CB Bancshares, Inc. - Exhibit 10.2



 



Exhibit 10.2


CB BANCSHARES, INC.

SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENT

FOR DOUGLAS R. WELD



(Effective as of May 1, 2003)



35






 





CB BANCSHARES, INC.

SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENT

FOR DOUGLAS R. WELD



          THIS
AGREEMENT is adopted this 22nd day of July, 2003, by and
between CB Bancshares, Inc., a Hawaii corporation (the “Company”), and Douglas
R. Weld, Executive Vice President of City Bank, a wholly-owned subsidiary of
the Company (the “Executive”).



RECITALS



          The Executive is a member of a select group of management or highly
compensated employees who contribute materially to the continued growth,
development, and future business success of the Company. In order to promote
the loyalty, diligence, and performance of the Executive and to support the
economic security of the Executive during retirement, the Company desires to
provide to the Executive a supplemental executive retirement benefit.



          This Agreement is intended to be an unfunded nonqualified deferred
compensation arrangement for purposes of the Internal Revenue Code of 1986, as
amended (the “Code”), and the Employee Retirement Income Security Act of 1974,
as amended (“ERISA”). This Agreement is intended to constitute a “top hat”
arrangement described in ERISA Section 201(2) and, therefore, exempt from the
coverage, funding, and fiduciary requirements of ERISA. All benefits payable
under this Agreement shall be paid out of the general assets of the Company.



          It is acknowledged that the Executive is employed by City Bank, a
wholly-owned subsidiary of the Company and, for purposes of this Agreement,
reference to employment with (or termination of employment from) the Company
shall include employment with (or termination of employment from) City Bank or
any other wholly-owned subsidiary of the Company that employs the Executive,
and all such entities shall be treated as single employer with respect to the
employment of the Executive. However, reference to the Company with respect
to obligations and responsibilities and funding for the payment of benefits,
and with respect to the governance of this Agreement (e.g., the Board of
Directors shall mean the Board of Directors of CB Bancshares, Inc.), and with
respect to a Change of Control shall mean reference only to CB Bancshares,
Inc.




 






 





AGREEMENT



          That in consideration of the following agreements hereinafter contained
the Company and the Executive agree as follows:



Definitions



          Whenever used in this Agreement, the following words and phrases shall
have the meanings specified:



“Actuarial Equivalent” means a form of benefit different in time, period, or
manner of payment from a given form of benefit, but having the same value as
of a given date of determination based on a 7% interest assumption and the IAM
1983 Mortality Table.


“Beneficiary” means such term as described in Article 4.


“Change of Control” shall mean any of the following: (a) any person (as
defined in Section 3(a)(9) of the Securities Exchange Act of 1934, as amended
from time to time (“Exchange Act”) and as used in Sections 13(d) and 14(d)
thereof), excluding the Company, any majority owned subsidiary of the Company
(a “Subsidiary”), and any employee benefit plan sponsored or maintained by the
Company or any Subsidiary (including any trustee of such plan acting as
trustee), but including a “group” as defined in Section 13(d)(3) of the
Exchange Act (a “Person”), becomes the beneficial owner of shares of the
Company having at least 20% of the total number of votes that may be cast for
the election of directors of the Company (the “Voting Shares”); (b) the
shareholders of the Company shall approve any merger, consolidation or other
business combination of the Company, sale of the Company’s assets or
combination of the foregoing transactions (a “Transaction”) other than a
Transaction involving only the Company and one or more of its Subsidiaries, or
a Transaction immediately following which the shareholders of the Company
immediately prior to the Transaction continue to have a majority of the voting
power in the resulting entity excluding for this purpose any shareholder
owning directly or indirectly more than 10% of the shares of the other company
involved in the merger; or (c) within any 24 month period beginning or after
December, 1995, the persons who were directors of the Company immediately
before the beginning of such period (the “Incumbent Directors”) shall cease
(for any reason other than death) to constitute at least a majority of the
Board of Directors of the Company or the board of directors of any successor
to the Company, provided that any director who was not a director as of
December, 1995, shall be deemed to be an Incumbent Director if such director
was elected to the Board by, or on the recommendation of or with the approval
of, at least two-thirds of the directors who then qualified as Incumbent
Directors either actually or by prior operation of this Section 1.3.
Notwithstanding the foregoing, no Change of Control shall be deemed to have
occurred for the purposes of this Agreement by reason of any actions or events
in which the Executive participates in a capacity other than in the capacity
as Executive (or as a director of the Company or a Subsidiary, where
applicable.) In accordance with the


37






 


Recitals to this Agreement, the term “Company” under this Section 1.3 shall
mean CB Bancshares, Inc.


