Exhibit 10.5

 

Central Pacific Financial Corp. 2013 Stock Compensation Plan

 

Stock Appreciation Rights Grant Agreement

 

This Stock Appreciation Rights Grant Agreement (“Agreement”) is effective as of
the Date of Grant stated in the accompanying Notice of Stock Appreciation Rights
Grant (“Notice”), between Central Pacific Financial Corp., a Hawaii corporation
(“Company” and “CPF”) with its registered office at 220 South King Street,
Honolulu, Hawaii 96813, and the Grantee stated in the Notice (“Grantee”), who is
an employee of the Company or one of its subsidiaries.  The Notice is
incorporated herein by this reference and made a part of this Agreement.

 

1.                                      Grant of Stock Appreciation Rights.  The
Company hereby grants to Grantee stock appreciation rights (“SARs”) with respect
to the number of CPF Shares stated in the Notice (“Shares”).  In addition to
continuous status as an employee of the Company, this grant may be conditioned
on the achievement of performance goals during the Performance Period stated in
the Notice (“Performance Period”).  Except as provided in Section 8 below, the
SARs shall neither vest nor become exercisable unless Grantee is employed by the
Company or one of its subsidiaries continuously from the Date of Grant stated in
the Notice (“Date of Grant”) until the Vesting Date(s) stated in the Notice
(“Vesting Date”).  This grant is subject to the terms and conditions of this
Agreement, the Notice and the applicable terms and conditions of the Central
Pacific Financial Corp. 2013 Stock Compensation Plan (“Plan”).

 

2.                                      Grant Price.  The Grant Price is stated
in the Notice (“Grant Price”) and shall be the fair market value per share of
Company common stock on the Date of Grant.  Fair market value shall be based on
the closing price of a share of the Company’s common stock on the Date of Grant.

 

4.                                      Value of the SARs; Payment in Whole
Shares.  Upon exercise of the SARs, for each Share with respect to which a SAR
is exercised, Grantee shall be entitled to receive value equal to the difference
between the fair market value of a Share on the date of exercise minus the Grant
Price.  The Company shall pay the value owing to Grantee upon exercise in whole
Shares, rounded down.  No cash will be awarded upon exercise, and no fractional
shares will be issued or delivered.

 

5.                                      Vesting.  Except as provided in
Section 8, the SARs that are available for exercise in accordance with Section 2
shall vest and become exercisable on the Vesting Date.

 

6.                                      Term of SARs.  The SARs shall terminate
on the Expiration Date stated in the Notice (“Expiration Date”).  Thereafter,
the SARs shall not be exercisable.

 

7.                                      Method of Exercise.  Grantee may
exercise the SARs by written notice to the Company in a form satisfactory to the
Company stating that Grantee has elected to exercise the SARs and stating the
number of Shares as to which the SARs are to be exercised.  The date of the
Company’s actual receipt of the notice shall be treated as the date of exercise
of the SARs.

 

8.                                      Termination of Employment.

 

a.                                       General Rule.  In consideration of this
grant, Grantee agrees that, while the Company or a subsidiary employs Grantee,
Grantee shall devote Grantee’s entire time, energy, and skills to the service of
the Company or a subsidiary and for the promotion of its interests and the
achievement of the performance goals.  Except as otherwise provided in this
Section, if Grantee does not remain continuously in the employ of the Company or
a subsidiary until the Vesting Date (e.g., voluntary or involuntary termination
of employment or retirement), this grant shall terminate immediately and become
null and void, all rights hereunder shall cease, and Grantee shall not be
entitled to exercise the SARs with respect to any Shares.

 

b.                                       Death or Disability after Performance
Period.  In the event of Grantee’s termination of employment due to death or
“disability”, as defined in Section 409A(a)(2)(C) of the Code after the
Performance Period, if any, the SARs shall become immediately vested and
exercisable for

 

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the number of Shares with respect to which the SARs are exercisable.  The SARs
shall be exercisable for the lesser of twelve (12) months from the date of death
or disability or until the Expiration Date.

