Exhibit
10.1


 


BANK
OF HAWAII CORPORATION


 


CHANGE-IN-CONTROL
RETENTION PLAN


 


Amended
and Restated Effective December 17, 2009


 

















 


TABLE
OF CONTENTS


 


	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  Article 1.

  	
  Establishment and Purpose

  	
  1

  
	
   

  	
   

  	
   

  
	
  Article 2.

  	
  Definitions

  	
  1

  
	
   

  	
   

  	
   

  
	
  Article 3.

  	
  Participation

  	
  5

  
	
   

  	
   

  	
   

  
	
  Article 4.

  	
  Benefits

  	
  6

  
	
   

  	
   

  	
   

  
	
  Article 5.

  	
  Termination for Cause

  	
  7

  
	
   

  	
   

  	
   

  
	
  Article 6.

  	
  Other Benefits

  	
  7

  
	
   

  	
   

  	
   

  
	
  Article 7.

  	
  Benefits in the Event of Death

  	
  7

  
	
   

  	
   

  	
   

  
	
  Article 8.

  	
  Legal Fees

  	
  8

  
	
   

  	
   

  	
   

  
	
  Article 9.

  	
  Tax Withholding

  	
  8

  
	
   

  	
   

  	
   

  
	
  Article 10.

  	
  Restrictive Covenants

  	
  8

  
	
   

  	
   

  	
   

  
	
  Article 11.

  	
  Administration

  	
  9

  
	
   

  	
   

  	
   

  
	
  Article 12.

  	
  Claims Procedures

  	
  10

  
	
   

  	
   

  	
   

  
	
  Article 13.

  	
  Amendment or Termination

  	
  11

  
	
   

  	
   

  	
   

  
	
  Article 14.

  	
  Successors

  	
  11

  
	
   

  	
   

  	
   

  
	
  Article 15.

  	
  Third Party Beneficiaries

  	
  11

  
	
   

  	
   

  	
   

  
	
  Article 16.

  	
  Indemnification

  	
  12

  
	
   

  	
   

  	
   

  
	
  Article 17.

  	
  Incapacity

  	
  12

  
	
   

  	
   

  	
   

  
	
  Article 18.

  	
  Funding

  	
  12

  
	
   

  	
   

  	
   

  
	
  Article 19.

  	
  FDIC Limitations

  	
  12

  
	
   

  	
   

  	
   

  
	
  Article 20.

  	
  Nonassignment

  	
  13

  
	
   

  	
   

  	
   

  
	
  Article 21.

  	
  Enforceability and Controlling Law

  	
  13

  
	
   

  	
   

  	
   

  
	
  APPENDIX A

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  APPENDIX B

  	
   

  	
   

  



 


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BANK OF
HAWAII CORPORATION


CHANGE-IN-CONTROL
RETENTION PLAN


 


Article 1.                                            Establishment,
Restatement and Purpose.


 


1.1                               Establishment
and Restatement of Plan.  Effective as of
the date of adoption by the Human Resources and Compensation Committee of its
Board of Directors, Bank of Hawaii Corporation, a Delaware corporation, (the “Company”)
hereby amends and restates this retention compensation plan known as the Bank
of Hawaii Corporation Change-in-Control Retention Plan (the “Plan”), as
originally adopted October 19, 2007. 
This Plan originally superseded and replaced the Bank of Hawaii
Corporation Key Executive Severance Plan, effective as of April 27, 1983,
(the “Prior Plan”).  Under the Prior
Plan, the Company entered into Key Executive Change-in-Control Severance
Agreements and Executive Change-in-Control Severance Agreements (collectively, “Prior
Agreements”) with certain executive officers of the Company and its
subsidiaries.  An executive covered by a
Prior Agreement shall have no rights under the Prior Plan and Prior Agreement
as of the date the executive agrees in writing to be covered by this Plan.


 


1.2                               Purpose
of Plan.  The purpose of the Plan is to
advance the interests of the Company and its shareholders by ensuring that the
Company will have the continued employment, dedication, and focused attention
of its executive officers notwithstanding the possibility, threat, or
occurrence of a Change in Control of the Company.  The Plan is intended to provide the Company’s
executives with a level of economic security in the event of a Change in
Control that protects the compensation and benefit expectations of the
executives and is competitive with other organizations.


 


Article 2.                                            Definitions


 


Whenever used in the Plan,
the following terms shall have the meanings set forth below unless a different
meaning is clearly required by the context.


 


2.1                               “Base
Salary” means the Participant’s annual gross base salary from the Company or a
Subsidiary for the applicable Fiscal Year before any deductions, exclusions,
deferrals, or contributions on a tax-qualified or non-tax-qualified basis under
any plan or program of the Company or a Subsidiary, and excluding bonuses,
incentive compensation, special fees or awards, commissions, allowances, any
form of premium pay, and amounts designated by the Company or a Subsidiary as
payment toward or reimbursement of expenses. 
If a Participant is employed for less than a complete Fiscal Year, Base
Salary for the Fiscal Year shall be the annualized gross base salary (subject
to the adjustments described in the preceding sentence) based on the
Participant’s highest base salary rate during such Fiscal Year.  Base Salary shall be determined under this Section 2.1
in accordance with the personnel records and established practices and
procedures of the Company.


 


2.2                               “Beneficial
Owner” or “Beneficial Ownership” has the
meaning ascribed to such term in Rule 13d-3 of the General Rules and
Regulations under the Exchange Act.


 

















 


2.3                               “Board” means the
Board of Directors of the Company.


 


2.4                               “Cause” means the
occurrence of any one or more of the following:


 


(a)                                  The Participant’s
willful failure to perform his or her duties for the Company (other than any
such failure resulting from the Participant’s Disability), after written demand
for substantial performance has been delivered to the Participant by the
Committee that specifically identifies how the Participant has not
substantially performed his or her duties, and the Participant fails to remedy
the situation within fifteen (15) business days of such written demand from the
Committee;


 


(b)                                 Gross
negligence in the performance of the Participant’s duties;


 


(c)                                  The Participant’s
conviction of, or plea of nolo contendere, to any felony whatsoever or any
other crime involving the personal enrichment of the Participant at the expense
of the Company;


 


(d)                                 The Participant’s
willful engagement in conduct that is demonstrably and materially injurious to
the Company, monetarily or otherwise;


 


(e)                                  A material
violation of any federal or state banking law or regulation;


 


(f)                                    A material
violation of any provision of the Company’s Code of Business Conduct and Ethics
(including any successor thereto) or any other Company-established code of
conduct to which the Participant is subject; or


 


(g)                                 Willful
violation of any of the covenants contained in Article 10, as applicable.