“Code” means the Internal Revenue Code of 1986, as amended.


“Disability” means the Executive’s suffering a sickness, accident or injury
which has been determined by the carrier of any individual or group disability
insurance policy covering the Executive, or by the Social Security
Administration, to be a disability rendering the Executive totally and
permanently disabled. The Executive must submit proof to the Company of the
carrier’s or Social Security Administration’s determination upon the request
of the Company.


“Early Termination Date” means the date on which the Executive incurs a
Termination of Employment which is prior to the Executive’s Normal Retirement
Date and which is for reasons other than death, Disability, Termination for
Cause, or Termination for Good Reason following a Change of Control.


“Effective Date” means May 1, 2003.


“Final Monthly Compensation” means the amount determined as follows: [the
average of the annual base “Compensation” plus annual bonuses paid to the
Executive during the five year period immediately preceding the date of
Termination of Employment] divided by 12. For this purpose, the term
“Compensation” shall exclude any amounts paid on or after Termination of
Employment (e.g., severance pay, unused sick leave, unused vacation).
Further, the term “Compensation” shall include salary reduction amounts
contributed by the Company and not includible in the Executive’s income
pursuant to Code Sections 125 and 401(k). Unless otherwise provided herein,
at any time prior to the Normal Retirement Date, the Executive’s Final Monthly
Compensation determined as of the Normal Retirement Date shall be projected
based on a 4.5% annual salary increase adjustment.


“Involuntary Termination” means that the Executive ceases to be employed by
the Company at the direction of the Company and without the written consent of
the Executive.


“Normal Retirement Date” means the Executive’s 65th birthday.


“Pension Offset” means the value of the Executive’s then-existing aggregate
vested account balance or accrued benefit or any prior payment under any
defined contribution plan or defined benefit pension plan maintained by the
Company (or any predecessor employer such as International Savings and Loan
Association, Ltd.) (exclusive of any account balance or payment derived from
the Executive’s elective deferral contributions under Code Section 401(k)) as
of the Termination of Employment. For this purpose, any prior payment shall
be equal to the amount of such payment without interest adjustment from the
date of payment. The projected Pension Offset as of the Normal Retirement
Date shall be determined based on factors as may be reasonably assumed by the
Company based on existing facts and circumstances


38






 


and as shall be set forth, and periodically updated at the Company’s
discretion, in Exhibit 3 as attached. Further, for purposes of determining
the Pension Offset, the value described in this Section 1.11 shall be
converted to the Actuarial Equivalent form of a monthly annuity payment to the
Executive for life.


“Social Security Benefit” means 50% of the monthly social security
benefit to which the Executive is entitled under the Social Security Act. For
purposes of determining the Executive’s projected Social Security Benefit, the
Company shall estimate the Social Security Benefit from the base pay rate
assuming a 4.5% annual salary increase adjustment. For purposes of determining
a Disability Benefit under Section 2.3, the Social Security Benefit offset
used in the Normal Retirement Benefit formula shall be equal to the
Executive’s actual disability benefit payment under the Social Security Act
due to the Executive’s Disability and, if the Executive is not entitled to an
actual disability benefit payment under the Social Security Act, the Social
Security Benefit offset shall be determined as otherwise provided hereunder.


“Termination for Cause” means such term as described in Article 5.


“Termination for Good Reason” means the Executive ceases to be employed by the
Company due to the occurrence of any of the following events without the
Executive’s express written consent following a Change of Control: (a) without
the Executive’s express written consent, the assignment to the Executive of
any duties inconsistent with his positions, duties, responsibilities and
status with the Company, or a change in the Executive’s reporting
responsibilities, titles or offices, or any removal of the Executive from or
any failure to re-elect the Executive to any of such positions, except in
connection with the Executive’s Termination for Cause, Disability, retirement
on or after his Normal Retirement Date, or as a result of his death; (b) a
reduction by the Company in the Executive’s base salary as in effect on the
date hereof or as the same may be increased from time to time; (c) without the
Executive’s express written consent the failure by the Company to continue any
action which would adversely affect the Executive’s participation in or
materially reduce the Executive’s benefits under any of such plans, or the
failure by the Company to provide the Executive with the number of paid
vacation days to which the Executive is then entitled on the basis of years of
service with the Company in accordance with the Company’s normal vacation
policy in effect on the date hereof; (d) the Company requiring the Executive
to be based anywhere other than in the community where the Executive is
currently based at the time of a change in control, except for required travel
on Company business to an extent substantially consistent with the Executive’s
present business travel obligations, or in the event the Executive consents to
a proposed relocation, the failure by the Company to pay (or reimburse the
Executive) for all reasonable moving expenses incurred by the Executive
relating to a change of his or her principal residence in connection with such
relocation and to indemnify the Executive against any loss of the fair market
value of such residence as determined by a real estate appraiser designated by
the Executive and reasonably satisfactory to the Company realized on the sale
of the Executive’s principal residence in connection with any such change of
residence.


