Document:

TERRITORIAL BANCORP INC.
                              EMPLOYMENT AGREEMENT

     THIS AGREEMENT (the  "Agreement") is made and entered into this 13th day of
November,  2009, by and between  Territorial Bancorp Inc., a corporation located
at 1132 Bishop Street, 22nd Floor, Honolulu,  Hawaii 96813 (the "Company"),  and
Ralph Nakatsuka ("Executive").

                                   WITNESSETH

     WHEREAS,  Executive is currently  employed as Co-Chief Operating Officer of
Territorial Savings Bank (the "Bank"); and

     WHEREAS,  the Bank has  adopted  a Plan of  Conversion  and  Reorganization
pursuant to which the Bank has become a wholly owned  subsidiary  of the Company
(the "Conversion"); and

     WHEREAS, the Company desires to assure itself of the continued availability
of the Executive's services as provided in this Agreement; and

     WHEREAS,  Executive  is  willing  to serve  the  Company  on the  terms and
conditions hereinafter set forth; and

     WHEREAS,  Executive  has  previously  entered  into a  separate  employment
agreement with the Bank.

     NOW, THEREFORE,  in consideration of the mutual covenants herein contained,
and upon the other terms and conditions hereinafter provided, the parties hereby
agree as follows:

1. Employment.  During the term of this Agreement,  which is effective as of the
date first set forth above (the "Commencement  Date"),  Executive shall continue
to serve in the capacity of Co-Chief Operating Officer of the Company. Executive
shall  continue to render such  administrative  and  management  services to the
Company as are currently  rendered and as are  customarily  performed by persons
situated in a similar  executive  capacity.  Executive shall continue to promote
the business of the Company. Executive's other duties shall be such as the Board
of Directors of the Company (the "Board of  Directors" or "Board") may from time
to time reasonably direct, including normal duties as an officer of the Company.

2. Base  Compensation.  The Company  agrees to pay Executive  during the Term of
this Agreement (as  hereinafter  defined in Section 6) a base salary at the rate
of  $282,555  per  annum,  payable  in  accordance  with the  customary  payroll
practices of the Company;  provided,  however, that the rate of Executive's base
salary shall be reviewed by the Board of Directors not less often than annually,
and Executive  shall be entitled to receive annual  increases at such percentage
or in such an amount  as the Board of  Directors,  in its sole  discretion,  may
decide.

3. Discretionary  Bonus.  Executive shall be entitled to receive an annual bonus
in an amount which is based on the bonus program maintained by the Company as of
the date of this  Agreement and shall be eligible to  participate  in any future
bonus  program  adopted  by  the

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Company in an  equitable  manner.  No other  compensation  provided  for in this
Agreement shall be deemed a substitute for Executive's  right to receive bonuses
when and as declared by the Board of Directors or as provided for by any plan or
program of the Company.

4. Expenses.  During the term of this Agreement,  Executive shall be entitled to
receive prompt  reimbursement of all reasonable expenses incurred (in accordance
with the policies and  procedures of the Company) in performing  services  under
this  Agreement,  provided  that  Executive  properly  accounts  for expenses in
accordance  with the policies of the Company and provided  further that all such
reimbursements  pursuant to this Section 4 shall be paid promptly by the Company
and in any event no later than March 15 of the year  immediately  following  the
year in which the expense was incurred.

5. Employee Benefits.

     (a)  Participation  in Retirement and Executive  Benefit  Plans.  Executive
shall be entitled,  while employed under the terms of this Agreement, to receive
all benefits under any  tax-qualified or non-qualified  employee benefit plan or
arrangement  in  effect  as of the date of this  Agreement  or that the  Company
implements  at any time during the term of this  Agreement.  Executive  shall be
entitled to participate in such future plans or  arrangements  on the same terms
as other employees of the Company or as established by the Company for Executive
or other selected employees.

     (b) Fringe  Benefits.  Executive  shall be entitled to receive any benefits
under any fringe benefit plan or policy that is in effect as of the date of this
Agreement,  including any discount or reduced fee employee loan program, or that
the Company  implements  at any time during the term of this  Agreement,  on the
same  terms  as the  Company's  senior  management  employees.  Nothing  paid to
Executive under any plan or arrangement presently in effect or made available in
the future will be deemed to be in lieu of base salary or other  compensation to
Executive under this Agreement.

     (c) Automobile,  Cellular Phone Use, Computer and Memberships.  The Company
or the Bank shall provide  Executive with the use of an automobile in accordance
with the Company's or the Bank's automobile policy for executive vice presidents
and  above,  as in  effect  from time to time.  The  Company  or the Bank  shall
annually include on Executive's Form W-2 any amount  attributable to Executive's
personal  use of such  automobile.  The  Company or the Bank shall also  provide
Executive  with  the  use of a  cellular  phone  and  shall  pay  (or  reimburse
Executive) for all  reasonable  expenses  related to the use of such phone.  The
Company  or the Bank  shall also  provide  Executive  with the use of a personal
digital assistant or similar device, and home, portable and office computers and
shall pay (or reimburse  Executive) for all reasonable  expenses  related to the
use of such  computers or devices.  In  addition,  the Company or the Bank shall
reimburse  or  pay  Executive  amounts   sufficient  to  establish  or  maintain
membership in any club or  organization  (business,  social or otherwise)  which
will benefit the Company or the Bank  (including  such fees or dues  relating to
the use of the club or organization).

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     (d)  Paid  Leave  Time.  Executive  shall  be  entitled  to  leave  time in
accordance  with the  standard  policies or  practices of the Company for senior
executive officers, as in effect from time to time.

     (e) Financial Planning.  Executive shall be entitled to use the services of
a tax professional and a personal financial planning  professional (which may be
the same person or entity for both services (the "Tax Service  Professional") of
his choosing and seek  reimbursement  by the Company for the reasonable  cost of
such Tax Service Professional  actually incurred by the Executive.  The services
to be provided shall include (i) the preparation of all required federal,  state
and local  personal  income tax  returns,  (ii) advice with  respect to federal,
state and local  income tax  treatment  of cash and other forms of  compensation
paid to the  Executive  by the  Company  and  (iii)  investment  and  retirement
counseling and estate planning.  Notwithstanding the foregoing,  the annual cost
to the Company of such  services  shall not exceed  $5,000 (the "Annual  Cost").
Reimbursement  of the Annual  Cost shall be paid  promptly by the Company and in
any event no later than March 15 of the year  immediately  following the year in
which the Annual Cost was incurred.  The Annual Cost shall be reviewed  annually
by the  Compensation  Committee  of the  Company  and,  if  increased,  shall be
reflected in an addendum hereto.

