentive
Stock Option is granted. The purchase price of any shares purchased shall be
paid in full at the time of each purchase in one or a combination of the
following methods: (i) in cash or by certified or cashier's check payable to the
order of the Corporation, or (ii) by shares of Common Stock of the Corporation
already owned by the Participant; provided, however, the Committee may in its
absolute discretion limit the Participant's ability to exercise an Option by
delivering shares, and any shares delivered which were initially acquired upon
exercise of a stock option must have been owned by the Participant at least six
months as of the date of delivery. Shares of Common Stock used to satisfy the
exercise price of an Option shall be valued at their Fair Market Value on the
date of exercise.
(b) In addition to the payment methods described in subsection (a), the Option
may provide that the Option can be exercised and payment made by delivering a
properly executed exercise notice together with irrevocable instructions to a
broker to promptly deliver to the Corporation the amount of sale proceeds
necessary to pay the exercise price and, unless otherwise allowed by the
Committee, any applicable tax withholding under Section 7.6. The Corporation
shall not be obligated to deliver certificates for the shares unless and until
it receives full payment of the exercise price therefor.
3.3 Option Period.
Each Option and all rights or obligations thereunder shall expire on such date
as shall be determined by the Committee, but not later than 10 years after the
Award Date, and shall be subject to earlier termination as hereinafter provided.
3.4 Exercise of Options.
Except as otherwise provided in Sections 7.3 and 7.4, an Option may become
exercisable, in whole or in part, on the date or dates specified in the Award
Agreement and thereafter shall remain exercisable until the expiration or
earlier termination of the Participant's Option. No Option shall be exercisable
for at least six months after the Award Date. The Committee may, at any time
after the granting of the Option and from time to time, increase the number of
shares purchasable at any time so long as the total number of shares subject to
the Option is not increased. No Option shall be exercisable except in respect of
whole shares, and fractional share interests shall be disregarded. Not less than
100 shares of Common Stock may be purchased at one time unless the number
purchased is the total number at the time available for purchase under the terms
of the Option.
3.5 Limitations on Grant of lncentive Stock Options.
(a) To the extent that the aggregate Fair Market Value of stock with respect
to which incentive stock options first exercisable by a Participant in any
calendar year exceeds $100,000, taking into account both Common Stock subject to
Incentive Stock Options under this Plan and stock subject to incentive stock
option-under all other plans of the Company, such options shall be treated as
nonqualified stock options. For purposes of determining whether the $100,000
limit is exceeded, the Fair Market Value of stock subject to
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options shall be determined as of the date the options are awarded. In reducing
the number of options treated as incentive stock options to meet the $100,000
limit, the most recently granted options shall be reduced first. To the extent a
reduction of simultaneously granted options is necessary to meet the $100,000
limit, the Corporation may, in the manner and to the extent permitted by law,
designate which shares of Common Stock are to be treated as shares acquired
pursuant to the exercise of an Incentive Stock Option under this Plan.
(b) There shall be imposed in any Award Agreement relating to Incentive Stock
Options such terms and conditions as are required in order that the Option be an
"incentive stock option" as that term is defined in Section 422 of the Code.
(c) No Incentive Stock Option may be granted to any person who, at the time
the Incentive Stock Option is granted, owns shares of outstanding Common Stock
possessing more than 10% of the total combined voting power of all classes of
stock of the Company, unless the exercise price of such Option is at least 110%
of the Fair Market Value of the stock subject to the Option and such Option by
its terms is not exercisable after the expiration of five years from the date
such Option is granted.
IV. STOCK APPRECIATION RIGHTS.
4.1 Grants.
In its discretion, the Committee may grant Stock Appreciation Rights
concurrently with the grant of Options on such terms as set forth by the
Committee in the Award Agreement for such Option. A Stock Appreciation Right
shall extend to all or a portion of the shares covered by the related Option. A
Stock Appreciation Right shall entitle the Participant who holds the related
Option, upon exercise of the Stock Appreciation Right and surrender of the
related Option, or portion thereof, to the extent the Stock Appreciation Right
and related Option each were previously unexercised, to receive payment of an
amount determined pursuant to Section 4.3. Any Stock Appreciation Right granted
in connection with an Incentive Stock Option shall contain such terms as may be
required to comply with the provisions of Section 422 of the Code and the
regulations promulgated thereunder.
4.2 Exercise of Stock Appreciation Rights.
(a) A Stock Appreciation Right shall be exercisable only at such time or
times, and to the extent, that the related Option shall be exercisable and only
when the Fair Market Value of the stock subject to the related Option exceeds
the Option price of the related Option.
(b) In the event that a Stock Appreciation Right is exercised, the number of
shares of Common Stock subject to the related Option shall be charged against
the maximum amount of Common Stock that may be issued or transferred pursuant to
Awards under this Plan. The number of shares subject to the Stock Appreciation
Right and the related Option of the Participant shall also be reduced by such
number of shares.
(c) If a Stock Appreciation Right extends to less than all the shares covered
by the related Option and if a portion of the related Option is thereafter
exercised, the number of shares subject to the unexercised Stock Appreciation
Right shall be reduced only if and to the extent that the remaining number of
shares covered by such related Option is less than the remaining number of
shares subject to such Stock Appreciation Right.
4.3 Payment.
(a) Upon exercise of a Stock Appreciation Right and surrender of an
exercisable portion of the related Option, the Participant shall be entitled to
receive payment of an amount determined by multiplying:
(i) the difference obtained by subtracting the Option price per share of
Common Stock under the related Option from the Fair Market Value of a share of
Common Stock on the date of exercise of the Stock Appreciation Right, by
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(ii) the number of shares with respect to which the Stock Appreciation
Right shall have been exercised.
(b) The Committee, in its sole discretion, may provide for payment upon
exercise under subsection (a) above to be solely in cash, solely in shares of
Common Stock (valued at Fair Market Value on the date of exercise of the Stock
Appreciation Right), or partly in such shares and partly in cash, or may leave
the election of same to the Participant, subject to any applicable legal
requirements and, in the case of Participants subject to Section 16 of the
Exchange Act, the limitations under Rule 16b-3, if applicable. In any event,
cash shall be paid in lieu of fractional shares. Absent a determination to the
contrary by the Committee, all Stock Appreciation Rights shall be settled in
cash as soon as practical after exercise. The exercise price for the Stock
Appreciation Right shall be the exercise price of the related Option.
Notwithstanding the foregoing, the Committee may, in the Award Agreement,
determine the specific form of payment or the specified amount of cash or stock
or combination thereof which may be delivered upon exercise of a Stock
Appreciation Right.
V. RESTRICTED STOCK AWARDS.
5.1 Grants.
Subject to Section 2.4, the Committee may, in its discretion, grant one or
more Restricted Stock Awards to any Eligible Employee. Each Restricted Stock
Award Agreement shall specify the number of shares of Common Stock to be issued
to the Participant, the date of such issuance, the price, if any, to be paid for
such shares by the Participant and the restrictions imposed on such shares,
which restrictions shall not terminate earlier than one year after the Award
Date.
5.2 Restrictions.
(a) Shares of Common Stock included in Restricted Stock Awards may not be
sold, assigned, transferred, pledged or otherwise disposed of or encumbered,
either voluntarily or involuntarily, until such shares have vested.
(b) Participants receiving Restricted Stock shall not be entitled to dividend
or voting rights for the shares until they are vested.
(c) In the event that the Participant shall have paid cash in connection with
the Restricted Stock Award, the Award Agreement shall specify whether and to
what extent such cash shall be returned upon a forfeiture (with or without an
earnings factor).
VI. PERFORMANCE SHARE AWARDS.
6.1 Grants.
The Committee may, in its discretion, grant Performance Share Awards to
Eligible Employees based upon: the appreciation in the Fair Market Value, book
value or other measure of value of the Common Stock; the performance of the
Company based on earnings or cash flow; or such other factors as the Committee
shall determine. In making such determinations, the Committee shall consider
(among other factors deemed relevant to the specific award type), the Eligible
Employee's contributions to the Company, responsibilities and other
compensation. A Performance Share Award Agreement shall specify the number of
shares of Common Stock subject to the Performance Share Award, the price, if
any, to be paid for such shares by the Participant and the required amount of
appreciation in the Fair Market Value, book value or other measure of value of
Common Stock, the required amount of change in the performance of the Company
based on earnings or cash flow of the Company or specified Subsidiary or other
factors and other conditions determined by the Committee upon which issuance to
the Participant shall be based, which issuance shall not be less than six months
after the Award Date. To the extent a Performance Share Award constitutes an
equity security (as this phrase is defined in Rule 16a-1 under the Exchange Act)
issued by the Corporation and is
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paid in shares of Common Stock or cash, the number of shares of Common Stock
subject to such Performance Share Award shall be charged against the maximum
amount of Common Stock that may be issued pursuant to Awards under this Plan.
VII. OTHER PROVISIONS.
7.1 Rights of Eligible Employees, Participants and Beneficiaries.
(a) Status as an Eligible Employee shall not be construed as a commitment that
any Award will be made under this Plan to an Eligible Employee or to Eligible
Employees generally.
(b) Nothing contained in this Plan (or in Award Agreements or in any other
documents related to this Plan or to Awards) shall confer upon any Eligible
Employee or Participant any right to continue in the employ of the Company or
constitute any contract or agreement of employment, or interfere in any way with
the right of the Company to reduce such person's compensation or other benefits
or to terminate the employment of such Eligible Employee or Participant, with or
without cause, but nothing contained in this Plan or any document related
thereto shall affect any other contractual right of any Eligible Employee or
Participant.
(c) Amounts payable pursuant to an Award shall be paid only to the Participant
or, in the event of the Participant's death, to the Participant's Beneficiary
or, in the event of the Participant's Total Disability, to the Participant's
Personal Representative or, if there is none, to the Participant. Other than by
will or the laws of descent and distribution, no Award nor benefit payable
under, nor interest in, this Plan or in any Award shall be subject in any manner
to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or
charge and any such attempted action shall be void and no such benefit or
interest shall be, in any manner, liable for, or subject to, debts, contracts,
liabilities, engagements or torts of any Eligible Employee, Participant or
Beneficiary. The Committee shall disregard any attempted transfer, assignment or
other alienation prohibited by the preceding sentence and shall pay or deliver
such cash or shares of Common Stock in accordance with the provisions of this
Plan.
(d) No Participant, Beneficiary or other person shall have any right, title or
interest in any fund or in any specific asset (including shares of Common Stock)
of the Company by reason of any Award granted hereunder. Neither the provisions
of this Plan (or of any documents related hereto), nor the creation or adoption
of this Plan, nor any action taken pursuant to the provisions of this Plan shall
create, or be construed to create, a trust of any kind or a fiduciary
relationship between the Company and any Participant, Beneficiary or other
person. To the extent that a Participant, Beneficiary or other person acquires a
right to receive an Award hereunder, such right shall be no greater than the
right of any unsecured general creditor of the Company.
7.2 Adjustments Upon Changes in Capitalization.
(a) If the outstanding shares of Common Stock are changed into or exchanged
for cash or a different number or kind of shares or securities of the
Corporation, or if additional shares or new or different securities are
distributed with respect to the outstanding shares of the Common Stock, through
a reorganization or merger in which the Corporation is the surviving entity, or
through a combination, consolidation, recapitalization, reclassification, stock
split, stock dividend, reverse stock split, stock consolidation, dividend or
distribution of property to the stockholders of the Corporation which in the
judgment of the Committee materially affects the value of the Common Stock or
other capital change or adjustment, an appropriate adjustment shall be made in
the number and kind of shares or other consideration that is subject to or may
be delivered under this Plan and pursuant to outstanding Awards. A corresponding
adjustment to the consideration payable with respect to Awards granted prior to
any such change and to the price, if any, paid in connection with Restricted
Stock Awards or Performance Share Awards shall also be made. Any such
adjustment, however, shall be made without change in the total payment, if any,
applicable to the portion of
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the Award not exercised but with a corresponding adjustment in the price for
each share. Corresponding adjustments shall be made with respect to Stock
Appreciation Rights based upon the adjustments made to the Options to which they
are related.
The foregoing adjustments to Awards granted to such Participants may be
suspended for so long as the Commission determines that such adjustments
adversely affect the ability of persons subject to the reporting and liability
provisions of Section 16 of the Exchange Act to avoid liability under Section 16
of the Exchange Act.
(b) In adjusting Awards to reflect the changes described in this Section 7.2,
or in determining that no such adjustment is necessary, the Board may rely upon
the advice of independent counsel and accountants of the Corporation, and the
determination of the Board shall be conclusive. No fractional shares of stock
shall be issued under this Plan on account of any such adjustment.
7.3 Termination of Employment.
(a) If the Participant's employment by the Company terminates for any reason
other than Retirement, Total Disability or death, the Participant shall have,
subject to earlier termination pursuant to or as contemplated by Section 3.3,
three months from the date of termination of employment to exercise any Option
to the extent it shall have become exercisable on the date of termination of
employment, and any Option not exercisable on that date shall terminate.
(b) If the Participant's employment by the Company terminates as a result of
Retirement, Total Disability or death, the Participant, Participant's Personal
Representative or his or her Beneficiary, as the case may be, shall have,
subject to earlier termination pursuant to or as contemplated by Section 3.3, 12
months from the date of termination of employment to exercise any Option to the
extent it shall have become exercisable by the date of termination of
employment, and any Option not exercisable on that date shall terminate.
(c) Each Stock Appreciation Right granted concurrently with an Option shall
have the same termination provisions and exercisability periods as the Option to
which it relates. The exercisability period of a Stock Appreciation Right shall
not exceed that provided in Section 3.3 or in the related Award Agreement and
the Stock Appreciation Right shall expire at the end of such exercisability
period.
(d) In the event of termination of employment with the Company for any reason,
(i) shares of Common Stock subject to the Participant's Restricted Stock Award
shall be forfeited in accordance with the provisions of the related Award
Agreement to the extent such shares have not become vested on that date; and
(ii) shares of Common Stock subject to the Participant's Performance Share Award
shall be forfeited in accordance with the provisions of the related Award
Agreement to the extent such shares have not been issued or become issuable on
that date.
(e) In the event of termination of employment with the Company for any reason,
other than discharge for cause, the Committee may, in its discretion, increase
the portion of the Participant's Award available to the Participant, or
Participant`s Beneficiary or Personal Representative, as the case may be, upon
such terms as the Committee shall determine.
(f) If an entity ceases to be a Subsidiary, such action shall be deemed for
purposes of this Section 7.3 to be a termination of employment of each employee
of that entity who does not continue as an employee of another entity within the
Company.
7.4 Acceleration of Awards.
Unless prior to an Event the Board determines that, upon its occurrence, there
shall be no acceleration of Awards or determines those Awards which shall be
accelerated and the extent to which they shall be
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accelerated, upon the occurrence of an Event (i) each Option and each related
Stock Appreciation Right shall become immediately exercisable to the full extent
theretofore not exercisable, (ii) Restricted Stock shall immediately vest free
of restrictions and (iii) the number of shares covered by each Performance Share
Award shall be issued to the Participant; provided, however, that Awards shall
not in any event be so accelerated to a date less than six months after the
Award Date. Acceleration of Awards shall comply with applicable regulatory
requirements, including without limitation Rule 16b-3 and Section 422 of the
Code. For purposes of this section only, the Board shall mean the Board as
constituted immediately prior to the Event.
7.5 Government Regulations.
This Plan, the granting of Awards under this Plan and the issuance or transfer
of shares of Common Stock (and/or the payment of money) pursuant thereto are
subject to all applicable federal and state laws, rules and regulations and to
such approvals by any regulatory or governmental agency (including without
limitation "no action" positions of the Commission) which may, in the opinion of
counsel for the Corporation, be necessary or advisable in connection therewith.
Without limiting the generality of the foregoing, no Awards may be granted under
this Plan, and no shares shall be issued by the Corporation, nor cash payments
made by the Corporation, pursuant to or in connection with any such Award,
unless and until, in each such case, all legal requirements applicable to the
issuance or payment have, in the opinion of counsel to the Corporation, been
complied with. In connection with any stock issuance or transfer, the person
acquiring the shares shall, if requested by the Corporation, give assurances
satisfactory to counsel to the Corporation in respect of such matters as the
Corporation may deem desirable to assure compliance with all applicable legal
requirements.
7.6 Tax Withholding.
Upon the disposition by a Participant or other person of shares of Common
Stock acquired pursuant to the exercise of an Incentive Stock Option prior to
satisfaction of the holding period requirements of Section 422 of the Code, or
upon the exercise of a Nonqualified Stock Option, the exercise of a Stock
Appreciation Right, the vesting of a Restricted Stock Award, or the payment of a
Performance Share Award, the Company shall have the right to (i) require such
Participant or such other person to pay by cash, or certified or cashier's check
payable to the Company, the amount of any taxes which the Company may be
required to withhold with respect to such transactions or (ii) deduct from
amounts paid in cash the amount of any taxes which the Company may be required
to withhold with respect to such cash amounts. The above notwithstanding, in any
case where a tax is required to be withheld in connection with the issuance or
transfer of shares of Common Stock under this Plan, the Participant may elect,
pursuant to such rules as the Committee may establish, to have the Company
reduce the number of such shares issued or transferred by the appropriate number
of shares to accomplish such withholding; provided, the Committee may impose
such conditions on the payment of any withholding obligation necessary in the
case of persons subject to the reporting and liability provisions of Section 16
of the Exchange Act to avoid liability under Section 16 of the Exchange Act or
to secure the benefits otherwise available under any applicable exemptive or
other rule thereunder with respect to a "plan" or particular award or action
related thereto.
7.7 Amendment, Termination and Suspension.
(a) The Board may, at any time, terminate or, from time to time, amend, modify
or suspend this Plan (or any part hereof), including without limitation,
amendments or modifications as may be necessary to avoid liability under Section
16 of the Exchange Act or to secure the benefits otherwise available under any
applicable exemptive or other rule thereunder with respect to a "plan" or
particular award or action related thereto. In addition, the Committee may, from
time to time, amend or modify any provision of this Plan except Section 7.4 and,
with the consent of the Participant, make such modifications of the terms and
conditions of such Participant's Award as it shall deem advisable. The
Committee, with the consent of the Participant, may also amend the terms of any
Option to provide that the purchase price under the Option of the shares
remaining subject to the original Award shall be reestablished at a price not
less than 100% of the Fair Market Value of the Common Stock on the effective
date of the amendment. No modification of any
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other term or provision of any Option which is amended in accordance with the
foregoing shall be required, although the Committee may, in its discretion, make
such further modifications of any such Option as are not inconsistent with or
prohibited by this Plan. No Awards may be granted during any suspension of this
Plan or after its termination.
(b) If an amendment would (i) materially increase the benefits accruing to
Participants under this Plan, (ii) materially increase the aggregate number of
securities which may be issued under this Plan, or (iii) materially modify the
requirements as to eligibility for participation in this Plan, the amendment
shall be approved by the Board and, to the extent then required by Section 424
of the Code or as may be necessary or desirable to avoid liability under Section
16 of the Exchange Act or to secure the benefits otherwise available under any
applicable exemptive or other rule thereunder with respect to a "plan" or
particular award or action related thereto or required by any other applicable
law, or any successor provision thereto, by the requisite number of
stockholders.
(c) In the case of Awards issued before the effective date of any amendment,
suspension or termination of this Plan, such amendment, suspension or
termination of this Plan shall not, without specific action of the Board or the
Committee and the consent of the Participant, in any way modify, amend, alter or
impair any rights or obligations under any Award previously granted under this
Plan.
7.8 Privileges of Stock Ownership; Nondistributive Intent.
A Participant shall not be entitled to the privilege of stock ownership as to
any shares of Common Stock not actually issued to him or her. Upon the issuance
and transfer of shares to the Participant, unless a registration statement is in
effect under the Securities Act and applicable state securities law relating to
such issued and transferred Common Stock and there is available for delivery a
prospectus meeting the requirements of Section 10 of the Securities Act, the
Common Stock may be issued and transferred to the Participant only if he or she
represents and warrants in writing to the Corporation that the shares are being
acquired for investment and not with a view to the resale or distribution
thereof. No shares shall be issued and transferred unless and until there shall
have been full compliance with any then applicable regulatory requirements
(including those of exchanges upon which any Common Stock of the Corporation may
be listed).
7.9 Effective Date of this Plan.
This Plan shall become effective on May 15, 1991, the date of adoption by the
Board, subject, however, to approval by the stockholders of the Corporation
within 12 months from the date of its adoption by the Board.
7.10 Term of this Plan.
Unless previously terminated by the Board, this Plan shall terminate at the
close of business on May 14, 2001, and no Awards shall be granted under it
thereafter, but such termination shall not affect any Award theretofore granted.
7.11 Governing Law.
This Plan and the documents evidencing Awards and all other related documents
shall be governed by, and construed in accordance with, the laws of the State of
California. If any provision shall be held by a court of competent jurisdiction
to be invalid and unenforceable, the remaining provisions of this Plan shall
continue to be fully effective.
7.12 Limitations as to Section 16 Persons.
(a) Notwithstanding any other provision of this Plan, any Award granted
hereunder to an Eligible Employee who is then subject to Section 16 of the
Exchange Act is subject to the following additional limitations:
(1) the Award may provide for the issuance of shares of Common Stock as a
stock bonus for no consideration other than services rendered; or
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(2) in the case of an Award under which shares of Common Stock are or in
the future may be issued for any other type of consideration, the amount of
such consideration either (i) shall be equal to the minimum amount (such as
the par value of such shares) required to be received by the Company to comply
with applicable state law, or (ii) shall be equal to or greater than 50% of
the Fair Market Value of the shares of Common Stock on the date of the Award;
provided in the case of Restricted Stock Awards, that the purchase price shall
equal the minimum amount described in clause (i) above (but not more than 10%
of the market value of the stock subject to the Award on the Award Date) and
any right to purchase such restricted stock must be exercised within sixty
(60) days of the Award Date.
(b) The foregoing limitations in this Section 7.12 on Awards granted to such
Participants shall be suspended upon the earlier of (i) confirmation by the
Commission either by regulation, official staff interpretation or no-action
letter issued to the Corporation that such limitations are not necessary to
secure the benefits otherwise available with respect to a "plan" or particular
award as the case may be, under Rule 16b-3 or (ii) the Deferred Effective Date.
7.13 Transfer and Other Restrictions under Rule 16b-3.
Any Option, similar right (including stock appreciation rights) or other Award
that would constitute a derivative security (as this phrase is defined in Rule
16a-1 under the Exchange Act and used in Rule 16b-3 thereunder) and that is
issued under this Plan shall not be transferable by the Participant other than
by will or the laws of descent and distribution or, after the Deferred Effective
Date, pursuant to a QDRO. The designation of a beneficiary by an officer or
director of the Corporation shall not be deemed to constitute a transfer under
this Plan. Any Option, similar right (including stock appreciation rights) or
other Award granted prior to the Deferred Effective Date under this Plan shall
be exercisable during the Participant's lifetime only by such Participant or by
such Participant's duly appointed guardian or Personal Representative.
It is the intent of the Corporation that the Plan satisfy and be interpreted
in a manner that in the case of Participants who are or may be subject to
Section 16 of the Exchange Act satisfied the applicable requirements of the
applicable Rule 16b-3 so that such persons will be entitled to the benefits of
such rule or other exemptive rules under Section 16 of the Exchange Act and will
not be subjected to avoidable liability thereunder in respect of benefits
intended by the Plan. If any provision of the Plan or of any Award would
frustrate or otherwise conflict with the intent expressed above, that provision,
to the extent possible, shall be interpreted and deemed amended as to avoid such
conflict, but to the extent of any remaining irreconcilable conflict with such
intent as to such persons in the circumstances, such provision shall be deemed
void.
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EXHIBIT 10.12
DOLE FOOD COMPANY, INC.
BOARD OF DIRECTORS DEFERRED COMPENSATION PLAN
ARTICLE 1
PURPOSE
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The purpose of this Dole Food Company, Inc. Board of Directors Deferred
Compensation Plan (the "Plan") is to provide a means whereby Dole Food Company,
Inc. (the "Company") may afford the opportunity to defer annual retained and
meeting fees on a pre-tax basis to non-employee members of the Board of
Directors (the "Board").
This plan is effective as of October 1, 1993. It shall have no application
to any persons who terminated their service on the Board prior to October 1,
1993, except as otherwise expressly determined by the Committee.
ARTICLE 2
DEFINITIONS AND CERTAIN PROVISIONS
----------------------------------
Annual Retainer. "Annual Retainer" means the Participant's annual retainer
---------------
for service as a Director prior to any such compensation being deferred under
this Plan or any plan or agreement of the Company whereby compensation for
service as a Director is deferred.
Beneficiary. "Beneficiary" means the person or persons
-----------
designated as such in accordance with Article 6.
Board. "Board" means the Board of Directors of the
-----
Company.
Committee. "Committee" means the Compensation and Benefits Committee of
---------
the Board appointed to administer the Plan pursuant to Article 3.
Declared Rate. "Declared Rate" means the interest rate for each Plan Year
-------------
established by the Company in accordance with Section 4.3(a).
Deferral Account. "Deferral Account" means the account maintained on the
----------------
books of account of the Company for each Participant pursuant to Section 4.3.
Enrollment Agreement. "Enrollment Agreement" means the election form which
--------------------
an eligible Director files with the Company to participate in the Plan.
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Meeting Fees. "Meeting Fees" means the Participant's regular meeting fees
------------
for attending meetings of the Board and Committees of the Board prior to any
such compensation being deferred under this Plan or any plan or agreement of the
Company whereby compensation for service as a Director is deferred.
Participant. "Participant" means a Director who has filed a completed and
-----------
executed Enrollment Agreement with the Committee and is participating in the
Plan in accordance with the provisions of Article 4.
Plan Year. "Plan Year" means the calendar year beginning January 1 and
---------
ending December 31, except the first Plan Year will be from October 1 to
December 31, 1993.
Retirement. "Retirement" means termination of service on the Board other
----------
than by reason of death.
Director. "Director"" means a member of the Board who is not also an
--------
employee of the Company.
ARTICLE 3
ADMINISTRATION OF THE PLAN
--------------------------
(a) The Committee is the plan administrator and shall supervise and
control the operation of this Plan in accordance with its terms.
(b) The Committee may appoint from its number such committees with such
powers as it shall determine; may authorize one or more of its number or its
agent to execute or deliver any instrument or make any payment on its behalf;
and may utilize counsel, employ agents and provide for such clerical and
accounting services as it may require in carrying out the provisions of the
Plan.
(c) The Committee shall hold meetings upon such notice, at such place or
places, and at such time or times as it may from time to time determine.
(d) The action of a majority of the members expressed from time to time by
a vote at a meeting or in writing without a meeting shall constitute the action
of the Committee and shall have the same effect for all purposes as if assented
to by all members of the Committee at the time in office.
2
<PAGE>
(e) No member of the Committee shall receive any compensation for his
services as such, and, except as required by law, no bond or other security
shall be required of him in such capacity in any jurisdiction. To the extent
permitted by applicable law, the Company, without charging such to the Plan,
shall indemnify each member of the Committee against any and all claims, losses,
damages, expenses (including reasonable attorney fees) and liabilities arising
from any action or failure to act, except when the same is finally judicially
determined to be due to the gross negligence or willful misconduct of such
member.
(f) Subject to the limitations of the Plan, the Committee from time to
time shall establish rules or regulations for the administration of the Plan and
the transaction of its business. The Committee shall interpret the Plan and
decide any and all matters arising hereunder (except such matters which the
Board from time to time may reserve to itself), including the right to remedy
possible ambiguities, inconsistencies or omissions. All interpretations,
determinations and decisions of the Committee or the Board with respect to
eligibility for benefits, the terms of the Plan or any other matter hereunder
shall be based on a reasonable interpretation of the Plan and shall be made by
the Committee or the Board, in its sole discretion. All such interpretations,
determinations and decisions of the Committee or the Board shall be final,
conclusive and binding on all parties affected thereby. No rule of strict
construction shall be applied against the Company, the Committee, the Board or
any other person in the interpretation of any terms of the Plan or any rule or
procedure established by the Committee.
(g) If a written request by a Participant or Beneficiary for the payment
of any benefits hereunder has been rejected by the Committee, then the Committee
shall within a reasonable period of time notify the Participant of such
rejection in writing setting forth the specific reasons for such rejection. Such
written explanation shall be written in a manner calculated to be understood by
the Participant. The Committee shall afford any Participant, whose claim for
benefits has been rejected, a reasonable opportunity for review of such claim.
3
<PAGE>
ARTICLE 4
PARTICIPATION
-------------
4.1 Election to Participate. A Director may elect to participate in the
-----------------------
Plan effective as of the first day of the Plan Year by filing a completed and
fully executed Enrollment Agreement with the Committee prior to the beginning of
such Plan Year. The Committee may also permit any person who first becomes a
Director on or after the first day of a Plan Year to enroll in the Plan within
30 days following his election as a Director. A separate Enrollment Agreement
must be completed for each Plan Year in which a Participant makes deferrals
under the Plan.
