Exhibit 10.6

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Central Pacific Financial Corp.
2004 Stock Compensation Plan
 
 
(Incorporates all changes up to and including Amendment No. 2011-1 dated April
27, 2011)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

--------------------------------------------------------------------------------

 
Contents
 
 

Article 1.    Establishment, Purpose, and Duration        Article 2.   
Definitions        Article 3.    Administration        Article 4.    Shares
Subject to the Plan and Maximum Awards        Article 5.    Eligibility and
Participation        Article 6.    Stock Options        Article 7.    Stock
Appreciation Rights        Article 8.    Restricted Stock and Restricted Stock
Units        Article 9.    Performance Shares and Performance Units       
Article 10.    Stock-Based Awards        Article 11.    Performance Measures   
    Article 12.    Beneficiary Designation        Article 13.    Deferrals and
Share Settlements       Article 14.    Rights of Employees and Independent
Contractors        Article 15.   Change in Control        Article 16.   
Amendment, Modification, Suspension, and Termination        Article 17.   
Withholding        Article 18.    Successors        Article 19.    General
Provisions        Article 20.    Legal Construction 

 
 
 

--------------------------------------------------------------------------------

 
Central Pacific Financial Corp.
2004 Stock Compensation Plan
 
 
Article 1.  Establishment, Purpose, and Duration
 
1.1 Establishment of the Plan.  Central Pacific Financial Corp., a Hawaii
corporation (hereinafter referred to as the “Company”), establishes an incentive
compensation plan to be known as the Central Pacific Financial Corp. 2004 Stock
Compensation Plan (hereinafter referred to as the “Plan”), as set forth in this
document.
 
The Plan permits the grant of Nonqualified Stock Options, Incentive Stock
Options, Stock Appreciation Rights (“SARs”), Restricted Stock, Restricted Stock
Units, Performance Shares, Performance Units, and Stock-Based Awards.
 
The Plan shall become effective upon shareholder approval of the Plan (the
“Effective Date”) and shall remain in effect as provided in Section 1.3 hereof.
 
1.2 Purpose of the Plan.  The purpose of the Plan is to promote the success and
enhance the value of the Company by linking the personal interests of the
Participants to those of the Company’s shareholders, and by providing
Participants with an incentive for outstanding performance.
 
The Plan is further intended to provide flexibility to the Company in its
ability to motivate, attract, and retain the services of Participants upon whose
judgment, interest, and special effort the successful conduct of its operation
largely is dependent.
 
1.3 Duration of the Plan.  Unless sooner terminated as provided herein, the Plan
shall terminate ten (10) years from the Effective Date.  After the Plan is
terminated, no future Awards may be granted, but Awards previously granted shall
remain outstanding in accordance with their applicable terms and conditions and
the Plan’s terms and conditions.  Notwithstanding the foregoing, no Incentive
Stock Options may be granted more than ten (10) years after the earlier of (a)
the adoption of the Plan by the Board, and (b) the Effective Date.
 
1.4 Awards under Prior Option Plans.  From and after the Effective Date, the
Company will make new Awards only under this Plan.  For the avoidance of doubt,
all awards granted before the Effective Date under any prior plan shall remain
in full force and effect and shall continue to be governed by the terms of the
applicable plan and related award agreement.
 
 
Article 2.  Definitions
 
Whenever used in the Plan, the following terms shall have the meaning set forth
below, and when the meaning is intended, the initial letter of the word shall be
capitalized.
 
1.1  
“Affiliate” shall have the meaning ascribed to such term in Rule 12b-2 of the
General Rules and Regulations of the Exchange Act.

 
1.2  
“Award” means, individually or collectively, a grant under this Plan of NQSOs,
ISOs, SARs, Restricted Stock, Restricted Stock Units, Performance Shares,
Performance Units, or Stock-Based Awards.

 
1.3  
“Award Agreement” means either (i) an agreement entered into by the Company and
each Participant setting forth the terms and provisions applicable to Awards
granted under this Plan; or (ii) a statement issued by the Company to a
Participant describing the terms and provisions of such Award.

 
1.4  
“Beneficial Owner or Beneficial Ownership” shall have the meaning ascribed to
such term in rule 13d-3 of the General Rules and Regulations under the Exchange
Act.

 
1.5  
“Board” or “Board of Directors” means the Board of Directors of the Company.

 
1.6  
“Cause” means:

 
(a)  
Gross negligence or gross neglect of duties;

 
(b)  
Commission of a felony or of a gross misdemeanor involving moral turpitude; or

 
(c)  
Fraud, disloyalty, dishonesty or willful violation of any law or significant
Company policy committed in connection with the person’s employment in service
and resulting in an adverse effect on the Company.

 
1.7  
“Change in Control” shall mean any of the following:

 
(a)  
Individuals who, on the date of adoption of this Plan, constitute the Board (the
“Incumbent Directors”) cease for any reason to constitute at least a majority of
the Board, provided that any person becoming a director subsequent to such date,
whose election or nomination for election was approved by a vote of at least
two-thirds of the Incumbent Directors then on the Board (either by a specific
vote or by approval of the proxy statement of the Company in which such person
is named as a nominee for director, without written objection to such
nomination) shall be an Incumbent Director; provided, however, that no
individual initially elected or nominated as a director of the Company as a
result of an actual or threatened election contest with respect to directors or
as a result of any other actual or threatened solicitation of proxies or
consents by or on behalf of any person other than the Board shall be deemed to
be an Incumbent Director;

 
(b)  
Any “person” (as such term is defined in Section 3(a)(9) of the Exchange Act and
as used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act) is or becomes a
“beneficial owner” (as defined in Rule 13d 3 under the Exchange Act), directly
or indirectly, of securities of the Company representing 25% or more of the
combined voting power of the Company’s then outstanding securities eligible to
vote for the election of the Board (the “Company Voting Securities”); provided,
however, that the event described in this paragraph (ii) shall not be deemed to
be a Change in Control by virtue of any of the following acquisitions: (A) by
the Company or any Subsidiary, (B) by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any Subsidiary, (C) by any
underwriter temporarily holding securities pursuant to an offering of such
securities or (D) pursuant to a Non-Qualifying Transaction (as defined in
paragraph (c)); or

 
(c)  
The consummation of a merger, consolidation, statutory share exchange, sale of
all or substantially all of the Company’s assets, a plan of liquidation or
dissolution of the Company or similar form of corporate transaction involving
the Company or any of its Subsidiaries that requires the approval of the
Company’s shareholders, whether for such transaction or the issuance of
securities in the transaction (a “Business Transaction”), unless immediately
following such Business Transaction: (A) more than 50% of the total voting power
of (x) the corporation resulting from such Business Transaction (the “Surviving
Corporation”), or (y) if applicable, the ultimate parent corporation that
directly or indirectly has beneficial ownership of at least 95% of the voting
securities eligible to elect directors of the Surviving Corporation (the “Parent
Corporation”), is represented by Company Voting Securities that were outstanding
immediately prior to such Business Transaction (or, if applicable, is
represented by shares into which such Company Voting Securities were converted
pursuant to such Business Transaction), and such voting power among the holders
thereof is in substantially the same proportion as the voting power of such
Company Voting Securities among the holders thereof immediately prior to the
Business Transaction, (B) no person (other than any employee benefit plan (or
related trust) sponsored or maintained by the Surviving Corporation or the
Parent Corporation), is or becomes the beneficial owner, directly or indirectly,
of 25% or more of the total voting power of the outstanding voting securities
eligible to elect directors of the Parent Corporation (or, if there is no Parent
Corporation, the Surviving Corporation) and (C) at least a majority of the
members of the board of directors of the Parent Corporation (or, if there is no
Parent Corporation, the Surviving Corporation) following the consummation of the
Business Transaction were Incumbent Directors at the time of the Board’s
approval of the execution of the initial agreement providing for such Business
Transaction (any Business Transaction which satisfies all of the criteria
specified in (A), (B) and (C) above shall be deemed to be a “Non-Qualifying
Transaction”).

