Exhibit 10.8

 

September 9, 2004

 

Denis K. Isono
5415 Kilauea Place
Honolulu, Hawaii 96816

 

Re:                               Employment Agreement

 

Dear Denis:

 

This is your EMPLOYMENT AGREEMENT with Central Pacific Financial Corp., a Hawaii
corporation (the “Company”).

 

1.              THE MERGER AGREEMENT; EFFECTIVENESS

 

This Agreement relates to the Agreement and Plan of Merger, dated as of
April 22, 2004 (the “Merger Agreement”), between the Company and CB Bancshares,
Inc., a Hawaii corporation (“CB Bancshares”).  It sets forth the terms of your
employment with the Company and its affiliates (together, as constituted from
time to time, the “Group”) once the merger provided for in the Merger Agreement
becomes effective.  However, if the Merger Agreement or your present employment
terminates for any reason before the merger occurs, all of this Agreement’s
provisions will terminate and there will be no liability of any kind under this
Agreement.

 

2.              TERMS SCHEDULE

 

Some of the terms of your employment are in the attached schedule (your
“Schedule”), which is part of this Agreement.

 

3.              YOUR POSITION, PERFORMANCE AND OTHER ACTIVITIES

 

(A)          POSITION.  YOU WILL BE EMPLOYED IN THE POSITION STATED IN YOUR
SCHEDULE.

 

(B)         AUTHORITY, RESPONSIBILITIES AND REPORTING.  YOU WILL HAVE ANY
REPORTING RELATIONSHIPS SET FORTH IN YOUR SCHEDULE.  YOU WILL HAVE THE AUTHORITY
AND RESPONSIBILITIES THAT CORRESPOND TO YOUR POSITION, INCLUDING ANY PARTICULAR
AUTHORITY AND RESPONSIBILITIES THAT ARE SPECIFIED IN THE SCHEDULE OR THAT THE
COMPANY’S BOARD OF DIRECTORS (THE “BOARD”)

 

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OR ANY OFFICER OF THE GROUP TO WHOM YOU REPORT IN ACCORDANCE WITH YOUR
SCHEDULE MAY ASSIGN TO YOU FROM TIME TO TIME CONSISTENT WITH THE PROVISIONS OF
THIS AGREEMENT.

 

(C)          PERFORMANCE.  DURING YOUR EMPLOYMENT, YOU WILL DEVOTE SUBSTANTIALLY
ALL OF YOUR BUSINESS TIME AND ATTENTION TO THE GROUP AND WILL USE GOOD FAITH
EFFORTS TO DISCHARGE YOUR RESPONSIBILITIES UNDER THIS AGREEMENT TO THE BEST OF
YOUR ABILITY.

 

(D)         OTHER ACTIVITIES.  DURING YOUR EMPLOYMENT, YOU MAY SERVE ON
CORPORATE, CIVIC OR CHARITABLE BOARDS AND MANAGE PERSONAL INVESTMENTS, SO LONG
AS THESE ACTIVITIES DO NOT SIGNIFICANTLY INTERFERE WITH YOUR PERFORMANCE OF YOUR
RESPONSIBILITIES UNDER THIS AGREEMENT AND ARE CONSISTENT WITH THE GROUP’S CODE
OF CONDUCT AND ETHICS.  THE COMPANY ACKNOWLEDGES THAT YOU CURRENTLY SERVE ON,
AND APPROVES YOUR CONTINUED SERVICE ON, THE CORPORATE, CIVIC AND CHARITABLE
BOARDS LISTED IN YOUR SCHEDULE.

 

4.              TERM OF YOUR EMPLOYMENT

 

Your employment under this Agreement will begin at the time the merger provided
for in the Merger Agreement becomes effective (your “Start Date”) and end on the
earlier of (1) the end of the Agreement Period stated in your Schedule or (2)
the effectiveness of early termination of your employment under Section 7(e). 
References in this Agreement to “your employment” are to your employment under
this Agreement.

 

5.     YOUR COMPENSATION

 

(A)          SALARY.  DURING YOUR EMPLOYMENT, YOU WILL RECEIVE AN ANNUAL BASE
SALARY (ADJUSTED AS PROVIDED HEREIN FROM TIME TO TIME, YOUR “SALARY”).  THE
STARTING AMOUNT OF YOUR SALARY IS STATED IN YOUR SCHEDULE.  THE COMPANY MAY
INCREASE IT AT ANY TIME FOR ANY REASON.  THE COMPANY MAY NOT DECREASE YOUR
SALARY (INCLUDING AFTER ANY INCREASE), AND ANY INCREASE IN YOUR SALARY WILL NOT
REDUCE OR LIMIT ANY OTHER OBLIGATION TO YOU UNDER THIS AGREEMENT.  YOUR SALARY
WILL BE PAID IN ACCORDANCE WITH THE GROUP’S PRACTICES FOR SIMILARLY SITUATED
EXECUTIVES.

 

(B)         BONUS.  YOU WILL BE ENTITLED TO RECEIVE AN ANNUAL CASH BONUS (YOUR
“BONUS”) FOR EACH FISCAL YEAR OF THE COMPANY ENDING DURING YOUR EMPLOYMENT.  THE
AMOUNT OF YOUR BONUS WILL BE DETERMINED BY THE COMPANY IN ACCORDANCE WITH YOUR
SCHEDULE, AND IT WILL BE PAID IN ACCORDANCE WITH THE GROUP’S PRACTICES FOR
SIMILARLY SITUATED EXECUTIVES OF THE GROUP.

 

(C)          OTHER EXECUTIVE COMPENSATION PLANS AND ADDITIONAL COMPENSATION. 
DURING YOUR EMPLOYMENT, YOU WILL BE ENTITLED TO PARTICIPATE IN ALL OF THE
GROUP’S EXECUTIVE COMPENSATION PLANS, INCLUDING ANY MANAGEMENT INCENTIVE PLANS,
DEFERRED COMPENSATION PLANS, SUPPLEMENTAL RETIREMENT PLANS AND STOCK AND STOCK
OPTION PLANS, ON A BASIS THAT IS AT LEAST AS FAVORABLE AS THAT PROVIDED TO
SIMILARLY SITUATED EXECUTIVES OF THE GROUP (SUBJECT TO THE PROVISIONS OF YOUR
SCHEDULE).  YOU WILL ALSO RECEIVE ANY ADDITIONAL COMPENSATION PROVIDED IN YOUR
SCHEDULE.

 

6.              EMPLOYEE BENEFITS.

 

(A)          EMPLOYEE BENEFIT PLANS.  DURING YOUR EMPLOYMENT, YOU WILL BE
ENTITLED TO (1) PARTICIPATE IN EACH OF THE GROUP’S EMPLOYEE BENEFIT AND WELFARE
PLANS, INCLUDING PLANS

 

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PROVIDING RETIREMENT BENEFITS OR MEDICAL, DENTAL, HOSPITALIZATION, LIFE OR
DISABILITY INSURANCE, AND (2) RECEIVE PERQUISITES, IN EACH CASE ON A BASIS THAT
IS AT LEAST AS FAVORABLE AS THAT PROVIDED TO SIMILARLY SITUATED EXECUTIVES OF
THE GROUP (SUBJECT TO THE PROVISIONS OF YOUR SCHEDULE).

 

(B)         VACATION.  YOU WILL BE ENTITLED TO PAID ANNUAL VACATION DURING YOUR
EMPLOYMENT ON A BASIS THAT IS AT LEAST AS FAVORABLE AS THAT PROVIDED TO
SIMILARLY SITUATED EXECUTIVES OF THE GROUP.

