Document:

Exhibit

Exhibit 10.3
FORM OF ASB HAWAII, INC.
2016 EQUITY AND INCENTIVE PLAN
		
	Section 1. 
	Name and Purpose of Plan.

The name of this Plan is the ASB Hawaii, Inc. 2016 Equity and Incentive Plan (the “Plan”). The purpose of the Plan is to provide an additional incentive to selected Eligible Recipients (as defined below) whose contributions are essential to the growth and success of the business of the Company and its Affiliates, including American Savings Bank, F.S.B., in order to strengthen the commitment of such persons to the Company and its Affiliates, motivate such persons to faithfully and diligently perform their responsibilities and attract and retain competent and dedicated persons whose efforts will result in the long-term growth and profitability of the Company and its Affiliates. To accomplish such purposes, the Plan provides that the Company may grant Options, Share Appreciation Rights, Restricted Shares, Restricted Stock Units, Performance Shares, Other Share-Based Awards, Other Cash-Based Awards or any combination of the foregoing.
		
	Section 2. 
	Definitions.

For purposes of the Plan, the following terms shall be defined as set forth below:
		
	(a)
	“Administrator” means the Compensation Committee of the Board, provided that the Board shall have the authority to appoint such other committee(s), subcommittee(s) or person(s) to administer the Plan or to make and/or administer specific Awards hereunder. If for any reason, no appointment is in effect at any time, “Administrator” shall mean the Board. Notwithstanding the foregoing, “Administrator” means the Board for purposes of granting Awards to members of the Board who are not employees of the Company or any of its Affiliates and administering the Plan with respect to those Awards, unless the Board determines otherwise.

		
	(b)
	“Affiliate” means a Person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the Person specified. An entity shall be deemed an Affiliate of the Company for purposes of this definition only for such periods as the requisite ownership or control relationship is maintained.

		
	(c)
	“Award” means any Option, Share Appreciation Right, Restricted Share, Restricted Stock Unit, Performance Share, Other Share-Based Award or Other Cash-Based Award granted under the Plan.

		
	(d)
	“Award Agreement” means any written agreement, contract or other instrument or document evidencing an Award. The Administrator may, but need not, require a Participant to sign an Award Agreement.

		
	(e)
	“Beneficial Owner” (or any variant thereof) has the meaning set forth in Rule 13d-3 under the Exchange Act.

		
	(f)
	“Board” means the Board of Directors of the Company.

		
	(g)
	“Cause” shall have the meaning assigned to such term in any individual employment or severance agreement or Award Agreement with the Participant or, if no such agreement exists or the agreement does not define “Cause,” Cause shall mean (i) the refusal or neglect of the Participant to perform substantially his or her employment-related duties, (ii) the Participant’s personal dishonesty, incompetence, willful misconduct or breach of fiduciary duty, (iii) the Participant’s indictment for, conviction of or entering a plea of guilty or nolo contendere to a crime constituting a felony or any crime involving moral turpitude that reflects unfavorably on the Company or any Subsidiary or his or her willful violation of any applicable law (other than a traffic violation or other offense or violation outside of the course of employment which in no way adversely affects the Company and its Subsidiaries or their reputation or the ability of the Participant to perform his or her employment-related duties or to represent the Company or any Subsidiary of the Company that employs such Participant), (iv) the Participant’s failure to reasonably cooperate, following a request to do so by the Company, in any internal or governmental investigation of the Company or any of its Subsidiaries or (v) the Participant’s material breach of any written covenant or agreement with the Company or any of its Subsidiaries not to disclose any information pertaining to the Company or such Subsidiary or not to compete or interfere with the Company or such Subsidiary.

		
	(h)
	“Change in Capitalization” means any (i) merger, consolidation, reclassification, recapitalization, spin-off, split-off, spin-out, repurchase, liquidation or other reorganization or corporate transaction or event, (ii) dividend (whether in the form of cash, Common Stock or other property, other than a regular cash dividend), stock split or reverse stock split, (iii) combination or exchange of shares, (iv) other change in corporate structure or (v) declaration of a special dividend (including a cash dividend) or other distribution, which, in any such case, the Administrator determines, in its sole discretion, affects the Shares such that an adjustment pursuant to Section 6 hereof is appropriate.

		
	(i)
	“Change in Control” shall be deemed to have occurred if an event set forth in any one of the following paragraphs shall have occurred:

		
	(i)
	any Person is or becomes (other than in connection with a transaction described in paragraph (iii) below) the Beneficial Owner, directly or indirectly, of securities of the Company (not including in the securities beneficially 

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owned by such Person any securities acquired directly from the Company or any of its Affiliates) representing more than thirty percent (30%) of the combined voting power of the Company’s then outstanding securities; or
		
	(ii)
	during any period of two (2) consecutive years, individuals who at the beginning of such period constitute the Board and any new director (other than a director whose initial assumption of office is in connection with an actual or threatened election contest, including without limitation a consent solicitation, relating to the election of directors of the Company) whose election by the Board or nomination for election by the Company’s shareholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved cease for any reason to constitute a majority thereof; or

		
	(iii)
	consummation of a merger or consolidation of the Company or any Subsidiary of the Company with any other company, other than (A) a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity), in combination with the ownership of any trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its Affiliates, more than fifty percent (50%) of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation, or (B) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no Person acquires more than fifty percent (50%) of the combined voting power of the Company’s then outstanding securities; or

		
	(iv)
	the shareholders of the Company approve a plan of complete liquidation of the Company;

		
	(v)
	there is consummated an agreement for the sale, disposition or long-term lease by the Company of all or substantially all of the Company’s assets.

Notwithstanding the foregoing, a “Change in Control” shall not be deemed to have occurred (1) by virtue of the consummation of any transaction or series of integrated transactions immediately following which the record holders of the Common Stock of the Company immediately prior to such transaction or series of transactions continue to have substantially the same proportionate ownership in one or more entities which, singly or together, immediately following such transaction or series of transactions, own all or substantially all of the assets of the Company as constituted immediately prior to such transaction or series of transactions, or (2) with respect to any Award subject to Section 409A of the Code, unless the applicable event also constitutes a change in the ownership or effective control of the Company or in the ownership of a substantial portion of the assets of the Company under Section 409A(a)(2)(A)(v) of the Code and regulations thereunder (to the extent required in order for the Award to comply with Section 409A).
		
	(j)
	“Code” means the Internal Revenue Code of 1986, as amended from time to time, or any successor thereto.

		
	(k)
	“Common Stock” means the common stock of the Company.

		
	(l)
	“Company” means ASB Hawaii, Inc., a Hawaii corporation (or any successor, except as the term “Company” is used in the definition of “Change in Control” above).

		
	(m)
	“Covered Employee” shall have the meaning set forth in Section 162(m) of the Code.

		
	(n)
	“Disability” means, with respect to any Participant, that such Participant (i) as determined by the Administrator in its sole discretion, is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, or (ii) is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, receiving income replacement benefits for a period of not less than three (3) months under an accident and health plan covering employees of the Company or an Affiliate thereof.

		
	(o)
	“Effective Date” means the Distribution Date, as defined in the Separation and Distribution Agreement by and between Hawaiian Electric Industries, Inc. and ASB Hawaii, Inc.

		
	(p)
	“Eligible Recipient” means any (i) employee of the Company or any Affiliate, (ii) non-employee member of the board of directors of the Company or any Affiliate, or (iii) consultant or independent contractor to the Company or any Affiliate, in each case who has been selected as an eligible participant by the Administrator.

		
	(q)
	“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended from time to time.

		
	(r)
	“Exercise Price” means, with respect to any Award under which the holder may purchase Shares, the per share price at which a holder of such Award granted hereunder may purchase Shares issuable upon exercise of such Award.

		
	(s)
	“Fair Market Value” means, as of any given date, with respect to any Awards granted hereunder: (i) the closing sale price of a share of Common Stock on such date on the national securities exchange on which the Company’s equity securities are principally listed or traded, or, if on such date no trade was conducted, the most recent preceding date on which there was such a trade; (ii) if the shares of Common Stock are then traded in an over-the-counter market, the average of the closing bid and asked prices for the shares of Common Stock in such over-the-counter market for the last preceding date on which there was a sale of such Common Stock in such market; (iii) the fair market value of a share of Common Stock as determined in accordance with a method prescribed in the applicable Award 

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Agreement; or (iv) the fair market value of a share of Common Stock as otherwise determined by the Administrator in the good faith exercise of its discretion and, as required, in compliance with Section 409A of the Code.
		
	(t)
	“Free Standing Rights” shall have the meaning as set forth in Section 9 hereof.

		
	(u)
	“Incentive Stock Option” or “ISO” means any Option intended to be an “incentive stock option” within the meaning of Section 422 of the Code.

		
	(v)
	“Non-Qualified Stock Option” or “NQSO” means any Option that is not an Incentive Stock Option, including any Option that provides (as of the time such Option is granted) that it will not be treated as an Incentive Stock Option.

		
	(w)
	“Option” means an option to purchase shares of Common Stock granted pursuant to Section 8 hereof. An Option may be either an ISO or an NQSO.

		
	(x)
	“Other Cash-Based Award” means a cash Award granted to a Participant under Section 11 hereof, including cash awarded as a bonus or upon the attainment of Performance Goals or otherwise as permitted under the Plan.

		
	(y)
	“Other Share-Based Award” means a right or other interest granted to a Participant under the Plan that may be denominated or payable in, valued in whole or in part by reference to, or otherwise based on or related to, Common Stock, including, but not limited to, unrestricted Shares, dividend equivalents or performance units, each of which may be subject to the attainment of Performance Goals or a period of continued employment or other terms or conditions as permitted under the Plan.

		
	(z)
	“Participant” means any Eligible Recipient selected by the Administrator, pursuant to the Administrator’s authority provided for in Section 3 hereof, to receive, and has not rejected, grants of Options, Share Appreciation Rights, Restricted Shares, Restricted Stock Units, Performance Shares, Other Share-Based Awards, Other Cash-Based Awards or any combination of the foregoing, and, upon his or her death, his or her successors, heirs, executors and administrators, as the case may be.