 
Notwithstanding the foregoing, a Change in Control of the Company shall not be
deemed to occur solely because any person acquires beneficial ownership of more
than 25% of the Company Voting Securities as a result of the acquisition of
Company Voting Securities by the Company which reduces the number of Company
Voting Securities outstanding; provided, that if after such acquisition by the
Company such person becomes the beneficial owner of additional Company Voting
Securities that increases the percentage of outstanding Company Voting
Securities beneficially owned by such person, a Change in Control of the Company
shall then occur.
 
1.8  
“Code” means the U.S. Internal Revenue Code of 1986, as amended from time to
time, or any successor thereto.

 
1.9  
“Committee” means the Compensation Committee of the Board.  However, if a member
of the Compensation Committee is not an “outside director” within the meaning of
Section 162(m) of the Code or is not a “non-employee director” within the
meaning of Rule 16b-3 under the Exchange Act, the Compensation Committee may
from time to time delegate some or all of its functions under the Plan to a
committee or subcommittee composed of members that meet the relevant
requirements.  The term “Committee” includes any such committee or subcommittee,
to the extent of the Compensation Committee’s delegation.

 
1.10  
“Company” means Central Pacific Financial Corp., a Hawaii corporation, and any
successor thereto as provided in Article 18 herein.

 
1.11  
“Covered Employee” means a Participant who is a “covered employee,” as defined
in Section 162(m) of the Code and the regulations promulgated under Section
162(m) of the Code, or any successor statute.

 
1.12  
“Director” means any individual who is a member of the Board of Directors of the
Company and/or its Subsidiaries.

 
1.13  
“Employee” means any employee of the Company, its Affiliates, and/or its
Subsidiaries.  Directors who are not otherwise employed by the Company, its
Affiliates, and/or its Subsidiaries shall not be considered Employees under this
Plan.

 
Individuals described in the first sentence of this definition who are foreign
nationals or are employed outside of the United States, or both, are considered
to be Employees and may be granted Awards on the terms and conditions set forth
in the Plan, or on such other terms and conditions as may, in the judgment of
the Committee, be necessary or desirable to further the purpose of the Plan.
 
1.14  
“Exchange Act” means the Securities Exchange Act of 1934, as amended from time
to time, or any successor act thereto.

 
1.15  
“Fair Market Value” or “FMV” means a price that is based on the opening,
closing, actual, high, low, or average selling prices of a Share on the New York
Stock Exchange (“NYSE”) or other established stock exchange (or exchanges) on
the applicable date, the preceding trading day, the next succeeding trading day,
or an average of trading days, as determined by the Committee in its
discretion.  Such definition of FMV shall be specified in the Award Agreement
and may differ depending on whether FMV is in reference to the grant, exercise,
vesting, or settlement or payout of an Award.  If, however, the accounting
standards used to account for equity awards granted to Participants are
substantially modified subsequent to the Effective Date of the Plan, the
Committee shall have the ability to determine an Award’s FMV based on the
relevant facts and circumstances.  If Shares are not traded on an established
stock exchange, FMV shall be determined by the Committee based on objective
criteria.

 
1.16  
“Fiscal Year” means the year commencing on January 1 and ending December 31 or
other time period as approved by the Board.

 
1.17  
“Freestanding SAR” means an SAR that is granted independently of any Options, as
described in Article 7 herein.

 
1.18  
“Full Value Award” means an Award other than in the form of an ISO, NQSO, or SAR
and which is settled by the issuance of Shares.

 
1.19  
“Grant Price” means the price at which a SAR may be exercised by a Participant,
as determined by the Committee and set forth in Section 7.1 herein.

 
1.20  
“Incentive Stock Option” or “ISO” means an Option to purchase Shares granted
under Article 6 herein and that is designated as an Incentive Stock Option and
is intended to meet the requirements of Section 422 of the Code, or any
successor provision.

 
1.21  
“Independent Contractor” means an individual providing services to the Company,
its Affiliates, and/or its Subsidiaries, other than a Director who is not also
an Employee of the Company, its Affiliates, and/or its Subsidiaries. Such
Independent Contractor shall be eligible to participate in the Plan as selected
by the Committee in accordance with Article 5.  Notwithstanding any other
provision in the Plan to the contrary, the following shall apply in the case of
an Independent Contractor who is allowed to participate in the Plan: (a) with
respect to any reference in this Plan to the working relationship between such
Independent Contractor and the Company, its Affiliates, and/or its Subsidiaries,
the term “service” shall apply as may be appropriate in lieu of the term
“employment” or “employ”; (b) no such Independent Contractor shall be eligible
for a grant of an ISO; and (c) the exercise period and vesting of an Award
following such Independent Contractor’s termination from service shall be
specified and governed under the terms and conditions of the Award as may be
determined by the Committee and set forth in the Independent Contractor’s Award
Agreement related to such Award.

 
1.22  
“Insider” shall mean an individual who is, on the relevant date, an officer,
Director, or more than ten percent (10%) Beneficial Owner of any class of the
Company’s equity securities that is registered pursuant to Section 12 of the
Exchange Act, as determined by the Board in accordance with Section 16 of the
Exchange Act.

 
1.23  
“Nonqualified Stock Option” or “NQSO” means an Option to purchase Shares,
granted under Article 6 herein, which is not intended to be an Incentive Stock
Option or that otherwise does not meet such requirements.

 
1.24  
“Option” means an Incentive Stock Option or a Nonqualified Stock Option, as
described in Article 6 herein.

 
1.25  
“Option Price” means the price at which a Share may be purchased by a
Participant pursuant to an Option, as determined by the Committee.

 
1.26  
“Participant” means an Employee, Director or Independent Contractor who has been
selected to receive an Award or who has an outstanding Award granted under the
Plan.

 
1.27  
“Performance-Based Compensation” means compensation under an Award that
satisfies the requirements of Section 162(m) of the Code for deductibility of
remuneration paid to Covered Employees.

 
1.28  
“Performance Measures” means measures as described in Article 11 on which the
performance goals are based and which are approved by the Company’s shareholders
pursuant to this Plan in order to qualify Awards as Performance-Based
Compensation.

 
1.29  
“Performance Period” means the period of time during which the performance goals
must be met in order to determine the degree of payout and/or vesting with
respect to an Award.

 
1.30  
“Performance Share” means an Award granted to a Participant, as described in
Article 9 herein.

 
1.31  
“Performance Unit” means an Award granted to a Participant, as described in
Article 9 herein.

 
1.32  
“Period of Restriction” means the period when Awards are subject to forfeiture
based on the passage of time, the achievement of performance goals, and/or upon
the occurrence of other events as determined by the Committee, at its
discretion.

 
1.33  
“Person” shall have 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.

 
1.34  
“Restricted Stock” means an Award of Shares granted to a Participant pursuant to
Article 8 herein.

 
1.35  
“Restricted Stock Unit’’ means an Award granted to a Participant pursuant to
Article 8 herein.

 
1.36  
“Shares” or “Stock” means the Shares of common stock of the Company.

 
1.37  
“Stock Appreciation Right” or “SAR” means an Award, designated as an SAR,
pursuant to the terms of Article 7 herein.

 
1.38  
“Stock-Based Award” means an Award granted pursuant to the terms of Section 10.2
herein.

 
1.39  
“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 at least fifty percent (50%) of the total
combined voting power in one of the other entities in such chain.

 
1.40  
“Tandem SAR” means an SAR that is granted in connection with a related Option
pursuant to Article 7 herein, the exercise of which shall require forfeiture of
the right to purchase a Share under the related Option (and when a Share is
purchased under the Option, the Tandem SAR shall similarly be cancelled) or an
SAR that is granted in tandem with an Option but the exercise of such Option
does not cancel the SAR, but rather results in the exercise of the related SAR.

 
 
Article 3.  Administration
 
3.1 General.  The Committee shall be responsible for administering the
Plan.  The Committee may employ attorneys, consultants, accountants, and other
persons, and the Committee, the Company, and its officers and Directors shall be
entitled to rely upon the advice, opinions, or valuations of any such
persons.  All actions taken and all interpretations and determinations made by
the Committee shall be final, conclusive, and binding upon the Participants, the
Company, and all other interested parties.
 
