Document:

Exhibit 10.6

 Exhibit 10.6 
 TERRITORIAL SAVINGS BANK 
 EMPLOYMENT AGREEMENT 
 THIS AGREEMENT (the “Agreement”) entered into this 29th day of October, 2008, by
and between Territorial Savings Bank located at 1132 Bishop Street, 22nd Floor, Honolulu, Hawaii 96813 (the “Bank”), and Ralph Nakatsuka
(“Executive”). 
 WHEREAS, the Bank wishes to assure itself of the continued services of Executive for the period provided
in this Agreement; and 
 WHEREAS, Executive is willing to continue to serve in the employ of the Bank on a full-time basis for the
term of this Agreement; and 
 WHEREAS, the parties desire by this writing to set forth the terms and conditions of the employment
relationship of the Bank and Executive. 
 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 October 29, 2008 (the “Commencement Date”), Executive shall serve in the capacity of Co-Chief Operating Officer of the Bank. Executive shall render such administrative and management services to the Bank as are
currently rendered and as are customarily performed by persons situated in a similar executive capacity. Executive shall promote the business of the Bank. Executive’s other duties shall be such as the Board of Directors of the Bank (the
“Board of Directors” or “Board”) may from time to time reasonably direct, including normal duties as an officer of the Bank. 
 2.
Base Compensation. The Bank agrees to pay Executive during the Term of this Agreement (as hereinafter defined in Section 6) a base salary at the rate of $269,100 per annum, payable in accordance with the customary payroll practices of the
Bank; 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 Bank as of the date of this Agreement and shall be eligible to participate in any future bonus program adopted by the Bank 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 Bank. 
 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 Bank) in performing services under this Agreement, provided that Executive properly accounts for expenses in accordance with the policies of the Bank and provided further that all such reimbursements pursuant
to this Section 4 shall be paid promptly by the Bank 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 Bank 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 Bank or as established by the Bank 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 Bank
implements at any time during the term of this Agreement, on the same terms as the Bank’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 Bank shall provide Executive with the use of an automobile in accordance with the Bank’s automobile policy for executive vice presidents and above, as in effect from time to time. The Bank shall annually include on
Executive’s Form W-2 any amount attributable to Executive’s personal use of such automobile. 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 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 Bank shall reimburse or pay Executive amounts sufficient to establish or maintain membership in any club or organization (business, social or otherwise) to which will benefit the Bank (including
such fees or dues relating to the use of the club or organization). 
 (d) Paid Leave Time. Executive shall be entitled to
leave time in accordance with the standard policies or practices of the Bank for senior executive officers, as in effect from time to time. 
 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 from the Commencement Date. Commencing on the first
anniversary of the Commencement Date and continuing on each anniversary thereafter (each an “Anniversary Date”), the disinterested members of the Board of Directors of the Bank 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 15 of this Agreement. The Board of Directors of the Bank
will review the Agreement and Executive’s performance annually for purposes of determining 

  

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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 Bank 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 Bank 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 Bank 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 business materially competes with the depository, lending or other business
activities of the Bank. The parties hereto, recognizing that irreparable injury will result to the Bank, 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 Bank 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 Bank 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 Bank, 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 Bank from pursuing any other remedies available to the Bank 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 Bank is a valuable, special and unique asset of the business of the Bank. 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 Bank 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 Bank. Further,
Executive may disclose information regarding the business activities of the Bank 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 Bank, solely as a passive or minority investor. 
  

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 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 Bank, 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: 
 (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
Bank’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 Bank. 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 Bank within ninety (90) days after the initial occurrence of such event and that the Bank
has been given at least thirty (30) days to cure the situation (but the Bank 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 

  

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structure of the Bank, Executive would be required to report to a person or persons other than the Chief Executive Officer; (iii) if the Bank 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 Bank 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. 
 (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 §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 Bank 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 Bank 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 Bank; 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 Bank. 
 (ii) The Bank 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 

  

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Disability and will end on the earlier of (A) the date Executive returns to the full-time employment of the Bank in the same capacity as he was employed
prior to his termination for Disability and pursuant to an employment agreement between Executive and the Bank; (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 Bank’s defined benefit pension plan) or begins receiving benefits under any substitute retirement plan adopted by the Bank; or (D) the date of Executive’s death. Notwithstanding any other provision to the
contrary, the Bank’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
Bank for Executive which was paid for by the Bank as partial satisfaction of its obligation under this Section 8(c). 
 (iii) The Bank
shall cause to be continued life insurance and non-taxable medical and dental coverage substantially identical to the coverage maintained by the Bank 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 Bank, in the same capacity as he was employed prior to his termination for Disability and pursuant to an employment agreement between Executive and the Bank; (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 Bank’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. 
  

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 (f) Termination and Board Membership. To the extent Executive is a member of the board of
directors of Territorial Bancorp Inc. (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 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 a conversion of the Bank from the mutual to stock
form of organization (“Conversion”). Upon a Conversion, the resulting bank and holding company shall be subject to this Agreement and the obligations of the Bank set forth herein. 
  

