Exhibit 10.1

 

Central Pacific Financial Corp.

2013 Stock Compensation Plan

 

Article 1.

 

Establishment, Purpose, and Duration

 

1.1             Establishment of the Plan .  Central Pacific Financial Corp., a Hawaii corporation (hereinafter referred to as the “Company”), establishes an incentive compensation plan to be known as the Central Pacific Financial Corp. 2013 Stock Compensation Plan (hereinafter referred to as the “Plan”), as set forth in this document.

 

The Plan permits the grant of Nonqualified Stock Options, Incentive Stock Options, Stock Appreciation Rights (“SARs”), Restricted Stock, Restricted Stock Units, Performance Shares, Performance Units, and Stock-Based Awards.

 

The Plan shall become effective upon shareholder approval of the Plan (the “Effective Date”) and shall remain in effect as provided in Section 1.3 hereof.

 

1.2             Purpose of the Plan .  The purpose of the Plan is to promote the success and enhance the value of the Company by linking the personal interests of the Participants to those of the Company’s shareholders, and by providing Participants with an incentive for outstanding performance.

 

The Plan is further intended to provide flexibility to the Company in its ability to motivate, attract, and retain the services of Participants upon whose judgment, interest, and special effort the successful conduct of its operation largely is dependent.

 

1.3             Duration of the Plan .  Unless sooner terminated as provided herein, the Plan shall terminate ten (10) years from the Effective Date. After the Plan is terminated, no future Awards may be granted, but Awards previously granted shall remain outstanding in accordance with their applicable terms and conditions and the Plan’s terms and conditions. Notwithstanding the foregoing, no Incentive Stock Options may be granted more than ten (10) years after the earlier of (a) the adoption of the Plan by the Board, and (b) the Effective Date.

 

1.4             Awards under Prior Option Plans .  From and after the Effective Date, the Company will make new Awards only under this Plan. For the avoidance of doubt, all awards granted before the Effective Date under any prior plan shall remain in full force and effect and shall continue to be governed by the terms of the applicable plan and related award agreement.

 

Article 2.

 

Definitions

 

Whenever used in the Plan, the following terms shall have the meaning set forth below, and when the meaning is intended, the initial letter of the word shall be capitalized.

 

2.1             “Affiliate” shall have the meaning ascribed to such term in Rule 12b-2 of the General Rules and Regulations of the Exchange Act.

 

2.2             “Award” means, individually or collectively, a grant under this Plan of NQSOs, ISOs, SARs, Restricted Stock, Restricted Stock Units, Performance Shares, Performance Units, or Stock-Based Awards.

 

2.3             “Award Agreement” means either (i) an agreement entered into by the Company and each Participant setting forth the terms and provisions applicable to Awards granted under this Plan; or (ii) a statement issued by the Company to a Participant describing the terms and provisions of such Award.

 

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2.4             “Beneficial Owner or Beneficial Ownership” shall have the meaning ascribed to such term in rule 13d-3 of the General Rules and Regulations under the Exchange Act.

 

2.5             “Board” or “Board of Directors” means the Board of Directors of the Company.

 

2.6             “Cause” means:

 

(a)                        Gross negligence or gross neglect of duties;

 

(b)                        Commission of a felony or of a gross misdemeanor involving moral turpitude; or

 

(c)                         Fraud, disloyalty, dishonesty or willful violation of any law or significant Company policy committed in connection with the person’s employment in service and resulting in an adverse effect on the Company.

 

2.7             “Change in Control” shall mean any of the following:

 

(a)                        Any “person” (as such term is used in Sections 13(d) and 14(d) of the 1934 Securities Exchange Act) or group becomes the “beneficial owner” (as defined in Rule 13d-3 of the 1934 Securities Exchange Act) or has the right to acquire beneficial ownership, directly or indirectly, of securities of the Company representing fifty percent (50%) or more of the total voting power represented by the Company’s then outstanding voting securities;

 

(b)                        The consummation of the sale, lease or other disposition by the Company of all or substantially all of the Company’s assets (including any equity interests in subsidiaries); or

 

(c)                         The consummation of a merger, consolidation, business combination, scheme of arrangement, share exchange or similar transaction involving the Company and any other corporation (“Business Combination”), other than (x) a Business Combination which results in both (A) the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or its parent) at least forty-five (45%) of the total voting power represented by the voting securities of the Company or such surviving entity or its parent outstanding immediately after such Business Combination and (B) the incumbent members of the Board immediately prior to the Business Combination continuing to represent not less than two thirds ( 2 / 3 ) of the members of the board of directors of the surviving entity or its parent, or (y) a Business Combination which results in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or its parent) at least fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity or its parent outstanding immediately after such Business Combination; or

 

(d)                        Any combination of (a), (b) and (c)..

 

2.8             “Code” means the U.S. Internal Revenue Code of 1986, as amended from time to time, or any successor thereto.