 

(C)          BUSINESS EXPENSES.  YOU WILL BE REIMBURSED FOR ALL BUSINESS AND
ENTERTAINMENT EXPENSES INCURRED BY YOU IN PERFORMING YOUR RESPONSIBILITIES UNDER
THIS AGREEMENT.  HOWEVER, YOUR REIMBURSEMENT WILL BE SUBJECT TO THE GROUP’S
NORMAL PRACTICES FOR SIMILARLY SITUATED EXECUTIVES.

 

(D)         INDEMNIFICATION.  TO THE EXTENT PERMITTED BY LAW, THE COMPANY WILL
INDEMNIFY YOU AGAINST ANY ACTUAL OR THREATENED ACTION, SUIT OR PROCEEDING,
WHETHER CIVIL, CRIMINAL, ADMINISTRATIVE OR INVESTIGATIVE, ARISING BY REASON OF
YOUR STATUS AS A DIRECTOR, OFFICER, EMPLOYEE AND/OR AGENT OF THE GROUP DURING
YOUR EMPLOYMENT OR YOUR STATUS, IF ANY, AS A TRUSTEE OR OTHER FIDUCIARY OF ANY
EMPLOYEE BENEFIT PLAN SPONSORED BY ANY MEMBER OF THE GROUP.  IN ADDITION, TO THE
EXTENT PERMITTED BY LAW, THE COMPANY WILL PAY OR REIMBURSE ANY EXPENSES,
INCLUDING REASONABLE ATTORNEY’S FEES, YOU INCUR IN INVESTIGATING AND DEFENDING
ANY ACTUAL OR THREATENED ACTION, SUIT OR PROCEEDING FOR WHICH YOU MAY BE
ENTITLED TO INDEMNIFICATION UNDER THIS SECTION 6(D).  HOWEVER, YOU AGREE TO
REPAY ANY EXPENSES PAID OR REIMBURSED BY THE COMPANY IF IT IS ULTIMATELY
DETERMINED THAT YOU ARE NOT LEGALLY ENTITLED TO BE INDEMNIFIED BY THE COMPANY. 
IF THE COMPANY’S ABILITY TO MAKE ANY PAYMENT CONTEMPLATED BY THIS SECTION 6(D)
DEPENDS ON AN INVESTIGATION OR DETERMINATION BY THE BOARD OF DIRECTORS OF ANY
MEMBER OF THE GROUP, AT YOUR REQUEST THE COMPANY WILL USE ITS BEST EFFORTS TO
CAUSE THE INVESTIGATION TO BE MADE (AT THE COMPANY’S EXPENSE) AND TO HAVE THE
RELEVANT BOARD REACH A DETERMINATION AS SOON AS REASONABLY POSSIBLE.

 

(E)          ADDITIONAL BENEFITS.  DURING YOUR EMPLOYMENT, YOU WILL BE PROVIDED
ANY ADDITIONAL BENEFITS STATED IN YOUR SCHEDULE.

 

7.              EARLY TERMINATION OF YOUR EMPLOYMENT.

 

(A)          NO REASON REQUIRED.  YOU OR THE COMPANY MAY TERMINATE YOUR
EMPLOYMENT EARLY AT ANY TIME FOR ANY REASON, OR FOR NO REASON, SUBJECT TO
COMPLIANCE WITH SECTION 7(E).

 

(B)         TERMINATION BY THE COMPANY FOR CAUSE.

 

(1)          “Cause” means any of the following:

 

(A)      Your willful failure to perform substantially your responsibilities
under this Agreement, after demand for substantial performance has been given by
the Board that specifically identifies how you have not substantially performed
your responsibilities,

 

(B)        Your conviction of any felony or of a misdemeanor involving fraud,
dishonesty, or moral turpitude,

 

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(C)        Your willful or intentional material breach of this Agreement that
results in financial or reputational detriment to the Group that is not de
minimis,

 

(D)       Your willful or intentional material misconduct in the performance of
your duties under the Agreement that results in financial or reputational
detriment to the Group that is not de minimis,

 

(E)         Your material breach of the Group’s Code of Business Conduct and
Ethics if the breach is of a nature for which other similarly situated
executives of the Group would be terminated, or

 

(F)         Your willful attempt to obstruct or willful failure to cooperate
with any investigation authorized by the Board or any governmental or
self-regulatory entity.

 

For this definition, (i) no act or omission by you will be “willful” unless it
is made by you in bad faith or without a reasonable belief that your act or
omission was in the best interests of the Group and (ii) any act or omission by
you based on authority given pursuant to a resolution duly adopted by the Board
or on the advice of counsel for the Group will be deemed made in good faith and
in the best interests of the Company.

 

(2)          To terminate your employment “for Cause”, Cause must have occurred
and the Company must comply with Section 7(e) and any other steps required in
your Schedule for termination for Cause.

 

(C)          TERMINATION BY YOU FOR GOOD REASON.

 

(1)          “Good Reason” means any of the following:

 

(A)      Any material and adverse change in your position from that provided in
your Schedule (including by reason of removal or failure to be elected or
re-elected),

 

(B)        Any failure by the Company to provide you with authority,
responsibilities and reporting relationships as provided in Section 3(b)
(including assigning you duties materially inconsistent with your position and
responsibilities),

 

(C)        Any failure by the Company to provide you with compensation or
benefits as provided in Section 5 and Section 6,

 

(D)       Any failure by the Company to comply with Section 12(c), or

 

(E)         The occurrence of any additional event set forth in your Schedule as
being Good Reason.

 

(2)          To terminate your employment “for Good Reason”, Good Reason must
have occurred and you must comply with Section 7(e) and any other steps

 

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required in your Schedule for termination for Good Reason.  However, (A) Good
Reason will not include any isolated, insubstantial and inadvertent failure by
the Company that is not in bad faith and is cured promptly on your giving the
Company notice, (B) if you do not give a Termination Notice to the Company
within 180 days after you have knowledge that an event constituting Good Reason
has occurred, the event will no longer constitute Good Reason, and (C) an event
will not constitute Good Reason if you have consented to it in accordance with
Section 14(f).

 

(D)         TERMINATION ON DISABILITY OR DEATH.

 

(1)          “Disability” means your absence from your responsibilities with the
Company on a full-time basis for 130 business days in any consecutive 12 months
as a result of incapacity due to mental or physical illness or injury.  If the
Company determines in good faith that your Disability has occurred, it may give
you Termination Notice.  If, within 30 days of Termination Notice, you do not
return to full-time performance of your responsibilities, your employment will
terminate (the “Disability Effective Date”).  If you do return to full-time
performance in that 30-day period, the Termination Notice will be cancelled. 
Except as provided in this Section 7(d), any incapacity due to mental or
physical illness or injury will not affect the Company’s obligations under this
Agreement.

 

(2)          Your employment will terminate automatically on your death.

 

(E)          TERMINATION NOTICE.

 

(1)          To terminate your employment early, either you or the Company must
provide a Termination Notice to the other.  A “Termination Notice” is a written
notice that states the specific provision of this Agreement on which termination
is based, including, if applicable, the specific clause of the definition of
Cause or Good Reason and a reasonably detailed description of the facts that
permit termination under that clause.  (The failure to include any fact in a
Termination Notice that contributes to a showing of Cause or Good Reason does
not preclude either party from asserting that fact in enforcing its rights under
this Agreement.)

