Document:

EX-10.1

 Exhibit 10.1 

Execution Version 
 FIRST
AMENDMENT TO SECOND LIEN CREDIT AGREEMENT 
 This FIRST AMENDMENT TO SECOND LIEN CREDIT AGREEMENT (this “Amendment”) is
entered into as of March 2, 2020, by and among RTI SURGICAL, INC., a Delaware corporation (the “Borrower”), the other Persons party hereto that are designated as a “Loan Party” on the signature pages hereof, ARES
CAPITAL CORPORATION, as administrative agent for the Lenders (in such capacity, the “Administrative Agent”), and the LENDERS signatory hereto, which Lenders constitute the Required Lenders, each in their individual capacity as a
Lender under the Credit Agreement (as defined below). 
 W I T N E S S E T H: 

WHEREAS, the Borrower, the other Loan Parties, the Administrative Agent and the Lenders from time to time party thereto are parties to that
certain Second Lien Credit Agreement, dated as of March 8, 2019 (as the same may be amended, amended and restated, supplemented, or otherwise modified from time to time, the “Credit Agreement”); 

WHEREAS, the Borrower has requested that the Administrative Agent and the Lenders agree to amend certain provisions of the Credit Agreement;
and 
 WHEREAS, on the terms subject to the conditions set forth in this Amendment, the Administrative Agent and the Consenting Lenders are
willing to agree to such amendments; 
 NOW, THEREFORE, in consideration of the mutual agreements, provisions and covenants contained
herein, the parties agree as follows: 
 1. Defined Terms. Capitalized terms used but not defined herein shall have the meanings
ascribed to them in the Credit Agreement. 
 2. Amendments to Credit Agreement. Effective upon the satisfaction of the conditions set
forth in Section 3 hereof, the parties hereto hereby agree as follows: 
 a. The definition of
“EBITDA” set forth in Section 1.01 of the Credit Agreement is hereby amended by deleting the “and” immediately prior to clause (a)(x) thereof, inserting “and” at the end of such clause (a)(x) and adding a new
clause (a)(xi) at the end of such clause (a), which shall read in its entirety as follows: 
 (xi) any non-recurring fees, cash charges and other cash expenses made or incurred prior to January 1, 2022, in connection with the Disposition contemplated by the Equity Purchase Agreement; provided that the
aggregate amount added back to EBITDA pursuant to this clause (xi) shall not exceed $9,000,000, 
 b. Section 1.01
of the Credit Agreement is hereby amended by inserting the following defined terms in appropriate alphabetical order in such Section: 

“Equity Purchase Agreement” means that certain the Equity Purchase Agreement, dated January 13, 2020,
between the Borrower and Ardi Bidco Ltd., a Delaware corporation, as in effect on the First Amendment Effective Date. 

“First Amendment” means the First Amendment to Second Lien Credit Agreement, dated as of March 2, 2020,
among the Borrower, the Administrative Agent, the Loan Parties that are parties thereto and the Lenders that are parties thereto. 

 “First Amendment Effective Date” means the date on which
the First Amendment became effective in accordance with its terms. 
 c. Section 6.12(b) of the Credit Agreement is
hereby amended and restated to read in its entirety as follows: 
 (b) Total Net Leverage Ratio. The Loan Parties
shall not suffer or permit the Total Net Leverage Ratio as of any date set forth below to be greater than the maximum ratio set forth in the table below opposite such date: 
  