 

2.9             “Committee” means the Compensation Committee of the Board. However, if a member of the Compensation Committee is not an “outside director” within the meaning of Section 162(m) of the Code or is not a “non-employee director” within the meaning of Rule 16b-3 under the Exchange Act, the Compensation Committee may from time to time delegate some or all of its functions under the Plan to a committee or subcommittee composed of members that meet the relevant requirements. The term “Committee” includes any such committee or subcommittee, to the extent of the Compensation Committee’s delegation.

 

2.10      “Company” means Central Pacific Financial Corp., a Hawaii corporation, and any successor thereto as provided in Article 18 herein.

 

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2.11      “Covered Employee” means a Participant who is a “covered employee,” as defined in Section 162(m) of the Code and the regulations promulgated under Section 162(m) of the Code, or any successor statute.

 

2.12      “Director” means any individual who is a member of the Board of Directors of the Company and/or its Subsidiaries.

 

2.13      “Employee” means any employee of the Company, its Affiliates, and/or its Subsidiaries. Directors who are not otherwise employed by the Company, its Affiliates, and/or its Subsidiaries shall not be considered Employees under this Plan.

 

2.14      Individuals described in the first sentence of this definition who are foreign nationals or are employed outside of the United States, or both, are considered to be Employees and may be granted Awards on the terms and conditions set forth in the Plan, or on such other terms and conditions as may, in the judgment of the Committee, be necessary or desirable to further the purpose of the Plan.

 

2.15      “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, or any successor act thereto.

 

2.16      “Fair Market Value” or “FMV” means a price that is based on the opening, closing, actual, high, low, or average selling prices of a Share on the New York Stock Exchange (“NYSE”) or other established stock exchange (or exchanges) on the applicable date, the preceding trading day, the next succeeding trading day, or an average of trading days, as determined by the Committee in its discretion. Such definition of FMV shall be specified in the Award Agreement and may differ depending on whether FMV is in reference to the grant, exercise, vesting, or settlement or payout of an Award. If, however, the accounting standards used to account for equity awards granted to Participants are substantially modified subsequent to the Effective Date of the Plan, the Committee shall have the ability to determine an Award’s FMV based on the relevant facts and circumstances. If Shares are not traded on an established stock exchange, FMV shall be determined by the Committee based on objective criteria.

 

2.17      “Fiscal Year” means the year commencing on January 1 and ending December 31 or other time period as approved by the Board.

 

2.18      “Freestanding SAR” means an SAR that is granted independently of any Options, as described in Article 7 herein.

 

2.19      “Full Value Award” means an Award other than in the form of an ISO, NQSO, or SAR and which is settled by the issuance of Shares.

 

2.20      “Grant Price” means the price at which a SAR may be exercised by a Participant, as determined by the Committee and set forth in Section 7.1 herein.

 

2.21      “Incentive Stock Option” or “ISO” means an Option to purchase Shares granted under Article 6 herein and that is designated as an Incentive Stock Option and is intended to meet the requirements of Section 422 of the Code, or any successor provision.

 

2.22      “Independent Contractor” means an individual providing services to the Company, its Affiliates, and/or its Subsidiaries, other than a Director who is not also an Employee of the Company, its Affiliates, and/or its Subsidiaries. Such Independent Contractor shall be eligible to participate in the Plan as selected by the Committee in accordance with Article 5. Notwithstanding any other provision in the Plan to the contrary, the following shall apply in the case of an Independent Contractor who is allowed to participate in the Plan: (a) with respect to any reference in this Plan to the working relationship between such Independent Contractor and the Company, its Affiliates, and/or its Subsidiaries, the term “service” shall apply as may be appropriate in lieu of the term “employment” or “employ”; (b) no such Independent Contractor shall be eligible for a grant of an ISO; and (c) the

 

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exercise period and vesting of an Award following such Independent Contractor’s termination from service shall be specified and governed under the terms and conditions of the Award as may be determined by the Committee and set forth in the Independent Contractor’s Award Agreement related to such Award.

 

2.23      “Insider” shall mean an individual who is, on the relevant date, an officer, Director, or more than ten percent (10%) Beneficial Owner of any class of the Company’s equity securities that is registered pursuant to Section 12 of the Exchange Act, as determined by the Board in accordance with Section 16 of the Exchange Act.

 

2.24      “Nonqualified Stock Option” or “NQSO” means an Option to purchase Shares, granted under Article 6 herein, which is not intended to be an Incentive Stock Option or that otherwise does not meet such requirements.

 

2.25      “Option” means an Incentive Stock Option or a Nonqualified Stock Option, as described in Article 6 herein.

 

2.26      “Option Price” means the price at which a Share may be purchased by a Participant pursuant to an Option, as determined by the Committee.