Pursuant to such Enrollment Agreement, the Participant shall irrevocably
elect the deferral option(s) in which he chooses to participate in accordance
with Section 4.2.
4.2 Deferral Options. The following deferral options will be available to
----------------
Directors under the Plan, subject to the limitations and conditions herein
stated and such other limitations and conditions as the Committee may impose,
from time to time, in its complete and sole discretion.
(a) Annual Retainer. A Director may elect to defer a specified percent of
---------------
his Annual Retainer to be earned the following year. A minimum deferral of fifty
percent (50%) of the Participant's Annual Retainer is required, and the maximum
deferral allowed is one hundred percent (100%) of the Participant's Annual
Retainer.
(b) Meeting Fees. A Director may elect to defer a specified percent of his
------------
Meeting Fees to be earned the following year. A minimum deferral of fifty
percent (50%) of the Participant's Meeting Fees is required, and the maximum
deferral allowed is one hundred percent (100%) of the Participant's Meeting
Fees.
A Director may elect deferral option (a) only, deferral option (b) only,
or deferral options (a) and (b).
4
<PAGE>
4.3 Deferral Accounts. The Committee shall establish and maintain separate
-----------------
Deferral Accounts for each Participant.
The amount by which a Participant's Annual Retainer or Meeting Fees are
deferred in accordance with Section 4.2 shall be credited to the Participant's
Deferral Account no later than the first day of the month following the month in
which such Annual Retainer and/or Meeting Fees would otherwise have been paid.
The Deferral Account shall be debited by the amount of any payments made to the
Participant or the Participant's Beneficiary with respect to such Deferral
Account pursuant to this Plan.
(a) Interest on Deferral Accounts. Prior to the beginning of each Plan
-----------------------------
Year a Declared Rate of interest will be established by the Company for that
Plan Year. Interest will be credited monthly to unpaid balances of Deferral
Accounts at one-twelfth of the annual Declared Rate, compounded annually. The
Declared Rate for any Plan Year applies both to the amounts initially deferred
for such Plan Year, and to the amounts previously credited to Deferral Accounts
for previous Plan Years.
4.4 Valuation of Accounts. The value of a Deferral Account as of any date
---------------------
shall equal the amounts theretofore credited to such account, plus the interest
deemed to be earned on such account in accordance with Section 4.3 through the
day preceding such date, less the amounts theretofore debited to such account.
4.5 Statement of Accounts. The Committee shall submit to each Participant,
---------------------
within one hundred twenty (120) days after the close of each Plan Year, a
statement in such form as the Committee deems desirable setting forth the
balance standing to the credit of each Participant in each of his Deferral
Accounts.
ARTICLE 5
BENEFITS
--------
5.1 Retirement Benefit. A Participant is eligible for a retirement benefit
------------------
under this Plan when he has satisfied the requirements for Retirement (as
defined in Article 2). The retirement benefit will be based on the total value
of the Participant's Deferral Account.
5
<PAGE>
The retirement benefit attributable to the amounts deferred for any Plan
Year will be paid at the time and in the manner which the Participant elects
pursuant to the Enrollment Agreement applicable to such Plan Year. Enrollment
Agreements are irrevocable.
The Enrollment Agreement shall provide that a Participant may elect to
receive his retirement benefit either:
(a) Commencing the first of the month following the Participant's
Retirement; or
(b) Commencing the first of the month and year the Participant elects in
his Enrollment Agreement, or the first of the month following his Retirement, if
later.
The Enrollment Agreement shall also provide that a Participant may further
elect to receive his retirement benefit in either a lump sum or annual
installments over 5, 10, or 15 years.
If the Participant elects to receive a lump sum payment, the amount will
be equal to the value of the Deferral Account as of the last day of the month
preceding the month of commencement of payment.
If the Participant elects to receive annual installments, interest will be
credited on the unpaid balance in the Deferral Account at the Declared Rate in
effect during each year of the payment period.
5.2 Survivor Benefit.
----------------
(a) If a Participant dies before commencement of payment of his retirement
benefit, the Company will pay to the Participant's Beneficiary the retirement
benefit the Participant would have received had the Participant terminated his
service on the Board on the day prior to such Participant's death, irrespective
of when the Participant had elected to receive payment of his retirement
benefit. Such payment shall be made in accordance with the method of payment
(i.e.. lump sum or installments) which the Participant had elected for payment
of his retirement benefit.
(b) If a Participant dies after the commencement of a payment of his
retirement benefit, the Company will pay to the Participant's Beneficiary the
remaining installments of any such benefit that would have been paid to the
Participant had the Participant survived.
6
<PAGE>
5.3 Emergency Benefit. In the event that the Committee, upon written
-----------------
petition of the Participant, determines, in its sole discretion, that the
Participant has suffered an unforeseeable financial emergency, the Company shall
pay to the Participant, as soon as practicable following such determination, an
amount up to the balance of his Deferral Account as necessary to meet the
emergency (the "Emergency Benefit"). For purposes of this Plan, an unforeseeable
financial emergency is an unexpected need for cash arising from an illness,
casualty loss, sudden financial reversal, or other such unforeseeable
occurrence. The amount of the benefits otherwise payable under the Plan shall
thereafter be adjusted to reflect the payment of the Emergency Benefit.
Applications for Emergency Benefits and the determinations thereon by the
Committee shall be in writing, and a Participant may be required to furnish
written proof of the financial emergency. Any participant who receives an
Emergency Benefit will be precluded from electing to make new deferrals under
the Plan until the next enrollment period which occurs at least 12 months
following payment of the Emergency Benefit.
5.4 Small Benefit. In the event the Committee determines that the balance
-------------
of a Participant's Deferral Account is less than $25,000 at the time of
commencement of payment of his retirement benefit, or the portion of the balance
of the Participant's Deferral Account payable to any Beneficiary is less than
$25,000 at the time of commencement of payment of a survivor benefit to such
Beneficiary, the Company may pay the benefit in the form of a lump sum payment,
notwithstanding any provision of this Article 5 to the contrary. Such lump sum
payment shall be equal to the balance of the Participant's Deferral Account or
the portion thereof payable to a Beneficiary.
5.5 Withholding: Employment Taxes. To the extent required by the law in
-----------------------------
effect at the time payments are made, the Company shall withhold from payments
made hereunder the minimum taxes required to be withheld by the federal or any
state or local government.
ARTICLE 6
BENEFICIARY DESIGNATION
-----------------------
Each Participant shall have the right, at any time to designate any person
or persons as Beneficiary or Beneficiaries to whom payments under this Plan
shall be made in the event of the Participant's death prior to complete
distribution to the Participant of the benefits due under the Plan. Each
Beneficiary designation shall become effective only when filed in writing with
the Committee on a form prescribed or accepted by the Committee.
7
<PAGE>
Any Participant shall have the right to designate a new Beneficiary at any
time by filing with the Committee a written request for such change, but any
such change shall become effective only upon receipt of such request by the
Committee. Upon receipt by the Committee of such request, the change shall
relate back to and take effect as of the date the Participant signs such
request, whether or not the Participant is living at the time the Committee
receives such request.
If there is no designated Beneficiary living at the death of the
Participant when any payment hereunder shall be payable to a Beneficiary, then
such payment shall be made as follows:
To such Participant's wife or husband, if living and if not living, to
such Participant's executors or administrators.
ARTICLE 7
ARBITRATION
-----------
7.1 (a) A Participant or, following the Participant's death, a Beneficiary
(collectively referred to in this section as "Claimant") may, if he desires,
submit any claim for payment under this Plan or dispute regarding the
interpretation of this Plan to arbitration. This right to select arbitration
shall be solely that of the Claimant, and the Claimant, may decide whether or
not to arbitrate in his discretion. The "right to select arbitration" does not
impose upon the Claimant a requirement to submit a dispute for arbitration. The
Claimant may, in lieu of arbitration, bring an action in appropriate civil
court. The Claimant retains the right to select arbitration, even if a civil
action (including, without limitation, an action for declatory relief) is
brought by the Company, or any other fiduciary of the Plan prior to the
commencement of arbitration. If arbitration is selected by the Claimant after a
civil action concerning the Claimant's dispute has been brought by a person
other than the Claimant, the Company, the Trustee and the Claimant shall take
such actions as are necessary or appropriate, including dismissal of the civil
action, so that the arbitration can be timely heard. Once an arbitration is
commenced, it may not be discontinued without the unanimous consent of all
parties to the arbitration. During the lifetime of the Participant only he can
use the arbitration procedure set forth in this section.
(b) Any claim for arbitration may be submitted as follows: if the Claimant
disagrees with an interpretation of this Plan by the Company, or any fiduciary
of the Plan, or disagrees with the calculation of his benefit under the Plan,
such claim may be filed in writing with an arbitrator of the Claimant's choice
who is selected by the method described in the next four sentences. The first
step of the selection shall consist of the Claimant submitting in writing a list
of five potential arbitrators to the Company, and the trustee of any grantor
trust which holds assets
8
<PAGE>
for the purpose of making benefit payments under this Plan ("Trustee"). Each of
the five arbitrators must be either (1) a member of the National Academy of
Arbitrators located in the state of the Claimant's principal resident or (2) a
retired California Superior Court or Appellate Court judge. Within one week
after receipt of the list, the Trustee and the Company shall jointly select one
of the five arbitrators as the arbitrator for the dispute in question. If the
Trustee and Company fail to select an arbitrator in a timely manner (including
failure to select an arbitrator by reason of disagreement between the Trustee
and Company as to the arbitrator to be selected), the Claimant shall then
designate one of the five arbitrators as the arbitrator of the dispute in
question.
(c) The arbitration hearing shall be held within seven days (or as soon
thereafter as possible) after the selection of the arbitrator. No continuance of
said hearing shall be allowed without the mutual consent of the Claimant, the
Trustee and the Company. Absence from or nonparticipation at the hearing by any
party shall not prevent the issuance of an award. Hearing procedures which will
expedite the hearing may be ordered at the arbitrator's discretion, and the
arbitrator may close the hearing in his sole discretion when he decides he has
heard sufficient evidence to satisfy issuance of an award.
(d) The arbitrator's award shall be rendered as expeditiously as possible
and in no event later than one week after the close of the hearing. In the event
the arbitrator finds that the Claimant is entitled to the benefits he claimed,
the arbitrator shall order the Company and/or the Trustee to pay such benefits,
in the amounts and at such time as the arbitrator determines. The obligation of
the Trustee to pay such benefits shall not, however, exceed the assets of the
trust, and the Company shall be jointly and severally liable for any amount
which the Trustee is ordered to pay. The award of the arbitrator shall be final
and binding upon the parties. The Company shall thereupon pay the Claimant
immediately the amount that the arbitrator orders to be paid in the manner
described in the award. The award may be enforced in any appropriate court as
soon as possible after its rendition. If any action is brought to confirm the
award, no appeal shall be taken by any party from any decision rendered in such
action.
(e) If the arbitrator determines either that the Claimant is entitled to
the claimed benefits or that the claim by the Claimant was made in good faith,
the arbitrator shall direct the Company to pay to the Claimant and Company
agrees to pay to the Claimant in accordance with such order, an amount equal to
the Claimant's expenses in pursuing the claim, including attorneys' fees.
9
<PAGE>
ARTICLE 8
AMENDMENT AND TERMINATION OF THE PLAN
-------------------------------------
8.1 Amendment. The Board may at any time amend the Plan in whole or in
---------
part; provided, however, that (1) no such amendment shall be effective to
decrease the benefits accrued by any Participant prior to the date of such
amendment; (2) no such amendment shall, without the written consent of a
Participant, delay the date on which payment of the Participant's benefit is to
be made; and (3) no amendment shall modify the procedure set forth under Section
8.2(b), except as may apply to a Participant who consents in writing to such
amendment. Written notice of any amendment shall be given to each Participant in
the Plan.
8.2 Termination.
-----------
(a) Company's right to Terminate. The Board may at any time
----------------------------
terminate the Plan.
(b) Payments Upon Termination. Upon any termination of the Plan
-------------------------
under this Section 8.2, the Participants will be deemed to have
voluntarily terminated their participation under the Plan as of the date
of such termination. Annual Retainer and Meeting Fees shall
prospectively cease to be deferred for the then Plan Year, and the
Company will pay to each Participant the value of each of the
Participant's deferral accounts, determined as if each had met the
requirements for Retirement on the date of such termination of the Plan,
at such times and pursuant to such terms and conditions as the Committee
in its sole discretion shall determine.
ARTICLE 9
MISCELLANEOUS
-------------
9.1 Unsecured General Creditor. Participants and their Beneficiaries,
--------------------------
heirs, successors, and assigns shall have no legal or equitable rights, claims,
or interests in any specific property or assets of the Company, nor shall they
be, as a result of this Plan, beneficiaries of, or have any rights, claims, or
interest in any life insurance policies, annuity contracts, or the proceeds
therefrom which may hereafter be owned or acquired by the Company("Policies").
Such Policies or assets of the Company shall not be held under any trust for the
benefit of Participants, their Beneficiaries, heirs, successors, or assigns, or
held in any way as collateral security for the fulfilling of the obligations of
the Company under this Plan. Any and all of the Company's assets and Policies,
shall be, and remain, the general, unpledged, unrestricted assets of the
Company. The Company's obligation under the Plan shall be merely that of any
10
<PAGE>
unfunded and unsecured promise of the Company to pay money in the future.
9.2 Obligations to Company. If a Participant becomes entitled to a
----------------------
distribution of benefits under the Plan, and if at such time the Participant has
outstanding any debt, obligation, or other liability representing an amount
owing to the Company, then the Company may offset such amount owed to it against
the amount of benefits otherwise distributable. Such determination shall be made
by the Committee.
9.3 Nonassignability. Neither a Participant nor any other person shall
----------------
have any right to commute, sell, assign, transfer, pledge, anticipate, mortgage
or otherwise encumber, hypothecate or convey in advance of actual receipt the
amounts, if any, payable, hereunder, or any part thereof, or interest therein
which are, and all rights to which are, expressly declared to be unassignable
and non-transferable. No part of the amounts payable shall, prior to actual
payment, be subject to seizure or sequestration for the payment of any debts,
judgments, alimony or separate maintenance owed by a Participant or any other
person, nor be transferable by operation of law in the event of a Participant's
or any other person's bankruptcy or insolvency.
9.4 Service as a Director Not Guaranteed. Nothing contained in this Plan
------------------------------------
nor any action taken hereunder shall be construed as a contract giving any
Director any right to be retained in service on the Board.
9.5 Protective Provisions. Each Participant shall cooperate with the
---------------------
Company by furnishing any and all information requested by the Company in order
to facilitate the payment of benefits hereunder.
9.6 Gender, Singular, & Plural. All pronouns and any variations thereof
--------------------------
shall be deemed to refer to the masculine, feminine, or neuter, as the identity
of the person or persons may require. As the context may require, the singular
may be read as the plural and the plural as the singular.
9.7 Captions. The captions of the articles, sections, and paragraphs of
--------
this Plan are for convenience only and shall not control or affect the meaning
or construction of any of its provisions.
9.8 Validity. In the event any provision of this Plan is held invalid,
--------
void, or unenforceable, the same shall not affect, in any respect, whatsoever,
the validity of any other provision of this Plan.
9.9 Notice. Any notice or filing required or permitted to be
------
given to the Committee under the Plan shall be sufficient if in writing and
11
<PAGE>
hand delivered, or sent by registered or certified mail, to the principal office
of the Company, directed to the attention of the Vice President--Human Resources
of the Company. Such notice shall be deemed given as of the date of delivery or,
if delivery is made by mail, as of the date shown on the postmark on the receipt
for registration or certification.
9.10 Applicable Law. This Plan shall be governed and construed in
--------------
accordance with the laws of the State of California.
12
<PAGE>
EXHIBIT 10.13
CASTLE & COOKE HOMES, INC.
1993 STOCK OPTION AND AWARD PLAN
(as amended, through September 1, 1993)
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
-----
<S> <C>
I. THE PLAN............................................. 1
1.1 Purpose......................................... 1
1.2 Administration and Authorization;
Power and Procedure............................. 1
1.3 Participation................................... 3
1.4 Shares Available for Awards..................... 3
1.5 Grant of Awards................................. 4
1.6 Award Period.................................... 4
1.7 Limitations on Exercise and Vesting of Awards.. 4
1.8 Acceptance of Notes to Finance Exercise......... 5
1.9 No Transferability.............................. 6
II. EMPLOYEE OPTIONS..................................... 6
2.1 Grants.......................................... 6
2.2 Option Price.................................... 6
2.3 Limitations on Grant and Terms of
Incentive Stock Options......................... 7
2.4 Limits on 10% Holders........................... 8
2.5 Option Repricing/Cancellation and
Regrant/Waiver of Restrictions.................. 8
III. STOCK APPRECIATION RIGHTS............................ 8
3.1 Grants.......................................... 8
3.2 Exercise of Stock Appreciation Rights........... 9
3.3 Payment......................................... 9
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
IV. RESTRICTED STOCK AWARDS.......................... 10
4.1 Grants..................................... 10
4.2 Restrictions............................... 10
4.3 Return to the Corporation.................. 11
V. PERFORMANCE SHARE AWARDS AND STOCK BONUSES....... 11
5.1 Grants of Performance Share Awards......... 11
5.2 Grants of Stock Bonuses.................... 11
5.3 Deferred Payments.......................... 12
VI. OTHER PROVISIONS................................. 12
6.1 Rights of Eligible Employees,
Participants.and Beneficiaries............. 12
6.2 Adjustments; Acceleration.................. 13
6.3 Termination of Employment; Termination
of Subsidiary Status....................... 14
6.4 Compliance with Laws....................... 15
6.5 Tax Withholding............................ 15
6.6 Plan Amendment, Termination and
Suspension................................. 16
6.7 Privileges of Stock Ownership.............. 16
6.8 Effective Date of this Plan................ 17
6.9 Term of this Plan.......................... 17
6.10 Governing Law/Construction/Severability.... 17
6.11 Captions................................... 18
6.12 Non-Exclusivity of Plan.................... 18
VII. DEFINITIONS......................................... 18
7.1 Definitions................................. 18
</TABLE>
ii
<PAGE>
CASTLE & COOKE HOMES, INC.
1993 STOCK OPTION AND AWARD PLAN
(as amended, through September 1, 1993)
I. THE PLAN.
1.1 Purpose
-------
The purpose of this Plan is to promote the success of the Company
and the interest of its stockholders by providing an additional means through
the grant of Awards to attract, motivate, retain and reward key employees by
providing them long-term incentives to improve the financial performance of the
Company. "Corporation" means Castle & Cooke Homes, Inc., a Hawaii corporation,
and its successors, and "Company" means the Corporation and its Subsidiaries,
collectively. These terms and other capitalized terms are defined in Article
VII.
1.2 Administration and Authorization; Power and Procedure.
-----------------------------------------------------
(a) Committee. This Plan shall be administered by and all
---------
Awards to Eligible Employees shall be authorized by the Committee. Action of
the Committee with respect to the administration of this Plan shall be taken
pursuant to a majority vote or by written consent of its members.
(b) Plan Awards; Interpretation; Powers of Committee. Subject
------------------------------------------------
to the express provisions of this Plan, the Committee shall have the authority,
and the determinations of the Committee shall be conclusive with respect:
(i) to determine the particular Eligible Employees who will
receive Awards;
(ii) to grant Awards to Eligible Employees, determine the price
at which securities will be offered or awarded and the amount of
securities to be offered or awarded to any of such persons, and
determine the other specific terms and conditions of such Awards
consistent with the express limits of this Plan, and establish the
installments (if any) in which such Awards shall become exercisable or
shall vest, or determine that no delayed exercisability or vesting is
required, and establish the events of termination or reversion of such
Awards;
1
<PAGE>
(iii) to approve the forms of Award Agreements (which need not be
identical either as to type of award or among Participants);
(iv) to construe and interpret this Plan and any agreements
defining the rights and obligations of the Company and Employee
Participants under this Plan, further define the terms used in this
Plan, and prescribe, amend and rescind rules and regulations relating
to the administration of this Plan;
(v) to cancel, modify, or waive the Corporation's rights with
respect to, or modify, discontinue, suspend, or terminate any or all
outstanding Awards held by Eligible Employees, subject to any required
consent under Section 6.6;
(vi) to accelerate or extend the exercisability or extend the
term of any or all such outstanding Awards within the maximum ten-year
term of Awards under Section 1.6; and
(vii) to make all other determinations and take such other
action as contemplated by this Plan or as may be necessary or
advisable for the administration of this Plan and the effectuation of
its purposes.
(c) Binding Determinations. Any action taken by, or inaction
----------------------
of, the Corporation, any Subsidiary, the Board or the Committee relating or
pursuant to this Plan shall be within the absolute discretion of that entity or
body and shall be conclusive and binding upon all persons. No member of the
Board or Committee, or officer of the Corporation or any Subsidiary, shall be
liable for any such action or inaction of the entity or body, of another person
or, except in circumstances involving bad faith, of himself or herself. Subject
only to compliance with the express provisions hereof, the Board and Committee
may act in their absolute discretion in matters within their authority related
to this Plan.
(d) Reliance on Experts. In making any determination or in
-------------------
taking or not taking any action under this Plan, the Committee or the Board, as
the case may be, may obtain and may rely upon the advice of experts, including
professional advisors to the Corporation. No director, officer or agent of the
Company shall be liable for any such action or determination taken or made or
omitted in good faith.
(e) Delegation. The Committee may delegate ministerial, non-
----------
discretionary functions to individuals who are officers or employees of the
Company.
2
<PAGE>
1.3 Participation.
-------------
Awards may be granted by the Committee only to those persons that
the Committee determines to be Eligible Employees. An Eligible Employee who has
been granted an Award may, if otherwise eligible, be granted additional Awards
if the Committee shall so determine. Non-Employee Directors shall not be
eligible to receive any Awards.
1.4 Shares Available for Awards.
----------------------------
Subject to the provisions of Section 6.2, the capital stock that
may be delivered under this Plan shall be shares of the Corporation's authorized
but unissued Common Stock. The shares may be delivered for any lawful
consideration.
(a) Number of Shares. The maximum number of shares of Common
----------------
Stock that may be delivered pursuant to Awards granted to Eligible Employees
under this Plan shall not exceed 900,000 shares, subject to adjustments
contemplated by Section 6.2.
(b) Calculation of Available Shares and Replenishment. Shares
--------------------------------------------------
subject to outstanding Awards of derivative securities (as defined in Rule 16a-
1(c) under the Exchange Act) shall be reserved for issuance. If any Option or
other right to acquire shares of Common Stock under or receive cash or shares in
respect of an Award shall expire or be cancelled or terminated without having
been exercised or paid in full, or any Common Stock subject to a Restricted
Stock Award or other Award shall not vest or be delivered, the unpurchased,
unvested or undelivered shares of Common Stock subject thereto shall again be
available for the purposes of this Plan, subject only to any applicable
limitations under Rule 16b-3; provided, however, that if the Corporation
------------------
withholds shares of Common Stock pursuant to Section 6.5, the number of shares
that would have been deliverable with respect to an Award but that are withheld
pursuant to the provisions of Section 6.5 may in effect not be issued, but the
aggregate number of shares issuable with respect to the applicable Award and
under this Plan shall be reduced by the number of shares withheld and such
shares shall not be available for additional Awards under this Plan. Subject
only to the preceding sentence, Section 1.4(c) and Section 6.10(c), (1) Awards
payable solely in cash, and Awards that do not constitute equity securities as
defined in Rule 16a-1(d), shall not reduce the number of shares available for
Awards under this Plan, (2) any imputed charges to the maximum number of shares
deliverable under this Plan (through reserves or otherwise) shall be reversed in
the case of Awards actually paid in cash, and (3), to the extent any shares were
previously reserved in respect of Awards payable in cash or shares, the number
of shares not delivered shall again be available for purposes of this Plan.
3
<PAGE>
(c) Provisions for Certain Cash Awards. The maximum number of Awards
-----------------------------------
payable solely in cash under the Plan that would constitute derivative
securities but for the exclusion in Rule 16a-1(c)(3)(i) under the Exchange Act
("Cash Only Awards"), including Cash Only Awards in the form of Performance
Share Awards or Stock Appreciation Rights, to the extent paid in cash, shall be
based upon the number of shares referenced for purpose of determining the value
or price of the Cash Only Award and shall not, together with the number of
shares theretofore delivered and subject to then outstanding Awards payable (or
deemed payable) in shares under this Plan, exceed 900,000, subject to
adjustments under Section 6.2. Cash Only Awards and other Awards payable in
cash or payable in cash or shares that are forfeited or for any reason are not
so paid under this Plan may again, subject to Section 6.10(c), be the subject of
and available for subsequent Awards under the Plan. Except as above provided
for tax withholding offsets under Section 6.5, if an Award may be settled only
in cash and satisfies the requirements for exemption under Rule 16b-3 or
exclusion from the definition of derivative security under Rule 16a-1(c)(3)(ii),
such Award need not be counted against the limits under Section 1.4(a), (b) or
(c).
1.5 Grant of Awards.
---------------
Subject to the express provisions of this Plan, the Committee shall
determine those individuals who are Eligible Employees, the number of shares of
Common Stock subject to each Award, the price (if any) to be paid for the shares
or the Award, the other terms of the Award, and, in the case of Performance
Share Awards, in addition to the matters addressed in Section 1.2(b), the
specific objectives, goals and performance criteria (such as an increase in
sales, market value, earnings or book value over a base period, the years of
service before vesting, the relevant job classification or level of
responsibility or other factors) that further define the terms of the
Performance Share Award. Each Award shall be evidenced by an Award Agreement
signed by the Corporation and, if required by the Committee, by the Participant.
Each Award shall be subject to the terms and conditions set forth in this Plan
and such other terms and conditions established by the Committee as are not
inconsistent with the specific provisions of this Plan.
1.6 Award Period.
------------
Each Award and all executory rights or obligations under the related
Award Agreement shall expire on such date (if any) as shall be determined by the
Committee, but in the case of Options or other rights to acquire Common Stock
not later than ten (10) years after the Award Date.
1.7 Limitations on Exercise and Vesting of Awards.
---------------------------------------------
(a) Provisions for Exercise. Unless the Committee otherwise
-----------------------
provides, no Award shall be exercisable or shall vest until at least six months
after the initial
4
<PAGE>
Award Date, and once exercisable an Award shall remain exercisable until the
expiration or earlier termination of the Award.
(b) Procedure. Any exercisable Award shall be deemed to be
---------
exercised when the Corporation receives written notice of such exercise from the
Participant, together with any required payment made in accordance with Section
2.2.
(c) Fractional Shares/Minimum Issue. Fractional share interests
-------------------------------
shall be disregarded, but may be accumulated. The Committee, however, may
determine in the case of Eligible Employees that cash, other securities, or
other property will be paid or transferred in lieu of any fractional share
interests. No fewer than 100 shares may be purchased on exercise of any Award
at one time unless the number purchased is the total number at the time
available for purchase under the Award.
1.8 Acceptance of Notes to Finance Exercise.
---------------------------------------
The Corporation may, with the Committee's approval, accept one or
more notes from any Eligible Employee in connection with the exercise or receipt
of any outstanding Award; provided that any such note shall be subject to the
following terms and conditions:
(a) The principal of the note shall not exceed the amount
required to be paid to the Corporation upon the exercise or receipt of one or
more Awards under this Plan and the note shall be delivered directly to the
Corporation in consideration of such exercise or receipt.
(b) The initial term of the note shall be determined by the
Committee; provided that the term of the note, including extensions, shall not
--------
exceed a period of 10 years.
(c) The note shall provide for full recourse to the Employee
Participant and shall bear interest at a rate determined by the Committee but
not less than the interest rate necessary to avoid the imputation of interest
under the Code.
(d) If the employment of the Employee Participant terminates,
the unpaid principal balance of the note shall become due and payable on the
10th business day after such termination; provided, however, that if a sale of
such shares would cause such Employee Participant to incur liability under
Section 16(b) of the Exchange Act, the unpaid balance shall become due and
payable on the 10th business day after the first day on which a sale of such
shares could have been made without incurring such liability assuming for these
purposes that there are no other transactions (or deemed transactions in
securities of this
5
<PAGE>
Corporation) by the Employee Participant subsequent to such termination.
(e) If required by the Committee or by applicable law, the note
shall be secured by a pledge of any shares or rights financed thereby in
compliance with applicable law.
(f) The terms, repayment provisions, and collateral release
provisions of the note and the pledge securing the note shall conform with
applicable rules and regulations of the Federal Reserve Board as then in effect.