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 (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 §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: 
 (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 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 Bank.
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. Limitation of Benefits under Certain Circumstances. 
 (a) In no event shall the payments and
benefits received by Executive exceed three times Executive’s average compensation over the past five years, in accordance with the OTS regulations. 
 (b) If the payments and benefits pursuant to Section 9 of this Agreement, either alone or together with other payments and benefits which the Executive has the right to receive from the Bank, would constitute a
“parachute payment” under Section 280G of the Code, the cash severance payable by the Bank pursuant to Section 9 shall be reduced by the amount, if any, which is the minimum amount necessary to result in no portion of the
payments and benefits under Section 9 being non-deductible to the Bank pursuant to Section 280G of the Code and subject to the excise tax imposed under Section 4999 of the Code. The determination of any reduction in the payments and
benefits shall be based upon the opinion of the Bank’s independent public accountants and paid for by the Bank. In the event that the Bank and/or the Executive do not agree with the opinion of such accountants, (i) the Bank shall pay to
the 

  

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Executive the maximum amount of payments and benefits as selected by the Executive, which such opinion indicates there is a high probability do not result in
any of such payments and benefits being non-deductible to the Bank and subject to the imposition of the excise tax imposed under Section 4999 of the Code and (ii) the Bank may request, and the Executive shall have the right to demand that
they request, a ruling from the IRS as to whether the disputed payments and benefits have such consequences. Any such request for a ruling from the IRS shall be promptly prepared and filed by the Bank, but in no event later than thirty
(30) days from the date of the accountant’s opinion referred to above, and shall be subject to the Executive’s approval prior to filing, which shall not be unreasonably withheld. The Bank and the Executive agree to be bound by any
ruling received from the IRS and to make appropriate payments to each other to reflect any such rulings, together with interest at the applicable federal rate. 
 11. Successors and Assigns. 
 (a) This Agreement shall inure to the benefit of and be binding upon any corporate or other
successor of the Bank which shall acquire, directly or indirectly, by merger, consolidation, purchase or otherwise, all or substantially all of the assets of the Bank. 
 (b) Since the Bank 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 Bank. 
 12. 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. 
 13. 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. 
 14. 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. 
 15. 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 Bank, or, in the case of the Bank, to the Bank at its
main office to the attention of the Board of Directors. 
 16. Indemnification. The Bank 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 Bank 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 Bank (whether or not he continues to be a director or officer at the time of incurring such 

  

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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 Bank 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 Bank (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 Bank
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 16 or otherwise. Indemnification under this Section 16 shall be made in accordance with 12 C.F.R. §545.121 or any successor thereto. 
 17. 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.

 18. Required Regulatory Provisions. 
 In the event any of the provisions of this Section 18 are in conflict with the terms of this Agreement, this Section 18 shall prevail. 
 (a) The Bank may terminate Executive’s employment at any time, but any termination by the Bank, 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) If Executive is suspended from office and/or temporarily prohibited from participating in the conduct of the Bank’s affairs by a notice served
under Section 8(e)(3) or 8(g)(1) of the Federal Deposit Insurance Act, 12 U.S.C. §1818(e)(3) or (g)(1); the Bank’s obligations under this contract shall be suspended as of the date of service, unless stayed by appropriate proceedings.
If the charges in the notice are dismissed, the Bank may in its discretion: (i) pay Executive all or part of the compensation withheld while their contract obligations were suspended; and (ii) reinstate (in whole or in part) any of the
obligations which were suspended. 
 (c) If Executive is removed and/or permanently prohibited from participating in the conduct of the
Bank’s affairs by an order issued under Section 8(e)(4) or 8(g)(1) of the Federal Deposit Insurance Act, 12 U.S.C. §1818(e)(4) or (g)(1), all obligations of the Bank under this contract shall terminate as of the effective date of the
order, but vested rights of the contracting parties shall not be affected. 
 (d) If the Bank is in default as defined in
Section 3(x)(1) of the Federal Deposit Insurance Act, 12 U.S.C. §1813(x)(1) all obligations of the Bank under this contract shall terminate as of the date of default, but this paragraph shall not affect any vested rights of the contracting
parties. 
  

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 (e) All obligations of the Bank under this contract shall be terminated, except to the extent determined
that continuation of the contract is necessary for the continued operation of the institution: (i) by the Director of the OTS (or his designee) or the FDIC, at the time the FDIC enters into an agreement to provide assistance to or on behalf of
the Bank under authority contained in Section 13(c) of the Federal Deposit Insurance Act, 12 U.S.C. §1823(c); or (ii) by the Director of the OTS (or his designee) at the time the Director of the OTS (or his designee) approves a
supervisory merger to resolve problems related to the operations of the Bank or when the Bank is determined by the Director of the OTS to be in an unsafe or unsound condition. Any rights of the parties that have already vested, however, shall not be
affected by such action. 
 (f) Any payments made to Executive pursuant to this Agreement or otherwise, are subject to and conditioned upon
their compliance with 12 U.S.C. Section 1828(k) and any regulations promulgated thereunder. 
 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 Bank, 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 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 Bank, 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. 
  