 

2.27      “Participant” means an Employee, Director or Independent Contractor who has been selected to receive an Award or who has an outstanding Award granted under the Plan.

 

2.28      “Performance-Based Compensation” means compensation under an Award that satisfies the requirements of Section 162(m) of the Code for deductibility of remuneration paid to Covered Employees.

 

2.29      “Performance Measures” means measures as described in Article 11 on which the performance goals are based and which are approved by the Company’s shareholders pursuant to this Plan in order to qualify Awards as Performance-Based Compensation.

 

2.30      “Performance Period” means the period of time during which the performance goals must be met in order to determine the degree of payout and/or vesting with respect to an Award.

 

2.31      “Performance Share” means an Award granted to a Participant, as described in Article 9 herein.

 

2.32      “Performance Unit” means an Award granted to a Participant, as described in Article 9 herein.

 

2.33      “Period of Restriction” means the period when Awards are subject to forfeiture based on the passage of time, the achievement of performance goals, and/or upon the occurrence of other events as determined by the Committee, at its discretion.

 

2.34      “Person” shall have the meaning ascribed to such term in Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof, including a “group” as defined in Section 13(d) thereof.

 

2.35      “Restricted Stock” means an Award of Shares granted to a Participant pursuant to Article 8 herein.

 

2.36      “Restricted Stock Unit” means an Award granted to a Participant pursuant to Article 8 herein.

 

2.37      “Shares” or “Stock” means the Shares of common stock of the Company.

 

2.38      “Stock Appreciation Right” or “SAR” means an Award, designated as an SAR, pursuant to the terms of Article 7 herein.

 

2.39      “Stock-Based Award” means an Award granted pursuant to the terms of Section 10.2 herein.

 

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2.40      “Subsidiary” means any corporation, partnership, joint venture, limited liability company, or other entity (other than the Company) in an unbroken chain of entities beginning with the Company if each of the entities other than the last entity in the unbroken chain owns at least fifty percent (50%) of the total combined voting power in one of the other entities in such chain.

 

2.41      “Tandem SAR” means an SAR that is granted in connection with a related Option pursuant to Article 7 herein, the exercise of which shall require forfeiture of the right to purchase a Share under the related Option (and when a Share is purchased under the Option, the Tandem SAR shall similarly be cancelled) or an SAR that is granted in tandem with an Option but the exercise of such Option does not cancel the SAR, but rather results in the exercise of the related SAR.

 

Article 3.

 

Administration

 

3.1             General.   The Committee shall be responsible for administering the Plan. The Committee may employ attorneys, consultants, accountants, and other persons, and the Committee, the Company, and its officers and Directors shall be entitled to rely upon the advice, opinions, or valuations of any such persons. All actions taken and all interpretations and determinations made by the Committee shall be final, conclusive, and binding upon the Participants, the Company, and all other interested parties.

 

3.2             Authority of the Committee .  The Committee shall have full and exclusive discretionary power and authority to interpret the terms and the intent of the Plan and to determine eligibility for Awards and to adopt such rules, regulations, and guidelines for administering the Plan as the Committee may deem necessary or proper. Such authority shall include, but not be limited to, selecting Award recipients, establishing all Award terms and conditions and, subject to Article 16, adopting modifications and amendments, or subplans to the Plan or any Award Agreement, including without limitation, any that are necessary to comply with the laws of the countries in which the Company, its Affiliates, and/or its Subsidiaries operate.

 

3.3             Delegation .  The Committee may delegate to one or more of its members or to one or more officers of the Company, its Affiliates and/or its Subsidiaries, or to one or more agents or advisors such administrative duties as it may deem advisable, and the Committee or any person to whom it has delegated duties as aforesaid may employ one or more persons to render advice with respect to any responsibility the Committee or such person may have under the Plan. Except with respect to Awards to insiders, the Committee may (to the extent permitted by applicable law), by resolution, authorize one or more officers of the Company to do one or both of the following: (a) designate officers, Employees, or Independent Contractors of the Company, its Affiliates, and/or its Subsidiaries to be recipients of Awards; and (b) determine the size of the Award: provided, however, that the resolution providing such authorization sets forth the total number of Awards such officer or officers may grant.

 

Article 4.