 

c.                                        Change in Control.  In the event of a
“Change in Control Event” as described in Section 1.409A-3(i)(5) of the Treasury
Regulations, the Performance Period, if any, shall be deemed to have ended as of
the date of the Change in Control Event if the Performance Period has not
already ended, and the maximum number of SARs shall immediately become vested
and exercisable.  The SARs shall be exercisable for the lesser of twelve (12)
months from the date of the Change in Control Event or until the Expiration
Date.

 

d.                                       Termination of Employment after Vesting
for Reasons other than Death, Disability, or Change in Control.  If Grantee’s
employment terminates following vesting for any reason other than those
described in Sections 8.b. and 8.c. above, the SARs that are vested and
exercisable as of such termination date shall continue to be exercisable for
three (3) months after such termination.  Grantee’s employment shall not be
treated as terminated in the case of a transfer of employment within or between
the Company and its subsidiaries or in the case of sick leave or other approved
leave of absences.

 

e.                                        Death Following Termination of
Employment.  If Grantee dies within the three (3) or twelve (12) month exercise
periods following disability, change in control, or termination of employment
other than for death, disability, or change in control, as applicable above, the
SARs that are exercisable as of the employee’s date of death shall continue to
be exercisable for twelve (12) months following Grantee’s date of death.

 

9.                                      Issuance of Shares; Registration;
Withholding Taxes.  As soon as practicable after the exercise date of the SARs,
the Company shall cause to be issued and delivered to Grantee, or for Grantee’s
account, a certificate or certificates for the Shares to which Grantee is
entitled.  The Company may postpone the issuance or delivery of the Shares until
(a) the completion of registration or other qualification of such Shares or
transaction under any state or federal law, rule or regulation, or any listing
on any securities exchange, as the Company shall determine to be necessary or
desirable; (b) the receipt by the Company of such written representations or
other documentation as the Company deems necessary to establish compliance with
all applicable laws, rules, and regulations, including applicable federal and
state securities laws and listing requirements, if any; and (c) the payment to
the Company, upon its demand, of any amount requested by the Company to satisfy
any federal, state, or other governmental withholding tax requirements related
to the exercise of the SARs.  The Company shall have the right to withhold with
respect to the payment of any Shares any taxes required to be withheld because
of such payment, including the withholding of Shares otherwise payable due to
exercise of the SARs.  Grantee shall comply with any and all legal requirements
relating to Grantee’s resale or other disposition of any Shares acquired under
this Agreement.  The certificates representing the Shares acquired pursuant to
the exercise of the SARs may bear such legend as described in Section 13 below
or as the Company otherwise deems appropriate to ensure compliance with
applicable law.

 

10.                               Nontransferability of SARs.  The SARs and this
Agreement shall not be assignable or transferable by Grantee other than by will
or by the laws of descent and distribution.  During Grantee’s lifetime, the SARs
and all rights of Grantee under this Agreement may be exercised only by Grantee
(or by Grantee’s legal guardian or legal representative).  If the SAR is
exercised after Grantee’s death, the Company may require evidence reasonably
satisfactory to it of the appointment and qualification of Grantee’s personal
representatives or executors and their authority and of the right of any heir or
distributee to exercise the SARs.  Any purported transfer or assignment of the
SARs shall be void and of no effect, and shall give the Company the right to
terminate the SARs as of the date of such purported transfer or assignment. 
Notwithstanding the foregoing, with the consent of the Compensation Committee of
the Board of Directors of the Company (“Committee”), Grantee may transfer the
SARs to a revocable trust under which Grantee is both the trustee and the
beneficiary.

 

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11.                               SARs/Share Adjustments.  The number of
SARs/Shares and the Grant Price shall be adjusted proportionately for any
increase or decrease in the number of issued shares of Company common stock by
reason of a reorganization, merger, recapitalization, reclassification, stock
split, stock dividend, or other like change in the capital structure of the
Company.  The adjustment required shall be made by the Committee, whose
determination shall be conclusive.  In no event shall the adjusted Grant Price
be less than the fair market value of the adjusted SARs/Shares on the Date of
Grant.