6. Term of  Agreement.  Executive's  employment  under this  Agreement  shall be
deemed to have  commenced as of the  Commencement  Date and shall continue for a
period of thirty-six (36) calendar months thereafter.  Commencing on February 1,
2010  and  continuing  on  February  1st  of  each  year  thereafter   (each  an
"Anniversary Date"), the disinterested  members of the Board of Directors of the
Company may extend the Agreement an additional year such that the remaining term
of the Agreement shall be thirty-six (36) months, unless Executive elects not to
extend the term of this Agreement by giving  written  notice in accordance  with
Section 14 of this Agreement.  The Board of Directors of the Company will review
the Agreement and Executive's  performance  annually for purposes of determining
whether to extend the Agreement  and the rationale and results  thereof shall be
included in the minutes of the Board's  meeting.  The Board of  Directors of the
Company  shall give written  notice to Executive as soon as possible  after such
review as to whether the Agreement is to be extended;  provided, however, if the
Board  fails to  conduct  such  review or if  written  notice of  nonrenewal  is
provided to Executive, then in such case the term of this Agreement shall become
fixed  and  shall  cease at the end of  thirty-six  (36)  full  calendar  months
following the Anniversary Date.

7. Noncompetition and Confidentiality.

     (a) Executive  shall devote his full time and attention to the  performance
of his  employment  under this  Agreement.  Upon any  termination of Executive's
employment  hereunder  pursuant to Section 8(b) of this Agreement  (other than a
termination  which  occurs  after the  effective  date of a Change in  Control),
Executive  agrees  not to compete  with the  Company  or any  subsidiary  of the
Company for a period of one (1) year  following  such  termination  in any city,
town or county in which  Executive's  normal  business  office is  located or in
which the Company or any subsidiary of the Company has an office or has filed an
application for regulatory approval to establish an office, determined as of the
effective date of such termination, except as agreed to pursuant to a resolution
duly adopted by the Board of Directors. Executive agrees that during such period
and within said  cities,  towns and  counties,  Executive  shall not work for or
advise,  consult or otherwise  serve with,  directly or  indirectly,  any entity
whose

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business  materially  competes with the  depository,  lending or other  business
activities of the Company or any subsidiary of the Company.  The parties hereto,
recognizing that irreparable injury will result to the Company or any subsidiary
of the Company,  and their  business  and  property in the event of  Executive's
breach of this  Section  7(a),  agree  that in the  event of any such  breach by
Executive,  the Company will be entitled,  in addition to any other remedies and
damages  available,  to an  injunction  to  restrain  the  violation  hereof  by
Executive,  Executive's partners,  agents,  servants,  employees and all persons
acting for or under the direction of Executive.  Executive represents and admits
that in the event he terminates  employment with the Company pursuant to Section
8(b) of this Agreement,  Executive's  experience and  capabilities are such that
Executive can obtain employment in a business engaged in other lines and/or of a
different  nature than the Company,  and that the enforcement of a remedy by way
of injunction  will not prevent  Executive  from earning a  livelihood.  Nothing
herein will be construed  as  prohibiting  the Company  from  pursuing any other
remedies available to the Company for breach or threatened breach, including the
recovery of damages from Executive.

     (b)  Executive  recognizes  and  acknowledges  that  the  knowledge  of the
business  activities  and plans for  business  activities  of the  Company  is a
valuable,  special and unique asset of the  business of the  Company.  Executive
will not, during or after the term of his employment,  disclose any knowledge of
the past,  present,  planned or considered business activities of the Company to
any  person,  firm,  corporation,  or other  entity  for any  reason or  purpose
whatsoever.  Notwithstanding the foregoing, Executive may disclose any knowledge
of banking,  financial and/or economic  principles,  concepts or ideas which are
not solely and exclusively derived from the business plans and activities of the
Company.  Further,  Executive  may disclose  information  regarding the business
activities of the Company to the Office of Thrift  Supervision  ("OTS") or other
regulatory or judicial body pursuant to a formal regulatory request or subpoena.

     (c) Nothing contained in this Section 7 shall be deemed to prevent or limit
the right of Executive to invest in any entity which conducts  business  similar
to that of the Company, solely as a passive or minority investor.

8. Termination.

     Executive's employment under this Agreement shall be terminated upon any of
the following occurrences:

     (a) Death. Executive's employment under this Agreement shall terminate upon
his death.  Executive's  estate  shall be entitled  to receive  payments of base
salary, payable in accordance with the regular payroll practices of the Company,
for sixty (60) days immediately  following the date of Executive's death and any
other compensation accrued as of the date of death.

     (b) Termination of Employment by the Board of Directors  Without Just Cause
or by the  Executive  for  Good  Reason.  In the  event  that  (i) the  Board of
Directors terminates  Executive's employment without "Just Cause" (as defined in
Section  8(d)) or (ii) such  employment is terminated by the Executive for "Good
Reason" (as defined in Section 8(b)(iii), Executive shall be entitled to:

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          (i) his base salary for the remaining term of the Agreement, including
          any  renewals or  extensions  thereof,  at the current  rate in effect
          pursuant to Section 2 of this Agreement, plus the amount of the annual
          cash  bonus  earned  in  the  calendar  year  preceding  the  year  of
          termination,  and a cash  equivalent  amount  equal to the  additional
          retirement    benefits   under   any   retirement   program   (whether
          tax-qualified  or  non-qualified)   that  Executive  would  have  been
          entitled to had his employment continued through the remaining term of
          the Agreement (with the amount of benefits  determined by reference to
          the benefits  received by the Executive or accrued on his behalf under
          such   programs   during  the  twelve   (12)  months   preceding   his
          termination).

          (ii) coverage under the Company's life insurance plans and non-taxable
          medical, health, and dental plans (each being a "Welfare Plan") in the
          same manner in which  Executive  received  coverage on the last day of
          his employment with the Company.  Executive and his covered dependents
          (if any) shall continue  participating in such Welfare Plans,  subject
          to the same premium contributions (if any) on the part of Executive as
          were required  immediately  prior to his termination until the earlier
          of (i) his death;  (ii) his employment by another  employer other than
          one of which he is the majority  owner;  or (iii) three (3) years from
          his termination date.

          (iii) For  purposes  of this  Agreement,  termination  of  Executive's
          employment hereunder for "Good Reason" shall be limited to Executive's
          voluntary termination of employment after the occurrence of any of the
          following  events  which  have not been  consented  to in  advance  by
          Executive in writing; provided that Executive has given written notice
          to the Company within ninety (90) days after the initial occurrence of
          such event and that the  Company  has been given at least  thirty (30)
          days to cure the  situation  (but the  Company  may waive its right to
          cure):  (i) if  Executive  would  be  required  to move  his  personal
          residence  or perform  his  principal  executive  functions  more than
          twenty-five  (25)  miles  from  Executive's  primary  office as of the
          Commencement  Date;  (ii) if, in the  organizational  structure of the
          Company,  Executive would be required to report to a person or persons
          other than the Chief  Executive  Officer;  (iii) if the Company should
          fail to maintain  Executive's base  compensation in effect pursuant to
          Section 2 of this Agreement, or fail to maintain the existing employee
          benefit plans or arrangements  in which  Executive  participates as of
          the date of this  Agreement,  including any material  fringe  benefit,
          bonus plan  and/or  retirement  plan,  except to the extent  that such
          reduction in  compensation  or benefit  programs is part of an overall
          adjustment  in  compensation  and  benefits  for all  employees of the
          Company and the Executive is otherwise compensated for such an overall
          adjustment in an equitable manner; (iv) if Executive would be assigned
          duties and responsibilities  other than those normally associated with
          his  position as  referenced  in Section 1 of this  Agreement;  (v) if
          Executive's  responsibilities  or  authority  have  in  any  way  been
          materially diminished or reduced other than for reasons of Just Cause;
          or (vi) if Executive is not annually reappointed as Co-Chief Operating
          Officer other than for reasons of Just Cause.