 

Shares Subject to the Plan and Maximum Awards

 

4.1             Number of Shares Available for Awards.   Subject to adjustment as provided in this Article  4, the number of Shares which may be delivered pursuant to Awards granted under the Plan (the “Share Authorization”) shall be 2,200,000 Shares. Upon stockholder approval of the Plan, no further Awards will be granted under the Central Pacific Financial Corp. 2004 Stock Compensation Plan, but the Central Pacific Financial Corp. 2004 Stock Compensation Plan shall remain in effect for purposes of Awards previously granted. Notwithstanding any provision provided herein, the maximum aggregate number of Shares that may be granted pursuant to any Award granted in any one Fiscal Year to any one Participant shall be 400,000 Shares. Any Shares related to Awards which terminate by expiration, forfeiture, cancellation, or otherwise without the issuance of such Shares, are settled in cash in lieu of

 

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Shares, or are exchanged with the Committee’s permission for Awards not involving Shares, shall be available again for grant under the Plan. Moreover, if the Option Price of any Option granted under the Plan or the tax withholding requirements with respect to any Award granted under the Plan are satisfied by tendering Shares to the Company (by either actual delivery or by attestation), or if an SAR is exercised, only the number of Shares issued, net of the Shares tendered, if any, will be deemed delivered for purposes of determining the maximum number of Shares available for delivery under the Plan. The maximum number of Shares available for issuance under the Plan shall not be reduced to reflect any dividends or dividend equivalents that are reinvested into additional Shares or credited as additional Restricted Stock, Restricted Stock Units, Performance Shares, or Stock-Based Awards. The Shares available for issuance under the Plan may be authorized and unissued Shares or treasury Shares.

 

4.2             Adjustments in Authorized Shares.   In the event of any corporate event or transaction (including, but not limited to, a change in the Shares of the Company or the capitalization of the Company) such as a merger, consolidation, reorganization, recapitalization, separation, Stock dividend, Stock split, reverse Stock split, split up, spin-off, or other distribution of Stock or property of the Company, combination of securities, exchange of securities, dividend in kind, or other like change in capital structure or distribution (other than normal cash dividends) to shareholders of the Company, or any similar corporate event or transaction, the Committee. in its sole discretion, in order to prevent dilution or enlargement of Participants’ rights under the Plan, shall substitute or adjust, in an equitable manner, as applicable, the number and kind of Shares that may be issued under the Plan, the number and kind of Shares subject to outstanding Awards, the Option Price or Grant Price applicable to outstanding Awards, the Award Limits, and other value determinations applicable to outstanding Awards.

 

Appropriate adjustments may also be made by the Committee in the terms of any Awards under the Plan to reflect such changes or distributions and to modify any other terms of outstanding Awards on an equitable basis, including modifications of performance goals and changes in the length of Performance Periods. The determination of the Committee as to the foregoing adjustments, if any, shall be conclusive and binding on Participants under the Plan.

 

Subject to the provisions of Article 15 and any applicable law or regulatory requirement, without affecting the number of Shares reserved or available hereunder, the Committee may authorize the issuance, assumption, substitution, conversion or termination of Awards under this Plan in connection with any merger, consolidation, acquisition of property or Stock, or reorganization, upon such terms and conditions as it may deem appropriate. Additionally, the Committee may amend the Plan, or adopt supplements to the Plan, in such manner as it deems appropriate to provide for such issuance, assumption, substitution, conversion or termination, all without further action by the Company’s shareholders. Notwithstanding anything to the contrary, any adjustments, modifications, amendments or changes of any kind made pursuant to this Section 4.2 shall be made in a manner compliant with Section 409A of the Code.

 

Article 5.

 

Eligibility and Participation

 

5.1             Eligibility.   Individuals eligible to participate in the Plan include all Employees, Directors, and Independent Contractors.

 

5.2             Actual Participation.   Subject to the provisions of the Plan, the Committee may from time to time, select from all eligible Employees, Directors, and Independent Contractors, those to whom Awards shall be granted and shall determine the nature and amount of each Award.

 

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Article 6.

 

Stock Options

 

6.1             Grant of Options.   Subject to the terms and provisions of the Plan, Options may be granted to Participants in such number, and upon such terms, and at any time and from time to time as shall be determined by the Committee, provided that ISOs shall not be granted to Non-Employee Directors and Independent Contractors.

 

6.2             Award Agreement.   Each Option grant shall be evidenced by an Award Agreement that shall specify the Option Price, the duration of the Option, the number of Shares to which the Option pertains, the conditions upon which an Option shall become vested and exercisable, and such other provisions as the Committee shall determine which are not inconsistent with the terms of the Plan. The Award Agreement also shall specify whether the Option is intended to be an ISO or a NQSO.

 

6.3             Option Price.   The Option Price for each grant of an Option under this Plan shall be determined by the Committee and shall be specified in the Award Agreement. The Option Price shall be at least one hundred percent (100%) of the FMV of the Shares on the date of grant.

 

6.4             Duration of Options.   Each Option granted to a Participant shall expire at such time as the Committee shall determine at the time of grant; provided, however, no Option shall be exercisable later than the tenth (10th) anniversary date of its grant.

 

6.5             Exercise of Options.   Options granted under this Article 6 shall be exercisable at such times and be subject to such restrictions and conditions as the Committee shall in each instance approve, which need not be the same for each grant or for each Participant.