		
	(aa)
	“Performance Goals” means performance goals based on one or more of the following criteria: (i) stock price or total return to shareholders; (ii) basic or diluted earnings per share; (iii) net income (before or after taxes); (iv) earnings before or after all or any of interest, taxes, depreciation and/or amortization; (v) gross revenue; (vi) return measures, including return on assets, designated assets, capital employed, equity, tangible common equity, shareholder equity and return versus the Company’s cost of capital; (vii) market share; (viii) assets; (ix) loans; (x) deposits and core deposits; (xi) cost or expense reduction goals; (xii) earnings from continuing operations; (xiii) levels of expense, cost or liability; (xiv) performance against operational budgets; (xv) a Participant’s individual operational project goals; (xvi) return on average common equity; (xvii) individual performance goals; (xviii) balance sheet measures; (xix) tangible book value; (xx) free cash flow; (xxi) net interest margin; (xxii) modified free cash flow (net income plus depreciation and amortization less net capital expenditures); (xxiii) shareholder value added; (xxiv) pre-tax, pre-provision income; (xxv) efficiency ratio; (xxvi) net charge offs, loan and asset quality measures, loan reserves, loan delinquencies, non-performing assets ratios or amounts, and Texas ratio; (xxvii) satisfactory internal or external audits; (xxviii) achievement of balance sheet or income statement objectives; (xxix) customer satisfaction metrics; (xxx) achievement of customer satisfaction goals; (xxxi) dividend payments; (xxxii) capital and capital measures, including working capital and regulatory capital; (xxxiii) improvement of financial ratings; (xxxiv) internal rate of return; (xxxv) geographic expansion; (xxxvi) net asset value; (xxxvii) net operating gross margin; (xxxviii) net operating profit after taxes; (xxxix) net sales growth; (xl) operating income; (xli) operating margin; (xlii) pro forma income; (xliii) regulatory compliance; (xliv) implementation or completion of one or more projects or transactions, including mergers, acquisitions, dispositions, and restructurings; (xlv) any other objective goals that the Administrator establishes; and (xlvi) any combination of, or a specified increase or decrease of one or more of the foregoing over a specified period. Where applicable, the Performance Goals may be expressed in terms of attaining a specified level of the particular criteria or the attainment of a percentage increase or decrease in the particular criteria, and may be applied to one or more of the Company or Affiliates thereof, or a department, division, branch, Affiliate or strategic business unit of the Company, or may be applied to the performance of the Company relative to a market index, a group of other companies or a combination thereof, all as determined by the Administrator. The Performance Goals may include a threshold level of performance below which no payment shall be made (or no vesting shall occur), levels of performance at which specified payments shall be made (or specified vesting shall occur), and a maximum level of performance above which no additional payment shall be made (or at which full vesting shall occur). Each of the foregoing Performance Goals shall be subject to certification by the Administrator; and provided, that the Administrator shall have the authority to make equitable adjustments to the Performance Goals in recognition of unusual or non-recurring events affecting the Company or any Affiliate thereof or the financial statements of the Company or any Affiliate thereof, in response to changes in applicable laws or regulations, or to account for items of gain, loss or expense determined to be extraordinary or unusual in nature or infrequent in occurrence or related to the disposal of a segment of a business or related to a change in accounting principles, in any case to the extent such adjustment does not cause a loss of deduction under Section 162(m) of the Code.

		
	(bb)
	“Performance Shares” means Shares that are subject to restrictions that lapse upon the attainment of specified performance objectives and that are granted pursuant to Section 10 hereof.

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	(cc)
	“Person” shall have the meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, except that such term shall not include (i) the Company or any Subsidiary thereof, (ii) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any Subsidiary thereof, (iii) an underwriter temporarily holding securities pursuant to an offering of such securities, or (iv) a corporation owned, directly or indirectly, by the shareholders of the Company in substantially the same proportions as their ownership of stock of the Company.

		
	(dd)
	“Plan” shall have the meaning as set forth in Section 1 hereof.

		
	(ee)
	“Related Rights” shall have the meaning as set forth in Section 9 hereof.

		
	(ff)
	“Restricted Period” means any such period as may be set by the Administrator commencing on the date of grant of an Award, subject to the provisions of the Plan and the applicable Award Agreement, during which the Participant shall not be permitted to sell, transfer, pledge or assign shares subject to such Award granted under the Plan; provided, however, that the Administrator may, in its sole discretion, provide for the lapse of such restrictions in installments and may accelerate or waive such restrictions in whole or in part based on such factors and such circumstances as the Administrator may determine, in its sole discretion, including, but not limited to, the attainment of certain performance related goals, the Participant’s termination of employment with the Company or any of its Affiliates, the Participant’s death or Disability, or the occurrence of a Change in Control.

		
	(gg)
	“Restricted Shares” means Shares granted pursuant to Section 10 hereof subject to certain restrictions that lapse at the end of a specified period or periods.

		
	(hh)
	“Restricted Stock Units” means the right granted pursuant to Section 10 hereof to receive Shares at the end of a specified deferral period or periods and/or upon attainment of specified performance objectives.

		
	(ii)
	“Retirement” means a termination of a Participant’s employment (other than for Cause) on or after (i) the attainment of age fifty-five with at least five years of continuous employment, or (ii) the attainment of at least age fifty with at least five years of continuous employment and the Participant satisfies the “Rule of 65.” The “Rule of 65” is the attainment of at least age fifty plus a number of completed full years of employment such that the Participant’s age plus the number of full years of employment equals or exceeds sixty-five years.

		
	(jj)
	“Rule 16b-3” means Rule 16b-3 promulgated under the Exchange Act, as amended from time to time.

		
	(kk)
	“Shares” means shares of Common Stock reserved for issuance under the Plan, as adjusted pursuant to the Plan, and any successor (pursuant to a merger, consolidation or other reorganization) security.

		
	(ll)
	“Share Appreciation Right” means the right pursuant to an Award granted under Section 9 hereof to receive an amount equal to the excess, if any, of (i) the aggregate Fair Market Value, as of the date such Award or portion thereof is surrendered, of the Shares covered by such Award or such portion thereof, over (ii) the aggregate Exercise Price of such Award or such portion thereof.

		
	(mm)
	“Subsidiary” means, with respect to any Person, as of any date of determination, any other Person as to which such first Person owns or otherwise controls, directly or indirectly, more than fifty percent (50%) of the voting shares or other similar interests or a sole general partner interest or managing member or similar interest of such other Person. An entity shall be deemed a Subsidiary of the Company for purposes of this definition only for such periods as the requisite ownership or control relationship is maintained.

		
	(nn)
	“Substitute Awards” shall have the meaning as set forth in Section 4(e) hereof.

		
	Section 3. 
	Administration.

		
	(a)
	The Plan shall be administered by the Administrator and shall be administered in accordance with the requirements of Section 162(m) of the Code (but only to the extent necessary and desirable to maintain qualification of awards under the Plan under Section 162(m) of the Code) and, to the extent applicable, Rule 16b-3. The Plan is intended to comply, and shall be administered in a manner that is intended to comply, with Section 409A of the Code (and exceptions thereto) and shall be construed and interpreted in accordance with such intent. To the extent that an Award, issuance and/or payment is subject to Section 409A of the Code, it shall be awarded and/or issued or paid in a manner that will comply with Section 409A of the Code, including any applicable regulations or guidance issued by the Secretary of the Treasury and the Internal Revenue Service with respect thereto.

		
	(b)
	Pursuant to the terms of the Plan, the Administrator, subject to any restrictions established by the Board, shall have the power and authority, without limitation:

		
	(1)
	to select those Eligible Recipients who shall be Participants;

		
	(2)
	to determine whether, when and to what extent Options, Share Appreciation Rights, Restricted Shares, Restricted Stock Units, Performance Shares, Other Share-Based Awards, Other Cash-Based Awards or a combination of any of the foregoing, are to be granted hereunder to Eligible Recipients (including Awards to be granted as Substitute Awards);

		
	(3)
	to determine the number of Shares to be covered by each Award granted hereunder;

		
	(4)
	to determine the terms and conditions, subject to Section 4(d), Section 10(c)(1) and Section 17 hereof and not inconsistent with the terms of the Plan, of each Award granted hereunder (including, but not limited to, (i) the 

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restrictions applicable to Restricted Shares or Restricted Stock Units and the conditions under which restrictions applicable to such Restricted Shares or Restricted Stock Units shall lapse, (ii) the Performance Goals or other performance related objectives and periods applicable to Performance Shares, (iii) the Exercise Price of each Award with an Exercise Price, (iv) the vesting schedule applicable to each Award, (v) the number of Shares subject to each Award, (vi) any exceptions to nontransferability and (vii) subject to the requirements of Section 409A of the Code (to the extent applicable), any amendments to the terms and conditions of outstanding Awards, including, but not limited to, extending the exercise period of such Awards and accelerating the vesting schedule of such Awards);
		
	(5)
	to permit a Participant to elect to defer receipt of all or any portion of the cash or shares of Common Stock that are payable under an Award and provide that such deferred amount shall be credited with an interest rate or such other rate of return as shall be specified by the Administrator, all on such terms and conditions as may be established by the Administrator; provided, however, that any such election and deferral shall comply with the requirements of Section 409A of the Code;

		
	(6)
	to determine the terms and conditions, not inconsistent with the terms of the Plan, which shall govern all written instruments evidencing Options, Share Appreciation Rights, Restricted Shares, Restricted Stock Units, Performance Shares or Other Share-Based Awards, Other Cash-Based Awards or any combination of the foregoing granted hereunder;

		
	(7)
	to determine Fair Market Value;

		
	(8)
	to determine the duration and purpose of leaves of absence which may be granted to a Participant without constituting termination of the Participant’s employment for purposes of Awards granted under the Plan;

		
	(9)
	to adopt, alter and repeal such administrative rules, guidelines and practices governing the Plan as it shall from time to time deem advisable;

		
	(10)
	to establish one or more sub-plans; and

		
	(11)
	to construe and interpret the terms and provisions of the Plan and any Award issued under the Plan (and any Award Agreement relating thereto), and to otherwise supervise the administration of the Plan and to exercise all powers and authorities either specifically granted under the Plan or necessary and advisable in the administration of the Plan.