1.9 No Transferability.
------------------
Awards may be exercised only by, and amounts payable or shares
issuable pursuant to an Award shall be paid only to (or registered only in the
name of), the Participant or, if the Participant has died, the Participant's
Beneficiary or, if the Participant has suffered a Disability, the Participant's
Personal Representative, if any, or if there is none, the Participant, or (to
the extent permitted by applicable law and Rule 16b-3) to a third party pursuant
to such conditions and procedures as the Committee may establish. Other than by
will or the laws of descent and distribution or other exception to transfer
restrictions under Rule 16b-3 (except to the extent not permitted in the case of
an Incentive Stock Option), no right or benefit under this Plan or any award,
including, without limitation, any Option, performance share or share of
Restricted Stock shall be transferrable by the Participant or shall be subject
in any manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance or charge (other than to the Corporation) and any such attempted
action shall be void. The Corporation shall disregard any attempt at transfer,
assignment or other alienation prohibited by the preceding sentences and shall
pay or deliver such cash or shares of Common Stock in accordance with the
provisions of this Plan. The designation of a Beneficiary for purposes hereof
shall not constitute a transfer for these purposes.
II. EMPLOYEE OPTIONS.
2.1 Grants.
------
One or more Options may be granted under this Article to any
Eligible Employee. Each Option granted shall be designated by the Committee in
the applicable Award Agreement as either a Nonqualified Stock Option or an
Incentive Stock Option.
2.2 Option Price.
------------
(a) Pricing Limits. The purchase price per share of the Common
-------------
Stock covered by each Option shall be determined by the Committee at the time of
the
6
<PAGE>
Award, but in the case of Incentive Stock Options shall not be less than 100%
(110% in the case of a Participant described in Section 2.4) of the Fair Market
Value of the Common Stock on the date of grant.
(b) Payment Provisions. The purchase price of any shares
------------------
purchased on exercise of an Option granted under this Article shall be paid in
full at the time of each purchase in one or a combination of the following
methods: (i) in cash or by electronic funds transfer; (ii) by certified or
cashier's check payable to the order of the Corporation; (iii) if authorized by
the Committee or specified in the applicable Award Agreement, by a promissory
note of the Participant consistent with the requirements of Section 1.8; or (iv)
by the delivery of shares of Common Stock of the Corporation already owned by
the Participant, provided, however, that the Committee may in its absolute
-------- -------
discretion limit the Participant's ability to exercise an Award by delivering
such shares, and any shares delivered which were initially acquired upon
exercise of a stock option must have been owned by the Participant at least six
months as of the date of delivery. Shares of Common Stock used to satisfy the
exercise price of an Option shall be valued at their Fair Market Value on the
date of exercise. In addition to the payment methods described above, the
Committee may provide that the Option can be exercised and payment made by
delivering a properly executed exercise notice together with irrevocable
instructions to a broker to promptly deliver to the Corporation the amount of
sale proceeds necessary to pay the exercise price and, unless otherwise allowed
by the Committee, any applicable tax withholding under Section 6.5. The
Corporation shall not be obligated to deliver certificates for the shares unless
and until it receives full payment of the exercise price therefor and any
related withholding obligations have been satisfied.
2.3 Limitations on Grant and Terms of Incentive Stock Options.
---------------------------------------------------------
(a) $100,000 Limit. To the extent that the aggregate Fair
--------------
Market Value of stock with respect to which incentive stock options first become
exercisable by a Participant in any calendar year exceeds $100,000, taking into
account both Common Stock subject to Incentive Stock Options under this Plan and
stock subject to incentive stock options under all other plans of the Company or
any parent corporation, such options shall be treated as nonqualified stock
options. For this purpose, the Fair Market Value of the stock subject to
options shall be determined as of the date the options were awarded. In
reducing the number of options treated as incentive stock options to meet the
$100,000 limit, the most recently granted options shall be reduced first. To
the extent a reduction of simultaneously granted options is necessary to meet
the $100,000 limit, the Committee may, in the manner and to the extent permitted
by law, designate which shares of Common Stock are to be treated as shares
acquired pursuant to the exercise of an Incentive Stock Option.
(b) Option Period. Each Option and all rights thereunder shall
-------------
expire no later than ten years after the Award Date.
7
<PAGE>
(c) Other Code Limits. There shall be imposed in any Award
-----------------
Agreement relating to Incentive Stock Options such terms and conditions as
from time to time are required in order that the Option be an "incentive stock
option" as that term is defined in Section 422 of the Code.
2.4 Limits on 10% Holders.
---------------------
No Incentive Stock Option may be granted to any person who, at
the time the Option is granted, owns (or is deemed to own under Section 424(d)
of the Code) shares of outstanding Common Stock possessing more than 10% of the
total combined voting power of all classes of stock of the Corporation, unless
the exercise price of such Option is at least 110% of the Fair Market Value of
the stock subject to the Option and such Option by its terms is not exercisable
after the expiration of five years from the date such Option is granted.
2.5 Option Repricing/Cancellation and Regrant/Waiver of
---------------------------------------------------
Restrictions.
------------
Subject to Section 1.4 and Section 6.6 and the specific
limitations on Awards contained in this Plan, the Committee from time to time
may authorize, generally or in specific cases only, for the benefit of any
Eligible Employee any adjustment in the exercise or purchase price, the vesting
schedule, the number of shares subject to, the restrictions upon or the term of,
an Award granted under this Article by cancellation of an outstanding Award and
a subsequent regranting of an Award, by amendment, by substitution of an
outstanding Award, by waiver or by other legally valid means. Such amendment or
other action may result among other changes in an exercise or purchase price
which is higher or lower than the exercise or purchase price of the original or
prior Award, provide for a greater or lesser number of shares subject to the
Award, or provide for a longer or shorter vesting or exercise period.
III. STOCK APPRECIATION RIGHTS.
3.1 Grants.
------
In its discretion, the Committee may grant to any Eligible
Employee Stock Appreciation Rights concurrently with the grant of Options on
such terms as set forth by the Committee in the Award Agreement for such Option.
Any Stock Appreciation Right granted in connection with an Incentive Stock
Option shall contain such terms as may be required to comply with the provisions
of Section 422 of the Code and the regulations promulgated thereunder.
8
<PAGE>
3.2 Exercise of Stock Appreciation Rights.
-------------------------------------
(a) Exercisability. Unless the Award Agreement or the Committee
--------------
otherwise provides, a Stock Appreciation Right shall be exercisable at such time
or times, and to the extent, that the related Option shall be exercisable and
only when the Fair Market Value of the stock subject to the related Option
exceeds the Option price of the related Option.
(b) Effect on Available Shares. To the extent that a Stock
--------------------------
Appreciation Right is exercised, the number of shares of Common Stock subject to
the related Option shall be charged against the maximum amount of Common Stock
that may be delivered pursuant to Awards under this Plan. The number of shares
subject to the Stock Appreciation Right and the related Option of the
Participant shall also be reduced by such number of shares.
(c) Proportionate Reduction. If a Stock Appreciation Right
------------------------
extends to less than all the shares covered by the related Option and if a
portion of the related Option is thereafter exercised, the number of shares
subject to the unexercised Stock Appreciation Right shall be reduced only if and
to the extent that the remaining number of shares covered by such related Option
is less than the remaining number of shares subject to such Stock Appreciation
Right.
3.3 Payment.
-------
(a) Amount. Unless the Committee otherwise provides, upon
------
exercise of a Stock Appreciation Right and surrender of an exercisable portion
of any related Option to the extent required by Section 3.2, the Participant
shall be entitled to receive subject to Section 6.5 payment of an amount
determined by multiplying
(i) the difference obtained by subtracting the exercise
price per share of Common Stock under the related Option from the Fair
Market Value of a share of Common Stock on the date of exercise of the
Stock Appreciation Right, by
(ii) the number of shares with respect to which the Stock
Appreciation Right shall have been exercised.
(b) Form of Payment. The Committee, in its sole discretion,
---------------
shall determine the form in which payment shall be made of the amount determined
under paragraph (a) above, either solely in cash, solely in shares of Common
Stock (valued at Fair Market Value on the date of exercise of the Stock
Appreciation Right), or partly in such
9
<PAGE>
shares and partly in cash, provided that the Committee shall have determined
that such exercise and payment are consistent with applicable law. If the
Committee permits the Participant to elect to receive cash or shares (or a
combination thereof) on such exercise, any such election shall be subject to
such conditions as the Committee may impose and, in the case of any Section 16
Person, any election to receive cash shall be subject to any applicable
limitations under Rule 16b-3.
IV. RESTRICTED STOCK AWARDS.
4.1 Grants.
------
The Committee may, in its discretion, grant one or more
Restricted Stock Awards to any Eligible Employee. Each Restricted Stock Award
Agreement shall specify the number of shares of Common Stock to be issued to the
Participant, the date of such issuance, the consideration for such shares (but
not less than the minimum lawful consideration under applicable state law) by
the Participant and the restrictions imposed on such shares and the conditions
of release or lapse of such restrictions. Such restrictions shall not lapse
earlier than one year after the Award Date, except to the extent the Committee
may otherwise provide. Stock certificates evidencing shares of Restricted Stock
pending the lapse of the restrictions ("Restricted Shares") shall bear a legend
making the appropriate reference to the restrictions imposed hereunder and shall
be held by the Corporation or by a third party designated by the Committee until
the restrictions on such shares have vested in accordance with the provisions of
the Award and Section 1.7. Upon issuance of the Restricted Stock Award, the
Participant may be required to provide such further assurance and documents as
the Committee may require to enforce the restrictions.
4.2 Restrictions.
------------
(a) Pre-Vesting Restraints. Except as provided in Section 4.1
----------------------
and 1.9, restricted shares comprising any Restricted Stock Award may not be
sold, assigned, transferred, pledges or otherwise disposed of or encumbered,
either voluntarily or involuntarily, until such shares have vested.
(b) Dividend and Voting Rights. Unless otherwise provided in
--------------------------
the applicable Award Agreement, a Participant receiving a Restricted Stock Award
shall not be entitled to dividends for any of the shares (which may be retained
in a restricted account) until they have vested, but shall be entitled to vote
such shares prior to vesting.
(c) Cash Payments. If the Participant shall have paid cash in
-------------
connection with the Restricted Stock Award, the Award Agreement shall specify
whether and to what extent such cash shall be returned (with or without an
earnings factor) as to any
10
<PAGE>
restricted shares which cease to be eligible for vesting.
4.3 Return to the Corporation.
--------------------------
Unless the Committee otherwise expressly provides, shares of
Restricted Stock that are subject to restrictions at the time of termination of
employment or are subject to other conditions to vesting that have not been
satisfied by the time specified in the applicable Award Agreement shall not vest
and shall be returned to the Corporation in such manner and on such terms as the
Committee shall therein provide.
V. PERFORMANCE SHARE AWARDS AND STOCK BONUSES.
5.1 Grants of Performance Share Awards.
----------------------------------
The Committee may, in its discretion, grant Performance Share Awards
to Eligible Employees based upon such factors, which in the case of any Award to
a Section 16 Person shall include but not be limited to the contributions,
responsibilities and other compensation of the person as the Committee shall
deem relevant in light of the specific type and terms of the award. An Award
Agreement shall specify the maximum number of shares of Common Stock (if any)
subject to the Performance Share Award, the consideration (but not less than the
minimum lawful consideration) to be paid for any such shares as may be issuable
to the Participant, the duration of the Award and the conditions upon which
delivery of any shares or cash to the Participant shall be based. The amount of
cash or shares or other property that may be deliverable pursuant to such Award
shall be based upon the degree of attainment over a specified period (a
"performance cycle") as may be established by the Committee of such measure(s)
of the performance of the Company (or any part thereof) or the Participant as
may be established by the Committee. The Committee may provide for full or
partial credit, prior to completion of such performance cycle or the attainment
of the performance achievement specified in the Award, in the event of the
Participant's death, Retirement, or Total Disability, a Change in Control Event
or in such other circumstances as the Committee may determine.
5.2 Grants of Stock Bonuses.
-----------------------
The Committee may grant a Stock Bonus to any Eligible Employee to
reward exceptional or special services, contributions or achievements in the
manner and on such terms and conditions (including any restrictions on such
shares) as determined from time to time by the Committee. The number of shares
so awarded shall be determined by the Committee. The Award may be granted
independently or in lieu of a cash bonus.
11
<PAGE>
5.3 Deferred Payments.
-----------------
The Committee may authorize for the benefit of any Eligible Employee
the deferral of any payment of cash or shares that may become due or of cash
otherwise payable under this Plan, and provide for accreted benefits thereon
based upon such deferral, at the election or at the request of such Participant,
subject to the other terms of this Plan. Such deferral shall be subject to such
further conditions, restrictions or requirements as the Committee may impose,
subject to any then vested rights of Participants.
VI. OTHER PROVISIONS.
6.1 Rights of Eligible Employees, Participants and Beneficiaries.
------------------------------------------------------------
(a) Employment Status. Status as an Eligible Employee shall not
-----------------
be construed as a commitment that any Award will be made under this Plan to an
Eligible Employee or to Eligible Employees generally.
(b) No Employment Contract. Nothing contained in this Plan (or
----------------------
in any other documents related to this Plan or to any Award) shall confer upon
any Eligible Employee or other Participant any right to continue in the employ
or other service of the Company or constitute any contract or agreement of
employment or other service, nor shall interfere in any way with the right of
the Company to change such person's compensation or other benefits or to
terminate the employment of such person, with or without cause, but nothing
contained in this Plan or any document related hereto shall adversely affect any
independent contractual right of such person without his or her consent thereto.
(c) Plan Not Funded. Awards payable under this Plan shall be
---------------
payable in shares or from the general assets of the Corporation, and (except as
provided in Section 1.4(b)) no special or separate reserve, fund or deposit
shall be made to assure payment of such Awards. No Participant, Beneficiary or
other person shall have any right, title or interest in any fund or in any
specific asset (including shares of Common Stock, except as expressly otherwise
provided) of the Company by reason of any Award hereunder. Neither the
provisions of this Plan (or of any related documents), nor the creation or
adoption of this Plan, nor any action taken pursuant to the provisions of this
Plan shall create, or be construed to create, a trust of any kind or a fiduciary
relationship between the Company and any Participant, Beneficiary or other
person. To the extent that a Participant, Beneficiary or other person acquires
a right to receive payment pursuant to any Award hereunder, such right shall be
no greater than the right of any unsecured general creditor of the Company.
12
<PAGE>
6.2 Adjustments; Acceleration.
-------------------------
(a) Adjustments. If the outstanding shares of Common Stock are
-----------
changed into or exchanged for cash, other property or a different number or kind
of shares or securities of the Corporation, or if additional shares or new or
different securities are distributed with respect to the outstanding shares of
the Common Stock, through a reorganization or merger in which the Corporation is
the surviving entity, or through a combination, consolidation, recapitalization,
reclassification, stock split, stock dividend, reverse stock split, stock
consolidation, dividend or distribution of cash or property to the shareholders
of the Corporation, or if there shall occur any other extraordinary corporate
transaction or event in respect of the Common Stock or a sale of substantially
all the assets of the Corporation as an entirety which in the judgment of the
Committee materially affects the Common Stock, then the Committee shall, in
such manner and to such extent (if any) as it deems appropriate and equitable,
(a) proportionately adjust any or all of (1) the number and kind of shares or
other consideration that is subject to or may be delivered under this Plan and
pursuant to outstanding Awards, (2) any performance standards appropriate to any
outstanding awards and/or (3) the consideration payable with respect to Awards
granted prior to any such change and the price, if any, paid in connection with
Restricted Stock Awards or Performance Share Awards; or (b) in the case of an
extraordinary dividend or other distribution, merger, reorganization,
consolidation, combination, sale of assets, split up, exchange or spin off, make
provision for a cash payment or for the substitution or exchange of (x) any or
all outstanding Awards or the cash, securities or property deliverable to the
holder of any or all outstanding Awards, for (y) cash, property and/or other
securities, based upon the distribution or consideration payable to holders of
the Common Stock of the Corporation upon or in respect of such event; provided,
---------
however, in each case, that with respect to awards of Incentive Stock Options,
- -------
no such adjustment shall be made which would cause this Plan to violate Section
422 or 424(a) of the Code or any successor provisions thereto. Corresponding
adjustments shall be made with respect to any Stock Appreciation Rights based
upon the adjustments made to the Options to which they are related.
(b) Acceleration of Awards Upon Change in Control. Unless prior
---------------------------------------------
to a Change in Control Event the Committee determines that, upon its occurrence,
there shall be no acceleration of benefits under Awards or determines that only
certain or limited benefits under Awards shall be accelerated and the extent to
which they shall be accelerated, and/or establishes a different time in respect
of such Event for such acceleration, then upon the occurrence of a Change in
Control Event (i) each Option and Stock Appreciation Right shall become
immediately exercisable, (ii) Restricted Stock shall immediately vest free of
restrictions, and (iii) the number of shares, cash or other property covered by
each Performance Share Award shall be issued to the Participant; provided,
however, that in no event shall any Award be accelerated as to any Section 16
Person to a date less than six months after the Award Date of such Award. The
Committee may override the limitations on acceleration in this Section 6.2 (b)
by express provision in the Award Agreement and may
13
<PAGE>
accord any Eligible Employee a right to refuse such acceleration in such
circumstances as the Committee may approve. Any acceleration of Awards shall
comply with any applicable regulatory requirements, including without limitation
Rule 16b-3 and Section 422 of the Code.
(c) Possible Early Termination of Accelerated Awards. If any
-------------------------------------------------
Option or other right to acquire Common Stock under this Plan has been fully
accelerated as permitted by Section 6.2(b) but is not exercised prior to (i) a
dissolution of the Corporation, or (ii) a reorganization event described in
Section 6.2(a) that the Corporation does not survive, or (iii) the consummation
of the reorganization event described in Section 6.2(a) that results in a Change
of Control approved by the Board, and no provision has been made for the
survival, substitution, exchange or other settlement of such Option or right,
such Option or right shall thereupon terminate.
6.3 Termination of Employment; Termination of Subsidiary Status.
------------------------------------------------------------
(a) If the Participant's employment by the Company terminates
for any reason other than Retirement, Total Disability or death, the Participant
shall have, subject to earlier termination pursuant to or as contemplated by
Section 1.6, three months from the date of termination of employment to exercise
any Option to the extent it shall have become exercisable on the date of
termination of employment, and any Option to the extent not exercisable on that
date shall terminate.
(b) If the Participant's employment by the Company terminates as
a result of Retirement, Total Disability or death, the Participant,
Participant's Personal Representative or his or her Beneficiary, as the case may
be, shall have, subject to earlier termination pursuant to or as contemplated by
Section 1.6, 12 months from the date of termination of employment to exercise
any Option to the extent it shall have become exercisable by the date of
termination of employment, and any Option to the extent not exercisable on that
date shall terminate.
(c) Each Stock Appreciation Right granted concurrently with an
Option shall have the same termination provisions and exercisability periods as
the Option to which it relates. The exercisability period of a Stock
Appreciation Right shall not exceed that provided in Section 1.6 or in the
related Award Agreement and the Stock Appreciation Right shall expire at the end
of such exercisability period.
(d) The Committee shall establish in respect of each other Award
granted hereunder the Participant's rights and benefits (if any) in the event of
a termination of employment and in so doing may make distinctions based upon the
cause of termination and the nature of the Award.
14
<PAGE>
(e) For purposes of this Plan and any Award hereunder, if an entity
ceases to be a Subsidiary, a termination of employment shall be deemed to have
occurred with respect to each employee of such Subsidiary who does not continue
as an employee of another entity owned, controlled by or under common control
with the Company.
(f) Notwithstanding the foregoing provisions, in the event of,
or in anticipation of, a termination of employment with the Company for any
reason, other than discharge for cause, the Committee may, in its discretion,
increase the portion of the Participant's Award available to the Participant, or
Participant's Beneficiary or Personal Representative, as the case may be, or,
subject to the provisions of Section 1.6, extend the exercisability period upon
such terms as the Committee shall determine.
6.4 Compliance With Laws.
--------------------
This Plan, the granting and vesting of Awards under this Plan and the
offer, issuance and delivery of shares of Common Stock and/or the payment of
money under this Plan or under Awards granted hereunder are subject to
compliance with all applicable federal and state laws, rules and regulations
(including but not limited to state and federal securities law and federal
margin requirements) and to such approvals by any listing, agency or any
regulatory or governmental authority as may, in the opinion of counsel for the
Corporation, be necessary or advisable in connection therewith. Any securities
delivered under this Plan shall be subject to such restrictions, and the person
acquiring such securities shall, if requested by the Corporation, provide such
assurances and representations to the Corporation as the Corporation may deem
necessary or desirable to assure compliance with all applicable legal
requirements.
6.5 Tax Withholding.
---------------
Upon any exercise, vesting, or payment of any Award or upon the
disposition of shares of Common Stock acquired pursuant to the exercise of an
Incentive Stock Option prior to satisfaction of the holding period requirements
of Section 422 of the Code, the Company shall have the right at its option to
(i) require the Participant (or Personal Representative or Beneficiary, as the
case may be) to pay or provide for payment of the amount of any taxes which the
Company may be required to withhold with respect to such transaction or (ii)
deduct from any amount payable the amount of any taxes which the Company may be
required to withhold with respect to such cash amount. In any case where a tax
is required to be withheld in connection with the delivery of shares of Common
Stock under this Plan, the Participant may elect, pursuant to such rules and
subject to such conditions as the Committee may establish, to have the
Corporation reduce the number of shares to be delivered by (or otherwise
reacquire) the appropriate number of shares valued at their then Fair Market
Value, to satisfy such withholding obligation; provided, the Committee may
impose such conditions on the payment of any withholding obligation necessary in
the
15
<PAGE>
case of persons subject to the reporting and liability provisions of Section 16
of the Exchange Act to avoid liability under Section 16 of the Exchange Act or
to secure the benefits otherwise available under any applicable exemptive or
other rule thereunder with respect to a "plan" or particular award or action
related thereto.
6.6 Plan Amendment, Termination and Suspension.
------------------------------------------
(a) Board or Committee Authorization. The Board may, at any
--------------------------------
time, terminate or, from time to time, amend, modify or suspend this Plan, in
whole or in part. No Awards may be granted during any suspension of this Plan
or after termination of this Plan, but the Committee shall retain jurisdiction
as to Awards then outstanding in accordance with the terms of this Plan.
(b) Shareholder Approval. To the extent then required by Rule
--------------------
16b-3 to secure benefits thereunder or to avoid liability under Section 16 of
the Exchange Act (and Rules thereunder) or required under Sections 422 and 424
of the Code or any other applicable law, or deemed necessary or advisable by the
Board, any amendment to this Plan shall be subject to shareholder approval.
(c) Amendments to Awards. Without limiting any other express
--------------------
authority of the Committee under but subject to the express limits of this Plan,
the Committee by agreement or resolution may waive conditions of or limitations
on Awards to Eligible Employees that the Committee in the prior exercise of its
discretion has imposed, without the consent of a Participant, and may make other
changes to the terms and conditions of Awards that do not affect, in any manner
materially adverse to the Employee Participant, his or her rights and benefits
under an Award.
(d) Limitations on Amendments to Plan and Awards. No amendment,
--------------------------------------------
suspension or termination of this Plan or change of or affecting any outstanding
Award shall, without written consent of the Participant, affect in any manner
materially adverse to the Participant any rights or benefits of the Participant
or obligations of the Corporation under any Award granted under this Plan prior
to the effective date of such change. Changes contemplated by Section 6.2 shall
not be deemed to constitute changes or amendments for purposes of this Section
6.6.
6.7 Privileges of Stock Ownership.
-----------------------------
Except as otherwise expressly authorized by the Committee or this
Plan, a Participant shall not be entitled to any privilege of stock ownership as
to any shares of Common Stock not actually delivered to and held of record by
him or her. No adjustment will be made for dividends or other rights as a
shareholders for which a record date is prior to such date of delivery.
16
<PAGE>
6.8 Effective Date of this Plan.
---------------------------
This Plan shall be effective as of February ________, 1993.
6.9 Term of this Plan.
-----------------
No Award shall be granted after February _______, 2003 (the
"termination date"). Unless otherwise expressly provided in this Plan or in an
applicable Award Agreement, any Award theretofore granted may extend beyond such
date, and all authority of the Committee with respect to Awards hereunder,
including its authority to amend an Award, shall continue during any suspension
of this Plan and in respect of outstanding Awards on such termination date.
6.10 Governing Law/Construction/Severability.
---------------------------------------
(a) Choice of Law. This Plan, the Awards, all documents
-------------
evidencing Awards and all other related documents shall be governed by, and
construed in accordance with the laws of the State of Hawaii.
(b) Severability. If any provision shall be held by a court of
------------
competent jurisdiction to be invalid and unenforceable, the remaining provisions
of this Plan shall continue in effect.
(c) Plan Construction. It is the intent of the Corporation that
-----------------
this Plan and Awards hereunder satisfy and be interpreted in a manner that
satisfies the applicable requirements of Rule 16b-3 so that such persons will be
entitled to the benefits of Rule 16b-3 or other exemptive rules under Section 16
of the Exchange Act and will not be subjected to avoidable liability thereunder.
If any provision of this Plan or of any Award or any prior action by the
Committee would otherwise frustrate or conflict with the intent expressed above,
that provision to the extent possible shall be interpreted and deemed amended so
as to avoid such conflict, but to the extent of any remaining irreconcilable
conflict with such intent as to Section 16. Persons in the circumstances, such
provision shall be deemed void, to the extent permitted by law and deemed
advisable by the Committee.
(d) Limitations Prior to September 1, 1993. Notwithstanding any
---------------------------------------
other provision of this Plan, any Award granted to a Section 16 Person prior to
the mandatory expiration of the Rule 16b transition period is subject to the
following additional limitations:
(1) the Award may provide for the issuance of shares of Common
Stock as a stock bonus for no consideration other than services rendered; and
17
<PAGE>
(2) in the event of an Award under which shares of Common Stock are
or in the future may be issued for any other type of consideration, the amount
of such consideration either (a) shall be equal to the minimum (such as the par
value of such shares) required to be received by the Corporation to comply with
applicable state law, or (b) shall be equal to or greater than 50% of the Fair
Market Value of the shares of Common Stock on the date of the Award; provided
--------
that in the case of Restricted Stock Awards, the amount shall equal the minimum
lawful amount (but not more than 10% of the market value of the stock subject to
the Award on the Award Date) and any right to purchase the Restricted Stock must
be exercised within 60 days of the Award Date.
6.11 Captions.
--------
Captions and headings are given to the sections and subsections of
this Plan solely as a convenience to facilitate reference. Such headings shall
not be deemed in any way material or relevant to the construction or
interpretation of this Plan or any provision thereof.
6.12 Non-Exclusivity of Plan.
-----------------------
Nothing in this Plan shall limit or be deemed to limit the authority
of the Board or the Committee to grant awards or authorize any other
compensation, with or without reference to the Common Stock, under any other
plan or authority.
VII. DEFINITIONS.
7.1 Definitions.
-----------
(a) "Award" shall mean an award of any Option, Stock
-------
Appreciation Right, Restricted Stock, Stock Bonus, Performance Share Award,
dividend equivalent or deferred payment right or other right or security that
would constitute a "derivative security" under Rule 16a-1(c) of the Exchange
Act, or any combination thereof, whether alternative or cumulative, authorized
by and granted under this Plan.
(b) "Award Agreement" shall mean any writing setting forth the
-----------------
terms of an Award that has been authorized by the Committee.
(c) "Award Date" shall mean the date upon which the Committee
------------
took the action granted an Award or such later date as the Committee designates
as the Award Date.
(d) "Award Period" shall mean the period beginning on an Award
--------------
Date and ending on the expiration date of such Award.
18
<PAGE>
(e) "Beneficiary" shall mean the person, persons, trust or
-------------
trusts entitled by will or the laws of descent and distribution to receive the
benefits specified in the Award Agreement and under this Plan in the event of a
Participant's death, and shall mean the Participant's executor or administrator
if no other Beneficiary is identified and able to act under the circumstances.
(f) "Board" shall mean the Board of Directors of the
-------
Corporation.
(g) "Change in Control Event" shall mean any of the following:
-------------------------
(1) Approval by the shareholders of the Corporation of the
dissolution or liquidation of the Corporation;
(2) Approval by the shareholders of the Corporation of an
agreement to merge or consolidate, or otherwise reorganize, with or
into one or more entities that are not Subsidiaries or other
affiliates, as a result of which less than 50% of the outstanding
voting securities of the surviving or resulting entity immediately
after the reorganization are, or will be, owned, directly or
indirectly, by shareholders of the Corporation immediately before such
reorganization (assuming for purposes of such determination that there
is no change in the record ownership of the Corporation's securities
from the record date for such approval until such reorganization but
including in such determination any securities of the other parties to
such reorganization held by affiliates of the Corporation);
(3) Approval by the shareholders of the Corporation of the sale
of substantially all of the Corporations' business and/or assets to a
person or entity which is not a Subsidiary or other affiliate; or
(4) Any "person" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act) (other than a person having beneficial
ownership of securities of the Corporation at the time of adoption of
this Plan or an affiliate of such person, or any successor, heir,
descendent or related party of or to any of them) becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Corporation representing
more than 50% of the combined voting power of the Corporation's then
outstanding securities entitled to then vote generally in the election
of directors of the Corporation.
(h) "Code" shall mean the Internal Revenue Code of 1986, as
------
amended from time to time.
19
<PAGE>
(i) "Commission" shall mean the Securities and Exchange
------------
Commission.