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

							
		 		 	TERRITORIAL SAVINGS BANK
				
	November 10, 2008	 		 	By:	 	 /s/ Harold H. Ohama

	Date	 		 		 	Chairman of the Compensation Committee
				
	November 10, 2008	 		 		 	 /s/ Ralph Nakatsuka

	Date	 		 		 	Ralph Nakatsuka

  

 12Exhibit 10.7

 Exhibit 10.7 
 TERRITORIAL SAVINGS BANK 
 AMENDED AND RESTATED 
 SUPPLEMENTAL EMPLOYEE RETIREMENT AGREEMENT  
 FOR ALLAN S. KITAGAWA 
 THIS AGREEMENT is adopted as of October 29, 2008, by and between
TERRITORIAL SAVINGS BANK (the “Bank”), and Allan S. Kitagawa, Chairman, President and Chief Executive Officer of the Bank (the “Executive”). 
 RECITALS 
 The Bank and the Executive entered into the Supplemental Employee Retirement
Agreement on May 24, 2002 (the “Predecessor Agreement”) in order to provide the Executive with a supplemental retirement benefit. Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) provides that
certain nonqualified deferred compensation arrangements such as the Predecessor Agreement must comply with its terms and the Treasury Regulations issued thereunder or the recipient of such compensation shall be subject to additional taxes and
penalties. The Bank and the Executive desire to revise the Predecessor Agreement in the manner set forth herein in order to conform such agreement to Code Section 409A. 
 This Agreement is intended to be an unfunded nonqualified deferred compensation arrangement for purposes of the Code, and the Employee Retirement Income
Security Act of 1974, as amended (“ERISA”). This Agreement is intended to constitute a “top hat” arrangement described in ERISA and, therefore, exempt from the coverage, funding, and fiduciary requirements of ERISA. All benefits
payable under this Agreement shall be paid out of the general assets of the Bank. 
 AGREEMENT 
 That in consideration of the following agreements hereinafter contained the Bank and the Executive agree as follows: 
 ARTICLE 1 
 DEFINITIONS 

 Whenever used in this Agreement, the following words and phrases shall have the meanings specified: 
 1.1 “Accrual Balance” means the liability that should be accrued by the Bank, under Generally Accepted Accounting Principles
(“GAAP”), for the Bank’s obligation to the Executive under this Agreement, by applying Accounting Principles Board Opinion Number 12 (“APB 12”) as amended by Statement of Financial Accounting Standards Number 106 (“FAS
106”) and the Discount Rate. Any one of a variety of amortization methods may be used to determine the Accrued Balance. However, once chosen, the method must be consistently applied. 
 1.2 “Beneficiary” means such term as described in Article 4. 

 1.3 “Change of Control” shall mean any of the following: 
 (a) There occurs a “change in control” of the Bank within the meaning of the Home Owners Loan Act of 1933 or 12 C.F.R. Part 574 as applied to
the Bank as if it were a federally chartered institution. 
 (b) As a result of, or in connection with, any merger or other business
combination, sale of assets or contested election, wherein the people who were non-employee directors of the Bank before such transaction or event cease to constitute a majority of the Board of Directors of the Bank or any successor to the Bank.

 (c) The Bank transfers substantially all of its assets to another corporation or entity which is not an affiliate of the Bank. 

(d) The Bank is merged or consolidated with another corporation or entity and, as a result of such merger or consolidation, less than 60% of the
equity interest in the surviving or resulting corporation is owned by the former shareholders or depositors of the Bank. 
 A Change of
Control shall not occur solely as a result of a conversion of the Bank from the mutual stock form of organization (“Conversion”) or reorganization of the Bank into the mutual holding company form of ownership (“Reorganization”).
Upon any Conversion or Reorganization, the resulting bank and holding company (if one is formed in the transaction) shall be subject to this Agreement and the obligations of the Bank set forth herein and further shall enter into agreements or
amendments hereto with the Executive providing for at least the same benefits provided under this Agreement. 
 1.4 “Code”
means the Internal Revenue Code of 1986, as amended. 
 1.5 “Disability” or “Disabled” means that the Executive:
(a) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12
months; or (b) is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement
benefits for a period of not less than three months under an accident and health plan covering employees of the Executive’s employer; or (c) is determined to be disabled by the Social Security Administration. 
 1.6 “Discount Rate” means the rate used by the Bank for determining the Accrual Balance. Effective January 1, 2008, the Discount
Rate shall be five percent (5.0%). 
 1.7 “Early Termination Date” means the date on which the Executive incurs a
Termination of Employment which is prior to the Executive’s Normal Retirement Date and which is for reasons other than death, Disability, Termination for Cause, or following a Change of Control. 
 1.8 “Effective Date” means January 1, 2005. 
  