		
	(c)
	The Administrator may delegate its authority under this Section 3 and the terms of the Plan to such extent it deems desirable and is consistent with the requirements of applicable law. All decisions made by the Administrator pursuant to the provisions of the Plan shall be final, conclusive and binding on all persons, including the Company and the Participants. Neither the Administrator nor any officer or employee of the Company or any Subsidiary thereof acting on the Administrator’s behalf shall be personally liable for any action, omission, determination, or interpretation taken or made in good faith with respect to the Plan, and all members of the Board or the committee acting as the Administrator and each and any officer or employee of the Company and of any Subsidiary thereof acting on the Administrator’s behalf shall, to the maximum extent permitted by law, be fully indemnified and protected by the Company in respect of any such action, omission, determination or interpretation.

		
	Section 4. 
	Shares Reserved for Issuance Under the Plan.

		
	(a)
	Subject to subsection (b) below and Section 6 hereof, a total of 2,000,000 Shares of Common Stock shall be reserved and available for issuance pursuant to Awards granted under the Plan. Shares issued under the Plan may, in whole or in part, be authorized but unissued Shares or Shares that shall have been or may be reacquired by the Company in the open market, in private transactions or otherwise.

		
	(b)
	If any Shares subject to an Award are forfeited, cancelled, exchanged or surrendered or if an Award otherwise terminates or expires without a distribution of shares to the Participant, the Shares with respect to such Award shall, to the extent of any such forfeiture, cancellation, exchange, surrender, termination or expiration, again be available for Awards under the Plan on a one-for-one basis. If any Award is settled, in part or in full in cash, the Shares settled in cash shall again be available for issuance in connection with future Awards granted under the Plan on a one-for-one basis. For sake of clarity and notwithstanding the foregoing, in the case of Shares that are withheld (or delivered) to pay the Exercise Price of an Option or withholding taxes, no such withheld (or delivered) Shares shall be available for the grant of Awards hereunder.

		
	(c)
	All Shares may be made subject to Awards of ISOs.

		
	(d)
	Notwithstanding any other provision of the Plan (but except as otherwise provided in this Section 4(d) and exclusive of Substitute Awards within the meaning of Section 4(e) hereof), Awards other than Options and Share Appreciation Rights shall vest (i.e., become nonforfeitable) over a minimum period of one year provided that (i) in the event of a Change in Control or, in respect of such an Award to any Participant, in the event of the Participant’s death, Disability, or Retirement, no minimum vesting period shall be required, and (ii) up to 5% of the Shares authorized for issuance under this Plan may be made subject to Awards without minimum vesting requirements. For purposes of this Section 

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4(d), the one-year minimum vesting requirement shall be deemed to be satisfied with respect to an Award if the Award vests no more rapidly than ratably over a one-year period.
		
	(e)
	Substitute Awards shall not reduce the Shares authorized for grant under the Plan or the limitations on grants to a Participant under Section 5 hereof, nor shall Shares subject to a Substitute Award be added to the Shares available for Awards under the Plan as provided in subsection (b) above. Additionally, in the event that a company acquired by the Company or any Subsidiary or with which the Company or any Subsidiary combines has shares available under a pre-existing plan approved by its shareholders and not adopted in contemplation of such acquisition or combination, the shares available for grant pursuant to the terms of such pre-existing plan (as adjusted, to the extent appropriate, using the exchange ratio or other adjustment or valuation ratio or formula used in such acquisition or combination to determine the consideration payable to the holders of common stock of the entities party to such acquisition or combination) may be used for Awards under the Plan and shall not reduce the Shares authorized for grant under the Plan (and Shares subject to such Awards shall not be added to the Shares available for Awards under the Plan as provided in subsection (b) above); provided that Awards using such available shares shall not be made after the date awards or grants could have been made under the terms of the pre-existing plan, absent the acquisition or combination, and shall only be made to individuals who were employees or directors of such other company immediately prior to such acquisition or combination. “Substitute Awards” shall mean Awards granted or Shares issued by the Company in assumption of, or in substitution or exchange for, awards previously granted, or the right or obligation to make future awards, in each case by a company acquired by the Company or any Subsidiary or with which the Company or any Subsidiary combines.

		
	Section 5. 
	Award Limitations.

		
	(a)
	Subject to adjustment as provided in Section 6 hereof, no Participant may be granted Awards of (i) Options or Share Appreciation Rights during any calendar year with respect to more than 700,000 Shares and (ii) Restricted Shares, Restricted Stock Units, Performance Shares and/or Other Share-Based Awards during any calendar year that are denominated in Shares under which more than 250,000 Shares may be earned for each twelve (12) months in the vesting period or performance period. Also, during any calendar year, no Participant may be granted Awards that are Other Cash-Based Awards pursuant to Section 11 hereof under which more than $3,000,000 may be earned for each twelve (12) months in the performance period. If an Award is cancelled, the cancelled Award shall continue to be counted toward the applicable limitation in this Section 5(a).

		
	(b)
	Notwithstanding anything to the contrary in this Plan, the value of all Awards granted under this Plan and all other cash compensation paid by the Company to any Non-Employee Director in any calendar year shall not exceed $250,000. For the purpose of this Section 5(b), (i) “Non-Employee Director” means a member of the Board who is not an employee of the Company or any of its Affiliates and (ii) the value of any Award shall be its grant date fair value, as determined in accordance with ASC 718, but excluding the impact of estimated forfeitures related to service-based vesting provisions.

		
	Section 6. 
	Equitable Adjustments.

In the event of any Change in Capitalization, an equitable substitution or proportionate adjustment shall be made, in each case, as may be determined by the Administrator, in its sole discretion, in (i) the aggregate number of shares of Common Stock reserved for issuance under the Plan and the maximum number of Shares that may be subject to Awards granted to any Participant in any calendar or fiscal year, (ii) the kind, number and Exercise Price subject to outstanding Options and Share Appreciation Rights granted under the Plan, and (iii) the kind, number and purchase price of Shares subject to outstanding Restricted Shares, Restricted Stock Units, Performance Shares or Other Share-Based Awards granted under the Plan, in each case as may be determined by the Administrator, in its sole discretion, provided, however, that any fractional shares resulting from the adjustment shall be eliminated. Such other equitable substitutions or adjustments shall be made as may be determined by the Administrator, in its sole discretion. No such adjustment shall be made that would cause any Award that is subject to Section 409A of the Code to fail to comply with the requirements of such section, and with respect to ISOs, any adjustment shall be made in accordance with the provisions of Section 424(h) of the Code and any regulations or guidance promulgated thereunder. Without limiting the generality of the foregoing, in connection with a Change in Capitalization, the Administrator may provide, in its sole discretion, for the cancellation of any outstanding Award granted hereunder in exchange for payment in cash or other property having an aggregate Fair Market Value of the Shares covered by such Award, reduced by the aggregate Exercise Price or purchase price thereof, if any. Any Awards with an aggregate exercise price (or aggregate base in the case of a Share Appreciation Right) or part thereof canceled that is greater than the aggregate Fair Market Value of the shares of Common Stock subject to the Award or part thereof canceled, may be cancelled for no consideration. The Administrator’s determinations pursuant to this Section 6 shall be final, binding and conclusive.

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	Section 7. 
	Eligibility.

The Participants under the Plan shall be selected from time to time by the Administrator, in its sole discretion, from among Eligible Recipients. Awards may be granted to Eligible Recipients; provided, however, that ISOs shall be granted only to employees (including officers and directors who are also employees) of the Company or any of its Subsidiaries.
		
	Section 8. 
	Options.

		
	(a)
	General. The grant of each Option shall be memorialized in an Award Agreement, containing such terms and conditions as the Administrator shall determine, in its sole discretion, including among other things the Exercise Price of the Option, the term of the Option, provisions regarding exercisability of the Option, and whether the Option granted thereunder is an ISO or an NQSO. Each Option granted under the Plan shall be an NQSO unless expressly identified as an ISO. The provisions of each Option need not be the same with respect to each Participant. More than one Option may be granted to the same Participant and be outstanding concurrently hereunder. Options granted under the Plan shall be subject to the terms and conditions set forth in this Section 8 and shall contain such additional terms and conditions, not inconsistent with the terms of the Plan, as the Administrator shall deem desirable and set forth in the applicable Award Agreement.

		
	(b)
	Exercise Price. The Exercise Price of Shares purchasable under an Option shall be determined by the Administrator in its sole discretion at the time of grant, but, except for Substitute Awards, in no event shall the exercise price of an Option be less than one hundred percent (100%) of the Fair Market Value of the Common Stock on the date of grant. If a Participant owns or is deemed to own (by reason of the attribution rules applicable under Section 424(d) of the Code) more than ten percent (10%) of the combined voting power of all classes of stock of the Company or of any of its Subsidiaries and an Incentive Stock Option is granted to such Participant, the Exercise Price of such Incentive Stock Option (to the extent required at the time of grant by the Code), except for Substitute Awards, shall be no less than one hundred ten percent (110%) of the Fair Market Value of the Common Stock on the date such Incentive Stock Option is granted.

		
	(c)
	Option Term. The maximum term of each Option shall be fixed by the Administrator, but no Option shall be exercisable more than ten (10) years after the date such Option is granted; provided, however, that if an employee owns or is deemed to own (by reason of the attribution rules of Section 424(d) of the Code) more than ten percent (10%) of the combined voting power of all classes of stock of the Company or of any of its Subsidiaries and an Incentive Stock Option is granted to such employee, the term of such Incentive Stock Option (to the extent required by the Code at the time of grant) shall be no more than five (5) years from the date of grant. Each Option’s term is subject to earlier expiration pursuant to the applicable provisions in the Plan and the Award Agreement.

		
	(d)
	Exercisability. Each Option shall be exercisable at such time or times and subject to such terms and conditions, including the attainment of pre-established Performance Goals, as shall be determined by the Administrator in the applicable Award Agreement. The Administrator may also provide that any Option shall be exercisable only in installments. Notwithstanding anything to the contrary contained herein, an Option may not be exercised for a fraction of a share.