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          (iv) The sum due under  Section  8(b)(i) shall be paid in one lump sum
          within   thirty   (30)   calendar   days   after   such   termination.
          Notwithstanding  the foregoing,  in the event Executive is a Specified
          Employee (within the meaning of Treasury Regulations  ss.1.409A-1(i)),
          then, to the extent  necessary to avoid  penalties  under Code Section
          409A,  payment shall be withheld and shall be paid to Executive on the
          first day of the seventh month  following  Executive's  termination of
          employment by the Company without Just Cause.

          (v) For purposes of Section  8(b),  termination  of employment as used
          herein shall mean "Separation from Service" as defined in Code Section
          409A and the Treasury Regulations promulgated thereunder.

     (c) Disability.

          (i)  Termination  by the Company of  Executive's  employment  based on
          "Disability"  shall occur if: (A) Executive is unable to engage in any
          substantial  gainful activity by reason of any medically  determinable
          physical or mental impairment that can be expected to result in death,
          or last for a  continuous  period of not less than twelve (12) months;
          (B) by  reason  of  any  medically  determinable  physical  or  mental
          impairment  that can be  expected  to  result  in  death,  or last for
          continuous  period of not less than twelve (12)  months,  Executive is
          receiving  income  replacement  benefits for a period of not less than
          three (3) months under an accident and health plan covering  employees
          of the Company;  or (C) Executive is determined to be totally disabled
          by the Social Security Administration.  Executive shall be entitled to
          receive  benefits  under  any  short  or  long-term   disability  plan
          maintained by the Company.

          (ii) The Company shall pay  Executive,  as  disability  pay, a monthly
          payment equal to three-quarters  (3/4) of Executive's  monthly rate of
          base salary,  plus any bonus paid to Executive for the preceding year.
          These  disability  payments shall commence  within thirty (30) days of
          the date of Executive's  termination due to Disability and will end on
          the  earlier  of (A)  the  date  Executive  returns  to the  full-time
          employment  of the  Company in the same  capacity  as he was  employed
          prior to his  termination for Disability and pursuant to an employment
          agreement  between  Executive  and  the  Company;  (B)  the  date  the
          Executive begins full-time  employment with another employer;  (C) the
          date Executive attains the normal age of retirement (as defined in the
          Company's  defined benefit pension plan) or begins receiving  benefits
          under any substitute  retirement  plan adopted by the Company;  or (D)
          the date of Executive's death.  Notwithstanding any other provision to
          the contrary, the Company's obligation for any payments required to be
          made under this Section 8(c) shall be reduced by any proceeds received
          by Executive from disability  income insurance or any other disability
          policy or plan  maintained by the Company for Executive which was paid
          for by the Company as partial  satisfaction  of its  obligation  under
          this Section 8(c).

          (iii) The  Company  shall cause to be  continued  life  insurance  and
          non-taxable medical and dental coverage substantially identical to the
          coverage  maintained  by

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          the Company for Executive  prior to his  termination  for  Disability.
          This coverage  shall cease upon the earlier of (A) the date  Executive
          returns  to the  full-time  employment  of the  Company,  in the  same
          capacity as he was employed  prior to his  termination  for Disability
          and pursuant to an  employment  agreement  between  Executive  and the
          Company;  (B) the date  Executive  begins  full-time  employment  with
          another  employer;  (C) the date  Executive  attains the normal age of
          retirement or begins receiving benefits under the Company's retirement
          plan; or (D) the date of Executive's death.

          (iv) Notwithstanding the foregoing,  there will be no reduction in the
          compensation  otherwise  payable to Executive during any period during
          which  Executive is incapable of  performing  his duties  hereunder by
          reason of temporary disability.

     (d)  Termination of Employment by the Board of Directors for Just Cause. In
the event  Executive's  employment is terminated  for "Just Cause," no continued
payments or benefits  shall be due under this  Agreement.  For  purposes of this
Agreement,  termination  for "Just Cause" shall be defined as termination due to
Executive's personal  dishonesty,  incompetence,  willful misconduct,  breach of
fiduciary duty involving personal profit,  intentional failure to perform stated
duties,  willful  violation of any law, rule or  regulation  (other than traffic
violations or similar  offenses) or final  cease-and-desist  order,  or material
breach of any provision of this Agreement Any  determination  of "Just Cause" as
defined by this  Section  8(d)  shall be  determined  by a majority  vote of the
entire  membership  of the Board of  Directors at a meeting of such Board called
and  held  for  the  purpose  (after  reasonable  notice  to  Executive  and  an
opportunity for Executive to be heard before the Board with counsel), of finding
that in the good faith  opinion of the Board,  Executive  committed  the conduct
described above and specifying the particulars thereof.

     (e) Voluntary  Termination  of Employment by Executive  Other Than for Good
Reason. The voluntary  termination of employment by Executive during the term of
this  Agreement,  other than for Good Reason,  with the delivery of no less than
sixty (60) days written notice to the Board of Directors,  entitles Executive to
receive only the base salary,  vested  rights,  and all employee  benefits up to
Executive's termination date.

     (f) Termination and Board  Membership.  To the extent Executive is a member
of the board of directors of the Company or the Bank or any of their  affiliates
on the date of an involuntary  termination of employment with the Company or the
Bank or a termination of employment for Good Reason,  Executive  shall be deemed
to have automatically  resigned from all of the boards of directors  immediately
following such termination of employment with the Company or the Bank.

     (g) Termination  and Release of Claims.  Any payments to be made under this
Agreement shall be contingent on Executive's  execution and  non-revocation of a
mutual  release in a form  acceptable  to the  Company  and the Bank;  provided,
however,  that if the Company or the Bank refuse to execute such mutual release,
the  Executive's  obligation  to  execute  and  not  revoke  the  release  as  a
precondition to receiving such severance  benefits shall  terminate.  The mutual
release agreement shall release the Company and the Bank from any and all claims
and

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other actions by Executive and it shall also release the Executive  from any and
all claims and other actions by the Company and the Bank.

9. Change in Control.

     (a) For purposes of this  Agreement,  a Change in Control of the Company or
the Bank shall be deemed to have occurred if and when:

          (i) there occurs a change in control of the Company or the Bank within
          the meaning of the Home Owners Loan Act of 1933 or 12 C.F.R.  Part 574
          as  applied  to the  Company  or the  Bank as if it  were a  federally
          chartered institution;

          (ii) as a result  of,  or in  connection  with,  any  merger  or other
          business  combination,  sale of assets or contested election,  wherein
          the persons who were non-employee directors of the Company or the Bank
          before such transaction or event cease to constitute a majority of the
          Board of Directors of the Company or the Bank or any  successor to the
          Company or the Bank;

          (iii)  the  Company  or the Bank  transfers  substantially  all of its
          assets to another  corporation  or entity which is not an affiliate of
          the Company or the Bank; or

          (iv) the Company or the Bank is merged or  consolidated  with  another
          corporation   or  entity   and,   as  a  result  of  such   merger  or
          consolidation, less than sixty percent (60%) of the equity interest in
          the  surviving  or  resulting  corporation  is  owned  by  the  former
          shareholders or depositors of the Company or the Bank.