3.2 Authority of the Committee.  The Committee shall have full and exclusive
discretionary power and authority to interpret the terms and the intent of the
Plan and to determine eligibility for Awards and to adopt such rules,
regulations, and guidelines for administering the Plan as the Committee may deem
necessary or proper.  Such authority shall include, but not be limited to,
selecting Award recipients, establishing all Award terms and conditions and,
subject to Article 16, adopting modifications and amendments, or subplans to the
Plan or any Award Agreement, including without limitation, any that are
necessary to comply with the laws of the countries in which the Company, its
Affiliates, and/or its Subsidiaries operate.
 
3.3 Delegation.  The Committee may delegate to one or more of its members or to
one or more officers of the Company, its Affiliates and/or its Subsidiaries, or
to one or more agents or advisors such administrative duties as it may deem
advisable, and the Committee or any person to whom it has delegated duties as
aforesaid may employ one or more persons to render advice with respect to any
responsibility the Committee or such person may have under the Plan.  Except
with respect to Awards to insiders, the Committee may (to the extent permitted
by applicable law), by resolution, authorize one or more officers of the Company
to do one or both of the following: (a) designate officers, Employees, or
Independent Contractors of the Company, its Affiliates, and/or its Subsidiaries
to be recipients of Awards; and (b) determine the size of the Award: provided,
however, that the resolution providing such authorization sets forth the total
number of Awards such officer or officers may grant.
 
 
Article 4.  Shares Subject to the Plan and Maximum Awards
 
4.1 Number of Shares Available for Awards.  Subject to adjustment as provided
under this Article 4, the number of Shares which may be delivered pursuant to
Awards granted under the Plan (“Share Authorization”) shall be 4,944,831
Shares.  For clarity this amount consists of (i) the amdended Share
Authorization of 2,500,000 shares approved in 2007, as equitably adjusted by the
Committee to a Share Authorization of 1,402,589 to give effect to the
one-for-twnety reverse stock split being implemented by the Company and (ii) an
increase in the authorized shares over that amount by 3,542,242 shares.  The
maximum number of Shares that may be granted pursuant to any Award granted in
any one Fiscal Year to any one Participant shall be the total number of Shares
that then remain available under the Share Authorization.  The maximum number of
Shares that may be issued for Full Value Awards at any time shall be the total
number of Shares that then remain available under the Shyare Authorization.  All
Shares available under the Plan may be issued pursuant to Awards in the form of
ISOs. Any Shares related to Awards which terminate by expiration, forfeiture,
cancellation, or otherwise without the issuance of such Shares, are settled in
cash in lieu of Shares, or are exchanged with the Committee’s permission for
Awards not involving Shares, shall be available again for grant under the
Plan.  Moreover, if the Option Price of any Option granted under the Plan or the
tax withholding requirements with respect to any Award granted under the Plan
are satisfied by tendering Shares to the Company (by either actual delivery or
by attestation), or if an SAR is exercised, only the number of Shares issued,
net of the Shares tendered, if any, will be deemed delivered for purposes of
determining the maximum number of Shares available for delivery under the
Plan.  The maximum number of Shares available for issuance under the Plan shall
not be reduced to reflect any dividends or dividend equivalents that are
reinvested into additional Shares or credited as additional Restricted Stock,
Restricted Stock Units, Performance Shares, or Stock-Based Awards.  The Shares
available for issuance under the Plan may be authorized and unissued Shares or
treasury Shares.
 
4.2 Adjustments in Authorized Shares.  In the event of any corporate event or
transaction (including, but not limited to, a change in the Shares of the
Company or the capitalization of the Company) such as a merger, consolidation,
reorganization, recapitalization, separation, Stock dividend, Stock split,
reverse Stock split, split up, spin-off, or other distribution of Stock or
property of the Company, combination of securities, exchange of securities,
dividend in kind, or other like change in capital structure or distribution
(other than normal cash dividends) to shareholders of the Company, or any
similar corporate event or transaction, the Committee. in its sole discretion,
in order to prevent dilution or enlargement of Participants’ rights under the
Plan, shall substitute or adjust, in an equitable manner, as applicable, the
number and kind of Shares that may be issued under the Plan, the number and kind
of Shares subject to outstanding Awards, the Option Price or Grant Price
applicable to outstanding Awards, the Award Limits, and other value
determinations applicable to outstanding Awards.
 
Appropriate adjustments may also be made by the Committee in the terms of any
Awards under the Plan to reflect such changes or distributions and to modify any
other terms of outstanding Awards on an equitable basis, including modifications
of performance goals and changes in the length of Performance Periods.  The
determination of the Committee as to the foregoing adjustments, if any, shall be
conclusive and binding on Participants under the Plan.
 
Subject to the provisions of Article 15 and any applicable law or regulatory
requirement, without affecting the number of Shares reserved or available
hereunder, the Committee may authorize the issuance, assumption, substitution,
conversion or termination of Awards under this Plan in connection with any
merger, consolidation, acquisition of property or Stock, or reorganization, upon
such terms and conditions as it may deem appropriate.  Additionally, the
Committee may amend the Plan, or adopt supplements to the Plan, in such manner
as it deems appropriate to provide for such issuance, assumption, substitution,
conversion or termination, all without further action by the Company’s
shareholders.  Notwithstanding anything to the contrary, any adjustments,
modifications, amendments or changes of any kind made pursuant to this Section
4.2 shall be made in a manner compliant with Section 409A of the Code.
 
 
Article 5.  Eligibility and Participation
 
5.1 Eligibility.  Individuals eligible to participate in the Plan include all
Employees, Directors, and Independent Contractors.
 
5.2 Actual Participation.  Subject to the provisions of the Plan, the Committee
may from time to time, select from all eligible Employees, Directors, and
Independent Contractors, those to whom Awards shall be granted and shall
determine the nature and amount of each Award.
 
 
Article 6.  Stock Options
 
6.1 Grant of Options.  Subject to the terms and provisions of the Plan, Options
may be granted to Participants in such number, and upon such terms, and at any
time and from time to time as shall be determined by the Committee, provided
that ISOs shall not be granted to Non-Employee Directors and Independent
Contractors.
 
6.2 Award Agreement.  Each Option grant shall be evidenced by an Award Agreement
that shall specify the Option Price, the duration of the Option, the number of
Shares to which the Option pertains, the conditions upon which an Option shall
become vested and exercisable, and such other provisions as the Committee shall
determine which are not inconsistent with the terms of the Plan.  The Award
Agreement also shall specify whether the Option is intended to be an ISO or a
NQSO.
 
6.3 Option Price.  The Option Price for each grant of an Option under this Plan
shall be determined by the Committee and shall be specified in the Award
Agreement.  The Option Price shall be at least one hundred percent (100%) of the
FMV of the Shares on the date of grant.
 
6.4 Duration of Options.  Each Option granted to a Participant shall expire at
such time as the Committee shall determine at the time of grant; provided,
however, no Option shall be exercisable later than the tenth (10th) anniversary
date of its grant.
 
6.5 Exercise of Options.  Options granted under this Article 6 shall be
exercisable at such times and be subject to such restrictions and conditions as
the Committee shall in each instance approve, which need not be the same for
each grant or for each Participant.
 
6.6 Payment.  Options granted under this Article 6 shall be exercised by the
delivery of a written notice of exercise to the Company, setting forth the
number of Shares with respect to which the Option is to be exercised,
accompanied by full payment for the Shares.
 
The Option Price upon exercise of any Option shall be payable to the Company in
full either: (a) in cash or its equivalent; (b) by tendering (either by actual
delivery or attestation) previously acquired Shares having an aggregate FMV at
the time of exercise equal to the total Option Price (provided, if required to
maintain favorable accounting treatment for the Options granted, the Shares that
are tendered must have been held by the Participant for at least six (6) months
prior to their tender to satisfy the Option Price or have been purchased on the
open market): (c) by a combination of (a) and (b); or (d) any other method
approved by the Committee in its sole discretion at the time of grant and as set
forth in the Award Agreement.
 
The Committee also may allow cashless exercise as permitted under the Federal
Reserve Board’s Regulation T, subject to applicable securities law restrictions,
or by any other means which the Committee determines to be consistent with the
Plan’s purpose and applicable law.
 
Subject to Section 6.7 and any governing rules or regulations, as soon as
practicable after receipt of a written notification of exercise and full
payment, the Company shall deliver to the Participant, Share certificates or
evidence of book entry Shares, in an appropriate amount based upon the number of
Shares purchased under the Option(s).
 