		
	(e)
	Method of Exercise. Options may be exercised in whole or in part by giving written notice of exercise to the Company specifying the number of Shares to be purchased, accompanied by payment in full of the aggregate Exercise Price of the Shares so purchased in cash or its equivalent, as determined by the Administrator. As determined by the Administrator, in its sole discretion, with respect to any Option or category of Options, payment in whole or in part may also be made (i) by means of consideration received under any cashless exercise procedure approved by the Administrator (including the withholding of Shares otherwise issuable upon exercise), (ii) in the form of unrestricted Shares already owned by the Participant that, in the case of unrestricted Shares acquired upon exercise of an Option, (x) have been owned by the Participant for such period, if any, as may be specified by the Administrator, and (y) have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which such Option shall be exercised, (iii) any other form of consideration approved by the Administrator and permitted by applicable law or (iv) any combination of the foregoing.

		
	(f)
	Rights as Shareholder. A Participant shall have no rights to dividends or any other rights of a shareholder with respect to the Shares subject to an Option until the Participant has given written notice of the exercise thereof, has paid in full for such Shares and has satisfied the requirements of Section 15 hereof, and the Shares are delivered to the Participant.

		
	(g)
	Termination of Employment.

		
	(1)
	Unless the applicable Award Agreement provides otherwise, in the event that the employment of a Participant with the Company and all Affiliates thereof shall terminate for any reason other than Cause, Disability, or death, (A) Options granted to such Participant, to the extent that they are exercisable at the time of such termination, shall remain exercisable until the date that is three months after such termination, on which date they shall expire, and (B) Options granted to such Participant, to the extent that they were not exercisable at the time of such 

7

termination, shall expire at the close of business on the date of such termination. The three month period described in this Section 8(g)(1) shall be extended to one year after the date of such termination in the event of the Participant’s death during such three month period. Notwithstanding the foregoing, no Option shall be exercisable after the expiration of its term.
		
	(2)
	Unless the applicable Award Agreement provides otherwise, in the event that the employment of a Participant with the Company and all Affiliates thereof shall terminate on account of the Retirement, Disability or death of the Participant, Options granted to such Participant, to the extent that they were not yet vested at the time of such termination, shall become fully vested and exercisable as to all Shares covered thereby, and all Options granted to such Participant shall remain exercisable in each case until the date that is one year (three months in the case of a termination by reason of Retirement) after such termination, on which date they shall expire. Notwithstanding the foregoing, no Option shall be exercisable after the expiration of its term.

		
	(3)
	In the event of the termination of a Participant’s employment for Cause, all outstanding Options granted to such Participant shall expire at the commencement of business on the date of such termination.

		
	(h)
	Other Change in Employment Status. An Option shall be affected, both with regard to vesting schedule and termination, by leaves of absence, changes from full-time to part-time employment, partial disability or other changes in the employment status of an Participant, in such respects, if any, as may be determined in the discretion of the Administrator.

		
	(i)
	Annual Limit on Incentive Stock Options. To the extent that the aggregate Fair Market Value (determined as of the date the Incentive Stock Option is granted) of shares of Common Stock with respect to which Incentive Stock Options granted to a Participant under this Plan and all other option plans of the Company or of any Subsidiary of the Company become exercisable for the first time by the Participant during any calendar year exceeds $100,000 (as determined in accordance with Section 422(d) of the Code), the portion of such Incentive Stock Options in excess of $100,000 shall be treated as Non-Qualified Stock Options.

		
	Section 9. 
	Share Appreciation Rights.

		
	(a)
	General. Share Appreciation Rights may be granted either alone (“Free Standing Rights”) or in conjunction with all or part of any Option granted under the Plan (“Related Rights”). Subject to Section 409A of the Code, in the case of a Non-Qualified Stock Option, Related Rights may be granted either at or after the time of the grant of such Option. In the case of an Incentive Stock Option, Related Rights may be granted only at the time of the grant of the Incentive Stock Option. The Administrator shall determine the Eligible Recipients to whom, and the time or times at which, grants of Share Appreciation Rights shall be made, the number of Shares to be awarded, the price per Share, and all other conditions of Share Appreciation Rights. Notwithstanding the foregoing, no Related Right may be granted for more Shares than are subject to the Option to which it relates and any Share Appreciation Right, except for Substitute Awards, must be granted with an Exercise Price not less than the Fair Market Value of Common Stock on the date of grant. The provisions of Share Appreciation Rights need not be the same with respect to each Participant. Share Appreciation Rights granted under the Plan shall be subject to the following terms and conditions set forth in this Section 9 and shall contain such additional terms and conditions, not inconsistent with the terms of the Plan, as the Administrator shall deem desirable, as set forth in the applicable Award Agreement.

		
	(b)
	Awards; Rights as Shareholder. The grant of each Share Appreciation Right shall be memorialized in an Award Agreement, containing such terms and conditions as the Administrator shall determine, in its sole discretion. A Participant shall have no rights to dividends or any other rights of a shareholder with respect to the Shares subject to a Share Appreciation Right until the Participant has given written notice of the exercise thereof, has paid in full for such Shares (to the extent applicable) and has satisfied the requirements of Section 15 hereof, and the Shares are delivered to the Participant.

		
	(c)
	Exercisability.

		
	(1)
	Share Appreciation Rights that are Free Standing Rights shall be exercisable at such time or times and subject to such terms and conditions as shall be determined by the Administrator in the applicable Award Agreement.

		
	(2)
	Share Appreciation Rights that are Related Rights shall be exercisable only at such time or times and to the extent that the Options to which they relate shall be exercisable in accordance with the provisions of Section 8 hereof and this Section 9; provided, however, that a Related Right granted in connection with an Incentive Stock Option shall be exercisable only if and when the Fair Market Value of the Common Stock subject to the Incentive Stock Option exceeds the Exercise Price of such Option.

		
	(d)
	Payment Upon Exercise.

		
	(1)
	Upon the exercise of a Free Standing Right, the Participant shall be entitled to receive up to, but not more than, that number of Shares equal in value to the excess of the Fair Market Value as of the date of exercise over the price per share specified in the Free Standing Right multiplied by the number of Shares in respect of which the Free Standing Right is being exercised, with the Administrator having the right to determine the form of payment to the extent provided in the terms of an Award Agreement.

8

		
	(2)
	A Related Right may be exercised by a Participant by surrendering the applicable portion of the related Option. Upon such exercise and surrender, the Participant shall be entitled to receive up to, but not more than, that number of Shares equal in value to the excess of the Fair Market Value as of the date of exercise over the Exercise Price specified in the related Option multiplied by the number of Shares in respect of which the Related Right is being exercised, with the Administrator having the right to determine the form of payment to the extent provided in the terms of an Award Agreement. Options which have been so surrendered, in whole or in part, shall no longer be exercisable to the extent the Related Rights have been so exercised.

		
	(3)
	Notwithstanding the foregoing, the Administrator may determine to settle the exercise of a Share Appreciation Right in cash (or in any combination of Shares and cash) to the extent provided in the terms of an Award Agreement.

		
	(e)
	Termination of Employment.

		
	(1)
	Unless the applicable Award Agreement provides otherwise, in the event that the employment of a Participant with the Company and all Affiliates thereof (who has been granted one or more Free Standing Rights) shall terminate for any reason other than Cause, Disability, or death, (A) Free Standing Rights granted to such Participant, to the extent that they are exercisable at the time of such termination, shall remain exercisable until the date that is three months after such termination, on which date they shall expire, and (B) Free Standing Rights granted to such Participant, to the extent that they were not exercisable at the time of such termination, shall expire at the close of business on the date of such termination. The three month period described in this Section 9(e)(1) shall be extended to one year after the date of such termination in the event of the Participant’s death during such three month period. Notwithstanding the foregoing, no Free Standing Right shall be exercisable after the expiration of its term.

		
	(2)
	Unless the applicable Award Agreement provides otherwise, in the event that the employment of a Participant with the Company and all Affiliates thereof (who has been granted one or more Free Standing Rights) shall terminate on account of the Retirement, Disability , or death of the Participant, Free Standing Rights granted to such Participant, to the extent that they were not yet vested at the time of such termination, shall become fully vested as to all Shares covered thereby and Free Standing Rights granted to such Participant shall remain exercisable until the date that is one year (three months in the case of a termination by reason of Retirement) after such termination, on which date they shall expire. Notwithstanding the foregoing, no Free Standing Right shall be exercisable after the expiration of its term.

		
	(3)
	In the event of the termination of a Participant’s employment for Cause, all outstanding Free Standing Rights granted to such Participant shall expire at the commencement of business on the date of such termination.

		
	(4)
	In the event of the termination of employment with the Company and all Affiliates thereof of a Participant who has been granted one or more Related Rights, such rights shall be exercisable at such time or times and subject to such terms and conditions as set forth in the related Options.

		
	(f)
	Term.

		
	(1)
	The term of each Free Standing Right shall be fixed by the Administrator, but no Free Standing Right shall be exercisable more than ten (10) years after the date such right is granted.

		
	(2)
	The term of each Related Right shall be the term of the Option to which it relates, but no Related Right shall be exercisable more than ten (10) years after the date such right is granted.

		
	Section 10. 
	Restricted Shares, Restricted Stock Units and Performance Shares.

		
	(a)
	General. Restricted Shares, Restricted Stock Units or Performance Shares may be issued either alone or in addition to other Awards granted under the Plan. The Administrator shall determine the Eligible Recipients to whom, and the time or times at which, Awards of Restricted Shares, Restricted Stock Units or Performance Shares shall be made; the number of Restricted Shares, Restricted Stock Units or Performance Shares to be awarded; the price, if any, to be paid by the Participant for the acquisition of Restricted Shares, Restricted Stock Units or Performance Shares; the Restricted Period, if any, applicable to Restricted Shares, Restricted Stock Units or Performance Shares; the Performance Goals and/or other performance related objectives (if any) applicable to Restricted Shares, Restricted Stock Units or Performance Shares; and all other conditions of the Restricted Shares, Restricted Stock Units and Performance Shares. If the restrictions, performance objectives and/or conditions established by the Administrator do not lapse or are not attained or satisfied (as applicable), a Participant shall forfeit his or her Restricted Shares, Restricted Stock Units or Performance Shares in accordance with the terms of the grant. The provisions of the Restricted Shares, Restricted Stock Units or Performance Shares need not be the same with respect to each Participant.