39






 


“Termination of Employment” means that the Executive ceases to be employed by
the Company for any reason, voluntary or involuntary, other than by reason of
a leave of absence approved by the Company and the Executive.


“Year of Service” means each consecutive 12-month period of service ending on
the anniversary date of the Executive’s date of hire and during which the
Executive is employed on a full-time basis by the Company for at least 1,000
hours of service, inclusive of approved leaves of absence. Unless otherwise
provided herein, Years of Service shall include all Years of Service beginning
from the Executive’s date of hire.


Lifetime Benefits


Normal Retirement Benefit. Upon the Executive’s Termination of Employment on
or after his Normal Retirement Date for reasons other than death, the Company
shall pay to the Executive the “Normal Retirement Benefit” described in this
Section 2.1 in lieu of any other benefit under this Agreement.


Amount of Benefit. The Normal Retirement Benefit under this Section 2.1 is
the following monthly amount payable for the life of the Executive: 65% of
Final Monthly Compensation minus Social Security Benefit minus Pension Offset.
However, for purposes of determining the Normal Retirement Benefit under such
formula, the otherwise applicable “65%” under the preceding sentence shall be
reduced by 2.5% for each Year of Service less than 25 Years of Service, and
shall be increased by 2.5% for each Year of Service exceeding 25 Years of
Service (subject to a maximum adjusted percentage of 70%). Further, the
Normal Retirement Benefit shall be subject to the vesting schedule described
in Article 5.


Payment of Benefit. The Company shall pay the Normal Retirement Benefit to the
Executive in the specified form of the distribution option elected by the
Executive in accordance with the attached Exhibit 1. As reflected in Exhibit
1, prior to the commencement of any payment, the Executive may be allowed to
elect an additional form of distribution option or modify a previously elected
form of distribution option, but such election shall be allowed, if at all,
only at the time and in the manner specifically approved by the Board of
Directors at its complete discretion.


Early Termination Benefit. Upon the Executive’s Termination of Employment on
an Early Termination Date, the Company shall pay to the Executive the “Early
Termination Benefit” described in this Section 2.2 in lieu of any other
benefit under this Agreement.


Amount of Benefit. The Early Termination Benefit under this Section 2.2 shall
be equal to the Executive’s projected Normal Retirement Benefit which is
accrued as of the date of the Executive’s Termination of Employment and
payable commencing as of the first day of the month following his Normal
Retirement Date. Further, the Early Termination Benefit shall be subject to
the vesting schedule described in Article 5.


Payment of Benefit. The Company shall pay the Early Retirement Benefit to the
Executive in the Actuarial Equivalent form of equal monthly installments over
a


40






 


216-month term commencing as of the first day of the month following the
Executive’s Normal Retirement Date.


Disability Benefit. Upon the Executive’s Termination of Employment due to
Disability prior to his Normal Retirement Date, the Company shall pay to the
Executive the “Disability Benefit” described in this Section 2.3 in lieu of
any other benefit under this Agreement.


Amount of Benefit. The Disability Benefit under this Section 2.3 shall be
equal to the Executive’s Normal Retirement Benefit projected to his Normal
Retirement Date and payable commencing as of the first day of the month
following his Normal Retirement Date. Accordingly, in determining the
Executive’s projected Normal Retirement Benefit for this purpose, the
Executive shall be credited with the Years of Service that the Executive would
otherwise have earned if he continued employment through his Normal Retirement
Date. However, for this purpose, the Executive’s Final Monthly Compensation
shall be determined as of the date of his Termination of Employment and shall
not be subject to any projected annual increase to his Normal Retirement Date.


Payment of Benefit. The Company shall pay the Disability Benefit to the
Executive in the Actuarial Equivalent form of equal monthly installments over
a 216-month term commencing as of the first day of the month following the
Executive’s Normal Retirement Date.


Change of Control Benefit. Upon the Executive’s Involuntary Termination of
Employment or Termination for Good Reason prior to his Normal Retirement Date
and within 36 months following the occurrence of a Change of Control, the
Company shall pay to the Executive the “Change of Control Benefit” described
in this Section 2.4 in lieu of any other benefit under this Agreement.


