Document:

Exhibit

Exhibit 10.31
BANK OF HAWAII CORPORATION 
2014 STOCK AND INCENTIVE PLAN 
 
RESTRICTED STOCK UNIT GRANT AGREEMENT (PERFORMANCE BASED) 
(FEBRUARY 26, 2016)
This Restricted Stock Unit Grant Agreement (“Agreement”) dated February 26, 2016 (“Grant Date”), between Bank of Hawaii Corporation, a Delaware corporation (“Company”), with its registered office at 130 Merchant Street, Honolulu, Hawaii 96813, and the executive of the Company or subsidiary of the Company (“Grantee”) who as of the Grant Date is an Eligible Person under the Bank of Hawaii Corporation 2014 Stock and Incentive Plan (“Plan”) and who is specified in the “Notice of 2015 Restricted Stock Unit Grant (Performance-Based)” (“Notice”) attached hereto.
1.    Grant of Restricted Units.  Effective as of the Grant Date, the Human Resources and Compensation Committee of the Company’s Board of Directors (“Committee”) has granted to Grantee the number Restricted Stock Units (“Restricted Units”) as specified in the Notice pursuant to the Plan.  Forty percent (40%) of the Restricted Units are hereby designated as “First Category Units”, forty percent (40%) as “Second Category Units”, and twenty percent (20%) as “Third Category Units”.
2.    Restrictions During Period of Restriction.  The given category of Restricted Units shall be subject to forfeiture by Grantee as specified in the Plan and this Agreement until the “Period of Restriction” terminates as to such Restricted Units.  The Restricted Units shall vest in Grantee upon termination of the Period of Restriction (to the extent that the Restricted Units have not previously been forfeited).  For purposes of this Agreement, the term “Period of Restriction” shall mean the period that commences on the Grant Date and terminates on March 1, 2019, after the certification of achievement of service and financial performance objectives as described in this Section 2 below (or which Period of Restriction otherwise terminates as provided in this Section 2 below).
As described below, the Period of Restriction shall terminate based upon the level of achievement of specified financial performance criteria, where the First Category Units shall be conditioned upon “Return on Equity”, the Second Category Units shall be conditioned upon “Stock Price to Book Ratio”, and the Third Category Units shall be conditioned upon “Tier 1 Capital Ratio” (“Financial Performance Criteria”).  In this regard, the Period of Restriction shall terminate with respect to the “Applicable Vesting Percentage” of the First Category Units and Second Category Units, as the case may be, based upon the Company’s achievement of the respective Financial Performance Criteria in accordance with the following schedule:
	
		
	Return on Equity and Stock Price to Book Ratio

	Three Year Average Percentile Rank
	Applicable Vesting 
Percentage

	75th and Above (Maximum)
	100%

	62.5th – 74.9th
	75%

	50th - 62.49th
	50%

	Below 50th
	0%

4811-2131-0241.7        

Further, the Period of Restriction shall terminate with respect to the “Applicable Vesting Percentage” of the Third Category Units based upon the Company’s achievement of the respective Financial Performance Criteria in accordance with the following schedule:
	