 

6.6             Payment.   Options granted under this Article 6 shall be exercised by the delivery of a written notice of exercise to the Company, setting forth the number of Shares with respect to which the Option is to be exercised, accompanied by full payment for the Shares.

 

The Option Price upon exercise of any Option shall be payable to the Company in full either: (a) in cash or its equivalent; (b) by tendering (either by actual delivery or attestation) previously acquired Shares having an aggregate FMV at the time of exercise equal to the total Option Price (provided, if required to maintain favorable accounting treatment for the Options granted, the Shares that are tendered must have been held by the Participant for at least six (6) months prior to their tender to satisfy the Option Price or have been purchased on the open market); (c) by a combination of (a) and (b); or (d) any other method approved by the Committee in its sole discretion.

 

The Committee also may allow cashless exercise as permitted under the Federal Reserve Board’s Regulation T, subject to applicable securities law restrictions, or by any other means which the Committee determines to be consistent with the Plan’s purpose and applicable law.

 

Subject to Section 6.7 and any governing rules or regulations, as soon as practicable after receipt of a written notification of exercise and full payment, the Company shall deliver to the Participant, Share certificates or evidence of book entry Shares, in an appropriate amount based upon the number of Shares purchased under the Option(s).

 

Unless otherwise determined by the Committee, all payments under all of the methods indicated above shall be paid in United States dollars.

 

6.7             Restrictions on Share Transferability.   The Committee may impose such restrictions on any Shares acquired pursuant to the exercise of an Option granted under this Article 6 as it may deem advisable, including, without limitation, requiring the Participant to hold the Shares acquired pursuant to exercise for a specified period of time, restrictions under applicable federal securities laws, under the requirements of any stock exchange or market upon which such Shares are then listed and/or traded, and under any blue sky or state securities laws applicable to such Shares.

 

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6.8             Termination of Employment.   Each Participant’s Award Agreement shall set forth the extent to which the Participant shall have the right to exercise the Option following termination of the Participant’s employment with the Company, its Affiliates, and/or its Subsidiaries. Such provisions shall be determined in the sole discretion of the Committee, shall be included in the Award Agreement entered into with each Participant, need not be uniform among all Options issued pursuant to this Article 6, and may reflect distinctions based on the reasons for termination.

 

6.9             Transferability of Options .

 

(a)          Incentive Stock Options. No ISO granted under the Plan may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution. Further, all ISOs granted to a Participant under this Article 6 shall be exercisable during his or her lifetime only by such Participant.

 

(b)          Nonqualified Stock Options. Except as otherwise provided in a Participant’s Award Agreement or otherwise at any time by the Committee, no NQSO granted under this Article 6 may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution; provided that the Board or Committee may permit further transferability, on a general or a specific basis, and may impose conditions and limitations on any permitted transferability. Further, except as otherwise provided in a Participant’s Award Agreement or otherwise at any time by the Committee, or unless the Board or the Committee decides to permit further transferability, all NQSOs granted to a Participant under this Article 6 shall be exercisable during his or her lifetime only by such Participant.

 

6.10      Notification of Disqualifying Disposition .  The Participant will notify the Company upon the disposition of Shares issued pursuant to the exercise of an ISO. The Company will use such information to determine whether a disqualifying disposition as described in Section 421(b) of the Code has occurred.

 

Article 7.

 

Stock Appreciation Rights

 

7.1             Grant of SARs. Subject to the terms and conditions of the Plan, SARs may be granted to Participants at any time and from time to time as shall be determined by the Committee. The Committee may grant Freestanding SARs, Tandem SARs, or any combination of these forms of SARs.

 

Subject to the terms and conditions of the Plan, the Committee shall have complete discretion in determining the number of SARs granted to each Participant and, consistent with the provisions of the Plan, in determining the terms and conditions pertaining to such SARs.

 

The SAR Grant Price for each grant of a Freestanding SAR shall be determined by the Committee and shall be specified in the Award Agreement. The SAR Grant Price must be at least one hundred percent (100%) of the FMV of the Shares on the date of grant. The Grant Price of Tandem SARs shall be equal to the Option Price of the related Option.

 

7.2             SAR Agreement.   Each SAR Award shall be evidenced by an Award Agreement that shall specify the Grant Price, the term of the SAR, and such other provisions as the Committee shall determine.

 

7.3             Term of SAR.   The term of an SAR granted under the Plan shall be determined by the Committee, in its sole discretion, and except as determined otherwise by the Committee and specified in the SAR Award Agreement, no SAR shall be exercisable later than the tenth (10 th ) anniversary date of its grant.

 

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7.4             Exercise of Freestanding SARs.   Freestanding SARs may be exercised upon whatever terms and conditions the Committee, in its sole discretion, imposes upon them.

 

7.5             Exercise of Tandem SARs.   Tandem SARs may he exercised for all or part of the Shares subject to the related Option upon the surrender of the right to exercise the equivalent portion of the related Option. A Tandem SAR may be exercised only with respect to the Shares for which its related Option is then exercisable.