 

(2)          If your employment is terminated by the Company other than for
Disability or death or you terminate your employment for Good Reason, your
employment will end on the date specified in the Notice of Termination.  If you
terminate your employment without Good Reason, your employment will end 60 days
after the Company receives the Termination Notice (although the Company may
accelerate the end of your employment by providing you with notice or,
alternatively, may place you on paid leave during such period).  If your
employment is terminated by reason of your death or Disability, your employment
will end on the date of death or the Disability Effective Date, as applicable.

 

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8.              THE COMPANY’S OBLIGATIONS IN CONNECTION WITH YOUR EARLY
TERMINATION

 

(A)          GENERAL EFFECT.  ON TERMINATION IN ACCORDANCE WITH SECTION 7, YOUR
EMPLOYMENT WILL END AND THE GROUP WILL HAVE NO FURTHER OBLIGATIONS TO YOU EXCEPT
AS PROVIDED IN THIS SECTION 8.

 

(B)         FOR GOOD REASON OR WITHOUT CAUSE.  IF THE COMPANY TERMINATES YOUR
EMPLOYMENT WITHOUT CAUSE OR YOU TERMINATE YOUR EMPLOYMENT FOR GOOD REASON:

 

(1)          The Company will pay you the following as of the end of your
employment:  (A) your unpaid Salary, (B) your Salary for any accrued but unused
vacation and (C) any accrued expense reimbursements (together, your “Accrued
Compensation”).  In addition, the Company will timely pay you any other amounts
and provide you any benefits that are required, or to which you are entitled (in
each case as an active employee for any period before the effectiveness of early
termination of your employment and as a terminated employee after
effectiveness), under any plan or contract of the Company or the Group
(together, the “Other Accrued Benefits”).

 

(2)          The Company will pay you your Accrued Bonus.  Your “Accrued Bonus”
means the sum of (A) any unpaid but vested Bonus for the fiscal year ending
before Termination Notice is given and (B) any excess of (i) your target Bonus
for the fiscal year in which Termination Notice is given multiplied by the
number of days of your employment since the fiscal year ending before
Termination Notice is given divided by 365 over (ii) any Bonus paid to you for a
fiscal year ending after Termination Notice is given.

 

(3)          The Company will pay you (A) the sum of your Salary and your target
Bonus for the fiscal year in which Termination Notice is given multiplied by (B)
the length of the Severance Period stated in your Schedule (in years, including
any fractional years).

 

(4)          All stock options issued by the Group to you will vest and become
immediately exercisable, and, subject to your Schedule, will remain exercisable
for at least 12 months after the end of your employment (or, if earlier, until
they would have expired but for your termination).  All restricted stock and
other equity-based compensation awarded by the Group to you will vest and become
immediately payable.  The benefits in this Section 8(b)(4) are referred to as
“Accelerated Vesting”.

 

(5)          The Company will provide any “Additional Good Reason/Without Cause
Benefits” provided in your Schedule.

 

(C)          FOR CAUSE OR WITHOUT GOOD REASON.  IF THE COMPANY TERMINATES YOUR
EMPLOYMENT FOR CAUSE OR YOU TERMINATE YOUR EMPLOYMENT WITHOUT GOOD REASON, THE
COMPANY WILL PAY YOU YOUR ACCRUED COMPENSATION AND WILL PROVIDE YOU YOUR OTHER
ACCRUED BENEFITS.

 

(d)         Death or Disability.  If your employment terminates as a result of
your Death or Disability, the Company will pay you your Accrued Compensation and
Accrued Bonus

 

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and will provide your Other Accrued Benefits.  The Company will also provide any
“Additional Death/Disability Benefits” provided in your Schedule.

 

(e)          Additional Provisions.  Your Schedule may provide additional
provisions that relate to the Company’s obligations in this Section 8 or the
Company’s obligations on your termination generally.  These provisions are a
part of this Agreement.

 

(f)            Condition.  Subject to your Schedule, as a condition to making
the payments and providing the benefits stated in this Section 8, the Company
may require you to execute and deliver a general release (substantially in the
form attached as Exhibit A) in which you release all claims that you may have
against any member of the Group and any of their respective past or present
officers, directors, employees or agents other than your rights under this
Agreement, your rights under any Other Accrued Benefits, and your rights to
indemnification and continued liability insurance coverage (under this Agreement
or otherwise).

 

(g)         Timing.  Subject to Section 8(f), the benefits provided in this
Section 8 will begin at the end of your employment, any cash payments owed to
you under this Section 8 will be paid in a lump sum amount no later than 15
business days following the termination of your employment, and the Other
Accrued Benefits will be provided in accordance with the terms of the relevant
plan or contract.

 

(h)         Resignation from Directorships and Officerships.  Unless the Group
waives this requirement, the termination of your employment for any reason will
constitute your resignation from (1) any director, officer or employee position
you then have with any member of the Group and (2) all fiduciary positions
(including as trustee) you hold with respect to any pension plans or trusts
established by any member of the Group.  You agree that this Agreement will
serve as your written notice of resignation in this circumstance.

 

9.              PROPRIETARY INFORMATION.

 

(a)          Definition.      means confidential or proprietary information,
knowledge or data concerning (1) the Group’s businesses, strategies, operations,
financial affairs, organizational matters, personnel matters, budgets, business
plans, marketing plans, studies, policies, procedures, products, ideas,
processes, software systems, trade secrets and technical know-how, and other
information regarding the business of the Group and (2) any matter relating to
clients of the Group or other third parties having relationships with the
Group.  Proprietary Information may include information furnished to you orally
or in writing (whatever the form or storage medium) or gathered by inspection,
in each case before or after the date of this Agreement.  However, Proprietary
Information does not include information (1) that was or becomes generally
available to you on a non-confidential basis, if the source of this information
was not reasonably known to you to be bound by a duty of confidentiality, (2)
that was or becomes generally available to the public or within the relevant
trade or industry, other than as a result of a disclosure by you, directly or
indirectly, or (3) that was independently developed by you without reference to
any Proprietary Information.

 

(b)         Use and Disclosure.  You will obtain or create Proprietary
Information in the course of your involvement in the Group’s activities and may
already have Proprietary

 

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Information.  You agree that the Proprietary Information is the exclusive
property of the Group, and that, during your employment, you will use and
disclose Proprietary Information only for the Group’s benefit and in accordance
with any restrictions placed on its use or disclosure by the Group.  After your
employment, you will not use or disclose any Proprietary Information. 
Notwithstanding anything to the contrary in this Section 9(b), Proprietary
Information may be disclosed when required by law or by any court, arbitrator,
mediator or administrative or legislative body (including any committee
thereof), provided that (1) you shall request confidential treatment with
respect to such information and/or request matters with respect to such
information be sealed and (2) you shall disclose the minimum amount required.

 

(c)          Limitations.  Nothing in this Agreement prohibits you or the Group
from providing truthful testimony to governmental, regulatory or self-regulatory
authorities.

 

10.       ON-GOING RESTRICTIONS ON YOUR ACTIVITIES

 

(a)          Terms used.  This Section uses the following defined terms:

 

“Competitive Enterprise” means (1) Bank of Hawaii, First Hawaiian Bank, American
Savings Bank, Finance Factors and Hawaii National Bank and any successors
thereto or (2) any business enterprise that holds a 25% or greater equity,
voting or profit participation interest in any of the preceding.

 

“Client” means any client of the Company to whom you provided services, for whom
you transacted business, or whose identity became known to you in connection
with your employment by the Group.

 

“Solicit” means any communication, regardless of who initiates it, that invites,
advises, encourages or requests any person to take or refrain from taking any
action.