		
	Tier 1 Capital Ratio

	Three Year Average Percentile Rank
	Applicable Vesting 
Percentage

	65th and Above (Maximum)
	100%

	55th – 64.9th
	75%

	50th - 54.9th
	50%

	Below 50th
	0%

For purposes of this Agreement, the terms “Return on Equity”, “Stock Price to Book Ratio”, and “Tier 1 Capital Ratio” (as defined by the Federal Reserve Bank) shall mean such terms as determined at year end for the banks that comprise the S&P Supercomposite Regional Bank Index.  With respect to the given Financial Performance Criteria, the “Three Year Average Percentile” shall mean the Company’s percentile level on the S&P Supercomposite Regional Bank Index for the average of the numerical measures over the three years 2016, 2017, and 2018.  The Financial Performance Criteria shall be determined based on references to measures and percentiles for the peer group banks that comprise the January 4, 2016, S&P Supercomposite Regional Bank Index (with peer group banks determined by excluding banks with assets >$50B).
a.    Termination of Period of Restriction For First Category Units
The Period of Restriction shall terminate on March 1, 2019, with respect to the amount equal to the Applicable Vesting Percentage multiplied by the First Category Units, provided that:  (i) the Committee shall have certified the Three Year Average Percentile level for the Company’s “Return on Equity” that corresponds to such Applicable Vesting Percentage; and (ii) Grantee is an Employee on March 1, 2019.
b.    Termination of Period of Restriction Second Category Units
The Period of Restriction shall terminate on March 1, 2019, with respect to the amount equal to the Applicable Vesting Percentage multiplied by the Second Category Units provided that: (i) the Committee shall have certified the Three Year Average Percentile level for the Company’s “Stock Price to Book Ratio” that corresponds to such Applicable Vesting Percentage; and (ii) Grantee is an Employee on March 1, 2019.
c.    Termination of Period of Restriction Third Category Units
The Period of Restriction shall terminate on March 1, 2019, with respect to the amount equal to the Applicable Vesting Percentage multiplied by the Third Category Units provided that: (i) the Committee shall have certified the Three Year Average Percentile level for the Company’s “Tier 1 Capital Ratio” that corresponds to such Applicable Vesting Percentage; and (ii) Grantee is an Employee on March 1, 2019.
d.    Termination of Period of Restriction Upon Certain Terminations of Employment
In addition to the termination of the Period of Restriction based on the achievement of the service and financial performance objectives as described in Sections 2.a-2.c above, the Period of Restriction shall terminate in connection with certain terminations of Grantee’s employment with the Company and its subsidiaries as described in this Section 2.d.  Specifically, the Period of Restriction for all of the Restricted Units shall terminate (to the extent that the Period of Restriction has not previously terminated or the Restricted Units have not previously been forfeited) upon the occurrence of any of the following: (i) the death of Grantee; (ii) the Grantee ceasing to be an Employee due to “disability” within the meaning of that term under Section 409A of the Internal Revenue Code of 1986, as amended (“Code”) and the regulations promulgated thereunder; or (iii) upon or after the occurrence of a “Change in Control” (within the meaning of Section 2.5 of the Bank of Hawaii Corporation Change-in-Control Retention Plan, restatement effective December 17, 2009 (“Change-in-Control Plan”)) either (A) Grantee’s employment with the Company and its subsidiaries is terminated by the Company without “Cause” (within the meaning of Section 

2.