Amount of Benefit. The Change of Control Benefit under this Section 2.4 shall
be equal to the Executive’s Normal Retirement Benefit projected to his Normal
Retirement Date and payable commencing as of the first day of the month
following his Normal Retirement Date. Accordingly, for purposes of determining
the Executive’s projected Normal Retirement Benefit, the Executive shall be
credited with the Years of Service that the Executive would have otherwise
earned if he continued employment through his Normal Retirement Date.
However, for purposes of calculating the Change of Control Benefit, the
Executive’s projected Normal Retirement Benefit shall be determined by
applying the Pension Offset determined as of the Executive’s Termination of
Employment (without any assumed employer contributions and earnings projected
to Normal Retirement Date).


Payment of Benefit. The Company shall pay the Normal Retirement Benefit to the
Executive in the specified form of the distribution option elected by the
Executive in accordance with the attached Exhibit 1. As reflected in Exhibit
1, prior to the commencement of any payment, the Executive may be allowed to
elect an additional form of distribution option or modify a previously elected
form of distribution option, but


41






 


such election shall be allowed, if at all, only at the time and in the manner
specifically approved by the Board of Directors at its complete discretion.


Excess Parachute Payment. If any benefit payable under this Agreement would
create an excise tax under the excess parachute rules of Code Sections 280G
and 4999, the Company shall pay to the Executive an additional amount (the
“Gross-up”) equal to the excise penalty tax amount divided by the sum of one
minus the sum of the penalty tax rate plus the executive’s marginal income tax
rate. The Gross-up shall be paid in a lump sum within 60 days of Termination
of Employment following Change in Control.



		
	 	               In the event the Internal Revenue Service adjusts the excise tax
computation of the Company, as provided in this Section 2.4.3 herein,
such that the Executive is liable for the payment of a greater excise
tax under Code Sections 280G and 4999, or such that the Executive does
not receive the full benefit that he would have received, the Company
shall reimburse the Executive for the full amount necessary to make the
Executive whole, including the value of the excise tax and all
corresponding interest and penalties due to the Internal Revenue
Service.



Death Benefits



Death During Active Service. If the Executive dies while in the active
service of the Company, the Company shall pay to the Executive’s Beneficiary
the “Preretirement Death Benefit” described in this Section 3.1 in lieu of any
other benefit under this Agreement. The Company shall not pay any
Preretirement Death Benefit under this Section 3.1 if the Executive has
received any lifetime benefit payment provided under Article 2.


Amount of Benefit. The Preretirement Death Benefit under this Section 3.1
shall be equal to the Executive’s Normal Retirement Benefit projected to his
Normal Retirement Date. Accordingly, for purposes of determining the
Executive’s Normal Retirement Benefit, the Executive shall be credited with
the Years of Service that the Executive would have otherwise earned if he
continued employment through his Normal Retirement Date, and the Executive’s
Final Monthly Compensation shall be subject to the applicable projected annual
salary increase.



		
	 	          3.1.2 Payment of Benefit. Upon the Executive’s Death, the Company
shall pay the Preretirement Death Benefit to the Executive’s Beneficiary
in the form of the Actuarial Equivalent form of equal monthly
installments over a 20-year term commencing as of the first day of the
month following date of the Executive’s Death.



Death During Payment of a Lifetime Benefit. If the Executive dies after any
lifetime benefit payments have commenced under Article 2 but before receiving
all such payments, the Company shall pay the remaining benefit payments to the
Executive’s Beneficiary at the same time and in the same amounts they would
have been paid to the Executive had the Executive survived. However, only the
benefit payments


42






 


required under the Executive’s form of distribution option shall be paid
(e.g., no payment to the Executive’s Beneficiary if the Executive had elected
a life annuity form of distribution).


Death After Termination of Employment But Before Payment of a Lifetime Benefit
Commences. If the Executive is entitled to the commencement of any lifetime
benefit payments under Article 2, but dies prior to the commencement of such
benefit payments, the Company shall pay the same benefit payments to the
Executive’s Beneficiary that the Executive was entitled to prior to death.
However, only the benefit payments required under the Executive’s form of
distribution option shall be paid (e.g., no payment to the Executive’s
Beneficiary if the Executive had elected a life annuity form of distribution).


Beneficiaries


     The Executive shall designate a Beneficiary by filing a written
designation with the Company in a manner similar to the attached Exhibit 2.
The Executive may revoke or modify the designation at any time by filing a new
designation. However, a designation shall only be effective if signed by the
Executive and received by the Company during the Executive’s lifetime. The
Executive’s Beneficiary designation shall be deemed automatically revoked if
the Beneficiary predeceases the Executive, or if the Executive names a spouse
as Beneficiary and the marriage is subsequently dissolved. If the Executive
dies without a valid beneficiary designation, all payments shall be made to
the personal representative of the Executive’s estate.


