Exhibit 10.10


 


Effective as of September 14, 2004


 


Douglas R. Weld

1048 Kaolo Street

Honolulu, Hawaii 96825


 


Re:                      Employment
Agreement


 


Dear Doug:


 


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”)


 





















 


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 willful 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.  “Proprietary
Information” 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.


 


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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





















 


(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) 544-0779


 


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,

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Clint
  Arnoldus

  
	
   

  	
  Chief
  Executive Officer

  



 


 


	
  Accepted and
  Agreed:

  
	
   

  
	
   

  	
   

  
	
  Date:

  



 


14





















 


Terms Schedule


to Employment Agreement of


Mr. Douglas R. Weld


 


	
  Name and address for notices

  	
  Douglas R. Weld
1048 Kaolo Street

  Honolulu, Hawaii 96825
Facsimile: None

  
	
   

  	
   

  
	
  Position

  	
  You will serve as
  Executive Vice President and Chief Credit Officer of Central Pacific Bank.

  
	
   

  	
   

  
	
  Reporting, Authority and Responsibilities

  	
  You will report to the Chief Executive Officer of Central Pacific
  Bank. You will have the authority and responsibilities at least commensurate
  with the authority and responsibilities you held during the 90-day period
  immediately preceding the Effective Time (as defined in the Merger Agreement
  - being September 15, 2004).

  
	
   

  	
   

  
	
  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

  	
  $195,000

  
	
   

  	
   

  
	
  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.

  
	
   

  	
   

  
	
  Other Executive Compensation Plans

  	
  You agree that you will not be entitled to participate in any
  supplemental executive retirement plans sponsored by the Group. However,
  notwithstanding the foregoing, under the circumstances provided in this Agreement,
  you will be provided with benefits and/or payments as if your Supplemental
  Executive Retirement Agreement, dated May 1, 2003, with CB Bancshares (“CB
  SERP Agreement”) continued in effect.

  
	
   

  	
   

  
	
   

  	
  Moreover, in the event of any termination for Good Reason by you, to
  include termination for any reason or no reason by you on or before December
  31, 2005, you shall be entitled to receive payment of the greater of: (i) the
  Early Termination Benefit under Section 2.2 of your CB SERP Agreement or (ii)
  the Change of Control Benefit under Section 2.4 of your CB SERP Agreement,
  notwithstanding the lack of any further Change of Control (as defined in your
  CB SERP Agreement) or

  



 





















 


	
   

  	
  Change in Control (as defined in this Agreement and/or this
  Schedule).

  
	
   

  	
   

  
	
  Additional Benefits

  	
  Employee Benefit Plans. For purposes of
  determining eligibility to participate in, and vesting under, the Group’s
  employee benefit and welfare plans, you will be credited fully for your
  service with any member of the “controlled group of corporations” of which CB
  Bancshares was a member.

  
	
   

  	
   

  
	
   

  	
  Treatment of CBBI CIC Agreement and SERP
  Agreement. You
  understand that, as of your Start Date, this Agreement will supersede and
  replace (a) your Change of Control Agreement, dated July 22, 2003, with
  CB Bancshares (the “CB CIC Agreement”)
  and your Supplemental Executive Retirement Agreement, dated May 1, 2003, with CB Bancshares (the “CB SERP
  Agreement”). However, under the circumstances provided in this
  Agreement, you will be provided with benefits and/or payments as if these
  agreements continued in effect.

  
	
   

  	
   

  
	
   

  	
  Treatment of CBBI Options. You agree that you have waived any
  further rights under Section 7(d)(iii) of your CB CIC Agreement to receive cash in return for your CB
  Bancshares options and agree that these options will be converted into
  options to purchase common stock of the Company in accordance with the terms
  of the Merger Agreement.

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  
	
   

  	
  Club Dues. The Company will reimburse you
  for the customary annual club membership dues at a Hawaii country club in
  which you are a member.

  
	
   

  	
   

  
	
   

  	
  Other Perquisites. The Company will (i)
  either provide you with or reimburse you for cell phone charges for two cell
  phones to be used primarily for business purposes, (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:

  



 


2





















 


	
   

  	
  (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).

  
	
   

  	
   

  
	
   

  	
  (2)   If
  you terminate your employment for any reason or no reason prior to December
  31, 2005.

  
	
   

  	
   

  
	
  Good Reason Steps

  	
  If you terminate your employment on or before December 31, 2005,
  pursuant to clause (2) of this Schedule (in other words by invoking your
  right to “terminate your employment for any reason or no reason prior to
  December 31, 2005”), then in such event the Company shall not be given any
  opportunity to cure (cure not being applicable to this instance). You agree
  that you will provide the Company with a Termination Notice at least 60 days
  prior to the termination date and/or agree to continue your employment with
  the Company for a period of at least 60 days after having given the
  Termination Notice, and in either event 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. In the event the Company accelerates the
  end of your employment or places you on paid leave during the aforementioned
  60-day period, the Company will pay you for the full 60-day notice period. 