					
	 Computation Period Ending:
	  	Maximum Total Net
Leverage Ratio:	 
	 March 31, 2019
	  	 	9.00:1.00	 
	 June 30, 2019
	  	 	7.50:1.00	 
	 September 30, 2019
	  	 	6.00:1.00	 
	 December 31, 2019
	  	 	5.00:1.00	 
	 March 31, 2020
	  	 	5.75:1.00	 
	 June 30, 2020
	  	 	5.75:1.00	 
	 September 30, 2020
	  	 	5.75:1.00	 
	 December 31, 2020
	  	 	5.75:1.00	 
	 March 31, 2021
	  	 	5.25:1.00	 
	 June 30, 2021
	  	 	5.25:1.00	 
	 September 30, 2021 and the last day of each fiscal quarter ending thereafter
	  	 	3.50:1.00	 

 d. Section 2.11 of the Credit Agreement is hereby amended and restated to read it its
entirety as follows: 
 The Borrower hereby agrees to pay in cash in immediately available funds, upon the earlier to occur
of (i) October 13, 2020 and (ii) the date on which the definitive abandonment of the Disposition contemplated by the Equity Purchase Agreement occurs, to each Lender that is a party to the First Amendment, in consideration for its
agreement to enter into the First Amendment, its pro rata share of a fee (the “First Amendment Fee”) in an amount equal to 0.50% of the aggregate outstanding Term Loans held by all such Lenders on the First Amendment Effective Date,
which First Amendment Fee is fully earned on the First Amendment Effective Date; provided, however, that the requirement to pay the First Amendment Fee shall terminate if, prior to the date that it would otherwise be due, the
Disposition contemplated by the Equity Purchase Agreement has been consummated in accordance with the terms of the Equity Purchase Agreement. 

  
 2 

 3. Conditions. The effectiveness of this Amendment is subject to the satisfaction of
the following conditions precedent: 
 a. the execution and delivery of this Amendment by each Loan Party, the Administrative
Agent and Lenders constituting the Required Lenders; 
 b. immediately after giving effect to this Amendment, no Default or
Event of Default shall exist; 
 c. the representations and warranties made by each Loan Party contained in Section 4
shall be true and correct in all material respects as of the date hereof (except where such representations and warranties expressly relate to an earlier date, in which case such representations and warranties shall have been true and correct in all
material respects as of such earlier date); provided that any representation or warranty that, by its terms, is qualified as to “materiality”, “Material Adverse Effect” or similar language, shall be true and correct in all
respects in accordance with its terms on such respective dates; and 
 d. each of the Administrative Agent and each Lender
shall have received, for its own respective account, the reasonable fees, costs and out-of-pocket expenses due and payable to such Person pursuant Section 9.03 of
the Credit Agreement (including the reasonable fees, disbursements and other charges of counsel) for which invoices have been presented at least one (1) Business Day prior to the date hereof. 

4. Representations and Warranties. Each Loan Party hereby represents and warrants to the Administrative Agent and each Lender as
follows: 
 a. each Loan Party has the corporate or other organizational power and authority to execute, deliver and carry
out the terms and provisions of this Amendment and has taken all necessary corporate or other organizational action to authorize the execution, delivery and performance of this Amendment; 

b. each Loan Party has duly executed and delivered this Amendment, and this Amendment and the Credit Agreement, as amended
hereby, constitute the legal, valid and binding obligation of such Loan Party, enforceable in accordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, moratorium, reorganization and other similar laws
relating to or affecting creditors’ rights generally and general principles of equity (whether considered in a proceeding in equity or law); 

c. neither (a) the execution, delivery and performance by any Loan Party of this Amendment and compliance with the terms
and provisions thereof nor (b) the consummation of the transactions contemplated hereby will (i) violate any Requirement of Law applicable to any Loan Party or any Subsidiary, except as could not reasonably be expected to result in a
Material Adverse Effect, (ii) violate or result in a default under any indenture, agreement or other instrument binding upon any Loan Party or any Subsidiary or the assets of any Loan Party or any Subsidiary, or give rise to a right thereunder
to require any payment to be made by any Loan Party or any of its Subsidiaries in any material respect, or (iii) result in the creation or imposition of any Lien on any asset of any Loan Party or any Subsidiary, except Liens created pursuant to
the Loan Documents or otherwise permitted under the Credit Agreement; 

  
 3 

 d. no Default or Event of Default has occurred and is continuing or would
immediately result after giving effect to this Amendment; and 
 e. all representations and warranties made by each Loan
Party contained herein or in the other Loan Documents is true and correct in all material respects, in each case, with the same effect as though such representations and warranties had been made on and as of the date hereof (except where such
representations and warranties expressly relate to an earlier date, in which case such representations and warranties were true and correct in all material respects as of such earlier date); provided, that any representation or warranty that,
by its terms, is qualified as to “materiality”, “Material Adverse Effect” or similar language, is true and correct in all respects in accordance with its terms on such respective dates. 