Unless otherwise determined by the Committee, all payments under all of the
methods indicated above shall be paid in United States dollars.
 
6.7 Restrictions on Share Transferability.  The Committee may impose such
restrictions on any Shares acquired pursuant to the exercise of an Option
granted under this Article 6 as it may deem advisable, including, without
limitation, requiring the Participant to hold the Shares acquired pursuant to
exercise for a specified period of time, restrictions under applicable federal
securities laws, under the requirements of any stock exchange or market upon
which such Shares are then listed and/or traded, and under any blue sky or state
securities laws applicable to such Shares.
 
6.8 Termination of Employment.  Each Participant’s Award Agreement shall set
forth the extent to which the Participant shall have the right to exercise the
Option following termination of the Participant’s employment with the Company,
its Affiliates, and/or its Subsidiaries.  Such provisions shall be determined in
the sole discretion of the Committee, shall be included in the Award Agreement
entered into with each Participant, need not be uniform among all Options issued
pursuant to this Article 6, and may reflect distinctions based on the reasons
for termination.
 
6.9 Transferability of Options.
 
(a)  
Incentive Stock Options.  No ISO granted under the Plan may be sold,
transferred, pledged, assigned, or otherwise alienated or hypothecated, other
than by will or by the laws of descent and distribution.  Further, all ISOs
granted to a Participant under this Article 6 shall be exercisable during his or
her lifetime only by such Participant.

 
(b)  
Nonqualified Stock Options.  Except as otherwise provided in a Participant’s
Award Agreement or otherwise at any time by the Committee, no NQSO granted under
this Article 6 may be sold, transferred, pledged, assigned, or otherwise
alienated or hypothecated, other than by will or by the laws of descent and
distribution; provided that the Board or Committee may permit further
transferability, on a general or a specific basis, and may impose conditions and
limitations on any permitted transferability.  Further, except as otherwise
provided in a Participant’s Award Agreement or otherwise at any time by the
Committee, or unless the Board or the Committee decides to permit further
transferability, all NQSOs granted to a Participant under this Article 6 shall
be exercisable during his or her lifetime only by such Participant.

 
6.10 Notification of Disqualifying Disposition.  The Participant will notify the
Company upon the disposition of Shares issued pursuant to the exercise of an
ISO.  The Company will use such information to determine whether a disqualifying
disposition as described in Section 421(b) of the Code has occurred.
 
 
Article 7.  Stock Appreciation Rights
 
7.1 Grant of SARs.  Subject to the terms and conditions of the Plan, SARs may be
granted to Participants at any time and from time to time as shall be determined
by the Committee.  The Committee may grant Freestanding SARs, Tandem SARs, or
any combination of these forms of SARs.
 
Subject to the terms and conditions of the Plan, the Committee shall have
complete discretion in determining the number of SARs granted to each
Participant and, consistent with the provisions of the Plan, in determining the
terms and conditions pertaining to such SARs.
 
The SAR Grant Price for each grant of a Freestanding SAR shall be determined by
the Committee and shall be specified in the Award Agreement.  The SAR Grant
Price must be at least one hundred percent (100%) of the FMV of the Shares on
the date of grant.  The Grant Price of Tandem SARs shall be equal to the Option
Price of the related Option.
 
7.2 SAR Agreement.  Each SAR Award shall be evidenced by an Award Agreement that
shall specify the Grant Price, the term of the SAR, and such other provisions as
the Committee shall determine.
 
7.3 Term of SAR.  The term of an SAR granted under the Plan shall be determined
by the Committee, in its sole discretion, and except as determined otherwise by
the Committee and specified in the SAR Award Agreement, no SAR shall be
exercisable later than the tenth (10th) anniversary date of its grant.
 
7.4 Exercise of Freestanding SARs.  Freestanding SARs may be exercised upon
whatever terms and conditions the Committee, in its sole discretion, imposes
upon them.
 
7.5 Exercise of Tandem SARs.  Tandem SARs may he exercised for all or part of
the Shares subject to the related Option upon the surrender of the right to
exercise the equivalent portion of the related Option.  A Tandem SAR may be
exercised only with respect to the Shares for which its related Option is then
exercisable.
 
Notwithstanding any other provision of this Plan to the contrary, with respect
to a Tandem SAR granted in connection with an ISO: (a) the Tandem SAR will
expire no later than the expiration of the underlying ISO; (b) the value of the
payout with respect to the Tandem SAR may be for no more than one hundred
percent (100%) of the difference between the Option Price of the underlying ISO
and the FMV of the Shares subject to the underlying ISO at the time the Tandem
SAR is exercised; and (c) the Tandem SAR may be exercised only when the FMV of
the Shares subject to the ISO exceeds the Option Price of the ISO.
 
7.6 Payment of SAR Amount.  Upon the exercise of an SAR, a Participant shall be
entitled to receive payment from the Company in an amount determined by
multiplying:
 
(a)  
The difference between the FMV of a Share on the date of exercise over the Grant
Price; by

 
(b)  
The number of Shares with respect to which the SAR is exercised.

 
At the discretion of the Committee, the payment upon SAR exercise may be in
cash, in Shares of equivalent value, in some combination thereof, or in any
other manner approved by the Committee at its sole discretion.  The Committee’s
determination regarding the form of SAR payout shall be set forth or reserved
for later determination in the Award Agreement pertaining to the grant of the
SAR.
 
7.7 Termination of Employment.  Each Award Agreement shall set forth the extent
to which the Participant shall have the right to exercise the SAR following
termination of the Participant’s employment with the Company, its Affiliates,
and or its Subsidiaries.  Such provisions shall be determined in the sole
discretion of the Committee, shall be included in the Award Agreement entered
into with Participants, need not be uniform among all SARs issued pursuant to
the Plan, and may reflect distinctions based on the reasons for termination.
 
7.8 Nontransferability of SARs.  Except as otherwise provided in a Participant’s
Award Agreement, no SAR granted under the Plan may be sold, transferred,
pledged, assigned, or otherwise alienated or hypothecated, other than by will or
by the laws of descent and distribution; provided that the Board or Committee
may permit further transferability, on a general or a specific basis, and may
impose conditions and limitations on any permitted transferability.  Further,
except as otherwise provided in a Participant’s Award Agreement or otherwise
unless the Board or the Committee decides to permit further transferability, all
SARs granted to a Participant under this Article 7 shall be exercisable during
his or her lifetime only by such Participant.
 
7.9 Other Restrictions.  The Committee shall impose such other conditions and/or
restrictions on any Shares received upon exercise of a SAR granted pursuant to
the Plan as it may deem advisable.  This includes, but is not limited to,
requiring the Participant to hold the Shares received upon exercise of an SAR
for a specified period of time.
 
 
Article 8.  Restricted Stock and Restricted Stock Units
 
8.1 Grant of Restricted Stock or Restricted Stock Units.  Subject to the terms
and provisions of the Plan, the Committee, at any time and from time to time,
may grant Shares of Restricted Stock and/or Restricted Stock Units to
Participants in such amounts, as the Committee shall determine.  Restricted
Stock Units shall be similar to Restricted Stock except that no Shares are
actually awarded to the Participant on the date of grant.
 
8.2 Restricted Stock or Restricted Stock Unit Agreement.  Each Restricted Stock
and/or Restricted Stock Unit grant shall be evidenced by an Award Agreement that
shall specify the Period(s) of Restriction, the number of Shares of Restricted
Stock or the number of Restricted Stock Units granted, and such other provisions
as the Committee shall determine.
 
8.3 Transferability.  Except as provided in this Article 8, the Shares of
Restricted Stock and/or Restricted Stock Units granted herein may not be sold,
transferred, pledged, assigned, or otherwise alienated or hypothecated until the
end of the applicable Period of Restriction established by the Committee and
specified in the Award Agreement (and in the case of Restricted Stock Units
until the date of delivery or other payment), or upon earlier satisfaction of
any other conditions, as specified by the Committee, in its sole discretion, and
set forth in the Award Agreement. All rights with respect to the Restricted
Stock and/or Restricted Stock Units granted to a Participant under the Plan
shall be available during his or her lifetime only to such Participant.
 