(j) "Committee" shall mean a committee appointed by the Board to
-----------
administer this Plan, which committee shall be comprised only of three (or,
effective September 1, 1993, two) or more directors or such greater number of
directors as may be required under applicable law, each of whom, during such
time as one or more Participants may be subject to Section 16 of the Exchange
Act, shall be Disinterested; provided that until such time as the Corporation
has a class of securities registered pursuant to Section 12 of the Exchange Act,
the Board as a whole shall comprise the Committee without regard to whether its
members are "Disinterested" .
(k) "Common Stock" shall mean the Common Stock of the
--------------
Corporation and such other securities or property as may become the subject of
Awards, or become subject to Awards, pursuant to an adjustment made under
Section 6.2 of this Plan.
(l) "Company" shall mean, collectively, the Corporation and its
---------
Subsidiaries.
(m) "Corporation" shall mean Castle & Cooke Homes, Inc., a
-------------
Hawaii corporation, and its successors.
(n) "Disinterested" shall mean disinterested within the meaning
---------------
of any applicable regulatory requirements, including Rule 16b-3.
(o) "Eligible Employee" shall mean an officer (whether or not a
-------------------
director) or key employee of the Company, or any Other Eligible Person, as
determined by the Committee in its discretion.
(p) "ERISA" shall mean the Employee Retirement Income Security
-------
Act of 1974, as amended.
(q) "Exchange Act" shall mean the Securities Exchange Act of
--------------
1934, as amended from time to time.
(r) "Fair Market Value" on any date shall mean the closing price
-------------------
of the stock on the Composite Tape, as published in the Western Edition of The
Wall Street Journal, of the principal national securities exchange on which the
stock is so listed or admitted to trade, on such date, or, if there is no
trading of the stock on such date, then the closing price of the stock as quoted
on such Composite Tape on the next preceding date on which there was trading in
such shares; provided, however, if the stock is not listed or admitted to trade
on a national securities exchange, the Committee may designate such other
20
<PAGE>
exchange, market or source of data as it deems appropriate for determining such
value for Plan purposes.
(s) "Incentive Stock Option" shall mean an Option which is
------------------------
designated as an incentive stock option within the meaning of Section 422 of the
Code and which contains such provisions as are necessary to comply with that
section.
(t) "Nonqualified Stock Option" shall mean an Option that is
---------------------------
designated as a Nonqualified Stock Option and shall include any Option intended
as an Incentive Stock Option that fails to meet the applicable legal
requirements thereof. Any Option granted hereunder that is not designated as an
incentive stock option shall be deemed to be designated a nonqualified stock
option under this Plan and not an incentive stock option under the Code.
(u) "Non-Employee Director" shall mean a member of the Board of
-----------------------
Directors of the Corporation who is not an officer or employee of the Company.
(v) "Option" shall mean an option to purchase Common Stock under
--------
this Plan. The Committee shall designate any Option granted to an Eligible
Employee as a Nonqualified Stock Option or an Incentive Stock Option.
(w) "Other Eligible Person" shall mean any other person
-----------------------
(including significant agents and consultants) who performs substantial services
for the Company of a nature similar to those performed by key employees, who is
selected to participate in this Plan by the Committee from time to time;
provided that in no event shall a Non-Employee Director be selected as an Other
Eligible Person.
(x) "Participant" shall mean an Eligible Employee who has been
-------------
granted an Award under this Plan.
(y) "Performance Share Award" shall mean an award of a right to
-----------------------
receive shares of Common Stock, the issuance of which is contingent upon
attainment of performance objectives specified by the Committee.
(z) "Personal Representative" shall mean the person or persons
-------------------------
who, upon the disability or incompetence of a Participant, shall have acquired
on behalf of the Participant, by legal proceeding or otherwise, the power to
exercise the rights or receive benefits under this Plan by virtue of having
become the legal representative of the Participant.
(aa) "Plan" shall mean this Castle & Cooke Homes, Inc. 1993 Stock
------
Option and Award Plan.
21
<PAGE>
(bb) "Restricted Stock" shall mean shares of Common Stock awarded to a
------------------
Participant subject to payment of such consideration, if any, and such
conditions on vesting (which may include, among others, the passage of time,
specified performance objectives or other factors) and such transfer and other
restrictions as are established in or pursuant to this Plan and the related
Award Agreement, for so long as such shares remain unvested under the terms of
the applicable Award Agreement.
(cc) "Retirement" shall mean retirement from active service as an
------------
employee or officer of the Company on or after attaining age 55 with ten or more
years of service or age 65.
(dd) "Rule 16b-3" shall mean Rule 16b-3 as promulgated by the
------------
Commission pursuant to the Exchange Act.
(ee) "Section 16 Person" shall mean a person subject to Section
-------------------
16(a) of the Exchange Act.
(ff) "Securities Act" shall mean the Securities Act of 1933, as
----------------
amended from time to time.
(gg) "Stock Appreciation Right" shall mean a right authorized
--------------------------
under this Plan to receive a number of shares of Common Stock or an amount of
cash, or a combination of shares and cash, the aggregate amount or value of
which is determined by reference to a change in the Fair Market Value of the
Common Stock.
(hh) "Stock Bonus" shall mean an Award of shares of Common Stock
-------------
for no consideration other than past services and without restriction other than
such transfer or other restrictions as the Committee may deem advisable to
assure compliance with law.
(ii) "Subsidiary" shall mean any corporation or other entity a
------------
majority of whose outstanding voting stock or voting power is beneficially owned
directly or indirectly by the Corporation.
(jj) "Total Disability" shall mean a "permanent and total
------------------
disability" within the meaning of Section 22(e)(3) of the Code and such other
disabilities, infirmities, afflictions or conditions as the Committee by rule
may include.
22
<PAGE>
EXHIBIT 10.14
CASTLE & COOKE HOMES, INC.
EXECUTIVE INCENTIVE PLAN
------------------------
This Castle & Cooke Homes, Inc. incentive plan is intended to better match
performance, short term and long term, and allow management to tie incentive
compensation to specific goals and objectives.
The Castle & Cooke Homes, Inc. plan is divided into three sections as follows:
1. Incentive Plan Objectives
2. Senior Operating Managers
3. Executive Incentive Plan
OBJECTIVES
The primary objective of the incentive plan is to better relate individual
performance to individual compensation. Six specific objectives of this
incentive compensation plan are as follows:
1. Better relate individual performance to individual compensation.
2. Expand the boundaries of the current program to better reward superior
performance and allow for management discretion in rewarding special
achievement.
3. Acknowledge differing business objectives between staff and operating
positions and reflect those differences in individualized incentive
reward systems.
4. Directly relate the individual goal setting process to individual
accountability for results and resultant incentive compensation.
5. Reflect differing objectives and business needs by group.
6. Incorporate a long-term business component in the program.
Separate programs of the incentive plan are needed to differentiate between
senior operating positions and other operating and staff/support functions. The
next two sections outline those programs.
The eligibility requirements are as follows:
1. Key management personnel who have significant impact.
2. Salary Grade 15 and above.
<PAGE>
3. Work at least three periods during year.
4. Full-time active employee on payment date.
SENIOR OPERATING MANAGERS INCENTIVE PLAN
The line/operating managers plan is focused on bottom line performance at the
level of the individual's responsibilities. This is most heavily weighted
towards short term financial goals but also includes strategic objectives aimed
at longer term business development. The three key factors emphasized in this
plan to determine individual incentive awards are: individual achievement of
goals, management discretion, and division performance (e.g., Castle & Cooke
Homes - Hawaii or Castle & Cooke Homes - Mainland in total).
Participation
- -------------
Eligibility will consist of only the top operating managers designated by the
Presidents (Hawaii and Mainland) of Castle & Cooke Homes, Inc. In future years
eligibility may be extended to other key operating managers with major
profit/loss or cost responsibility.
Plan Overview
- -------------
The plan is customized to recognize the specific role and basic objectives of
each position. The plan, and more specifically the measures, are determined at
the beginning of the period for each position by the President with input of
each individual in the plan and approval of the Chairman. The plan would
include specific quantifiable budget targets as well as other objectives which
are crucial to the long-term strength of the business.
1. Through the budget process, financial targets are established. Those
would differ somewhat by position. The major measurement would be EBIT,
but in certain cases the focus would be on other quantitative
measurements (such as project costs, product delivery timing, etc.).
Next, a quantitative target (e.g., EBIT of $12.3 M) is determined for
each measure. This would be based on the approved budgets of the group
or project.
2. To adequately focus the individual on actions which may not have an
impact on current period financial measures but are crucial to the long
term health of the project/group/division, additional goals or
objectives which are more qualitative are established. These are a
function of the strategic objectives established for the Division as a
whole and each Business Group through the budget process. (Note: If
financial performance fell below 75% of the objective/budget, any
incentive rewards for attaining those qualitative objectives would be
discretionary.)
2
<PAGE>
3. Next, by position, those financial and strategic goals are individually
weighted depending on the focus of the employee's position and overall
importance of the goal to the Division and Business Group's success. For
example, a Project Manager will have a higher weight assigned to a
financial goal (i.e., project EBIT goal - 90% versus strategic goals -
10%) than might a Group head who is also responsible for the overall
strategic management of the Business Group (i.e., division EBIT - 75%
versus strategic goals - 25%). In all instances, the emphasis or
majority weighting would be on financial rather than strategic
objectives.
4. Target incentive compensation levels by positions are determined by
grade. Within each Business Group, key managers are assigned an
Unadjusted Potential Incentive percent of base salary based on their
level of responsibility and impact on Business Group performance. This
percent corresponds to assigned salary grades as shown below:
<TABLE>
<CAPTION>
Unadjusted
Salary Grade Potential Incentive
------------ -------------------
<S> <C>
E-20 to E-17 40%
E-23 to E-21 35%
E-26 to E-24 30%
E-29 to E-27 25%
E-30 20%
15 to 17 15%
</TABLE>
The unadjusted potential incentive multiplied by annual salary equals
Individual Guideline Incentive. Each individual guideline incentive
is then adjusted based on the division performance adjustment shown in
5.b. below, to establish an Adjusted Guideline Incentive.
Meeting financial and other objectives would position the individual
to earn 100% of their target level compensation. For exceptional
performance for this small group, there would be a cap at a doubling
of salary.
5. This program takes into consideration the overall profitability of the
division as well as the need for groups and individuals to work
together as a team.
a. If either division (C&C Homes - Hawaii or C&C Homes - Mainland) is
unprofitable as a whole, all payments would be suspended for that
division.
3
<PAGE>
b. Payments would be adjusted by each division's performance in total.
<TABLE>
<CAPTION>
Division
Actual/Budget Adjustments
------------- -----------
<S> <C>
80% - 15%
100% -0-
120% + 10%
</TABLE>
The emphasis is on encouraging superior performance through
exceptional incentives. The plan has been constructed and
objectives/incentives payments will be developed to ensure incentives
are a fraction of the benefits to the Company and its shareholders.
6. Management discretion is the final incentive determinant. There is
---------------------
implicit management discretion in determining the degree to which
certain goals are achieved (i.e., those goals not entirely objectively
quantifiable). In addition, this final management discretion factor
allows top management to increase or decrease Adjusted Guideline
Incentive payments by up to + 20% in order to account for unusual
performance factors or business conditions not addressed in the
incentive system itself. Individual Guideline Incentive multiplied by
the management discretion factor equals the actual recommended
incentive payment.
The Chairman may adjust more or less than the 20% guideline. A
discretionary adjustment by the Chairman shall not be construed to be
a pattern or waiver of the usual rule.
At bonus review time, the Chairman will be presented with an Incentive Data
Sheet. The Incentive Data Sheet will indicate the specific business group
(i.e., Residential Projects - Hawaii or Residential Projects - Mainland), the
key individual and operating group goals and results, and the manager
recommending the incentive payment.
EXECUTIVE INCENTIVE PLAN
This plan is designed to incorporate a formal objective setting and monitoring
process into the program itself. This will permit a more direct link between
the two and reinforce the adherence to previously determined objectives.
Incentive Pool
- --------------
Each key manager is assigned an unadjusted potential incentive percent of base
salary based on his or her level of responsibility and impact on overall
performance. This percent corresponds to assigned salary grades as shown below:
4
<PAGE>
<TABLE>
<CAPTION>
Unadjusted
Salary Grade Potential Incentive
------------ -------------------
<S> <C>
E-20 to E-17 40%
E-23 to E-21 35%
E-26 to E-24 30%
E-29 to E-27 25%
E-30 20%
15 to 17 15%
</TABLE>
Each individual guideline incentive is adjusted based on performance, resulting
in an Adjusted Guideline Incentive as shown below. Threshold C&C Homes - Hawaii
or C&C Homes - Mainland performance is 75% of EBIT budget and is capped at 150%.
The sum of all Adjusted Guideline Incentives is the total incentive pool for the
plan. See example below. While individual payments may be higher or lower than
the Adjusted Guideline Incentive (as discussed in detail below), the total of
all incentive payments should not exceed the total Guideline Incentive Pool.
Castle & Cooke Homes, Inc.
--------------------------
<TABLE>
<CAPTION>
Unadjusted Adjusted
Potential Annual Performance Guideline
Employee Incentive X Salary X Adjustment Incentive
- -------- ---------- ------ ----------- ---------
<S> <C> <C> <C> <C>
A 15% $50,000 110% $ 8,250
B 20% 60,000 " 13,200
C 20% 65,000 " 14,300
D 30% 80,000 " 26,400
-------
Total Guideline Incentive Pool $62,150
</TABLE>
Incentive Awards to Individuals
- ----------------------------------
At the beginning of the year objectives for each individual are established
through an interactive process between the employee and senior management.
These goals will be specific and measurable and will relate to the key
objectives established by top management. Goals will be reviewed semi-annually
and will be revised as necessary to account for more short-term or time
sensitive objectives.
Once an Adjusted Guideline Incentive is established for each participant, the
recommended individual incentive award is determined based on both performance
against objectives and top management input as follows:
5
<PAGE>
a. Performance Against Objectives
------------------------------
75% of the individual recommended incentive award is based on
level of achievement on established goals and objectives.
Attainment of these goals is considered standard performance and
qualifies an individual for up to 100% of his or her target
incentive. Exceptional performance relative to these goals could
allow for up to 150% of an individual's unadjusted potential
incentive, subject to the total amount available in the Guideline
Incentive Pool. For example, a person who had a 15% potential
incentive and had achieved all his or her goals, could receive a
15% incentive for 75% of his or her individual recommended
incentive award. A person who had a 15% potential incentive and
exceptional performance could receive 16.9% incentive (15% x 150%
x 75%).
b. Top Management Input
--------------------
The remaining 25% of the individual recommended incentive award
is discretionary based on top management's view of performance on
factors such as team orientation, support toward others in the
organization and other criteria not specifically evaluated in the
individual's key objectives. For example, a person with a 15%
target and 100% performance could receive a 3.75% target
incentive for 25% of his or her individual recommended incentive
award (15% x 100% x 25%).
The final recommended incentive for each plan participant is the total of the
awards for (a) performance against objectives and (b) top management input. In
the situation above, the individual would receive a 20.65% award, subject to the
pool. Adjustments would be made to individual incentives if the total
individual recommendations exceeds the Guideline Incentive Pool.
Approvals of Proposed Incentive Awards
- --------------------------------------
At bonus review time, the Chairman will be presented with an Incentive Data
Sheet and addenda for the plan. The Incentive Data Sheet will indicate the key
individual and operating group goals and results, recommended individual
incentives and the total incentive pool and the names of managers recommending
the incentive payments.
6
<PAGE>
EXHIBIT 10.15
DOLE FOOD COMPANY, INC.
ANNUAL INCENTIVE PLAN FOR EXECUTIVE OFFICERS
SECTION 1. PURPOSE
The purposes of the Plan are (i) to compensate and reward the
Executive Officers/1/ of the Corporation on an individual basis with annual cash
Bonuses ("Bonuses") for the achievement of pre-established performance goals and
-------
(ii) to stimulate the efforts of such persons by giving them an opportunity to
receive Bonuses directly related to such performance. Maximum amounts payable
will be based upon the application of a formula that includes variables relative
to base salary levels and the degree of the attainment of the applicable
performance goals.
SECTION 2. TERM
Subject to Section 9, the Plan shall be effective as of January 2,
1994 (the "Effective Date") and shall be in effect with respect to each of the
--------------
five years ending December 26, 1998, unless earlier terminated by the
Corporation pursuant to Section 10.
SECTION 3. COVERAGE; ELIGIBLE PERSONS
Each Executive Officer serving as such in any of the positions set
forth in Section 4.1 or any equivalent position at any time during the
applicable Year for which a Bonus may be granted hereunder shall be eligible to
participate and may be a Participant in the Plan, subject to the provisions
hereof. The specific Participants shall be designated by the Committee at the
time performance goal targets are set or, in the case of a person becoming
eligible during a Year, within 30 days after such event. An Eligible Person not
selected to participate in the Plan for any Year may participate in another
annual cash incentive plan of the Corporation for such Year or be selected by
the Committee to participate in the Plan in other Years. An Eligible Person may
not participate concurrently in both the Plan and such other annual incentive
plan.
- ------------------
/1/ This and certain other terms used in the Plan are defined in
Section 13.
1
<PAGE>
SECTION 4. BASE SALARY FACTOR
4.1. Base Salary and Base Salary Factor. Subject to the terms
-----------------------------------
hereof, each Participant's Bonus, if any, shall be determined by reference to
the applicable multiplier (the "Base Salary Factor") of the Participant's base
------------------
salary ("Base Salary") for his or her position at the beginning of the
-----------
applicable year (or, if services commence during the year, in accordance with
the provisions of Section 7.5 and, if the Participant's eligible position
changes during the year, in accordance with the provisions of Section 4.2). The
initial Base Salary of each eligible position shall be his or her Base Salary as
of January 1, 1994 or any later date of appointment as an Eligible Person. The
Base Salary Factors are as follows:
Base Salary Factors
-------------------
Chairman and Chief Executive Officer 75%
Other Participants 50%
4.2. Base Salary Adjustments for Changes in Position. If a
-----------------------------------------------
Participant holds more than one eligible position during any Year, the product
of the Base Salary and the Base Salary Factor of such Participant for purposes
of the Plan for such year shall be computed by (a) multiplying (i) the Base
Salary Factor (as indicated in or pursuant to Section 4.1 above) for each
position, by (ii) the applicable Base Salary for each position, and by (iii) a
fraction, the numerator of which is the number of Periods in the Year during
which such Participant held such position and the denominator of which is the
number of Periods in the applicable Year, and (b) taking the sum of the products
of such calculation.
4.3. Base Salary Limit. Base Salary for purposes of this Plan shall
-----------------
not exceed $900,000.
SECTION 5. PERFORMANCE TARGETS AND GOALS; MAXIMUM BONUSES
5.1. Performance Goals. Performance Goals under the Plan initially
-----------------
shall include one or a combination of the following measures:
Earnings Before Taxes (EBT)
Business Unit Earnings Before Taxes (B/U-EBT)
Cost Reduction (CR)
Subject to the provisions of Section 8, the Committee from time to time, in
respect of Years after the 1994 Year, may use any one or combination of the
Performance Goals (as defined in Section
2
<PAGE>
13.2), weighted in such manner as the Committee may determine pursuant to
Section 6.2. The Applicable Performance Factor with respect to any such
additional or substituted performance goals, subject to such weighting, shall be
as set forth in Section 6.1.
5.2. Pre-Established Targets. For each Year commencing with 1994,
-----------------------
the Committee shall determine the Applicable Performance Goal or Goals and
targets (including applicable Minimum, On Plan and Maximum for applying the
Performance Factors) and the weighting (subject to Section 6.2) of the
---
Performance Goals(and Performance Factors), if more than one Goal applies, in
advance of any applicable deadline for such action under Section 162(m) of the
Internal Revenue Code of 1986, as amended (the "Code") for the subject Year.
----
Prior to such deadline, the Committee also shall determine or confirm each
Participant's Base Salary for such Year for purposes of the Plan, subject to
Sections 4 and 8.
5.3. Formula for Determining Maximum Bonus. Subject to Sections 5.4,
-------------------------------------
6.2, 7 and 8, each Participant's maximum Bonus for any Year will be the product
of his or her (a) Base Salary, (b) the Base Salary Factor, and (c) the
Applicable Performance Factor. For the first Year of the Plan, the Applicable
Performance Factors will be the EBT or B/U-EBT Factor and the CR Factor, at the
consolidated level, and for subsequent Years, one or more of the Performance
Factors.
5.4 Maximum Dollar Amount. Notwithstanding any other provision
---------------------
hereof, no Person shall receive any Bonus under the Plan in any Year in excess
of $1,012,500.
SECTION 6. PERFORMANCE FACTORS
6.1. Performance Factor.
------------------
The Applicable Performance Factor for any Year shall be determined in
accordance with the following table, where Minimum, Target and Maximum
represent, respectively, the attainment of the Minimum, On Plan, and Maximum for
the applicable Year, established by the Committee for such purposes:
Applicable
Performance Performance Factor*
------------- ------------------
Less than Minimum 0
Minimum 50%
Target/On Plan 100%
At or Above Maximum 150%
* Applicable Factors for performance between specified performance-to-target
levels above Minimum and below Maximum shall be determined using linear
interpolation.
3
<PAGE>
6.2. Weighting of Factors. If more than one Performance Factor
--------------------
applies to a Participant's bonus opportunity, the weighting of the Factors shall
be as established by the Committee, initially in the ratio of 7 (for the EBT
and/or B/U-EBT Factors) to 3 (for the CR Factor) or, for Years after 1994, in
such other proportion (and including such other or additional Performance
Factors) as the Committee, consistent with Sections 5 and 8, may from time to
time determine in advance of the deadline described in Section 5.2. The maximum
Bonus payable if more than one Performance Factor applies shall be determined by
taking the result obtained by application of the formula set forth in the first
sentence of Section 5.3 to each Performance Goal, multiplying that result by the
weighting factor for that Performance Goal, and taking the sum of the products
of such calculation. Each weighting factor shall be expressed as a fraction
(less than one) or percentage, and the aggregate amount of all weighting factors
shall be one (1) or 100%.
SECTION 7. PAYMENTS
7.1. Time of Payment. Bonuses for any Year shall be payable as soon
---------------
as practicable following the completion of the Company's audit for the Year, but
not later than 90 days after Year end.
7.2. Committee Certification. As a condition to the right of a
-----------------------
Participant to receive any payment under the Plan, the Committee shall first be
required to certify, by resolution of the Committee or other appropriate action,
that the Bonus has been accurately determined in accordance with the provisions
of the Plan and that the Performance Goals and any other material terms were in
fact satisfied.
7.3. Committee Discretion to Reduce Bonuses. The Committee in its
--------------------------------------
sole discretion may reduce the amount payable under the formula provisions of
the Plan as applied to the pre-established goals to any one or more Participants
for any Year as to which the Committee determines that the level of achievement
of the pre-established performance goals was influenced by any extraordinary,
non-recurring event or other factor extraneous to such individual Participant's
performance, or that the Company or applicable Business Unit failed to achieve
other corporate objectives. Subject to Section 8, the Committee may also define
such other conditions and terms of payment of Bonuses (including but not limited
to the achievement of other financial, strategic or individual goals, which may
be objective or subjective) as it may deem desirable in carrying out the
purposes of the Plan, provided, however, that the Committee may not increase the
-------- -------
maximum amount payable hereunder, under the applicable formula or otherwise, to
any individual.
4
<PAGE>
7.4. Deferral. The Committee may determine that payment of all or a
--------
portion of any Bonus may be deferred under a Company-sponsored deferred
compensation plan, if in effect, provided that the amount of any interest
--------
accrued thereon shall not exceed 120% of the Applicable Federal Rate, compounded
semi-annually.
7.5. Payment for Partial Periods.
---------------------------
(a) Effect of Termination of Service. If any Participant ceases to be
--------------------------------
an Eligible Person for any reason (other than a voluntary resignation or
termination for Cause) prior to the end of a Year during which he or she
participates and such person has served as an Executive Officer at least three
Periods during such Year, such Participant (or his or her Beneficiary) may be
paid, subject to Sections 7.2 and 7.3, a prorated Bonus computed as follows:
the Bonus that would have been payable for the full Year shall be multiplied by
a fraction the numerator of which shall be the number of full Periods in the
Year through the date the Participant ceased to be eligible, and the denominator
of which shall be the number of full Periods in the applicable Year. If the
Participant served less than three Periods during such Year or there has been a
Termination of Service for Cause or because of a voluntary resignation, no Bonus
shall be paid hereunder.
(b) Mid-Year Commencement of Service. Notwithstanding the
--------------------------------
provisions of Section 4.1 above, if a Participant's services as an Executive
Officer commence during any year, his or her Base Salary for purposes of the
Plan in that year shall be his or her Base Salary as of the commencement of
services as an Executive Officer, multiplied by a fraction, the numerator of
which is the number of full Periods in the year during which such Participant
held such position and the denominator of which is the number of full Periods in
the applicable Year; provided such person is employed by the Company for at
--------
least three full Periods during the year.
(c) Minimum Service Limits. If the Participant fails to meet
----------------------
the applicable minimum service requirements of this Section 7.5 during such
Year, no Bonus shall be paid hereunder.
7.6. Withholding. The Company that employs the Participant shall
-----------
have the right to deduct any sums required by federal, state or local tax law to
be withheld with respect to the payment of any Bonus. The Company shall have no
obligation to advise any Participant of the existence of the tax or the amount
which the employer corporation will be so required to withhold.
5
<PAGE>
SECTION 8. ADMINISTRATION AND INTERPRETATION
The Plan shall be administered by the Committee, which shall have the
sole authority to make rules and regulations for the administration of the Plan
and to interpret the Plan. The interpretations and decisions of the Committee
with regard to the Plan shall be final, conclusive and binding. The Committee
may request advice or assistance or employ such persons (including, without
limitation, officers and employees of the Company, legal counsel and
accountants) as it deems necessary for the proper administration of the Plan and
may delegate to such persons responsibility for the day-to-day operations of the
Plan not requiring discretion of the Committee hereunder. It is the intent of
the Company that all payments under the Plan qualify as performance-based
compensation under Section 162(m) of the Code and the Plan shall be interpreted
consistent with such intent. Any provision, application or interpretation of
the Plan inconsistent with this intent to satisfy the standards in Section
162(m) of the Code shall be disregarded. The Committee shall have no liability
for its actions taken or omitted in good faith.
SECTION 9. STOCKHOLDER APPROVAL
The Plan shall be subject to approval by a majority of those shares
of Common Stock of the Corporation voting in person or by proxy on the Plan at
the 1994 annual meeting of stockholders. Such stockholder approval shall be a
condition to the right of a Participant to receive any payment hereunder.
SECTION 10. AMENDMENT OR TERMINATION
The Committee may from time to time amend the Plan in any respect or
terminate the Plan, in whole or in part, provided that no such action shall
retroactively impair or otherwise adversely affect the rights of any Participant
to benefits under the Plan which have vested prior to the date of such action.
SECTION 11. RIGHTS OF PARTICIPANTS AND BENEFICIARIES; NO ASSIGNMENT
11.1. Vesting. No rights hereunder shall vest prior to the
-------
Committee's action under Section 7.2.
11.2. Employment Matters. Participation in this Plan shall not be
------------------
construed as constituting a commitment, guarantee, agreement or understanding of
any kind that the Company shall continue to employ any individual.
11.3. No Assignment; No Attachment; No Preference. The Company shall
-------------------------------------------
pay all amounts payable only to the Participant or his or her Beneficiary for
purposes of the Plan. The Company shall not be liable for the debts, contracts,
or engagements of any Participant or his or her Beneficiaries, and rights to
6
<PAGE>
payments under the Plan may not be taken in execution by attachment or
garnishment, or by any other legal or equitable proceeding while in the hands
of the Company; nor shall any Participant or his or her Beneficiaries have any
right to assign, pledge or hypothecate any benefits or payments hereunder; nor
shall any Participant or his or her Beneficiaries have any claims to any assets
of the Company for any payments hereunder which are senior to the claims of the
Company's general creditors.
11.4 Governing Law. This Plan, any Bonuses hereunder, and all other
-------------
related matters shall be governed by, and construed in accordance with the laws
of the State of California, except as to matters of Federal law.
11.5 Reliance on Experts. In making any determination or in taking
-------------------
or not taking any action under the Plan, the Committee may obtain and may rely
upon the advice of experts, including officers and professional advisors to the
Corporation. No director, officer or agent of the Company shall be liable for
any such action or determination taken or made or omitted in good faith.
11.6 Golden Parachute Limitations. In no event shall a payment be
----------------------------
made under the Plan in an amount which would not be fully deductible by the
Company for federal income tax purposes because of Section 280G of the Internal
Revenue Code of 1986, as amended, (the "Code") nor shall any payment hereunder
be accelerated if any portion of such accelerated payment would not be
deductible by the Company because of Section 280G of the Code. If a Participant
would be entitled to benefits or payments hereunder and under any other plan or
program which would constitute "parachute payments" as defined in Section 280G
of the Code, then the Participant may by written notice to the Corporation
designate the order in which such parachute payments shall be reduced or
modified so that the Company is not denied federal income tax deductions for any
"parachute payments" because of Section 280G of the Code.