     For purposes of Section 9 of this Agreement,  a Change in Control shall not
occur as a result of the Conversion.

     (b) If  Executive's  employment is terminated for any reason other than for
Just Cause within twelve months  following a Change in Control,  Executive shall
be entitled to receive the greater of the following:

          (i) the amount of the payment and benefits  specified in Section 8(b),
          or

          (ii) the amount of the payment and benefits specified in Section 9(c).

          Such  payment  shall be made in a lump sum  within  thirty  (30)  days
     following  Executive's  termination  of  employment.  For  purposes of this
     Section 9,  termination of employment as used herein shall mean "Separation
     from Service" as defined in Code Section 409A and the Treasury  Regulations
     promulgated  thereunder.   Notwithstanding  the  foregoing,  in  the  event
     Executive  is  a  Specified   Employee  (within  the  meaning  of  Treasury
     Regulations  ss.1.409A-1(i)),  then,  to  the  extent  necessary  to  avoid
     penalties  under Code Section 409A,  payment shall be withheld and shall be
     paid  to  Executive  on  the  first  day  of the  seventh  month  following
     Executive's termination of employment.

     (c) For  purposes of Section  9(b)(ii),  the amount of payment and benefits
shall be equal to:

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          (i) an amount  equal to three (3) times his "base  amount," as defined
          in Code Section 280G(b)(3), less one (1) dollar; and

          (ii) coverage  under the Company's or Bank's life  insurance  plan and
          non-taxable  medical,  health and dental  plans (each being a "Welfare
          Plan") in the same manner in which Executive  received coverage on the
          last day of his employment with the Company. Executive and his covered
          dependents  (if any)  shall  continue  participating  in such  Welfare
          Plans, subject to the same premium  contributions (if any) on the part
          of Executive as were  required  immediately  prior to his  termination
          until the  earlier of (i) his death;  (ii) his  employment  by another
          employer  other than one of which he is the majority  owner;  or (iii)
          three (3) years from his termination date.

10. Successors and Assigns.

     (a) This  Agreement  shall inure to the benefit of and be binding  upon any
corporate or other  successor of the Company  which shall  acquire,  directly or
indirectly,   by  merger,   consolidation,   purchase  or   otherwise,   all  or
substantially all of the assets of the Company.

     (b) Since the Company is contracting  for the unique and personal skills of
Executive,  Executive shall be precluded from assigning or delegating his rights
or duties hereunder without first obtaining the written consent of the Company.

11.  Amendments.  No amendments or additions to this Agreement  shall be binding
upon the  parties  hereto  unless  made in writing  and signed by both  parties,
except as herein otherwise specifically provided.

12. Applicable Law. This agreement shall be governed in all respects, whether as
to validity,  construction,  capacity,  performance or otherwise, by the laws of
the State of Hawaii,  except to the extent  that  Federal law shall be deemed to
apply.

13. Severability. The provisions of this Agreement shall be deemed severable and
the  invalidity  or  unenforceability  of any  provision  shall not  affect  the
validity or enforceability of the other provisions hereof.

14. Notices. Any notices,  requests,  demands and other communications  provided
for or deemed  necessary by this  Agreement  shall be sufficient if set forth in
writing and delivered in person or sent by registered or certified mail, postage
prepaid,  to, in the case of  Executive,  the last  address  filed in writing by
Executive  with the Company,  or, in the case of the Company,  to the Company at
its main office to the attention of the Board of Directors.

15.  Indemnification.  The Company shall provide Executive (including his heirs,
executors and  administrators)  with coverage  under a standard  directors'  and
officers' liability  insurance policy at its expense, or in lieu thereof,  shall
indemnify Executive (and his heirs, executors and administrators) to the fullest
extent  permitted  under law and  applicable  regulation  or under any  existing
indemnification  agreement by and between  Executive and the Company against all
expenses  and  liabilities  reasonably  incurred  by him in  connection  with or
arising out of any  action,  suit or  proceeding  in which he may be involved by
reason of his having been a director  or officer of the Company  (whether or not
he continues to be a director or officer at the time of

                                       9

<PAGE>

incurring  such  expenses or  liabilities).  Such expenses and  liabilities  may
include,  but are not limited to, judgment,  court costs and attorneys' fees and
the cost of  reasonable  settlements.  The Company  shall pay such  expenses and
liabilities in advance of a final judicial decision (hereinafter an "advancement
of expenses");  provided,  however, that, an advancement of expenses incurred by
Executive in his capacity as a director or executive officer of the Company (and
not in any other  capacity in which  service  was or is  rendered  by  Executive
including,  without  limitation,  services to an employee benefit plan) shall be
made only upon  delivery  to the Company of an  undertaking,  by or on behalf of
Executive, to repay all amounts so advanced if it shall ultimately be determined
by final  judicial  decision from which there is no further right to appeal that
Executive is not entitled to be indemnified for such expenses under this Section
15 or  otherwise.  Indemnification  under  this  Section  15  shall  be  made in
accordance with 12 C.F.R. ss.545.121 or any successor thereto.

16.  Entire  Agreement.  This  Agreement  together  with  any  understanding  or
modifications  thereof  as may be agreed to in  writing  by the  parties,  shall
constitute the entire agreement between the parties hereto.

17. Source of Payments.  Notwithstanding  any provision in this Agreement to the
contrary,  to the extent  payments  and  benefits,  as  provided  for under this
Agreement,  are paid or received by Executive under the employment  agreement in
effect  between  Executive  and the Bank,  the payments and benefits paid by the
Bank  will be  subtracted  from any  amount or  benefit  due  simultaneously  to
Executive under similar provisions of this Agreement. Payments will be allocated
in  proportion  to the level of activity  and the time  expended by Executive on
activities related to the Company and the Bank,  respectively,  as determined by
the Company and the Bank.

18. Required Regulatory Provisions.

     (a) The Company may terminate  Executive's  employment at any time, but any
termination by the Company,  other than  Termination  for Just Cause,  shall not
prejudice  Executive's  right to  compensation  or  other  benefits  under  this
Agreement.  Executive shall not have the right to receive  compensation or other
benefits for any period after  Termination  for Just Cause as defined in Section
8(d) hereinabove.

     (b)  Notwithstanding any other provision of this Agreement to the contrary,
any payments made to the Executive pursuant to this Agreement or otherwise,  are
subject to and conditioned upon their compliance with Section 12 U.S.C.  Section
1828(k),   FDIC   regulation   12  C.F.R.   Part  359,   Golden   Parachute  and
Indemnification Payments.