8.4 Other Restrictions.  The Committee shall impose such other conditions and/or
restrictions on any Shares of Restricted Stock or Restricted Stock Units granted
pursuant to the Plan as it may deem advisable including, without limitation, a
requirement that Participants pay a stipulated purchase price for each Share of
Restricted Stock or each Restricted Stock Unit, restrictions based upon the
achievement of specific performance goals, time-based restrictions on vesting
following the attainment of the performance goals, time-based restrictions,
restrictions under applicable federal or state securities laws, or any holding
requirements or sale restrictions placed on the Shares by the Company upon
vesting of such Restricted Stock or Restricted Stock Units.
 
To the extent deemed appropriate by the Committee, the Company may retain the
certificates representing Shares of Restricted Stock in the Company’s possession
until such time as all conditions and/or restrictions applicable to such Shares
have been satisfied or lapse.
 
Except as otherwise provided in this Article 8, Shares of Restricted Stock
covered by each Restricted Stock Award shall become freely transferable by the
Participant after all conditions and restrictions applicable to such Shares have
been satisfied or lapse, and Restricted Stock Units shall be paid in cash,
Shares, or a combination of cash and Shares as the Committee, in its sole
discretion shall determine.
 
8.5 Certificate Legend.  In addition to any legends placed on certificates
pursuant to Section 8.4 herein, each certificate representing Shares of
Restricted Stock granted pursuant to the Plan may bear a legend such as the
following:
 
“The sale or other transfer of the Shares of Stock represented by this
certificate, whether voluntary, involuntary, or by operation of law, is subject
to certain restrictions on transfer as set forth in the Central Pacific
Financial Corp.’s 2004 Stock Compensation Plan, and in the associated Restricted
Stock Award Agreement.  A copy of the Plan and such Restricted Stock Award
Agreement may be obtained from the Central Pacific Financial Corp.”
 
8.6 Voting Rights.  To the extent permitted or required by law, as determined by
the Committee, Participants holding Shares of Restricted Stock granted hereunder
may be granted the right to exercise full voting rights with respect to those
Shares during the Period of Restriction.  A Participant shall have no voting
rights with respect to any Restricted Stock Units granted hereunder.
 
8.7 Dividends and Dividend Equivalents.  During the Period of Restriction,
Participants holding Shares of Restricted Stock or Restricted Stock Units
granted hereunder may, if the Committee so determines, be credited with
dividends paid with respect to Restricted Stock or dividend equivalents with
respect to Restricted Stock Units while they are so held in a manner determined
by the Committee in its sole discretion.  The Committee may apply any
restrictions to the dividends or dividend equivalents that the Committee deems
appropriate.  The Committee, in its sole discretion, may determine the form of
payment of dividends or dividend equivalents, including cash, Shares, Restricted
Stock, or Restricted Stock Units and such dividends or dividend equivalents may
be subject to accrual, forfeiture, or payout restrictions as determined by the
Committee, provided that such dividends or dividend equivalents shall be paid or
provided in a manner compliant with Section 409A of the Code.
 
8.8 Termination of Employment.  Each Award Agreement shall set forth the extent
to which the Participant shall have the right to retain Restricted Stock and/or
Restricted Stock Units following termination of the Participant’s employment
with the Company, its Affiliates, and/or its Subsidiaries.  Such provisions
shall be determined in the sole discretion of the Committee, shall be included
in the Award Agreement entered into with each Participant, need not be uniform
among all Shares of Restricted Stock or Restricted Stock Units issued pursuant
to the Plan, and may reflect distinctions based on the reasons for termination.
 
8.9 Section 83(b) Election.  The Committee may provide in an Award Agreement
that the Award of Restricted Stock is conditioned upon the Participant making or
refraining from making an election with respect to the Award under Section 83(b)
of the Code.  If a Participant makes an election pursuant to Section 83(b) of
the Code concerning a Restricted Stock Award, the Participant shall be required
to file promptly a copy of such election with the Company.
 
 
Article 9.  Performance Shares and Performance Units
 
9.1 Grant of Performance Shares and Performance Units.  Subject to the terms of
the Plan, Performance Shares and/or Performance Units may be granted to
Participants in such amounts and upon such terms, and at any time and from time
to time, as shall be determined by the Committee.
 
9.2 Value of Performance Shares and Performance Units.  Each Performance Share
shall have an initial value equal to the FMV of a Share on the date of
grant.  Each Performance Unit shall have an initial value that is established by
the Committee at the time of grant.  The Committee shall set performance goals
in its discretion which, depending on the extent to which they are met, will
determine the value and/or number of Performance Shares/Performance Units that
will be paid out to the Participant.
 
9.3 Earning of Performance Shares and Performance Units.  Subject to the terms
of this Plan, after the applicable Performance Period has ended, the holder of
Performance Shares/Performance Units shall be entitled to receive payout on the
value and number of Performance Shares/Performance Units earned by the
Participant over the Performance Period, to be determined as a function of the
extent to which the corresponding performance goals have been
achieved.  Notwithstanding the foregoing, the Company has the ability to require
the Participant to hold the Shares received pursuant to such Award for a
specified period of time.
 
9.4 Form and Timing of Payment of Performance Shares and Performance
Units.  Payment of earned Performance Shares/Performance Units shall be as
determined by the Committee and as evidenced in the Award Agreement.  Subject to
the terms of the Plan, the Committee, in its sole discretion, may pay earned
Performance Shares/Performance Units in the form of cash or in Shares (or in a
combination thereof) equal to the value of the earned Performance
Shares/Performance Units as soon as practicable after the end of the applicable
Performance Period, but in no event later than 2 ½ months following the end of
the calendar year in which such Performance Period ends; provided, however, that
any Shares may be granted subject to restrictions deemed appropriate by the
Committee, but only if the terms of such restrictions are compliant with Section
409A of the Code. The determination of the Committee with respect to the form of
payout of such Awards shall be set forth in the Award Agreement pertaining to
the grant of the Award.
 
9.5 Dividend Equivalents.  At the discretion of the Committee, Participants
holding Performance Shares may be entitled to receive dividend equivalents with
respect to dividends declared with respect to the Shares.  Such dividends may be
subject to accrual, forfeiture, or payout restrictions as determined by the
Committee in its sole discretion, provided that such dividends or dividend
equivalents shall be paid or provided in a manner compliant with Section 409A of
the Code.
 
9.6 Termination of Employment.  Each Award Agreement shall set forth the extent
to which the Participant shall have the right to retain Performance Shares
and/or Performance Units following termination of the Participant’s employment
with the Company, its Affiliates, and/or its Subsidiaries.  Such provisions
shall be determined in the sole discretion of the Committee, shall be included
in the Award Agreement entered into with each Participant, need not be uniform
among all Awards of Performance Shares or Performance Units issued pursuant to
the Plan, and may reflect distinctions based on the reasons for termination.
 
9.7 Nontransferability.  Except as otherwise provided in a Participant’s Award
Agreement, Performance Shares/Performance Units may not be sold, transferred,
pledged, assigned, or otherwise alienated or hypothecated, other than by will or
by the laws of descent and distribution.  Further, except as otherwise provided
in a Participant’s Award Agreement, a Participant’s rights under the Plan shall
be exercisable during his or her lifetime only by such Participant.
 
 
Article 10.  Stock-Based Awards
 
10.1 Stock-Based Awards.  The Committee may grant other types of equity-based or
equity-related Awards (including the grant or offer for sale of unrestricted
Shares) in such amounts and subject to such terms and conditions, as the
Committee shall determine.  Such Awards may entail the transfer of actual Shares
to Participants, or payment in cash or otherwise of amounts based on the value
of Shares and may include, without limitation, Awards designed to comply with or
take advantage of the applicable local laws of jurisdictions other than the
United States.
 
10.2 Value of Stock-Based Awards.  Each Stock-Based Award shall have a value
based on the value of a Share, as determined by the Committee.  The Committee
may establish performance goals in its discretion.  If the Committee exercises
its discretion to establish performance goals, the number and/or value of
Stock-Based Awards that will be paid out to the Participant will depend on the
extent to which the performance goals are met.
 
10.3 Earning of Stock-Based Awards.  Subject to the terms of this Plan, the
holder of Stock-Based Awards shall be entitled to receive payout on the number
and value of Stock-Based Awards earned by the Participant, to be determined as a
function of the extent to which applicable performance goals, if any, have been
achieved.
 
