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HEI Exhibit 10
CHANGE IN CONTROL AGREEMENT
THIS AGREEMENT, dated as of
(the "Effective Date"), is made by and between Hawaiian Electric
Industries, Inc., a Hawaii corporation (the "Company"), and
(the "HEI Executive").
WHEREAS, the Company considers it essential to the best
interests of its stockholders to foster the continued employment of
key management personnel; and
WHEREAS, the Board recognizes that, as is the case with many
publicly held corporations, the possibility of a Change in Control
exists and that such possibility, and the uncertainty and questions
which it may raise among management, may result in the departure or
distraction of management personnel to the detriment of the Company
and its stockholders; and
WHEREAS, the Board has determined that appropriate steps should
be taken to reinforce and encourage the continued attention and
dedication of members of the Company’s management, including
the Executive, to their assigned duties without distraction in the
face of potentially disturbing circumstances arising from the
possibility of a Change in Control; and
WHEREAS, the Executive currently is party to a Change-in-Control
Agreement (the "Existing CIC Agreement") with the Company; and
WHEREAS, the Company and the Executive intend for the Existing
CIC Agreement to cease to be of any force or effect as of the date
hereof;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the Company and the Executive hereby
agree as follows:
1. Defined Terms . The definitions
of capitalized terms used in this Agreement are provided in the
last Section hereof.
2. Term of Agreement . The Term of
this Agreement shall commence on the Effective Date and shall
continue in effect through the second anniversary of the Effective
Date; provided , however , that commencing on the
first anniversary of the Effective Date, and on each anniversary of
the Effective Date thereafter, the Term shall automatically be
extended for one additional year unless, not later than 90 days
prior to each such date, the Company or the Executive shall have
given notice not to extend the Term; and provided ,
further , that if a Change in Control shall have occurred
during the Term, the Term shall expire no earlier than 24 months
beyond the date on which such Change in Control occurred. Effective
as of the Effective Date, the Existing CIC Agreement shall
terminate and shall cease to be of any further force or effect and
the Executive waives all rights that may have accrued
thereunder.
3. Company’s Covenants Summarized
. In order to induce the Executive to remain
in the employ of the Company and in consideration of the
Executive’s covenants set forth in Section 4 hereof, the
Company agrees, under the conditions described herein, to pay the
Executive the Severance Payments and the other payments and
benefits described herein. No Severance Payments shall be payable
under this Agreement unless there shall have been (or,
under the terms of the second sentence of
Section 6.1 hereof, there shall be deemed to have been) a
termination of the Executive’s employment with the Company
following a Change in Control and during the Term. This Agreement
shall not be construed as creating an express or implied contract
of employment and, except as otherwise agreed in writing between
the Executive and the Company, the Executive shall not have any
right to be retained in the employ of the Company.
4. The Executive’s Covenants
. The Executive agrees that, subject to the
terms and conditions of this Agreement, in the event of a Potential
Change in Control during the Term, the Executive will remain in the
employ of the Company until the earliest of (i) a date which
is six months from the date of such Potential Change in Control,
(ii) the date of a Change in Control, (iii) the date of
termination by the Executive of the Executive’s employment
for Good Reason or by reason of death, Disability or Retirement, or
(iv) the termination by the Company of the Executive’s
employment for any reason.
5. Compensation Other Than Severance Payments .
5.1 Following a Change in Control and during the
Term, during any period that the Executive fails to perform the
Executive’s full time duties with the Company as a result of
incapacity due to physical or mental illness, the Company shall pay
the Executive’s full salary to the Executive at the rate in
effect at the commencement of any such period, together with all
compensation and benefits payable to the Executive under the terms
of any compensation or benefit plan, program or arrangement
maintained by the Company during such period (other than any
disability plan), until the Executive’s employment is
terminated by the Company for Disability.
5.2 If the Executive’s employment shall be
terminated for any reason following a Change in Control and during
the Term, the Company shall pay the Executive’s full salary
(determined without regard to any reduction constituting Good
Reason) to the Executive through the Date of Termination together
with all compensation and benefits payable to the Executive through
the Date of Termination under the terms of the Company’s
compensation and benefit plans, programs or arrangements as in
effect immediately prior to the Date of Termination or, subject to
execution of a release of claims in accordance with
Section 6.6 of this Agreement, as in effect immediately prior
to the first occurrence of an event or circumstance constituting
Good Reason if more favorable to the Executive.