 

“Restriction Period” has the meaning set forth in the Schedule.

 

(b)         Your Importance to the Group and the Effect of this Section 10.  You
acknowledge that, in the course of your involvement in the Group’s activities,
you will have access to Proprietary Information and the Group’s client base and
will yourself profit from the goodwill associated with the Group.  On the other
hand, in view of your access to Proprietary Information and your importance to
the Group, if you compete with the Group for some time after your employment,
the Group will likely suffer significant harm but the amount of loss would be
uncertain and not readily ascertainable.  You understand that this Section 10
will limit your ability to earn a livelihood in a Competitive Enterprise and
your relationships with Clients but you have determined that your complying with
this Section 10 will not result in severe economic hardship for you or your
family.

 

(c)          Non-Competition.  Until the end of your Restriction Period, you
will not, directly or indirectly:

 

(1)          hold a 5% or greater equity, voting or profit participation
interest in a Competitive Enterprise; or

 

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(2)          associate (including as a director, officer, employee, partner,
consultant, agent or advisor) with a Competitive Enterprise and in connection
with your association engage in Hawaii, or directly or indirectly manage or
supervise personnel engaged in Hawaii, in any activity:

 

(A)      that is substantially similar to any activity that you were engaged in,

 

(B)        that calls for the application of specialized knowledge or skills
substantially similar to those used by you in your activities;

 

(C)        that is substantially similar to any activity for which you had
direct or indirect managerial or supervisory responsibility,

 

in each case, for the Group at any time during the year before the end of your
employment (or, if earlier, the year before the date of determination).

 

(d)         Non-Solicitation of Clients.  Until the end of your Restriction
Period, you will not, directly or indirectly, Solicit any Client to transact
business with a Competitive Enterprise or to reduce or refrain from doing any
business with the Group.

 

(e)          Non-Solicitation of Group Employees.  Until the end of your
Restriction Period, you will not, directly or indirectly, Solicit anyone who is
then an employee of the Group (or who was an employee of the Group within the
prior six months) to resign from the Group or to apply for or accept employment
with any Competitive Enterprise.

 

(f)            Notice to New Employers.  Before you either apply for or accept
employment with any other person or entity while any of Section 10 (c), (d), or
(e) is in effect, you will provide the prospective employer with written notice
of the provisions of this Section 10 and will deliver a copy of the notice to
the Group.

 

(g)         No Disparagement.  You shall make no public statement that would
libel, slander or disparage any member of the Group or any of their respective
past or present officers, directors, employees or agents.  The Company agrees
that it shall (and shall use good faith efforts to cause the Chief Executive
Officer of the Company, the Board, and its officers and employees to) make no
public statement that would libel, slander or disparage you.

 

(h)         Survival.  Any termination of your employment (or breach of this
Agreement by you or the Group) shall have no effect on the continuing operation
of this Section 10.

 

11.       EFFECT ON OTHER AGREEMENTS.

 

(a)          Prior Employment Agreements and Severance Rights.  Beginning on
your Start Date, this Agreement will supersede any earlier employment agreement
or understanding and any earlier severance, change-in-control or similar rights
you may have with any member of the Group (including CB Bancshares or any
affiliate of it).

 

(b)         Effect on Other Agreements; Entire Agreement.This Agreement is the
entire agreement between you and the Company with respect to the relationship
contemplated by

 

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this Agreement and supersedes any earlier agreement, written or oral, with
respect to the subject matter of this Agreement.  You agree that you are not
entitled to any severance, change-in-control or similar rights under any plan of
the Group.  In entering into this Agreement, no party has relied on or made any
representation, warranty, inducement, promise or understanding that is not in
this Agreement.

 

12.       SUCCESSORS.

 

(a)          Payments on Your Death.  If you die and any amounts become payable
under this Agreement, the Company will pay those amounts to your estate.

 

(b)         Assignment by You.  You may not assign this Agreement without the
Company’s consent.  Also, except as required by law, your right to receive
payments or benefits under this Agreement may not be subject to execution,
attachment, levy or similar process.  Any attempt to effect any of the preceding
in violation of this Section 12(b), whether voluntary or involuntary, will be
void.

 

(c)          Assumption by any Surviving Company.  The Company will require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business or assets of the Company
to assume expressly and agree to perform this Agreement in the same manner and
to the same extent that the Company would be required to perform it if no such
succession had taken place.  As used in this Agreement, “Company” shall mean the
Company as hereinbefore defined and any successor to all or substantially all of
its business or assets.

 

13.       DISPUTES.

 

(a)          Employment Matter.  This Section 13 applies to any controversy or
claim between you and the Group arising out of or relating to or concerning any
aspect of this Agreement, your employment with the Group or the Company, the
termination of that employment or your compensation or benefits from the Group
or the Company (together, an “Employment Matter”).

 

(b)         Mandatory Arbitration.  Subject to the provisions of this
Section 13, any Employment Matter will be finally settled by arbitration in
Honolulu, Hawaii administered by the American Arbitration Association under its
Commercial Arbitration Rules then in effect.  However, the rules will be
modified in the following ways: (1) each arbitrator will agree to treat as
confidential evidence and other information presented to the same extent as the
information is required to be kept confidential under Section 9, (2) the
optional Rules for Emergency Measures of Protections will apply, (3) you and the
Group agree not to request any amendment or modification to the terms of this
Agreement except as provided in Section 14(c), (4) a decision must be rendered
within 10 business days of the parties’ closing statements or submission of
post-hearing briefs and (5) the arbitration will be conducted before a panel of
three arbitrators, one selected by you within 10 days of the commencement of
arbitration, one selected by the Company in the same period and the third
selected jointly by these arbitrators (or, if they are unable to agree on an
arbitrator within 30 days of the commencement of arbitration, the third
arbitrator will be appointed by the American Arbitration Association; provided
that the arbitrator shall be a partner or former partner at a nationally
recognized law firm).

 

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(c)          Limitation on Damages.  You and the Group agree that there will be
no punitive damages payable as a result of any Employment Matter and agree not
to request punitive damages.

 

(d)         Injunctions and Enforcement of Arbitration Awards.  You or the Group
may bring an action or special proceeding in a state or federal court of
competent jurisdiction sitting in Honolulu, Hawaii to enforce any arbitration
award under Section 13(b).  Also, the Group may bring such an action or
proceeding, in addition to its rights under Section 13(b) and whether or not an
arbitration proceeding has been or is ever initiated, to temporarily,
preliminarily or permanently enforce any part of Sections 9 and 10.  You agree
that (1) your violating any part of Sections 9 and 10 would cause damage to the
Group that cannot be measured or repaired, (2) the Group therefore is entitled
to an injunction, restraining order or other equitable relief restraining any
actual or threatened violation of those Sections, (3) no bond will need to be
posted for the Group to receive such an injunction, order or other relief and
(4) no proof will be required that monetary damages for violations of those
Sections would be difficult to calculate and that remedies at law would be
inadequate.

 

(e)          Jurisdiction and Choice of Forum.  You and the Group irrevocably
submit to the exclusive jurisdiction of any state or federal court located in
Honolulu, Hawaii (the “Forum”) over any Employment Matter that is not otherwise
arbitrated or resolved according to Section 13(b).  This includes any action or
proceeding to compel arbitration or to enforce an arbitration award.  Both you
and the Group (1) acknowledge that the Forum has a reasonable relation to this
Agreement and to the relationship between you and the Group and that the
submission to the Forum will apply even if the forum chooses to apply non-Forum
law, (2) waive, to the extent permitted by law, any objection to personal
jurisdiction or to the laying of venue of any action or proceeding covered by
this Section 13(e) in the Forum, (3) agree not to commence any such action or
proceeding in any forum other than the Forum and (4) agree that, to the extent
permitted by law, a final and non-appealable judgment in any such action or
proceeding in any such court will be conclusive and binding on you and the
Group.  However, nothing in this Agreement precludes you or the Group from
bringing any action or proceeding in any court for the purpose of enforcing the
provisions of Sections 13(b) and this 13(e).