Vesting


Vesting. The Executive shall only be entitled to the payment of his vested
interest in any benefit provided under this Agreement, and any unvested portion
of the benefit shall be forfeited and shall not be paid to the Executive.


43






 


     The Executive’s Normal Retirement Benefit and Early Termination Benefit
shall be vested in accordance with the below schedule. For purposes of
applying the vesting schedule, the Years of Service earned by the Executive
prior to the Effective Date shall be disregarded.



	 	 	 	 	 	 
	Years of Service	 	Vesting Percentage
	
	 	

	Less than 4 years
	 	 	0	%
	 	4 years
	 	 	10	%
	 	5 years
	 	 	20	%
	 	6 years
	 	 	30	%
	 	7 years
	 	 	45	%
	 	8 years
	 	 	60	%
	 	9 years
	 	 	80	%
	10 years or more
	 	 	100	%



          However, the Executive shall maintain a 100% vested and nonforfeitable
interest in his Disability Benefit, Preretirement Death Benefit, and Change of
Control Benefit. Therefore, the above vesting schedule shall not apply to the
determination of the Executive’s Normal Retirement Benefit for purposes of
calculating the Executive’s Disability Benefit, Preretirement Death Benefit,
and Change of Control Benefit.



Termination for Cause. However, notwithstanding the above Section 5.1 or any
other provision of this Agreement to the contrary, the Company shall not pay,
and the Executive shall not be entitled to, any benefit under this Agreement
if the Company terminates the Executive’s employment for cause as follows:
(a) an act or acts of dishonesty or gross misconduct on the Executive’s part
which result or are intended to result in material damage to the Company’s
business or reputation or (b) repeated material violations by the Executive to
use his best efforts to perform faithfully and efficiently the
responsibilities applicable to the Executive in accordance with the
Executive’s position or any written agreement between the Company and the
Executive, which violations are demonstrably willful and deliberate on the
Executive’s part and which result in material damage to the Company’s business
or reputation.


Suicide or Misstatement. The Company shall not pay, and the Executive shall
not be entitled to, any benefit under this Agreement if the Executive commits
suicide within three years after the date of this Agreement. In addition, the
Company shall not pay, and the Executive shall not be entitled to, any benefit
under this Agreement if the Executive has made any material misstatement of
fact on any application for any benefits provided by the Company to the
Executive.


Competition After Termination of Employment. The Company shall not pay, and
the Executive shall not be entitled to, any benefit under this Agreement if
the Executive within three years from Termination of Employment and without
the prior written consent of the Company, engages in, becomes interested in,
directly or indirectly, as a sole proprietor, as a partner in a partnership,
or as a substantial shareholder in a corporation, or becomes associated with,
in the capacity of employee, director, officer,


44






 


principal, agent, trustee or in any other capacity whatsoever, in any
enterprise in the State of Hawaii which enterprise is, or may be deemed to be,
competitive with any business carried on by the Company as of the date of
Termination of Employment. This section shall not apply following a Change in
Control.


ADMINISTRATION


Authority of Board. The Board of Directors of the Company shall maintain the
authority and discretion to control and manage the operation and
administration of the Agreement. In its discretion, the Board of Directors
shall make such rules, interpretations, and computations and take such other
actions to administer the Agreement, as it may deem appropriate. The rules,
interpretations, computations, and other actions of the Board of Directors
shall be binding and conclusive on all persons. In administering the
Agreement, the Board of Directors shall have the authority to: (a) require, as
a condition to receiving benefits under the Agreement, such information as it
may reasonably require for the proper administration of the Agreement; (b)
make and enforce such rules and regulations as it deems to be necessary for
the administration of the Agreement; (c) interpret the Agreement; (d)
determine the amount and timing of benefits payable to any person in
accordance with the provisions of the Agreement; and (e) direct all payments
to be made pursuant to the Agreement.


          The Board of Directors is granted the authority to name an individual or
individuals from time to time to carry out one or more of the duties described
above. The expenses of the Board of Directors, or the individual or
individuals described in the preceding sentence, shall be paid directly by the
Company.



Incapacity. If a benefit is payable to a minor, to a person declared
incompetent, or to a person incapable of handling the disposition of his or
her property, the Company may pay such benefit to the guardian, legal
representative, or person having the care or custody of such minor,
incompetent person, or incapable person. The Company may require proof of
incompetence, minority, or guardianship as it may deem appropriate prior to
distribution of the benefit. Such distribution shall completely discharge the
Company from all liability with respect to such benefit.