 


2.5                               “Change
in Control” means the first to occur of the following events:


 


(a)                                  The acquisition
by any individual, entity, or group (other than a trustee or other fiduciary
holding securities under an employee benefit plan of the Company or 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)
of Beneficial Ownership of twenty-five percent (25%) or more of the combined
voting power of the Company’s then outstanding securities entitled to vote for
the election of the directors of the Company;


 


(b)                                 The
consummation of a reorganization, merger, or consolidation of the Company or
sale or other disposition of all or substantially all of the assets of the
Company, excluding, however, a corporate transaction pursuant to which all or
substantially all of the individuals or entities who are the Beneficial Owners
of the Company immediately prior to the corporate transaction will beneficially
own, directly or indirectly, more than sixty percent (60%) of the outstanding
shares of common stock of the resulting entity and of the combined voting power
of the outstanding securities entitled to vote for the election of directors of
such entity; or


 


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(c)                                  Individuals
who, as of April 30, 2004, constitute the Board (the “Incumbent Board”)
cease for any reason to constitute at least a majority of such Board, provided
that any individual who becomes a director of the Company subsequent to April 30,
2004, whose election or nomination for election by the Company’s shareholders
was approved by the vote of at least a majority of the directors then
comprising the Incumbent Board shall be deemed a member of the Incumbent Board,
and provided further that any individual who was initially elected as a
director of the Company as a result of an actual or threatened election contest
or any other actual or threatened solicitation of proxies or consents by or on
behalf of any Person other than the Board shall not be deemed a member of the
Incumbent Board.


 


2.6                               “Code” means the
Internal Revenue Code of 1986, as amended from time to time, or any successor
thereto.


 


2.7                               “Committee” means the
Human Resources and Compensation Committee of the Board or any other committee
appointed by the Board to be responsible for the administration of the Plan.


 


2.8                               “Company” means Bank of
Hawaii Corporation, a Delaware corporation, or any successor thereto that is
subject to the Plan as provided in Article 14.


 


2.9                               “Confidential
Information” means any information with respect to the conduct
or details of the business of the Company and its Subsidiaries, including,
without limitation, information relating to its commercial and retail banking
services, mortgage banking services, commercial and consumer loans, merchant
credit card services, investments and capital market transactions and
strategies, methods of operation, customer and borrower lists, customer account
information, deposits, outstanding loans, products (existing and proposed),
prices, fees, costs, plans, technology, inventions, trade secrets, know-how,
software, marketing methods, policies, personnel, suppliers, competitors,
markets, or other specialized information or proprietary matters of the Company
and its Subsidiaries.


 


2.10                        “Date
of Termination” means the date of a Qualifying Termination.


 


2.11                        “Disability” or “Disabled” means the Participant (a) 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 (b) 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. In addition to the foregoing, a Participant shall be deemed
Disabled as of the date the Social Security Administration determines the
Participant to be totally disabled.


 


2.12                        “ERISA” means the
Employee Retirement Income Security Act of 1974, as amended from time to time,
or any successor act thereto.


 


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2.13                        “Exchange
Act” means the Securities Exchange Act of 1934, as amended from time to
time, or any successor act thereto.


 


2.14                        “Excise
Tax” means an excise tax imposed by Code section 4999 (or any successor
provision thereto) together with any similar tax imposed by state or local law,
including any interest or penalties.


 


2.15                        “Fiscal
Year” means the calendar year.


 


2.16                        “Good
Reason” means the occurrence of one or more of the following after a Change in
Control without the Participant’s express written consent:


 


(a)                                  A material
diminution in the Participant’s Base Salary;


 


(b)                                 A material
diminution in the Participant’s authority, duties, or responsibilities;


 


(c)                                  A material
diminution in the authority, duties, or responsibilities of the supervisor to
whom the Participant is required to report, including, to the extent
applicable, a requirement that the Participant report to a corporate officer or
employee instead of reporting directly to the Board;


 


(d)                                 A material
diminution in the budget over which the Participant retains authority;


 


(e)                                  A material
change in the geographic location at which the Participant must perform his or
her services (which for this purpose means the Participant is required to
relocate to a different Hawaiian Island or a place that is more than 50 miles
from where the Participant was based immediately prior to the Change in
Control);


 


(f)                                    Any other
action or inaction that constitutes a material breach by the Company of this
Plan or a written employment agreement with the Participant (or other agreement
as to the terms of employment between the Company and the Participant).


 


A Participant must give the
Company written notice that a “Good Reason” event has occurred within ninety
(90) days of its occurrence.  The notice
must provide a reasonably detailed description of the facts that constitute a “Good
Reason” event. The Company shall have thirty (30) business days to remedy the “Good
Reason” event.


 


2.17                        “Participant” means an
executive officer of the Company or a Subsidiary who has been approved as a
Participant by the Committee in accordance with Article 3.


 


2.18                        “Person” has the
meaning ascribed to such term in Section 3(a)(9) of the Exchange Act
and used in Sections 13(d) and 14(d) thereof, including a “group” as
defined in Section 13(d) thereof.


 


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2.19                        “Plan” means the Bank
of Hawaii Corporation Change-in-Control Retention Plan as set forth herein and
amended from time to time.


 


2.20                        “Qualifying
Termination” means within twenty-four (24) months following a
Change in Control, (a) the Participant’s employment is involuntarily
terminated by the Company and its Subsidiaries without Cause, or (b) the
Participant terminates employment from the Company and its Subsidiaries for
Good Reason.  The twenty-four month
period will be extended by one (1) additional month if the thirty-day cure
period in Section 2.16 is triggered in the twenty-third or twenty-fourth
month following a Change in Control.  It
is intended that any Qualifying Termination shall be an “involuntary Separation
from Service,” as defined in Treasury Regulation Section 1.409A-1(n).


 


2.21                        “Separation
from Service” or “Separates from Service”
has the meaning ascribed to such term in Treasury Regulation Section 1.409A-l(h) and
generally means termination of employment from the Company and its
Subsidiaries.


 


2.22                        “Specified
Employee” means an individual who, as of the date of his or
her Separation from Service, meets the requirements to be a “key employee” as
defined in Code Section 416(i)(1)(A)(i), (ii) or (iii) (applied
in accordance with the regulations thereunder and without regard to Section 416(i)(5))
at any time during the 12-month period ending on the Specified Employee
Identification Date.  For purposes of
this determination, the Specified Employee Identification Date is each December 31
and the Specified Employee Effective Date is the April 1 following such
Identification Date.  If the individual
is a key employee as of a Specified Employee Identification Date, the
individual is treated as a “key employee” for purposes of this section for the
entire 12-month period beginning on the Specified Employee Effective Date.  The terms “Identification Date” and “Effective
Date” for purposes of this paragraph have the meanings specified in Treasury
Regulation 1.409A-1(i)(3) and (4).