 

(f)            Waiver of Jury Trial.  To the extent permitted by law, you and
the Group waive any and all rights to a jury trial with respect to any
Employment Matter.

 

(g)         Governing Law.  This Agreement will be governed by and construed in
accordance with the laws of the State of Hawaii applicable to contracts made and
to be performed entirely within that State.

 

(h)         Costs.  The Company will pay or reimburse any reasonable expenses,
including reasonable attorney’s fees, you incur as a result of any Employment
Matter, provided that you substantially prevail in the Employment Matter.

 

(i)             Interest.  If the Company fails to pay when due any amount
required by the Agreement, it shall pay interest on such amount at a rate equal
to its prime commercial lending rate.

 

11

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(j)             Survival.  For the avoidance of doubt, any termination of your
employment (or breach of this Agreement by you or the Group) shall have no
effect on the continuing operation of this Section 13.

 

14.       GENERAL PROVISIONS.

 

(a)          Construction.

 

(1)          References (A) to Sections are to sections of this Agreement unless
otherwise stated; (B) to any contract (including this Agreement) are to the
contract as amended, modified, supplemented or replaced from time to time; (C)
to any statute, rule or regulation are to the statute, rule or regulation as
amended, modified, supplemented or replaced from time to time (and, in the case
of statutes, include any rules and regulations promulgated under the statute)
and to any section of any statute, rule or regulation include any successor to
the section; (D) to any governmental authority include any successor to the
governmental authority; (E) to any plan include any programs, practices and
policies; (F) to any entity include any corporation, limited liability company,
partnership, association, business trust and similar organization and include
any governmental authority; and (G) to any affiliate of any entity are to any
person or other entity directly or indirectly controlling, controlled by or
under common control with the first entity.

 

(2)          The various headings in this Agreement are for convenience of
reference only and in no way define, limit or describe the scope or intent of
any provisions or Sections of this Agreement.

 

(3)          Unless the context requires otherwise, (A) words describing the
singular number include the plural and vice versa, (B) words denoting any gender
include all genders and (C) the words “include”, “includes” and “including” will
be deemed to be followed by the words “without limitation”.

 

(4)          It is your and the Group’s intention that this Agreement not be
construed more strictly with regard to you or the Group.

 

(b)         Withholding.  You and the Group will treat all payments to you under
this Agreement as compensation for services.  Accordingly, the Group may
withhold from any payment any taxes that are required to be withheld under any
law, rule or regulation.  Any amounts so withheld will be timely and properly
remitted by the Company to the appropriate taxing authority.

 

(c)          Severability.  If any provision of this Agreement (or if the
application of any provision to a person or particular circumstances) is found
by any court of competent jurisdiction (or legally empowered agency) to be
illegal, invalid or unenforceable for any reason, then (1) the provision will be
amended automatically to the minimum extent necessary to cure the illegality or
invalidity and permit enforcement and (2) the remainder of this Agreement will
not be affected.  In particular, if any provision of Section 10 is so found to
violate law or be unenforceable because it applies for longer than a maximum
permitted period or to greater than a maximum permitted area, it will be
automatically amended to apply for the maximum permitted period and maximum
permitted area.

 

12

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(d)         No Set-off or Mitigation/Etc.  Your and the Company’s respective
obligations under this Agreement will not be affected by any set-off,
counterclaim, recoupment or other right you or any member of the Group may have
against each other or anyone else (except as provided in Section 10).  You do
not need to seek other employment or take any other action to mitigate any
amounts owed to you under this Agreement, and those amounts will not be reduced
if you do obtain other employment (except as this Agreement specifically
states).

 

(e)          Bank Regulatory Limitation.  If any payment or benefit under this
Agreement would otherwise be a golden parachute payment within the meaning of
Section 18(k) of the Federal Deposit Insurance Act (a “Golden Parachute
Payment”) that is prohibited by applicable law, then the total payments and
benefit will be reduced to the greatest amount that could be made to you without
there being a Golden Parachute Payment.  The Company will give you the
opportunity to select the order in which payments or benefits are reduced.  To
the extent reasonably practicable, the Company will seek the approval of the
Federal Deposit Insurance Corporation and/or the State of Hawaii Division of
Financial Institutions and any other bank regulatory body, as necessary, to make
any payment to you under this Agreement that would otherwise constitute a Golden
Parachute Payment.

 

(f)            Notices.  All notices, requests, demands, consents and other
communications under this Agreement must be in writing and will be deemed given
(1) on the business day sent, when delivered by hand or facsimile transmission
(with confirmation) during normal business hours, (2) on the business day after
the business day sent, if delivered by a nationally recognized overnight courier
or (3) on the third business day after the business day sent if delivered by
registered or certified mail, return receipt requested, in each case to the
following address or number (or to such other addresses or numbers as may be
specified by notice that conforms to this Section 14(f)):

 

If to you, to the address stated in your Schedule, and

 

If to the Company or any other member of the Group, to:

 

Central Pacific Financial Corp.
220 South King Street
Honolulu, Hawaii 96813
Attention:  Glenn K.C. Ching
Facsimile:  (808) 544-6835

 

with a copy to:

 

Sullivan & Cromwell LLP
125 Broad Street
New York, New York 10004
Attention:  Marc Trevino
Facsimile:  212-558-3588

 

(g)         Consideration.  This Agreement is entered in consideration of the
mutual covenants contained in this Agreement.  You and the Group acknowledge the
receipt and

 

13

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

 

sufficiency of the consideration to this Agreement and intend this Agreement to
be legally binding.

 

(h)         Amendments and Waivers.  Any provision of this Agreement may be
amended or waived but only if the amendment or waiver is in writing and signed,
in the case of an amendment, by you and the Company or, in the case of a waiver,
by the party that would have benefited from the provision waived.  Except as
this Agreement otherwise provides, no failure or delay by you or the Group to
exercise any right or remedy under this Agreement will operate as a waiver, and
no partial exercise of any right or remedy will preclude any further exercise.

 

(i)             Third Party Beneficiaries.  Subject to Section 12, this
Agreement will be binding on, inure to the benefit of and be enforceable by the
parties and their respective heirs, personal representatives, successors and
assigns.  This Agreement does not confer any rights, remedies, obligations or
liabilities to any entity or person other than you and the Company and your and
the Company’s permitted successors and assigns, although this Agreement will
inure to the benefit of, and confer related rights and remedies on, the Group
(including for this purpose for periods before your Start Date, the Company, CB
Bancshares and their respective affiliates).

 

(j)             Counterparts.  This Agreement may be executed as counterparts,
each of which will constitute an original and all of which, when taken together,
will constitute one agreement.

 

*        *        *

 

Please confirm your acceptance of the terms and conditions of your employment
with the Company by signing where indicated below.