5.3 If the Executive’s employment shall be
terminated for any reason following a Change in Control and during
the Term, the Company shall pay to the Executive the
Executive’s normal post termination compensation and benefits
as such payments become due. Such post termination compensation and
benefits shall be determined under, and paid in accordance with,
the Company’s retirement, insurance and other compensation or
benefit plans, programs and arrangements as in effect immediately
prior to the Date of Termination or, subject to execution of a
release of claims in accordance with Section 6.6 of this
Agreement, as in effect immediately prior to the occurrence of the
first event or circumstance constituting Good Reason if more
favorable to the Executive.
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5.4 For the two-year period commencing
immediately following a Change in Control, the Company agrees
(A) to provide the Executive with benefits substantially
similar to the material benefits provided to the Executive under
any of the Company’s executive compensation (including bonus,
equity or incentive compensation), pension, savings, life
insurance, medical, health and accident, or disability plans in
which the Executive was participating immediately prior to the
Change in Control and to provide the Executive with a number of
vacation days that would be no less favorable to the Executive than
the number determined in accordance with the vacation policy in
effect immediately prior to the Change in Control on the basis of
the Executive’s years of service with the Company,
(B) to timely pay to the Executive the Executive’s
current compensation and any installments of deferred compensation
due under any deferred compensation program of the Company, and
(C) not to take any other action that would directly or
indirectly deprive the Executive of any material fringe benefit
enjoyed by the Executive immediately prior to the Change in Control
(in each case except for across the board changes similarly
affecting all senior executives of the Company and all senior
executives of any Person in control of the Company).
6. Severance Payments .
6.1 If the Executive’s employment is terminated
following a Change in Control and within two (2) years after a
Change in Control (provided that such termination of employment
constitutes a "separation from service" within the meaning of
Section 409A of the Code), other than (A) by the Company
for Cause, (B) by reason of death or Disability, or
(C) by the Executive without Good Reason, then the Company
shall pay the Executive the amounts, and provide the Executive the
benefits, described in this Section 6.1 ("Severance
Payments"), in addition to any payments and benefits to which the
Executive is entitled under Section 5 hereof. For purposes of
this Agreement, the Executive’s employment shall be deemed to
have been terminated following a Change in Control by the Company
without Cause or by the Executive with Good Reason, if (i) the
Executive’s employment is terminated by the Company without
Cause prior to a Change in Control (whether or not a Change in
Control ever occurs) and such termination was at the request or
direction of a Person who has entered into an agreement with the
Company the consummation of which would constitute a Change in
Control, or (ii) the Executive terminates her employment for
Good Reason prior to a Change in Control (whether or not a Change
in Control ever occurs) and the circumstance or event which
constitutes Good Reason occurs at the request or direction of such
Person. For purposes of any determination regarding the
applicability of the immediately preceding sentence, any position
taken by the Executive shall be presumed to be correct unless the
Company establishes to the Board by clear and convincing evidence
that such position is not correct.
(A) In lieu of any further salary payments to the Executive for
periods subsequent to the Date of Termination, the Company shall
pay to the Executive a lump sum severance payment, in cash, equal
to (amount to be determined by executive’s position and board
approval) the sum of (i) the Executive’s highest base
salary as in effect during the three-year period ending immediately
prior to the Date of Termination and (ii) the
Executive’s target annual bonus pursuant to any annual bonus
or incentive plan maintained by the Company in respect of the
fiscal year in which occurs the Date of Termination (or, if higher,
the actual bonus in respect of any of the three preceding fiscal
years). The amount payable pursuant to this Section 6.1(A)
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shall be reduced by the amount of any cash
severance or salary continuation benefit paid or payable to the
Executive under any other plan, policy or program of the Company or
any written employment agreement between the Executive and the
Company.
(B) For the three-year period immediately following the Date of
Termination, the Company shall arrange to provide the Executive and
her dependents life, short-term disability, long-term disability,
travel accident, accidental death and dismemberment, medical,
dental and other health and welfare benefits substantially similar
to those provided to the Executive and her dependents immediately
prior to the Date of Termination or, if more favorable to the
Executive, those provided to the Executive and her dependents
immediately prior to the first occurrence of an event or
circumstance constituting Good Reason, at no greater cost to the
Executive than the cost to the Executive immediately prior to such
date or occurrence; provided , however , that such
health and welfare benefits shall be provided through an
arrangement that, as applicable, satisfies the requirements of
Sections 105 and 106 of the Code. To the extent that health and
welfare benefits of the same type are received by or made available
to the Executive during the three-year period following the
Executive’s Date of Termination (which such benefits received
by or made available to the Executive shall be reported by the
Executive to the insurance company or other appropriate party in
accordance with any applicable coordination of benefits
provisions), the benefits otherwise receivable by the Executive
pursuant to this Section 6.1(B) shall be made secondary to
such benefits; provided , however , that the Company
shall reimburse the Executive for the excess, if any, of the cost
of such benefits to the Executive over such cost immediately prior
to the Date of Termination or, if more favorable to the Executive,
the first occurrence of an event or circumstance constituting Good
Reason.