2.4 of the Change-in-Control Plan) or (B) Grantee terminates employment with the Company and its subsidiaries for “Good Reason” (within the meaning of Section 2.16 of the Change-In-Control Plan).
e.    Committee Determinations; Section 162(m).  The Committee shall certify whether the Financial Performance Criteria for the First Category Units, Second Category Units, and Third Category Units have been achieved on or prior to March 1, 2019.  In the event that the Committee does not certify the Financial Performance Criteria by March 1, 2019, due to the timing of available information or other administrative delay, the Committee shall make its certification as soon as possible thereafter and, to the extent that the satisfaction of the Financial Performance Criteria is certified, the Restricted Units subject to vesting shall vest at the time of the making of the certification (i.e., the Period of Restriction shall be terminated as of the time of the certification).  However, in this case, the service performance objective (i.e., employment as of March 1, 2019) shall be treated as satisfied if Grantee is an Employee on March 1, 2019.  This Agreement shall be interpreted and administered in a manner consistent with the intent that the Restricted Units granted hereunder comply with the requirements of the performance-based compensation exception under Code Section 162(m).
3.    Forfeiture of Unvested Restricted Units.  Restricted Units as to which the Period of Restriction has not terminated shall be forfeited upon the first to occur of:  (a) Grantee’s ceasing to be an Employee for any reason, whether voluntary or involuntary (other than for a termination of employment described in Section 2.d), and (b) March 1, 2019.  However, as described in Section 2 above with respect to the termination of the Period of Restriction on March 1, 2019, the Applicable Vesting Percentage of the given category of Restricted Units shall not be forfeited as of March 1, 2019, to the extent that: (a) with respect to such Applicable Vesting Percentage of such category of Restricted Units, the Committee has, on or prior to March 1, 2019, certified that the corresponding Three Year Average Percentile level for such Applicable Vesting Percentage has been achieved; and (b) the Grantee is an Employee on March 1, 2019.  In the event of a delay of the termination of the Period of Restriction due to the Committee’s certification of the Financial Performance Criteria after March 1, 2019 (as described in the above Section 2.e), then:  (A) the Restricted Units shall not be forfeited under 3(a) above if Grantee is an Employee on March 1, 2019; and (B) the certification date shall apply in lieu of March 1, 2019, as specified in 3(b) above.  Grantee’s employment shall not be treated as terminated in the case of a transfer of employment within the Company and its subsidiaries or in the case of sick leave and other approved leaves of absence.  Forfeiture of Restricted Units means that this Agreement and the Restricted Units shall immediately terminate and become null and void and all right hereunder shall cease and no person shall be entitled to any payment with respect to the Restricted Units.
4.    Payment for Restricted Units.  To the extent that the Period of Restriction terminates with respect to all or a portion of the Restricted Units as determined by the Committee, the Company shall make a cash payment to Grantee in the amount equivalent to the “Fair Market Value” of the affected Restricted Units, which payment shall be made as soon as reasonably practicable following the termination of the Period of Restriction and no later than 2 1/2 months following the end of the calendar year in which the termination occurs.  The amount of the cash payment shall be determined on the basis of the “Fair Market Value” of Company common stock as of the date of the termination of the Period of Restriction, where each Restricted Unit shall be equivalent in value to one share of Company common stock.  In accordance with Section 1.15 of the Plan, “Fair Market Value” of one Restricted Unit shall mean the closing sales price of one share of Company common stock on the New York Stock Exchange on the applicable date.  Grantee shall not be entitled to interest on the cash payment for the period between the date of the termination of the Period of Restriction and the date of actual payment.
5.    Nonassignability.  The Restricted Units may not be assigned or transferred by Grantee.  Further, the Restricted Units are not subject to attachment, execution, or other similar process.  In the event of any attempt by Grantee to alienate, assign, pledge, hypothecate, or otherwise dispose of the Stock Units, or the levy of any attachment, execution, or other similar process of the Restricted Units, the Committee may terminate the Restricted Units by notice to the Grantee without regard to consent by Grantee.
6.    Tax Withholding.  The Company shall have the right to withhold from the payment relating to Restricted Units any taxes required to be withheld because of such payment.
7.    Units Adjustments.  The number and kind of Restricted Units or other property subject to this Agreement shall be subject to adjustment in accordance with Section 13 of the Plan.
8.    Rights as Shareholder.  Neither Grantee nor any other person shall be, or have any of the rights and privileges of, a stockholder of the Company with respect to the Restricted Units and, accordingly, the Restricted Units carry neither voting rights nor rights to actual cash dividends.  Grantee shall not be entitled to the payment of actual or hypothetical dividends or earnings on the Restricted Units during or after the Period of Restriction.  The Restricted Units are bookkeeping entries that represent the Company’s unfunded and unsecured contractual obligation to make payments 

3.