		
	(b)
	Awards and Certificates.

		
	(1)
	The grant of each Award of Restricted Shares, Restricted Stock Units or Performance Shares shall be memorialized in an Award Agreement, containing such terms and conditions as the Administrator shall determine, in its sole discretion. Except as otherwise provided below in Section 10(c), (i) each Participant who is granted an Award of Restricted Shares or Performance Shares may, in the Company’s sole discretion, be issued a stock 

9

certificate in respect of such Restricted Shares or Performance Shares; and (ii) any such certificate so issued shall be registered in the name of the Participant, and shall bear an appropriate legend referring to the terms, conditions, and restrictions applicable to any such Award.
		
	(2)
	The Company may require that the stock certificates, if any, evidencing Restricted Shares or Performance Shares granted hereunder be held in the custody of the Company until the restrictions thereon shall have lapsed, and that, as a condition of any award of Restricted Shares or Performance Shares, the Participant shall have delivered a stock power, endorsed in blank, relating to the Shares covered by such Award.

		
	(3)
	With respect to Restricted Stock Units, at the expiration of the Restricted Period, stock certificates in respect of such Restricted Stock Units may, in the Company’s sole discretion, be delivered to the Participant, or his legal representative, in a number equal to the number of Shares covered by the Restricted Stock Unit Award.

		
	(4)
	Notwithstanding anything in the Plan to the contrary, any Restricted Shares, Restricted Stock Units (at the expiration of the Restricted Period) or Performance Shares (whether before or after any vesting conditions have been satisfied) may, in the Company’s sole discretion, be issued in uncertificated form pursuant to the customary arrangements for issuing shares in such form.

		
	(5)
	Further, notwithstanding anything in the Plan to the contrary, with respect to Restricted Stock Units, at the expiration of the Restricted Period, Shares shall promptly be issued (either in certificated or uncertificated form) to the Participant, unless otherwise deferred in accordance with procedures established by the Company in accordance with Section 409A of the Code, and such issuance shall in any event be made within such period as is required to avoid the imposition of a tax under Section 409A of the Code.

		
	(c)
	Restrictions and Conditions. The Restricted Shares, Restricted Stock Units and Performance Shares granted pursuant to this Section 10 shall be subject to the following restrictions and conditions and any additional restrictions or conditions as determined by the Administrator at the time of grant or, subject to Section 409A of the Code, thereafter:

		
	(1)
	The Administrator may, subject to Section 4(d) hereof, provide for the lapse of restrictions in installments and may accelerate or waive such restrictions in whole or in part based on such factors and such circumstances as the Administrator may determine in the event of (i) the attainment of certain performance related goals and/or (ii) the Participant’s Retirement, death or Disability; provided, however, that no Award that is intended to qualify as “qualified performance-based compensation” under Section 162(m) of the Code shall provide for the Award to become vested solely based upon the Participant’s Retirement. Notwithstanding the foregoing, the outstanding Awards may be determined to be subject to Section 17 hereof and, upon a Change in Control, shall be subject to Section 12 hereof.

		
	(2)
	Except as provided in Section 16 hereof or in the Award Agreement, the Participant shall generally have the rights of a shareholder of the Company with respect to Restricted Shares or Performance Shares during the Restricted Period. The Participant shall generally not have the rights of a shareholder with respect to Shares subject to Restricted Stock Units during the Restricted Period; provided, however, that, subject to Section 409A of the Code, an amount equal to dividends declared during the Restricted Period with respect to the number of Shares covered by Restricted Stock Units shall, unless otherwise set forth in an Award Agreement, be credited to the Participant at the same time as dividends are paid to the Company’s shareholders generally, provided that the Participant is then providing services to the Company or any Affiliate of the Company. Certificates for Shares of unrestricted Common Stock may, in the Company’s sole discretion, be delivered to the Participant only after the Restricted Period has expired without forfeiture in respect of such Restricted Shares, Restricted Stock Units or Performance Shares, except as the Administrator, in its sole discretion, shall otherwise determine. Notwithstanding the provisions of this Section 10(c)(2), cash dividends, stock and any other property (other than cash) distributed as a dividend or otherwise with respect to any Award of Restricted Shares, Restricted Stock Units, or Performance Shares that vests based on achievement of Performance Goals shall either (i) not be paid or credited or (ii) be accumulated, and shall be subject to restrictions and risk of forfeiture to the same extent as the Restricted Shares, Restricted Stock Units, or Performance Shares with respect to which such cash, stock or other property has been distributed and shall be paid at the time such restrictions and risk of forfeiture lapse.

		
	(3)
	The rights of Participants granted Restricted Shares, Restricted Stock Units or Performance Shares upon termination of employment with the Company or any Affiliate thereof during the Restricted Period shall be set forth in the Award Agreement.

		
	Section 11. 
	Other Share-Based or Cash-Based Awards.

		
	(a)
	The Administrator is authorized to grant Awards to Participants in the form of Other Share-Based Awards or Other Cash-Based Awards, as deemed by the Administrator to be consistent with the purposes of the Plan and as evidenced by an Award Agreement. The Administrator shall determine the terms and conditions of such Awards, consistent with the terms of the Plan, at the date of grant or thereafter, including any Performance Goals and performance periods. Common Stock or other securities or property delivered pursuant to an Award in the nature of a purchase right granted 

10

under this Section 11 shall be purchased for such consideration, paid for at such times, by such methods, and in such forms, including, without limitation, Shares, other Awards, notes or other property, as the Administrator shall determine, subject to any required corporate action. Any dividends or dividend equivalents granted/credited in connection with any Other Share-Based Award shall be subject to the last sentence of Section 10(c)(2) above.
		
	(b)
	The Administrator may establish other rules applicable to the Other Share-Based Awards and the Other Cash-Based Awards as it may determine in its discretion.

		
	Section 12. 
	Change in Control; Termination in Connection with a Change in Control.

		
	(a)
	In the event of a Change in Control, to the extent the surviving entity (or acquiring entity or parent company, as the case may be) does not agree to assume outstanding Awards or substitute equivalent awards or rights therefor (as determined by the Administrator in its sole discretion), all such outstanding Awards that are not assumed or continued or for which equivalent awards are not substituted shall become fully vested and exercisable and all restrictions on such Awards shall lapse (with all Performance Goals or other vesting criteria deemed achieved at one hundred percent (100%) of target levels) upon, or immediately prior, to the Change in Control and, with respect to such Awards that are Options and Share Appreciation Rights, the Participant in the discretion of the Administrator (i) shall have the right to exercise such Awards for a period of time determined by the Administrator or (ii) shall be entitled to receive an amount in cash equal to the excess (if any) of (A) the product of (x) the number of Shares subject to such Awards and (y) the per Share consideration paid as of the date of the occurrence of the Change in Control for the Shares pursuant to the Change in Control, less (B) the aggregate exercise price of such Awards, and all Awards not assumed or continued, or for which an equivalent award or right is not substituted therefor, shall terminate upon the Change in Control.

		
	(b)
	Except as otherwise provided in an Award Agreement or in an individual agreement between a Participant and the Company, any Award that is assumed or for which a substitution is made as described in subsection (a) above shall provide (x) that, if the Participant’s employment with the Company or an Affiliate thereof (or any successor) is terminated within twenty four (24) months following the Change in Control by the Company or Affiliate without Cause, the Award shall become fully vested and exercisable and all restrictions on such Awards shall lapse (with all Performance Goals or other vesting criteria deemed achieved at one hundred percent (100%) of target levels) and (y) each such Award that is an Option or Share Appreciation Right shall remain exercisable until the earlier of the expiration of one (1) year following such termination of employment or the expiration of the term of the Option or Share Appreciation Right.

		
	Section 13. 
	Amendment and Termination; Prohibition on Repricing

		
	(a)
	The Board may amend, alter or terminate the Plan, but no amendment, alteration, or termination shall be made that would impair the rights of a Participant under any Award theretofore granted without such Participant’s consent, or that without the approval of the Company’s shareholders would, (i) except as provided in Section 6 hereof, increase the total number of Shares, (ii) materially increase benefits provided under the Plan, (iii) materially alter the eligibility provisions of the Plan, or (iv) extend the maximum option term under Section 8(c) hereof. Unless the Board determines otherwise, the Board shall obtain approval of the Company’s shareholders for any amendment that would require such approval in order to satisfy the requirements of Sections 162(m) or 422 of the Code or Rule 16b-3, any rules of the stock exchange on which the Common Stock is traded or other applicable law. The Administrator may amend the terms of any Award theretofore granted, prospectively or retroactively, but, subject to Section 6 hereof and the immediately preceding sentence, no such amendment shall impair the rights of any Participant without his or her consent.

		
	(b)
	Other than pursuant to Section 6 hereof, the Administrator may not without the approval of the Company’s shareholders: (i) reduce the Exercise Price of an outstanding Option or Share Appreciation Right after it is granted; (ii) cancel an Option or Share Appreciation Right when the Exercise Price exceeds the Fair Market Value of one Share in exchange for cash or the grant of a new Award (other than in connection with a Change in Control); or (iii) take any other action with respect to an Option or Share Appreciation Right that would be treated as a repricing under the rules and regulations of the principal U.S. national securities exchange on which the Shares are listed.

		
	Section 14. 
	Unfunded Status of Plan.

The Plan is intended to constitute an “unfunded” plan for incentive compensation. With respect to any payments not yet made to a Participant by the Company, nothing contained herein shall give any such Participant any rights that are greater than those of a general creditor of the Company.

11

		
	Section 15. 
	Withholding Taxes.