19. Arbitration.

     (a) Any dispute or  controversy  arising under or in  connection  with this
Agreement shall be settled exclusively by arbitration,  conducted before a panel
of three  arbitrators  sitting in a location  selected by Executive within fifty
(50) miles from the location of the Company, in accordance with the rules of the
American Arbitration  Association then in effect. Judgment may be entered on the
arbitrator's award in any court having  jurisdiction;  provided,  however,  that
Executive shall be entitled to seek specific performance of his right to be paid
until the date of

                                       10

<PAGE>

termination  during the pendency of any dispute or controversy  arising under or
in connection with this Agreement.

     (b) In the event any dispute or controversy  arising under or in connection
with  Executive's  termination  is  resolved in favor of  Executive,  whether by
judgment, arbitration or settlement,  Executive shall be entitled to the payment
of all  back-pay,  including  salary,  bonuses and any other cash  compensation,
fringe  benefits and any  compensation  and benefits  due  Executive  under this
Agreement.

20. Payment of Costs and Legal Fees. All reasonable costs and legal fees paid or
incurred by  Executive  pursuant  to any  dispute or question of  interpretation
relating  to this  Agreement  shall be paid or  reimbursed  by the  Company,  if
Executive   is   successful   with  respect  to  such  dispute  or  question  of
interpretation  pursuant to a legal  judgment,  arbitration or settlement.  Such
reimbursements shall be paid to Executive within two and one-half (2 1/2) months
after the dispute is settled or resolved in Executive's favor.

     IN WITNESS WHEREOF,  the parties have executed this Agreement on the latest
date set forth below.

                                       TERRITORIAL BANCORP INC.

November 13, 2009                 By:  /s/ Harold H. Ohama
-----------------                      ----------------------------------------
Date                                   Chairman of the Compensation Committee

November 13, 2009                      /s/ Ralph Nakatsuka
-----------------                      ----------------------------------------
Date                                   Ralph NakatsukaTERRITORIAL SAVINGS BANK
                           NON-QUALIFIED SUPPLEMENTAL
                          EMPLOYEE STOCK OWNERSHIP PLAN

     1. Purpose

     This Non-Qualified  Supplemental  Employee Stock Ownership Plan ("Plan") is
intended to provide Participants (as defined herein) or their Beneficiaries with
the  economic  value of the annual  allocations  credited to such  Participant's
account  under The  Territorial  Savings  Bank  Employee  Stock  Ownership  Plan
("ESOP") which may not be accrued under said ESOP due to the limitations imposed
by Section 415 of the Internal  Revenue Code (the "Code") and the  limitation on
includible  compensation  imposed  by  Code  Section  401(a)(17).  The  benefits
provided  under  this Plan (as  described  below)  are  intended  to  constitute
deferred  compensation  for "a select group of management or highly  compensated
employees" for purposes of the Employee  Retirement Income Security Act of 1974,
as amended  ("ERISA").  This Plan is intended to comply with Section 409A of the
Internal  Revenue Code ("Code") and the  regulatory  guidance and other guidance
issued thereunder.

     2. Definitions

     Where the following  words and phrases appear in the Plan,  they shall have
the respective  meaning as set forth below unless the context clearly  indicates
the contrary. Except to the extent otherwise indicated herein, and to the extent
inconsistent with the definitions  provided below, the definitions  contained in
the ESOP are applicable under the Plan.

          2.1 "Account" means the  bookkeeping  account to which a Participant's
Annual ESOP Credits and earnings thereon are credited.

          2.2  "Annual   ESOP   Credit"   means  the  amount   credited  to  the
Participant's  account  in the  Plan,  determined  as set forth in  Section  4.1
hereof.

          2.3 "Applicable  Limitations"  means one or more of the following,  as
applicable:  (i) the maximum  limitations on annual additions to a tax-qualified
defined  contribution  plan  under  Code  Section  415(c);  or (ii) the  maximum
limitation on the annual  amount of  compensation  that may,  under Code Section
401(a)(17),  be taken into account in determining  contributions to and benefits
under tax-qualified plans.

          2.4 "Bank" means Territorial Savings Bank.

          2.5 "Beneficiary" means the person designated by the Participant under
the  ESOP  to  receive  the  Supplemental  ESOP  Benefit  in  the  event  of the
Participant's death.

          2.6 "Board of Directors"  means the Board of Directors of  Territorial
Savings Bank.

          2.7 "Change in Control"  shall mean (1) a change in  ownership  of the
Company or the Bank under  paragraph  (i)  below,  or (2) a change in  effective
control of the

<PAGE>

Company or the Bank under paragraph (ii) below, or (3) a change in the ownership
of a  substantial  portion  of the  assets  of the  Company  or the  Bank  under
paragraph (iii) below:

               i. Change in the ownership of the Bank. A change in the ownership
               of the Bank shall occur on the date that any one person,  or more
               than  one  person  acting  as a group  (as  defined  in  Treasury
               Regulation Section  1.409A-3(i)(5)(v)(B)),  acquires ownership of
               stock of the corporation  that,  together with stock held by such
               person or  group,  constitutes  more  than 50% of the total  fair
               market  value  or  total  voting  power  of  the  stock  of  such
               corporation; or

               ii. Change in the effective  control of the Bank. A change in the
               effective control of the Bank shall occur on the date that either
               (i) any one person, or more than one person acting as a group (as
               defined in Treasury  Regulation  Section  1.409A-3(i)(5)(vi)(D)),
               acquires (or has acquired  during the 12-month  period  ending on
               the  date  of the  most  recent  acquisition  by such  person  or
               persons) ownership of stock of the Bank possessing 30% or more of
               the  total  voting  power  of the  stock of the  Bank;  or (ii) a
               majority of members of the Bank's  board of Directors is replaced
               during any 12-month  period by  Directors  whose  appointment  or
               election  is not  endorsed  by a majority  of the  members of the
               corporation's  board  of  Directors  prior  to  the  date  of the
               appointment or election,  provided that this  sub-section (ii) is
               inapplicable where a majority  shareholder of the Bank is another
               corporation; or

               iii.  Change in the  ownership  of a  substantial  portion of the
               Bank's assets. A change in the ownership of a substantial portion
               of the Bank's assets shall occur on the date that any one person,
               or more than one person acting as a group (as defined in Treasury
               Regulation  Section  1.409A-3(i)(5)(vii)(C)),  acquires  (or  has
               acquired  during the  12-month  period  ending on the date of the
               most recent  acquisition  by such person or persons)  assets from
               the Bank that have a total  gross fair  market  value equal to or
               more than 40% of the total gross fair market  value of all of the
               assets of the corporation  immediately  prior to such acquisition
               or acquisitions.  For this purpose, gross fair market value means
               the value of the assets of the  corporation,  or the value of the
               assets  being  disposed  of,  determined  without  regard  to any
               liabilities  associated  with such assets.  There is no Change in
               Control event under this paragraph (iii) when there is a transfer
               to an  entity  that  is  controlled  by the  shareholders  of the
               transferring corporation immediately after the transfer; or

               iv.  For all  purposes  hereunder,  the  definition  of Change in
               Control shall be construed to be consistent with the requirements
               of  Treasury  Regulation  Section  1.409A-3(i)(5),  except to the
               extent modified herein.