 

 

Very truly yours,

 

 

 

 

 

/s/ Clint Arnoldus

 

 

Clint Arnoldus

 

Chairman, President & CEO

 

 

Accepted and Agreed:

 

 

 

 

 

/s/ Denis K. Isono

 

 

Date: 09/09/04

 

 

14

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Terms Schedule to Employment Agreement of
Mr. Denis K. Isono

 

Name and address for notices

 

Denis K. Isono
5415 Kilauea Place
Honolulu, Hawaii 96816

 

 

Facsimile:

 

 

 

 

 

Position

 

You will serve as Executive Vice-President, Operations and Services, of Central
Pacific Bank.

 

 

 

Reporting, Authority and Responsibilities

 

You will report to the President and Chief Operating Officer of Central Pacific
Bank.

 

 

 

Other Activities

 

None.

 

 

 

Agreement Period

 

Your Agreement Period begins on your Start Date and will end at the close of
business on the third anniversary of your Start Date.

 

 

 

Starting Salary

 

$189,263

 

 

 

Bonus

 

Your Bonus will be determined based on the achievement of performance goals
established by the Board (or a committee of the Board). Your minimum bonus
target is equal to 30% of your Salary. Performance goals shall be set within the
first 90 days of the Company’s fiscal year.

 

 

 

Additional Benefits

 

Vacation. You will be entitled to vacation totaling at least four weeks a year.
Club Dues.

The Company will reimburse you for your annual club membership dues up to a
maximum of $6,000 per year.

Other Perquisites. The Company will (i) reimburse your cell-phone charges up to
$60 per month, (ii) provide an automobile allowance of $700 per month and (iii)
reimburse your parking fees (to the extent the Company does not provide you with
a parking spot in the building in which you are required work).

 

 

 

Cause Steps

 

No additional steps.

 

 

 

Good Reason

 

The following will also constitute Good Reason:

 

(1)          Requiring you to be principally based at any office or location
more than 30 miles from your office at the time of this Agreement (it will not,
however, be Good Reason for the Company to require you to travel on business to
an extent consistent with your travel obligations at the time of this
Agreement).

 

 

 

Good Reason Steps

 

You may not terminate your employment for Good

 

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

 

 

 

Reason unless, you provide the Company a Termination Notice at least 15 days
prior to the termination date and the Company is given an opportunity to cure
before the termination date specified in such notice.

 

 

 

Severance Period

 

Your Severance Period will be the lesser of two years or the remainder of the
term of this agreement.

 

 

 

Additional Good Reason/Without Cause Benefits

 

If during the Agreement Period the Company terminates your employment without
Cause or you terminate your employment for Good Reason:

 

(1)          Through the remainder of your Severance Period, you, your spouse
and your dependents will continue to be entitled to participate in each of the
Group’s employee benefit and welfare plans providing for medical, dental,
hospitalization, life or disability insurance on a basis that is at least as
favorable as that provided to similarly situated executives of the Group and at
least as favorable as the basis in effect immediately before Termination Notice
was given (the “Welfare Benefits”). However, if the Group’s plans do not permit
you, your spouse or your dependents to participate on this basis, the Company
will provide Welfare Benefits (with the same after-tax effect for you) outside
of the plans. If you become employed during the Severance Period and are
eligible for coverage from your new employer, the Welfare Benefits will be
secondary to your new coverage (if the Group reimburses you for any increased
cost and provides any additional benefits that are necessary to provide you with
the full Welfare Benefits).

 

(2)          The Company will reimburse reasonable expenses you incur within one
year of termination for outplacement services to be provided you by an entity
you reasonably select, subject to a maximum of $12,500.

 

 

 

Additional Death/Disability Benefits

 

If your employment terminates as a result of your Death or Disability, the
Company will provide Accelerated Vesting.

 

 

 

Additional Provisions Related to Section 8 of the Agreement.

 

If there is a “Change in Control”, as defined in the attached Change in Control
Annex, your Agreement Period will automatically extend to the third anniversary
of the Change in Control, and benefits provided in the Change in Control Annex
will substitute for those stated in Section 8.

You are entitled to the additional payments set forth in

 

2

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

 

 

 

the attached Additional Payments Annex.

 

 

 

Restriction Period

 

If the Company terminates your employment without Cause or you terminate your
employment for Good Reason, your “Restriction Period” will be the period
beginning on your Start Date and ending at the end of your Severance Period.

If the Company terminates your employment for Cause or you terminate your
employment without Good Reason, your “Restriction Period” will be the period
beginning on your Start Date and ending at the end of your Agreement Period.

 

3

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Change in Control Annexto Employment Agreement of
Denis K. Isono

 

1.              CHANGE IN CONTROL

 

A “Change in Control” means any of the following:

 

(I)                                     INDIVIDUALS WHO, ON THE DATE OF THE
AGREEMENT, 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 THE DATE OF THE AGREEMENT, 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;

 

(II)                                  ANY “PERSON” (AS SUCH TERM IS DEFINED IN
SECTION 3(A)(9) OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED (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, (D) PURSUANT TO A NON-QUALIFYING TRANSACTION (AS
DEFINED IN PARAGRAPH (III), OR (E) PURSUANT TO ANY ACQUISITION BY YOU OR ANY
GROUP OF PERSONS INCLUDING YOU (OR ANY ENTITY CONTROLLED BY YOU OR ANY GROUP OF
PERSONS INCLUDING YOU); OR

 

(III)                               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 STOCKHOLDERS, 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.

 

2.              Qualifying Terminations

 

The provisions of this Change in Control Schedule apply to any “Qualifying
Termination.”  A qualifying termination is any of the following from the time of
a Change in Control until the two-year anniversary of a Change in Control:

 

(A)                                  THE COMPANY TERMINATING YOUR EMPLOYMENT
WITHOUT CAUSE;

 

(B)                                 YOUR TERMINATING YOUR EMPLOYMENT FOR GOOD
REASON;

 

Also, a Qualifying Termination will include any termination of your employment
before a Change in Control for reasons that would have constituted a Qualifying
Termination if they had occurred following a Change in Control if (A) the
termination (or Good Reason event) was in anticipation of a Change in Control or
at the request of a third party who had indicated an intention or taken steps
reasonably calculated to effect a Change in Control; and (B) such Change in
Control (or an alternative or competing Change in Control) actually occurs.

 

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3.              Payments on Qualifying Termination

 

(1)          Qualifying Terminations.  If there is a Qualifying Termination, the
Company will make the payments and provide the benefits set forth in
Section 8(b) of the Agreement (as if there were a termination for Good Reason)
except that your Severance Period will be 3 years (notwithstanding any contrary
provision in the Agreement or your Schedule).

 

(2)          Other Terminations.  If your employment terminates other than as a
result of a Qualifying Termination, the terms of the Agreement will continue to
apply.

 

4.     General Provisions.

 

(1)   Part of the Agreement.  This Annex is part of your Employment Agreement
(the “Agreement”) with Central Pacific Financial Corp., a Hawaii corporation. 
However, to the extent this Annex is inconsistent with the Agreement, this Annex
will govern.

 

(2)   Defined Terms.  Terms used but not defined in this Annex are used with the
meaning assigned in the Agreement.