10.4 Form and Timing of Payment of Stock-Based Awards.  Payment of earned
Stock-Based Awards shall be as determined by the Committee and as evidenced in
the Award Agreement.  Subject to the terms of the Plan, the Committee, in its
sole discretion, may pay earned Stock-Based Awards in the form of cash or in
Shares (or in a combination thereof) that have an aggregate FMV equal to the
value of the earned Stock-Based Awards.  Such Shares may be granted subject to
any restrictions deemed appropriate by the Committee.  The determination of the
Committee with respect to the form of payout of such Awards shall be set forth
in the Award Agreement pertaining to the grant of the Award.
 
10.5 Termination of Employment.  Each Award Agreement shall set forth the extent
to which the Participant shall have the right to receive Stock-Based Awards
following termination of the Participant’s employment with the Company, its
Affiliates, and/or its Subsidiaries.  Such provisions shall be determined in the
sole discretion of the Committee shall be included in the Award Agreement
entered into with each Participant, need not be uniform among all Awards of
Stock-Based Awards issued pursuant to the Plan, and may reflect distinctions
based on the reasons for termination.
 
10.6 Nontransferability.  Except as otherwise provided in a Participant’s Award
Agreement, Stock-Based Awards may not be sold, transferred, pledged, assigned,
or otherwise alienated or hypothecated, other than by will or by the laws of
descent and distribution.  Further, except as otherwise provided in a
Participant’s Award Agreement, a Participant’s rights under the Plan shall be
exercisable during the Participant’s lifetime only by the Participant.
 
10.7 Dividend Equivalents.  At the discretion of the Committee, Participants
holding Stock-Based Awards may be entitled to receive dividend equivalents with
respect to dividends declared with respect to the Shares.  Such dividends may be
subject to accrual, forfeiture, or payout restrictions as determined by the
Committee in its sole discretion, provided that such dividends or dividend
equivalents shall be paid or provided in a manner compliant with Section 409A of
the Code.
 
 
Article 11.  Performance Measures
 
Unless and until the Committee proposes for shareholder vote and the
shareholders approve a change in the general Performance Measures set forth in
this Article 11, the performance goals upon which the payment or vesting of an
Award to a Covered Employee that is intended to qualify as Performance-Based
Compensation shall be limited to the following Performance Measures:
 
(a)  
Earnings per share (actual or targeted growth);

 
(b)  
Net income after capital costs:

 
(c)  
Net income (before or after taxes);

 
(d)  
Return measures (including, but not limited to, return on assets, risk-adjusted
return on capital, or return on equity);

 
(e)  
Efficiency ratio;

 
(f)  
Full-time equivalency control;

 
(g)  
Stock price (including, but not limited to, growth measures and total
shareholder return);

 
(h)  
Noninterest income compared to net interest income ratio;

 
(i)  
Expense targets;

 
(j)  
Margins;

 
(k)  
Operating efficiency;

 
(l)  
EVA®;

 
(m)  
Credit quality measures;

 
(n)  
Customer satisfaction;

 
(o)  
Loan growth;

 
(p)  
Deposit growth;

 
(q)  
Net interest margin;

 
(r)  
Fee income;

 
(s)  
Operating expense; and

 
(t)  
Credit quality.

 
In addition to the foregoing, the Committee may consider the following
individual unit/production Performance Measures: cost per dollar loan growth;
cost per dollar deposit growth; revenue per personnel; operating expense to
group budget; service levels (group); and personal performance.
 
Any Performance Measure(s) may be used to measure the performance of the Company
as a whole or any business unit of the Company or any combination thereof, as
the Committee may deem appropriate, or any of the above Performance Measures as
compared to the performance of a group of comparator companies, or published or
special index that the Committee, in its sole discretion, deems
appropriate.  The Committee also has the authority to provide for accelerated
vesting of any Award based on the achievement of performance goals pursuant to
the Performance Measures specified in this Article 11.
 
The Committee may provide in any such Award that any evaluation of performance
may include or exclude any of the following events that occurs during a
Performance Period: (a) asset write-downs; (b) litigation or claim judgments or
settlements; (c) the effect of changes in tax laws, accounting principles, or
other laws or provisions affecting reported results; (d) reorganization or
restructuring programs; (e) extraordinary or nonrecurring items as described in
Accounting Principles Board Opinion No. 30 and/or in management’s discussion and
analysis of financial condition and results of operations appearing in the
Company’s annual report to shareholders for the applicable year; (f)
acquisitions or divestitures; and (g) foreign exchange gains and losses. To the
extent such inclusions or exclusions affect Awards to Covered Employees, they
shall be prescribed in a form that meets the requirements of Code Section 162(m)
for deductibility.
 
Awards that are designed to qualify as Performance-Based Compensation, and that
are held by Covered Employees, may not be adjusted upward.  The Committee shall
retain the discretion to adjust such Awards downward.
 
In the event that applicable tax and/or securities laws change to permit
Committee discretion to alter the governing Performance Measures without
obtaining shareholder approval of such changes, the Committee shall have sole
discretion to make such changes without obtaining shareholder approval.  In
addition, in the event that the Committee determines that it is advisable to
grant Awards that shall not qualify as Performance-Based Compensation, the
Committee may make such grants without satisfying the requirements of Code
Section 162(m).
 
 
Article 12.  Beneficiary Designation
 
A Participant’s “beneficiary” is the person or persons entitled to receive
payments or other benefits or exercise rights that are available under the Plan
in the event of the Participant’s death.  A Participant may designate a
beneficiary or change a previous beneficiary designation at any time by using
forms and following procedures approved by the Committee for that purpose.  If
no beneficiary designated by the Participant is eligible to receive payments or
other benefits or exercise rights that are available under the Plan at the
Participant’s death the beneficiary shall be the Participant’s estate.
 
Notwithstanding the provisions above, the Committee may in its discretion, after
notifying the affected Participants, modify the foregoing requirements,
institute additional requirements for beneficiary designations, or suspend the
existing beneficiary designations of living Participants or the process of
determining beneficiaries under this Article 12, or both.  If the Committee
suspends the process of designating beneficiaries on forms and in accordance
with procedures it has approved pursuant to this Article 12, the determination
of who is a Participant’s beneficiary shall be made under the Participant’s will
and applicable state law.
 
 
Article 13.  Deferrals and Share Settlements
 
Notwithstanding any other provision under the Plan, the Committee may permit or
require a Participant to defer such Participant’s receipt of the payment of cash
or the delivery of Shares that would otherwise be due to such Participant by
virtue of the exercise of an Option or SAR, or with respect to the lapse or
waiver of restrictions with respect to Restricted Stock or Restricted Stock
Units or the satisfaction of any requirements or performance goals with respect
to Performance Shares, Performance Units, or Stock-Based Awards.  If any such
deferral election is required or permitted, the Committee shall, in its sole
discretion, establish rules and procedures for such payment deferrals, provided
that such rules and procedures for any deferrals or deferral elections pursuant
to this Article 13 shall comply in all respects with Section 409A of the Code.
 
 
Article 14.  Rights of Employees and Independent Contractors
 
14.1 Employment.  Nothing in the Plan or an Award Agreement shall interfere with
or limit in any way the right of the Company, its Affiliates, and/or its
Subsidiaries to terminate any Participant’s employment or other service
relationship at any time, nor confer upon any Participant any right to continue
in the capacity in which he or she is employed or otherwise serves the Company,
its Affiliates, and/or its Subsidiaries.
 
Neither an Award nor any benefits arising under this Plan shall constitute part
of an employment contract with the Company, its Affiliates, and/or its
Subsidiaries and, accordingly, subject to Articles 3 and 16, this Plan and the
benefits hereunder may be terminated at any time in the sole and exclusive
discretion of the Committee without giving rise to liability on the part of the
Company, its Affiliates, and/or its Subsidiaries for severance payments.
 
For purposes of the Plan, transfer of employment of a Participant between the
Company, its Affiliates, and/or its Subsidiaries shall not be deemed a
termination of employment.  Additionally, the Committee shall have the ability
to stipulate in a Participant’s Award Agreement that a transfer to a company
that is spun-off from the Company shall not be deemed a termination of
employment with the Company for purposes of the Plan until the Participant’s
employment is terminated with the spun-off company.
 