5. No Modification. Except as expressly set forth herein, nothing contained herein shall be deemed to constitute a waiver of compliance
with any term or condition contained in the Credit Agreement or any of the other Loan Documents or constitute a course of conduct or dealing among the parties. Except as expressly stated herein, the Administrative Agent and Lenders reserve all
rights, privileges and remedies under the Loan Documents. Except as amended or consented to hereby, the Credit Agreement and other Loan Documents remain unmodified and in full force and effect. All references in the Loan Documents to the Credit
Agreement shall be deemed to be references to the Credit Agreement as amended and waived hereby. 
 6. Counterparts. This Amendment
may be executed by one or more of the parties hereto on any number of separate counterparts (including by facsimile or other electronic transmission), and all of said counterparts taken together shall be deemed to constitute one and the same
instrument. 
 7. Successors and Assigns. The provisions of this Amendment shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns; provided that none of the Loan Parties may assign or transfer any of its rights or obligations under this Amendment without the prior written consent of the Administrative Agent. 

8. Governing Law; Jurisdiction; Service of Process and Waiver of Jury Trial. The terms and provisions of Sections 9.09 and 9.10 of the
Credit Agreement are incorporated herein by reference and shall apply to this Amendment, mutatis mutandis. 
 9. Severability.
Any provision of this Amendment that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 

10. Reaffirmation. Each of the Loan Parties as debtor, grantor, pledgor, guarantor, assignor, or in other any other similar capacity in
which such Loan Party grants liens or security interests in its property or otherwise acts as accommodation party or guarantor, as the case may be, hereby (i) ratifies and reaffirms all of its payment and performance obligations, contingent or
otherwise, under each of the Loan Documents to which it is a party (after giving effect hereto) and, (ii) to the extent such Loan Party granted liens on or security interests in any of its property pursuant to any such Loan Document as security
for or otherwise guaranteed the Obligations of the Borrower under or with respect to the Loan Documents, ratifies and reaffirms such guarantee and grant of security interests and liens and confirms and agrees that such security interests and liens
hereafter secure all of the Obligations as amended hereby. Each of the Loan Parties hereby consents to this Amendment and acknowledges that the Credit Agreement, as amended hereby, and each of the other Loan Documents remains in full force and
effect and is hereby ratified and reaffirmed. The execution of this Amendment shall not operate as a waiver of any right, power or remedy of the Administrative Agent or Lenders, constitute a waiver of any provision of any of the Loan Documents or
serve to effect a novation of the Obligations. 
 [Remainder of Page Intentionally Left Blank; Signature Pages Follow] 

  
 4 

 IN WITNESS WHEREOF, each of the undersigned has executed this Amendment as of the date set
forth above. 
  

			
	BORROWER:
	
	RTI SURGICAL, INC.
		
	By:	 	 /s/ Jonathon M. Singer

	Name:	 	Jonathon M. Singer
	Title:	 	Chief Financial and Administrative Officer,
		 	Corporate Secretary

  

  
 First Amendment to Second Lien Credit
Agreement 

 
			
	OTHER LOAN PARTIES:
	
	PIONEER SURGICAL TECHNOLOGY, INC.
		
	By:	 	 /s/ Jonathon M. Singer

	Name:	 	Jonathon M. Singer
	Title:	 	President and CEO and Corporate Secretary
	
	REGENERATION TECHNOLOGIES, INC. - CARDIOVASCULAR
		
	By:	 	 /s/ Jonathon M. Singer

	Name:	 	Jonathon M. Singer
	Title:	 	President and CEO and Corporate Secretary
	
	BIOLOGICAL RECOVERY GROUP, INC.
		