FUNDING


Unfunded Plan. All amounts payable in accordance with the Agreement shall be
paid in cash from the general funds of the Company and no special or separate
fund, other than a “rabbi trust” established pursuant to Section 7.2 below,
shall be established, and no other segregation of assets shall be made to
assure the payment of any amounts payable in accordance with the Agreement.
The Executive shall have no right, title, or interest whatsoever in or to any
investment that the Company may make to aid it in meeting its obligations
hereunder, including, but not limited to, deemed investments. Nothing
contained in the Agreement, 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 and the Executive or any other person. To
the extent that any


45






 


person acquires a right to receive payments from the Company hereunder, such
right shall be no greater than the right of an unsecured creditor.


Rabbi Trust Allowed. The Company may, for administrative reasons, establish a
“rabbi trust” for the benefit of Executive under the Agreement. If such a
trust is established, its assets shall be used exclusively for the purposes
set forth in the Agreement and the applicable trust agreement, subject to the
following conditions:


          (a) The creation of said trust shall not cause the Agreement to be other
than “unfunded” for purposes of Title I of ERISA;




	 	 	 	The Company shall be treated as the “grantor” of said trust for
purposes of Code Section 677; and
	 
	 	 	 	The trust agreement shall provide that its assets may be used to
satisfy claims of the Company’s general creditors in the event of
insolvency, and the rights of such general creditors in such
circumstances are enforceable by them under federal and state law.



          It is intended that such a trust be consistent with tax law requirements
preventing inclusion in income for income tax purposes prior to actual payment
of benefits under the Agreement. If such a trust is established, then prior to
the payment of benefits to the Executive, there shall be no actual transfer of
assets to the Executive under the Agreement and trust, and the Agreement and
trust shall confer no current benefit that would be immediately taxable to the
Executive under the constructive receipt rule or economic benefit doctrine
under the tax laws.



AMENDMENT AND TERMINATION


Amendment or Termination. This Agreement may be amended or terminated only by
written mutual agreement between the Company and the Executive.


Reorganization of the Company. The Company shall not merge or consolidate into
or with another company, or reorganize, or sell substantially all of its
assets to another company, firm, or person unless such succeeding or
continuing company, firm, or person agrees to assume and discharge the
obligations of the Company under this Agreement. Upon the occurrence of such
event, the term “Company” as used in this Agreement shall be deemed to refer
to the successor or survivor company.


46






 


Claims and Review Procedures


Claims Procedure. An Executive or Beneficiary (the “Claimant”) who has not
received benefits under the Agreement that he or she believes should be paid
may make a claim for such benefits as follows:


Initiation – Written Claim. The Claimant may initiate a claim by submitting
to the Company a written claim for benefits.


Timing of Company Response. The Company shall respond to such Claimant within
90 days after receiving the claim. If the Company determines that special
circumstances require additional time for processing the claim, the Company
may extend the response period by an additional 90 days by notifying the
Claimant in writing, prior to the end of the initial 90-day period, that an
additional period is required. The notice of extension shall set forth the
special circumstances and the date by which the Company expects to render its
decision.


Notice of Decision. If the Company denies part or all of the claim, the
Company shall notify the Claimant in writing of such denial. The Company
shall write the notification in a manner calculated to be understood by the
Claimant. The notification shall set forth: (a) the specific reasons for the
denial; (b) a reference to the specific provisions of the Agreement on which
the denial is based; (c) description of any additional information or material
necessary for the Claimant to perfect the claim and an explanation of why it
is needed; (d) an explanation of the Agreement’s review procedures and the
time limits applicable to such procedures; (e) and a statement of the
claimant’s right to bring a civil action under ERISA Section 502(a) following
an adverse benefit determination on review.


Review Procedure. If the Company denies part or all of the claim, the
Claimant shall have the opportunity for a full and fair review by the Company
of the denial, as follows:


Initiation – Written Request. In order to initiate the review, the Claimant,
within 60 days after receiving the Company’s notice of denial, may file with
the Company a written request for review.


Additional Submissions – Information Access. The Claimant shall then have the
opportunity to submit written comments, documents, records, and other
information relating to the claim. The Company shall also provide the
Claimant, upon request and free of charge, reasonable access to, and copies
of, all documents, records and other information relevant (as defined in
applicable ERISA regulations) to the Claimant’s claim for benefits.


47






 


Considerations on Review. In considering the review, the Company shall take
into account all materials and information the Claimant submits relating to
the claim, without regard to whether such information was submitted or
considered in the initial benefit determination.



Timing of Company Response. The Company shall respond in writing to such
claimant within 60 days after receiving the request for review. If the
Company determines that special circumstances require additional time for
processing the claim, the Company can extend the response period by an
additional 60 days by notifying the claimant in writing, prior to the end of
the initial 60-day period, that an additional period is required. The notice
of extension must set forth the special circumstances and the date by which
the Company expects to render its decision.