 


2.23                        “Subsidiary” means any
corporation, partnership, joint venture, limited liability company, or other
entity (other than the Company) in an unbroken chain of entities beginning with
the Company if each of the entities other than the last entity in the unbroken
chain owns directly or indirectly at least 50% of the total combined voting
power of another corporation or other entity in such chain.


 


Article 3.                                            Participation


 


3.1                               Participation
Agreement.  An
executive officer of the Company or a Subsidiary shall become eligible to
participate in the Plan upon the Committee’s designation of the executive
officer as a Participant.  The
Participant’s “Effective Date of Participation” shall be the date the
Participant acknowledges in writing his or her participation in this amended
and restated Plan.


 


3.2                               End of
Participation.  Upon
Separation from Service prior to a Change in Control, a Participant shall cease
to be a Participant and shall no longer be eligible for benefits under this
Plan.  If a Participant enters into a
separation agreement or employment agreement with the Company that designates a
date prior to Separation from Service on which the 


 


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Participant’s participation in this Plan shall cease, the separation
agreement or employment agreement shall control.  Subject to any applicable separation or
employment agreement, prior to a Participant’s Separation from Service, the
Committee may in good faith determine that a Participant has ceased to be in
the class of executives eligible for coverage under the Plan, in which case the
Committee may terminate the Participant’s participation in the Plan effective
upon written notification to the Participant of such determination.  However, notwithstanding the foregoing, a
Participant’s participation in the Plan may not be involuntarily terminated
(except by reason of a Separation from Service prior to a Change in Control or
because of a termination for Cause at any time) (a) after the Committee
has actual knowledge that a third party has taken steps reasonably calculated
to effect a Change in Control (including, but not limited to, the commencement
of a tender offer for the voting stock of the Company or the circulation of a
proxy to the Company’s shareholders) and until the Committee determines in good
faith that such third party has fully abandoned or terminated its efforts to
effect a Change in Control, or (b) within twenty-four (24) months after a
Change in Control.  With respect to (b),
the foregoing 24 month period shall be extended by one (1) additional
month if the thirty-day cure period in Section 2.16 is triggered in the
twenty-third or twenty-fourth month following a Change in Control.


 


Article 4.                                            Benefits


 


4.1                               Right
to Benefits.  Following a
Qualifying Termination, a Participant shall have the rights and be entitled to the
benefits described in Sections 4.2 through 4.5.


 


4.2                               Severance,
Welfare, and Outplacement Benefits and Noncompetition Payments.  A Participant serving in the position of
Executive Vice President or other executive position below the level of Vice
Chairman as of the Participant’s Effective Date of Participation shall be
entitled to the severance, welfare and outplacement benefits and noncompetition
payments described in Appendix A attached hereto and incorporated herein by
this reference.  A Participant serving in
the position of Vice Chairman or above as of the Participant’s Effective Date
of Participation shall be entitled to the severance, welfare, outplacement and
relocation benefits and noncompetition payments described in Appendix B
attached hereto and incorporated herein by this reference.


 


4.3                               EIP
Benefits.  Any
contingent award granted to a Participant prior to a Change in Control under
the Bank of Hawaii Corporation Executive Incentive Plan (the “EIP”), or any
successor or other incentive bonus plan, shall be governed by the provisions of
the EIP or other incentive bonus plan.


 


4.4                               Equity
Compensation.  Any awards
granted to a Participant prior to a Change in Control under the Bank of Hawaii
Corporation 2004 Stock and Incentive Compensation Plan (the “2004 Stock Plan”),
the Bancorp Hawaii, Inc. Stock Option Plan of 1994 (the “1994 Stock Option
Plan”) or any successor or other equity compensation plan, shall be governed by
the provisions of the 2004 Stock Plan, the 1994 Stock Option Plan or other equity
compensation plan, subject to reduction pursuant to Section 5.a of
Appendix A or Section 6.b of Appendix B, as applicable.


 


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4.5          Other Incentive Compensation.  Any awards granted to a Participant prior to
a Change in Control under an incentive compensation plan of the Company or a
Subsidiary other than the EIP, the 2004 Stock Plan or the 1994 Stock Option
Plan shall be governed by the provisions of the applicable plan.


 


4.6          Company’s Covenant with Respect to Benefit Opportunities.  Following a Change in Control, the Company
agrees that it shall not materially reduce a Participant’s opportunities with
respect to incentive compensation, equity compensation, or employee benefits,
unless the reduction applies to executive officers of the Company generally.


 


Article 5.                                            Termination
for Cause


 


Nothing in this Plan shall
be construed to prevent the Company or its Subsidiaries from terminating a
Participant’s employment for any reason or for no reason.  However, if the Company or a Subsidiary
(including any successor to the Company or a Subsidiary) wishes to terminate a
Participant’s employment for Cause after a Change in Control, the Company (or
any successor to the Company) must give the Participant a written notice (“Notice
of Termination”) that identifies the specific clause in the definition of Cause
on which the termination is based and provides a reasonably detailed
description of the facts that permit termination under that clause.  If the Company (or any successor to the
Company) terminates a Participant’s employment without providing a Notice of
Termination, the termination shall be deemed to be a termination without
Cause.  If the Company or a Subsidiary
terminates a Participant for Cause, the Participant shall not be entitled to
the benefits described in Section 4.2. 
(The Participant’s rights to the benefits described in Sections 4.3,
4.4, and 4.5 depend on the terms of the applicable plans.)


 


Article 6.                                            Other
Benefits


 


Neither the provisions of
this Plan nor the benefits provided hereunder shall reduce any amounts
otherwise payable to the Participant under any other benefit, incentive,
retirement, or equity compensation plan, or any employment agreement, or other
plan or arrangement of the Company or its Subsidiaries.


 


Article 7.                                            Benefits
in the Event of Death


 


In the event of the death of
the Participant after becoming entitled to benefits under this Plan, any
benefits that would have been paid to the Participant shall be paid to the
Participant’s designated beneficiary(ies). 
The beneficiary(ies) of the Participant under the Bank of Hawaii
Retirement Savings Plan (or successor plan) shall be deemed to be the
Participant’s designated beneficiary(ies) under this Plan, unless a beneficiary
or beneficiaries are otherwise designated by the Participant in written form
delivered and acceptable to the Committee prior to the Participant’s
death.  A Participant may make or change
such designation at any time.  In the
event of the death of a Participant prior to becoming entitled to benefits
under this Plan, no benefits shall be paid to the Participant’s
beneficiary(ies), estate, or any other person on behalf of the Participant.