  
	
   

  	
   

  
	
   

  	
  If you terminate your employment for any other “Good Reason” (other
  than pursuant to clause (2) of this Schedule) under Sections 7(c)(1)(A), (B),
  (C), (D), or clause (1) under the “Good Reason” section of this Schedule,
  then in such event the Company shall be given an opportunity to cure before
  the termination date specified in such notice. You agree that you will
  provide the Company with a Termination Notice at least 60 days prior to the
  termination date and/or agree to continue your employment with the Company
  for a period of at least 60 days after having given the Termination Notice,
  and in either event 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. In the event the Company accelerates the end of your
  employment or places you on paid leave during the aforementioned 60-day
  period, the Company will pay you for the full 60-day notice period.

  



 


3





















 


	
  Severance Period

  	
  Your Severance Period will be the lesser of 2 years or the remainder
  of the Agreement Period.

  
	
   

  	
   

  
	
  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)   The
  Company will pay you any excess of $819,579.53  (your “Existing
  Severance Amount”) over the severance amount under Section
  8(b)(3).

  
	
   

  	
   

  
	
   

  	
  (2)   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).  Notwithstanding
  the foregoing, if you terminate your employment on or before December 31,
  2005, for a reason other than as specified under Sections 7(c)(1)(A), (B),
  (C), (D), or clause (1) under the “Good Reason” section of this Schedule, you
  will not be entitled to receive Welfare Benefits, as consideration for such
  Welfare Benefits is covered in your Existing Severance Amount. However, you
  will be entitled to elect to receive coverage under COBRA for a minimum of 18
  months after any such termination.

  
	
   

  	
   

  
	
   

  	
  (3)   The
  Company will pay you the greater of (a) the actuarial equivalent of the
  Normal Retirement Benefit under Section 2.1.1 of your CB SERP Agreement
  (calculated as if your CB SERP Agreement had continued in effect until the
  effective date of termination of your employment); or (b) $6,124.33, in each
  case in equal monthly installments over a 20

  



 


4





















 


	
   

  	
  year term commencing on the first day of
  the month following your 65th birthday. We refer to your right in this Clause
  (3) as your “SERP  Benefit,”
  the benefit in Clause (3)(a) as the “Normal  SERP  Benefit” and
  the benefit in Clause 3(b) as the “CIC  SERP  Benefit”.
  Instead of receiving your SERP Benefit in the form of a monthly installment
  commencing at age 65, you may elect to receive it in the form of a lump-sum
  payable at age 65 or, if earlier, your termination of employment: in the case
  of Clause (3)(a), the amount of such lump-sum would be the actuarial
  equivalent of the Normal SERP Benefit, and in the case of Clause (3)(b), the
  amount of such lump-sum would be the present value of the CIC SERP Benefit
  using a discount rate of 7%. As an illustration, as of your Start Date, the
  lump sum value of your CIC SERP Benefit is approximately $426,000.

  
	
   

  	
   

  
	
  Additional Death/Disability Benefits

  	
   

  	
  If your employment terminates as a result of your Death or
  Disability: 

  
	
   

  	
   

  	
  (1)   The
  Company will pay your Existing Severance Amount. 

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (2)   The
  Company will pay your SERP Benefit.

  
	
   

  	
   

  	
   

  
	
  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 the payments and benefits
  provided in the Change in Control Annex will substitute for those stated in
  Section 8, provided, however, your
  entitlement to the excess of your Existing Severance Amount over the
  severance amount under Section 8(b)(3) will terminate on the third anniversary
  of your Start Date.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  You are entitled to the additional payments set forth in the attached
  Additional Payments Annex. For the avoidance of doubt, the Company
  acknowledges that the rights conveyed pursuant to the Additional Payments
  Annex will apply to payments in connection with the merger contemplated by
  the Merger Agreement.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  If you terminate your
  employment for any reason or no reason on or before December 31, 2005, the
  Company will pay you those amounts set forth in Sections 8(b)(1), 8(b)(2) and
  8(b)(3) of the Agreement and clauses (1) and (3) of the “Additional Good
  Reason/Without Cause

  



 


5





















 


	
   

  	
  Benefits” section of this
  Schedule. You will not receive payments which are duplicative of payments
  calculated as part of the Existing Severance Amount, such as, for example
  payments under clause (2) of the “Additional Good Reason/Without Cause
  Benefits” section of this Schedule. 

  
	
   

  	
   

  
	
   

  	
  Your entitlement to your SERP Benefit shall survive termination of
  the Agreement, and the Company will pay you your SERP Benefit on any
  termination of your employment.

  
	
   

  	
   

  
	
  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.

  



 


6





















 


Change in Control Annex


to Employment Agreement of


Douglas R. Weld


 


 


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
(i) 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 (ii) such
Change in Control (or an alternative or competing Change in Control) actually
occurs.


 





















 


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

Douglas R. Weld


 


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


 





















 


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.


 





















 


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


 










(1)                                  Include
if applicable.


 





















 


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”).


 


2





















 


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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