upon the satisfaction of applicable conditions.  With respect to the Restricted Units, Grantee has no rights other than the rights of a general creditor of the Company.
9.    Employment Rights.  Neither the Plan nor the granting of the Restricted Units shall be a contract of employment of Grantee by the Company or any of its subsidiaries.  Grantee may be discharged from employment at any time by the employing Company or subsidiary, subject to any employment contract that may otherwise apply to Grantee.
10.    Amendment.  This Agreement may be amended by the Committee at any time based on its determination that the amendment is necessary or advisable in light of any addition to, or change in, the Code or regulations issued thereunder or any federal or state securities law or other law or regulation, or the Plan, or based on any discretionary authority of the Committee under the Plan.  Unless necessary or advisable due to a change in law, any amendment to this Agreement which has a material adverse effect on the interest of Grantee under this Agreement shall be adopted only with the consent of Grantee.
11.    Section 409A Compliance.  The Restricted Units are subject to a “substantial risk of forfeiture” until the termination of the Period of Restriction, at which time the payment for the Restricted Units shall be made to Grantee as soon as reasonably practicable and no later than 2 1/2 months following the end of the calendar year in which the Period of Restriction terminates.  Accordingly, the Restricted Units are subject to the “short term deferral” exception under Code Section 409A.  This Grant is intended to meet the requirements of Code Section 409A and shall interpreted in the manner consistent with compliance with Code Section 409A and guidance issued by the Internal Revenue Service.
12.    Notices.  Any notice or other communication made in connection with this Agreement shall be deemed duly given when delivered in person or mailed by certified or registered mail, return receipt requested, to Grantee at Grantee’s address shown on Company records or such other address designated by Grantee by similar notice, or to the Company at its then principal office, to the attention of the Corporate Secretary of the Company.  Furthermore, such notice or other communication shall be deemed duly given when transmitted electronically to Grantee at Grantee’s electronic mail address shown on the Company records or, to the extent that Grantee is an active employee, through the Company’s intranet.
13.    Plan Governs.  The Restricted Units evidenced by this Agreement are subject to the terms and conditions of the Plan and of this Agreement.  In case of conflict between the provisions of the Plan and the provisions of this Agreement, the provisions of the Plan shall control.  Capitalized terms used in this Agreement and not defined herein shall have the meaning assigned in the Plan unless the context indicates otherwise.
14.    Miscellaneous.  This Agreement shall bind and benefit Grantee, the heirs, distributees and personal representative of Grantee, and the Company and its successors and assigns.  This Agreement may be signed in counterparts, each of which shall be deemed an original, and said counterparts shall together constitute one and the same instrument.  Capitalized terms not herein defined shall have the meanings prescribed to them under the Plan.
BY ACCEPTING THE RESTRICTED UNITS GRANTED UNDER THIS RESTRICTED STOCK UNIT GRANT AGREEMENT, GRANTEE AGREES TO ALL THE TERMS AND CONDITIONS DESCRIBED IN THIS AGREEMENT AND IN THE PLAN.

4.

IN WITNESS WHEREOF, the Company has caused this Agreement to be signed on its behalf by the undersigned, thereunto duly authorized, effective as of the Date of Grant.
	
		
	 
	BANK OF HAWAII CORPORATION 
 
 
 
By ____________________________________ 
      MARK A. ROSSI 
      Its Vice Chairman 

	 
	 “Company”

	 
	Agreed and Accepted: 
 
 
 
_______________________________________ 

	 
	 “Grantee”

5.knd-ex1012_501.htm

 

Exhibit 10.12

AMENDMENT NO. 4

TO THE

KINDRED DEFERRED COMPENSATION PLAN

This is Amendment No. 4 to the Third Amendment and Restatement of the Kindred Deferred Compensation Plan, as last amended and restated as of January 1, 2009 (the "Plan"), which amendment shall be effective as of January 1, 2016.

Recitals

	
A.
	
Kindred Healthcare, Inc. (the "Company") maintains the Plan and has reserved the right in Section 12.2 of the Plan to amend the Plan from time to time in its discretion.

	
B.
	
The Company wishes to amend the Plan to (i) make matching purely discretionary (rather than link it with matching under the 401(k) Plan); (ii) allow deferral of certain special one-time bonuses which would, absent deferral hereunder, be short-term deferrals because they are due to be paid shortly after they vest; (iii) allow for other Employer contribution credits to selected Participants' Accounts in the discretion of the Company; and (iv) reduce the maximum limit for Annual Short-Term Incentives from 100% to 75% to facilitate administration of employment tax withholding related to such deferrals. 

