Document:

Exhibit 10.4

 

September 9, 2004

 

Ronald K. Migita

98-868 Naukewai Place

Aiea, HI 96701-2783

 

 

 

Re:     Employment
Agreement

 

Dear Ron:

 

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

 

8

 

(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

 

9

 

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).

 

10

 

(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) 544-6835

 

with a copy to:

 

Sullivan & Cromwell LLP

125 Broad Street

New York, New York 10004

Attention:  Marc Trevino

Facsimile:  212-558-3588

 

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

 

13

 

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

 

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

 

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

 

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

 

*                      *                      *

 

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

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Clint Arnoldus

  	
   

  
	
   

  	
  Clint Arnoldus

  
	
   

  	
  Chairman, President & CEO

  
	
   

  	
   

  
	
   

  	
   

  
	
  Accepted and Agreed:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ Ronald K. Migita

  	
   

  	
   

  
	
  Date: September 10, 2004

  	
   

  
				

 

14

 

Terms Schedule

to Employment Agreement of 

Mr. Ronald K. Migita

 

 

	
  Name and address for notices

  	
   

  	
  Ronald K. Migita 
98-868 Naukewai Place

  Aiea, HI 96701-2783

  

  Facsimile: (808) 535-2518

  
	
   

  	
   

  	
   

  
	
  Position

  	
   

  	
  You will serve as Chairman (Non-Executive) of the Company.

  
	
   

  	
   

  	
   

  
	
  Other Activities

  	
   

  	
  Air Force Civilian Advisory
  Council
American Bankers Association
Boy Scouts of America (Aloha Council,
  Western Region, and National)
Hawaii Bankers Association
Hawaii Business Roundtable
Honolulu Community Reinvestment
  Corporation
Honolulu Japanese Chamber of Commerce
Japan-America Society
Public Schools of Hawaii Foundation
The Deputies
The 200 Club
University of Hawaii Foundation
University of Hawaii Alumni
  Association

  
	
   

  	
   

  	
   

  
	
  Agreement Period

  	
   

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

  
	
   

  	
   

  	
   

  
	
  Starting Salary

  	
   

  	
  $200,000

For so long as you serve as a member
  of the Board of Directors of the Company, you will receive director fees in
  the ordinary course.

  
	
   

  	
   

  	
   

  
	
  Bonus

  	
   

  	
  You agree that you will not be entitled to a Bonus.  

  
	
   

  	
   

  	
   

  
	
  Other Executive Compensation Plans

  	
   

  	
  You agree that you will not be entitled to participate in any
  supplemental retirement plan sponsored by the Group.

  
	
   

  	
   

  	
   

  
	
  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 Options. 
  You agree that you waive any further rights under Section 7(d)(iii) of
  your Change of Control Agreement, dated March 28, 1996, with CB 

  

 

 

	
   

  	
   

  	
  Bancshares to receive cash in
  return for your CB Bancshares options (effective as of the date of this
  Agreement) 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 Waialae Country Club.

  

  Other Perquisites.  The Company will (i) reimburse
  your cellphone charges up to $60 per month, (ii) provide an automobile
  allowance of $700 per month, (iii) reimburse the customary and reasonable
  cost incurred by you in maintaining a home security system at your primary
  residence and (iv) reimburse your parking fees (to the extent the Company
  does not provide you with a parking spot in the building in which you are
  required work).

  
	
   

  	
   

  	
   

  
	
  Cause Steps

  	
   

  	
  No additional steps.

  
	
   

  	
   

  	
   

  
	
  Good Reason

  	
   

  	
  The following will also constitute Good
  Reason:

  
	
   

  	
   

  	
   

  
	
   

  	
   

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

  
	
   

  	
   

  	
   

  
	
  Good Reason Steps

  	
   

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

  
	
   

  	
   

  	
   

  
	
  Severance Period

  	
   

  	
  Your Severance Period will be the 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)     Through
  the remainder of your Severance Period, you, your spouse and your dependents
  will continue

  

 

2

 

	
   

  	
   

  	
  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).  

  
	
   

  	
   

  	
   

  
	
  Additional Death/Disability Benefits

  	
   

  	
  None. 