SECTION 12. ACCELERATION ON CHANGE IN CONTROL AND CERTAIN OTHER EVENTS;
ADJUSTMENTS UPON CERTAIN REORGANIZATIONS, RECAPITALIZATIONS, OR
OTHER MATERIAL CHANGES.
12.1. Fundamental Corporate Changes; Change in Control.
-------------------------------------------------
In the event of a merger, consolidation, or other reorganization in
which the Corporation is not the surviving entity, or a Change in Control, or
upon the sale of substantially all the property of the Corporation as an
entirety to an unaffiliated entity, or upon the dissolution or liquidation of
the Corporation, in any case occurring more than three Periods after the
commencement of a Year, payment shall be made, subject
7
<PAGE>
to Section 7.2 (but with the satisfaction of the applicable performance level or
targets determined on the basis of annualizing the year-to-date results from the
beginning of the applicable Year to the end of the month preceding the date of
such event), on a prorated basis to the date of such event in the manner
contemplated by Section 7.5(a). The Committee shall authorize early payout in
such event, provided that it determines the applicable Performance Goals have
--------
been so met. The amount of the prorated payment shall be discounted at the
Applicable Federal Rate.
12.2. Changes From Material Acquisitions, Dispositions or
--------------------------------------
Recapitalizations; Extraordinary Items; Accounting Changes. In the event of a
- ----------------------------------------------------------
material acquisition or disposition of business or assets, material
recapitalization, a material change in accounting principles or practices during
any Year, or extraordinary gains or losses, that in any case materially affects
the Company or applicable Business Unit and was not anticipated by the Committee
in setting the targets for that Year, the Committee, subject to Section 8, may
make adjustments to the targets for such Year, applied as of the date of such
event, based solely on objective criteria, so as to neutralize, in the
Committee's best judgement, the effect of the change on the applicable pre-
established targets for such Year.
SECTION 13. DEFINITIONS
13.1. Accounting Terms. Except as otherwise expressly provided or
----------------
the context otherwise requires, financial and accounting terms are used as
defined for purposes of, and shall be determined in accordance with, generally
accepted accounting principles, as from time to time in effect, and, if
applicable, as specifically applied and reflected in financial statements of the
Company or the applicable Business Unit, prepared in the ordinary course of
business. Without limiting the generality of the foregoing, such calculations
shall be made after all compensation accruals.
13.2. Defined Terms. For all purposes of the Plan, the following
-------------
definitions shall apply:
"Applicable Federal Rate" means the applicable federal rate determined
-----------------------
under Section 1274(d) of the Code and Treasury Regulations issued thereunder for
the month in which an early payment is made or interest on a deferred payment is
credited hereunder.
"Applicable Performance Factor" means the applicable EBT Factor, B/U-
-----------------------------
EBT Factor, CR Factor, ROE Factor, ROA Factor, B/U-EBT-ROI Factor, or
Productivity Index Factor, or combination thereof as the case may be, weighted
in the manner provided herein, as determined by the Committee consistent with
Sections 5, 6 and 8 for the applicable Year.
8
<PAGE>
"Base Salary" means the base annualized salary (or cash compensation)
-----------
rate of a Participant when the applicable target is set for the applicable Year,
or when the participant first becomes eligible to participate (if other than the
start of the applicable Year), exclusive of any Bonuses, commissions or actual
or imputed income from any Company-provided benefit or perquisite programs,
subject to any limitations in or pursuant to the Plan and prior to any
reductions for salary deferred pursuant to any plan of deferred compensation.
"Base Salary Factor" means the multiplier described in Section 4.1.
------------------
"Beneficiary" means the person designated by a Participant to receive
-----------
any benefits hereunder in the event of the death of the Participant during a
Year or prior to the payment of a Bonus for such Year or, in the absence of a
designated beneficiary, such Participant's estate.
"Bonus" means a cash payment or payment opportunity as the context
-----
requires.
"Business Unit" means a region, subsidiary, division or other
-------------
organizational unit of the Company, or segment of its operations for accounting
purposes, which maintains or which is the subject of a separate accounting of
its financial performance.
"B/U-CR" means Cost Reduction applied at the level of the applicable
------
Business Unit rather than on a consolidated basis.
"Business Unit Earnings Before Taxes" or "B/U-EBT" means pre-tax
----------------------------------- -------
earnings before the Business Unit's interest expense for the Year, less the
Business Unit's Capital Charge.
"Capital Charge" means (i) the target ratio of the Company's Debt to
---------------
Total Capital for the Year, as of the beginning of the Year, multiplied by the
Business Unit Net Investment at the beginning of the Year multiplied by the
Company's Cost Of Debt, less (ii) the product of (a) the sum of the Business
Unit's pre-tax earnings before interest expense for the Year and the difference
between the Business Unit Net Investment at the beginning and end of the Year
and (b) the Company's Cost Of Debt, less (iii) the Business Unit's capitalized
interest during the Year.
"B/U-EBT Factor" means the multiple based on performance relative to
--------------
Minimum, On Plan, and Maximum B/U-EBT, as set forth in or pursuant to Section 6.
"B/U-EBT ROI" means B/U-EBT for the Year divided by the average of the
-----------
amounts of Business Unit Net Investment at the end of each quarter of such year.
9
<PAGE>
"B/U-EBT ROI Factor" means the multiple based on performance relative
------------------
to Minimum, On Plan, and Maximum B/U-EBT ROI, as set forth in or pursuant to
Section 6.
"Business Unit Net Investment" means the applicable Business Unit's
----------------------------
total assets less the Business Unit's (i) cash and cash equivalents (short-term
investments), (ii) accounts payable and accrued liabilities, and (iii) minority
interests and deferred credits.
"Cause" means, in the judgment of the Committee, failure to perform
-----
one's duties of employment in a manner acceptable to the Committee or the
person's senior officer (or the Board in the case of the Chief Executive
Officer), conduct injurious to the Company, breach of fiduciary duty, neglect of
duty, willful misconduct or conviction of any felony.
"Change in Control" means and shall be deemed to have occurred if:
-----------------
(a) any "person" (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act, but excluding any person described in and satisfying the
conditions of Rule 13d-1(b)(1)) becomes the "beneficial owner" (as defined
generally in Rule 13d-3 under Exchange Act), directly or indirectly, of
securities of the Corporation representing 20% or more of the combined voting
power of the Corporation's then outstanding securities, unless such person was,
on the effective date of the Plan, such a beneficial owner of securities
representing 20% or more of such voting power; or (b) during any Period for two
consecutive years, individuals who at the beginning of such Period constitute
the Board cease for any reason to constitute at least a majority thereof, except
to the extent that the election, or the nomination for election by the
Corporation's stockholders, of each new Board member was approved by a vote of
at least three-fourths of the Board members then still in office who were Board
members at the beginning of such Period, with any such new director being deemed
for these purposes to have been an incumbent at the beginning of such Period
(but in case of succession, without duplication).
"Committee" means the Corporate Compensation and Benefits Committee of
---------
the Board or another committee appointed by the Board to administer the Plan and
comprised of two or more Board members, all of whom shall be ineligible to
participate in the Plan during their service on the Committee and (to the extent
required by applicable law and regulations) shall be "outside directors" within
the meaning of Section 162(m).
"Company" includes the Corporation and its subsidiaries, on a
-------
consolidated basis, unless the context otherwise requires.
"Corporation" means Dole Food Company, Inc. and shall include its
-----------
successors and assigns.
10
<PAGE>
"Cost of Debt" or "Cost of Funds" means the weighted average cost of
------------ -------------
short- and long-term debt during the Year immediately preceding the applicable
date of determination.
"Cost Reduction" or "CR" for any Year means a reduction in cost of
-------------- --
goods sold, selling, marketing, general and administrative expenses during the
Year, as compared to a prior year or average of more than one Year, expressed as
an absolute dollar amount, applied to the Company (on a consolidated basis) or
to the applicable Business Unit.
"CR Factor" means the multiple based on performance relative to
---------
Minimum, On Plan, and Maximum CR for the Company (on a consolidated basis) or
the applicable Business Unit, as set forth in or pursuant to Section 6.
"Debt" means the sum of short-term and long-term debt.
----
"Earnings Before Income Taxes" or "EBT" for any Year means the
---------------------------- ---
consolidated net income of the Corporation for such Year before income taxes.
"EBT Factor" means the multiple based on performance relative to
----------
Minimum, On Plan, and Maximum EBT for the applicable Year, as set forth in or
pursuant to Section 6.
"Eligible Person" means an Executive Officer of the Corporation.
---------------
"Executive Officer" has the meaning set forth in Rule 3b-7 under the
-----------------
Securities Exchange Act of 1934 and refers to the individuals confirmed to be
within such definition by the Committee.
"Maximum" means either the maximum payout or the level of performance
-------
at or above which such payout may be made, as the context requires, expressed as
a dollar amount or percentage of the Target amount.
"Minimum" has the same meaning as Threshold.
-------
"On Plan" has the same meaning as Target and reflects the performance
-------
level required for an Applicable Performance Factor of 1.00 (i.e., a payment
opportunity equal to 100% of the product of Base Salary and the Base Salary
Factor in the applicable Year).
"Participant" in respect of a Plan Year means an Executive Officer at
-----------
any time during the Year who is designated to participate in the Plan for such
Year by the Committee.
"Performance Factors" means the EBT Factor, the B/U-EBT Factor, the CR
-------------------
Factor, or, as contemplated by Section 5.1, the
11
<PAGE>
ROE Factor, the ROA Factor, the Productivity Index Factor, the B/U-EBT ROI
Factor, or any combination thereof, to the extent provided by the Committee
pursuant to Sections 5 and 6 and subject to Section 8.
"Performance Goals" include EBT, B/U-EBT, ROE, ROA, B/U EBT-ROI, and,
-----------------
at the Business Unit or Company (consolidated) level, CR and the Productivity
Index.
"Period" means the four-week accounting cycle of the Company.
------
"Productivity Index" means the weighted average cost per unit of
------------------
production divided by the standard or budgeted cost per unit of production for
the products included in such Index of the Company (on a consolidated basis) or
the applicable Business Unit or Units.
"Productivity Index Factor" means the Performance Factor multiple
-------------------------
based on performance relative to Minimum, On Plan and Maximum Productivity
Index, for the Company (on a consolidated basis) or the applicable Business
Unit, as set forth in or pursuant to Section 6.
"Return on Average Common Equity" or "ROE" means consolidated net
------------------------------- ---
income to common stockholders for the Year divided by the average of the
beginning and ending total common stockholders equity during the Year.
"ROE Factor" means the Performance Factor multiple based on
----------
performance relative to Minimum, On Plan and Maximum ROE, as set forth in or
pursuant to Section 6.
"Return on Average Assets" or "ROA" means consolidated net income
------------------------ ---
divided by the average of the beginning and ending total assets of the Company.
"ROA Factor" means the Performance Factor multiple based on
----------
performance relative to Minimum, On Plan and Maximum ROA, as set forth in or
pursuant to Section 6.
"Target" means "On Plan" and represents a performance level that is a
------
precondition to a payout under the formula provisions of the Plan at a
Performance Factor of 1.00 or 100% of the product of the Base Salary and the
Base Salary Factor. When used with lower case, "target" means a Minimum,
Threshold and/or Maximum, as the context requires.
"Termination of Service" means a termination of Service from the
----------------------
Company for any reason, whether voluntary or involuntary, including death or
disability.
12
<PAGE>
"Threshold" or "Minimum" means the minimum level of performance
--------- --------
relative to an On Plan target required to generate a payment under the Plan for
the applicable Year.
"Total Capital" means Debt plus total stockholders equity.
-------------
"Year" or "Plan Year" means the applicable fiscal year of the
---- ---------
Corporation.
13
<PAGE>
Exhibit 10.16
DOLE FOOD COMPANY, INC.
LONG-TERM INCENTIVE PLAN FOR EXECUTIVE OFFICERS
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
-----
<S> <C>
I. PURPOSE....................................................... 1
II. PLAN DESCRIPTION.............................................. 1
2.1 Participation............................................ 1
2.2 Description of Awards.................................... 1
2.3 Performance Measurement and Goals........................ 1
III. ADMINISTRATION................................................ 2
3.1 Role of the Committee................................... 3
3.2 Committee Certification................................. 3
3.3 Committee Discretion to Reduce Bonuses.................. 3
3.4 No Authority to Increase Bonuses........................ 3
3.5 Finality of Action; Exercise of Discretion.............. 3
IV. PERFORMANCE GOALS AND FACTORS................................. 4
4.1 Formula for Determining Awards; Base Salary and
Performance Factors..................................... 4
4.2 Base Salary Limit....................................... 4
4.3 Performance Goals....................................... 4
4.4 Pre-Established Targets................................. 4
4.5 Applicable Performance Factors and Weighting for
Determining Maximum Bonus Opportunity................... 4
4.6 Specific Performance Factors............................ 5
4.7 Maximum Dollar Amount................................... 5
4.8 Effect of Termination of Service........................ 5
4.9 New Participants........................................ 6
4.10 Intracompany and Position Transfers..................... 6
4.11 Award Payout............................................ 6
4.12 Deferral Option......................................... 7
4.13 Acceleration of Award Opportunities..................... 7
4.14 Adjustments Upon Acquisitions, Dispositions,
Recapitalizations, Extraordinary Items or Changes in
Accounting.............................................. 8
V. TERM; AMENDMENT AND TERMINATION OF THE PLAN..................... 8
5.1 Term.................................................... 8
5.2 Stockholder Approval.................................... 8
5.3 Amendments or Termination............................... 8
5.4 Effect of Plan Termination.............................. 9
VI. DISCRETIONARY NATURE OF GRANTS AND PAYOUTS..................... 9
6.1 No Assurance of Participation........................... 9
6.2 No Assurance of Continued Employment.................... 9
6.3 Disqualification........................................ 9
6.4 Vesting................................................. 9
VII. OTHER PROVISIONS.............................................. 10
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
7.1 Nonassignability....................................... 10
7.2 Designation of Beneficiaries........................... 10
7.3 Unsecured Status of Claim.............................. 10
7.4 Right of Offset........................................ 11
7.5 Tax Withholding........................................ 11
7.6 Validity............................................... 11
7.7 Inurement of Rights and Obligation..................... 11
7.8 Applicable Law......................................... 11
7.9 Golden Parachute Limitations........................... 11
VIII. DEFINITIONS; RULES OF CONSTRUCTION AND INTERPRETATION...... 12
8.1 Rules of Construction.................................. 12
8.2 Financial and Accounting Terms......................... 12
8.3 Section 162(m)......................................... 12
8.4 Defined Terms.......................................... 12
</TABLE>
ii
<PAGE>
DOLE FOOD COMPANY, INC.
LONG-TERM INCENTIVE PLAN FOR EXECUTIVE OFFICERS
I. PURPOSE.
The primary purpose of the Plan is to enhance the long-term
performance of the Company/1/ by linking a meaningful portion of each
Participant's compensation to the achievement of specific long-term financial
objectives of the Company and the Company's various Business Units. The Plan
also is designed to enhance the Company's ability to attract and retain high
quality management talent by providing, in conjunction with other compensation
plans offered by the Company, a competitive, performance-based total
compensation package.
II. PLAN DESCRIPTION.
2.1 PARTICIPATION. Awards may be granted only to Eligible Persons.
Actual Participants in the Plan shall be determined for each Cycle by the
Committee. An Eligible Person not selected to participate in the Plan for any
Cycle may participate in another long-term cash incentive plan of the
Corporation for such Year or be selected by the Committee to participate in the
Plan in other Cycles. An Eligible Person may not participate concurrently in
both the Plan and such other long-term cash incentive plan.
2.2 DESCRIPTION OF AWARDS. Awards granted under the Plan provide
Participants with the opportunity to earn a cash payment ("bonus") following the
end of a Performance Cycle based upon the level of performance of the Company
and/or Business Unit, as the case may be, against specific financial and/or
strategic performance goals established for the Performance Cycle by the
Committee. Each Award granted under the Plan shall consist of a Minimum (or
Threshold), On Plan (or Target) and Maximum payment opportunity expressed as a
multiple ("Applicable Performance Factor") of the product of a Participant's
-----------------------------
Base Salary and the applicable Base Salary Factor, as provided in Article IV.
Threshold, Target and Maximum payment opportunities for each Participant shall
be established by the Committee for each Performance Cycle and shall be
contained in the Participant's Award Agreement.
2.3 PERFORMANCE MEASUREMENT AND GOALS. Specific performance targets
and the relationship between achievement and payout opportunity shall be
determined by the Committee for each
- ----------------------
/1/ This and certain other terms used in the Plan are defined in
Article VIII.
<PAGE>
Performance Cycle and described or referenced in the Participant's Award
Agreement, but shall constitute confidential, proprietary business information
of the Company.
III. ADMINISTRATION.
3.1 ROLE OF THE COMMITTEE. The Plan shall be administered by the
Committee. Actions of the Committee with respect to the administration of the
Plan shall be taken pursuant to a majority vote or the unanimous written consent
of its members. The Committee may delegate ministerial, accounting, record-
keeping and similar functions necessary for the administration of the Plan to
individuals who are officers or employees of the Company. Subject to the
express provisions of the Plan, the Committee shall have the authority
(a) to construe, interpret and administer the Plan and any
agreements defining the rights and obligations of the Company and
Participants under the Plan,
(b) to further define the terms used in the Plan,
(c) to prescribe, amend and rescind rules and regulations
pertaining to the administration of the Plan,
(d) to determine the duration and purposes of leaves of absence
which may be granted to Participants without constituting a Termination of
Service for purposes of the Plan,
(e) to designate Plan Participants,
(f) to establish the size of Awards made to Participants under
the Plan and the Performance Goals for the Cycles, and the targets and
weighting of Performance Goals used to determine whether payments are
earned under the Plan,
(g) to determine when Awards shall be granted under the Plan,
(h) to validate the level of achievement in terms of goals or
objectives established for the Plan and to collect and interpret financial
results relative to performance measures, targets and objectives,
(i) to evaluate performance measures or targets or specific
numerical objectives during a Performance Cycle to determine (subject to
Section 8.3) whether adjustments are necessary for extraordinary events or
changes in capitalization, changes in accounting principles or policies, or
other events that were not contemplated when
2
<PAGE>
Awards were made or that are outside of the reasonable responsibility or
control of the Participants or make other adjustments as the Committee
deems appropriate, reasonable or equitable to reflect materially changed
circumstances of the Company or the applicable Business Unit from those
existing at the time the applicable targets or goals were established, in
accordance with the terms and limits of the Plan,
(j) to evaluate the extent to which the applicable Performance
Goals were achieved and determine, compute and certify the extent of
amounts payable,
(k) to reduce formula-based payment opportunities based upon
objective or subjective criteria deemed by the Committee to be appropriate
and in furtherance of the compensation policies of the Company, and
(l) to make all other determinations necessary or advisable for
the administration of the Plan.
The determination of the Committee on the foregoing matters need not be the same
from Cycle to Cycle or for all Participants in like manner in respect of a
single Performance Cycle.
3.2 COMMITTEE CERTIFICATION. No payment shall be made and no
Participant shall be entitled to receive any payment under the Plan, unless the
Committee shall have first certified, by resolution of the Committee or other
appropriate action, that the payment amount has been accurately determined in
accordance with the provisions of the Plan and the applicable Performance Goals
and any other material terms have been satisfied.
3.3 COMMITTEE DISCRETION TO REDUCE BONUSES. The Committee in its
sole discretion may reduce the maximum amount payable hereunder to any one or
more Participants for any Cycle in which it determines that (a) the achievement
of the pre-established Performance Goals was influenced by any unusual,
extraordinary, non-recurring event or other factor extraneous to individual
performance, or (b) in its judgement, the failure to meet other corporate
objectives in any respect or Period(s) within the Cycle warrants such reduction,
or (c) the Company or the individual failed to achieve other financial,
strategic or personal goals, which may be objective or subjective.
3.4 NO AUTHORITY TO INCREASE BONUSES. Subject to Section 4.14 and
8.3, the Committee may not increase the maximum amount payable to any individual
based on the formula or other provisions of the Plan.
3.5 FINALITY OF ACTION; EXERCISE OF DISCRETION. Any action taken by,
or inaction of, the Company, and Business Unit, the Board or the Committee
relating to the Plan shall be within
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the absolute discretion of that entity or body and shall be conclusive and
binding upon all persons. No member of the Board or Committee, or officer of
the Company or any Business Unit, shall be liable for any such action or
inaction, or the action or inaction of another person, except in circumstances
involving his or her bad faith. Subject only to compliance with the express
provisions hereof, the Committee may act in its absolute discretion in all
matters related to the Plan.
IV. PERFORMANCE GOALS AND FACTORS.
4.1 FORMULA FOR DETERMINING AWARDS; BASE SALARY AND PERFORMANCE
FACTORS. Subject to the terms hereof, each Participant's maximum bonus
opportunity under the Plan shall be the product of his or her Base Salary, the
Base Salary Factor for the applicable Cycle and, subject to Section 4.5, the
Applicable Performance Factor. The Base Salary Factors shall be as follows:
Base Salary Factors
-------------------
Office of the Chairman 150%
Other Participants 75% - 100% *
* The specific factor shall be within this range and determined by the
Committee at the time the applicable performance targets are established
pursuant to Section 4.4.
4.2 BASE SALARY LIMIT. Base Salary for purposes of the Plan shall
not exceed $800,000 during the first Cycle, $900,000 during the second Cycle and
$1,000,000 during the third Cycle.
4.3 PERFORMANCE GOALS. Performance Goals under the Plan shall
include one or a combination of the following:
Earnings Before Taxes (EBT)
Business Unit Earnings Before Taxes (B/U-EBT)
4.4 PRE-ESTABLISHED TARGETS. For each Cycle commencing with 1994,
the Committee shall determine the applicable EBT and B/U-EBT targets (including
the applicable Minimum, On Plan and Maximum for applying the Performance
Factors) and the weighting of such goals, if more than one goal is applicable,
in advance of any applicable deadline for such action under Section 162(m) of
the Internal Revenue Code of 1986, as amended (the "Code") for the subject
Cycle. ----
4.5 APPLICABLE PERFORMANCE FACTORS AND WEIGHTING FOR DETERMINING
MAXIMUM BONUS OPPORTUNITY. For Participants in the Office of the Chairman (or
having similar responsibilities), the Applicable Performance Factor in the first
Cycle shall be the EBT Factor and in the second or third Cycles any one or a
weighted
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average of the EBT and B/U-EBT Factors, as determined by the Committee. For any
other Participants, the Applicable Performance Factor will be any one or a
weighted average of the EBT Factor and the B/U-EBT Factor. The initial
weighting where both Factors apply shall be in such proportion as the Committee,
consistent with Section 8.3, may from time to time determine in advance of the
deadline described in Section 4.4. The maximum bonus payable if more than one
Performance Factor applies shall be determined by taking the result obtained by
application of the formula set forth in the first sentence of this Section 4.5
to each Performance Goal, multiplying that result by the weighting factor for
that Performance Goal and taking the sum of the products of such calculation.
Each weighting factor shall be expressed as a fraction (less than one) or
percentage, and the aggregate amount of all weighting factors shall be one (1)
or 100%.
4.6 SPECIFIC PERFORMANCE FACTORS. The EBT or B/U-EBT Factor for any
Cycle shall be determined in accordance with the following table, where Minimum,
Target and Maximum represent, respectively, the attainment of the Minimum, On
Plan, and Maximum for the applicable Cycle, established by the Committee for
such purposes:
EBT or B/U-EBT Applicable
Performance EBT or B/U-EBT Factor*
----------- ---------------------
Less than Minimum 0
Minimum 50%
Target 100%
At or Above Maximum 150%
* Applicable Factors for performance between specified Performance-to-Target
levels above Minimum and below Maximum shall be determined using linear
interpolation (applied to the targets in the manner specified by the Committee).
4.7 MAXIMUM DOLLAR AMOUNT. Notwithstanding any other provision
hereof, no Person shall receive any bonus under the Plan in excess of $1,800,000
for the first Cycle, $2,025,000 for the second Cycle, and $2,250,000 for the
third Cycle.
4.8 EFFECT OF TERMINATION OF SERVICE. If a Participant has a
Termination of Service during a Performance Cycle (other than because of a
voluntary resignation or termination by the Company for Cause) after at least
thirteen Periods of service as a Participant, the Participant shall remain
eligible to receive a prorated payment under the Plan. The maximum amount of
such payment shall be determined by multiplying the amount that the Participant
would have received if the Termination of Service had not occurred by a factor
equal to the number of full Periods of Service by the Participant during the
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Performance Cycle divided by the number of full Periods in the Performance
Cycle. Unless accelerated consistent with the provisions of Section(s) 4.13 and
8.3 in connection with or after the Termination of Service or other event
described in Section 4.13, prorated payments may only be made at the same time
as other payments under the Plan for the Performance Cycle in which the
Termination of Service occurred. If the foregoing minimum service requirement
is not met or a Participant's Termination of Service occurs during a Performance
Cycle for Cause or because of a voluntary resignation, the Participant's
opportunity to receive any payment under the Plan for the Performance Cycle
shall terminate, and no payout shall be made under the Plan.
4.9 NEW PARTICIPANTS. Subject to Section 8.3, an Eligible Person
may become a Participant in the Plan at any time before the end of the second
year of the Cycle, at the discretion of the Committee. If an Eligible Person
becomes a Participant during a Performance Cycle, the Participant's payment
opportunity shall be prorated by a factor equal to the number of full Periods
that the Eligible Officer was a Participant during the Performance Cycle divided
by the number of full Periods in the Performance Cycle. In calculating such
Participant's payment opportunity, the performance achievement level shall be
measured over the entire Performance Cycle; provided that if interim targets
--------
within the Cycle were established by the Committee in setting the targets for
the Cycle, any payout to such Participant shall be further conditioned upon the
achievement of such performance targets on a cumulative basis for the remainder
of the Cycle.
4.10 INTRACOMPANY AND POSITION TRANSFERS. If a Participant
participates in more than one capacity during any Cycle, the product of his or
her Base Salary and Base Salary Factor for purposes of the Plan for such year
shall be computed by (a) multiplying (i) the Base Salary Factor (as indicated in
or pursuant to Section 4.1 above) for each position by (ii) the applicable Base
Salary for such position, and by (iii) a factor equal to the number of full
Periods that the Eligible Officer was a Participant in each position during the
Performance Cycle divided by the number of full Periods in the Performance
Cycle, and (b) taking the sum of the products of such calculation. In
determining prorated payments for Participants affiliated with more than one
Business Unit (or more than one Business Unit/Company combination) during a
Cycle, performance achievement for each component (whether Business Unit or
Company) shall be measured over the entire Cycle, while the weighting of each
component shall be determined according to each Participant's Award Agreement,
as the same may be amended consistent herewith.
4.11 AWARD PAYOUT. Subject to opportunities to defer the receipt of
payment in accordance with Section 4.12 below and to accelerate payment under
Section 4.13, payment of any amounts which may be payable under the Plan shall
be in cash equivalent,
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payable as follows: one-half of the Award (as certified by the Committee
pursuant to Section 3.2 of the Plan) will be paid within ninety (90) days
following the completion of the Performance Cycle. The remaining one-half of
the Award for the Cycle will be paid, with interest from the day after the end
of the Cycle to the date paid, at the lesser of (a) the Company's Cost of Funds,
or (b) 120% of the Applicable Federal Rate, upon the first anniversary of the
completion of the Cycle, provided that the Participant's employment has
-------------
continued through such date, unless the Committee otherwise permits. Deferred
portions of Awards and associated interest accumulated thereon to the date of
payment will become immediately payable in the event of a Change in Control or a
Termination of Service for any reason other than for Cause or voluntary
resignation during such extended one-year Period.
4.12 DEFERRAL OPTION. The Committee may permit a Participant to
irrevocably elect to voluntarily defer payments vested in accordance with the
terms of any deferral plan adopted by the Company, provided that the amount of
-------- ----
any interest accrued thereon shall not exceed 120% of the Applicable Federal
Rate, compounded semi-annually.
4.13 ACCELERATION OF AWARD PAYOUT OPPORTUNITIES.
(a) Acceleration. Subject to Section 3.2 (certification), the
------------
Committee may authorize early payment of an Award if, at least one Year
after the commencement of a Cycle, a Participant's employment terminates
for any reason, other than a voluntary resignation or a termination for
Cause, or there shall occur an event described in Section 4.13(b)
(including a Change in Control), provided that the Committee determines
-------------
that the applicable Performance Goals have been met through the date of
such termination on the basis of achievement of Performance Goals relative
to targets to the date of such event and the amount of the payment is
discounted at the Applicable Federal Rate, compounded semi-annually, and
prorated based on time, in the manner contemplated by Section 4.8.