 2 

 1.9 “Normal Retirement Date” means the Executive’s 66th birthday. 
 1.10 “Specified Employee” means an employee who at the time of Termination of Employment is a key employee of the Bank, if any stock of
the Bank is publicly traded on an established securities market or otherwise. For purposes of this Agreement, an employee is a key employee if the employee meets the requirements of Code Section 416(i)(1)(A)(i), (ii), or (iii) (applied in
accordance with the regulations thereunder and disregarding section 416(i)(5)) at any time during the 12-month period ending on December 31 (the “identification period”). If the employee is a key employee during an identification
period, the employee is treated as a key employee for purposes of this Agreement during the twelve (12) month period that begins on the first day of April following the close of the identification period. 
 1.11 “Termination for Cause” means termination due to the 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 Termination for Cause shall be determined by a majority vote of the entire membership of the Board of Directors of the Bank 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 of Directors with counsel) of finding that, in the good faith opinion of the Board of Directors of the Bank, that Executive committed the conduct described above. 
 1.12 “Termination of Employment” means a Separation from Service with the Bank. Separation from Service shall mean the Executive’s
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 Executive’s right to reemployment is provided by law or contract. If the leave time exceeds six months and the Executive’s right to reemployment is not provided by law or by
contract, then the Executive shall have a Separation from Service on the first date immediately following such six-month period. Whether a Separation from Service has occurred is determined based on whether the facts and circumstances indicate that
the Bank and the Executive reasonably anticipated that no further services would be performed after a certain date or that the level of bona fide services the Executive would perform after such date (whether as an employee or as an independent
contractor) would permanently decrease to no more than 49% of the average level of bona fide services performed over the immediately preceding 36 months (or such lesser period of time in which the Executive performed services for the Bank). The
determination of whether the Executive has had a Separation from Service shall be made by applying the presumptions set forth in the Treasury Regulations under Code Section 409A. 
 1.13 “Year of Service” means a calendar year during which the Executive is employed by the Bank for at least 1,000 hours of service. For
this purpose, Years of Service earned prior to January 1, 2002 shall be disregarded. 
  

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 ARTICLE 2 
 LIFETIME BENEFITS 
 2.1 Normal Retirement Benefit. Upon the Executive’s
Termination of Employment on or after his Normal Retirement Date, the Bank shall pay to the Executive the “Normal Retirement Benefit” described in this Section 2.1 in lieu of any other benefit under this Agreement. 
 2.1.1 Amount of Benefit. The Normal Retirement Benefit under this Section 2.1 is the present value equivalent (determined
using a 5% discount rate) of an annual amount equal to Six Hundred Thousand Dollars ($600,000) payable for a term certain of 15 years. 
 2.1.2 Payment of Benefit. The Bank shall pay the Normal Retirement Benefit to the Executive in a single cash lump-sum distribution on the first day of the month following the Executive’s Termination of
Employment on or after his Normal Retirement Date. 
 2.2 Early Termination Benefit. Upon the Executive’s Termination of
Employment on an Early Termination Date, the Bank shall pay to the Executive the Early Termination Benefit described in this Section 2.2 in lieu of any other benefit under this Agreement. 
 2.2.1 Amount of Benefit. The Early Termination Benefit under this Section 2.2 is the Accrual Balance determined as of the end
of the Plan Year prior to the Executive’s Termination of Employment. 
 2.2.2 Payment of Benefit. The Bank shall
pay the Early Termination Benefit in a single cash lump-sum distribution within 30 days following the Executive’s Early Termination Date. 
 2.3 Disability Benefit. If the Executive incurs a Disability prior to his or her Normal Retirement Date, the Bank shall pay to the Executive the “Disability Benefit” described in this Section 2.3 in lieu of any other
benefit under this Agreement. 
 2.3.1 Amount of Benefit. The Disability Benefit under this Section 2.3 is the
present value equivalent (determined using a 5% discount rate) of an annual amount equal to Six Hundred Thousand Dollars ($600,000) payable for a term certain of 15 years. 
 2.3.2 Payment of Benefit. The Bank shall pay the Disability Benefit to the Executive in a single cash lump-sum distribution within
30 days following the date of the Executive’s termination due to Disability. 
 2.4 Change of Control Benefit. Upon the
Executive’s Termination of Employment within 36 months following the occurrence of a Change of Control, the Bank shall pay to the Executive the “Change in Control Benefit” described in this Section 2.4 in lieu of any other
benefit under this Agreement. 
  

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 2.4.1 Amount of Benefit. The Change of Control Benefit under this Section 2.4
is the present value equivalent (determined using a 5% discount rate) of an annual amount equal to Six Hundred Thousand Dollars ($600,000) payable for a term certain of 15 years. 
 2.4.2 Payment of Benefit. The Bank shall pay the Change in Control Benefit to the Executive in a single cash lump-sum distribution
within 30 days after the Executive’s Termination of Employment following the Chang in Control. 
 2.4.3 Excess
Parachute Payment. 
 (a) Tax Indemnification. Anything in this Agreement to the contrary notwithstanding, and except as set forth
below, in the event it shall be determined that any payment or distribution to or for the benefit of the Executive under this Agreement (“Payment”), would be subject to the excise tax imposed by Code Section 4999 or any interest or
penalties are incurred by the Executive with respect to such excise tax (the excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), the Executive shall be entitled to
receive an additional payment (“Gross-Up Payment”) in an amount such that after payment by the Executive of all taxes (including any interest or penalties imposed with respect to such taxes), including, without limitation, any income taxes
(and any interest and penalties imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments. Notwithstanding the foregoing,
the Bank shall pay to the Executive the Gross-Up Payment no later than the end of the Executive’s taxable year next following the Executive’s taxable year in which the Executive remits the Excise Tax to the related taxing authority.

