exhibit10-1.htm


     

    


     

    


    March 10,
2008

    


    Clint
Arnoldus

    c/o 220
South King Street

    Honolulu,
Hawaii 96813

    


    Re:               Early
Retirement

    


    Dear
Clint:

    


    Thank you
for the constructive discussions we have had regarding your early retirement and
the transition to a new Chief Executive Officer.  The purpose of this
letter is to confirm the agreement we have reached.

    


    1. Early
Retirement and Transition

    


    (a)        Early Retirement
Date and Transition.  We understand and agree that you intend
to retire by December 31, 2008.  The Board intends to begin the
process of identifying and selecting a successor promptly.

    


    (b)        Transition
Authority and Responsibility.  From the date of this letter
until the end of your employment, you will continue as Chief Executive Officer
with the authority and responsibility set forth in your Employment Agreement
dated September 9, 2004 with the Company (your “Employment
Agreement”).  In addition, you agree that additional
responsibilities during this period will be (1) to assist the Board in the
process of identifying and selecting a successor and (2) to assist your
successor in achieving a successful transition that maintains the Group’s
existing goodwill and business relationships.

    


    (c)        Early
Retirement.  Your employment will end at the time (which will
be on or before December 31, 2008) the Board reasonably selects in connection
with the transition to a new Chief Executive Officer (a termination of
employment as contemplated by this sentence, your “Early
Retirement”).  Consistent with Section 8(h) of your Employment
Agreement, your Early Retirement will also constitute your retirement as a
director of the Company.

    


    2. Compensation
and Benefits

    


    (a)        During
Employment.  During your employment, your compensation and
benefits will continue to be governed by your Employment
Agreement.  However, it is agreed that you will not participate in the
Company’s long-term incentive grants during 2008.

    


    (b)        On Early
Retirement.  The Company agrees that your Early Retirement will
be treated as a termination of your employment by the Company without
Cause.  Accordingly, on Early Retirement, you will be entitled to the
payment and benefits set forth in Section 8(b) of your Employment Agreement and
the Terms Schedule.  For the avoidance of doubt, we confirm the
following:

    


    
      	
               
      

            	
              (1)

            	
              That
      your current salary is $630,000, that your target bonus for 2008 is
      $378,000, and that the preceding amounts will not be reduced during your
      continued employment;

            


    

    


    
      	
               
      

            	
              (2)

            	
              On
      your Early Retirement, your outstanding stock options will remain
      outstanding until they would have expired but for your termination;
      and

            


    

    


    
      	
               
      

            	
              (3)

            	
              On
      your Early Retirement, you will be entitled to the Additional Good
      Reason/Without Cause Benefits set forth in your Schedule, and to the
      payments and benefits described in Additional Provisions Related to
      Section 8 of the Agreement and Conditions to Obligations to You on Early
      Termination in the Terms Schedule.

            


    

    


    (c)        Your SERP
Benefit.  You will be entitled to your SERP Benefit on your
Early Retirement.  The Company agrees that, notwithstanding that your
Early Retirement may occur before December 31, 2008, your SERP Benefit on Early
Retirement will be calculated as if your employment continued through that date
and you will be treated for this purpose as having earned your salary and bonus
for the full year (based on your target bonus).  Accordingly, your
SERP Benefit will be based on an average salary of $860,643 and 6.9167 years of
service.

    


    (d)        Other
Terminations.  You and we agree that this Agreement will not
limit your or our ability to terminate your employment in accordance with your
Employment Agreement.  However, we agree that any termination by the
Company without Cause after the date of this letter will be deemed to be your
Early Retirement in accordance with this letter, and you agree that the terms of
this letter do not constitute Good Reason.

    


    (e)        409A
Compliance.  Notwithstanding any provision in your Employment
Agreement to the contrary, the severance payment pursuant to Section 8(b)(3) of
your Employment Agreement and your SERP Benefit must be delayed for six months
from separation from service in order to comply with Section 409A(a)(2)(B)(i) of
the Code. Accordingly, the Company will delay making these payments until the
first day after the expiration of such six month period (at which time they will
be paid in lump sum). To the extent any expense reimbursement under your
Employment Agreement (other than pursuant to a benefit plan providing for
reimbursement of expenses referred to in Section 105(b) of the Code relating to
amounts expended for medical care) is determined to be deferred compensation
subject to Section 409A of the Code, the amount of any such expenses eligible
for reimbursement in one calendar year shall not affect the expenses eligible
for reimbursement in any other taxable year, in no event shall any expenses be
reimbursed after the last day of the calendar year following the calendar year
in which you incurred such expenses, and in no event shall any right to
reimbursement be subject to liquidation or exchange for another benefit. Any
Underpayment or Overpayment pursuant to your Employment Agreement shall be paid
no later than the end of your taxable year next following the taxable year in
which the Excise Tax is remitted.  For the avoidance of doubt, the
preceding two sentences shall not extend the time by which such reimbursements,
Underpayments or Overpayments are to be made under the Terms of the Employment
Agreement.  The Company agrees that it will deliver the mutual release
contemplated by Section 8(f) of your Employment Agreement and by your Schedule
no later than 2 days after your Early Retirement and you agree it must be
executed by you, become effective and not be revoked by you by the 55th day
following your Early Retirement.

    


    3. Miscellaneous

    


    (a)        Construction.  Sections
13 and 14 of your Employment Agreement will apply to this letter (substituting
references to the “Agreement” with references to this letter).  Terms
are used in this letter as they are defined in your Employment
Agreement.  For the avoidance of doubt, references to your Employment
Agreement include the Terms Schedule, Change in Control Annex and the Additional
Payments Annex to your Employment Agreement.

    


    (b)        Existing Employment
Agreement.  Your Employment Agreement will remain in full force
and effect, as modified by this letter.

     

    


    *                                  *                                  *

    


    I hope
the preceding agrees with your understanding.  If you agree, please
sign and return this letter, which will become a binding agreement on our
receipt.

    


    


    Sincerely,

    


    Central
Pacific Financial Corp.

     

    By: /s/ Ronald K.
Migita                                                            

          
Ronald K. Migita

          
Chairman of the Board

    


    


    Accepted
and agreed:

    


    By: /s/ Clint
Arnoldus                                                                
      
Clint Arnoldus