Amendment

1. Section 1.1 of the Plan is hereby amended so that as amended it shall read in its entirety as follows:

	
 
	
1.1
	
"Account Balance" shall mean with respect to a Participant the sum of (i) his or her Deferral Amount, plus (ii) any Contingent Company Award a Participant elects to defer, plus (iii) his or her Employer contributions, contributed under Section 3.2 hereof, plus (iv) interest credited in accordance with all the applicable interest crediting provisions of this Plan, less (v) all distributions.  This account shall be a bookkeeping entry only and shall be utilized solely as a device for the measurement and determination of the amounts to be paid to a Participant pursuant to this Plan.
	
 

2. A new Section 1.30 is hereby added to the Plan to read in its entirety as follows:

	
 
	
1.30
	
"Contingent Company Awards" means any written promise to pay a special bonus or other cash amount of at least $50,000 at a future date 12 months or more following notice of the award but only if (and then payable shortly after) the Employee continues employment until that date or some other substantial risk of forfeiture is a condition of such award's payment (a "short term deferral" under Code Section 409A).  Whether a Contingent Company Award may be timely deferred shall be determined by reference to the earliest date on which the risk of forfeiture thereof could lapse, ignoring any such possibility of lapse that could occur as a result of death (provided that a deferral election hereunder shall be void and of no effect if death occurs prior to 12 months after the deferral election hereunder).  A Contingent Company Award includes only amounts awarded outside the Company's regular annual or long term incentive programs, and may include but not be limited to sign-on bonuses, awards to encourage retention, or awards in connection with work on a specific project. 
	
 

3. Section 3.1 of the Plan is hereby amended to reduce the cap on Annual Short-Term Incentive deferrals from its current 100% to a maximum of 75%, effective for deferral elections made after the date of this Amendment.

4. Section 3.2(a) of the Plan is hereby amended so that as amended it will read in its entirety as follows:

	
 
	
3.2
	
Discretionary Employer Contributions.
	
 

	
 
	
(a)
	
Each Employer may, in its discretion, credit the Account Balance of selected Participants with a matching contribution in an amount and under a formula determined by the Employer at the time the matching contribution is made (or begun, in the case of matching to be credited  periodically), which formula may, but need not, take into account the deferrals made to and/or contributions that would be calculated under the matching contribution formula in effect for the Plan Year under the 401(k) plan of the Employer for which the Participant is eligible.
	
 

1

 

	
 
	
(b)
	
Each Employer may, in its discretion, credit the Account Balance of selected Participants with a contribution in an amount and under a formula determined by the Employer at the time the contribution is made ("Employer Nonelective Contributions"). 
	
 

	
 
	
(c)
	
Subject to Section 3.2(d), all amounts received under Section 3.2(a) that are allocated as matching contributions shall be at all times fully vested and nonforfeitable. All Employer Nonelective Contributions credited to a Participant's Account under Section 3.2(b) shall be credited to separate subaccounts in the Plan, based on the Plan Year in which credited, and each such subaccount shall be fully vested and nonforfeitable (except as provided in Section 3.2(d) below) on the earlier of (i) Termination of Employment on account of death or Disability, (ii) attainment of age 55 while still employed by the Employer, or (iii) the last day of the 5th Plan Year after such amount was credited, if the Participant is still employed on that date. If a Participant has a Termination of Employment and any Employer Nonelective Contribution subaccount is not vested in accordance with the previous sentence, then the entire subaccount in the Plan related to such Employer Nonelective Contribution, and interest credited thereon, shall be forfeited. 
	