	By:	 	 /s/ Jonathon M. Singer

	Name:	 	Jonathon M. Singer
	Title:	 	President and CEO and Corporate Secretary
	
	RTI SERVICES, INC.
		
	By:	 	 /s/ Jonathon M. Singer

	Name:	 	Jonathon M. Singer
	Title:	 	President and CEO and Corporate Secretary
	
	RTI DONOR SERVICES, INC.
		
	By:	 	 /s/ Jonathon M. Singer

	Name:	 	Jonathon M. Singer
	Title:	 	Secretary
	
	TUTOGEN MEDICAL, INC.
		
	By:	 	 /s/ Jonathon M. Singer

	Name:	 	Jonathon M. Singer
	Title:	 	President and CEO and Corporate Secretary

  
 First Amendment to Second Lien Credit
Agreement 

 
			
	TUTOGEN MEDICAL (UNITED STATES), INC.
		
	By:	 	 /s/ Jonathon M. Singer

	Name: Jonathon M. Singer
	Title:   President and CEO and Corporate Secretary
	
	ANGSTROM ACQUISITION CORP. II
		
	By:	 	 /s/ Jonathon M. Singer

	Name: Jonathon M. Singer
	Title:   President and CEO and Corporate Secretary
	
	PIONEER SURGICAL ORTHOBIOLOGICS, INC.
		
	By:	 	 /s/ Jonathon M. Singer

	Name: Jonathon M. Singer
	Title:   President and CEO and Corporate Secretary
	
	ZYGA TECHNOLOGY, INC.
		
	By:	 	 /s/ Jonathon M. Singer

	Name: Jonathon M. Singer
	Title:   President and CEO and Corporate Secretary
	
	PARADIGM SPINE, LLC
		
	By:	 	 /s/ Jonathon M. Singer

	Name: Jonathon M. Singer
	Title:   President and CEO and Corporate Secretary

  
 First Amendment to Second Lien Credit
Agreement 

 
			
	RTI SURGICAL HOLDINGS, INC.
		