 


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Article 8.                                            Legal
Fees


 


If a Participant takes
action to enforce the terms of the Plan against the Company and if such
enforcement action is successful with respect to one (1) or more material
points (whether by decision of a court or arbitrator or by settlement between
the Participant and the Company), the Company shall reimburse the Participant
for the reasonable legal fees and expenses incurred by the Participant in
connection with such action up to a maximum of $50,000.  The Company shall make the reimbursement as
soon as administratively practicable after the matter is finally resolved but
no later than the 15th day of the third month following the month in which the
matter is finally resolved (whether by non-appealable decision by a court or
arbitrator, by a legally binding settlement between the Participant and the
Company, or because the Company concedes that an amount is payable).  For purposes of this paragraph, a Participant
will be deemed to have succeeded with respect to a material point if the
Participant obtains a monetary award or settlement from the Company that is
more than de minimis.


 


Article 9.                                            Tax
Withholding


 


Notwithstanding anything
herein to the contrary, the payment of any amount under this Plan shall be
subject to such income tax, employment tax and other withholding as the Company
determines is required under applicable law.


 


Article 10.                                     Restrictive
Covenants


 


In consideration of the
benefits of participation in this Plan, the Participant agrees that, while the
Participant is employed by the Company or a Subsidiary and for twelve (12)
months following the Participant’s Date of Termination, the Participant shall
be bound by the following restrictions:


 


10.1        Nondisclosure.  Unless required or otherwise permitted by
law, the Participant shall not disclose to others or use for the benefit of any
person or entity other than the Company and its Subsidiaries any Confidential
Information or any summary or derivative of that information.


 


10.2        Noncompetition.  The Participant shall not, either directly or
indirectly, engage in or invest in, own, manage, operate, finance, control, be
employed by, work as a consultant or contractor for, or otherwise be associated
with any Financial Institution doing business in Hawaii; provided, however,
that the Participant may purchase or otherwise acquire up to one percent (1%)
of any class of securities of any such Financial Institution (but without
otherwise participating in the activities of such enterprise) if such securities
are listed on any national or regional securities exchange or have been
registered under Section 12(g) of the Exchange Act.  The term “Financial Institution” means any
commercial bank, savings institution, securities brokerage, mortgage company, insurance
broker or other company or organization that competes in Hawaii with the
Company or any of its Subsidiaries.


 


10.3        Nonsolicitation of Business.  The Participant shall not solicit business of
the same or similar type being carried on by the Company or its Subsidiaries
from any company, 


 


8

















 


person, or entity known by the Participant to be a customer of the
Company or its Subsidiaries, whether or not the Participant had personal
contact with such company, person or entity by reason of the Participant’s
employment with the Company or a Subsidiary.


 


10.4        Nonsolicitation of Employees.  The Participant shall not, whether for the
Participant’s own account or the account of any other person, solicit (other
than general, non-targeted solicitation), employ, or otherwise engage as an
employee, independent contractor, or otherwise, any person who is an employee
of the Company or its Subsidiaries or in any manner induce or attempt to induce
any employee of the Company or its Subsidiaries to terminate his or her
employment.


 


10.5        Nondisparagement.  The Participant shall not publicly denigrate
or in any manner undertake to publicly discredit the Company or its
Subsidiaries or any person or operation associated with the Company or its
Subsidiaries.


 


Article 11.                                     Administration


 


11.1        Administrative Authority.  The Committee shall have the responsibility
and authority to administer the Plan. 
The Committee shall administer the Plan in accordance with the Committee’s
charter and the governance rules and procedures applicable to the
Committee.  The Committee shall have
plenary authority, in its complete and sole discretion, to: (a) construe
and interpret the Plan and its terms and resolve any ambiguities herein; (b) determine
the amount and recipient of any payment hereunder; (c) prescribe, amend,
and rescind rules and regulations with respect to Plan administration or
interpretation; (d) make all other determinations and do all other things
necessary or appropriate for the administration of the Plan; and (e) have
all other powers granted to it in other sections of this Plan or as otherwise
necessary or appropriate to carry out its responsibilities hereunder.  The finding, decision, determination or
action of the Committee with respect to any question arising out of or in
connection with the administration, interpretation and application of the Plan
and the rules and regulations promulgated hereunder shall be final and
conclusive and binding upon any and all persons having any interest in the
Plan, subject only to the Plan’s claims rules. 
No findings, decisions or determinations of any kind made by the
Committee shall be disturbed by a court of law or otherwise unless there is a
judicial finding that the Committee has acted in an arbitrary and capricious
manner.


 


11.2        Code section 409A Compliance.  The Company intends the Plan to meet the
requirements of Code section 409A, the regulations promulgated thereunder and
any additional regulatory guidance provided thereunder by the Treasury
Department, and the Committee shall interpret and construe the terms of this
Plan in a manner consistent with such intent. 
Notwithstanding anything in the Plan to the contrary, any Plan provision
that does not meet the requirements of Code section 409A or applicable
regulatory guidance thereunder shall be reformed so as to satisfy such
requirements if such reformation may be accomplished without substantially
adversely affecting a Participant’s benefits, and if in the good faith
determination of the Committee such result cannot be achieved, shall be treated
as void.  Moreover, for purposes of
applying the provisions of Code section 409A to this Plan, each separately
identified amount to which a Participant is entitled under this Plan shall be
treated as a separate payment.  In
addition, to the extent permissible under Code section 409A, any series of
installment payments 


 


9

















 


under this Plan shall be treated as a right to a series of separate
payments.  Finally, and notwithstanding
anything in the Plan to the contrary, any Plan provision that does not meet the
requirements of any future federal or state statute or applicable regulatory
guidance thereunder shall be reformed so as to satisfy such requirements if
such reformation may be accomplished without substantially adversely affecting
a Participant’s benefits, and if in the good faith determination of the
Committee such result cannot be achieved, shall be treated as void.


 


Article 12.                                     Claims
Procedures


 


Any individual (a “Claimant”)
who has not received benefits under the Plan that he or she believes should be
paid may make a claim for such benefits as follows:


 


12.1        Written Claim.  The Claimant shall initiate a claim by
submitting to the Company a written claim for the benefits.


 


12.2        Timing of Company Response.  The Committee shall respond to the Claimant
within ninety (90) days after receiving the claim.  If the Committee determines that special
circumstances require additional time for processing the claim, the Committee
may extend the response period by an additional ninety (90) days by notifying
the Claimant 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
Committee expects to render its decision.


 


12.3        Notice of Decision.  If the Committee denies part or all of the
claim, the Committee shall notify the Claimant in writing of such denial.  The Committee shall write the notification in
a manner calculated to be understood by the Claimant.  The notification shall set forth: (a) the
specific reasons for the denial; (b) a reference to the specific
provisions of the Plan on which the denial is based; (c) a description of
any additional information or material necessary for the Claimant to perfect
the claim and an explanation of why it is needed; (d) an explanation of
the Plan’s review procedures and the time limits applicable to such procedures;
and (e) a statement of the Claimant’s right to bring a civil action under Section 502(a) of
ERISA following an adverse benefit determination on review.