          2.8 "Code"  means the Internal  Revenue Code of 1986,  as amended from
time to time.  Reference to a specific  provision of the Code shall include such
provision,  any  valid

                                       2

<PAGE>

regulation or ruling  promulgated  thereunder  and any  comparable  provision of
future law that amends, supplements or supersedes such provision.

          2.9  "Committee"  means  the  Compensation  Committee  of the Board of
Directors.

          2.10 "Company" means Territorial Bancorp, Inc.

          2.11 "Effective Date" means January 1, 2009.

          2.12  "Employee"  means an  employee of the  Employer on whose  behalf
benefits are payable under the ESOP.

          2.13 "Employer" means the Bank or the Company, as applicable,  and any
successors by merger, purchase,  reorganization or otherwise. If a subsidiary or
affiliate of the Employer  adopts the Plan, it shall be deemed the Employer with
respect to its employees.

          2.14 "ERISA"  means the  Employee  Retirement  Income  Security Act of
1974, as amended from time to time.  Reference to a specific  provision of ERISA
shall  include  such  provision,  any valid  regulation  or  ruling  promulgated
thereunder and any comparable  provision of future law that amends,  supplements
or supersedes such provision.

          2.15 "ESOP" means the tax-qualified  Territorial Savings Bank Employee
Stock Ownership Plan, and any successor thereto.

          2.16  "Participant"  means an  Employee  who has been  designated  for
participation in this Plan pursuant to Section 3.1.

          2.17 "Plan" means Territorial Savings Bank Non-Qualified  Supplemental
Employee  Stock  Ownership  Plan, as set forth herein and as may be amended from
time to time.

          2.18 "Plan Year" means the period from January 1 to December 31.

          2.19 "Separation from Service" means the Employee's death,  Retirement
or other  termination  of  employment  with the Bank  within the meaning of Code
Section  409A.  No  Separation  from  Service  shall be  deemed  to occur due to
military leave,  sick leave or other bona fide leave of absence if the period of
such leave does not exceed six months or, if longer,  so long as the  Employee's
right to reemployment  is provided by law or contract.  If the leave exceeds six
months and the  Employee's  right to  reemployment  is not provided by law or by
contract,  then the Employee  shall have a Separation  from Service on the first
date immediately following such six-month period.

     Whether a  termination  of employment  has occurred is determined  based on
whether the facts and  circumstances  indicate  that the  Employer  and Employee
reasonably  anticipated  that no further  services  would be  performed  after a
certain date or that the level of bona fide services the employee  would perform
after such date (whether as an employee or as an independent  contractor)  would
permanently  decrease  to no more  than 20% of the  average  level of bona  fide
services  performed  over the  immediately  preceding  36 months (or such lesser
period of time in

                                       3

<PAGE>

which the Participant  performed  services for the Bank).  The  determination of
whether  a  Participant  has had a  Separation  from  Service  shall  be made by
applying  the  presumptions  set forth in the  Treasury  Regulations  under Code
Section 409A.

          2.20 "Specified Employee" means any Participant who also satisfies the
definition  of "key  employee"  as such term is defined in Code  Section  416(i)
(without  regard  to  paragraph  5  thereof).  In the event a  Participant  is a
Specified  Employee,  no  distribution  shall be made to such  Participant  upon
Separation  from Service  (other than due to death or  Disability)  prior to the
first day of the seventh month following Separation from Service.

          2.21 "Stock" means the common stock of the Company, par value $.01 per
share.

          2.22  "Supplemental  ESOP  Benefit"  means the benefit  provided for a
Participant under this Plan.

          2.23  "Surviving  Spouse"  means  the legal  spouse of a  Participant,
living at the time of the death of the Participant.

     3. Participation

          3.1 Designation to Participate. Upon the designation of the Committee,
and subject to the  approval  of the Board of  Directors,  Employees  may become
Participants at any time during the Plan Year. Each Employee  initially selected
by the  Committee  to  participate  in the Plan  shall be set forth on Exhibit A
attached hereto and made a part hereof.

          3.2  Continuation  of  Participation.  An  Employee  who has  become a
Participant  shall  remain a  Participant  so long as benefits are payable to or
with respect to such Participant under the Plan.

     4. Benefit Requirements and Payments

          4.1  Supplemental  ESOP Benefits.  A Participant  shall be entitled to
receive as a benefit from this Plan the Supplemental ESOP Benefit  determined as
set  forth  herein.  In the  event of the  death of a  Participant  prior to the
commencement of payment of the Supplemental  ESOP Benefit,  the Surviving Spouse
of the  Participant  shall be entitled to receive as a benefit from this Plan an
amount  equal to 100% of the  Supplemental  ESOP  Benefit  that  would have been
payable to the  Participant  at the time of his  death.  The  Supplemental  ESOP
Benefit shall be that benefit earned by a Participant upon the investment of the
Annual ESOP Credits allocated to his Account. The Annual ESOP Credit is equal to
the sum of the difference (expressed in dollars) between "(a)" and "(b)," where:

               (a) is the  number  of  shares  of Stock  that  would  have  been
               allocated to the account of the Participant for a Plan Year under
               the ESOP and the dividends  and earnings  thereon paid during the
               Plan Year, but for the Applicable Limitations,  multiplied by the
               fair market  value of such Stock on the last day of the Plan Year
               for which the allocation is made; and

                                       4

<PAGE>

               (b) is the number of shares of Stock  actually  allocated  to the
               account  of the  Participant  for the  relevant  ESOP Plan  Year,
               multiplied by the fair market value of such Stock on the last day
               of the Plan  Year  for  which  the  allocation  is made,  and the
               dividends and earnings thereon paid during the Plan Year.

          4.2 Investment of Annual ESOP Credits.  Participants shall be entitled
to invest the Annual ESOP  Credits  allocated  to their  Account  among a select
group of broadly  diversified mutual funds selected by the Committee.  For these
purposes,  an investment shall be deemed to be made to a mutual fund (whether or
not actually made) when the Participant  gives such instruction to the Committee
that such  investment  shall be made. The frequency  with which such  investment
instruction  may be given to the Committee  shall be determined by the Committee
in its sole discretion. If the Employer establishes a rabbi trust and sets aside
assets to informally fund the benefit  obligation under this Plan, the Committee
may  permit  Participants  the  opportunity  to direct the  investment  of their
Account  under the rabbi trust,  but the Committee is not obligated to do so. If
the Employer establishes a rabbi trust but the Participants are not permitted to
actually invest their Accounts through  investment in the rabbi trust, the value
of a Participant's  Account shall nonetheless be determined on the basis of such
Participant's deemed investments.

          4.3  Incidents of  Supplemental  ESOP  Payments.  Benefits  under this
Section 4 shall be  payable to the  Participant  in a lump sum within 90 days of
the first to occur of:

               (a) the  Participant's  "Separation from Service," other than due
               to death or Disability;

               (b) the Participant's Disability;

               (c) the Participant's death; or

               (d) a Change in Control of the Bank or the Company.

     Notwithstanding  anything  herein to the contrary,  if the Participant is a
Specified  Employee  and  the  distribution  under  this  Section  is due to the
Participants  Separation from Service,  solely to the extent  necessary to avoid
penalties under Code Section 409A, the  distribution (or any part thereof) shall
be delayed until the first day of the seventh month  following  Separation  from
Service.