  
	
   

  	
   

  	
   

  
	
  Additional Provisions Related to Section 8 of the Agreement.

  	
   

  	
  None.

  
	
   

  	
   

  	
   

  
	
  Restriction Period

  	
   

  	
  Your “Restriction Period” will be the period beginning on your Start
  Date and ending at the end of your Agreement Period.

  

 

3

 

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:

  

 

3Exhibit 10.5

 

September 9, 2004

 

Neal K. Kanda

2319 Halehaka Street

Honolulu, Hawaii 96821

 

Re:                      Employment
Agreement

 

Dear Neal:

 

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

 

2

 

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,

 

3

 

(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

 

4

 

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.

 

5

 

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

 

6

 

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

 

7

 

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

 

8

 

(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

 

9

 

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).

 

10

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

11

 

(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) 544-6835

 

with a copy to:

 

Sullivan & Cromwell LLP

125 Broad Street

New York, New York   10004

Attention:  Marc Trevino

Facsimile:  212-558-3588

 

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

 

13

 

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

 

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

 

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

 

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

 

*                      *                      *

 

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

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Clint Arnoldus

  	
   

  
	
   

  	
  Clint Arnoldus

  
	
   

  	
  Chairman, President & CEO

  

 

 

Accepted and Agreed:

 

	
  /s/ Neal K. Kanda

  	
   

  
	
  Date: 09/09/2004

  

 

14

 

	
   

  	
  Terms
  Schedule

  
	
   

  	
  to
  Employment Agreement of

  
	
   

  	
  Mr. Neal
  Kanda

  

 

	
  Name and address for notices

  	
  Neal Kanda

  2319 Halehaka Street
Honolulu, Hawaii 96821
Facsimile:

  
	
   

  	
   

  
	
  Position

  	
  You will serve as President and Chief Operating Officer of the
  Company and Central Pacific Bank.

  
	
   

  	
   

  
	
  Reporting, Authority and Responsibilities

  	
  You will report to the Chief Executive Officer of the Company.

  
	
   

  	
   

  
	
  Other Activities

  	
  None.

  
	
   

  	
   

  
	
  Agreement Period

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

  
	
   

  	
   

  
	
  Starting Salary

  	
  $285,000

  
	
   

  	
   

  
	
  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 40% of your Salary. Performance goals shall be set
  within the first 90 days of the Company’s fiscal year.

  
	
   

  	
   

  
	
  Additional Benefits

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

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

   

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

  
	
   

  	
   

  
	
  Cause Steps

  	
  No additional steps.

  
	
   

  	
   

  
	
  Good Reason

  	
  The following will also constitute Good Reason:

   

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

  

 

 

	
   

  	
  obligations at the time of this Agreement).

  
	
   

  	
   

  
	
  Good Reason Steps

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

  
	
   

  	
   

  
	
  Severance Period

  	
  Your Severance Period will be 2 years.

  
	
   

  	
   

  
	
  Additional Good Reason/Without Cause Benefits

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

   

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

   

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

  
	
   

  	
   

  
	
  Additional Death/Disability Benefits

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

  
	
   

  	
   

  
	
  Additional Provisions Related to Section 8 of the Agreement.

  	
  If the Company does not offer to renew this Agreement on
  substantially identical terms before your Agreement Period expires, you will
  be entitled to payments and benefits under Section 8 as if your employment
  terminated for Good Reason at the end of your

  

 

2

 

	
   

  	
  Agreement Period.

   

  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. You are entitled to the additional payments set forth in the
  attached Additional Payments Annex.