 

12.                               No Rights as Shareholder.  Grantee shall
acquire none of the rights of a shareholder of the Company with respect to the
SARs until a certificate for Shares is issued to Grantee following the exercise
of the SARs.

 

13.                               Registration of Shares.  If a registration
statement under the Securities Act of 1933 (“Act”) with respect to Shares
issuable upon exercise of the SARs is not in effect at the time of exercise, or
if a registration statement with respect to the Shares is in effect but not with
respect to Grantee’s resale thereof and Grantee is an “affiliate” of the
Company, then, in either such case, (a) as a condition of the issuance of the
Shares, the person exercising such SARs shall give the Company a written
statement, satisfactory in form and substance to the Company, acknowledging that
such Shares may be reoffered or resold by Grantee only pursuant to Rule 144 or a
separate registration statement under the Act, and (b) the Company may place
upon any stock certificate for Shares the following legend or such other legend
as the Company may prescribe to prevent disposition of the Shares in violation
of the Act:

 

THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE “ACT”) AND MAY NOT BE OFFERED, SOLD, PLEDGED,
HYPOTHECATED, OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT WITH RESPECT TO THEM UNDER THE ACT OR THE AVAILABILITY OF
AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS.  FURTHERMORE, NO OFFER, SALE,
TRANSFER, PLEDGE, OR HYPOTHECATION MAY BE MADE WITHOUT APPROVAL OF COUNSEL FOR
CENTRAL PACIFIC FINANCIAL CORP. AFFIXED TO THIS CERTIFICATE.  THE STOCK TRANSFER
AGENT HAS BEEN ORDERED TO EFFECTUATE TRANSFERS OF THIS CERTIFICATE ONLY IN
ACCORDANCE WITH THE ABOVE INSTRUCTIONS.

 

14.                               Grantee Bound by Plan.  Grantee hereby
acknowledges receipt of a copy of the Plan and acknowledges that Grantee shall
be bound by its terms, regardless of whether such terms have been set forth in
this Agreement.  If there is any inconsistency between the terms of the Plan and
the terms of this Agreement, Grantee shall be bound by the terms of the Plan.

 

15.                               Employment Rights.  Neither the Plan nor the
granting of the SARs shall be a contract of employment with the Company or any
of its subsidiaries.  Subject to other applicable agreements with Grantee, the
Company or a subsidiary may discharge Grantee from employment at any time.

 

16.                               Amendment.  This Agreement may be amended by
the Committee at any time based on its determination that the amendment is
necessary or advisable in light of any addition to, or change in, the Code or
regulations issued thereunder, or any federal or state securities law or other
law or regulation, or the Plan, or based on any discretionary authority of the
Committee under the Plan.  However, unless necessary or advisable due to a
change in law, any amendment to this Agreement which has a material adverse
effect on the interest of Grantee under this Agreement shall be effective only
with the consent of Grantee.

 

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17.                               No Advice, Warranties, or Representations. 
The Company is not providing Grantee with advice, warranties, or representations
regarding any of the legal or tax effects to Grantee with respect to the SARs. 
Grantee is encouraged to seek legal and tax advice from Grantee’s own legal and
tax advisors.

 

18.                               Code Section 409A.  This grant of SARs has
been structured to meet the requirements for a stock appreciation right that
does not provide for a “deferral of compensation” as defined in
Section 1.409A-1(b) of the Treasury Regulations.

 

19.                               Miscellaneous.  This Agreement, the Notice and
the Plan set forth the final and entire agreement between the parties with
respect to the subject matter hereof, which shall be governed by and construed
in accordance with the laws of the State of Hawaii applicable to contracts made
and to be performed in Hawaii.  This Agreement shall bind and benefit Grantee,
the heirs, distributees, and personal representative of Grantee, and the Company
and its successors and assigns.

 

BY ACCEPTING THIS AGREEMENT AND THE SARS GRANTED PURSUANT TO THIS AGREEMENT,
GRANTEE AGREES TO ALL THE TERMS AND CONDITIONS DESCRIBED IN THIS AGREEMENT, IN
THE NOTICE AND IN THE PLAN.

 

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