          4.4 Form of Supplemental ESOP Payments.  A Participant's  supplemental
ESOP  benefits  under  Section 4.1 of this Plan shall be a benefit  paid in cash
equal to the value of the Participant's Account. The Participant's Account shall
be paid to the  Participant  upon the  occurrence  of the  event and at the time
specified in Section 4.3 above.

     5. Administration of the Plan

          5.1  Committee;  Duties.  This  Plan  shall  be  administered  by  the
Committee  which shall  consist of not less than three (3) persons  appointed by
the Board of Directors.  The Committee shall have the authority to make,  amend,
interpret  and  enforce  all   appropriate   rules

                                       5

<PAGE>

and regulations for the administration of the Plan and decide or resolve any and
all  questions,  including  interpretations  of this  Plan,  that  may  arise in
connection with the administration of the Plan; provided, however, that any such
interpretations,   rules  and/or   regulations  shall  be  consistent  with  the
requirements of Code Section 409A and any Treasury Regulations or other guidance
issued  thereunder.  A majority vote of the Committee  members shall control any
decision.  Members of the Committee may be Participants  under the Plan, so long
as a majority of the members are not Participants.

          5.2 Agents.  The Committee may, from time to time, employ other agents
and  delegate to them such  administrative  duties as it sees fit,  and may from
time to time consult with counsel who may be counsel to the Employer.

          5.3  Binding  Effect  of  Decisions.  The  decision  or  action of the
Committee  regarding of any question  arising out of or in  connection  with the
administration,  interpretation  and  application  of the Plan and the rules and
regulations promulgated hereunder shall be final and conclusive and binding upon
all persons having any interest in the Plan.

          5.4  Indemnity of  Committee.  The Employer  shall  indemnify and hold
harmless the members of the Committee against any and all claims,  loss, damage,
expense or  liability  arising from any action or failure to act with respect to
this Plan, except in the case of gross negligence or willful misconduct.

     6. Claims Procedure

          6.1 Claim. Any person claiming a benefit, requesting an interpretation
or ruling under the Plan, or requesting information under the Plan shall present
the request in writing to the Committee  which shall  respond in writing  within
thirty (30) days.

          6.2 Denial of Claim.  If the claim or request is denied,  the  written
notice of denial shall state:

               (a) the reason for denial,  with  specific  reference to the Plan
               provisions on which the denial is based.

               (b) a  description  of any  additional  material  or  information
               required and an explanation of why it is necessary.

               (c) an explanation of the Plan`s claim review procedure.

          6.3 Review of Claim.  Any person  whose  claim or request is denied or
who has not received a response  within  thirty (30) days may request  review by
notice given in writing to the Committee. The claim or request shall be reviewed
by the  Committee  who may,  but shall not be required  to, grant the claimant a
hearing.  On review,  the claimant may have  representation,  examine  pertinent
documents, and submit issues and comments in writing.

          6.4 Final  Decision.  The  decision on review  shall  normally be made
within  sixty (60) days.  If an  extension  of time is required for a hearing or
other special  circumstances,  the claimant shall be notified and the time limit
shall be one hundred  twenty (120) days.  The

                                       6

<PAGE>

decision  shall be in writing and shall state the reason and the  relevant  plan
provisions.  All  decisions  on  review  shall  be final  and  bind all  parties
concerned.

     7. Amendment or Termination

          7.1  Amendment of Plan. A majority of the Board of Directors may amend
this Plan at any time or from time to time.  However,  no such  amendment  shall
adversely  affect the benefits of the  Participant  which have accrued  prior to
such action.

          7.2 Plan Termination.

               (a) Partial  Termination.  The Board may partially  terminate the
               Plan by freezing  future  accruals if, in its judgment,  the tax,
               accounting,  or other effects of the  continuance of the Plan, or
               potential payments thereunder, would not be in the best interests
               of the Employer.

               (b) Complete  Termination.  Subject to the  requirements  of Code
               Section 409A, in the event of complete  termination  of the Plan,
               the Plan shall cease to operate and the Employer shall pay out to
               the  Participant his benefit as if the Participant had terminated
               employment as of the effective date of the complete  termination.
               Such complete termination of the Agreement shall occur only under
               the following circumstances and conditions:

                    (i) The  Administrator  may  terminate  the Plan  within  12
                    months of a corporate  dissolution  taxed under Code Section
                    331, or with approval of a bankruptcy  court  pursuant to 11
                    U.S.C.  ss.503(b)(1)(A),  provided that the amounts deferred
                    under  the  Plan are  included  in the  Participant's  gross
                    income in the latest of (i) the  calendar  year in which the
                    Plan terminates;  (ii) the calendar year in which the amount
                    is no longer subject to a substantial risk of forfeiture; or
                    (iii)  the  first  calendar  year in which  the  payment  is
                    administratively practicable.

                    (ii) The Board may  terminate the Plan by Board action taken
                    within the 30 days  preceding  a Change in Control  (but not
                    following a Change in Control), provided that the Plan shall
                    only be treated as terminated if all  substantially  similar
                    arrangements  sponsored by the Employer  are  terminated  so
                    that   the   Participant   and   all   participants    under
                    substantially  similar  arrangements are required to receive
                    all amounts of  compensation  deferred  under the terminated
                    arrangements within 12 months of the date of the termination
                    of the arrangements. For these purposes, "Change in Control"
                    shall be defined in accordance with the Treasury Regulations
                    under Code Section 409A.

                                       7

<PAGE>

                    (iii) The Board may terminate the Plan provided that (A) the
                    termination  and  liquidation  does not occur proximate to a
                    downturn in the financial health of the Bank or Company, (B)
                    all  arrangements  sponsored  by  the  Bank  that  would  be
                    aggregated with this Plan under Treasury Regulations Section
                    1.409A-1(c) if the Participant covered by this Plan was also
                    covered  by  any  of  those  other   arrangements  are  also
                    terminated;  (C) no payments  other than payments that would
                    be  payable  under  the  terms  of  the  arrangement  if the
                    termination  had not  occurred  are made within 12 months of
                    the  termination  of the  arrangement;  (D) all payments are
                    made   within   24  months   of  the   termination   of  the
                    arrangements;  and  (E)  the  Bank  does  not  adopt  a  new
                    arrangement  that would be  aggregated  with any  terminated
                    arrangement under Treasury  Regulations  Section 1.409A-1(c)
                    if the Participant participated in both arrangements, at any
                    time within three years following the date of termination of
                    the arrangement.

     8. Miscellaneous

          8.1  Unfunded  Plan.  This Plan is  intended  to be an  unfunded  plan
maintained  primarily  to provide  deferred  compensation  benefits for a select
group of management or highly compensated  employees.  However, the Employer may
elect to fund for the  benefits  of  Participants  as  described  in Section 8.3
below.  This Plan will  continue to be unfunded  for tax purposes and Title I of
ERISA even if benefits are funded by the Bank under Section 8.3 below.