Each Participant shall, no later than the date as of which the value of an Award first becomes includible in the gross income of such Participant for federal and/or state income tax purposes, pay to the Company, or make arrangements satisfactory to the Administrator regarding payment of, any federal, state, or local taxes of any kind required by law to be withheld with respect to the Award. The obligations of the Company under the Plan shall be conditional on the making of such payments or arrangements, and the Company shall, to the extent permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise due to such Participant. Whenever cash is to be paid pursuant to an award granted hereunder, the Company shall have the right to deduct therefrom an amount sufficient to satisfy any federal, state and local withholding tax requirements related thereto. Whenever Shares are to be delivered pursuant to an Award, the Company shall, unless it determines otherwise, satisfy the withholding tax requirements by withholding from the shares of Common Stock otherwise deliverable to a Participant Shares a number of Shares having a value not in excess of the minimum required statutory withholding rate for the Participant (or such other rate that will not cause an adverse accounting consequence or cost), with the Participant satisfying any remaining required withholding in cash. Such shares shall be valued at their Fair Market Value on the date on which the amount of tax to be withheld is determined. At the election of the Company, the Company may in its discretion require a Participant to remit to the Company in cash an amount sufficient to satisfy any related federal, state and local taxes to be withheld and applied to the tax obligations. The Company may also, in its discretion, use any other method of obtaining the necessary payment or proceeds, as permitted by law, to satisfy its withholding obligation with respect to any Option or other Award.
		
	Section 16. 
	Transfer of Awards.

Except as provided below, no Award and no Shares that have not been issued or as to which any applicable restriction, performance or deferral period has not lapsed, may be sold, assigned, transferred, pledged or otherwise encumbered, except by will or the laws of descent and distribution and shall be exercisable during the lifetime of a Participant only by such Participant or his guardian or legal representative. Any purported transfer of an Award or any economic benefit or interest therein in violation of the Plan or an Award Agreement shall be null and void ab initio, and shall not create any obligation or liability of the Company, and any person purportedly acquiring any Award or any economic benefit or interest therein transferred in violation of the Plan or an Award Agreement shall not be entitled to be recognized as a holder of such Shares.
		
	Section 17. 
	Section 162(m) of the Code; Performance Awards.

		
	(a)
	Covered Employees. Notwithstanding any other provision of the Plan, if the Administrator determines at the time a Restricted Share Award, a Restricted Stock Unit Award, a Performance Share Award, an Other Share-Based Award or an Other Cash-Based Award is granted to a Participant who is or may be, as of the end of the tax year in which the Company would claim a tax deduction in connection with such Award, a Covered Employee, then the Administrator may determine that this Section 17 is applicable to such Award.

		
	(b)
	Performance Goals. If the Administrator determines that a Restricted Share Award, a Restricted Stock Unit, a Performance Share Award, an Other Share-Based Award or an Other Cash-Based Award is intended to be subject to this Section 17, the lapsing of restrictions thereon and/or the distribution of cash, Shares or other property pursuant thereto, as applicable, shall be subject to the achievement of one or more objective Performance Goals established by the Administrator. Such Performance Goals (and any exclusions) shall (i) be set by the Administrator prior to the earlier of (a) 90 days after the commencement of the applicable performance period, or (b) the expiration of 25% of the performance period, and (ii) otherwise comply with the requirements of Section 162(m) of the Code and the regulations thereunder.

		
	(c)
	Adjustments. Notwithstanding any provision of the Plan (other than Section 12 hereof and the last sentence in the definition of “Performance Goals” above), with respect to any Restricted Share Award, Restricted Stock Unit Award, Performance Share Award, Other Share-Based Award or an Other Cash-Based Award that is subject to this Section 17, the Administrator may adjust downwards, but not upwards, the amount payable pursuant to such Award, and the Administrator may not waive the achievement of the applicable Performance Goals except in the case of the death or Disability of the Participant or as otherwise determined by the Administrator in special circumstances. The Administrator shall have the power to impose such other restrictions on Awards subject to this Section 17 as it may deem necessary or appropriate to ensure that such Awards satisfy all requirements for “qualified performance-based compensation” within the meaning of Section 162(m) of the Code.

		
	Section 18. 
	Continued Employment and Other Rights.

The adoption of the Plan shall not confer upon any Eligible Recipient any right to continued employment or service with the Company or any Affiliate thereof, as the case may be, nor shall it interfere in any way with the right of the Company 

12

or any Affiliate thereof to terminate the employment or service of any of its Eligible Recipients at any time. The adoption of the Plan shall not confer upon any Eligible Recipient any legal or equitable right against the Company, any Affiliate thereof, or the Administrator, except as expressly provided in the Plan.
		
	Section 19. 
	Effective Date; Other Plans.

The Plan is effective as of the Effective Date, subject to the Plan being approved by the stockholders of the Company within twelve months after the date the Plan is adopted by the Board. If the adoption of the Plan is not so approved by the Company’s stockholders, any Awards granted under the Plan shall be cancelled and void ab initio immediately upon the twelve month anniversary of the date of the Board’s adoption of the Plan.
		
	Section 20. 
	Term of Plan.

No Award shall be granted pursuant to the Plan on or after the tenth (10th) anniversary of the date of adoption of the Plan by the Board, but Awards theretofore granted may extend beyond that date. Unless sooner terminated by the Board pursuant to Section 13 hereof, the Plan shall terminate on the date on the tenth (10th) anniversary of the date of adoption of the Plan by the Board. The termination of the Plan shall not affect the validity of any Award outstanding on the date of termination.
		
	Section 21. 
	Section 409A of the Code; Other Code Provisions.

The intent of the parties is that payments and benefits under the Plan comply with Section 409A of the Code to the extent subject thereto, and, accordingly, to the maximum extent permitted, the Plan shall be interpreted and be administered to be in compliance therewith. Any payments described in the Plan that are due within the “short-term deferral period” as defined in Section 409A of the Code shall not be treated as deferred compensation unless applicable law requires otherwise. Notwithstanding anything to the contrary in the Plan, to the extent required in order to avoid accelerated taxation and/or tax penalties under Section 409A of the Code, amounts that would otherwise be payable and benefits that would otherwise be provided pursuant to the Plan during the six (6) month period immediately following the Participant’s termination of employment shall instead be paid on the first business day after the date that is six (6) months following the Participant’s separation from service (or upon the Participant’s death, if earlier). Notwithstanding any provision to the contrary in this Plan, no payment or distribution under this Plan that constitutes an item of deferred compensation under Section 409A of the Code and becomes payable by reason of a Participant’s termination of employment will be made to such Participant unless such Participant’s termination of employment constitutes a “separation from service” (as such term is defined in Section 409A of the Code). In addition, for purposes of the Plan, each amount to be paid or benefit to be provided to the Participant pursuant to the Plan, which constitutes deferred compensation subject to Section 409A of the Code, shall be construed as a separate identified payment for purposes of Section 409A of the Code. In no event shall the Company or any of its Affiliates have any liability to any Participant with respect to any Award failing to qualify for any specific tax treatment (such as an Option designated as an ISO failing to qualify for treatment as an incentive stock option under Section 422 of the Code) or for taxes or penalties incurred by a Participant under Section 409A of the Code with respect to any Award. The Administrator may grant Awards that qualify as performance-based compensation under Section 162(m) of the Code and awards that do not so qualify.
		
	Section 22. 
	Governing Law.

The Plan shall be governed by and construed in accordance with the laws of the State of Hawaii without giving effect to principles of conflicts of law of such state.
		
	Section 23. 
	Other Provisions.

		
	(a)
	Notwithstanding any other provision of the Plan or any Agreement to the contrary, Awards and any Shares issued or payments made under Awards shall be subject to any compensation clawback or recoupment policy (or policies) that the Company may have in effect from time to time, subject to such terms and conditions of such policy (or policies).

		
	(b)
	The Administrator may require each person acquiring Shares pursuant to Awards granted hereunder to represent to and agree with the Company in writing that such person is acquiring the Shares only for that person’s own account, and without a view to distribution thereof. The certificates for such Shares may include any legend which the Administrator deems appropriate to reflect any restrictions on transfer. All certificates for Shares issued pursuant to the Plan shall be subject to such stock transfer orders and other restrictions as the Administrator may deem advisable under the rules, regulations, and other requirements of the Securities and Exchange Commission, any stock exchange upon which the Common Stock is then listed or interdealer quotation system upon which the Common Stock is then 

13

quoted, and any applicable federal or state securities laws. The Administrator may place a legend or legends on any such certificates to make appropriate reference to such restrictions.
		
	(c)
	Neither the adoption of the Plan nor its submission to the Company’s shareholder for approval shall be taken to impose any limitations on the powers of the Company or its Affiliates to issue, grant, or assume options, warrants, rights, restricted stock or other awards otherwise than under the Plan, or to adopt other stock option, restricted stock, or other plans, or to impose any requirement of shareholder approval upon the same.

		
	(d)
	The Company shall not be required to issue any certificate or certificates for Shares with respect to Awards granted under the Plan, or record any person as a holder of record of Shares, without obtaining, to the complete satisfaction of the Administrator, the approval of all regulatory bodies the Administrator deems necessary, and without complying to the Board’s or Administrator complete satisfaction, with all rules and regulations under federal, state or local law the Administrator deems applicable.

		
	(e)
	To the extent that the Plan provides for issuance of stock certificates to reflect the issuance of Shares, the issuance may be effected on a noncertificated basis, to the extent not prohibited by applicable law or the rules of any stock exchange or automated dealer quotation system on which the Shares are traded.

		
	(f)
	No fractional Shares shall be issued or delivered pursuant to the Plan or any Award. Unless otherwise provided in the Plan, the Administrator shall determine whether cash, other Awards, or other property shall be issued or paid in lieu of any fractional Shares or whether any fractional Shares or any rights thereto shall be forfeited or otherwise eliminated.

