HEI Exhibit 10.7(b)
HAWAIIAN ELECTRIC INDUSTRIES,
INC.
NON-QUALIFIED STOCK OPTION
AGREEMENT
WITH DIVIDEND
EQUIVALENTS
THIS AGREEMENT, dated effective as
of Date , is made by and between Hawaiian Electric
Industries, Inc., a Hawaii corporation hereinafter referred to as
the “Company,” and Name , an employee of the
Company or of a Subsidiary of the Company, hereinafter referred to
as the “Employee.”
WHEREAS, the Company has heretofore
adopted the 1987 Stock Option and Incentive Plan of Hawaiian
Electric Industries, Inc. (as amended and restated effective
January 21, 2003) (hereinafter referred to as the
“Plan”);
WHEREAS, the Compensation Committee
of the Company’s Board of Directors (hereinafter referred to
as the “Committee”), appointed to administer the Plan,
has determined that it would be to the advantage and best interest
of the Company and its shareholders to grant to the Employee an
option to acquire shares of the Common Stock of the Company
pursuant to the Plan as an inducement to the Employee to remain in
the service of the Company or its Subsidiary and as a long-term
incentive for sustained high levels of performance for the Company
and its Subsidiaries; and
WHEREAS, the Committee has
instructed the Company to issue said option, which the Committee
has determined should be a “Non-Qualified Stock Option”
as authorized under the Plan, pursuant to the terms and conditions
set forth herein;
NOW, THEREFORE, in consideration of
the mutual covenants herein contained and other good and valuable
consideration, the receipt of which is hereby acknowledged, the
parties hereto do hereby agree as follows:
ARTICLE I
DEFINITIONS
Whenever the following terms are
used in this Agreement they shall have the meanings specified below
unless the context clearly indicates to the contrary.
Section 1.1
- Average Fair Market
Value
“Average Fair Market
Value” means, as of any determination date, the average of
the daily high and low sales prices of the Common Stock on
the
New York Stock Exchange as quoted in
the Composite Transactions published in the Western Edition of The
Wall Street Journal for all trading days during the calendar month
preceding the determination date. If the Common Stock is not
admitted to trade on the New York Stock Exchange, the Average Fair
Market Value shall be determined by the Committee in such other
reasonable manner as the Committee shall decide.
Section 1.2
- Board of
Directors
“Board of Directors”
means the Board of Directors of the Company.
Section 1.3
- Cause
“Cause” means, with
respect to the discharge by the Company of the Employee, (i)
refusal to perform duties assigned in accordance with the
Employee’s employment agreement with the Company, if any, or
assigned by any officer of the Company, or overt and willful
disobedience of orders or directives issued to the Employee by the
Company, and within the scope of the Employee’s duties to the
Company; (ii) commission of illegal acts in connection with the
performance of duties on behalf of the Company; or (iii) material
violation of the Company’s policies and
procedures.
- 2 -
Section 1.4
- Code
“Code” means the
Internal Revenue Code of 1986, as amended.
Section 1.5
- Committee
“Committee” means the
Compensation Committee of the Board of Directors. The Committee
will consist of two or more persons who are “disinterested
persons” within the meaning of Rule 16b-3 promulgated under
Section 16 of the Securities Exchange Act of 1934, as amended, and
“outside directors” within the meaning of Section
162(m) of the Code.
Section 1.6
- Common Stock
“Common Stock” means the
Common Stock of the Company.
Section 1.7
- Fair Market
Value
“Fair Market Value”
means, as of any determination date, the average of the daily high
and low sales prices of the Common Stock on the composite tape for
stocks listed on the New York Stock Exchange as quoted in the New
York Stock Exchange Composite Transactions published in the Western
Edition of The Wall Street Journal on the date as of which
Fair Market Value is to be determined, or if there is no trading of
Common Stock on such date, the average of the daily high and low
sales prices of the Common Stock as quoted in such Composite
Transactions on the next preceding date on which there was trading
in such shares, or if the Common Stock is not admitted to trade on
the New York Stock Exchange, the Fair Market Value shall be
determined by the Committee in such other reasonable manner as the
Committee shall decide.
Section 1.8
- Option
“Option” means the
option to purchase shares of Common Stock granted under this
Agreement.
- 3 -
Section 1.9
- Plan
“Plan” means the
Company’s 1987 Stock Option and Incentive Plan, as amended
and restated effective January 21, 2003, and as may be further
amended from time to time.
Section 1.10
- Subsidiary
“Subsidiary” means any
corporation (other than the Company) in an unbroken chain of
corporations beginning with the Company if, at the time of the
granting of the Option, each of the corporations other than the
last corporation in the unbroken chain owns stock possessing 50
percent or more of the total combined voting power of all classes
of stock in one of the other corporations in such chain.