 

Notwithstanding any other provision of this Plan to the contrary, with respect to a Tandem SAR granted in connection with an ISO: (a) the Tandem SAR will expire no later than the expiration of the underlying ISO; (b) the value of the payout with respect to the Tandem SAR may be for no more than one hundred percent (100%) of the difference between the Option Price of the underlying ISO and the FMV of the Shares subject to the underlying ISO at the time the Tandem SAR is exercised; and (c) the Tandem SAR may be exercised only when the FMV of the Shares subject to the ISO exceeds the Option Price of the ISO.

 

7.6             Payment of SAR Amount.   Upon the exercise of an SAR, a Participant shall be entitled to receive payment from the Company in an amount determined by multiplying:

 

(a)          The difference between the FMV of a Share on the date of exercise over the Grant Price; by

 

(b)          The number of Shares with respect to which the SAR is exercised.

 

At the discretion of the Committee, the payment upon SAR exercise may be in cash, in Shares of equivalent value, in some combination thereof, or in any other manner approved by the Committee at its sole discretion. The Committee’s determination regarding the form of SAR payout shall be set forth or reserved for later determination in the Award Agreement pertaining to the grant of the SAR.

 

7.7             Termination of Employment.   Each Award Agreement shall set forth the extent to which the Participant shall have the right to exercise the SAR following termination of the Participant’s employment with the Company, its Affiliates, and or its Subsidiaries. Such provisions shall be determined in the sole discretion of the Committee, shall be included in the Award Agreement entered into with Participants, need not be uniform among all SARs issued pursuant to the Plan, and may reflect distinctions based on the reasons for termination.

 

7.8             Nontransferability of SARs.   Except as otherwise provided in a Participant’s Award Agreement, no SAR granted under the Plan may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution; provided that the Board or Committee may permit further transferability, on a general or a specific basis, and may impose conditions and limitations on any permitted transferability. Further, except as otherwise provided in a Participant’s Award Agreement or otherwise unless the Board or the Committee decides to permit further transferability, all SARs granted to a Participant under this Article 7 shall be exercisable during his or her lifetime only by such Participant.

 

7.9             Other Restrictions.   The Committee shall impose such other conditions and/or restrictions on any Shares received upon exercise of a SAR granted pursuant to the Plan as it may deem advisable. This includes, but is not limited to, requiring the Participant to hold the Shares received upon exercise of an SAR for a specified period of time.

 

Article 8.

 

Restricted Stock and Restricted Stock Units

 

8.1             Grant of Restricted Stock or Restricted Stock Units.   Subject to the terms and provisions of the Plan, the Committee, at any time and from time to time, may grant Shares of Restricted Stock and/or Restricted Stock Units to Participants in such amounts, as the Committee shall determine. Restricted Stock Units shall be similar to Restricted Stock except that no Shares are actually awarded to the Participant on the date of grant.

 

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8.2             Restricted Stock or Restricted Stock Unit Agreement.   Each Restricted Stock and/or Restricted Stock Unit grant shall be evidenced by an Award Agreement that shall specify the Period(s) of Restriction, the number of Shares of Restricted Stock or the number of Restricted Stock Units granted, and such other provisions as the Committee shall determine.

 

8.3             Transferability.   Except as provided in this Article 8, the Shares of Restricted Stock and/or Restricted Stock Units granted herein may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated until the end of the applicable Period of Restriction established by the Committee and specified in the Award Agreement (and in the case of Restricted Stock Units until the date of delivery or other payment), or upon earlier satisfaction of any other conditions, as specified by the Committee, in its sole discretion, and set forth in the Award Agreement. All rights with respect to the Restricted Stock and/or Restricted Stock Units granted to a Participant under the Plan shall be available during his or her lifetime only to such Participant.

 

8.4             Other Restrictions.   The Committee shall impose such other conditions and/or restrictions on any Shares of Restricted Stock or Restricted Stock Units granted pursuant to the Plan as it may deem advisable including, without limitation, a requirement that Participants pay a stipulated purchase price for each Share of Restricted Stock or each Restricted Stock Unit, restrictions based upon the achievement of specific performance goals, time-based restrictions on vesting following the attainment of the performance goals, time-based restrictions, restrictions under applicable federal or state securities laws, or any holding requirements or sale restrictions placed on the Shares by the Company upon vesting of such Restricted Stock or Restricted Stock Units.

 

To the extent deemed appropriate by the Committee, the Company may retain the certificates representing Shares of Restricted Stock in the Company’s possession until such time as all conditions and/or restrictions applicable to such Shares have been satisfied or lapse.