 

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

 

Additional Payments Annex to Employment Agreement of
Denis K. Isono

 

1.              Gross-Up

 

Anything in the Agreement to the contrary notwithstanding, in the event it shall
be determined that any payment, award, benefit or distribution (or any
acceleration of any payment, award, benefit or distribution) by the Company (or
any of its affiliated entities) or any entity which effectuates a Change in
Control (or any of its affiliated entities) to or for your benefit (whether
pursuant to the terms of the Agreement or otherwise, but determined without
regard to any additional payments required under this Annex) (the “Payments”)
would be subject to the excise tax imposed by Section 4999 of the Internal
Revenue Code of 1986, as amended (the “Code”), or any interest or penalties are
incurred by you with respect to such excise tax (such excise tax, together with
any such interest and penalties, are hereinafter collectively referred to as the
“Excise Tax”), then the Company shall pay to you an additional payment (a
“Gross-Up Payment”) in an amount such that after payment by you of all taxes
(including, without limitation, any income taxes and any interest and penalties
imposed with respect thereto, and any excise tax) imposed upon the Gross-Up
Payment, you retain an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments.  For purposes of determining the amount of the
Gross-Up Payment, you shall be deemed to (i) pay federal income taxes at the
highest marginal rates of federal income taxation for the calendar year in which
the Gross-Up Payment is to be made and (ii) pay applicable state and local
income taxes at the highest marginal rate of taxation for the calendar year in
which the Gross-Up Payment is to be made, net of the maximum reduction in
federal income taxes which could be obtained from deduction of such state and
local taxes.

 

2.              Determination

 

(A)          GENERAL.  SUBJECT TO THE PROVISIONS OF THIS ANNEX, ALL
DETERMINATIONS REQUIRED TO BE MADE UNDER THIS ANNEX, INCLUDING WHETHER AND WHEN
A GROSS-UP PAYMENT IS REQUIRED, THE AMOUNT OF SUCH GROSS-UP PAYMENT, THE AMOUNT
OF ANY OPTION REDETERMINATION (AS DEFINED BELOW) AND THE ASSUMPTIONS TO BE
UTILIZED IN ARRIVING AT SUCH DETERMINATIONS, SHALL BE MADE BY THE PUBLIC
ACCOUNTING FIRM THAT IS RETAINED BY THE COMPANY AS OF THE DATE IMMEDIATELY PRIOR
TO THE CHANGE IN CONTROL (THE “ACCOUNTING FIRM”) WHICH SHALL PROVIDE DETAILED
SUPPORTING CALCULATIONS BOTH TO THE COMPANY AND YOU WITHIN FIFTEEN (15) BUSINESS
DAYS OF THE RECEIPT OF NOTICE FROM THE COMPANY OR YOU THAT THERE HAS BEEN A
PAYMENT, OR SUCH EARLIER TIME AS IS REQUESTED BY THE COMPANY (COLLECTIVELY, THE
“DETERMINATION”).  NOTWITHSTANDING THE FOREGOING, IN THE EVENT (I) THE BOARD
SHALL DETERMINE PRIOR TO THE CHANGE IN CONTROL THAT THE ACCOUNTING FIRM IS
PRECLUDED FROM PERFORMING SUCH SERVICES UNDER APPLICABLE AUDITOR INDEPENDENCE
RULES, (II) THE AUDIT COMMITTEE OF THE BOARD DETERMINES THAT IT DOES NOT WANT
THE ACCOUNTING FIRM TO PERFORM SUCH SERVICES BECAUSE OF AUDITOR INDEPENDENCE
CONCERNS OR (III) THE ACCOUNTING FIRM IS SERVING AS ACCOUNTANT OR AUDITOR FOR
THE PERSON(S) EFFECTING THE CHANGE IN CONTROL, THE BOARD SHALL APPOINT ANOTHER
NATIONALLY RECOGNIZED PUBLIC ACCOUNTING FIRM TO MAKE THE DETERMINATIONS REQUIRED
HEREUNDER (WHICH ACCOUNTING FIRM SHALL THEN BE REFERRED TO AS THE ACCOUNTING
FIRM HEREUNDER).  ALL FEES AND EXPENSES OF THE ACCOUNTING FIRM SHALL BE BORNE
SOLELY BY THE COMPANY AND THE COMPANY SHALL ENTER INTO ANY AGREEMENT REQUESTED
BY THE ACCOUNTING FIRM IN CONNECTION WITH THE PERFORMANCE OF THE SERVICES
HEREUNDER.  THE GROSS-UP PAYMENT UNDER THIS ANNEX WITH RESPECT TO ANY PAYMENTS
SHALL BE MADE NO LATER THAN THIRTY (30) DAYS FOLLOWING SUCH PAYMENT.  IF THE
ACCOUNTING FIRM DETERMINES THAT NO EXCISE TAX IS PAYABLE BY YOU, IT SHALL

 

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FURNISH YOU WITH A WRITTEN OPINION TO SUCH EFFECT, AND TO THE EFFECT THAT
FAILURE TO REPORT THE EXCISE TAX, IF ANY, ON YOUR APPLICABLE FEDERAL INCOME TAX
RETURN WILL NOT RESULT IN THE IMPOSITION OF A NEGLIGENCE OR SIMILAR PENALTY. 
THE DETERMINATION BY THE ACCOUNTING FIRM SHALL BE BINDING UPON THE COMPANY AND
YOU.

 

(B)         UNDERPAYMENT AND OVERPAYMENT.  AS A RESULT OF THE UNCERTAINTY IN THE
APPLICATION OF SECTION 4999 OF THE CODE AT THE TIME OF THE DETERMINATION, IT IS
POSSIBLE THAT GROSS-UP PAYMENTS WHICH WILL NOT HAVE BEEN MADE BY THE COMPANY
SHOULD HAVE BEEN MADE (“UNDERPAYMENT”) OR GROSS-UP PAYMENTS ARE MADE BY THE
COMPANY WHICH SHOULD NOT HAVE BEEN MADE (“OVERPAYMENT”), CONSISTENT WITH THE
CALCULATIONS REQUIRED TO BE MADE HEREUNDER.  IN THE EVENT THE AMOUNT OF THE
GROSS-UP PAYMENT IS LESS THAN THE AMOUNT NECESSARY TO REIMBURSE YOU FOR YOUR
EXCISE TAX, THE ACCOUNTING FIRM SHALL DETERMINE THE AMOUNT OF THE UNDERPAYMENT
THAT HAS OCCURRED AND ANY SUCH UNDERPAYMENT (TOGETHER WITH INTEREST AT THE RATE
PROVIDED IN SECTION 1274(B)(2)(B) OF THE CODE) SHALL BE PROMPTLY PAID BY THE
COMPANY TO OR FOR YOUR BENEFIT.  IN THE EVENT THE AMOUNT OF THE GROSS-UP PAYMENT
EXCEEDS THE AMOUNT NECESSARY TO REIMBURSE YOU FOR YOUR EXCISE TAX, THE
ACCOUNTING FIRM SHALL DETERMINE THE AMOUNT OF THE OVERPAYMENT THAT HAS BEEN MADE
AND ANY SUCH OVERPAYMENT (TOGETHER WITH INTEREST AT THE RATE PROVIDED IN
SECTION 1274(B)(2) OF THE CODE) SHALL BE PROMPTLY PAID BY YOU TO OR FOR THE
BENEFIT OF THE COMPANY IMMEDIATELY AFTER IT IS REFUNDED TO YOU BY THE INTERNAL
REVENUE SERVICE.  YOU SHALL COOPERATE, TO THE EXTENT YOUR EXPENSES ARE
REIMBURSED BY THE COMPANY, WITH ANY REASONABLE REQUESTS BY THE COMPANY IN
CONNECTION WITH ANY CONTESTS OR DISPUTES WITH THE INTERNAL REVENUE SERVICE IN
CONNECTION WITH THE EXCISE TAX.