 (b) Determination of Gross-Up Payment. Subject to the provisions of Section 2.4.3(c), all determinations required to be made
under this Section 2.4.3, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payments and the assumptions to be utilized in arriving at such determination, shall be made by a certified public accounting
firm reasonably acceptable to the Bank as may be designated by the Executive (“Accounting Firm”) which shall provide detailed supporting calculations both to the Bank and the Executive within 15 business days of the receipt of notice from
the Executive that there have been Payments, or such earlier time as is requested by the Bank. All fees and expenses of the Accounting Firm shall be borne solely by the Bank. Any Gross-Up Payment, as determined pursuant to this Section 2.4.3,
shall be paid by the Bank to the Executive within five days of (i) the later of the due date for the payments of any Excise Tax, and (ii) the receipt of the Accounting Firm’s determination. Any determination by the Accounting Firm
shall be binding upon the Bank and the Executive. As a result of the uncertainty in the application of Code Section 4999, at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which
will not have been made by the Bank should have been made (“Underpayment”), consistent with the calculations required to be made hereunder. In the event that the Bank exhausts its remedies pursuant to Section 2.4.3(c) and the
Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Bank to or for the benefit of the
Executive. 
  

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 (c) Treatment of Claims. The Executive shall notify the Bank in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment by the Bank of the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten business days after the Executive is informed in writing of
such claim and shall apprise the Bank of the nature of such claims and the date on which such claim is requested to be paid. The Executive shall not pay such claim prior to the expiration of the 30-day period following the date on which it gives
such notice to the Bank (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Bank notifies the Executive in writing prior to the expiration of such period that it desires to contest such
claim, the Executive shall: 
 (i) give the Bank any information reasonably requested by the Bank relating such claim,

 (ii) take such action in connection with contesting such claim as the Bank shall reasonably request in writing from time
to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Bank, 
 (iii) cooperate with the Bank in good faith in order effectively to contest such claim, and 
 (iv) permit the Bank to participate in any proceedings relating to such claim; provided, however, that the Bank shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with
such contest and indemnity and hold the Executive harmless, on an after-tax basis, for an Excise Tax or income tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses.
Without limitation on the foregoing provisions of this Section 2.4.3(c), the Bank shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forgo any and all administrative appeals, proceedings,
hearings and conferences with the taxing authority in respect of such claim and may, at its sole option, either direct the Executive to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and the Executive agrees
to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Bank shall determine; provided, however, that if the Bank directs the Executive to pay
such claim and sue for a refund, the Bank shall advance the amount of such payment to the Executive, on an interest-free basis, from any Excise Tax or income tax (including interest or penalties with respect thereto) imposed with respect to such
advance or with respect to any imputed income with respect to such advance; and further provided with respect to any extension of the statute of limitations relating to payment of taxes for the taxable year of the Executive with respect to which
such contested amount. Furthermore, the Bank’s control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and the Executive shall be entitled to settle or contest, as the case may be,
any other issues raised by the Internal Revenue service or any other taxing authority. 
  

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 (d) Adjustments to the Gross-Up Payment. If, after the receipt by the Executive of an amount
advanced by the Bank pursuant to Section 2.4.3(c), the Executive becomes entitled to receive any refund with respect to such claim, the Executive shall (subject to the Bank’s complying with the requirements of Section 2.4.3(c) pay to
the Bank the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto within 30 days). If, after the receipt by the Executive of an amount advanced by the Bank pursuant to Section 2.4.3(c), a
determination is made that the Executive shall not be entitled to any refund with respect to such claim and such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven and shall not be
required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of the Gross-Up Payment required to be paid. 
 2.5 Restriction on Timing of Payment. Notwithstanding any provision of this Agreement to the contrary, in the event the Executive is a Specified Employee, then, to the extent necessary to avoid penalties under Code Section 409A,
any payments under Sections 2.2 and 2.4 to which Executive is entitled for the first six months shall be withheld and shall be paid to the Executive in a single cash lump-sum distribution on the first day of the seventh month following the
Executive’s Termination of Employment. 
 ARTICLE 3 
 DEATH BENEFITS 
 3.1 Death During Active Service. If the Executive dies while in the
active service of the Bank, the Bank shall pay to the Executive’s Beneficiary the “Preretirement Death Benefit” described in this Section 3.1 in lieu of any other benefit under this Agreement. The Bank shall not pay any
Preretirement Death Benefit under this Section 3.1 if the Executive has received any of lifetime benefit payment provided under Article 2. 
 3.1.1 Amount of Benefit. The Preretirement Death Benefit under this Section 3.1 shall be the present value equivalent (determined using a 5% discount rate) of an annual amount equal to Six Hundred Thousand
Dollars ($600,000) payable for a term certain of 15 years, starting at what would have been the Executive’s Normal Retirement Age. 
 3.1.2 Payment of Benefit. Upon the Executive’s death, the Bank shall pay the Preretirement Death Benefit to the Executive’s Beneficiary in a single cash lump-sum distribution within 30 days following
the Executive’s death. 
 3.2 Death During Payment of a Lifetime Benefit. If the Executive dies after any lifetime benefit
payments have commenced under Article 2 but before receiving all such payments, the Bank shall pay the remaining benefit payments to the Executive’s Beneficiary at the same time and in the same amounts they would have been paid to the Executive
had the Executive survived. 
  

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 3.3 Death After Termination of Employment But Before Payment of a Lifetime Benefit Commences. If
the Executive is entitled to the commencement of any lifetime benefit payments under Article 2, but dies prior to the commencement of such benefit payments, the Bank shall pay the same benefit payments to the Executive’s Beneficiary that the
Executive was entitled to prior to death except that the benefit payments shall commence on the first day of the month following the date of the Executive’s death. 
 ARTICLE 4 
 BENEFICIARIES 
 The Executive shall designate a Beneficiary by filing a written designation (as attached hereto) with the Bank. The Executive may revoke or modify the
designation at any time by filing a new designation. However, a designation shall only be effective if signed by the Executive and received by the Bank during the Executive’s lifetime. The Executive’s Beneficiary designation shall be
deemed automatically revoked if the Beneficiary predeceases the Executive, or if the Executive names a spouse as Beneficiary and the marriage is subsequently dissolved. If the Executive dies without a valid beneficiary designation, all payments
shall be made to the personal representative of the Executive’s estate. 
 ARTICLE 5 
 VESTING 
 5.1 Full
Vesting. Except as otherwise provided in this Article 5, the Executive shall maintain a 100% vested and nonforfeitable interest in the benefits provided under this Agreement. 
 5.2 Termination for Cause. However, notwithstanding the above Section 5.1 or any other provision of this Agreement to the contrary, the Bank
shall not pay, and the Executive shall not be entitled to, any benefit under this Agreement due to the Executive’s Termination for Cause. 
 5.3 Suicide or Misstatement. The Bank shall not pay, and the Executive shall not be entitled to, any benefit under this Agreement if the Executive commits suicide within three years after the date of this Agreement. In addition, the
Bank shall not pay, and the Executive shall not be entitled to, any benefit under this Agreement if the Executive has made any material misstatement of fact on any application for any benefits provided by the Bank to the Executive. 
 ARTICLE 6 
 ADMINISTRATION

 6.1 Authority of Board. The Board of Directors shall maintain the authority and discretion to control and manage the
operation and administration of the Agreement. In its discretion, the Board of Directors shall make such rules, interpretations, and computations and take such other actions to administer the Agreement, as it may deem appropriate. The rules,
interpretations, computations, and other actions of the Board of Directors shall be binding and conclusive on all persons. In administering the Agreement, the Board of Directors shall have the authority to: (a) require, as a condition to
receiving benefits under the Agreement, such information as it may reasonably require for the proper administration of the Agreement; (b)

  

 8 

 
make and enforce such rules and regulations as it deems to be necessary for the administration of the Agreement; (c) interpret the Agreement;
(d) determine the amount and timing of benefits payable to any person in accordance with the provisions of the Agreement; and (e) direct all payments to be made pursuant to the Agreement. 
 The Board of Directors is granted the authority to name an individual or individuals from time to time to carry out one or more of the duties described
above. The expenses of the Board of Directors, or the individual or individuals described in the preceding sentence, shall be paid directly by the Bank. 
 6.2 Incapacity. If a benefit is payable to a minor, to a person declared incompetent, or to a person incapable of handling the disposition of his or her property, the Bank may pay such benefit to the guardian,
legal representative, or person having the care or custody of such minor, incompetent person, or incapable person. The Bank may require proof of incompetence, minority, or guardianship as it may deem appropriate prior to distribution of the benefit.
Such distribution shall completely discharge the Bank from all liability with respect to such benefit. 
 ARTICLE 7 
 FUNDING 
 7.1 Unfunded
Plan. All amounts payable in accordance with the Agreement shall be paid in cash from the general funds of the Bank and no special or separate fund, other than a “rabbi trust” established pursuant to Section 7.2 below, shall be
established, and no other segregation of assets shall be made to assure the payment of any amounts payable in accordance with the Agreement. The Executive shall have no right, title, or interest whatsoever in or to any investment that the Bank may
make to aid it in meeting its obligations hereunder, including, but not limited to, deemed investments. Nothing contained in the Agreement, and no action taken pursuant to its provisions shall create or be construed to create a trust of any kind, or
a fiduciary relationship between the Bank and the Executive or any other person. To the extent that any person acquires a right to receive payments from the Bank hereunder, such right shall be no greater than the right of an unsecured creditor.

 7.2 Rabbi Trust Allowed. The Bank may, for administrative reasons, establish a “rabbi trust” for the benefit of Executive
under the Agreement. If such a trust is established, its assets shall be used exclusively for the purposes set forth in the Agreement and the applicable trust agreement, subject to the following conditions: 
 (a) The creation of said trust shall not cause the Agreement to be other than “unfunded” for purposes of Title I of ERISA; 
 (b) The Bank shall be treated as the “grantor” of said trust for purposes of Code Section 677; and 
 (c) The trust agreement shall provide that its assets may be used to satisfy claims of the Bank’s general creditors in the event of insolvency, and
the rights of such general creditors in such circumstances are enforceable by them under federal and state law. 
  

 9 

 It is intended that such a trust be consistent with tax law requirements preventing inclusion in income
for income tax purposes prior to actual payment of benefits under the Agreement. If such a trust is established, then prior to the payment of benefits to the Executive, there shall be no actual transfer of assets to the Executive under the Agreement
and trust, and the Agreement and trust shall confer no current benefit that would be immediately taxable to the Executive under the constructive receipt rule or economic benefit doctrine under the tax laws. 
 ARTICLE 8 
 AMENDMENT AND
TERMINATION 
 8.1 Amendment and Termination. 
 (a) The Bank reserves the right to amend this Agreement at any time. However, to the extent any such amendment would adversely impact the accrued benefits of the Executive, the amendment shall require the written
consent of the Executive, even if the Executive is no longer employed by the Bank. 
 (b) The Bank reserves the right to terminate the
Agreement at any time. Upon termination of the Agreement, the Bank shall determine whether all payments of benefits shall be made in accordance with the normal distribution schedule set forth under the Agreement or if payment of benefits shall be
accelerated in order to wind down the Agreement. To the extent any benefits under the Agreement are subject to Code Section 409A, any acceleration of the payment of such benefits due to terminating the Agreement shall comply with the following:

 (i) the Bank may terminate the Agreement provided that: (A) all arrangements sponsored by the Bank that would be
aggregated with this Agreement under Treasury Regulations Section 1.409A-1(c)(2) if the Executive covered by this Agreement was also covered by any of those other arrangements are also terminated; (B) 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; (C) all payments are made within 24 months of the termination of the arrangements; and
(D) the Bank does not adopt a new arrangement that would be aggregated with any terminated arrangement under Treasury Regulations Section 1.409A-1(c)(2) if the same Executive participated in both arrangements, at any time within three
years following the date of termination of the arrangement. 
 (ii) The Bank may terminate the Agreement within the 30 days
preceding a Change in Control (but not following a Change in Control), provided that the Agreement shall only be treated as terminated if all substantially similar arrangements sponsored by the Bank are terminated so that the Executive and all
executives 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. 
 (iii) The Bank
may terminate the Agreement within 12 months of a corporate dissolution taxed under Code Section 331, or with approval of a bankruptcy 

  

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court pursuant to 11 U.S.C. §503(b)(1)(A), provided that the amounts deferred under the Agreement are included in the Executive’s gross income in
the latest of (A) the calendar year in which the Agreement terminates; (B) the calendar year in which the amount is no longer subject to a substantial risk of forfeiture; or (C) the first calendar year in which the payment is
administratively practicable. 
 8.2 Reorganization of the Bank. In the event of a merger or consolidation of the Bank, or the
transfer of substantially all of the assets of the Bank to another corporation, such continuing, resulting, or transferee corporation shall have the right to continue and carry the Agreement and to assume all liabilities of the Bank without
obtaining the consent of the Executive. If such successor shall assume the liabilities of the Bank hereunder, the Bank shall be relieved of all such liability, and the Executive shall have the right to assert any claim against the Bank for benefits
under or in connection with this Agreement. 
 8.3 Protected Benefits. If the Agreement is terminated, or if liabilities accrued
hereunder up to the date of an event specified in Section 8.2 are not assumed by the successor to the Bank, then the dollar amount of benefits of Executive or Beneficiary receiving benefits under the Agreement, and the dollar amount of benefits
of the Executive or Beneficiary who is entitled to benefits under the Agreement, shall be guaranteed and shall not thereafter be reduced without the Executive’s or Beneficiary’s consent. 
 ARTICLE 9 
 CLAIMS AND REVIEW
PROCEDURES 
 9.1 Claims Procedure. An Executive or Beneficiary (the “Claimant”) who has not received benefits under
the Agreement that he or she believes should be paid may make a claim for such benefits as follows: 
 9.1.1 Initiation
– Written Claim. The Claimant may initiate a claim by submitting to the Bank a written claim for benefits. 
 9.1.2
Timing of Bank Response. The Bank shall respond to such Claimant within 90 days after receiving the claim. If the Bank determines that special circumstances require additional time for processing the claim, the Bank may extend the response
period by an additional 90 days by notifying the Claimant in writing, prior to the end of the initial 90-day period, that an additional period is required. The notice of extension shall set forth the special circumstances and the date by which the
Bank expects to render its decision. 
 9.1.3 Notice of Decision. If the Bank denies part or all of the claim, the Bank
shall notify the Claimant in writing of such denial. The Bank shall write the notification in a manner calculated to be understood by the Claimant. The notification shall set forth: (a) the specific reasons for the denial; (b) a reference
to the specific provisions of the Agreement on which the denial is based; (c) description of any additional information or material necessary for the Claimant to perfect the claim and an explanation of why it is needed; (d) an explanation
of the Agreement’s review procedures and the time limits applicable to such procedures; (e) and a statement of the claimant’s right to bring a civil action under ERISA Section 502(a) following an adverse benefit determination on
review. 
  

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 9.2 Review Procedure. If the Bank denies part or all of the claim, the Claimant shall have the
opportunity for a full and fair review by the Bank of the denial, as follows: 
 9.2.1 Initiation – Written
Request. In order to initiate the review, the Claimant, within 60 days after receiving the Bank’s notice of denial, may file with the Bank a written request for review. 
 9.2.2 Additional Submissions – Information Access. The Claimant shall then have the opportunity to submit written comments,
documents, records, and other information relating to the claim. The Bank shall also provide the Claimant, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant (as defined in
applicable ERISA regulations) to the Claimant’s claim for benefits. 
 9.2.3 Considerations on Review. In
considering the review, the Bank shall take into account all materials and information the Claimant submits relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination.

 9.2.4 Timing of Bank Response. The Bank shall respond in writing to such claimant within 60 days after receiving the
request for review. If the Bank determines that special circumstances require additional time for processing the claim, the Bank can extend the response period by an additional 60 days by notifying the claimant in writing, prior to the end of the
initial 60-day period, that an additional period is required. The notice of extension must set forth the special circumstances and the date by which the Bank expects to render its decision. 
 9.2.5 Notice of Decision. The Bank shall notify the Claimant in writing of its decision on review. The Bank shall write the
notification in a manner calculated to be understood by the Claimant. The notification shall set forth: (a) the specific reasons for the denial; (b) a reference to the specific provisions of the Agreement on which the denial is based;
(c) a statement that the Claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant (as defined in applicable ERISA regulations) to the
Claimant’s claim for benefits; and (d) a statement of the Claimant’s right to bring a civil action under ERISA Section 502(a). 
 ARTICLE 10 
 LEGAL STATUS 
 This Agreement is intended to constitute a nonqualified deferred compensation agreement which is not subject to the qualification requirements of Code Section 401(a). Further, this Agreement is intended to
constitute a “top hat” arrangement within the meaning of ERISA 201(2) and is not subject to the coverage, funding, and fiduciary requirements of ERISA. Finally, until the occurrence of a distribution event and the actual payment to the
Executive of a benefit hereunder, it is intended that there has been no transfer of any benefit to the Executive under Code Section 83 and no benefit is subject to inclusion for income tax purposes. 
  

 12 

 ARTICLE 11 
 MISCELLANEOUS 
 11.1 Binding Effect. This Agreement shall bind the Executive and the
Bank, and their beneficiaries, survivors, executors, successors, administrators and transferees. 
 11.2 No Guarantee of Employment.
This Agreement is not an employment policy or contract. It does not give the Executive the right to remain an employee of the Bank, nor does it interfere with the Bank’s right to discharge the Executive. It also does not require the Executive
to remain an employee nor interfere with the Executive’s right to terminate employment at any time. 
 11.3 Nontransferability.
Benefits under this Agreement cannot be sold, transferred, assigned, pledged, attached, or encumbered in any manner. 
 11.4 Notice.
Any notice, consent, or demand required or permitted to be given under the provisions of this Agreement by one party to another shall be in writing, shall be signed by the party giving or making the same, and may be given either by delivering the
same to such other party personally, or by mailing the same, by United States certified mail, postage prepaid, to such party, addressed to their last known address as shown on the records of the Bank. The date of such mailing shall be deemed the
date of such mailed notice, consent, or demand. 
 11.5 Tax Withholding and Code Section 409A Taxes. Any distribution under this
Agreement shall be reduced by the amount of any taxes required to be withheld from such distribution. This Agreement 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. 
 11.6 Applicable Law. The Agreement and all rights hereunder shall be governed by the laws of the State of Hawaii, except to the extent preempted by the laws of the United States of America. 
 11.7 Entire Agreement. This Agreement constitutes the entire agreement between the Bank and the Executive as to the subject matter hereof. No
rights are granted to the Executive by virtue of this Agreement other than those specifically set forth herein. 
 11.8 Named
Fiduciary. The Bank shall be the named fiduciary and plan administrator under this Agreement. It may delegate to others certain aspects of the management and operational responsibilities including the employment of advisors and the delegation of
ministerial duties to qualified individuals. 
  

 13 

 11.9 Construction. The headings of the Articles in this Agreement is provided for convenience only
and will not affect its construction or interpretation. All references to “Article” or “Articles” refer to the corresponding Article or Articles of this Agreement. Wherever any words are used under the Agreement in the masculine,
feminine, or neuter gender, they shall be construed as though they were also used in another gender in all cases where they would so apply. 
 11.10 Acceleration of Payments. Except as specifically permitted herein or in other sections of this Agreement, 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) in the case of certain distributions to avoid
a non-allocation year under Code Section 409(p); (vi) to apply certain offsets in satisfaction of a debt of the Executive to the Bank; (vii) in satisfaction of certain bona fide disputes between the Executive and the Bank; or
(viii) for any other purpose set forth in the Treasury Regulations and subsequent guidance. 
 11.11 Required Provision. Any
payments made to the Executive pursuant to this Agreement, or otherwise, are subject to and conditioned upon their compliance with 12 U.S.C. § 1828(k) and any regulations promulgated thereunder. 
  

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 IN WITNESS WHEREOF, the Executive and the Bank have signed this Agreement on the dates set forth
below. 
  

							
		 		 	TERRITORIAL SAVINGS BANK
				
	November 10, 2008	 		 	By:	 	 /s/ Harold H. Ohama

	Date	 		 		 	Chairman, Compensation Committee of the Board
				
	November 10, 2008	 		 		 	 /s/ Allan S. Kitagawa

	Date	 		 		 	Allan S. Kitagawa

  

 15

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