(b) Fundamental Corporate Changes; Change in Control. In the event of
------------------------------------------------
a merger, consolidation, or other reorganization in which the Corporation
is not the surviving entity, or a Change in Control, or upon the sale of
substantially all the property of the Corporation as an entirety to an
unaffiliated entity, or upon the dissolution or liquidation of the
Corporation, payment shall be made, subject to Section 3.2 (but with the
satisfaction of the applicable performance level or targets determined on
the basis of the Cycle-to-date results from the beginning of the applicable
Cycle to the end of the month preceding the date of such event), on a
prorated basis to the date of such event in the manner contemplated by
Section 4.8. The
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Committee shall authorize early payout in such event, provided that it
determines that the applicable Performance Goals have been so met. The
amount of the prorated payment shall be discounted at the Applicable
Federal Rate.
4.14 ADJUSTMENTS UPON ACQUISITIONS, DISPOSITIONS, RECAPITALIZATIONS,
EXTRAORDINARY ITEMS OR CHANGES IN ACCOUNTING.
(a) Changes From Material Acquisitions, Dispositions or
---------------------------------------------------
Recapitalizations. In the event of a material acquisition or
-----------------
disposition of business or assets, a material recapitalization or
restructuring, or any extraordinary gain or loss, that affects the Company
(on a consolidated basis) or the applicable Business Unit and was not
anticipated by the Committee in setting the targets for the applicable
Cycle, the Committee, subject to Section 8.3, may make adjustments to the
targets for such Cycle, applied as of the date of such event, based solely
on objective criteria, so as to neutralize, in the Committee's best
judgement, the effect of the change on the applicable pre-established
targets for such Cycle.
(b) Accounting Matters. Similar changes shall be made in the case of
------------------
material changes in accounting policies or practices affecting the Company
or the applicable Business Unit, to the extent any such material change was
not anticipated at the time the targets were set, based on objective
criteria so as to neutralize, in the Committee's best judgement, the effect
of the change or event on the applicable pre-established targets for such
Cycle.
V. TERM; AMENDMENT AND TERMINATION OF THE PLAN.
5.1 TERM. Subject to Sections 5.2 and 5.3, the Plan shall be
effective as of January 2, 1994 (the "Effective Date") and shall be in
--------------
effect in respect of and through the three Cycles then commencing, unless
earlier terminated by the Committee pursuant to Section 5.3.
5.2 STOCKHOLDER APPROVAL. The Plan shall be subject to approval
by a majority of those shares voting, in person or by proxy, on the Plan at
the 1994 annual meeting of stockholders. Such stockholder approval shall
be a condition to the right of a Participant to receive any payment
hereunder.
5.3 AMENDMENTS OR TERMINATION. The Committee may, at any time,
terminate or, from time to time amend, modify or suspend the Plan (or any
part thereof). No such action shall retroactively impair or otherwise
adversely affect the rights of any Participant to benefits under the Plan
which have vested pursuant to Section 6.4 prior to the date of such action.
8
<PAGE>
5.4 EFFECT OF PLAN TERMINATION. If the Committee terminates or
suspends the Plan during a Cycle, the Committee may provide Participants
with a prorated payment for such Cycle based on the number of full Periods
of the Cycle completed at the time of the Committee's action divided by the
number of full Periods in the Cycle. Performance for determining the
amount of such prorated payments shall be based in the Committee's
discretion on the entire Cycle or, if payout is to be accelerated, on the
basis of performance through the date of the Committee's action, as
contemplated by Section 4.13. If performance continues to be measured over
the original Cycle, payment of any earned amounts shall be made following
completion of the Cycle, as provided in Section 4.11. If performance
is measured over a shorter Period, payment of any amounts shall be made
within 90 days following the completion of the revised performance
measurement term, subject to Sections 6.4 and 8.3.
VI. DISCRETIONARY NATURE OF GRANTS AND PAYOUTS.
6.1 NO ASSURANCE OF PARTICIPATION. Status as an Eligible Person
shall not be construed as a commitment that any Award will be made under
the Plan or to Eligible Persons generally.
6.2 NO ASSURANCE OF CONTINUED EMPLOYMENT. Nothing contained in
the Plan or in Award Agreements or in any other documents related to the
Plan shall confer upon any Eligible Person or Participant any right to
continue in the employ of the Company or constitute any contract or
agreement of employment, or interfere in any way with the right of the
Company to reduce such person's compensation or other benefits or to
terminate the employment of such Eligible Person or Participant, with or
without Cause. However, nothing contained in the Plan or any document
related thereto shall affect any other contractual right of any Eligible
Person or Participant.
6.3 DISQUALIFICATION. Members of the Board who are not officers
or employees of the Company, and members of the Committee during the Period
of their service on the Committee, shall be ineligible to be granted Awards
under the Plan.
6.4 VESTING. Rights under the Plan shall not vest prior to the
Committee's action under Section 3.2 and confirmation of the amount to be
paid and, with respect to mandatorily deferred portions of any such amount,
completion of the additional year of service contemplated by Section 4.11.
Such rights thereafter shall be solely as an unsecured general creditor of
the Corporation.
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VII. OTHER PROVISIONS.
7.1 NONASSIGNABILITY. No Participant shall have any right to
commute, sell, assign, transfer, pledge, anticipate, mortgage or otherwise
encumber, hypothecate or convey in advance of actual receipt any benefit
payable under the Plan, or any part thereof, or any interest therein, which
are, and all rights to which are, expressly declared to be unassignable and
non-transferable. No portion of the amounts payable under the Plan shall,
prior to actual payment, be subject to seizure, attachment, lien or
sequestration for the payment of any debts, judgments, alimony or separate
maintenance owed by a Participant or any other person, nor be transferable
by operation of law in the event of a Participant's or any other person's
bankruptcy or insolvency. Any such transfer in violation of the preceding
provisions shall be considered null and void.
7.2 DESIGNATION OF BENEFICIARIES. Each Participant shall have
the right at any time to designate any person or persons as beneficiaries
to whom any benefits provided under the Plan shall be distributed in the
event of the Participant's death prior to distribution of all benefits due
the Participant under the Plan. Each beneficiary designation shall be
effective only when filed in writing with the Company during a
Participant's lifetime on a Beneficiary Designation Form approved by the
Company. If a Participant designates more than one beneficiary,
distribution of any payment due the Participant under the Plan shall be
made in equal proportions to each beneficiary unless otherwise stated on
the Beneficiary Designation Form.
The filing of a new Beneficiary Designation Form shall cancel all
designations previously filed. Any finalized divorce or marriage (other
than a common law marriage) of a Participant subsequent to the date of
filing of a Beneficiary Designation Form shall revoke such designation,
unless (a) in the case of divorce, the previous spouse was not designated
as beneficiary, or (b) in the case of marriage, the Participant's new
spouse had been previously designated as beneficiary. The spouse of a
married Participant shall join in any designation of a beneficiary other
than the spouse. If a Participant fails to designate a beneficiary as
provided for above, if the beneficiary designation is revoked by marriage,
divorce or otherwise, or if the beneficiary predeceases the Participant
without execution of a new designation, then the Committee shall direct the
distribution of Plan benefits to the Participant's estate.
7.3 UNSECURED STATUS OF CLAIM. Participants and their
beneficiaries, heirs, successors and assigns shall have no legal or
equitable rights, interests or claims in respect of any unvested benefits
under the Plan, and no rights, interests or claims as to any vested
benefits in any specific property or assets of the Company. No asset of
the Company shall be held under any trust for the benefit of Participants,
their
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<PAGE>
beneficiaries, heirs, successors or assigns, or held in any way as
collateral security for the fulfillment of the Company's obligations under
the Plan.
7.4 RIGHT OF OFFSET. If a Participant becomes entitled to a
payment under the Plan and if at such time the Participant has outstanding
any debt, obligation or other liability representing an amount owing to the
Company, then the Company, to the maximum extent permitted by law, may
offset such amount against the amount of the payment otherwise due the
Participant under the Plan.
7.5 TAX WITHHOLDING. The Company shall withhold from any
payment due under the Plan an amount sufficient to satisfy all and any
amounts required by applicable federal, state and local laws with respect
to such payment. The Company shall have no obligation to advise any
Participant of the existence of any tax or the amount which the employer
corporation may be so required to withhold.
7.6 VALIDITY. In the event that any provision of the Plan is
held to be invalid or unenforceable, the same shall not affect, in any way
whatsoever, the validity of any other provision of the Plan.
7.7 INUREMENT OF RIGHTS AND OBLIGATIONS. Any rights and
obligations under the Plan shall inure to the benefit of, and shall be
binding upon the Corporation, its successors and assigns, Participants and
Beneficiaries.
7.8 APPLICABLE LAW. The Plan and any related documents and
matters shall be governed in accordance with the laws of the State of
California, except as to matters of Federal law.
7.9 GOLDEN PARACHUTE LIMITATIONS. In no event shall a payment
be made under the Plan in an amount which would not be fully deductible by
the Company for federal income tax purposes because of Section 280G of the
Internal Revenue Code of 1986, as amended, (the "Code") nor shall any
----
payment hereunder be accelerated if any portion of such accelerated payment
would not be deductible by the Company because of Section 280G of the Code.
If a Participant would be entitled to benefits or payments hereunder and
under any other plan or program which would constitute "parachute payments"
as defined in Section 280G of the Code, then the Participant may by written
notice to the Corporation designate the order in which such parachute
payments shall be reduced or modified so that the Company is not denied
federal income tax deductions for any "parachute payments" because of
Section 280G of the Code.
11
<PAGE>
VIII. DEFINITIONS; RULES OF CONSTRUCTION AND INTERPRETATION.
8.1 RULES OF CONSTRUCTION. For all purposes of the Plan and
Award Agreements, unless otherwise expressly provided or the context
otherwise requires,
(a) the terms used in the Plan, and not otherwise defined have
the meaning assigned to them in this Article VIII, and the terms include
the plural and the singular,
(b) all references in this Plan to designated "Articles,"
"Sections" and other subdivisions are to the designated Articles, Sections
and other subdivisions of the body of this Plan, and
(c) pronouns of either gender or neuter shall include, as
appropriate, the other pronoun forms.
8.2 FINANCIAL AND ACCOUNTING TERMS. Except as otherwise expressly
provided or the context otherwise requires, financial and accounting terms are
used as defined for purposes of, and shall be determined in accordance with,
generally accepted accounting principles, as from time to time in effect, and,
if applicable, as specifically applied and reflected in financial statements of
the Company or the applicable Business Unit, prepared in the ordinary course of
business and, without limiting the generality of the foregoing, after all
compensation accruals.
8.3 SECTION 162(M). It is the intent of the Company that all
payments under the Plan qualify as performance-based compensation under Section
162(m) of the Code and the Plan shall be interpreted consistent with such
intent. Any inconsistent provision shall be disregarded.
8.4 DEFINED TERMS. For all purposes of the Plan, the following
definitions shall apply:
"APPLICABLE FEDERAL RATE" means the applicable federal rate determined
under Section 1274(d) of the Code and Treasury Regulations issued
thereunder for the month in which an early payment is made or interest on a
deferred payment is credited under the Plan.
"APPLICABLE PERFORMANCE FACTOR" means the applicable EBT Factor and/or B/U-
EBT Factor, weighted in the manner provided herein, as determined by the
Committee consistent with the terms hereof, for the applicable Cycle.
"AWARD" shall mean the grant of the opportunity to earn a payment or bonus
under the Plan.
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<PAGE>
"AWARD AGREEMENT" shall mean a written agreement entered into between the
Corporation and a Participant setting forth the terms and conditions with
respect to an Award. Such agreement shall specify the payment opportunity
associated with the Award, the performance measures and objectives on which
such opportunity is based, and the applicable Cycle and, if applicable,
the period of time over which performance shall be measured for determining
amount of any payment.
"BASE SALARY" means the average of the base annualized salary (or cash
compensation) rate of a Participant as of the beginning of each year of
participation in the applicable Cycle (or the time during the Cycle when a
Participant first commences participation in the Plan), exclusive of any
bonuses, commissions or actual or imputed income from any Company-provided
benefit or perquisite programs, subject to any limitations in or pursuant
to the Plan and prior to any reductions for salary deferred pursuant to any
plan of deferred compensation.
"BASE SALARY FACTOR" means the multiple of Base Salary as set forth in or
pursuant to Section 4.1.
"BENEFICIARY" means the person designated by a Participant to receive any
benefits hereunder in the event of the death of the Participant during a
Cycle or prior to the payment of a bonus for such Cycle or, in the absence
of a designated beneficiary, such Participant's estate.
"BOARD" shall mean the Board of Directors of the Company.
"BUSINESS UNIT" means a region, subsidiary, division or other
organizational unit of the Company, or segment of its operations for
accounting purposes, which maintains or which is the subject of a separate
accounting of its financial performance.
"BUSINESS UNIT EARNINGS BEFORE TAXES" OR "B/U-EBT" means the sum of the
pre-tax earnings before the Business Unit's interest expense, less the
Business Unit's Capital Charge for each Year of the Cycle.
"CAPITAL CHARGE" means (i) the target ratio of the Company's Debt to
Total Capital for each Year of the Cycle, as of the beginning of the
Year, multiplied by the Business Unit Net Investment at the beginning
of such Year, multiplied by the Company's Cost of Debt, less (ii) the
product of (a) the sum of (1) the Business Unit's pre-tax earnings
before interest expense for the Year and (2) the difference between
the Business Unit Net Investment at the beginning and end of the Year
and (b) the Company's Cost of Debt, less
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(iii) the Business Unit's capitalized interest during such Year.
"DEBT" means the sum of short-term and long-term debt.
"NET INVESTMENT" means the applicable Business Unit's total assets
less the Business Unit's (i) cash and cash equivalents (short-term
investments), (ii) accounts payable and accrued liabilities, and (iii)
minority interests and deferred credits.
"TOTAL CAPITAL" means Debt plus total stockholders' equity.
"B/U-EBT FACTOR" means the multiple based on performance relative to
Minimum, On Plan, and Maximum B/U-EBT, as set forth in or pursuant to
Section 4.6.
"CAUSE" means, in the judgment of the Committee, failure to perform one's
duties of employment in a manner acceptable to the Committee or the
person's senior officer (or the Board in the case of the Chief Executive
Officer), conduct injurious to the Company, breach of fiduciary duty,
neglect of duty, willful misconduct, or conviction of any felony.
"CHANGE IN CONTROL" means and shall be deemed to have occurred if: (a) any
"person" (as such term is used in Sections 13(d) and 14(d) of the Exchange
Act, but excluding any person described in and satisfying the conditions of
Rule 13d-1(b)(1) thereunder) becomes the "beneficial owner" (as defined
generally in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Corporation representing 20% or more of the combined
voting power of the Corporation's then outstanding securities, unless such
person was, on the effective date of the Plan, such a beneficial owner of
securities representing 20% or more of such voting power; or (b) during any
Period for two consecutive years, individuals who at the beginning of such
Period constitute the Board cease for any reason to constitute at least a
majority thereof, except to the extent that the election, or the nomination
for election by the Corporation's stockholders, of each new Board member
was approved by a vote of at least three-fourths of the Board members then
still in office who were Board members at the beginning of such Period,
with any such new director being deemed for these purposes to have been an
incumbent at the beginning of such Period (but in case of succession,
without duplication).
"COMMITTEE" means the Corporate Compensation and Benefits Committee of the
Board or another committee appointed by the Board to administer the Plan
and comprised of two or more Board members, all of whom shall be ineligible
to
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participate in the Plan during their service on the Committee and (to the
extent then required by applicable law and regulations) shall be "outside
directors" within the meaning of Section 162(m).
"COMPANY" includes the Corporation and its subsidiaries, on a consolidated
basis, unless the context otherwise requires.
"CORPORATION" means Dole Food Company, Inc. and shall include its
successors and assigns.
"COST OF FUNDS" OR "COST OF DEBT" means the weighted average cost of short-
term and long-term debt during the applicable Year, which in the case of
determinations under Section 4.11 shall be the Year immediately preceding
the applicable date of determination.
"CYCLE" means Performance Cycle.
"EARNINGS BEFORE INCOME TAXES" or "EBT" for any Cycle means the
consolidated net income of the Corporation for such Cycle before income
taxes.
"EBT" has the meaning set forth above.
"EBT FACTOR" means the multiple based on performance relative to Minimum,
On Plan, and Maximum EBT for the applicable Cycle, as set forth in or
pursuant to Section 4.6.
"ELIGIBLE PERSON" means an Executive Officer of the Corporation.
"EXECUTIVE OFFICER" has the meaning set forth in Rule 3b-7 under the
Securities Exchange Act of 1934 and refers to the individuals confirmed to
be within such definition by the Committee.
"MAXIMUM" means either the maximum payout or the level of performance at or
above which such payout may be made, as the context requires, in any Cycle
under the Plan, expressed as a dollar amount or percentage of the Target
amount.
"MINIMUM" has the same meaning as Threshold.
"ON PLAN" has the same meaning as Target and reflects the performance level
required for an Applicable Performance Factor of 1.00 (i.e., a payment
opportunity equal to 100% of the product of Base Salary and the Base Salary
Factor in the applicable Cycle).
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"PARTICIPANT" means an Eligible Officer who has been designated a
Participant by the Committee for the applicable Performance Cycle and
granted an Award in accordance with the terms and subject to the conditions
of the Plan.
"PERFORMANCE CYCLE" OR "CYCLE" means the period of time over which
performance is measured for determining the amount of any payment earned
from Awards granted under the Plan. Each Performance Cycle shall represent
an exclusive period of three fiscal years (i.e., thirty-nine consecutive
Periods) beginning on the first day of the Company's fiscal year in 1994.
"PERFORMANCE GOALS" means EBT, and/or B/U-EBT.
"PERIOD" means the four-week accounting cycle of the Company.
"PLAN" means the Dole Food Company, Inc. Long-Term Incentive Plan for
Executive Officers, as described in this document.
"SECTION 162(m)" means Section 162(m) of the Internal Revenue Code of 1986,
as from time to time in effect.
"SERVICE" means full-time employment with the Company, or part-time
employment as approved by the Committee, including a voluntary leave of
absence if approved by the Committee.
"SUBSIDIARY" means any corporation or other entity of which the Company
beneficially owns, either directly or indirectly, a majority or more of the
voting stock or voting power.
"TARGET" means "On Plan" and represents a performance level that is a
precondition to a payout under the formula provisions of the Plan at a
Performance Factor of 1.00 or 100% of the product of the Base Salary and
the Base Salary Factor. When used with lower case, "target" means a
Minimum, Threshold and/or Maximum, as the context requires.
"TERMINATION OF SERVICE" means a termination of Service from the Company
for any reason, whether voluntary or involuntary, including death and
disability.
"THRESHOLD" means the minimum level of performance relative to an On Plan
target required to generate a payment under the Plan for the applicable
Cycle, expressed as a dollar amount or percentage of the Target amount.
"YEAR" means the applicable fiscal year of the Corporation.
16
<PAGE>
CONFIDENTIAL
------------
DOLE FOOD COMPANY, INC.
LONG-TERM INCENTIVE PLAN
FOR EXECUTIVE OFFICERS
AWARD AGREEMENT
This AWARD AGREEMENT is made and entered into at Westlake Village,
California as of _______, 199 by and between DOLE FOOD COMPANY, INC. (the
"Company") and ___________________ (the "Participant").
WHEREAS, the Company has adopted the DOLE FOOD COMPANY, INC. LONG-TERM
INCENTIVE PLAN FOR EXECUTIVE OFFICERS (the "Plan"), and
WHEREAS, the Participant has been designated an Eligible Person and
has been selected to participate in the Plan in accordance with the terms and
conditions of the Plan, and
WHEREAS, the Plan states that an Award Agreement be entered into
between the Company and the Participant setting forth certain terms and
conditions of the Plan as they apply to the Participant.
NOW, THEREFORE, the Company and the Participant hereby agree as
follows:
1. The Plan.
The Plan is hereby incorporated into and made a part of this Award
Agreement as though set forth in full herein. The parties shall be bound by,
and have the benefit of, each and every provision of the Plan. Undefined terms
used herein are used as defined in the Plan. The Participant acknowledges that
he or she has read and understands the terms of the Plan.
2. The Award.
The Participant is hereby granted an Award under the Plan for the
Performance Cycle beginning ____________ and ending _________________.
17
<PAGE>
3. Payment Opportunity.
The total Threshold, Target and Maximum payment opportunities
associated with the Award are as follows:
<TABLE>
<CAPTION>
if Performance is Performance Factor*
----------------- ------------------
<S> <C>
Less than Threshold 0
Threshold .5
Target 1.0
At or Above Maximum 1.5
</TABLE>
* Applicable Factors for performance between specified Performance-to-
Target levels above Minimum to Target and from Target to Maximum
shall be determined using linear interpolation.
4. Performance Factors; Allocation/Weighting of Goals.
The total payment opportunity associated with the Award will be
allocated as follows:
EBT - %
[cross out an
B/U-EBT- % inapplicable
-----
100% performance goal]
5. Confidentiality of Performance Targets.
Performance targets and applicable Minimum, On Plan and Maximum levels
for purposes of determining any payment opportunity on the Award may be reviewed
by the Participant at the Office of the General Counsel of the Corporation, upon
reasonable request during normal business hours.
SUCH INFORMATION CONSTITUTES CONFIDENTIAL AND PROPRIETARY BUSINESS INFORMATION,
THE DISCLOSURE OF WHICH IS PROHIBITED BY THE COMPANY'S POLICIES.
6. Base Salary Factor.
Participant's Base Salary Factor shall be _____.
7. Tax Withholding and Legal Compliance.
All payments hereunder shall be subject to applicable withholding tax
obligations and compliance with applicable other laws.
18
<PAGE>
8. Commencement Date.
Participant's service during the Performance Cycle commenced _______,
19__.
IN WITNESS WHEREOF, the parties hereto have entered into the
Agreement on the date first above written.
DOLE FOOD COMPANY, INC.
By: ___________________________
Its: __________________________
PARTICIPANT
___________________________
19
<PAGE>
EXHIBIT 11
DOLE FOOD COMPANY, INC. AND SUBSIDIARIES
Computation of Earnings Per Common Share
(in thousands, except per share data)
<TABLE>
<CAPTION>
1993 1992 1991
------ ------ ------
<S> <C> <C> <C>
PRIMARY
Income before cumulative effect of change
in accounting principle $ 77,889 $ 65,213 $ 133,726
Cumulative effect of change in accounting
principle - (49,492) -
---------- ---------- ----------
Net income applicable to common shares $ 77,889 $ 15,721 $ 133,726
========== =========== ==========
Average number of common shares
outstanding during the year 59,441 59,408 59,337
Shares issuable upon exercise of stock
options at average prices during the
year 261 253 329
---------- ---------- ----------
Total 59,702 59,661 59,666
========== ========== ==========
Primary earnings per common share
Income before cumulative effect of
change in accounting principle $ 1.30 $ 1.09 $ 2.24
Cumulative effect of change in accounting
principle - (0.83) -
---------- ---------- ----------
Net income $ 1.30 $ 0.26 $ 2.24
========== ========== ==========
FULLY DILUTED
Income before cumulative effect of change
in accounting principle $ 77,889 $ 65,213 $ 133,726
Cumulative effect of change in accounting
principle - (49,492) -
---------- ---------- ----------
Net income applicable to common shares $ 77,889 $ 15,721 $ 133,726
========== ========== ==========
Average number of common shares
outstanding during the year 59,441 59,408 59,337
Shares issuable upon exercise of stock
options at higher of average prices or
end of year prices 261 262 329
---------- ---------- ----------
Total 59,702 59,670 59,666
========== ========== ==========
Fully diluted earnings per common share
Income before cumulative effect of
change in accounting principle $ 1.30 $ 1.09 $ 2.24
Cumulative effect of change in accounting
principle - (0.83) -
---------- ---------- ----------
Net income $ 1.30 $ 0.26 $ 2.24
========== ========== ==========
</TABLE>
<PAGE>
Dole Food Company, Inc.
Consolidated Statement of Income
<TABLE>
<CAPTION>
(in thousands, except per share data) 1993 1992 1991
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenue $3,430,521 $3,375,492 $3,215,999
Cost of products sold 2,880,502 2,862,729 2,636,250
- ----------------------------------------------------------------------------------------
Gross margin 550,019 512,763 579,749
Selling, marketing and administrative expenses 365,250 327,985 355,997
Cost reduction program 42,500 45,700 --
- ----------------------------------------------------------------------------------------
Operating income 142,269 139,078 223,752
Interest expense (71,682) (72,777) (64,357)
Interest income 12,464 15,846 14,942
Gain on sale of 18% of common stock of subsidiary 30,853 -- --
Other expense -- net (15,815) (10,534) (5,111)
- ----------------------------------------------------------------------------------------
Income before income taxes and cumulative effect
of change in accounting principle 98,089 71,613 169,226
Income taxes (20,200) (6,400) (35,500)
- ----------------------------------------------------------------------------------------
Income before cumulative effect of
change in accounting principle 77,889 65,213 133,726
Cumulative effect of change in accounting
principle -- (49,492) --
- ----------------------------------------------------------------------------------------
Net income $ 77,889 $ 15,721 $ 133,726
========================================================================================
Earnings per common share, primary and
fully diluted
Income before cumulative effect of
change in accounting principle $ 1.30 $ 1.09 $ 2.24
Cumulative effect of change in
accounting principle -- (.83) --
- ----------------------------------------------------------------------------------------
Net income $ 1.30 $ .26 $ 2.24
========================================================================================
</TABLE>
See Notes to Consolidated Financial Statements.
PAGE NINETEEN
<PAGE>
Dole Food Company, Inc.
Consolidated Balance Sheet
<TABLE>
<CAPTION>
(in thousands, except shares outstanding) 1993 1992
- ------------------------------------------------------------------------------
<S> <C> <C>
Current assets
Cash and short-term investments $ 37,497 $ 57,272
Receivables -- net 407,554 346,284
Inventories 553,428 550,947
Real estate development inventory 105,900 85,788
Prepaid expenses 37,970 26,693
- ------------------------------------------------------------------------------
Total current assets 1,142,349 1,066,984
Real estate developments 288,217 288,475
Investments 34,071 31,603
Property, plant and equipment -- net 1,767,089 1,565,135
Long-term receivables -- net 70,653 91,608
Other assets 85,540 51,258
- ------------------------------------------------------------------------------
$3,387,919 $3,095,063
==============================================================================
Current liabilities
Notes payable $ 64,050 $ 93,513
Current portion of long-term debt 14,612 20,802
Accounts payable 163,966 137,604
Accrued liabilities 417,524 393,756
- ------------------------------------------------------------------------------
Total current liabilities 660,152 645,675
Long-term debt 1,158,297 987,730
Deferred income taxes and other long-term liabilities 430,014 425,304
Minority interests 87,342 35,336
Common shareholders' equity
Common stock (shares outstanding:
1993 -- 59,455,918; 1992 -- 59,414,655) 320,099 320,057
Additional paid-in capital 164,908 163,686
Retained earnings 596,573 542,468
Cumulative foreign currency translation adjustment (29,466) (25,193)
- ------------------------------------------------------------------------------
Total common shareholders' equity 1,052,114 1,001,018
- ------------------------------------------------------------------------------
$3,387,919 $3,095,063
==============================================================================
</TABLE>
See Notes to Consolidated Financial Statements.
PAGE TWENTY
<PAGE>
Dole Food Company, Inc.
Consolidated Statement of Cash Flow
<TABLE>
<CAPTION>
(in thousands) 1993 1992 1991
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating activities
Net income $ 77,889 $ 15,721 $ 133,726
Adjustments to net income
Depreciation and amortization 132,623 109,631 86,777
Equity (earnings) distributions, net (3,306) (1,880) 4,595
Gain on sale of subsidiary stock (30,853) -- --
Provision (benefit) for deferred income
taxes 649 (33,408) 36,122
Cumulative effect of accounting change -- 49,492 --
Charge for cost reduction program 42,500 45,700 --
Other (963) (585) 88
Change in operating assets and
liabilities, net of effects from
acquisitions
Receivables -- net (18,603) (22,024) (22,492)
Inventories 16,477 4,609 (58,570)
Prepaid expenses (8,222) 1,947 (1,527)
Real estate developments (22,598) (86,990) (23,334)
Other assets (23,145) (14,345) (606)
Accounts payable and accrued liabilities (31,296) (35,113) (4,666)
Income taxes payable (5,636) 13,929 (15,327)
Other 5,146 (13,043) (12,552)
- --------------------------------------------------------------------------------
Cash flow from operations 130,662 33,641 122,234
Investing activities
Proceeds from property disposals 17,140 5,917 1,479
Capital additions (218,659) (191,745) (325,160)
Purchase price of acquisitions, net of
acquired cash (107,996) (14,342) --
Purchases of investments -- net (181) (5,002) (5,088)
Other 1,659 2,776 2,488
- --------------------------------------------------------------------------------
Cash flow used in investing activities (308,037) (202,396) (326,281)
Financing activities
Short-term borrowings 78,244 149,184 159,933
Repayments of short-term debt (117,014) (134,313) (169,133)
Long-term borrowings 687,782 359,480 605,027
Repayments of long-term debt (542,487) (166,734) (350,680)
Cash dividends paid (23,784) (23,763) (29,710)
Net proceeds on sale of subsidiary common
stock 73,595 -- --
Other 1,264 568 3,388
- --------------------------------------------------------------------------------
Cash flow from financing activities 157,600 184,422 218,825
Increase (decrease) in cash and short-term
investments (19,775) 15,667 14,778
Cash and short-term investments at beginning
of year 57,272 41,605 26,827
- --------------------------------------------------------------------------------
Cash and short-term investments at end of year $ 37,497 $ 57,272 $ 41,605
================================================================================
</TABLE>
See Notes to Consolidated Financial Statements.