 

(C)          OPTION REDETERMINATION.  IN THE EVENT THAT THE COMPANY DETERMINES
THAT THE VALUE OF ANY ACCELERATED VESTING OF STOCK OPTIONS HELD BY YOU SHALL BE
REDETERMINED WITHIN THE CONTEXT OF TREASURY REGULATION §1.280G-1 Q/A 33 (THE
“OPTION REDETERMINATION”), YOU SHALL (I) FILE WITH THE INTERNAL REVENUE SERVICE
AN AMENDED FEDERAL INCOME TAX RETURN THAT CLAIMS A REFUND OF THE OVERPAYMENT OF
THE EXCISE TAX ATTRIBUTABLE TO SUCH OPTION REDETERMINATION AND (II) PROMPTLY PAY
THE REFUNDABLE EXCISE TAX TO THE COMPANY.

 

3.              General Provisions.

 

(A)          PART OF THE AGREEMENT.  THIS ANNEX IS PART OF YOUR EMPLOYMENT
AGREEMENT (THE “AGREEMENT”) WITH CENTRAL PACIFIC FINANCIAL CORP., A HAWAII
CORPORATION.  HOWEVER, TO THE EXTENT THIS ANNEX IS INCONSISTENT WITH THE
AGREEMENT, THIS ANNEX WILL GOVERN.

 

(B)         DEFINED TERMS.  TERMS USED BUT NOT DEFINED IN THIS ANNEX ARE USED
WITH THE MEANING ASSIGNED IN THE AGREEMENT.

 

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Exhibit A to Employment Agreement

Form of Release

 

This is your RELEASE with Central Pacific Financial Corp., a Hawaii corporation
(the “Company”).

 

1.              Your Employment Agreement

 

This Release relates to your Employment Agreement (which includes your Terms
Schedule, [Change of Control Annex and Additional Payments Annex](1)) dated as
of June [day], 2004 and as amended from time to time, with the Company (your
“Employment Agreement”).

 

2.              Release of Claims

 

(a)          Released Claims.  In consideration of the payments and benefits
described in your Employment Agreement, you release and discharge the Company
and its subsidiaries, affiliates, officers, directors, employees, agents and
their successors and assigns (the “Group Released Parties”) from any and all
actions, causes of action, claims, allegations, rights, obligations,
liabilities, or charges (collectively, “Claims”) that you may have, whether
known or unknown, by reason of any matter, related to any Employment Matter (as
defined in your Employment Agreement).  Without limitation, released Claims
include (1) Claims for compensation, bonuses or benefits, (2) Claims under any
compensation plan or arrangement maintained by any member of the Group, (3)
Claims for wrongful, constructive or unlawful discharge, (4) Claims for age and
national origin discrimination, (5) Claims for sexual harassment, (6) Claims
related to whistleblowing, (7) Claims for emotional distress, intentional
infliction of emotional distress, assault, battery or pain and suffering, (8)
Claims for punitive or exemplary damages, (9) Claims for violations of any of
the following acts or laws:  the Equal Pay Act, Title VII of the Civil Rights
Act of 1964, the Civil Rights Act of 1991, the Age Discrimination in Employment
Act of 1967 (“ADEA”), the Americans with Disabilities Act of 1991, the Employee
Retirement Income Security Act of 1974, the Worker Adjustment Retraining and
Notification Act, the Family Medical Leave Act, Hawaii’s Whistle Blowers
Protection Act, Hawaii’s Employment Practices Law, Hawaii’s Payment of Wages
Law, Hawaii’s Wage and Hour Law, Hawaii’s Temporary Disability Insurance Law,
Hawaii’s Prepaid Health Care Act, Hawaii’s Dislocated Workers’ Act, Hawaii’s
Occupational Safety and Health Law and Hawaii’s Family Leave Law (including all
amendments to any of these acts or laws), or (10) Claims for violations of any
other federal, state or municipal fair employment statutes or laws.  In
addition, in consideration of the provisions of your Employment Agreement, you
further agree to waive any and all rights under the laws of any jurisdiction in
the United States, or any other country, that limit a general release to those
claims that are known or suspected to exist in your favor as of the date of this
Agreement.

 

(b)         Exceptions.  Notwithstanding Section 2(a), this Release shall not
(1) limit in any way your ability to bring an action to enforce your rights
under your Employment Agreement, (2) release any claim for Other Accrued
Benefits (as defined in your Employment Agreement), or (3) release any claim for
indemnification and continued liability coverage (under your Employment
Agreement or otherwise).  For purposes of this

 

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(1)                                  Include if applicable.

 

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RELEASE, THE TERM “CLAIMS” AS USED SHALL NOT INCLUDE ANY CLAIMS NOT RELEASED BY
YOU AS SET FORTH IN THIS SECTION 2(B).

 

(C)          REPRESENTATIONS AND WARRANTIES.  YOU REPRESENT AND WARRANT THAT YOU
HAVE NOT, AND AS OF THE EFFECTIVE DATE (AS DEFINED IN SECTION 4) WILL NOT HAVE,
FILED ANY CIVIL ACTION, SUIT, ARBITRATION, ADMINISTRATIVE CHARGE, OR LEGAL
PROCEEDING AGAINST ANY GROUP RELEASED PARTY NOR HAVE YOU ASSIGNED, PLEDGED, OR
HYPOTHECATED AS OF THE EFFECTIVE DATE ANY CLAIM TO ANY PERSON AND NO OTHER
PERSON HAS AN INTEREST IN THE CLAIMS THAT YOU ARE RELEASING HEREIN.

 

(D)         NO RELIEF FOR RELEASED CLAIMS.  YOU AGREE THAT SHOULD ANY PERSON OR
ENTITY FILE OR CAUSE TO BE FILED ANY CIVIL ACTION, SUIT, ARBITRATION OR OTHER
LEGAL PROCEEDING SEEKING EQUITABLE OR MONETARY RELIEF CONCERNING ANY CLAIM
RELEASED BY YOU, YOU WILL NOT SEEK OR ACCEPT ANY PERSONAL RELIEF FROM OR AS THE
RESULT OF THE ACTION, SUIT, ARBITRATION OR PROCEEDING.

 

3.              Your Understanding of this Release and Your Rights

 

You acknowledge and agree that you have read this Release in its entirety and
that this Release releases known and unknown Claims, including, without
limitation, to rights and claims arising under ADEA.  You further acknowledge
and agree that:

 

(a)          You are entering into this Release and releasing, waiving and
discharging rights or claims only in exchange for consideration which you are
not already entitled to receive.

 

(b)         You have been advised, and are being advised by the terms of the
Release, to consult with an attorney before executing this Release.  You also
acknowledge that you chose and consulted with the counsel of your choice
concerning your rights and that your counsel negotiated this Release on your
behalf.

 

(c)          You have been advised, and are being advised by the terms of this
Release, that you have had at least 21 days within which to consider this
Release.

 

4.              Your Ability to Revoke this Release; Effective Date

 

You may revoke this Release within 7 days of signing (for any reason or no
reason) by complying with the following sentence.  To revoke this Release, you
must deliver (or cause to be delivered) written notice of your revocation to the
Group at [Address and Contact Person] no later than 5:00 p.m. Hawaii time on
[date].  If you revoke this Release in accordance with the preceding sentence,
it will become null and void.  If you do not, this Release will become effective
at such time (the “Effective Date”).

 

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5.              Your Employment Agreement

 

For the avoidance of doubt, your Employment Agreement will continue in full
force and effect, including, without limitation, your obligations under Sections
9 and 10 of your Employment Agreement.

 

6.              Dispute Resolution

 

The terms of this Release shall be governed by Section 13 of your Employment
Agreement.

 

Accepted and Agreed:

 

 

 

 

Date:

 

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