 


12.4        Review Procedure.  If the Committee denies part or all of the
claim, the Claimant shall have the opportunity for a full and fair review by
the Committee of the denial.  To initiate
the review, the Claimant, within sixty (60) days after receiving the Committee’s
notice of denial, must file with the Committee a written request for
review.  The Claimant shall then have the
opportunity to submit written comments, documents, records and other
information relating to the claim.  The
Committee shall also provide the Claimant, 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.  In considering the claim
on review, the Committee 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.


 


10

















 


12.5        Committee Response.  The Committee shall respond in writing to the
Claimant within sixty (60) days after receiving the request for review.  If the Committee determines that special
circumstances require additional time for processing the claim, the Committee
may extend the response period by an additional sixty (60) days by notifying
the Claimant 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 Committee expects to render its decision.  The Committee shall notify the Claimant in
writing of its decision on review.  The
Committee shall write the notification in a manner calculated to be understood
by the Claimant. The notification shall set forth: (a) the specific
reasons for the denial; (b) a reference to the specific provisions of the
Plan on which the denial is based; (c) a statement that the Claimant 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 Claimant’s claim for benefits; and (d) a
statement of the Claimant’s right to bring a civil action under Section 502(a) of
ERISA after exhausting all administrative claims and review procedures in this Article 12.


 


Article 13.                                     Amendment
or Termination


 


The Committee may amend or
terminate the Plan at any time and in any manner without the consent of any
Participant or other affected individual, provided that any amendment or
termination shall not adversely affect the benefits payable (or to be paid) to
a Participant whose Date of Termination occurred prior to the date of such
amendment or termination (except as otherwise provided in Section 11.2).  Notwithstanding the foregoing, for a period
of two (2) years following a Change in Control, the Plan may not be
terminated or amended in any manner adverse to a Participant without the
written consent of the Participant (except as otherwise provided in Section 11.2).  Furthermore, in the event the Committee has
knowledge that a third party has taken steps reasonably calculated to effect a
Change in Control including, but not limited to, the commencement of a tender
offer for the voting stock of the Company or the circulation of a proxy to the
Company’s shareholders, then this Plan shall remain irrevocably in effect until
the Committee, in good faith, determines that such third party has fully
abandoned or terminated its effort to effect a Change in Control.


 


Article 14.                                     Successors


 


The Company shall require
any successor (whether direct or indirect, by purchase, merger, consolidation,
or otherwise) of all or substantially all of the business or assets of the
Company or of any division or Subsidiary thereof to assume expressly and agree
to perform the Company’s obligations under this Plan in the same manner and to
the same extent that the Company would be required to perform them if no such
succession had taken place.


 


Article 15.                                     Third
Party Beneficiaries


 


This Plan shall inure to the
benefit of and be enforceable by the Participant’s personal or legal
representatives, executors, administrators, successors, heirs, and assigns.


 


11

















 


Article 16.                                     Indemnification


 


In addition to such other
rights of indemnification as they may have as members of the Board, the Company
shall indemnify the members of the Board and the Committee against all
reasonable expenses, including attorneys’ fees, actually and reasonably
incurred in connection with the defense of any action, suit, or proceeding, or
in connection with any appeal therein, to which they or any of them may be a
party by reason of any action or failure to act under or in connection with the
Plan, and against all amounts reasonably paid by them in settlement thereof or
paid by them in satisfaction of a judgment in any such action, suit, or
proceeding, if such members acted in good faith and in a manner that they
believed to be in, and not opposed to, the best interests of the Company.


 


Article 17.                                     Incapacity


 


If the Committee finds that
any person to whom a benefit is payable under this Plan is legally, physically,
or mentally incapable of personally receiving and receipting for such payment,
the Committee may direct that such benefit be paid to any person, persons, or
institutions who have custody of such person, or are providing necessities of
life (including. without limitation, food, shelter, clothing, medical, or
custodial care) to such person, to the extent deemed appropriate by the
Committee.  Any such payment shall
constitute a full discharge of the liability of the Company to the extent
thereof.


 


Article 18.                                     Funding


 


The amounts payable under
this Plan shall be paid in cash from the general assets of the Company, and a
Participant shall have no right, title, or interest in or to investments, if any,
which the Company may make to aid it in meeting its obligations under this
Plan.  Title to and beneficial ownership
of any such investments shall at all times remain in the Company.  Nothing contained in this Plan, and no action
taken pursuant to its provisions, shall create or be construed to create a
trust of any kind.  To the extent that
any person acquires a right to receive a payment under this Plan, such right
shall be no greater than the right of an unsecured creditor.


 


Article 19.                                     FDIC
Limitations


 


If any payment or benefit
under this Plan would otherwise be a golden parachute payment within the
meaning of Section 18(k) of the Federal Deposit Insurance Act (a “Golden
Parachute Payment”) that is prohibited by applicable law, then the payments and
benefits will be reduced to the greatest amount that can be paid to the
Participant without there being a prohibited Golden Parachute Payment.  To the extent reasonably practicable, the
Company shall seek the approval of the Federal Deposit Insurance Corporation
(the “FDIC”) and/or the State of Hawaii Division of Financial Institutions and
any other bank regulatory body, as necessary, to make any payment to the
Participant that would otherwise constitute a Golden Parachute Payment.


 


12

















 


Article 20.                                     Nonassignment


 


The interests of a
Participant hereunder may not be sold, transferred, assigned, pledged, or
hypothecated.  No Participant may borrow
against his/her interest in the Plan.


 


Article 21.                                     Enforceability
and Controlling Law


 


If any provision of this
Plan is held by a court of competent jurisdiction to be invalid or
unenforceable, the remaining provisions shall continue in full force and
effect.  Except to the extent preempted
by ERISA, the provisions of this Plan shall be construed, administered, and
enforced according to the laws of the State of Hawaii without giving effect to
the conflict of laws principles.


 


13
















 


APPENDIX A


 


BANK OF HAWAII CORPORATION


CHANGE-IN-CONTROL RETENTION PLAN


 


Benefits for Executive Vice Presidents


 


1.                                      Entitlement
to Benefits


 


A Participant covered by
this Appendix A shall be entitled to the benefits described in this Appendix A
if the Participant has a Qualifying Termination.  All payments hereunder shall be subject to
tax withholding as provided in Article 9 of the Plan and the FDIC
Limitations as provided under Article 19 of the Plan.


 


2.                                      Severance
Benefits


 


a.                                     Base
Salary and Bonus.  The Company
shall pay the Participant the following severance benefit:


 


i.                                        An amount equal
to one (1) times the Participant’s highest annual Base Salary earned at
any time during the two (2) complete Fiscal Years immediately preceding
the Participant’s Date of Termination or, if shorter, during the Participant’s
entire period of employment with the Company and its Subsidiaries; plus


 


ii.                                     An amount equal
to one (1) times (a) the Participant’s annual bonus target percentage
under the Bank of Hawaii Corporation Executive Incentive Plan (or any successor
or alternative plan or arrangement providing for an annual incentive bonus)
during the Fiscal Year in which the Participant’s Date of Termination occurs,
multiplied by (b) the Participant’s highest annual Base Salary earned at
any time during the two (2) complete Fiscal Years immediately preceding
the Participant’s Date of Termination or, if shorter, during the Participant’s
entire period of employment with the Company and its Subsidiaries.