PAGE TWENTY-ONE
<PAGE>
Dole Food Company, Inc.
Notes to Consolidated Financial Statements
Note 1 -- Summary of Accounting Policies
Principles of Consolidation -- The consolidated financial statements include the
accounts of Dole Food Company, Inc. and all significant majority-owned
subsidiaries ("the Company").
Annual Closing Date -- The Company's fiscal year ends on the Saturday closest to
December 31. Fiscal years 1993, 1992 and 1991 ended on January 1, 1994, January
2, 1993 and December 28, 1991, respectively. Fiscal years 1993 and 1991 had 52
weeks and fiscal year 1992 had 53 weeks.
Inventories -- Inventories are stated at the lower of cost or market. Cost is
determined principally on a first-in, first-out basis. Specific identification
and average cost methods are also used for packing materials and operating
supplies.
Agricultural Costs -- The costs of growing bananas and pineapples are charged to
operations as incurred. Growing costs related to other crops are recognized when
the crops are harvested and sold.
Real Estate Developments -- Real estate developments are carried at cost, not in
excess of net realizable value. Costs which are directly related to land
development and construction are capitalized and amortized to cost of sales as
closings occur. Income from the sale of land and residential units is recognized
when closings have occurred and other criteria for sale and profit recognition
are satisfied in accordance with generally accepted accounting principles
governing profit recognition for real estate transactions.
Investments -- Investments in affiliates with ownership of 20% to 50% are
generally recorded on the equity method.
Property, Plant and Equipment -- Property, plant and equipment are stated at
cost, less accumulated depreciation. Depreciation is computed principally by the
straight-line method over the estimated useful lives of the assets.
Foreign Exchange -- The U.S. dollar is the functional currency for substantially
all of Dole's consolidated operations. Net foreign exchange gains or losses for
companies with the U.S. dollar as their functional currency are included in
determining net income and resulted in net losses of $3.6 million, $2.4 million
and $.4 million, for 1993, 1992 and 1991, respectively. Net exchange gains or
losses resulting from the translation of assets and liabilities of foreign
subsidiaries whose local currency is the functional currency are accumulated in
a separate component of common shareholders' equity.
Income Taxes -- The Company adopted Statement of Financial Accounting Standards
No. 109, "Accounting for Income Taxes" effective January 1, 1989. Under this
method, income tax liabilities and assets are recognized at enacted tax rates
for the expected future tax consequences of temporary differences between
carrying amounts and the tax basis of assets and liabilities. The income taxes
which would be due upon the distribution of foreign subsidiary earnings have not
been provided where the undistributed earnings are considered permanently
invested.
Earnings Per Common Share -- Primary earnings per common share are based on the
weighted average number of shares outstanding during the period after
consideration of the dilutive effect of stock options and restricted stock
awards. The primary weighted average number of common shares outstanding was
59.7 million for 1993, 1992 and 1991.
Cash and Short-Term Investments -- Cash and short-term investments include cash
on hand and time deposits. Such short-term investments generally have maturities
of three months or less at the time of purchase.
Fair Value of Financial Instruments -- For short-term financial instruments, the
historical carrying amount is a reasonable estimate of fair value. For long-term
financial instruments not readily marketable, fair values were estimated based
upon discounted future cash flows at prevailing market interest rates. Based on
these assumptions, management believes the fair market values of the Company's
financial instruments are not materially different from their recorded amounts
as of January 1, 1994.
Reclassifications -- Certain prior year amounts have been reclassified to
conform to the 1993 presentation.
Note 2 -- Acquisitions
During 1993, the Company acquired certain businesses for an aggregate purchase
price of approximately $117 million. These acquisitions included a French dried
fruit and nut business with revenues of $65 million, and three French banana
ripening and distribution companies which occurred in January 1993. In December
1993, the Company acquired two affiliated fruit juice businesses with combined
estimated annual sales of $90 million. The purchase agreement related to this
acquisition provides for potential additional consideration to be paid based
upon the future operating results of the acquired company through February 1996.
The Company also acquired in December 1993,
PAGE TWENTY-TWO
<PAGE>
five commercial real estate properties. These acquisitions were accounted for as
purchases and accordingly, the purchase price was allocated on a preliminary
basis to the net assets acquired based upon their estimated fair values at the
dates of acquisitions. The fair values of assets acquired and liabilities
assumed in connection with these acquisitions were $200 million (including cash
of $9 million) and $83 million, respectively.
Note 3 -- Sale of Subsidiary Stock
On March 4, 1993, approximately 18% or 5.4 million shares of the common stock of
the Company's residential real estate development company, Castle & Cooke Homes,
Inc., was sold at $15 per share through an initial public offering. The Company
continues to own the remaining 82% of Castle & Cooke Homes, Inc.'s common stock.
Net proceeds from the sale totaled approximately $74 million and resulted in a
gain of approximately $31 million ($18 million, net of tax). The minority
shareholders' interest of 18% totaled approximately $49 million at January 1,
1994.
Note 4 -- Current Assets and Liabilities
Short-term investments of $11.7 million and $35.3 million in 1993 and 1992,
respectively, consisted principally of time deposits. Outstanding checks which
are funded as presented for payment totaled $31.7 million and $37.3 million in
1993 and 1992, respectively, and were included in accounts payable.
Details of certain current assets were as follows:
<TABLE>
<CAPTION>
(in thousands) 1993 1992
- -----------------------------------------------------------
<S> <C> <C>
Receivables
Trade $290,507 $245,539
Notes and other 130,253 110,926
Affiliated operations 14,343 14,728
- -----------------------------------------------------------
435,103 371,193
Allowance for doubtful accounts (27,549) (24,909)
- -----------------------------------------------------------
$407,554 $346,284
===========================================================
Inventories
Finished products $213,753 $192,339
Raw materials and work in progress 160,635 152,337
Growing crop costs 38,509 46,297
Packing materials 69,843 84,345
Operating supplies and other 70,688 75,629
- -----------------------------------------------------------
$553,428 $550,947
===========================================================
</TABLE>
Accrued liabilities in 1993 and 1992 included approximately $105 million and $96
million, respectively, of amounts due to growers.
In 1992, the Company implemented a worldwide cost reduction program which
involved employee reductions, facility consolidations and aggressive efforts to
reduce procurement costs and enhance productivity. The Company recorded a charge
in the fourth quarter of 1992 of $45.7 million for severance and costs
associated with these undertakings. In 1993, in line with its continued cost
reduction and profit improvement efforts, the Company targeted additional
operations for closure and consolidation, resulting in a fourth quarter charge
of $42.5 million. Accrued liabilities in 1993 and 1992 included a liability of
approximately $46 million and $42 million, respectively, related to these
programs.
Note 5 -- Property, Plant and Equipment
Major classes of property, plant and equipment were as follows:
<TABLE>
<CAPTION>
(in thousands) 1993 1992
- ---------------------------------------------------------
<S> <C> <C>
Land and land improvements $ 681,353 $ 609,036
Buildings and improvements 499,680 460,415
Machinery and equipment 921,031 768,387
Construction in progress 153,934 114,693
- ---------------------------------------------------------
2,255,998 1,952,531
Accumulated depreciation (488,909) (387,396)
- ---------------------------------------------------------
$1,767,089 $1,565,135
=========================================================
</TABLE>
At January 1, 1994, the Company had commitments to spend approximately $60
million for vessels for its fresh fruit operations.
PAGE TWENTY-THREE
<PAGE>
Note 6 -- Debt
Notes payable of $64.1 million in 1993 and $93.5 million in 1992 consisted
primarily of short-term borrowings required to fund certain foreign operations.
Long-term debt consisted of:
<TABLE>
<CAPTION>
(in thousands) 1993 1992
- --------------------------------------------------------------
<S> <C> <C>
Unsecured debt
Notes payable to banks at an
average interest rate of 3.9%
(4.4% -- 1992) $ 397,807 $ 757,599
10.06% senior notes due 1995 -- 172,000
6.75% notes due 2000 225,000 --
7% notes due 2003 300,000 --
7.875% debentures due 2013 175,000 --
Various other notes due 1994-
2006 at an average interest rate
of 7.2% (5.5% -- 1992) 16,604 62,038
Secured debt
Mortgages, contracts and notes
due 1994-2006, at an average
interest rate of 6.7%
(10.4% -- 1992) 61,967 17,303
Unamortized debt discount and
issue costs (3,469) (408)
- --------------------------------------------------------------
1,172,909 1,008,532
Current maturities (14,612) (20,802)
- --------------------------------------------------------------
$1,158,297 $ 987,730
==============================================================
</TABLE>
On May 6, 1993 and July 27, 1993, the Company sold $300 million and $400
million, respectively, of unsecured notes in public offerings. The $300 million
notes bear interest at 7% and mature in 2003. The $400 million issuance is
comprised of $225 million notes bearing interest at 6.75% and maturing in 2000
and $175 million notes bearing interest at 7.875% and maturing in 2013. Net
proceeds from the sales of the notes were used to refinance outstanding
indebtedness, including the early retirement of $172 million of 10.06% senior
notes due 1995.
At January 2, 1993, notes payable to banks were comprised of net borrowings
under a $1.1 billion revolving credit agreement which was terminated in November
1993.
On November 17, 1993, the Company entered into a $400 million, 364-day revolving
credit facility ("Facility"). The initial and each succeeding revolving 364-
day term may be extended for an additional 364 days upon approval by the
lenders. Alternatively, the outstanding loans, if any, at the end of a 364-day
term may be converted to a 3-year term loan at the request of the Company. At
the Company's option, borrowings under the Facility bear interest at a certain
percentage over the agent's prime rate or the London Interbank Offered Rate
("LIBOR"). There were no borrowings outstanding under the Facility at year-
end.
The Company may borrow under uncommitted lines of credit at rates offered from
time to time by various banks that may or may not be lenders under the $400
million Facility. At January 1, 1994, net borrowings outstanding under the
uncommitted lines of credit totaled $398 million.
At January 2, 1993, Castle & Cooke Homes, Inc. had borrowings under a $75
million revolving credit facility totaling $52.5 million with a weighted average
interest rate of 5.1%.
In February 1993, Castle & Cooke Homes, Inc. entered into a $100 million
revolving credit facility consisting of an $81 million line of credit for
existing operations and a $19 million line of credit which, subject to lender
approval, is available for future real estate developments. The $81 million
portion of the credit facility requires a series of commitment reductions over
its term as follows: $10 million in each of March 1994, September 1994 and March
1995; $20 million in September 1995. The revolving credit facility terminates in
March 1996 and is secured by real property. At the option of Castle & Cooke
Homes, Inc., the revolving credit facility bears interest at a certain
percentage over the agent bank's base rate or LIBOR. Borrowings under this
agreement totaled $47.7 million at January 1, 1994 with a weighted average
interest rate of 5.5%.
Sinking fund requirements and maturities with respect to long-term debt at
January 1, 1994 were as follows (in millions): 1995 -- $22; 1996 -- $33; 1997 --
$399; 1998 -- $1; and thereafter -- $703.
Interest payments during 1993, 1992 and 1991, net of amounts capitalized,
totaled $60.0 million, $75.9 million and $67.7 million, respectively. Interest
costs of $4.4 million, $5.4 million and $9.1 million were capitalized in 1993,
1992, and 1991, respectively, pertaining to self-constructed assets.
PAGE TWENTY-FOUR
<PAGE>
Provisions under revolving loan agreements require the Company and certain real
estate subsidiaries (in the case of the $100 million credit facility) to comply
with certain financial covenants which include maintaining a minimum
consolidated net worth and minimum fixed charge coverage ratio and limit the
amount of outstanding indebtedness, certain project financing and real estate
investments.
Note 7 -- Employee Benefit Plans
The Company has qualified defined benefit pension plans covering most full-time
employees. Benefits under these plans are generally based on each employee's
eligible compensation, except for certain hourly plans which are based on
negotiated benefits, and years of service.
The Company's funding policy is to fund the net periodic pension cost plus a 15-
year amortization of the unfunded liability.
The status of the plans was as follows:
<TABLE>
<CAPTION>
(in thousands) 1993 1992
- ---------------------------------------------------------------
<S> <C> <C>
Actuarial present value of
accumulated benefit obligation
Vested $248,492 $219,972
Non-vested 16,866 10,378
- ---------------------------------------------------------------
$265,358 $230,350
===============================================================
Actuarial present value of projected
benefit obligation $282,765 $254,530
Plan assets at fair value, primarily
stocks and bonds 241,262 220,545
- ---------------------------------------------------------------
Projected benefit obligation in excess
of plan assets (41,503) (33,985)
Unrecognized net transition
obligation 2,167 3,082
Unrecognized prior service cost 6,763 4,905
Unrecognized net loss 13,320 854
Additional minimum liability (9,120) (2,907)
- ---------------------------------------------------------------
Accrued pension liability $(28,373) $(28,051)
===============================================================
</TABLE>
For U.S. plans, the projected benefit obligation was determined using an assumed
discount rate of 7.25% in 1993 and 8.5% in 1992, and an assumed rate of increase
in future compensation levels of 5% in 1993 and 6% in 1992. The expected long-
term rate of return on assets was 9% in both years. For non-U.S. plans, the
projected benefit obligation was determined using assumed discount rates of 12%
to 15% in 1993 and 12.5% to 15% in 1992, and assumed rates of increase in future
compensation levels of 10% to 13% in 1993 and 10.5% to 13% in 1992. The expected
long-term rate of return on assets for non-U.S. plans was 12% to 15% in 1993.
Pension expense included the following components:
<TABLE>
<CAPTION>
(in thousands) 1993 1992 1991
- ------------------------------------------------------------
<S> <C> <C> <C>
Service cost-benefits earned
during the year $ 6,600 $ 6,691 $ 6,379
Interest cost on projected
benefit obligation 21,737 20,894 19,627
Actual return on plan assets (33,136) (16,675) (33,947)
Net amortization and deferral 14,125 (2,085) 14,719
- ------------------------------------------------------------
$ 9,326 $ 8,825 $ 6,778
============================================================
</TABLE>
The Company has several 401(k) plans generally covering full-time U.S. employees
with at least one year of continuous service. Eligible employees may defer a
percentage of their annual compensation up to a maximum allowable under federal
income tax law to supplement their retirement income. These plans provide for
Company contributions based on a certain percentage of each participant's
contribution. Total Company contributions to these plans for 1993, 1992 and 1991
were $4.8 million, $4.3 million, and $4.9 million, respectively.
The Company is also a party to various industrywide collective bargaining
agreements which also provide pension benefits. Total contributions to these
plans plus direct payments to pensioners were $1.9 million in 1993 and $3.0
million in both 1992 and 1991.
In addition to providing pension benefits, the Company provides certain health
care and life insurance benefits for eligible retired employees. Certain
employees may become eligible for such benefits if they fulfill established
requirements upon reaching retirement age.
In 1992, the Company implemented Statement of Financial Accounting Standards No.
106, "Employers' Accounting for Postretirement Benefits Other Than Pensions."
This statement, among other changes, requires companies to accrue the projected
costs of retiree benefits during the employee's active service period. The
Company elected to immediately recognize the accumulated postretirement benefit
obligation as of December 29, 1991 of $82.5 million ($49.5 million, net of tax).
PAGE TWENTY-FIVE
<PAGE>
The status of the plans was as follows:
<TABLE>
<CAPTION>
(in thousands) 1993 1992
- ----------------------------------------------------------------
<S> <C> <C>
Accumulated postretirement
benefit obligation ("APBO")
Retirees $61,993 $54,737
Fully eligible actives 20,560 18,274
Other actives 15,511 12,874
- ----------------------------------------------------------------
98,064 85,885
Unrecognized prior service cost (92) --
Unrecognized net loss (9,347) (299)
- ----------------------------------------------------------------
Accrued postretirement
benefit liability $88,625 $85,586
================================================================
</TABLE>
Net periodic postretirement benefit cost included the following components:
<TABLE>
<CAPTION>
(in thousands) 1993 1992
- ----------------------------------------------------------------
<S> <C> <C>
Service cost -- benefits earned during
the year $ 852 $ 926
Interest cost on APBO 7,751 7,622
Net amortization and deferral 5 --
- ----------------------------------------------------------------
Net periodic postretirement
benefit cost $8,608 $8,548
================================================================
</TABLE>
For U.S. plans, an annual rate of increase in the per capita cost of covered
health care benefits of 13.5% in 1993 decreasing to 5.5% in 2010 and thereafter
was assumed for 1993, and a level rate of 10.5% was assumed for 1992. For the
Company's foreign plan, the assumed health care cost trend rate was 15% in both
years. The health care cost trend rate assumption has a significant effect on
the amounts reported. Increasing the assumed health care cost trend rate by one
percentage point in each year would have resulted in an increase in the
Company's APBO as of January 1, 1994 of approximately $9.6 million and the
aggregate of the service and interest cost components of net periodic
postretirement benefit cost for 1993 of approximately $1 million. The weighted
average discount rate used in determining the APBO was 7.25% in 1993 and 9% in
1992 for U.S. plans and 15% in both years for the foreign plan. The plans are
not funded.
Prior to 1992, the cost of postretirement benefits was recognized as payments
were made. These costs totaled $4.9 million during 1991.
Statement of Financial Accounting Standards No. 112, "Employers' Accounting for
Postemployment Benefits" is effective for the Company's 1994 fiscal year. This
standard requires that the cost of benefits provided to former or inactive
employees be recognized on the accrual basis of accounting. Since most of these
benefits were already accounted for by the Company on an accrual method, the
cumulative effect of adopting this new standard is not expected to be material.
Note 8 -- Stock Options and Awards
Under the 1991 and 1982 Stock Option and Award Plans ("the Plans"), the Company
can grant incentive stock options, non-qualified stock options, stock
appreciation rights, restricted stock awards and performance share awards to
officers and key employees of the Company. Stock options may be exercised for up
to ten years from the date of grant with or without stock appreciation rights,
as determined by the committee of the Company's Board of Directors administering
the Plans. No stock appreciation rights or performance share awards were
outstanding at January 1, 1994.
Stock option transactions during 1993 were as follows:
<TABLE>
<CAPTION>
Average
Shares Price
- ----------------------------------------------------
<S> <C> <C>
Beginning of year-outstanding 1,495,730 $29.70
Granted 411,850 33.12
Exercised (41,733) 27.88
Cancelled (146,065) 36.52
- ----------------------------------------------------
End of year-outstanding 1,719,782 $29.98
====================================================
Exercisable 1,172,694 $28.08
====================================================
</TABLE>
During 1992, the Company granted 27,500 restricted stock awards to key
employees. These awards become fully vested over a five-year period from the
date of grant.
Note 9 -- Shareholders' Equity
Authorized capital at January 1, 1994 consisted of 80 million shares of no par
value common stock and 30 million shares of no par value preferred stock,
issuable in series. At January 1, 1994, approximately 3.8 million shares of
common stock were reserved for issuance under the Company's Stock Option and
Award Plans (see Note 8). There was no preferred stock outstanding.
PAGE TWENTY-SIX
<PAGE>
The changes in shareholders' equity were as follows:
<TABLE>
<CAPTION>
Cumulative
Foreign Total
Additional Currency Common Common
Common Paid-in Retained Translation Shareholders' Shares
(in thousands, except share data) Stock Capital Earnings Adjustment Equity Outstanding
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 29, 1990 $319,912 $159,875 $440,567 $(23,465) $ 896,889 59,270,305
Net income -- -- 133,726 -- 133,726 --
Cash dividends declared ($.40 per share) -- -- (23,783) -- (23,783) --
Translation adjustments -- -- -- (780) (780) --
Other 124 3,264 -- -- 3,388 123,638
- ------------------------------------------------------------------------------------------------------------------------
Balance, December 28, 1991 320,036 163,139 550,510 (24,245) 1,009,440 59,393,943
Net income -- -- 15,721 -- 15,721 --
Cash dividends declared ($.40 per share) -- -- (23,763) -- (23,763) --
Translation adjustments -- -- -- (948) (948) --
Other 21 547 -- -- 568 20,712
- ------------------------------------------------------------------------------------------------------------------------
Balance, January 2, 1993 320,057 163,686 542,468 (25,193) 1,001,018 59,414,655
Net income -- -- 77,889 -- 77,889 --
Cash dividends declared ($.40 per share) -- -- (23,784) -- (23,784) --
Translation adjustments -- -- -- (4,273) (4,273) --
Other 42 1,222 -- -- 1,264 41,263
- ------------------------------------------------------------------------------------------------------------------------
Balance, January 1, 1994 $320,099 $164,908 $596,573 $(29,466) $1,052,114 59,455,918
========================================================================================================================
</TABLE>
Note 10 -- Contingencies
The Company is contingently liable as joint indemnitors on surety bonds related
to its real estate development operations. Outstanding bond commitments
approximated $97 million at January 1, 1994.
The Company is involved from time to time in various claims and legal actions
incident to its operations, both as plaintiff and defendant. In the opinion of
management, after consultation with legal counsel, none of such claims is
expected to have a material adverse effect on the Company.
Note 11 -- Lease Commitments
The Company has obligations under non-cancelable operating leases, primarily for
ship charters and containers, and certain equipment and office facilities. Lease
terms are generally for less than the economic life of the property. Certain
agricultural land leases provide for increases in minimum rentals based on
production. Total rental expense was $169 million, $171 million and $147 million
(net of sublease income of $19 million, $39 million and $30 million) for 1993,
1992 and 1991, respectively.
At January 1, 1994, the aggregate minimum rental commitments were as follows (in
millions): 1994 -- $99; 1995 -- $77; 1996 -- $51; 1997 -- $31; 1998 -- $13 and
thereafter -- $37. Future sublease income totaled $24 million.
PAGE TWENTY-SEVEN
<PAGE>
Note 12 -- Income Taxes
In 1992, the Company adopted Statement of Financial Accounting Standards No.
109, "Accounting for Income Taxes" and elected to apply the provisions
retroactively to 1989. Accordingly, retained earnings at December 30, 1989 were
reduced by $31.7 million, the cumulative effect of the change in the method of
accounting for income taxes. The accompanying consolidated financial statements
for 1991 have been restated for the effects of adopting this standard.
Income tax expense (benefit) was as follows:
<TABLE>
<CAPTION>
(in thousands) 1993 1992 1991
- ----------------------------------------------------------------
<S> <C> <C> <C>
Current
Federal, state and local $ 5,926 $ 20,472 $(16,907)
Foreign 13,625 19,336 16,285
- ----------------------------------------------------------------
19,551 39,808 (622)
- ----------------------------------------------------------------
Deferred
Federal, state and local 6,034 (33,408) 36,122
Foreign (5,385) -- --
- ----------------------------------------------------------------
649 (33,408) 36,122
- ----------------------------------------------------------------
$20,200 $ 6,400 $ 35,500
================================================================
</TABLE>
Pretax earnings attributable to foreign operations were $145 million, $163
million and $231 million for 1993, 1992 and 1991, respectively. Undistributed
earnings of foreign subsidiaries, which have been or are intended to be
permanently invested, aggregated $768 million at January 1, 1994.
The Company's reported income tax expense varied from the expense calculated
using the U.S. federal statutory tax rate for the following reasons:
<TABLE>
<CAPTION>
(in thousands) 1993 1992 1991
- -----------------------------------------------------------
<S> <C> <C> <C>
Expense computed at U.S.
federal statutory income
tax rate $ 34,331 $ 24,348 $ 57,537
Foreign income taxed at
different rates (24,014) (21,431) (25,514)
Dividends from subsidiaries 341 425 174
State and local income
tax, net of federal income
tax benefit 1,715 1,532 1,620
Impact of tax rate change 2,510 -- --
Other 5,317 1,526 1,683
- -----------------------------------------------------------
Reported income tax
expense $ 20,200 $ 6,400 $ 35,500
===========================================================
</TABLE>
Total income tax payments for 1993, 1992 and 1991 were $23.7 million, $29.4
million and $19.2 million, respectively.
Deferred tax assets (liabilities) were comprised of the following:
<TABLE>
<CAPTION>
(in thousands) 1993 1992 1991
- -------------------------------------------------------------------------
<S> <C> <C> <C>
Operating reserves $ 16,769 $ 17,919 $ (18,895)
Accelerated depreciation (41,703) (42,613) (39,982)
Inventory valuation methods 10,083 14,437 11,896
Effect of differences between
book values assigned in
prior acquisitions and
historical tax values (109,953) (104,245) (90,909)
Postretirement benefits 36,336 34,234 --
Current year acquisitions (8,603) -- --
Tax credit carryforward 39,075 -- --
Net operating loss
carryforward 3,115 16,042 --
Gain on sale of subsidiary
stock (12,650) -- --
Other (30,053) (24,125) (16,864)
- -------------------------------------------------------------------------
$ (97,584) $ (88,351) $(154,754)
=========================================================================
</TABLE>
The tax credit carryforward amount is primarily comprised of alternative minimum
tax credits which can be utilized to reduce regular tax liabilities and may be
carried forward indefinitely. The remaining credits expire from 1998 to 2008.
Total deferred tax assets and deferred tax liabilities were as follows:
<TABLE>
<CAPTION>
(in thousands) 1993 1992 1991
- --------------------------------------------------------------------------
<S> <C> <C> <C>
Deferred tax assets $ 200,249 $ 190,546 $ 140,074
Deferred tax liabilities (297,833) (278,897) (294,828)
- --------------------------------------------------------------------------
$ (97,584) $ (88,351) $(154,754)
==========================================================================
</TABLE>
The Company remains contingently liable with respect to certain tax credits sold
with recourse by Flexi-Van Corporation ("Flexi-Van"), the Company's former
transportation equipment leasing business, to a third party in 1981. These
credits are now being contested by the Internal Revenue Service. Flexi-Van,
which separated from the Company in 1987 and was subsequently acquired by David
H. Murdock, has indemnified the Company against obligations that might result
from the resolution of this matter.
PAGE TWENTY-EIGHT
<PAGE>
Note 13 -- Industry and Geographic Area Segment Information
The Company's major operations are in Food Products, Real Estate and Resorts.
The Food Products segment procures, grows, processes and markets fruits,
vegetables and nuts in the following locations: (1) North America; (2) Latin
America -- principally Chile, Colombia, Costa Rica, Ecuador, Honduras and
Panama; (3) Far East -- principally Japan, the Philippines and Thailand; and (4)
Europe -- principally Germany, France and Italy. Real estate activities are
conducted in the United States and consist primarily of holding, developing,
operating and selling residential and commercial real estate in Hawaii,
California and Arizona. Resorts include two luxury hotels on the Island of
Lana'i in Hawaii.
Revenue, operating income, identifiable assets, capital expenditures and
depreciation and amortization pertaining to the industries and geographic areas
in which the Company operates are presented below. Product transfers between
geographic areas are accounted for based on the estimated fair market value of
the products.
<TABLE>
<CAPTION>
(in millions) 1993 1992 1991
- ---------------------------------------------------------
<S> <C> <C> <C>
Revenue
Food Products
North America $1,852 $1,997 $1,950
Latin America 640 924 931
Far East 700 648 589
Europe 577 488 445
Intercompany elimination (661) (937) (951)
- ---------------------------------------------------------
Total Food Products 3,108 3,120 2,964
Real Estate 284 230 235
Resorts 39 26 17
- ---------------------------------------------------------
$3,431 $3,376 $3,216
=========================================================
Operating Income
Food Products
North America $ 39 $ 40 $ 35
Latin America 62 64 91
Far East 77 83 91
Europe -- 10 36
- ---------------------------------------------------------
Total Food Products 178 197 253
Real Estate 64 53 41
Resorts (40) (41) (39)
Corporate and unallocated (17) (24) (31)
Cost reduction program (43) (46) --
- ---------------------------------------------------------
$ 142 $ 139 $ 224
=========================================================
</TABLE>
<TABLE>
<CAPTION>
(in millions) 1993 1992 1991
<S> <C> <C> <C>
- ---------------------------------------------------------
Identifiable Assets
Food Products
North America $1,264 $1,199 $1,205
Latin America 486 495 469
Far East 266 248 195
Europe 211 85 53
- ---------------------------------------------------------
Total Food Products 2,227 2,027 1,922
Real Estate 788 715 617
Resorts 316 301 292
Corporate 57 52 47
- ---------------------------------------------------------
$3,388 $3,095 $2,878
=========================================================
Capital Expenditures
Food Products $ 174 $ 164 $ 259
Real Estate 9 18 13
Resorts 36 10 53
- ---------------------------------------------------------
$ 219 $ 192 $ 325
=========================================================
Depreciation and Amortization
Food Products $ 100 $ 88 $ 71
Real Estate 12 5 5
Resorts 16 15 10
Corporate and unallocated 5 2 1
- ---------------------------------------------------------
$ 133 $ 110 $ 87
=========================================================
</TABLE>
Notes: Food Products revenue includes inter-area transfers from Latin America to
North America, the Far East and Europe of $418 million in 1993; $731 million in
1992 and $757 million in 1991; inter-area transfers from the Far East to North
America and Europe of $227 million in 1993; $206 million in 1992 and $184
million in 1991; inter-area transfers from North America to Latin America, the
Far East and Europe of zero in 1993 and 1992 and $10 million in 1991; and inter-
area transfers from Europe to North America and Latin America of $16 million in
1993 and zero in 1992 and 1991.