	By:	 	 /s/ Jonathon M. Singer

	Name: Jonathon M. Singer
	 Title:   Chief Financial Officer and Administrative

    Officer, Corporate Secretary

	
	ANDI’S BELMARALL, LLC
		
	By:	 	 /s/ Jonathon M. Singer

	Name: Jonathon M. Singer
	Title:   CEO and Secretary
	
	FOURTH DIMENSION SPINE, LLC
		
	By:	 	 /s/ Jonathon M. Singer

	Name: Jonathon M. Singer
	Title:   Chairman and CEO and Secretary
	
	RTI OEM, LLC
		
	By:	 	 /s/ Ryan Bartolucci

	Name: Ryan Bartolucci
	Title:   Vice President & Chief Financial Officer

  
 First Amendment to Second Lien Credit
Agreement 

			
	ADMINISTRATIVE AGENT AND LENDERS
	
	 ARES CAPITAL CORPORATION,

individually and as Administrative Agent and as a Lender

		
	By:	 	 /s/ Mark Affolter

	Name:	 	Mark Affolter
	Title:	 	Authorized Signatory
	
	 CION ARES DIVERSIFIED CREDIT FUND,

as a Lender

		
	By:	 	 /s/ Mark Affolter

	Name:	 	Mark Affolter
	Title:	 	Authorized Signatory
	
	 ARES CENTRE STREET PARTNERSHIP, L.P.,

as a Lender

	
	By: Ares Centre Street GP, Inc., as general partner
		
	By:	 	 /s/ Mark Affolter

	Name:	 	Mark Affolter
	Title:	 	Authorized Signatory
	
	ARES PCS HOLDINGS INC., as a Lender
	
	By: Ares Capital Management LLC, its servicer
		
	By:	 	 /s/ Mark Affolter

	Name:	 	Mark Affolter
	Title:	 	Authorized Signatory
	
	 ARES PRIVATE CREDIT SOLUTIONS, L.P.,

as a Lender

	
	By: Ares Capital Management LLC, its investment manager
		
	By:	 	 /s/ Mark Affolter

	Name:	 	Mark Affolter
	Title:	 	Authorized Signatory

  
 First Amendment to Second Lien Credit
Agreement 

			
	ARES JASPER FUND, L.P., as a Lender
	
	By: Ares Capital Management LLC, its investment manager
		
	By:	 	 /s/ Mark Affolter

	Name:	 	Mark Affolter
	Title:	 	Authorized Signatory
	
	ARES ND CREDIT STRATEGIES FUND LLC, as a Lender
	
	By: Ares Capital Management LLC, its account manager
		
	By:	 	 /s/ Mark Affolter

	Name:	 	Mark Affolter
	Title:	 	Authorized Signatory
	
	ARES CREDIT STRATEGIES INSURANCE DEDICATED FUND SERIES OF SALI MULTI-SERIES FUND, L.P., as a Lender
	
	By: Ares Management LLC, its investment subadvisor
	By: Ares Capital Management LLC, as subadvisor
		
	By:	 	 /s/ Mark Affolter

	Name:	 	Mark Affolter
	Title:	 	Authorized Signatory
	
	ARES SENIOR DIRECT LENDING MASTER FUND DESIGNATED ACTIVITY COMPANY, as a Lender
	
	By: Ares Capital Management LLC, its investment manager
		
	By:	 	 /s/ Mark Affolter

	Name:	 	Mark Affolter
	Title:	 	Authorized Signatory

  

  
 First Amendment to Second Lien Credit
Agreement 

			
	ARES SENIOR DIRECT LENDING PARALLEL FUND (L), L.P., as a Lender
	
	By: Ares Capital Management LLC, its investment manager
		
	By:	 	 /s/ Mark Affolter

	Name:	 	Mark Affolter
	Title:	 	Authorized Signatory
	
	ARES SENIOR DIRECT LENDING PARALLEL FUND (U), L.P., as a Lender
	
	By: Ares Capital Management LLC, its investment manager
		
	By:	 	 /s/ Mark Affolter

	Name:	 	Mark Affolter
	Title:	 	Authorized Signatory
	
	ARES SDL HOLDINGS (U) INC., as a Lender
	
	By: Ares Capital Management LLC, its investment manager
		
	By:	 	 /s/ Mark Affolter

	Name:	 	Mark Affolter
	Title:	 	Authorized Signatory
	
	ARES DIRECT FINANCE I LP, as a Lender
	
	By: Ares Capital Management LLC, its investment manager
		
	By:	 	 /s/ Mark Affolter

	Name:	 	Mark Affolter
	Title:	 	Authorized Signatory

  
 First Amendment to Second Lien Credit
Agreement 

			
	ARES EUROPEAN CREDIT STRATEGIES FUND VIII (BUMA), L.P., as a Lender
	
	By: Ares Management Limited, its investment manager
	By: Ares Capital Management LLC, its subadvisor
		
	By:	 	 /s/ Mark Affolter

	Name:	 	Mark Affolter
	Title:	 	Authorized Signatory

  
 First Amendment to Second Lien Credit
AgreementEXHIBIT 10.2

  

  

    

    

    

    FORM OF

    

    

    Stock Option

    

    

    Granted by

    

    

    TERRITORIAL BANCORP INC.

    

    

    under the

    

    

    TERRITORIAL BANCORP INC.

