Exhibit 10.9


 


Effective as of September 14, 2004


 


Dean
K. Hirata

46-255 Ikiiki Street

Kaneohe, Hawaii 96744


 


Re:       Employment Agreement


 


Dear
Dean:


 


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 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. Dean K. Hirata


 


	
  Name and address for notices

  	
   

  	
  Dean K. Hirata

  46-255 Ikiiki Street

  Kaneohe, Hawaii 96744

  Facsimile: (808) 535-2524

  
	
   

  	
   

  	
   

  
	
  Position

  	
   

  	
  You will serve as Executive Vice President and Chief Financial
  Officer of the Company and Central Pacific Bank.

  
	
   

  	
   

  	
   

  
	
  Reporting, Authority and Responsibilities

  	
   

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

  
	
   

  	
   

  	
   

  
	
  Other Activities

  	
   

  	
  Director, Japanese Cultural Center of Hawaii

  Director, Hawaii Meals on Wheels

  
	
   

  	
   

  	
   

  
	
  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

  	
   

  	
  $200,000

  
	
   

  	
   

  	
   

  
	
  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 June 1, 2002, with CB
  Bancshares continued in effect.

  
	
   

  	
   

  	
   

  
	
  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 May 13, 1999,  with CB
  Bancshares, as amended (the “CB CIC
  Agreement”) and

  



 





















 


	
   

  	
   

  	
  your Supplemental Executive Retirement Agreement, dated June 1,
  2002, 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 Oahu Country
  Club.

  

  Other Perquisites. The Company
  will (i) reimburse your cell phone charges for one cell phone 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:

   

  (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

  	
   

  	
  You may not terminate your employment for Good Reason unless, you provide the Company a
  Termination Notice at least 15 days prior to the termination date and the
  Company is given an opportunity to cure before the

  



 


2





















 


	
   

  	
   

  	
  termination date specified in such notice.

  

  Notwithstanding the foregoing, if you terminate your employment prior to 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 may not terminate your employment unless you provide the
  Company 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 (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).

  
	
   

  	
   

  	
   

  
	
  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
  $824,548.77  (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 prior to December 31, 2005, for a reason other
  than as specified under Sections

  



 


3





















 


	
   

  	
   

  	
  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.

   

  (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) and (b) $19,708.58, in each case payable in equal monthly
  installments over a 20 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 $736,000.

   

  (4)   The Company will reimburse reasonable
  expenses you incur within one year of termination for outplacement services
  to be provided you by an entity you reasonably select, subject to a maximum of $25,000.

  
	
   

  	
   

  	
   

  
	
  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)   In the event of your Death during your
  employment, the Company will pay your beneficiary(ies) the greater of (a) the
  actuarial equivalent of the Preretirement Death Benefit under Section 3.1
  of your CB SERP Agreement (calculated as if your CB SERP Agreement had
  continued in effect until your Death and provided

  



 


4





















 


	
   

  	
   

  	
  you have not received or commenced receiving any
  benefit under Article 2 of your CB SERP Agreement) payable in equal
  monthly installments over a 20 year term commencing on the first day of the
  month following your death and (b) the actuarial equivalent of your CIC SERP
  Benefit, payable in equal monthly installments over a 20 year term commencing
  on the first day of the month following your death. Instead of receiving your
  CIC SERP Benefit in the form of a monthly installment, your beneficiary(ies)
  may elect to receive it in the form of a lump-sum payable upon your death and
  the amount of such lump-sum would be the present value of the CIC SERP
  Benefit using a discount rate of 7%.

   

  (3)   In the event of your Disability during your
  employment, the Company will pay you the greater of (a) the actuarial
  equivalent of the Disability Benefit under Section 2.3 of your CB SERP
  Agreement (calculated as if your CB SERP Agreement had continued in effect
  until the date of your Disability), payable in equal monthly installments
  over a 216-month term commencing on the first day of the month following your
  65th birthday and (b) the CIC SERP Benefit payable in equal
  monthly installments over a 20 year term commencing on the first day of the
  month following your 65th birthday. Instead of receiving your CIC 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 upon your disability
  and the amount of such lump-sum would be the present value of the CIC SERP
  Benefit using a discount rate of 7%.

  
	
   

  	
   

  	
   

  
	
  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

  



 


5





















 


	
   

  	
   

  	
  merger contemplated by the Merger Agreement.

   

  If you terminate your employment for any reason or no reason prior to
  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 sections (1) and
  (3) of the “Additional Good Reason/Without Cause 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 section (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


Dean K. Hirata


 


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


Dean K. Hirata


 


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”).


 





















 


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: