Document:

Exhibit
10.8

 

September 9, 2004

 

Denis K. Isono

5415 Kilauea Place

Honolulu, Hawaii 96816

 

Re:                               Employment Agreement

 

Dear Denis:

 

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.      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.

 

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/ Denis K. Isono

  	
   

  	
   

  
	
  Date: 09/09/04

  	
   

  
				

 

14

 

Terms Schedule to Employment Agreement
of

Mr. Denis K. Isono

 

	
  Name and address for notices

  	
   

  	
  Denis K. Isono

  5415 Kilauea Place

  Honolulu, Hawaii 96816

  
	
   

  	
   

  	
  Facsimile:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Position

  	
   

  	
  You will serve as Executive Vice-President,
  Operations and Services, of Central Pacific Bank.

  
	
   

  	
   

  	
   

  
	
  Reporting, Authority and Responsibilities

  	
   

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

  
	
   

  	
   

  	
   

  
	
  Other Activities

  	
   

  	
  None.

  
	
   

  	
   

  	
   

  
	
  Agreement Period

  	
   

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

  
	
   

  	
   

  	
   

  
	
  Starting Salary

  	
   

  	
  $189,263

  
	
   

  	
   

  	
   

  
	
  Bonus

  	
   

  	
  Your Bonus will be determined based on the
  achievement of performance goals established by the Board (or a committee of
  the Board). Your minimum bonus target is equal to 30% of your Salary.
  Performance goals shall be set within the first 90 days of the Company’s
  fiscal year.

  
	
   

  	
   

  	
   

  
	
  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 the lesser of
  two years or the remainder of the term of this agreement.

  
	
   

  	
   

  	
   

  
	
  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 $12,500.

  
	
   

  	
   

  	
   

  
	
  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 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
  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 

  

 

2

 

	
   

  	
   

  	
  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 Annexto Employment
Agreement of

Denis K. Isono

 

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 

Denis K. Isono

 

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:

  

 

3Exhibit
10.29

 

NEORX CORPORATION

NONQUALIFIED STOCK OPTION AGREEMENT

UNDER THE RESTATED 2004 INCENTIVE COMPENSATION

PLAN

 

(Nonemployee Directors)

 

THIS AGREEMENT is made between
NeoRx Corporation (“NeoRx”) and «Name».  Capitalized
terms not explicity defined in this Agreement but defined in the NeoRx
Corporation 2004 Incentive Compensation Plan (the “Plan”) shall have the same
definitions as in the Plan.

 

Grant Date.  The
effective date of this Agreement is «Date» (the “Grant Date”).

 

Grant.  The
Board of Directors hereby grants to you an Option to purchase «Shares» shares (the “Shares”)
of NeoRx Common Stock at the Option price of $«Price» per share (the “Option”).  The Option is granted pursuant to the Stock
Option Grant Program for Nonemployee Directors (the “Program”) under the Plan
and is subject to the terms and conditions of the Program and the Plan.

 

Nonqualified
Stock Option. This Option is granted as a nonqualified stock
option, which is not intended to qualify as an “incentive stock option” as that
term is used under Section 422 of the Internal Revenue Code of 1986, as
amended.

 

Term.  The term of the Option is ten
years from the Grant Date, unless sooner terminated.

 

Exercise.  During your lifetime only you or
a permitted transferee or assignee can exercise the Option.  The Plan permits exercise of the Option by
the personal representative of your estate or the beneficiary thereof following
your death.

 

Termination of
Option.  The
unvested portion of the Option will terminate automatically on the date you
cease to be an Eligible Director (as defined in the Program) of NeoRx for any
reason.  The vested portion of the Option
will remain exercisable for five years after the date you cease to be an
Eligible Director or until the date the Option expires by its terms, whichever
is earlier.

 

It is your
responsibility to be aware of the date on which the Option terminates and is no
longer exercisable.

 

Vesting and
Exercisability.  Fifty
percent (50%) of the Option will vest and become exercisable immediately following
the «Mt1» annual
meeting of shareholders.  The remaining
fifty percent (50%) of the Option will vest and become exercisable immediately
following the «Mt2»
annual meeting of shareholders.

 

1

 

Terms of
Payment.  The
Option price must be paid in full at the time of exercise in cash or by check
acceptable to the Compensation Committee or to the extent permitted by the
Compensation Committee, in NeoRx Common Stock (which generally must have been
held for at least six months), delivery of an exercise notice, together with
irrevocable instructions to a broker to deliver to NeoRx the amount of proceeds
necessary to pay the exercise price, or any other form of consideration
permitted by  the Compensation Committee,
or a combination thereof, as the Compensation Committee may determine.  Common Stock delivered as full or partial
payment upon exercise will be valued at the fair market value of the Common
Stock.  In addition, you must pay or
otherwise make provision for any applicable tax withholding amounts that may
become due on exercise before NeoRx will be obligated to issue any Shares to
you.

 

Dividend, Stock
Split, Combination or Reclassification.  If, from time to time, during the term of
this Agreement, there is any stock dividend, stock split, combination of
shares, or reclassification of the outstanding Common Stock, then any and all
new, substituted or additional shares to which you are entitled by reason of
this Agreement will be included in the word “Shares” for all purposes of this
Agreement with the same force and effect as the Shares presently subject to
this Agreement and there will be a corresponding adjustment to the price for
each Share.

 

Acceptance and
Acknowledgment.  By your
signature below, you accept the Option described above and in the Plan and the
Program, and acknowledge receipt of a copy of this Agreement, the Plan, the
Program and the Plan Summary.  You also
acknowledge that you have read and understand the Plan and the Program,
including the provisions of Section 13 of the Plan.

 

 

	
   

  	
  NEORX
  CORPORATION

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Anna
  Lewak Wight

  	
   

  
	
   

  	
   

  	
  Vice
  President, Legal

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  PARTICIPANT:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Signature:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Taxpayer I.D.:

  	
   

  	
   

  
								

 

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