The cost reduction program charge included in operating income for 1993 is
related to the Food Products segment. The cost reduction program charge included
in operating income for 1992 is allocable to the following segments: Food
Products -- $43 million, Real Estate -- $3 million.
PAGE TWENTY-NINE
<PAGE>
Note 14 -- Quarterly Financial Information (Unaudited)
The following table presents summarized quarterly results.
<TABLE>
<CAPTION>
First Second Third Fourth
(in thousands, except per share data) Quarter Quarter Quarter Quarter Year
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1993
Revenue $766,488 $863,653 $1,005,791 $794,589 $3,430,521
Gross margin 131,791 159,307 149,203 109,718 550,019
Net income (loss) 53,258 39,656 5,103 (20,128) 77,889
=========================================================================================================================
Earnings (loss) per common share $ .89 $ .66 $ .09 $ (.34) $ 1.30
=========================================================================================================================
1992
Revenue $753,284 $901,753 $ 956,880 $763,575 $3,375,492
Gross margin 120,857 151,673 151,588 88,645 512,763
Income (loss) before cumulative effect of accounting change 26,694 40,064 21,313 (22,858) 65,213
Cumulative effect of accounting change (49,492) -- -- -- (49,492)
- -------------------------------------------------------------------------------------------------------------------------
Net income (loss) $(22,798) $ 40,064 $ 21,313 $(22,858) $ 15,721
=========================================================================================================================
Earnings (loss) per common share
Income (loss) before cumulative effect of accounting change $ .45 $ .67 $ .36 $ (.39) $ 1.09
Cumulative effect of accounting change (.83) -- -- -- (.83)
- -------------------------------------------------------------------------------------------------------------------------
Net income (loss) $ (.38) $ .67 $ .36 $ (.39) $ .26
=========================================================================================================================
</TABLE>
Operating results for the fourth quarters of both 1993 and 1992 include a $42.5
million ($26.7 million, net of tax) and a $45.7 million ($27.4 million, net of
tax) charge, respectively, for the Company's cost reduction programs.
The first quarter of 1992 has been restated to reflect the adoption of SFAS No.
106. The impact of the adoption was not material in subsequent quarters, which
have not been restated. See Note 7 in Notes to Consolidated Financial
Statements.
All quarters have 12 weeks, except the third quarters of 1993 and 1992 which
have 16 weeks each and the fourth quarter of 1992 which has 13 weeks.
Note 15 -- Common Stock Data (Unaudited)
The following table shows the market price range of the Company's common stock
for each quarter in 1993 and 1992.
<TABLE>
<CAPTION>
High Low
- --------------------------------------------
<S> <C> <C>
1993
First Quarter $35 1/2 $30 1/4
Second Quarter 37 7/8 32 1/4
Third Quarter 37 1/2 30 3/8
Fourth Quarter 31 3/4 25 7/8
- --------------------------------------------
Year $37 7/8 $25 7/8
============================================
1992
First Quarter $40 $33
Second Quarter 36 7/8 29 1/4
Third Quarter 31 3/8 26 3/4
Fourth Quarter 32 7/8 26
- --------------------------------------------
Year $40 $26
============================================
</TABLE>
PAGE THIRTY
<PAGE>
Dole Food Company, Inc.
Report of Independent Public Accountants
To the Shareholders and Board of Directors of Dole Food Company, Inc.:
We have audited the accompanying consolidated balance sheet of Dole Food
Company, Inc. (a Hawaii corporation), and subsidiaries as of January 1, 1994 and
January 2, 1993, and the related consolidated statements of income and cash flow
for the years ended January 1, 1994, January 2, 1993 and December 28, 1991.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Dole Food Company,
Inc. and subsidiaries as of January 1, 1994 and January 2, 1993, and the results
of their operations and their cash flow for the years ended January 1, 1994,
January 2, 1993 and December 28, 1991, in conformity with generally accepted
accounting principles.
As discussed in Note 7 to the consolidated financial statements, the Company
changed its method of accounting for postretirement benefits other than
pensions, effective December 29, 1991.
/s/ ARTHUR ANDERSEN & CO.
Los Angeles, California
February 7, 1994
PAGE THIRTY-ONE
<PAGE>
Dole Food Company, Inc.
Management's Discussion and Analysis of Results of Operations and Financial
Position
1993 Compared With 1992 --
Revenue -- Consolidated revenue for 1993 was comparable to 1992, increasing $55
million and reaching a record level of over $3.4 billion.
Revenues for the food operations in 1993 and 1992 were level, accounting for
just over 90% of consolidated net sales. New businesses acquired in early 1993
accounted for approximately $100 million of revenue growth.
Banana revenues generated in the Company's North America and Far East markets
were down in 1993 due to lower prices. Revenues in the European market were also
lower as volumes into the European Community ("EC") were limited due to the new
EC banana regulations. Overall, the Company's worldwide banana volumes were
comparable in 1993 and 1992.
Improvements in 1993 revenue were noted for the fresh vegetable business,
attributable to higher lettuce and celery prices. This increase was offset by
declines in citrus revenues due to lower volumes and in fresh and packaged
pineapple sales due to lower prices.
The Company's residential real estate company, Castle & Cooke Homes, Inc.,
reported higher revenue in 1993 as home deliveries for both Hawaii and
California increased by 46% in 1993 compared to 1992, partially offset by lower
average home prices.
Selling, Marketing and Administrative Expenses -- Selling, marketing and
administrative expenses increased 11% from $328 million in 1992 to $365 million
in 1993. The effect of new acquisitions, plus additional spending for new
products and marketing programs for the fresh vegetable and packaged foods
operations more than offset savings achieved through cost reduction measures.
Cost Reduction Program -- The Company is continuing its emphasis on cost
reduction efforts. Dole has targeted the closure of certain of its businesses
which have suffered continuing losses. These include its Hawaiian sugar
operations, its Argentina deciduous operation, its Philippine shrimp farming
operation and a vegetable packing house. In addition, under Dole's newly
implemented management structure, certain functions within each of four global
regions, North America, Latin America, the Far East and Europe, are being
streamlined and consolidated, resulting in labor savings. One-time costs
associated with the above mentioned operational closures and other actions total
$43 million on a pretax basis and have been recorded in the 1993 fourth quarter
results. The charge included provisions for severance payments and other
employee related expenses, facilities consolidation costs, and other related
expenses, as well as write-downs of non-recoverable assets resulting from the
decision to close the above operations. These new initiatives identified in 1993
are part of the Company's continuing worldwide cost reduction program initially
launched in 1992, which is aimed at reducing the Company's cost structure and
increasing profitability. However, the ultimate impact on operating results of
the cost reduction measures described above and other steps initiated in the
prior year will depend on various operating factors and market conditions in
which the Company operates.
Operating Income -- Consolidated operating income, before cost reduction
charges, was $185 million in both 1993 and 1992. Operating income for the
Company's food operations, net of corporate general and administrative expenses
and before the 1993 and 1992 charges for cost reduction programs, totaled $161
million in 1993 compared to $173 million in 1992. During 1993, the food
operations experienced price pressures on some of its products, resulting in
lower earnings. However, the successful implementation of cost reduction efforts
throughout the Company partially offset a portion of these earnings declines.
Cost reductions achieved during 1993 were significant, totaling approximately
$130 million, including a substantial reduction in the Company's worldwide labor
force. Marginally productive banana lands were abandoned and various
agricultural and harvesting practices were re-examined and modified to be more
cost effective. The efficiency of the Company's shipping service between Latin
America and North America was significantly improved. The Company's citrus and
deciduous businesses were consolidated in Bakersfield, several citrus packing
houses and an underutilized facility in Bakersfield were closed, and the
packaged foods headquarters were relocated from San Francisco to Westlake
Village, California. Tighter inventory controls and new supplier contracts also
contributed significantly to 1993's cost reductions.
Banana earnings which accounted for a significant portion of operating income
were lower in 1993 than in 1992 due to several factors. The new European
Community banana regulations which impose quotas on bananas exported from Latin
America to the EC were implemented on July 1, 1993. These regulations disrupted
traditional trading patterns causing banana volumes displaced by the EC
restrictions to be shipped into North American and non-EC European banana
markets, resulting in lower prices in the affected markets. Earnings were also
lower in the Far East markets due to the recession in Japan and increased
industry volumes. Another condition which affected the 1993 banana results was
an outbreak in the Company's farms in Honduras of sigatoka, a fungus which
attacks banana plants. This resulted in reduced volumes and increased fruit
costs from that source in the second half of 1993. Steps were taken to control
the disease and at year-end, growing costs are returning to more normal levels.
In addition, operating income for the fourth quarter of 1992 included an
insurance recovery of approximately $15 million related to the 1991 Costa Rican
earthquake.
Dole distributes its products in more than 70 countries throughout the world.
Its international sales are usually transacted in U.S. dollars and major
European and Asian currencies, while many of its costs are incurred in
currencies
PAGE THIRTY-TWO
<PAGE>
different from those that are received from the sale of the product. Results of
operations may be significantly affected by fluctuations of currency exchange
rates in both the sourcing and selling locations. The overall net impact of
foreign currency fluctuations was immaterial to the results of operations in
1993 and 1992.
The packaged foods and fresh pineapple operations also reported lower earnings
in 1993. Price pressures for canned pineapple resulted from heavy industry
supplies and a drop in demand in Europe and Japan due to recessions in those
areas. Prices were also lower in 1993 for Dole's beverage products due to strong
competition from lower-priced orange juice, and for fresh pineapple due to the
recession.
During 1994 worldwide banana markets will continue to adjust to the new European
Community banana regulations and price pressures are expected to persist on
canned pineapple and concentrate.
Lower 1993 earnings for bananas and pineapples were partially offset by the
strong performance of the fresh vegetable operations resulting primarily from
higher lettuce and celery prices and improvements in cost structure. Improved
1993 results were also reported for California table grapes as sales prices were
up from 1992 levels.
Included in the Company's real estate operations was Castle & Cooke Homes, Inc.,
which reported operating income for 1993 of $56 million compared to $52 million
for 1992. Higher earnings in 1993 were primarily attributable to an increase in
the number of units sold at the Hawaiian developments, partially offset by lower
earnings for the California developments.
The Lana'i resorts operations reported an operating loss before depreciation of
$24 million for 1993 as compared to $26 million in 1992, with improved occupancy
rates for both hotels in 1993. Depreciation expense was approximately $16
million and $15 million in 1993 and 1992, respectively.
Gain on Sale of Subsidiary Common Stock -- On March 4, 1993, approximately 18%
or 5.4 million shares of the common stock of Castle & Cooke Homes, Inc. was sold
at $15 per share through an initial public offering. The Company continues to
own the remaining 82% of Castle & Cooke Homes, Inc.'s common stock. Net proceeds
from the sale totaled approximately $74 million and resulted in a gain of
approximately $31 million ($18 million, net of tax).
Interest Expense, Net -- Interest expense, net of interest income and
capitalized interest, increased to $59 million in 1993 from $57 million in 1992,
primarily attributable to higher average debt levels offset by a lower weighted
average borrowing rate, and a decline in interest income.
Income Taxes -- The Company's effective income tax rate increased to 20.6% for
1993 from 8.9% in 1992, primarily as a result of a change in the mix of domestic
and foreign earnings, largely due to the inclusion of the gain on the initial
public offering of Castle & Cooke Homes, Inc. In addition, the higher federal
income tax rates enacted in August 1993 required the Company to provide
additional taxes on its 1993 domestic earnings, as well as on its net deferred
tax liability.
1992 Compared With 1991--
Revenue -- Consolidated revenue increased $160 million or 5% from 1991 to 1992,
reaching nearly $3.4 billion. This improvement was largely attributable to the
fresh fruit and vegetable operations, primarily citrus which returned to normal
packing and farming operating levels after suffering in 1991 from reduced fruit
production caused by the December 1990 freeze in California. In fresh
vegetables, higher sales volumes for most products resulted in a revenue gain in
1992. The Company's Latin American beverage operation also contributed to the
revenue growth as a result of higher soft drink prices and volumes. Bananas
accounted for approximately 30% and 32% of consolidated revenue in 1992 and
1991, respectively. Although sales volumes for the Company's banana operations
were moderately higher in 1992 and foreign currency exchange rates were
favorable compared to 1991, prices worldwide were down, keeping revenue at its
1991 level.
Selling, Marketing and Administrative Expenses -- Selling, marketing and
administrative expenses decreased 8% from $356 million in 1991 to $328 million
in 1992, primarily due to reduced costs of marketing programs and lower general
and administrative expenses.
Cost Reduction Program -- In 1992, the Company implemented a formal worldwide
cost reduction program which involved employee reductions, facility
consolidations and aggressive efforts to reduce procurement costs and enhance
productivity. A fourth quarter pretax charge of $46 million was recorded for
severance and costs associated with this program.
Operating Income -- Consolidated operating income for 1992, before the cost
reduction charge, was $185 million compared to $224 million in 1991, an overall
decline of 17%. The Company's food operations, net of corporate general and
administrative expenses and before the cost reduction program charge described
above, reported operating income of $173 million in 1992 as compared to $222
million in 1991. This decline was principally related to banana operations,
where lower prices due to a worldwide oversupply and global recession led to
lower results. Nevertheless, banana operations continued to account for a
significant portion of operating income in 1992.
Citrus showed improved results as volumes were significantly higher in 1992
compared to 1991, when volumes were negatively affected by the December 1990
California freeze. The Latin American beverage operations enjoyed improved
results in 1992, as did the packaged foods operations. Partially offsetting
these increases were lower 1992 results for the dried fruit and nuts and the
fresh vegetable operations, primarily attributable to lower first half lettuce
prices caused by high industry volumes.
Operating income for 1992 also included an insurance recovery of approximately
$15 million related to the 1991 Costa Rican earthquake.
PAGE THIRTY-THREE
<PAGE>
Included in the Company's real estate operations was the residential business
which reported operating income of $52 million for 1992 as compared to $44
million for 1991, an 18% increase. The improvement in earnings was primarily due
to an increase in the average sales price of homes sold at the Company's
residential projects in Hawaii.
Resort operations and related support activities on the Island of Lana'i in
Hawaii reported improved occupancy rates and lower marketing expense in 1992,
resulting in an operating loss before depreciation of $26 million for 1992 as
compared to $29 million in 1991. Depreciation expense was $15 million and $10
million for 1992 and 1991, respectively.
Interest Expense, Net -- Interest expense, net of interest income and
capitalized interest, increased to $57 million in 1992 from $50 million in 1991.
This increase reflects the higher average borrowing levels required to finance
the Company's capital investments and a lower amount of capitalized interest,
partially offset by lower interest rates.
Other Expense -- Other expense increased in 1992, primarily the result of higher
minority interest expense related to improved earnings for the Company's citrus
and Latin American beverage operations.
Income Taxes -- The Company's effective income tax rate decreased from 21% in
1991 to 8.9% in 1992 as a result of the effect of the significant fourth quarter
charge for the cost reduction program on the mix of foreign and domestic
earnings.
New Accounting Pronouncements -- In 1992, the Company implemented Statements of
Financial Accounting Standards Nos. 106 and 109 covering postretirement benefits
and income tax accounting. Complying with the requirements of these standards
resulted in a one-time non-cash charge to 1992 earnings of $49 million, net of
tax, and a retroactive charge to prior earnings of $32 million. The impact of
the adoption of these standards is more fully described in the Consolidated
Financial Statements and related Notes.
Liquidity and Capital Resources --
In 1993, the Company's working capital requirements and capital programs were
financed through a combination of internally generated funds and external
borrowings. Cash flow from operations was $131 million for 1993, an increase of
$97 million from $34 million for 1992. The increase was primarily attributable
to decreased spending for real estate developments.
Cash flow from financing activities of $158 million in 1993 decreased from
$184 million in 1992. The Company's financing needs were lower in 1993 in part
due to the proceeds generated by the March 1993 initial public offering of
Castle & Cooke Homes, Inc. The balance of the Company's financing needs were met
primarily by long-term borrowings.
On May 6, 1993 and July 27, 1993, the Company sold $300 million and $400
million, respectively, of unsecured notes in public offerings. The $300 million
notes bear interest at 7% and mature in 2003. The $400 million issuance is
comprised of $225 million notes bearing interest at 6.75% and maturing in 2000
and $175 million notes bearing interest at 7.875% and maturing in 2013. Net
proceeds from the sale of the notes were used to refinance outstanding
indebtedness.
On November 17, 1993, the Company entered into a $400 million, 364-day revolving
credit facility ("Facility"). The initial and each succeeding revolving 364-
day term may be extended for an additional 364 days upon approval by the
lenders. Alternatively, the outstanding loans, if any, at the end of a 364-day
term may be converted to a 3-year term loan at the request of the Company. At
the Company's option, borrowings under the Facility bear interest at a certain
percentage over the agent's prime rate or the London Interbank Offered Rate
("LIBOR"). There were no borrowings outstanding under the Facility at year-
end.
The Company may borrow under uncommitted lines of credit at rates offered from
time to time by various banks that may or may not be lenders under the $400
million Facility. At January 1, 1994, net borrowings under the uncommitted lines
of credit totaled approximately $398 million, with a weighted average interest
rate of 3.9%.
In connection with the initial public offering mentioned above, Castle & Cooke
Homes, Inc. entered into a $100 million revolving credit facility with a group
of banks. The revolving credit facility has a term of three years and bears
interest at a variable rate. At January 1, 1994, borrowings under this credit
facility totaled $48 million, with a weighted average interest rate of 5.5%.
Capital expenditures for 1993 totaled approximately $219 million, of which $174
million was invested in the Company's food operations for infrastructure,
further development and modernization of new and existing facilities and
progress payments on new vessels. The remaining progress payments related to the
vessels, which are expected to be delivered in 1994, total approximately $60
million.
During 1993, the Company acquired certain businesses for an aggregate purchase
price of approximately $117 million. These acquisitions included a French dried
fruit and nut business with revenues of $65 million, and three French banana
ripening and distribution companies which occurred in January 1993. In December
1993, the Company acquired two affiliated fruit juice businesses with combined
estimated annual sales of $90 million. The purchase agreement related to this
acquisition provides for potential additional consideration to be paid based
upon the future operating results of the acquired company through February 1996.
The Company also acquired in December 1993, five commercial real estate
properties.
During 1993, an additional $36 million was invested in the continuing
development of the Lana'i resort project, primarily related to the Manele Bay
golf course.
The Company declared and paid four quarterly dividends of 10 cents per share on
its common stock totaling approximately $24 million in 1993.
PAGE THIRTY-FOUR
<PAGE>
Dole Food Company, Inc.
Results of Operations and Selected Financial Data
<TABLE>
<CAPTION>
(in millions, except per share data) 1993 1992 1991 1990 1989 1988 1987 1986
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenue $3,431 $3,376 $3,216 $3,003 $2,718 $2,469 $1,855 $1,777
Cost of products sold 2,881 2,863 2,636 2,419 2,167 1,919 1,456 1,386
- ----------------------------------------------------------------------------------------------------------------------------------
Gross margin 550 513 580 584 551 550 399 391
Selling, marketing and administrative expenses 365 328 356 355 352 355 247 260
Cost reduction program 43 46 -- -- -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Operating income 142 139 224 229 199 195 152 131
Interest expense -- net (59) (57) (50) (42) (41) (34) (15) (26)
Gain on sale of subsidiary stock or
investment 31 -- -- 8 -- 18 -- --
Other expense -- net (16) (11) (5) (7) (7) (4) (3) (5)
- ----------------------------------------------------------------------------------------------------------------------------------
Income from continuing operations before
income taxes and accounting change 98 71 169 188 151 175 134 100
Income taxes (20) (6) (35) (68) (56) (63) (45) (27)
- ----------------------------------------------------------------------------------------------------------------------------------
Income from continuing operations before
accounting change 78 65 134 120 95 112 89 73
Discontinued operations -- -- -- -- -- -- 8 (29)
- ----------------------------------------------------------------------------------------------------------------------------------
Income before accounting change 78 65 134 120 95 112 97 44
Cumulative effect of accounting change -- (49) -- -- (32) -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Net income $ 78 $ 16 $ 134 $ 120 $ 63 $ 112 $ 97 $ 44
==================================================================================================================================
Earnings per common share, fully diluted
Continuing operations $1.30 $ 1.09 $2.24 $2.03 $1.60 $1.90 $1.49 $1.22
Cumulative effect of accounting change -- (.83) -- -- (.53) -- -- --
Net income $1.30 $ .26 $2.24 $2.03 $1.07 $1.90 $1.60 $.56
==================================================================================================================================
Other statistics
Working capital $ 482 $ 421 $ 466 $ 309 $ 102 $ 350 $ 306 $ 324
Total assets 3,388 3,095 2,878 2,499 2,349 1,922 1,711 1,227
Long-term debt 1,158 988 813 542 244 331 341 139
Total debt 1,237 1,102 889 638 648 431 385 198
Convertible preferred stocks -- -- -- -- -- -- 107 108
Common shareholders' equity 1,052 1,001 1,009 897 804 743 532 470
Cash dividends declared per common share .40 .40 .40 .10 -- -- -- --
Capital additions for continuing operations 219 192 325 247 304 155 87 34
Depreciation and amortization from
continuing operations 133 110 87 72 58 44 29 30
==================================================================================================================================
</TABLE>
Note: The results of operations of Flexi-Van Corporation for 1987 and 1986 have
been presented as a discontinued operation.
PAGE THIRTY-FIVE
<PAGE>
Company and Shareholder Information
The Company
Founded in Hawaii in 1851, Dole Food Company, Inc. is the world's largest
producer and marketer of fresh fruits and vegetables, and markets a growing line
of packaged foods. It is also a major real estate owner and developer in Hawaii,
California and Arizona. The Company does business in more than 70 countries and
employs approximately 45,000 full-time people worldwide.
Corporate Headquarters
31355 Oak Crest Drive
Westlake Village, CA 91361
(818) 879-6600
Auditors
Arthur Andersen & Co.
633 West Fifth Street
Los Angeles, CA 90071
Securities Transfer Agent
The First National Bank of Boston
P.O. Box 644
Boston, MA 02102
Shareholder Inquiries
Shareholders and members of the investment industry should direct inquiries to:
Office of the Corporate Secretary
Dole Food Company, Inc.
31355 Oak Crest Drive
Westlake Village, CA 91361
(818) 879-6600
Form 10-K
A copy of Dole Food Company, Inc.'s Form 10-K, a corporate operational and
financial report filed annually with the Securities and Exchange Commission, is
available upon request without charge.
Stock Exchange
Dole Food Company, Inc.'s common stock (DOL) is traded on the New York and
Pacific Stock Exchanges.
[PRINTED ON RECYCLED
PAPER LOGO APPEARS HERE]
The financial pages of this annual report are printed on recycled paper.
Dole(R) is a registered trademark of Dole Food Company, Inc. The Lodge at Koele,
The Manele Bay Hotel, The Experience at Koele and The Challenge at Manele are
trademarks and service marks of Dole Food Company, Inc. and/or its affiliates.
(C) 1994 Dole Food Company, Inc. All rights reserved.
PAGE THIRTY-SEVEN
<PAGE>
EXHIBIT 21
SUBSIDIARIES OF DOLE FOOD COMPANY, INC.
---------------------------------------
There are no parents of the Registrant.
Registrant's consolidated subsidiaries are shown below together with the
percentage of voting securities owned and the state or jurisdiction of
organization of each subsidiary. The names have been omitted for subsidiaries
which, if considered in the aggregate as a single subsidiary, do not constitute
a significant subsidiary. Subsidiaries of subsidiaries are indented in the
following table:
<TABLE>
<CAPTION>
PERCENT OF
OUTSTANDING
VOTING SECURITIES
OWNED AS OF
SUBSIDIARIES OF REGISTRANT JANUARY 1, 1994
-------------------------- -----------------
<S> <C>
Castle & Cooke Fresh Fruit Company 100%
(Nevada)
ABA Holding, Inc. 100%
(New Jersey)
Juice Bowl Products, Inc. 100%
(Florida)
Looza Distribution N.V. 100%
(Belgium)
Beebe Orchard Company 100%
(Delaware)
Dole Citrus 100%
(California)
Dole Fresh Fruit Company 100%
(Nevada)
Dole Europe Company 100%
(Delaware)
</TABLE>
1
<PAGE>
<TABLE>
<CAPTION>
PERCENT OF
OUTSTANDING
VOTING SECURITIES
OWNED AS OF
SUBSIDIARIES OF REGISTRANT JANUARY 1, 1994
-------------------------- -----------------
<S> <C>
Castle & Cooke Fresh Fruit Company (cont'd)
Dole Fresh Fruit Europe Ltd. & Co. 100%
(Federal Republic of Germany)
Dole Fresh Fruit International, Inc. 100%
(Panama)
Standard Fruit Company 100%
(Delaware)
Cerveceria Hondurena, S.A. 66%
(Honduras)
Standard Fruit Company de Costa Rica, S.A. 100%
(Costa Rica)
Standard Fruit and Steamship Company 100%
(Delaware)
Wells & Wade Fruit Company 100%
(Washington)
Castle & Cooke Worldwide Limited 100%
(Hong Kong)
Dole Fresh Fruit International, Limited 100%
(Liberia)
Solvest, Ltd. 100%
(Bermuda)
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
PERCENT OF
OUTSTANDING
VOTING SECURITIES
OWNED AS OF
SUBSIDIARIES OF REGISTRANT JANUARY 1, 1994
-------------------------- -----------------
<S> <C>
Castle & Cooke Worldwide Limited (cont'd)
Standard Fruit de Honduras, S.A. 100%
(Honduras)
Dole Europe B.V. 100%
(Netherlands)
Soleil Holding France S.A. 100%
(France)
SAMICA, S.A. 100%
(France)
Dole Chile, S.A. 100%
(Chile)
Dole Thailand Limited 64%
(Thailand)
Compania Financiera de Costa Rica, S.A. 100%
(Costa Rica)
Dole Bakersfield, Inc. 100%
(California)
Dole Dried Fruit and Nut Company 100%
(California)
Dole Fresh Vegetables, Inc. 100%
(California)
Bud Antle, Inc. 100%
(California)
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
PERCENT OF
OUTSTANDING
VOTING SECURITIES
OWNED AS OF
SUBSIDIARIES OF REGISTRANT JANUARY 1, 1994
- -------------------------- -----------------
<S> <C>
Dole Carrot Company 100%
(California)
Royal Packing Co. 100%
(California)
Dole Japan, Ltd. 100%
(Japan)
Dole Land Company, Inc. 100%
(Hawaii)
Dole Mega Holding Corp. 100%
(Hawaii)
Mega Properties Partnership 1%
(a Delaware general partnership)
Dole Mega Trust 99%
(a Delaware business trust)
Mega Properties Partnership 99%
(a Delaware general partnership)
Dole Philippines, Inc. 99%
(Republic of the Philippines)
Earlibest Orange Association, Inc. 100%
(California)
S & J Ranch, Inc. 100%
(California)
Dole Nut Company 100%
(California)
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
PERCENT OF
OUTSTANDING
VOTING SECURITIES
OWNED AS OF
SUBSIDIARIES OF REGISTRANT JANUARY 1, 1994
- -------------------------- -----------------
<S> <C>
M K Development, Inc. 100%
(Hawaii)
Lanai Resort Partners 98%
(a California general partnership)
Castle & Cooke Properties, Inc. 100%
(Hawaii)
Castle & Cooke Homes, Inc. 50%
(Hawaii)
Castle & Cooke Homes Hawaii, Inc. 100%
(Hawaii)
Castle & Cooke California, Inc. 100%
(California)
Castle & Cooke Communities, Inc. 100%
(Hawaii)
Castle & Cooke Bakersfield Holdings, Inc. 100%
(Delaware)
Castle & Cooke Homes, Inc. 32%
(Hawaii)
Castle & Cooke Homes, Inc. 100%
(California)
Waialua Sugar Company, Inc. 100%
(Hawaii)
</TABLE>
5
<PAGE>
Exhibit 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
reports included (or incorporated by reference) in this Form 10-K into Dole Food
Company, Inc.'s previously filed Registration Statements on Form S-3
Registration Nos. 33-41480 and 33-64984 and Form S-8 Registration Nos. 2-87475,
33-594, 33-28782 and 33-42152.
Los Angeles, California
February 7, 1994