Section 1.11
- Termination of
Employment
“Termination of
Employment” means the time when the employee-employer
relationship between the Employee and the Company or a Subsidiary
is terminated for any reason, including but not limited to a
termination by resignation, discharge, death or retirement, but
excluding any termination where there is a simultaneous
reemployment by the Company or a Subsidiary. The Committee, in its
sole discretion, shall determine the effect of all other matters
and questions relating to Termination of Employment, including but
not limited to the question of whether a Termination of Employment
resulted from a discharge for Cause, and all questions of whether
particular leaves of absence constitute Terminations of
Employment.
- 4 -
ARTICLE II
GRANT OF OPTION
Section 2.1
- Grant of Option
In consideration of the
Employee’s continued service to the Company or its
Subsidiaries and for other good and valuable consideration, on the
date hereof the Company grants to the Employee the option to
purchase any part or all of an aggregate of
«Shares» shares of its Common Stock,
subject to the vesting provisions and upon the terms and conditions
set forth in this Agreement.
Section 2.2
- Purchase Price
The purchase price of the shares of
Common Stock covered by the Option shall be share
price per share, without commission or other charge, which
represents the Average Fair Market Value.
Section 2.3
- Consideration to the
Company
In consideration of the granting of
the Option by the Company the Employee agrees to render faithful
and efficient services to the Company or a Subsidiary, with such
duties and responsibilities as the Company shall from time to time
prescribe, from the date the Option is granted to the date of
Termination of Employment. Nothing in this Agreement or in the Plan
shall confer upon the Employee any right to continue in the employ
of the Company or any Subsidiary or shall interfere with or
restrict in any way the rights of the Company and its Subsidiaries,
which are hereby expressly reserved, to discharge the Employee at
any time for any reason whatsoever, with or without
Cause.
Section 2.4
- Adjustments to the
Option
The number of shares, purchase price
and other terms and conditions of this option are subject to
adjustment by the Committee in accordance with the Adjustment
Provisions of the Plan, as in existence on the date of this
Agreement. Any such adjustment by the Committee shall be final and
binding upon the Employee, the Company, and all other interested
persons.
- 5 -
ARTICLE III
PERIOD OF
EXERCISABILITY
Section 3.1
- Commencement of
Exercisability
(a) The Option shall vest and become
exercisable in four (4) cumulative installments, as
follows:
(i) The first installment shall
consist of 25% of the shares covered by the Option and shall vest
and become exercisable on the first anniversary of the date the
Option was granted.
(ii) The second installment shall
consist of 25% of the shares covered by the Option and shall vest
and become exercisable on the second anniversary of the date the
Option was granted.
(iii) The third installment shall
consist of 25% of the shares covered by the Option and shall vest
and become exercisable on the third anniversary of the date the
Option was granted.
(iv) The fourth installment shall
consist of 25% of the shares covered by the Option and shall vest
and become exercisable on the fourth anniversary of the date the
Option was granted.
(b) No portion of the Option which
is unexercisable under the terms of this Agreement at Termination
of Employment shall thereafter become exercisable, unless the
Committee, in its sole discretion, elects to accelerate the vesting
of all or any portion of the unvested shares on the date of
termination.
Section 3.2
- Duration of
Exercisability
The installments provided for in
Section 3.1 are cumulative. Each such installment which becomes
exercisable pursuant to Section 3.1 shall remain exercisable until
it becomes unexercisable pursuant to Section 3.3.
- 6 -
Section 3.3 - Expiration of
Option
The Option shall expire and may not
be exercised to any extent by anyone after the first to occur of
the following events:
(a) The expiration of 10 years from
the date the Option was granted; or
(b) The Employee’s Termination
of Employment for Cause; or
(c) The expiration of one year from
the date of the Employee’s Termination of Employment for any
reason other than retirement, death, disability, or
Cause;
(d) The expiration of three years
from the date of the Employee’s Termination of Employment as
a result of the Employee’s retirement, death or
disability.
Section 3.4
- Acceleration of
Exercisability
(a) If the Employee’s
Termination of Employment occurs as a result of retirement, then
upon such retirement the Option shall become exercisable as to all
shares covered thereby, notwithstanding that the Option may not yet
have become fully exercisable under Section 3.1(a).
(b) Notwithstanding the provisions
of Section 3.1, in the event of a Change in Control of the Company
the Option shall become fully vested and exercisable as to all
shares covered thereby.
(c) For purposes of this Section
3.4, a “Change in Control” shall be deemed to have
occurred if the conditions set forth in any one of the following
paragraphs shall have been satisfied:
(i) any Person is or becomes the
beneficial owner (as defined in Rule 13d-3 under the Securities and
Exchange Act of 1934, as amended (the “Exchange Act”)),
directly or indirectly, of securities of the Company (not including
in the securities beneficially owned by such Person any securities
acquired directly from the Company or any of its affiliates)
representing more than 30% of the combined voting power of the
Company’s then outstanding securities; or
- 7 -