 


b.                                     Cash in
Lieu of Continuing Health and Welfare Benefits.  In lieu of continuing health and welfare
benefits (other than COBRA coverage) under any of the Company’s or a Subsidiary’s
plans after the Participant’s Date of Termination, the Company shall pay the
Participant an amount equal to two (2) times the cost of annual COBRA
premiums for the medical, dental, and vision plan coverage that the Company and
its Subsidiaries provided to the Participant immediately prior to the
Participant’s Date of Termination.  If
the Participant was not covered by a medical, dental, or vision plan
immediately prior to the Participant’s Date of Termination, the cash payment
shall be based on the average annual COBRA premiums for the plan(s) then
offered by the Company to employees generally.


 


A-1

















 


c.                                     Time
and Form of Payment.  The
Company shall pay the benefits described in this Section 2 to the
Participant in a lump sum in the month following the Participant’s Date of
Termination.  Notwithstanding the
foregoing to the contrary, if the Participant is a Specified Employee as of the
date of his Separation from Service, no amounts payable under this Appendix A
shall be made before the first day of the seventh month following the
Participant’s Separation from Service (or, if earlier, the date of the
Participant’s death) if and to the extent that such payment or benefit
constitutes deferred compensation (or may be nonqualified deferred
compensation) under Code section 409A and such payment delay is required to
comply with the requirements of Code Section 409A.  Any severance compensation payment delayed by
reason of the prior sentence shall be paid out or provided in a single lump sum
at the end of such required delay period in order to catch up to the original
payment schedule.


 


3.                                      Outplacement
Benefits


 


The Company shall reimburse
the Participant for the reasonable expenses incurred by the Participant for
outplacement services.  The maximum
amount of reimbursement shall not exceed $15,000, as adjusted for inflation
after 2007 in accordance with the consumer price index for the Honolulu
metropolitan area. If the Company provides the outplacement services in-kind
(by contracting with an outplacement services provider), the outplacement
services must be completed by the end of the second full calendar year
following the Participant’s Date of Termination.  If, with the Company’s permission, the
Participant contracts on his or her own for outplacement services, the
Participant must incur the expenses by the end of the second full calendar year
following the Participant’s Date of Termination, and the Company shall
reimburse the Participant as the expenses are incurred and substantiated, but
no later than December 31 of the third full calendar year following the
Participant’s Date of Termination.


 


4.                                      Payment
for Restrictive Covenants


 


a.                                     Amount.  If for the twelve (12) month period
immediately following the Participant’s Date of Termination the Participant
refrains from engaging in those activities prohibited under Article 10 of
the Plan (i.e., the Participant complies with the Plan’s non-competition,
non-solicitation, non-disclosure and non-disparagement provisions), the Company
shall pay the Participant the following amount:


 


i.                                        An amount equal
to one (1) times the Participant’s highest annual Base Salary earned at
any time during the two (2) complete Fiscal Years immediately preceding
the Participant’s Date of Termination or, if shorter, during the Participant’s
entire period of employment with the Company and its Subsidiaries; plus


 


ii.                                     An amount equal
to one (1) times (a) the Participant’s annual bonus target percentage
under the Bank of Hawaii Corporation Executive Incentive Plan (or any successor
or alternative plan or arrangement providing for an annual incentive bonus)
during the Fiscal Year in which the Participant’s Date of Termination occurs,
multiplied by (b) the Participant’s highest annual Base Salary earned at
any time during the two (2) complete Fiscal 


 


A-2

















 


Years immediately preceding
the Participant’s Date of Termination or, if shorter, during the Participant’s
entire period of employment with the Company and its Subsidiaries.


 


b.                                     Time
and Form of Payment.  The
Company shall make the payment described in this Section 4 to the
Participant in a lump sum in the thirteenth month following the Participant’s
Date of Termination.


 


5.                                      Parachute
Payments


 


a.                                     Reduction
of Severance Benefits.  If
it is determined that any payment, award, benefit, or distribution by the
Company or its Subsidiaries (or by an entity which effectuates a Change in
Control or any of its affiliated entities) to or for the benefit of the
Participant pursuant to the terms of this Plan or otherwise, including, without
limitation, the lapse or termination of any restriction on or the vesting or
exercisability of any equity compensation award (collectively, the “Benefit
Payments”) would be subject to Excise Tax, then the Benefit Payments shall be
reduced as provided below to the extent that the value of the aggregate reduced
Benefit Payments that the Participant is entitled to receive shall be one
dollar ($1) less than the maximum amount the Participant may receive without
becoming subject to the Excise Tax. 
Reductions under this paragraph shall be taken first from the portion of
the Participant’s Benefit Payments, if any, that is attributable to equity
compensation under Section 4.4 of the Plan, the vesting and payment of
which would otherwise be accelerated on account of a Change in Control, and next
from Severance Benefits payable in cash under Section 2 of this Appendix
A.  If the reduced Benefit Payments would
be subject to Excise Tax even if the foregoing unvested equity compensation and
Severance Benefits are completely eliminated, then the unvested equity
compensation shall be completely forfeited and the Severance Benefits payable
in cash under Section 2 of this Appendix A shall be reduced to zero ($0).


 


b.                                     Determination.  All determinations required to be made under
this Section 5 shall be made by an outside “Big 4” or similar
accounting firm chosen and paid for by the Company (the “Accounting Firm”).  Within thirty (30) calendar days after the date
of the Change in Control, the Participant shall direct the Accounting Firm to
make its determination in accordance with Section 1.280G-l of the Treasury
Regulations, and within thirty (30) calendar days after the Accounting Firm
receives such direction, it shall submit its determination and detailed
supporting calculations (collectively, the “Determination”) to both the Company
and the Participant.  The Accounting Firm
shall furnish an opinion (addressed to both the Participant and the Company) as
to the effect of this Section 5 on the Participant’s Benefit
Payments.  If the Accounting Firm determines
that no Excise Tax is payable by the Participant, it shall furnish an opinion
(addressed to both the Participant and the Company) or other evidence
reasonably acceptable to the Participant and the Company that there is
substantial authority not to report any Excise Tax on the Participant’s federal
income tax return.  The Determination by
the Accounting Firm shall be binding upon the Company and the Participant
absent manifest error.