Notice of Decision. The Company shall notify the Claimant in writing of its
decision on review. The Company shall write the notification in a manner
calculated to be understood by the Claimant. The notification shall set
forth: (a) the specific reasons for the denial; (b) a reference to the
specific provisions of the Agreement on which the denial is based; (c) a
statement that the Claimant is entitled to receive, upon request and free of
charge, reasonable access to, and copies of, all documents, records and other
information relevant (as defined in applicable ERISA regulations) to the
Claimant’s claim for benefits; and (d) a statement of the Claimant’s right to
bring a civil action under ERISA Section 502(a).



LEGAL STATUS



          This Agreement is intended to constitute a nonqualified deferred
compensation agreement which is not subject to the qualification requirements
of Code Section 401(a). Further, this Agreement is intended to constitute an
“top hat” arrangement within the meaning of ERISA 201(2) and is not subject to
the coverage, funding, and fiduciary requirements of ERISA. Finally, until
the occurrence of a distribution event and the actual payment to the Executive
of a benefit hereunder, it is intended that there has been no transfer of any
benefit to the Executive under Code Section 83 and no benefit is subject to
inclusion for income tax purposes.


Miscellaneous



Binding Effect. This Agreement shall bind the Executive and the Company, and
their beneficiaries, survivors, executors, successors, administrators and
transferees.




48






 





No Guarantee of Employment. This Agreement is not an employment policy or
contract. It does not give the Executive the right to remain an employee of
the Company, nor does it interfere with the Company’s right to discharge the
Executive. It also does not require the Executive to remain an employee nor
interfere with the Executive’s right to terminate employment at any time.


Nontransferability. Benefits under this Agreement cannot be sold, transferred,
assigned, pledged, attached, or encumbered in any manner.


Notice. Any notice, consent, or demand required or permitted to be given
under the provisions of this Agreement by one party to another shall be in
writing, shall be signed by the party giving or making the same, and may be
given either by delivering the same to such other party personally, or by
mailing the same, by United States certified mail, postage prepaid, to such
party, addressed to their last known address as shown on the records of the
Company. The date of such mailing shall be deemed the date of such mailed
notice, consent, or demand.


Tax Withholding. The Company shall withhold any taxes that are required to be
withheld from the benefits provided under this Agreement.


Applicable Law. The Agreement and all rights hereunder shall be governed by
the laws of the State of Hawaii, except to the extent preempted by the laws of
the United States of America.


Entire Agreement. This Agreement constitutes the entire agreement between the
Company and the Executive as to the subject matter hereof. No rights are
granted to the Executive by virtue of this Agreement other than those
specifically set forth herein.


Named Fiduciary. The Company shall be the named fiduciary and plan
administrator under this Agreement. It may delegate to others certain aspects
of the management and operational responsibilities including the employment of
advisors and the delegation of ministerial duties to qualified individuals.


Construction. The headings of the Articles in this Agreement is provided for
convenience only and will not affect its construction or interpretation. All
references to “Article” or “Articles” refer to the corresponding Article or
Articles of this Agreement. Wherever any words are used under the Agreement in
the masculine, feminine, or neuter gender, they shall be construed as though
they were also used in another gender in all cases where they would so apply.


49






 


          IN WITNESS WHEREOF, the Company and the Executive have signed this
Agreement on the date first written above.




	 	 	 
	COMPANY:	 	 
	 	 	 
	CB BANCSHARES, INC.	 	
EXECUTIVE:
	 	 	 
	By /s/ Ronald K. Migita	 	
        /s/ Douglas R. Weld
	Title: President and Chief Executive Officer	 	
DOUGLAS R. WELD



50






 



EXHIBIT 1

CB BANCSHARES, INC.

SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENT

FOR DOUGLAS R. WELD



FORM OF BENEFIT ELECTION



     As the Executive under the above-named agreement (“Agreement”), and in
accordance with Sections 2.1 and 2.4 of the Agreement, I understand that I am
required to elect the Actuarial Equivalent form of distribution of my Normal
Retirement Benefit and Change of Control Benefit, respectively, as of the date
of the Agreement. I understand that this election is irrevocable and that I am
not entitled to change the form of distribution hereby elected. However, I
understand that, prior to the commencement of the distribution of my benefit,
the Company shall allow me to file a petition with the Company which may
request a change in the form of distribution, and the Board of Directors, in
its sole and complete discretion, may accept or reject such a request. I
hereby elect the form of distribution as indicated below (check appropriate
boxes):


     Section 2.1
of the Agreement – Normal Retirement Benefit



	 	o	 	Equal monthly installments over a period of 10 years commencing
as of the first day of the month following termination of employment.
	 
	 	o	 	Equal monthly installments over a period of 15 years commencing
as of the first day of the month following termination of employment.
	 
	 	o	 	Single lump sum payment within 30 days following termination
of employment.
	 
	 	o 	 	Single life annuity commencing as of the first day of the
month following termination of employment.
	 
	 	o 	 	Joint and 50% survivor annuity commencing as of the first day of
the month following termination of employment.
	 
	 	o 	 	Joint and 100% survivor annuity commencing as of the first day of
the month following termination of employment.