 

	
 
	
(d)
	
Notwithstanding any other provision of this Plan including Section 3.2(b) or (c), the Committee shall have the right in its sole discretion to cause any or all of the Employer contributions credited to an Account Balance, including earnings, to be forfeited if the Committee at any time determines that:
	
 

	
 
	
(i)
	
The Participant has divulged Employer confidential information to a competitor of the Employer which is detrimental to the Employer; or
	
 

	
 
	
(ii)
	
The Participant has engaged in criminal conduct which is detrimental to the Employer.
	
 

5. Section 3.8 of the Plan is hereby amended so that as amended it shall read in its entirety as follows:

	
 
	
3.8
	
FICA and Other Employment Taxes. For each Plan Year in which an Annual Deferral Amount or Contingent Company Award is being withheld, a Participant's Employer shall ratably withhold the Participant's share of FICA and other employment taxes related to the Annual Deferral, Contingent Company Award and any match thereon, from that portion of the Participant's Base Annual Salary and Annual Short-Term Incentive that is not deferred and is actually paid to the Participant.  However, if the Employer, in its sole discretion so determines (and, in accordance with Treas. Reg. § 1.409A-3(j)(4), which regulation requires that no Participant be allowed to elect whether to exercise this discretion with respect to such Participant's Account), the amount to be deferred from a Contingent Company Award or via an Annual Deferral amount may be reduced (resulting in a de facto acceleration of payment) to the extent required to pay the Federal Insurance Contributions Act tax imposed under Code Sections 3101, 3121(a) and 3121(v)(2) of the Code with respect to compensation deferred under the Plan (the "FICA Amount").  Additionally, a payment may be accelerated (i.e., a deferral credit reduced) to pay the income tax on wages imposed under Code Section 3401 of the Code on the FICA Amount and to pay the additional income tax at source on wages attributable to the pyramiding Code Section 3401 wages and taxes.  The total accelerated payment (or reduced deferral) under this section may not exceed the aggregate of the FICA Amount and the income tax withholding related to the FICA Amount. 
	
 

6. A new Section 3.9 is hereby added to the Plan, to read in its entirety as follows:

	
 
	
3.9
	
Deferral of Contingent Company Awards.  If a person otherwise eligible to participate in this Plan is granted a Contingent Company Award, the Participant may make an election in writing to defer up to 75% of the payment of such award amount beyond the date it would otherwise be paid, in which case, such amount shall not be paid to the Participant but instead shall be credited to the Participant's Account under this Plan on the date it "vests" (ceases to be subject to continued employment or other substantial risk of forfeiture conditions), and, from and after that date and until the date it is paid, it shall be credited with interest in accordance with Sections 3.5 and 3.6 hereof and the amount, plus such interest, shall be part of the Account Balance hereunder.  An election to defer payment of Contingent Company Amounts must be made 12 months or more before such amounts are otherwise payable, will be irrevocable when delivered to the Company within that time frame, and will be paid to the Participant at the same time the Participant's Account Balance is otherwise payable hereunder (i.e., depending on whether a Retirement Benefit, 
	
 

2

 

	
 
		
Termination Benefit or Death Benefit is being paid), provided, however, that, except as provided in Article 5 (unforeseeable emergency) or Article 7 (Death Benefits,)  if Participant's Account Balance (or any portion thereof) is payable hereunder fewer than 5 years following the date the Contingent Company Award would have been paid absent a deferral election under this Plan, then that portion of the Account Balance that relates to the Contingent Company Award, and all interest credited thereon, shall be paid in a single lump sum 30 days following the 5th anniversary of the date such Contingent Company Award would have been paid, absent any deferral election under this Plan, rather than at the time and in the form of payment otherwise applicable upon Retirement or Termination.   
	
 

IN WITNESS WHEREOF, the Company has caused this Amendment No. 4 to be executed as of the date set forth below.

 

	
KINDRED HEALTHCARE, INC.

	
 

	
By:
	
 
	
/s/ Stephen R. Cunanan

	
Printed Name:
	
 
	
Stephen R. Cunanan

	
Title:
	
 
	
Chief People Officer

	
Date:
	
 
	
December 2, 2015

 

3

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