          8.2 Unsecured General Creditor. The Participant and his Beneficiaries,
heirs,  successors and assigns shall have no legal or equitable rights, interest
or  claims  in any  property  or  assets  of the  Employer,  nor  shall  they be
beneficiaries of, or have any rights,  claims or interests in any life insurance
policies,  annuity  contracts  or the proceeds  therefrom  owned or which may be
acquired by the Employer.  Such  policies or other assets of the Employer  shall
not  be  held  under  any  trust  for  the   benefit  of   Participants,   their
Beneficiaries,  heirs,  successors or assigns,  or held in any way as collateral
security for the fulfilling of the  obligations of Employer under this Plan. Any
and all of the Employer`s assets shall be, and remain,  the general,  unpledged,
unrestricted  assets of the Employer.  The Employer`s  obligation under the Plan
shall be that of an unfunded and unsecured  promise of the Employer to pay money
in the future.

          8.3 Trust Fund. The Employer  shall be responsible  for the payment of
all  benefits  provided  under the Plan.  At its  discretion,  the  Employer may
establish  one (1) or more rabbi  trusts,  with such  trustees  as the Board may
approve,  for the purpose of providing for payment of such benefits.  Such trust
or trusts may be  irrevocable,  but the assets  thereof  shall be subject to the
claims of the Employer`s  creditors.  To the extent any benefits  provided under
the Plan are actually paid from any such rabbi trust, the Employer shall have no
further  obligation  with respect  thereto,  but to the extent not so paid, such
benefits shall remain the obligation of, and shall be paid by, the Employer.

                                       8

<PAGE>

          8.4  Nonassignability.  Neither the  Participant  nor any other person
shall have any right to commute,  sell, assign,  transfer,  pledge,  anticipate,
mortgage or otherwise  encumber,  transfer,  hypothecate or convey in advance of
actual  receipt the amounts,  if any,  payable  hereunder,  or any part thereof,
which are, and all rights to which are,  expressly  declared to be  unassignable
and  nontransferable.  No part of the  amounts  payable  shall,  prior to actual
payment,  be subject to seizure or  sequestration  for the payment of any debts,
judgments,  alimony or separate  maintenance  owed by a Participant or any other
person,  nor be transferable by operation of law in the event of a Participant`s
or any other person`s bankruptcy or insolvency.

          8.5  Expenses  of Plan.  All  expenses of the Plan will be paid by the
Employer.

          8.6  Payment  of   Employment   and  Code  Section  409A  Taxes.   Any
distribution  under  this  Plan  shall be  reduced  by the  amount  of any taxes
required  to be  withheld  from such  distribution.  This Plan shall  permit the
acceleration  of the time or  schedule  of a payment to pay  employment  related
taxes as permitted under Treasury  Regulation Section  1.409A-3(j) or to pay any
taxes  that may become  due at any time that the  arrangement  fails to meet the
requirements  of Code  Section  409A  and the  regulations  and  other  guidance
promulgated  thereunder.  In the latter case, such payments shall not exceed the
amount  required to be included in income as the result of the failure to comply
with the requirements of Code Section 409A.

          8.7 Acceleration of Payments.  Except as specifically permitted herein
or in other  sections of this Plan, no  acceleration  of the time or schedule of
any payment may be made hereunder.  Notwithstanding the foregoing,  payments may
be  accelerated  hereunder by the Bank,  in  accordance  with the  provisions of
Treasury Regulation Section 1.409A-3(j)(4) and any subsequent guidance issued by
the United States Treasury Department. Accordingly, payments may be accelerated,
in accordance with  requirements and conditions of the Treasury  Regulations (or
subsequent guidance) in the following circumstances:  (i) as a result of certain
domestic  relations  orders;  (ii) in compliance with ethics agreements with the
Federal  government;  (iii) in  compliance  with  ethics  laws or  conflicts  of
interest laws;  (iv) in limited  cash-outs (but not in excess of the limit under
Code Section  402(g)(1)(B));  (v) to apply certain  offsets in satisfaction of a
debt of the  Participant to the Bank;  (vi) in satisfaction of certain bona fide
disputes  between the  Participant  and the Bank; or (vii) for any other purpose
set forth in the Treasury Regulations and subsequent guidance.

          8.8  Participation by Subsidiaries and Affiliates.  If any employer is
now or hereafter becomes a subsidiary or affiliated  company of the Employer and
its employees participate in the ESOP, the Board of Directors may authorize such
subsidiary or affiliated  company to participate  in this Plan upon  appropriate
action by such employer necessary to adopt the Plan.

          8.9 Delivery of Elections to Committee.  All  elections,  designation,
requests,  notices,  instructions and other communications required or permitted
under the Plan from the Employer, a Participant,  Beneficiary or other person to
the Committee shall be on the appropriate  form,  shall be mailed by first-class
mail or delivered to such address as shall be specified by such  Committee,  and
shall be deemed to have been given or delivered only upon actual receipt thereof
by such Committee at such location.

                                       9

<PAGE>

          8.10  Delivery of Notice to  Participants.  All  notices,  statements,
reports and other  communications  required or permitted under the Plan from the
Employer or the  Committee to any  Officer,  Participant,  Beneficiary  or other
person,  shall be  deemed to have been duly  given  when  delivered  to, or when
mailed by first-class  mail,  postage  prepaid,  and addressed to such person at
this address last appearing on the records of the Committee.

     9. Construction of the Plan

          9.1  Construction  of the Plan.  The  provisions of this Plan shall be
construed,  regulated,  and  administered  according to the laws of the State of
Hawaii, to the extent not superseded by Federal law.

          9.2  Counterparts.  This Plan has been  established by the Employer in
accordance  with the  resolutions  adopted by the Board of Directors  and may be
executed in any number of  counterparts,  each of which shall be deemed to be an
original.  All the counterparts  shall  constitute one instrument,  which may be
sufficiently evidenced by any one counterpart.

          9.3 Validity. In case any provision of this Plan shall be held illegal
or invalid for any reason,  said  illegality or invalidity  shall not affect the
remaining parts hereof, but this Plan shall be construed and enforced as if such
illegal or invalid provision had never been inserted herein.

                            [signature page follows]

                                       10

<PAGE>

     IN WITNESS WHEREOF, the Bank has adopted this Plan, effective as of January
1, 2009.

                                       TERRITORIAL SAVINGS BANK

November 13, 2009                  By: /s/ Harold H. Ohama
-----------------                      ----------------------------------------
Date                                   Chairman of the Compensation Committee

                                       11

<PAGE>

                            TERRITORIAL SAVINGS BANK
                            NONQUALIFIED SUPPLEMENTAL
                          EMPLOYEE STOCK OWNERSHIP PLAN

                                    Exhibit A
                                    ---------

-------------------------------------- ----------------------------------------
Name of Participant                    Date of Participation
-------------------------------------- ----------------------------------------
Allan S. Kitagawa                      January 1, 2009
-------------------------------------- ----------------------------------------
Vernon Hirata                          January 1, 2009
-------------------------------------- ----------------------------------------
Ralph Nakatsuka                        January 1, 2009
-------------------------------------- ----------------------------------------

-------------------------------------- ----------------------------------------

                                       12

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