 


c.                                     Cooperation
with Accounting Firm.  The Company
and the Participant shall each provide the Accounting Firm access to and copies
of any books, records, and documents in their possession that are reasonably
requested by the Accounting Firm, and otherwise cooperate 


 


A-3

















 


with the Accounting Firm, in connection with the preparation and
issuance of the Determination under this Section 5.


 


d.                                     Tax
Return Filing.  The
Participant shall file the Participant’s federal, state, and local income tax
returns on a consistent basis with the Determination of the Accounting
Firm.  The Participant shall make proper
payment of the amount of any Excise Tax, and at the request of the Company,
provide to the Company evidence of such payment.


 


e.                                     Internal
Revenue Service Claims.  The
Participant shall notify the Company in writing of any claim by the Internal
Revenue Service or any other taxing authority that, if successful, would
subject the Participant to an Excise Tax with respect to amounts paid by the
Company.  Such notification shall be
given as promptly as practicable but no later than fifteen (15) business days
after the Participant actually receives notice of such claim.  The Participant shall further apprise the
Company of the nature of such claim and the date on which such claim is
requested to be paid (in each case, to the extent known by the
Participant).  The Participant shall not
pay such claim prior to the earlier of (a) the expiration of the
30-calendar-day period following the date on which the Participant gives notice
to the Company, or (b) the date that any payment of an amount with respect
to such claim is due.  If the Company
notifies the Participant in writing prior to the expiration of such period that
it desires to contest such claim, the Participant shall (i) provide the
Company with any written records or documents in the Participant’s possession
relating to such claim reasonably requested by the Company, (ii) take such
action in connection with contesting such claim as the Company will reasonably
request in writing from time to time, including without limitation, accepting
legal representation with respect to such claim by an attorney selected by the
Company who is competent in the subject matter, (iii) cooperate with the
Company in good faith in order effectively to contest such claim, and (iv) permit
the Company to participate in any proceedings relating to such claim; provided,
however, that the Company will bear and pay directly all costs and expenses
(including interest and penalties) incurred in connection with such contest.  The Company’s control of any contested claim
will be limited to issues with respect to which an Excise Tax would apply on
amounts paid to the Participant by the Company, and the Participant shall be
solely responsible to settle or contest, as the case may be, any other issue
raised by the Internal Revenue Service or any other taxing authority.


 


A-4

















 


APPENDIX B


 


BANK OF HAWAII CORPORATION


CHANGE-IN-CONTROL RETENTION PLAN


Benefits
for Vice Chairmen and Above


 


1.                                      Entitlement
to Benefits


 


A Participant covered by
this Appendix B shall be entitled to the benefits described in this Appendix B
if the Participant has a Qualifying Termination.  All payments hereunder shall be subject to
tax withholding as provided in Article 9 of the Plan and the FDIC
Limitations as provided under Article 19 of the Plan.


 


2.                                      Severance
Benefits


 


a.                                     Base
Salary and Bonus.  The Company
shall pay the Participant the following severance benefit:


 


i.                                        An amount equal
to two (2) times the Participant’s highest annual Base Salary earned at
any time during the three (3) complete Fiscal Years immediately preceding
the Participant’s Date of Termination or, if shorter, during the Participant’s
entire period of employment with the Company and its Subsidiaries; plus


 


ii.                                     An amount equal
to two (2) times (a) the Participant’s annual bonus target percentage
under the Bank of Hawaii Corporation Executive Incentive Plan (or any successor
or alternative plan or arrangement providing for an annual incentive bonus)
during the Fiscal Year in which the Participant’s Date of Termination occurs,
multiplied by (b) the Participant’s highest annual Base Salary earned at
any time during the three (3) complete Fiscal Years immediately preceding
the Participant’s Date of Termination or, if shorter, during the Participant’s
entire period of employment with the Company and its Subsidiaries.


 


b.                             Cash in
Lieu of Continuing Health and Welfare Benefits.  In lieu of continuing health and welfare
benefits (other than COBRA coverage) under any of the Company’s or a Subsidiary’s
plans after the Participant’s Date of Termination, the Company shall pay the
Participant an amount equal to three (3) times the cost of annual COBRA
premiums for the medical, dental, and vision plan coverage that the Company and
its Subsidiaries provided to the Participant immediately prior to the
Participant’s Date of Termination.  If
the Participant was not covered by a medical, dental, or vision plan
immediately prior to the Participant’s Date of Termination, the cash payment
shall be based on the average annual COBRA premiums for the planes) then
offered by the Company to employees generally.


 


c.                                     Time
and Form of Payment.  The
Company shall pay the benefits described in this Section 2 to the
Participant in a lump sum in the month following the Participant’s Date of 


 


B-1

















 


Termination.  Notwithstanding the
foregoing to the contrary, if the Participant is a Specified Employee as of the
date of his Separation from Service, no amounts payable under this Appendix B
shall be made before the first day of the seventh (7th) month following the Participant’s Separation from
Service (or, if earlier, the date of the Participant’s death) if and to the
extent that such payment or benefit constitutes deferred compensation (or may
be nonqualified deferred compensation) under Code section 409A and such payment
delay is required to comply with the requirements of Code Section 409A.  Any severance compensation payment delayed by
reason of the prior sentence shall be paid out or provided in a single lump sum
at the end of such required delay period in order to catch up to the original
payment schedule.


 


3.                                      Outplacement
Benefits


 


The Company shall reimburse
the Participant for the reasonable expenses incurred by the Participant for
outplacement services.  The maximum
amount of reimbursement shall not exceed $20,000, as adjusted for inflation
after 2007 in accordance with the consumer price index for the Honolulu
metropolitan area.  If the Company
provides the outplacement services in-kind (by contracting with an outplacement
services provider), the outplacement services must be completed by the end of
the second full calendar year following the Participant’s Date of
Termination.  If, with the Company’s
permission, the Participant contracts on his or her own for outplacement
services, the Participant must incur the expenses by the end of the second full
calendar year following the Participant’s Date of Termination, and the Company
shall reimburse the Participant as the expenses are incurred and substantiated,
but no later than December 31 of the third full calendar year following
the Participant’s Date of Termination.


 


4.                                      Relocation
Benefits


 


The Company shall reimburse
the Participant for the reasonable moving expenses incurred by the Participant
in relocating his or her primary residence within twenty-four (24) months
following a Qualifying Termination.  The
Company shall not provide relocation benefits in excess of the benefits customarily
provided by the Company to transferred employees prior to the Change in Control
as part of the Company’s relocation practices and policies, and shall not
reimburse expenses that are reimbursable by another employer.  Reasonable moving expenses shall be limited
to expenses for the movement of household goods, shipment of automobiles,
airfare, and other travel expenses in connection with house-hunting activities
in the new location of residence, expenses for the sale of the Participant’s
primary residence, any loss on the sale of the Participant’s primary residence
and expenses for the purchase of a primary residence at the new location.  The maximum reimbursement for real estate
transaction expenses (e.g. any loss on the sale of the Participant’s primary
residence, expenses for the sale of the former primary residence, and expenses
for the purchase of the new primary residence) shall not exceed a total of
$100,000.  The maximum reimbursement for
all other reasonable moving expenses shall not exceed a total of $50,000.  The moving expenses must be incurred within
twenty-four (24) months following a Qualifying Termination.  The Company shall reimburse the moving
expenses as they are incurred and substantiated, but no later than December 31
of the third full calendar year following the Participant’s Date of
Termination.