(C) Vesting shall accelerate and restrictions shall lapse on all
unvested or restricted equity or equity-based awards in respect of
the Company held by the Executive as of the Date of Termination and
each stock option to acquire common stock of the Company and each
stock appreciation right in respect of the Company held by the
Executive as of the Date of Termination shall remain exercisable
following the Date of Termination for the full term of such option
or stock appreciation right.
(D) In addition to the benefits to which the Executive is
entitled under any Pension Plan that is a defined benefit plan, the
Company shall pay the Executive a lump sum amount, in cash, equal
to the sum of (i) the amount that would have been accrued
thereunder determined (A) as if the Executive had accumulated
(after the Date of Termination) thirty-six (36) additional
months of service credit thereunder and had been credited during
such period with compensation at the highest rate in effect during
the three-year period ending immediately prior to the Date of
Termination, and (B) without regard to any amendment to the
Pension Plan made subsequent to a Change in Control and on or prior
to the Date of Termination, which amendment adversely affects in
any manner the computation of benefits thereunder, and
(ii) the excess, if any, of (A) the Executive’s
accrued benefit under the Pension Plan as of the Date of
Termination over (B) the portion of such account balance that
is nonforfeitable under the terms of the Pension Plan.
(E) In addition to the benefits to which the Executive is
entitled under any Pension Plan that is a defined contribution or
individual account plan, the Company shall pay the Executive a lump
sum amount, in cash, equal to the sum of (i) the amount that
would have been
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contributed thereto or credited thereunder by the
Company on the Executive’s behalf during the three
(3) years immediately following the Date of Termination,
determined (x) as if the Executive made the maximum
permissible contributions thereto or credits thereunder during such
period, (y) as if the Executive earned compensation during
such period at a rate equal to the Executive’s highest rate
of compensation (as defined in the applicable Pension Plan) during
the three-year period ending immediately prior to the Date of
Termination, and (z) without regard to any amendment to the
Pension Plan made subsequent to the Change in Control and on or
prior to the Date of Termination, which amendment adversely affects
in any manner the computation of benefits thereunder, and
(ii) the excess, if any, of (x) the Executive’s
account balance under the Pension Plan as of the Date of
Termination over (y) the portion of such account balance that
is nonforfeitable as of the Date of Termination under the terms of
the Pension Plan.
(F) Notwithstanding any provision of any annual or long-term
incentive plan (exclusive of equity-based plans) to the contrary,
the Company shall pay to the Executive a lump sum amount, in cash,
equal to the sum of (i) any unpaid incentive compensation
which has been allocated or awarded to the Executive for a
completed bonus cycle preceding the Date of Termination under any
such plan and which, as of the Date of Termination, is contingent
only upon the continued employment of the Executive to a subsequent
date, (ii) if the Date of Termination occurs before the end of
the first half of the then-current bonus cycle under the applicable
plan, a pro rata portion to the Date of Termination of the
aggregate value of all contingent incentive compensation awards to
the Executive for the uncompleted period under any such plan,
calculated as to each such award by multiplying the award that the
Executive would have earned on the last day of the performance
award period, assuming the achievement, at the target level (or if
higher, at the then projected actual final level), of the
individual and corporate performance goals established with respect
to such award, by the fraction obtained by dividing the number of
full months and any fractional portion of a month during such
performance award period through the Date of Termination by the
total number of months contained in such performance award period,
and (iii) if the Date of Termination occurs after the end of
the first half of the then-current bonus cycle but before the end
of such bonus cycle under the applicable plan, the full aggregate
value of all contingent incentive compensation awards to the
Executive for the uncompleted period under any such plan assuming
the achievement, at the target level (or if higher, at the then
projected actual final level), of the individual and corporate
performance goals established with respect to such award.