14Exhibit

    
Exhibit 10.4
FORM OF ASB HAWAII, INC.
EXECUTIVE SEVERANCE PLAN
ARTICLE 1. INTRODUCTION
1.1    Establishment of Plan. ASB Hawaii, Inc. (“Company”), hereby establishes the
ASB Hawaii, Inc. Executive Severance Plan (“Plan”) for the benefit of a select group of management or highly compensated executives of the Company. The Plan is adopted effective as of the Distribution Date, as defined in the Separation and Distribution Agreement by and between Hawaiian Electric Industries, Inc. and ASB Hawaii, Inc. (“Effective Date”).
1.2    Purpose. The purpose of the Plan is to offer executives of the Company having
the rank of Executive Vice President and higher severance benefits in the event of the
termination of their employment in connection with a Change in Control of the Company so as to induce them to continue to provide dedicated service to the Company, notwithstanding the possibility of a Change in Control and termination of their employment in connection therewith.
ARTICLE 2. DEFINITIONS
Whenever used in the Plan, the following words and phrases shall have the meanings set forth below unless the context plainly requires a different meaning. When the defined meaning is intended, the term is capitalized. All other defined terms in this Plan shall have the meanings specified in the Sections of the Plan in which they appear.
2.1    “Accrued Obligations” means with respect to a Participant: (i) any accrued and
unpaid Base Salary of the Participant through the date of termination of employment, (ii) the Participant’s accrued and unused paid time off, if any; (iii) any annual bonus for a prior fiscal year that has been earned but not yet been paid; and (iv) any benefits (including but not limited to any disability benefits) payable to the Participant based on the Participant’s participation in any employee benefit plan, program or arrangement through the date of termination of the Participant’s employment.
2.2    “Affiliate” means any corporation or other entity or business that is required to
be treated as a single employer with the Company under Section 414 of the Code.
2.3    “Average Bonus” means the average of a Participant’s annual bonus for the
three most recent fiscal years of the Company (or such lesser number of full fiscal years that the Participant has been employed by the Company Group) preceding the occurrence of a Change in Control; provided, however, that if a Participant has not been employed for at least one full fiscal year prior to the Change in Control, “Average Bonus” shall mean the Participant’s target bonus for the year during which the Participant’s termination of employment with the Company Group occurs.
2.4    “Base Salary” means a Participant’s annual base salary as in effect
immediately prior to termination of the Participant’s employment, or if greater, the Participant’s annual base salary in effect immediately prior to a Change in Control.
2.5    “Benefits” means the payments described in Sections 4.1(a), 4.1(b) and 4.1(c) hereof.
2.6    “Board” means Board of Directors of the Company.
2.7    “Cause” means, with respect to a Participant, (i) the willful and continued
failure by the Participant to substantially perform the Participant's duties with the Company (other than any such failure resulting from the Participant's incapacity due to physical or mental illness or any such actual or anticipated failure after the Participant provides notice of termination for Good Reason) after a written demand for substantial performance is delivered to the Participant by the Board, which demand specifically identifies the manner in which the Board believes that the Participant has not substantially performed the Participant's duties, or (ii) the willful engaging by the Participant in conduct which is demonstrably and materially injurious to the Company, monetarily or otherwise.
2.8    “Change in Control” shall mean a “Change in Control” as defined in the ASB

1

Hawaii, Inc. 2016 Equity and Incentive Plan
2.9     “Code” means the Internal Revenue Code of 1986, as amended.
2.10     “Company” means American Savings Bank, F.S.B.
2.11     “Company Group” means the Company and its Affiliates.
2.12     “Eligible Employee” means an employee of the Company who holds the rank of Executive Vice President or higher.
2.13     “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
2.14     “Good Reason” means, with respect to a Participant, the occurrence (without the Participant's express written consent) after the Participant’s provision of written notice to the Company of the existence of such condition (which notice must be provided within sixty (60) days of the Participant learning of the existence of the condition and must specify the particular condition in reasonable detail) of any of the following: (a) a material reduction in the Participant's authority, duties or responsibilities, or a material adverse alteration in the nature or status of the Participant's responsibilities from those in effect immediately prior to the Change in Control (including, as applicable and without limitation, the Participant ceasing to be an executive officer of a public company); (b) a material diminution in the Participant’s base salary as in effect immediately prior to the Change in Control; (c) a material change in the geographic location at which the Participant must perform services, which for purposes of this Plan shall include only the relocation of the Participant's principal place of employment to a location more than fifty (50) miles distant from the Company's headquarters immediately prior to the Change in Control. Notwithstanding the foregoing, Good Reason shall only exist if the Company is provided a sixty (60)-day period to cure the event or condition giving rise to Good Reason (provided, that cure is possible), and it fails to do so within that cure period, and the Participant resigns within thirty (30) days following the Company’s failure to cure such event or condition.
2.15    “Participant” means an Eligible Employee who has been designated by the Board to participate in this Plan in accordance with Article 3 hereof.
2.16    “Plan Administrator” means the Compensation Committee of the Board.
2.17    “Severance Payment” means “Severance Payment” as defined in Section 4.1(a).
ARTICLE 3. PARTICIPATION
3.1    Participation. An Eligible Employee shall become a Participant only upon the
Board’s written designation of the Eligible Employee as a Participant.
3.2    Removal From Participation. The Board may terminate an Eligible
Employee’s participation in the Plan upon one year’s advance written notice to the Participant; provided, however, that after a Change in Control, the Board may terminate an Eligible Employee’s participation in the Plan only upon two years’ advance written notice to the Participant; and provided further that in no event shall a Participant’s participation in the Plan terminate after any termination of the Participant’s employment that entitles the Participant to receive the Severance Payment until all Benefits to which the Participant is entitled in connection with such termination of employment have been paid in full.
ARTICLE 4. BENEFITS AND BENEFIT PAYMENTS
4.1    Eligibility for Severance Benefits. If a Participant’s employment with the Company Group is terminated upon or within two years following a Change in Control other than (a) by the Company or any of its Affiliates for Cause, (b) by reason of death or Disability, or (b) by the Participant without Good Reason, then the Participant shall be entitled to the following:
		
	(a)
	A lump sum cash payment (the “Severance Payment”) equal to the product of (i) the sum of (A) the Participant’s Base Salary and (B) the Participant’s Average Bonus and (ii) the Severance Factor. Such lump-sum cash payment shall be paid payable at the time provided in Section 4.2. “Severance Factor” means (x) three (3) in the case of the Company’s Chief 

2

Executive Officer, and (y) two (2) in the case of all other Eligible Employees who are Participants.
		
	(b)
	A pro rated cash bonus in respect of the fiscal year during which the Participant’s termination of employment with the Company Group occurs equal to the product of (i) the amount of the bonus, if any, that would have been paid to the Participant assuming the Participant continued to be employed by the Company Group and (ii) a fraction, the numerator of which is the number of days from the beginning of such fiscal year to and including the date of the Participant’s termination of employment and the denominator of which shall be three hundred and sixty-five (365). Such pro-rated bonus shall be paid during the fiscal year that follows the date of the Participant’s termination of employment at the same time as annual bonuses are paid to senior executives who continue to be employed by the Company. The payment provided for by this Section 4.1(b) shall be reduced (but not below zero) by the amount of any annual bonus otherwise payable to the Participant for the fiscal year during which the Participant’s termination of employment occurs.

		
	(c)
	A monthly, taxable cash payment in amount (subject to reduction for applicable withholding taxes) equal to the difference between (x) the monthly COBRA premium for the most valuable coverage options available under the Company’s medical, dental, and vision benefit plans available on the date of the Participant’s termination of employment, and (y) the active employee monthly premium payable for such most valuable coverage options on the date of the Participant’s termination of employment, payable for twenty four (24) months commencing on the date provided in Section 4.2 (the “Medical Installments”).  Notwithstanding the forgoing, the Participant’s entitlement to the Medical Installments shall immediately cease upon the Participant’s becoming eligible for medical, dental and vision benefits under a subsequent employer’s plans.  

For purposes of this Plan, a Participant's employment shall be deemed to have been terminated following a Change in Control by the Company Group without Cause or by the Participant with Good Reason, if (i) the Participant's employment is terminated by the Company Group 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 (as defined in the ASB Hawaii, Inc. 2016 Equity and Incentive Plan) who has entered into an agreement with the Company the consummation of which would constitute a Change in Control, or (ii) a Participant terminates the Participant’s 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. A Participant’s entitlement to a Severance Payment and Medical Installments shall be conditioned upon the Participant providing to the Company the release of claims in accordance with Section 4.4.
4.2    Timing of Payment of Severance Payment and Medical Installments. If a Participant becomes entitled to the Severance Payment and the Medical Installments pursuant to Section 4.1, such Severance Payment shall be paid, and the Medical Installments shall commence, not later than 30 days after the Participant’s termination of employment. If the timing of the Participant’s providing to the Bank the release of claims required pursuant to Section 4.4 following the Participant’s termination of employment could affect whether the Severance Payment is paid, or the Medical Installments commence, in the calendar year during which the Participant’s termination of employment occurs or in the calendar year following the Participant’s termination of employment, the Severance Payment and/or the Medical Installments, as applicable, shall be paid  or commence in such following calendar year to the extent required in order to comply with Section 409A of the Code.
4.3    Person to Whom Payment is Made.
		
	(a)
	General Rules. Unless the Participant has died or is incompetent, the Participant’s Benefits shall be made to the Participant. If the Participant has died, then payment shall be made in accordance with Section 4.3(b). If the Participant is disabled and not competent to manage his or her affairs, then payment shall be made in accordance with any governing court order.  For estate planning purposes, the Participant may assign his or her interest to a revocable or irrevocable trust established by Participant.  

		
	(b)
	Procedures in the Event of Participant’s Death Prior to the Completion of Benefit Payments. The Participant shall designate a beneficiary in the event of his death by filing a written notice of such designation with the Plan Administrator. The Participant may designate any individual as his beneficiary or a revocable or irrevocable trust. The Participant may revoke or modify the designation at any time by a further written designation. However, no such designation, revocation or modification shall be effective unless signed by the Participant and accepted by the Plan Administrator during the Participant’s lifetime. The Participant’s beneficiary 

3

designation shall be deemed automatically revoked (i) if the beneficiary dies prior to the Participant’s death or (ii) if the Participant designates his spouse as beneficiary and then, prior to the Participant’s death, the Participant’s marriage to such individual is dissolved. If the Participant dies prior to the complete payment of the Participant’s Benefits, then payment of any amounts still owed to the Participant hereunder shall be made in accordance with the Participant’s beneficiary designation. If the Participant dies without a valid beneficiary designation, then all payments shall be made to the Participant’s surviving spouse, if any, and if none, to the Participant’s estate.
		