    2019 EQUITY INCENTIVE PLAN

    

    

    This stock option agreement (“Option” or “Agreement”) is and will be subject in
      every respect to the provisions of the 2019 Equity Incentive Plan (the “Plan”) of Territorial Bancorp Inc. (the “Company”), which are incorporated herein by reference and
      made a part hereof, subject to the provisions of this Agreement.  A copy of the Plan and Plan prospectus has been provided to each person granted a stock option pursuant to the Plan.  The holder of this Option (the “Participant”)
      hereby accepts this Option, subject to all the terms and provisions of the Plan and this Agreement, and agrees that all decisions under and interpretations of the Plan and this Agreement by the committee appointed to administer the Plan (“Committee”) or the Board of Directors will be final, binding and conclusive upon the Participant and the Participant’s heirs, legal representatives, successors and permitted assigns.  Capitalized terms used in this
      Agreement but not defined will have the same meaning as in the Plan.

    1.   Name
          of Participant:  ______________________________

    2.   Date
          of Grant:    ___________________________________

    3.   Exercise Price per Share: $__________________________
          

        

    
      
        4.    Total
            number of shares of Company common stock, $0.01 par value per share, that may be acquired pursuant to this Option: _____

          

      

    

    (subject to adjustment pursuant to Section 10 hereof).  The Option will be an Incentive Stock Option to the maximum extent permitted under the tax laws, which
      means that up to $100,000 of Options that vest in any one calendar year will be Incentive Stock Options (based on the exercise price of the Option).

    Please note that for purposes of determining the maximum number of Options that can vest in any one
        calendar year as Incentive Stock Options, the Options granted to you in this Agreement that vest in a calendar year will be aggregated with any earlier Option Award that you received that vest in the same calendar year.  If you vest in the maximum
        number of Incentive Stock Options in which you are permitted to vest for a calendar year under a prior Option Award, all Options that you receive under this Agreement that vest in the same calendar year will be considered Non-Statutory Stock
        Options.

    
      
        

    

    
    
      
        5.    Expiration Date of Option:  _________________, subject to earlier expiration due to Termination of Service.  This

          Option may not be exercised at any time on or after the Option’s expiration date. 

      

    

    
      
        
          6.    Vesting

              Schedule.  Unless sooner vested in accordance with the terms of this Award Agreement, the Options granted hereunder shall vest (i.e., become exercisable) in accordance with the following:

        

      

    

    	
             

            Percentage of

            Option Vested

          	
             

             

            

            Number of Shares Available for Exercise

          	
             

             

            Vesting Date

          
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 

    
      
        	

              	
                

                

                

              

      

    

    

      7. 

          Exercise Procedure.  This Option will be exercised in whole or in part by the Participant’s delivery to the Company of written notice (the “Notice of

        Exercise of Option” attached hereto as Exhibit A) setting forth the number of shares with respect to which this Option is to be exercised, together 

        with payment by cash or other means acceptable to the
        Committee.

     

    
    8.   Delivery of Shares.

    

    

    
      
        	

              	8.1	
                Delivery of Shares.  Delivery of shares of Common Stock upon the exercise of this Option will comply with all applicable laws (including the requirements of the
                  Securities Act) and the applicable requirements of any securities exchange or similar entity.

              

      

    

    

    

    9.   Change in Control.

    

    

    
      
        	

              	9.1	
                In the event of the Participant’s Involuntary Termination following a Change in Control, all Options held by the Participant, whether or not exercisable at such time, will become
                  fully exercisable for a period of one year following the Involuntary Termination of Service, subject to the expiration provisions otherwise applicable to the Option.

              

      

    

    

    

    
      
        	

              	9.2	
                A “Change in Control” will be deemed to have occurred as provided in Section 4.2 of the Plan.

              

      

    

    

    

    10.   Adjustment Provisions.

    

    

    This Option, including the number of shares subject to the Option and the exercise price, will be adjusted upon the occurrence of the
      events specified in, and in accordance with the provisions of Section 3.4 of the Plan.