14.2 Participation.  No Employee or Independent Contractor shall have the right
to be selected to receive an Award under this Plan, or, having been so selected,
to be selected to receive a future Award.
 
14.3 Rights as a Shareholder.  A Participant shall have none of the rights of a
shareholder with respect to Shares covered by any Award until the Participant
becomes the record holder of such Shares.
 
 
Article 15.  Change in Control
 
Upon the occurrence of a Change in Control, unless otherwise specifically
prohibited under applicable laws, or by the rules and regulations of any
governing governmental agencies or national securities exchanges, or unless the
Committee shall determine otherwise in the Award Agreement:
 
(a)  
Any and all Options and SARs granted hereunder shall become immediately
exercisable; additionally, if a Participant’s employment is terminated for any
other reason except Cause within twelve (12) months of such Change in Control,
the Participant shall have until the earlier of: (i) twelve (12) months
following such termination date; or (ii) the expiration of the Option or SAR
term, to exercise any such Option or SAR;

 
(b)  
Any Period of Restriction for Restricted Stock and Restricted Stock Units
granted hereunder that have not preciously vested shall end, and such Restricted
Stock and Restricted Stock Units shall become fully vested;

 
(c)  
The target payout opportunities attainable under all outstanding Awards under
the Plan which are subject to achievement of any of the Performance Measures
specified in Article 11, or any other performance conditions or restrictions
that the Committee has made the Award contingent upon, shall be deemed to have
been fully earned as of the effective date of the Change in Control.

 
(i)  
The vesting of all Awards denominated in Shares shall be accelerated as of the
effective date of the Change in Control, and there shall be paid out to
Participants a pro rata number of Shares based upon an assumed achievement of
all relevant targeted performance goals and upon the length of time within the
Performance Period, if any, that has elapsed prior to the Change in
Control.  The Committee has the authority to pay all or any portion of the value
of the Shares in cash.

 
(ii)  
Awards denominated in cash shall he paid pro rata to Participants with the
proration determined as a function of the length of time within the Performance
Period, if any, that has elapsed prior to the Change in Control, and based on an
assumed achievement of all relevant targeted performance goals.

 
(d)  
Subject to Article 16, herein, the Committee shall have the authority to make
any modifications to the Awards as determined by the Committee to be appropriate
before the effective date of the Change in Control.

 
 
Article 16.  Amendment, Modification, Suspension, and Termination
 
16.1 Amendment, Modification, Suspension, and Termination.  The Committee or
Board may, at any time and from time to time, alter, amend, modify, suspend, or
terminate the Plan in whole or in part, provided that any such alteration,
amendment, modification, suspension or termination of the Plan pursuant to this
Article 16 shall be effected in a manner compliant with Section 409A of the
Code.  Notwithstanding anything herein to the contrary, without the prior
approval of the Company’s shareholders, Options issued under the Plan will not
be repriced, replaced, or regranted through cancellation, or by lowering the
exercise price of a previously granted Option.  No amendment of the Plan shall
be made without shareholder approval if shareholder approval is required by law,
regulation, or stock exchange rule.
 
16.2 Adjustment of Awards Upon the Occurrence of Certain Unusual or Nonrecurring
Events.  The Committee may make adjustments in the terms and conditions of, and
the criteria included in, Awards in recognition of unusual or nonrecurring
events (including, without limitation, the events described in Section 4.2
hereof) affecting the Company or the financial statements of the Company or of
changes in applicable laws, regulations, or accounting principles, whenever the
Committee determines that such adjustments are appropriate in order to prevent
unintended dilution or enlargement of the benefits or potential benefits
intended to be made available under the Plan. The determination of the Committee
as to the foregoing adjustments, if any, shall be conclusive and binding on
Participants under the Plan. Notwithstanding anything to the contrary, any
adjustments pursuant to this Section 16.2 shall be effected in a manner
compliant with Section 409A of the Code.
 
16.3 Awards Previously Granted.  Notwithstanding any other provision of the Plan
to the contrary, no termination, amendment, suspension, or modification of the
Plan shall adversely affect in any material way any Award previously granted
under the Plan, without the written consent of the Participant holding such
Award.
 
16.4           Clawback and Other Provisions for Recovery or Termination of
Awards.  Central Pacific Financial Corp., Central Pacific Bank, Central Pacific
HomeLoans, and each and every of their respective affiliates and subsidiaries
(hereinafter individually and collectively referred to as the “Company”)
reserves the right, in its sole and absolute discretion, and at any time, and
for any reason, to make any changes to this plan or agreement, or to suspend or
terminate this plan or agreement either partially or in its entirety, or to
interpret any of the terms and provisions of this plan or agreement.  In
addition, and without in any way limiting the foregoing statements in this
paragraph and notwithstanding anything else stated in this plan or agreement,
this plan or agreement shall be subject to the following conditions:

i.  
Any term or provision in this plan that is interpreted, deemed or found by any
governmental agency or by the Company to be in violation or potential violation
of any law, guidance, rule, regulation, regulatory action, order or decree
(hereinafter individually and collectively referred to as “Law”) will be
modified to conform to the Law.

ii.  
Any bonus, retention award, incentive compensation or any other payment paid
under this plan or agreement is subject to recovery (clawback) by any
governmental agency or by the Company if it is based on materially inaccurate
statements of earnings, revenues or gains, or any performance criteria/metric or
other criteria or metric that is found by any governmental agency or the Company
to be materially inaccurate or to have encouraged unnecessary and/or excessive
risk taking.

iii.  
Golden parachute payments are prohibited under this plan or agreement.

iv.  
Payments to “senior executive officers” and “highly compensated employees” under
this plan or agreement may be prohibited or restricted by Law.

v.  
Payments under this plan or agreement must not violate the Company’s Policy
Prohibiting Excessive Expenditures.

vi.  
Payments for gross-ups are prohibited under this plan or agreement.

vii.  
Payments that require regulatory or other approval are prohibited unless and
until such approval is obtained, and the Company shall have no obligation to
seek such approval.

viii.  
The Company reserves the right to not make payments due to the Company’s
financial condition.

ix.  
The Company reserves the right to not make any payments which would cause the
Company to be in violation, default or breach of any of the Company’s contracts
or agreements.

x.  
The Company will not make any payments that may constitute excessive
compensation under Law or by the Company.

xi.  
The Company will not make any payments that threaten the Company’s safety and
soundness.

xii.  
The Company will not make any payments that encourage excessive risk taking.

xiii.  
The Company will not make any payments to any employee who is terminated
(voluntary or involuntary).

Participation in this plan or agreement shall not be construed as a promise or
guarantee of future or continued employment, or as stating provisions or terms
of employment.  The Company and its employees recognize their mutual right to
end their employment relationship at any time, and acknowledge that such
relationship is one of employment-at-will.  Regardless of this plan or
agreement, the Company may terminate your employment in its sole and absolute
discretion and at any time and for any reason.

Except and unless specifically stated otherwise elsewhere in the plan or
agreement document to which this section is made a part of, this section and
everything stated in this section shall prevail and control in the event of any
ambiguity or inconsistency between what’s stated in this section and what may be
stated elsewhere in the plan or agreement document.

 
Article 17.  Withholding
 
17.1 Tax Withholding.  The Company shall have the power and the right to deduct
or withhold, or require a Participant to remit to the Company, an amount
sufficient to satisfy federal, state, and local taxes, domestic or foreign
(including the Participant’s FICA obligation), required by law or regulation to
be withheld with respect to any taxable event arising or as a result of this
Plan.
 
17.2 Share Withholding.  With respect to withholding required upon the exercise
of Options or SARs, upon the lapse of restrictions on Restricted Stock or
Restricted Stock Units, or upon the achievement of performance goals related to
Performance Shares, or any other taxable event arising as a result of Awards
granted hereunder, the Company may require or Participants may elect, subject to
the approval of the Committee, to satisfy the withholding requirement, in whole
or in part, by having the Company withhold Shares having a FMV of a Share on the
date the tax is to be determined equal to the tax that could be imposed on the
transaction, provided that if required by the accounting rules and regulations
to maintain favorable accounting treatment for the Awards, the tax is to be
determined equal to the minimum statutory total tax that could be imposed on the
transaction.  All elections shall be irrevocable, made in writing, and signed by
the Participant, and shall be subject to any restrictions or limitations that
the Committee, in its sole discretion, deems appropriate.
 