 

Except as otherwise provided in this Article 8, Shares of Restricted Stock covered by each Restricted Stock Award shall become freely transferable by the Participant after all conditions and restrictions applicable to such Shares have been satisfied or lapse, and Restricted Stock Units shall be paid in cash, Shares, or a combination of cash and Shares as the Committee, in its sole discretion shall determine.

 

8.5             Certificate Legend.   In addition to any legends placed on certificates pursuant to Section 8.4 herein, each certificate representing Shares of Restricted Stock granted pursuant to the Plan may bear a legend such as the following:

 

“The sale or other transfer of the Shares of Stock represented by this certificate, whether voluntary, involuntary, or by operation of law, is subject to certain restrictions on transfer as set forth in the Central Pacific Financial Corp.’s 2013 Stock Compensation Plan, and in the associated Restricted Stock Award Agreement. A copy of the Plan and such Restricted Stock Award Agreement may be obtained from the Central Pacific Financial Corp.”

 

8.6             Voting Rights.   To the extent permitted or required by law, as determined by the Committee, Participants holding Shares of Restricted Stock granted hereunder may be granted the right to exercise full voting rights with respect to those Shares during the Period of Restriction. A Participant shall have no voting rights with respect to any Restricted Stock Units granted hereunder.

 

8.7             Dividends and Dividend Equivalents.   During the Period of Restriction, Participants holding Shares of Restricted Stock or Restricted Stock Units granted hereunder may, if the Committee so determines, be credited with dividends paid with respect to Restricted Stock or dividend equivalents with respect to Restricted Stock Units while they are so held in a manner determined by the Committee in its sole discretion. The Committee may apply any restrictions to the dividends or dividend equivalents that the Committee deems appropriate. The Committee, in its sole discretion, may determine the form of payment of dividends or dividend equivalents, including cash, Shares, Restricted

 

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Stock, or Restricted Stock Units and such dividends or dividend equivalents may be subject to accrual, forfeiture, or payout restrictions as determined by the Committee, provided that such dividends or dividend equivalents shall be paid or provided in a manner compliant with Section 409A of the Code.

 

8.8                  Termination of Employment.   Each Award Agreement shall set forth the extent to which the Participant shall have the right to retain Restricted Stock and/or Restricted Stock Units following termination of the Participant’s employment with the Company, its Affiliates, and/or its Subsidiaries. Such provisions shall be determined in the sole discretion of the Committee, shall be included in the Award Agreement entered into with each Participant, need not be uniform among all Shares of Restricted Stock or Restricted Stock Units issued pursuant to the Plan, and may reflect distinctions based on the reasons for termination.

 

8.9                  Section 83(b) Election.   The Committee may provide in an Award Agreement that the Award of Restricted Stock is conditioned upon the Participant making or refraining from making an election with respect to the Award under Section 83(b) of the Code. If a Participant makes an election pursuant to Section 83(b) of the Code concerning a Restricted Stock Award, the Participant shall be required to file promptly a copy of such election with the Company.

 

Article 9.

 

Performance Shares and Performance Units

 

9.1                  Grant of Performance Shares and Performance Units.   Subject to the terms of the Plan, Performance Shares and/or Performance Units may be granted to Participants in such amounts and upon such terms, and at any time and from time to time, as shall be determined by the Committee.

 

9.2                  Value of Performance Shares and Performance Units.   Each Performance Share shall have an initial value equal to the FMV of a Share on the date of grant. Each Performance Unit shall have an initial value that is established by the Committee at the time of grant. The Committee shall set performance goals in its discretion which, depending on the extent to which they are met, will determine the value and/or number of Performance Shares/Performance Units that will be paid out to the Participant.

 

9.3                  Earning of Performance Shares and Performance Units.   Subject to the terms of this Plan, after the applicable Performance Period has ended, the holder of Performance Shares/Performance Units shall be entitled to receive payout on the value and number of Performance Shares/Performance Units earned by the Participant over the Performance Period, to be determined as a function of the extent to which the corresponding performance goals have been achieved. Notwithstanding the foregoing, the Company has the ability to require the Participant to hold the Shares received pursuant to such Award for a specified period of time.

 

9.4                  Form and Timing of Payment of Performance Shares and Performance Units.   Payment of earned Performance Shares/Performance Units shall be as determined by the Committee and as evidenced in the Award Agreement. Subject to the terms of the Plan, the Committee, in its sole discretion, may pay earned Performance Shares/Performance Units in the form of cash or in Shares (or in a combination thereof) equal to the value of the earned Performance Shares/Performance Units as soon as practicable after the end of the applicable Performance Period, but in no event later than 2 1 / 2  months following the end of the calendar year in which such Performance Period ends; provided, however, that any Shares may be granted subject to restrictions deemed appropriate by the Committee, but only if the terms of such restrictions are compliant with Section 409A of the Code. The determination of the Committee with respect to the form of payout of such Awards shall be set forth in the Award Agreement pertaining to the grant of the Award.