    

    

    
      2

      
        

    

    11.   Termination of Option and Accelerated Vesting.

    This Option will terminate upon the expiration date, except as set forth in the following  provisions:

    
      
        	

              	11.1	
                Death.  In the event of the Participant’s Termination of Service by reason of the Participant’s death, any Options that would otherwise have vested under this Award will
                  vest, if not already vested.  This Option may thereafter be exercised by the Participant’s legal representative or beneficiaries for a period of one year following Termination of Service due to death or the remaining unexpired term of the
                  Option, if less.

              

      

    

    
      
        	

              	
                11.2

                 

                

                 

                

                 

                

                11.3

                

              	
                Disability.  In the event of the Participant’s Termination of Service by reason of the Participant’s Disability, any Options that would otherwise have vested under this
                  Award will vest, if not already vested.  This Option may thereafter be exercised for a period of one year following Termination of Service due to Disability or the remaining unexpired term of the Option, if less.

                 

                

                 Retirement.  If the Participant’s Service terminates due to Retirement, this Option may thereafter be exercised, to the extent it was exercisable at the time of such
                  termination, for a period of one year following Termination of Service due to Retirement or the remaining unexpired term of the Option, if less.  All unvested Options will be forfeited.

              

      

    

    
      
        	
                

                

              	11.4	
                Termination for Cause.  In the event of the Participant’s Termination of Service for Cause, all Options that have not been
                  exercised will expire and be forfeited.

              

      

    

    

    

    
      
        	

              	11.5	
                Other Termination.  In the event of the Participant’s Termination of Service for any reason other than due to death, Disability,
                  Retirement or for Cause, or an Involuntary Termination of Service upon a Change in Control, this Option may thereafter be exercised, to the extent it was exercisable at the time of such termination, for a period of three months following
                  termination, subject to termination on the Option’s expiration date, if earlier.  All unvested Options will be forfeited.

              

      

    

    

    

    
      
        	

              	11.6	
                Incentive Option Treatment.  The Incentive Stock Options granted hereunder are subject to the requirements of Section 421 of the Internal Revenue Code.  No Option will be
                  eligible for treatment as an Incentive Stock Option in the event such Option is exercised more than three months following Termination of Service (except in the case of Termination of Service due to death).  In order to obtain Incentive
                  Stock Option treatment for Options exercised by heirs or devisees of the Participant, the Participant’s death must have occurred while the Participant was employed or within three months of the Participant’s Termination of Service.

              

      

    

    

    

    12.      Miscellaneous.

    

    

    
      
        	

              	12.1	
                No Option will confer upon the Participant any rights as a stockholder of the Company prior to the date on which the individual fulfills all conditions for receipt of such rights.

              

      

    

    

    

    
      3

      
        

    

    
      
        	

              	12.2	
                This Agreement may not be amended or otherwise modified unless evidenced in writing and signed by the Company and the Participant.

              

      

    

    

    

    
      
        	

              	12.3	
                Except as otherwise provided by the Committee, Incentive Stock Options under the Plan are not transferable except (1) as designated by the Participant by will or by the laws of descent and distribution, (2) to
                  a trust established by the Participant, or (3) between spouses incident to a divorce or pursuant to a domestic relations order, provided, however,  that in the case of a transfer described under (3), the Option will not qualify as an
                  Incentive Stock Option as of the day of such transfer.

              

      

    

    

    

    
      
        	

              	12.4	
                This Option will be governed by and construed in accordance with the laws of the State of Hawaii.

              

      

    

    

    

    
      	
              12.5

            	
              The granting of this Option does not confer upon the Participant any right to be retained in the employ of the Company or any subsidiary.

            

    

    

    

    
      	
              12.6

            	
              Under current tax laws, an Option that is exercised as an Incentive Stock Option is not subject to ordinary income taxes so long as it is held for the requisite holding period, e.g., two (2)
                years from the date of grant of the Option and one (1) year from the date of exercise, whichever is later.  A Non-Qualified Stock Option will be subject to income tax withholding at the time of exercise.  Upon the exercise of a
                Non-Statutory Stock Option, the Participant shall be required to satisfy the minimum required federal, state and local tax withholding in the manner or manners permitted by the Company.