(G) If the Executive would have become entitled to benefits
under the Company’s post-retirement health care or life
insurance plans, as in effect immediately prior to the Date of
Termination or, if more favorable to the Executive, as in effect
immediately prior to the first occurrence of an event or
circumstance constituting Good Reason (in either case, if any), had
the Executive’s employment terminated at any time within
three (3) years after the Date of Termination, the Company
shall provide such post-retirement health care or life insurance
benefits to the Executive and the Executive’s dependents
commencing on the later of (i) the date on which such coverage
would have first become available and (ii) the date on which
benefits described in subsection (B) of this Section 6.1
terminate.
(H) The Company shall reimburse the Executive for expenses
incurred for outplacement services suitable to the
Executive’s position for a period of one (1) year
following the Date of Termination (or, if earlier, until the first
acceptance by the Executive of an offer of
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employment) in an amount not exceeding 15% of the
sum of the Executive’s highest annual base rate of salary as
in effect during the three-year period ending immediately prior to
the Date of Termination, which payment shall be made as soon as
practicable but in any event within thirty (30) business days
following the date of request for reimbursement. Subject to the
foregoing, in no event shall any payment described in this
Section 6.1(H) be made after the end of the calendar year
following the calendar year in which the expenses were
incurred.
(I) For the three-year period immediately following the Date of
Termination, the Company shall provide the Executive with her
customary perquisites (such as any use of a Company provided
automobile, club membership fee reimbursements, income tax
preparation and financial advisory services) in each case on the
same terms and conditions that were applicable immediately prior to
the Date of Termination or, if more favorable, immediately prior to
the first occurrence of an event or circumstance constituting Good
Reason, provided that in no event shall the amount of perquisites
to which the Executive is entitled under this Section 6.1(I)
for any taxable year of the Executive affect the amount of
perquisites to which the Executive is entitled under this
Section 6.1(I) for any other taxable year.
6.2 (A) Notwithstanding any other
provisions of this Agreement, in the event that any payment or
benefit received or to be received by the Executive (including any
payment or benefit received or to be received in connection with a
Change in Control or the termination of the Executive’s
employment, whether pursuant to the terms of this Agreement or any
other plan, arrangement or agreement) (all such payments and
benefits, including the Severance Payments, being hereinafter
referred to as the "Total Payments") would not be deductible (in
whole or part), by the Company, an affiliate or Person making such
payment or providing such benefit as a result of Section 280G
of the Code, then, to the extent necessary to make such portion of
the Total Payments deductible (and after taking into account any
reduction in the Total Payments provided by reason of
Section 280G of the Code in such other plan, arrangement or
agreement), the cash Severance Payments shall first be reduced (if
necessary, to zero), and all other Severance Payments shall
thereafter be reduced (if necessary, to zero); provided ,
however , that, to the extent permitted by Section 409A
of the Code, the Executive may elect to have the noncash Severance
Payments reduced (or eliminated) prior to any reduction of the cash
Severance Payments.
(B) For purposes of this limitation, (i) no portion of the
Total Payments the receipt or enjoyment of which the Executive
shall have waived at such time and in such manner as not to
constitute a "payment" within the meaning of Section 280G(b)
of the Code shall be taken into account, (ii) no portion of
the Total Payments shall be taken into account which, in the
opinion of tax counsel ("Tax Counsel") reasonably acceptable to the
Executive and selected by the accounting firm which was,
immediately prior to the Change in Control, the Company’s
independent auditor (the "Auditor"), does not constitute a
"parachute payment" within the meaning of Section 280G(b)(2)
of the Code, including by reason of Section 280G(b)(4)(A) of
the Code, (iii) the Severance Payments shall be reduced only
to the extent necessary so that the Total Payments (other than
those referred to in clauses (i) or (ii)) in their entirety
constitute reasonable compensation for services actually rendered
within the meaning of Section 280G(b)(4)(B) of the Code or are
otherwise not subject to disallowance as deductions by reason of
Section 280G of the Code, in the opinion of Tax Counsel, and
(iv) the value of any noncash benefit or any
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deferred payment or benefit included in the Total
Payments shall be determined by the Auditor in accordance with the
principles of Sections 280G(d)(3) and (4) of the
Code.
(C) If it is established pursuant to a Final Determination that,
notwithstanding the good faith of the Executive and the Company in
applying the terms of this Section 6.2, the Total Payments
paid to or for the Executive’s benefit are in an amount that
would result in any portion of such Total Payments being subject to
the Exc
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