	(c)
	Payment to Minors or Incompetents. If any Benefit is required to be paid to a minor or person declared incompetent or to a person incapable of handling the disposition of his or her property, the Company may pay such Benefit to the guardian, legal representative or person having the care or custody of such minor, incompetent person or incapable person. The Plan Administrator may require such proof of incompetence, minority or guardianship as it may deem appropriate prior to distribution of the Benefit. Such distribution shall completely discharge the Company from all liability with respect to such benefit.

4.4    Release of Claims Requirement. Notwithstanding anything to the contrary in
the preceding provisions of this Article 4, a Participant’s entitlement to any of the Benefits pursuant to Section 4.1 shall be subject to and conditioned upon the Participant providing to the Company a release of claims substantially in the form attached hereto that has become irrevocable not later than thirty days after the date of the Participant’s termination of employment.
4.5    Golden Parachute Tax. Notwithstanding anything in this Plan to the contrary,
if it is determined that any payment by the Company or an Affiliate to a Participant or for his or her benefit (whether or not paid or payable, or distributed or distributable, pursuant to the terms of this Plan or otherwise) (the “Payments”) would be subject to the excise tax imposed by Section 4999 (or any successor provisions) of the Code, or any interest or penalty would be incurred by the Participant with respect to such excise tax (such excise tax, together with any such interest and penalties, is hereinafter referred to collectively as the “Excise Tax”), then the Payments shall be reduced (but not below zero) if and to the extent that such reduction would result in the Participant’s retaining a larger amount, on an after-tax basis (taking into account federal, state, and local income taxes and the imposition of the Excise Tax), than if the Participant received all of the Payments. All determinations required to be made under this Section, shall be made by a nationally recognized independent accounting firm or a nationally recognized financial planning and benefits consulting company (the “Section 280G Firm”) selected by the Company, which shall provide detailed supporting calculations both to the Company and to the Participant within fifteen (15) business days of the receipt of notice by the Company. All fees and expenses of the 280G Firm shall be borne solely by the Company. In the event any such reduction is required, the Payments shall be reduced in the following order: (i) the Benefits provided for by Section 4.1 (other than the Medical Installments), (ii) any other cash Payment (other than the Medical Installments), (iii) the Medical Installments, (iv) the accelerated vesting of Company equity awards that the Participant holds that vest based (in whole or in part) on the achievement of performance goals, and (v) the accelerated vesting of all other Company equity awards that the Participant holds. Any determination by the 280G Firm shall be binding upon the Company, its Affiliates and the Participant.
ARTICLE 5. CLAIMS PROCEDURES
5.1    Benefit Claims.
		
	(a)
	If a Participant disagrees with the Plan Administrator’s determination of the amount of Benefits to which the Participant is entitled under the Plan (including a determination by the Plan Administrator that no Benefits are payable to the Participant under the Plan) the Participant may dispute such determination by submitting a written claim for Benefits to the Plan Administrator. The Plan Administrator shall respond to the Participant within 90 days after receiving the claim. If the Plan Administrator determines that special circumstances require additional time for processing the claim, the Plan Administrator may extend the response period by an additional 90 days by notifying the Participant in writing, prior to the end of the initial 90-day period, that an additional period is required. The notice of extension must set forth the special circumstances and the date by which the Plan Administrator expects to render its decision.

		
	(b)
	If a claim is denied in part or in whole, the Plan Administrator shall

4

notify the Participant in writing of such denial. The notification shall set forth:
		
	(i)
	The specific reasons for the denial,

		
	(ii)
	A reference to the specific provisions of the Plan on which the denial is based,

		
	(iii)
	A description of any additional information or material necessary for the claimant to perfect the claim and an explanation of why it is needed,

		
	(iv)
	An explanation of the Plan’s review procedures and the time limits applicable to such procedures, and

		
	(v)
	A statement of the Participant’s right to bring a civil action under ERISA Section 502(a) following an adverse benefit determination on review.

		
	(c)
	If a claim is denied in part or in whole, the Participant shall have the opportunity for a full and fair review by the Plan Administrator. To initiate the review, the Participant must file a written request for review with the Plan Administrator within 60 days after receiving the Plan Administrator’s notice of denial. The Participant shall then have the opportunity to submit written comments, documents, records and other information relating to the claim. The Plan Administrator shall also provide the Participant, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant (as defined in applicable ERISA regulations) to the claimant’s claim for benefits.

		
	(d)
	In considering the review, the Plan Administrator shall take into account all materials and information the claimant submits relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination.

		
	(e)
	The Plan Administrator shall respond in writing to the Participant within 60 days after receiving the request for review. If the Plan Administrator determines that special circumstances require additional time for processing the claim, the Plan Administrator may extend the response period by an additional 60 days by notifying the Participant in writing, prior to the end of the initial 60-day period, that an additional period is required. The notice of extension must set forth the special circumstances and the date by which the Plan Administrator expects to render its decision.

		
	(f)
	If the claim is denied in part or in whole upon review, the Plan

Administrator shall notify the Participant of its decision in writing. The notification shall set forth:  The specific reasons for the denial,
		
	(i)
	A reference to the specific provisions of the Plan on which the denial is based,

		
	(ii)
	A statement that the Participant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant (as defined in applicable ERISA regulations) to the Participant’s claim for Benefits, and

		
	(iii)
	A statement of the Participant’s right to bring a civil action under ERISA Section 502(a) after exhausting all administrative claims and review procedures in this Article 5.

		
	(a)
	After exhausting the foregoing claims procedures, the Participant or Participant’s representative may pursue any other legal or equitable remedy which may be available. If action is not taken within two years of the date of the final action on an appeal, then the Participant will be barred from taking legal action.

		
	(b)
	Determinations made under this Plan upon or after a Change in Control shall be subject to de novo review in any court proceeding.

ARTICLE 6. ADMINISTRATION
The Plan shall be administered by the Plan Administrator, which shall have the power to delegate specific duties and responsibilities hereunder to others. The Plan Administrator may rescind any such delegation at any time.
ARTICLE 7. AMENDMENT AND TERMINATION
The Company may amend or terminate the Plan at any time; provided, however, that no such amendment or termination that adversely affects the rights of a Participant shall become effective with respect to such Participant prior to the expiration of one year (two years in the case of an amendment adopted after the occurrence of a Change in Control) from the 

5

date written notice of such amendment or termination is provided to the Participant; and provided further that no such amendment or termination of the Plan shall become effective after a Participant’s termination of employment that entitles the Participant to receive the Severance Payment and Medical Installments until all Benefits to which the Participant is entitled under the Plan in connection with such termination of employment have been paid in full.
ARTICLE 8. MISCELLANEOUS
8.1    No Guaranty of Employment. The adoption and maintenance of the Plan shall not be deemed to be a contract of employment between the Company and any Participant. Nothing contained herein shall give a Participant the right to be retained in the employ of the Company or to interfere with the right of the Company to discharge the Participant at any time, nor shall it give the Company the right to require a Participant to remain in its employ or to interfere with the Participant’s right to separate from service at any time. 
8.2    Accrued Obligations. For sake of clarity, upon any termination of a Participant’s employment, the Participant shall be entitled to the Accrued Obligations. The Accrued Obligations shall be payable on or as soon as practicable after the Participant’s termination of employment, consistent with applicable law, except those obligations payable in accordance, and subject to, the terms of a governing plan, program or arrangement.
8.3    Non-Alienation. No benefit payable at any time under this Plan shall be subject in any manner to alienation, sale, transfer, assignment, pledge, attachment, or encumbrance of any kind.
8.4    Tax Withholding. All Benefits payable hereunder shall be subject to all applicable federal, state, and local tax withholding requirements.
8.5    Indemnification. To the extent allowed by law, the Company shall indemnify
and defend the Plan Administrator (and any representative of the Plan Administrator) against any and all claims, losses, damages, expenses, and liabilities incurred by such persons (including, but not limited to, reasonable attorney’s fees and any amounts paid in settlement with the Board’s approval) and arising from such person’s action or failure to act with respect to such person’s Plan responsibilities, but excepting any amount otherwise payable by insurance covering such liability and any liability determined by a court with proper jurisdiction to be the result of the person’s willful misconduct.
8.6    Assignment to Successor. The Company shall (i) assign its rights and
obligations under this Plan to any successor organization resulting from a merger, acquisition, or affiliation involving the Company, or resulting from a sale of substantially all of the Company’s assets and (ii) require any such successor organization to expressly assume such rights and obligations.
8.7    Section 409A. This Plan is intended to comply with the requirements of
Section 409A of Code (including the exceptions thereto), to the extent applicable, and shall be interpreted and administered accordingly. If any provision contained in this Plan conflicts with the requirements of Section 409A of the Code (or the exemptions intended to apply under this Plan), this Plan shall be deemed to be reformed to comply with the requirements of Section 409A of the Code (or applicable exemptions thereto). For purposes of determining the Participant’s entitlement to the Benefits under Section 4 hereof: (i) the Participant’s employment shall not be deemed to have terminated unless and until the Participant incurs a “separation from service” as defined in Section 409A of the Code, and (ii) the effective date of any termination or resignation of employment (or any similar term) shall be the effective date of the Participant’s separation from service. Notwithstanding anything to the contrary herein, if a payment or benefit under this Plan is due to a “separation from service” for purposes of the rules under Treas. Reg. § 1.409A-3(i)(2) (payments to specified employees upon a separation from service) and the Participant is determined to be a “specified employee” (as determined under Treas. Reg. § 1.409A-1(i)), such payment shall, to the extent necessary to comply with the requirements of Section 409A of the Code, be made on the later of: (i) the date specified by the foregoing provisions of this Plan or (ii) the date that is six (6) months after the date of the Participant’s separation from service (or, if earlier, the date of the Participant’s death). To the extent permitted by Section 409A, each payment hereunder shall be deemed to be a separate payment for purposes of Section 409A of the Code. The Benefits are intended not to constitute deferred compensation subject to Section 409A of the Code 
8.8    Applicable Law. The Plan and all rights hereunder shall be governed by and construed according to the laws of Hawaii, except to the extent such laws are pre-empted by the laws of the United States of America.

6

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