 


B-2

















 


5.                                      Payment
for Restrictive Covenants


 


a.                                     Amount.  If for the twelve (12) month period
immediately following the Participant’s Date of Termination the Participant
refrains from engaging in those activities prohibited under Article 10 of
the Plan (i.e., the Participant complies with the Plan’s non-competition,
non-solicitation, non-disclosure and non-disparagement provisions), the Company
shall pay the Participant the following amount:


 


i.                                        An amount equal
to one (1) times the Participant’s highest annual Base Salary earned at
any time during the three (3) complete Fiscal Years immediately preceding
the Participant’s Date of Termination or, if shorter, during the Participant’s
entire period of employment with the Company and its Subsidiaries; plus


 


ii.                                     An amount equal
to one (1) times (a) the Participant’s annual bonus target percentage
under the Bank of Hawaii Corporation Executive Incentive Plan (or any successor
or alternative plan or arrangement providing for an annual incentive bonus)
during the Fiscal Year in which the Participant’s Date of Termination occurs,
multiplied by (b) the Participant’s highest annual Base Salary earned at
any time during the three (3) complete Fiscal Years immediately preceding
the Participant’s Date of Termination or, if shorter, during the Participant’s
entire period of employment with the Company and its Subsidiaries.


 


b.                                     Time
and Form of Payment.  The
Company shall make the payment described in this Section 5 to the
Participant in a lump sum in the thirteenth month following the Participant’s
Date of Termination.


 


6.                                      Parachute
Payments


 


a.                                     Reduction
of Severance Benefits.  If
it is determined that any payment, award, benefit, or distribution by the
Company or its Subsidiaries (or by an entity which effectuates a Change in
Control or any of its affiliated entities) to or for the benefit of the
Participant pursuant to the terms of this Plan or otherwise, including, without
limitation, the lapse or termination of any restriction on or the vesting or
exercisability of any equity compensation award (collectively, the “Benefit
Payments”) would be subject to Excise Tax, then the Benefit Payments shall be
reduced as provided below to the extent that the value of the aggregate reduced
Benefit Payments that the Participant is entitled to receive shall be one
dollar ($1) less than the maximum amount the Participant may receive without
becoming subject to the Excise Tax.  Reductions
under this paragraph shall be taken first from the portion of the Participant’s
Benefit Payments, if any, that is attributable to equity compensation under Section 4.4
of the Plan, the vesting and payment of which would otherwise be accelerated on
account of a Change in Control, and next from Severance Benefits payable in
cash under Section 2 of this Appendix B. 
If the reduced Benefit Payments would be subject to Excise Tax even if
the foregoing unvested equity compensation and Severance Benefits are
completely eliminated, then the unvested equity 


 


B-3

















 


compensation shall be completely forfeited and the Severance Benefits
payable in cash under Section 2 of this Appendix B shall be reduced to
zero ($0).


 


b.                                     Determination.  All determinations required to be made under
this Section 6, shall be made by an outside “Big 4” or similar accounting
firm chosen and paid for by the Company (the “Accounting Firm”).  Within thirty (30) calendar days after the
date of the Change in Control and at such other times as may be appropriate,
the Participant shall direct the Accounting Firm to make its determination in
accordance with Section 1.280G-1 of the Treasury Regulations, and within
thirty (30) calendar days after the Accounting Firm receives such direction, it
shall submit its determination and detailed supporting calculations
(collectively, the “Determination”) to both the Company and the
Participant.  The Accounting Firm shall
furnish an opinion (addressed to both the Participant and the Company) as to
the effect of this Section 6 on the Participant’s Benefit Payments.  If the Accounting Firm determines that no
Excise Tax is payable by the Participant, it shall furnish an opinion
(addressed to both the Participant and the Company) or other evidence
reasonably acceptable to the Participant and the Company that the there is
substantial authority not to report any Excise Tax on the Participant’s federal
income tax return.  The Determination by
the Accounting Firm shall be binding upon the Company and the Participant
absent manifest error.


 


c.                                     Cooperation
with Accounting Firm.  The Company
and the Participant shall each provide the Accounting Firm access to and copies
of any books, records, and documents in their possession that are reasonably
requested by the Accounting Firm, and otherwise cooperate with the Accounting
Firm, in connection with the preparation and issuance of the Determination
under this Section 6.


 


d.                                     Tax
Return Filing.  The
Participant shall file the Participant’s federal, state, and local income tax
returns on a consistent basis with the Determination of the Accounting
Firm.  The Participant shall make proper
payment of the amount of any Excise Tax, and at the request of the Company,
provide to the Company evidence of such payment.


 


e.                                     Internal
Revenue Service Claims.  The
Participant shall notify the Company in writing of any claim by the Internal
Revenue Service or any other taxing authority that, if successful, would
subject the Participant to an Excise Tax with respect to amounts paid by the
Company.  Such notification shall be
given as promptly as practicable but no later than fifteen (15) business days
after the Participant actually receives notice of such claim.  The Participant shall further apprise the
Company of the nature of such claim and the date on which such claim is
requested to be paid (in each case, to the extent known by the
Participant).  The Participant shall not
pay such claim prior to the earlier of (a) the expiration of the 30-calendar-day
period following the date on which the Participant gives notice to the Company,
or (b) the date that any payment of an amount with respect to such claim
is due.  If the Company notifies the
Participant in writing prior to the expiration of such period that it desires
to contest such claim, the Participant shall (i) provide the Company with
any written records or documents in the Participant’s possession relating to
such claim reasonably requested by the Company, (ii) take such action in
connection with contesting such claim as the Company will reasonably request in
writing from time to time, including without limitation, accepting legal
representation with respect to such claim by an attorney selected by the
Company who is competent in the subject 


 


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matter, (iii) cooperate with the Company in good faith in order
effectively to contest such claim, and (iv) permit the Company to
participate in any proceedings relating to such claim; provided, however, that
the Company will bear and pay directly all costs and expenses (including
interest and penalties) incurred in connection with such contest.  The Company’s control of any contested claim
will be limited to issues with respect to which an Excise Tax would apply on
amounts paid to the Participant by the Company, and the Participant shall be
solely responsible to settle or contest, as the case may be, any other issue
raised by the Internal Revenue Service or any other taxing authority.


 


B-5