     Section 2.4
of the Agreement – Change of Control Benefit



	 	o 	 	Equal monthly installments over a period of 20 years commencing
as of the first day of the month following Normal Retirement Date.
	 
	 	o 	 	 Equal monthly installments over a period of 20 years commencing
as of the first day of the month following termination of employment.
	 
	 	o 	 	Single lump sum payment within 30 days following termination
of employment.
	 
	 	o 	 	Single lump sum payment made on the first day of the
                 month immediately following termination of employment.




	 	 	 	 	 	 	 
	Dated	 	 	 	Signature	 	 
	 	 	


	 	 	 	





	 	 	 
	 	 	
RECEIPT ACKNOWLEDGED:
	 	 	
CB BANCSHARES, INC.




	 	 	 	 	 	 	 
	Dated	 	 	 	By	 	 
	 	 	


	 	 	 	

	 	 	 	 	 	 	Its




51










 



EXHIBIT 2

CB BANCSHARES, INC.

SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENT

FOR DOUGLAS R. WELD



BENEFICIARY DESIGNATION FORM




	 	 	 	 	 	 	 	 	 
	Executive’s  Name	 	 	 	 	 	 
	 	 	


	Address	 	 	 	 	 	 	 	 
	 	


	Social Security	 	 	 	Birth Date	 
	 	 	


	 	 	 	




     As the Executive under the above-named agreement (“Agreement”), I hereby
acknowledge that, in accordance with the right granted to me under the
Agreement to designate and redesignate the beneficiary or beneficiaries to
receive my Agreement benefit in the event of my death following my termination
of employment and prior to the complete distribution of my retirement benefit,
I hereby designate the following beneficiaries to receive such benefit in the
order of priority as indicated:



	 	 	 	 	 
	Primary Beneficiary:	 
	 	 	 	 	 
	Full name:	 	 	 
	 	 	


	Street address:	 	 
	 	 	


	City/State/Zip code:	 	 
	 	 	 	


	Social Security Number:
	 	 	 	 	


	Relationship to me:	 
	 	 	 	





     Contingent Beneficiary (i.e., my designated beneficiary in the event my
primary beneficiary predeceases me):



	 	 	 	 	 
	Full name:	 	 	 
	 	 	


	Street address:	 	 
	 	 	


	City/State/Zip code:	 	 
	 	 	 	


	Social Security Number:
	 	 	 	 	


	Relationship to me:	 
	 	 	 	






I understand that I may change these beneficiary designations by filing a new
written designation with the Company. I further understand that the
designations will be automatically revoked if the beneficiary predeceases me,
or, if I have named my spouse as beneficiary and our marriage is subsequently
dissolved. I understand that any beneficiary designation is not valid unless
received by the Company prior to my death.



	 	 	 	 	 	 	 	 	 
	Dated	 	 	 	Signature	 	 	 
	 	


	 	 	 	



	 	 	 	 	 	 	 	 	 
	 	 	 	 	RECEIPT ACKNOWLEDGED:
	 	 	 	 	CB
BANCSHARES, INC.
	 	 	 	 	 	 	 
	Dated	 	 	 	By	 	 	 	 
	 	 	


	 	 	

	 	 	 	 	 	Its	 	 



52






 



EXHIBIT 3

CB BANCSHARES, INC.

SUPPLEMENTAL EXECUTIVE RETIREMENT AGREEMENT

FOR DOUGLAS R. WELD



ASSUMPTIONS

(Effective as of May 1, 2003)



Section 1.11 Pension Offset



     For purposes of determining the projected Pension Offset as of the Normal
Retirement Date, the following assumptions shall apply: (a) an annual employer
contribution rate of 3% of eligible compensation to the existing qualified
401(k) plan maintained by the Company; (b) an annual employer contribution rate
of 1% of eligible compensation to the existing qualified employee stock
ownership plan maintained by the Company; (c) 7% annual earnings under such
plans; and (d) 4.5% annual salary increase.


53