 
Article 18.  Successors
 
All obligations of the Company under the Plan with respect to Awards granted
hereunder, shall be binding on any successor to the Company, whether the
existence of such successor is the result of a direct or indirect purchase,
merger, consolidation, or otherwise, of all or substantially all of the business
and/or assets of the Company.
 
 
Article 19.  General Provisions
 
19.1 Forfeiture Events. The Committee may specify in an Award Agreement that the
Participant’s rights, payments, and benefits with respect to an Award shall be
subject to reduction, cancellation, forfeiture, or recoupment upon the
occurrence of certain specified events, in addition to any otherwise applicable
vesting or performance conditions of an Award.  Such events shall include, but
shall not be limited to, termination of employment for Cause, violation of
material Company, Affiliate, and/or Subsidiary policies, breach of
noncompetition, confidentiality, or other restrictive covenants that may apply
to the Participant, or other conduct by the Participant that is detrimental to
the business or reputation of the Company, its Affiliates, and/or its
Subsidiaries.
 
19.2 Legend.  The certificates for Shares may include any legend that the
Committee deems appropriate to reflect any restrictions on transfer of such
Shares.
 
19.3 Delivery of Title.  The Company shall have no obligation to issue or
deliver evidence of title for Shares issued under the Plan prior to:
 
(a)  
Obtaining any approvals from governmental agencies that the Company determines
are necessary or advisable; and

 
(b)  
Completion of any registration or other qualification of the Shares under any
applicable national or foreign law or ruling of any governmental body that the
Company determines to be necessary or advisable.

 
19.4 Investment Representations.  The Committee may require each Participant
receiving Shares pursuant to an Award under this Plan to represent and warrant
in writing that the Participant is acquiring the Shares for investment and
without any present intention to sell or distribute such Shares.
 
19.5 Employees Based Outside of the United States.  Notwithstanding any
provision of the Plan to the contrary, in order to comply with the laws in other
countries in which the Company, its Affiliates, and/or its Subsidiaries operate
or have Employees or Independent Contractors, the Committee, in its sole
discretion, shall have the power and authority to:
 
(a)  
Determine which Affiliates and Subsidiaries shall be covered by the Plan;

 
(b)  
Determine which Employees and Independent Contractors outside the United States
are eligible to participate in the Plan;

 
(c)  
Modify the terms and conditions of any Award granted to Employees or Independent
Contractors outside the United States to comply with applicable foreign laws:

 
(d)  
Establish subplans and modify exercise procedures and other terms and
procedures, to the extent such actions may be necessary or advisable.  Any
subplans and modifications to Plan terms and procedures established under this
Section 19.5 by the Committee shall be attached to this Plan document as
appendices; and

 
(e)  
Take any action, before or after an Award is made that it deems advisable to
obtain approval or comply with any necessary local government regulatory
exemptions or approvals.

 
Notwithstanding the above, the Committee may not take any actions hereunder, and
no Awards shall be granted, that would violate the Exchange Act, the Code, any
securities law, or governing statute or any other applicable law.
 
19.6 Uncertificated Shares.  To the extent that the Plan provides for issuance
of certificates to reflect the transfer of Shares, the transfer of such Shares
may be effected on a noncertificated basis, to the extent not prohibited by
applicable law or the rules of any stock exchange.
 
19.7 Unfunded Plan.  Participants shall have no right, title, or interest
whatsoever in or to any investments that the Company, its Affiliates, and/or its
Subsidiaries may make to aid it in meeting its obligations under the
Plan.  Nothing contained in the Plan, and no action taken pursuant to its
provisions, shall create or be construed to create a trust of any kind, or a
fiduciary relationship between the Company, its Affiliates, and/or its
Subsidiaries and any Participant, beneficiary, legal representative, or any
other person.  To the extent that any person acquires a right to receive
payments from the Company, its Affiliates, and/or its Subsidiaries under the
Plan, such right shall be no greater than the right of an unsecured general
creditor of the Company.  All payments to be made hereunder shall be paid from
the general funds of the Company and no special or separate fund shall be
established and no segregation of assets shall be made to assure payment of such
amounts except as expressly set forth in the Plan.  The Plan is not intended to
be subject to ERISA.
 
19.8 No Fractional Shares.  No fractional Shares shall be issued or delivered
pursuant to the Plan or any Award.  The Committee shall determine whether cash,
Awards, or other property shall be issued or paid in lieu of fractional Shares
or whether such fractional Shares or any rights thereto shall be forfeited or
otherwise eliminated.
 
19.9 Retirement and Welfare Plans.  The Awards under this Plans will not be
included as “compensation” for purposes of computing benefits payable to any
Participant under the Company’s retirement plans (both qualified and
nonqualified) or welfare benefit plans unless such other plan expressly provides
that such compensation shall be taken into account in computing a Participant’s
benefit.
 
 
Article 20.  Legal Construction
 
20.1 Gender and Number.  Except where otherwise indicated by the context, any
masculine term used herein also shall include the feminine, the plural shall
include the singular, and the singular shall include the plural.
 
20.2 Severability.  In the event any provision of the Plan shall be held illegal
or invalid for any reason, the illegality or invalidity shall not affect the
remaining parts of the Plan, and the Plan shall be construed and enforced as if
the illegal or invalid provision had not been included.
 
20.3 Requirements of Law.  The granting of Awards and the issuance of Shares
under the Plan shall be subject to all applicable laws, rules, and regulations,
and to such approvals by any governmental agencies or national securities
exchanges as may be required.  The Company shall receive the consideration
required by law for the issuance of Awards under the Plan.
 
The inability of the Company to obtain authority from any regulatory body having
jurisdiction, which authority is deemed by the Company’s counsel to be necessary
to the lawful issuance and sale of any Shares hereunder, shall relieve the
Company of any liability in respect of the failure to issue or sell such Shares
as to which such requisite authority shall not have been obtained.
 
20.4 Securities Law Compliance.  The Company may use reasonable endeavors to
register Shares allotted pursuant to the exercise of an Award with the United
States Securities and Exchange Commission or to effect compliance with the
registration, qualification, and listing requirements of any national or foreign
securities laws, stock exchange, or automated quotation system.  With respect to
Insiders, transactions under this Plan are intended to comply with all
applicable conditions of Rule 16b-3 or its successors under the Exchange
Act.  To the extent any provision of the Plan or action by the Committee fails
to so comply, it shall be deemed null and void, to the extent permitted by law
and deemed advisable by the Committee.
 
20.5 Governing Law.  The Plan and each Award Agreement shall be governed by the
laws of the State of Hawaii, excluding any conflicts or choice of law rule or
principle that might otherwise refer construction or interpretation of the Plan
to the substantive law of another jurisdiction.  Unless otherwise provided in
the Award Agreement, recipients of an Award under the Plan are deemed to submit
to the exclusive jurisdiction and venue of the federal or state courts of
Hawaii, to resolve any and all issues that may arise out of or relate to the
Plan or any related Award Agreement.
 
20.6 Section 409A of the Code.  It is the Company’s intent that payments under
the Plan are exempt from, and do not constitute “deferred compensation” subject
to, Section 409A of the Code and that the Plan be administered accordingly.  If
and to the extent that any payment is determined by the Company to constitute
“non-qualified deferred compensation” subject to Section 409A of the Code and is
payable hereunder to a Participant by reason of his termination of employment,
then (a) such payment or benefit shall be made or provided to the Participant
only upon a “separation from service” as defined for purposes of Section 409A of
the Code under applicable regulations and (b) if the Participant is a “specified
employee” (within the meaning of Section 409A of the Code and as determined by
the Company), such payment shall not be made or provided before the date that is
six months after the date of the Participant’s separation from service (or his
earlier death).  Neither the Company nor its affiliates shall have any liability
to any Participant, Participant’s spouse or other beneficiary of any
Participant’s spouse or other beneficiary of any Participant or otherwise if the
Plan or any amounts paid or payable hereunder are subject to the additional tax
and penalties under Section 409A of the Code.
 
 

--------------------------------------------------------------------------------