  
	
   

  	
   

  
	
  Restriction Period

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

   

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

  

 

3

 

	
   

  	
  Change in Control Annex

  
	
   

  	
  to Employment Agreement of

  
	
   

  	
  Neal K. Kanda

  

 

1.             Change in Control

 

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

 

(i)        Individuals who, on the
date of the Agreement, constitute the Board (the “Incumbent Directors”) cease
for any reason to constitute at least a majority of the Board, provided that
any person becoming a director subsequent to the date of the Agreement, whose
election or nomination for election was approved by a vote of at least
two-thirds of the Incumbent Directors then on the Board (either by a specific
vote or by approval of the proxy statement of the Company in which such person
is named as a nominee for director, without written objection to such
nomination) shall be an Incumbent Director; provided, however, that no individual initially elected or nominated
as a director of the Company as a result of an actual or threatened election
contest with respect to directors or as a result of any other actual or
threatened solicitation of proxies or consents by or on behalf of any person
other than the Board shall be deemed to be an Incumbent Director;

 

(ii)       Any “person” (as such
term is defined in Section 3(a)(9) of the Securities Exchange Act of 1934,
as amended (the “Exchange Act”)
and as used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act) is or
becomes a “beneficial owner” (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company representing 25% or
more of the combined voting power of the Company’s then outstanding securities
eligible to vote for the election of the Board (the “Company Voting Securities”); provided,
however, that the event described in
this paragraph (ii) shall not be deemed to be a Change in Control by
virtue of any of the following acquisitions:  (A) by the Company
or any Subsidiary, (B) by any employee benefit plan (or related trust) sponsored
or maintained by the Company or any Subsidiary, (C) by any underwriter
temporarily holding securities pursuant to an offering of such securities,
(D) pursuant to a Non-Qualifying Transaction (as defined in paragraph
(iii), or (E) pursuant to any acquisition by you or any group of persons
including you (or any entity controlled by you or any group of persons
including you); or

 

(iii)      The consummation of a
merger, consolidation, statutory share exchange, sale of all or substantially
all of the Company’s assets, a plan of liquidation or dissolution of the
Company or similar form of corporate transaction involving the Company or any
of its Subsidiaries that requires the approval of the Company’s stockholders,
whether for such transaction or the issuance of securities in the transaction
(a “Business Transaction”),
unless immediately following such Business Transaction:  (A) more than 50%  of the total voting power of
(x) the corporation resulting from such Business Transaction (the “Surviving Corporation”),
or (y) if applicable, the ultimate parent corporation that directly or
indirectly has beneficial ownership of at least 95% of the voting securities
eligible to elect directors of the Surviving Corporation (the “Parent Corporation”),
is represented by Company Voting Securities that were outstanding immediately
prior to such Business Transaction (or, if applicable, is represented by shares
into which such Company Voting Securities were converted pursuant to such
Business Transaction), and such voting power among the holders thereof is in
substantially the same proportion as the voting power of such Company Voting
Securities among the holders thereof immediately prior to the Business
Transaction, (B) no person (other

 

 

than any employee benefit plan
(or related trust) sponsored or maintained by the Surviving Corporation or the
Parent Corporation),  is or
becomes the beneficial owner, directly or indirectly, of 25% or more of the
total voting power of the outstanding voting securities eligible to elect
directors of the Parent Corporation (or, if there is no Parent Corporation, the
Surviving Corporation) and (C) at least a majority of the members of the
board of directors of the Parent Corporation (or, if there is no Parent
Corporation, the Surviving Corporation) following the consummation of the
Business Transaction were Incumbent Directors at the time of the Board’s
approval of the execution of the initial agreement providing for such Business
Transaction  (any Business
Transaction which satisfies all of the criteria specified in (A), (B) and (C)
above shall be deemed to be a “Non-Qualifying
Transaction”).

 

Notwithstanding the foregoing, a Change in Control of the Company shall
not be deemed to occur solely because any person acquires beneficial ownership
of more than 25% of the Company Voting Securities as a result of the
acquisition of Company Voting Securities by the Company which reduces the
number of Company Voting Securities outstanding; provided,
that if after such acquisition by the
Company such person becomes the beneficial owner of additional Company Voting
Securities that increases the percentage of outstanding Company Voting
Securities beneficially owned by such person, a Change in Control of the
Company shall then occur.

 

2.             Qualifying
Terminations

 

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

 

(a)       The Company terminating
your employment without Cause;

 

(b)      Your terminating your
employment for Good Reason;

 

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

 

 

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

  
	
   

  	
  Neal K.
  Kanda

  

 

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:

  

 

3

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