            

    

    

    

    
      	
              12.7

            	
              This Stock Option Award, or any portion of this Award, is subject to forfeiture in accordance with the requirements of Section 7.17 of the Plan.

            

    

    

    

    

    

    
      4

      
        

    

    IN WITNESS WHEREOF, the Company has caused this instrument to be executed in its name and on its behalf as of the date of grant of this Option set forth above.

     TERITORIAL BANCORP INC.

     By: ___________________________

    Its:
        ____________________________

    

    

    PARTICIPANT’S ACCEPTANCE

    The undersigned hereby accepts the foregoing Option and agrees to the terms and conditions hereof, including the terms and provisions of the 2019 Equity
      Incentive Plan.  The undersigned hereby acknowledges receipt of a copy of the Company’s 2019 Equity Incentive Plan.

    PARTICIPANT

     

    

     

    

    _______________________________

    

    

    

    

    

     

    

    
      5

      
        

    

    EXHIBIT A

    

    

    NOTICE OF EXERCISE OF OPTION

      (BY EMPLOYEE)

    

    

    I hereby exercise the stock option (the “Option”) granted to me by Territorial Bancorp Inc. (the “Company”) or its affiliate, subject to all the terms and provisions set forth in the Stock Option
      Agreement (the “Agreement”) and the Territorial Bancorp Inc. 2019 Equity Incentive Plan (the “Plan”) referred to therein, and notify you of my desire to purchase __________________ shares of common stock of the Company (“Common Stock”) for a purchase
      price of $_______ per share.

    

    

    I wish to pay the purchase price by (check one or more, as applicable):

    [Any payment to be delivered must accompany this Notice of Exercise of Option]

    

    

    
      
        	

              	___	
                Cash or personal, certified or cashier’s check in the sum of $_______, in full/partial payment of the purchase price.

              

      

    

    
      
        	

              	___	
                Stock of the Company with a fair market value of $______ in full/partial payment of the purchase price.*

              

      

    

    
      
        	

              	___	
                A “net settlement” of the Option whereby I direct the Company to withhold a sufficient number of shares to satisfy the purchase price.  [  ]  Withhold a sufficient number of shares to pay minimum required taxes  [  ]  Calculate minimum
                  required withholding and I will submit payment.

              

      

    

    
      
        	

              	___	
                A check (personal, certified or cashier’s) in the sum of $_______ and stock of the Company with a fair market value of $______, in full payment of the purchase price.*

              

      

    

    
      
        	

              	___	
                Please sell ______ shares from my Option shares through my broker in full/partial payment of the purchase price.  If my broker requires additional forms in order to consummate this “broker cashless exercise,” I have included them with
                  this election.

              

      

    

    I understand that after this exercise, ____________ shares of Common Stock remain subject to the Option, subject to all terms and provisions set forth in the Agreement and the
      Plan.

    I hereby represent that it is my intention to acquire these shares for the following purpose:

    ___ investment

    ___ resale or distribution

    

    

    Please note: if your intention is to resell (or distribute within the meaning of Section 2(11) of the Securities Act of 1933) the shares you acquire through this Option exercise,
      the Company or transfer agent may require an opinion of counsel that such resale or distribution would not violate the Securities Act of 1933 prior to your exercise of such Option.

    Date: ____________, _____.                                       _________________________________________

    Participant’s signature

    

    

    * If I elect to exercise by exchanging shares I already own, I
      will constructively return shares that I already own to purchase the new option shares.  If my shares are in certificate form, I must attach a separate statement indicating the certificate number of the shares I am treating as having been
      exchanged.  If the shares are held in “street name” by a registered broker, I must provide the Company with a notarized statement attesting to the number of shares owned that will be treated as having been exchanged.  I will keep the shares that I
      already own and treat them as if they are shares acquired by the option exercise.  In addition, I will receive additional shares equal to the difference between the shares I constructively exchange and the total new option shares that I acquire.

  

  6

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