 

9.5                  Dividend Equivalents.   At the discretion of the Committee, Participants holding Performance Shares may be entitled to receive dividend equivalents with respect to dividends declared with respect

 

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to the Shares. Such dividends may be subject to accrual, forfeiture, or payout restrictions as determined by the Committee in its sole discretion, provided that such dividends or dividend equivalents shall be paid or provided in a manner compliant with Section 409A of the Code.

 

9.6                  Termination of Employment.   Each Award Agreement shall set forth the extent to which the Participant shall have the right to retain Performance Shares and/or Performance Units following termination of the Participant’s employment with the Company, its Affiliates, and/or its Subsidiaries. Such provisions shall be determined in the sole discretion of the Committee, shall be included in the Award Agreement entered into with each Participant, need not be uniform among all Awards of Performance Shares or Performance Units issued pursuant to the Plan, and may reflect distinctions based on the reasons for termination.

 

9.7                  Nontransferability.   Except as otherwise provided in a Participant’s Award Agreement, Performance Shares/Performance Units may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution. Further, except as otherwise provided in a Participant’s Award Agreement, a Participant’s rights under the Plan shall be exercisable during his or her lifetime only by such Participant.

 

Article 10.

 

Stock-Based Awards

 

10.1           Stock-Based Awards.   The Committee may grant other types of equity-based or equity-related Awards (including the grant or offer for sale of unrestricted Shares) in such amounts and subject to such terms and conditions, as the Committee shall determine. Such Awards may entail the transfer of actual Shares to Participants, or payment in cash or otherwise of amounts based on the value of Shares and may include, without limitation, Awards designed to comply with or take advantage of the applicable local laws of jurisdictions other than the United States.

 

10.2           Value of Stock-Based Awards.   Each Stock-Based Award shall have a value based on the value of a Share, as determined by the Committee. The Committee may establish performance goals in its discretion. If the Committee exercises its discretion to establish performance goals, the number and/or value of Stock-Based Awards that will be paid out to the Participant will depend on the extent to which the performance goals are met.

 

10.3           Earning of Stock-Based Awards.   Subject to the terms of this Plan, the holder of Stock-Based Awards shall be entitled to receive payout on the number and value of Stock-Based Awards earned by the Participant, to be determined as a function of the extent to which applicable performance goals, if any, have been achieved.

 

10.4           Form and Timing of Payment of Stock-Based Awards .  Payment of earned Stock-Based Awards shall be as determined by the Committee and as evidenced in the Award Agreement. Subject to the terms of the Plan, the Committee, in its sole discretion, may pay earned Stock-Based Awards in the form of cash or in Shares (or in a combination thereof) that have an aggregate FMV equal to the value of the earned Stock-Based Awards. Such Shares may be granted subject to any restrictions deemed appropriate by the Committee. The determination of the Committee with respect to the form of payout of such Awards shall be set forth in the Award Agreement pertaining to the grant of the Award.

 

10.5           Termination of Employment.   Each Award Agreement shall set forth the extent to which the Participant shall have the right to receive Stock-Based Awards following termination of the Participant’s employment with the Company, its Affiliates, and/or its Subsidiaries. Such provisions shall be determined in the sole discretion of the Committee shall be included in the Award Agreement entered into with each Participant, need not be uniform among all Awards of Stock-Based Awards issued pursuant to the Plan, and may reflect distinctions based on the reasons for termination.

 

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10.6           Nontransferability.   Except as otherwise provided in a Participant’s Award Agreement, Stock-Based Awards may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution. Further, except as otherwise provided in a Participant’s Award Agreement, a Participant’s rights under the Plan shall be exercisable during the Participant’s lifetime only by the Participant.

 

10.7           Dividend Equivalents.   At the discretion of the Committee, Participants holding Stock-Based Awards may be entitled to receive dividend equivalents with respect to dividends declared with respect to the Shares. Such dividends may be subject to accrual, forfeiture, or payout restrictions as determined by the Committee in its sole discretion, provided that such dividends or dividend equivalents shall be paid or provided in a manner compliant with Section 409A of the Code.

 

Article 11.

 

Performance Measures

 

Unless and until the Committee proposes for shareholder vote and the shareholders approve a change in the general Performance Measures set forth in this Article 11, the performance goals upon which the payment or vesting of an Award to a Covered Employee that is intended to qualify as Performance-Based Compensation shall be limited to the following Performance Measures: net sales; gross sales; revenue; net revenue; gross revenue; net income; net income after capital costs, non-interest income compared to net interest income ratio; growth of loans and/or deposits; growth in number of customers, households or assets; cash generation; cash flow; unit volume; market share; cost reduction; EVA ® ; costs and expenses (including expense efficiency ratios and other expense measures); strategic plan development and implementation; customer satisfaction; credit quality measures; full-time equivalency control; allowance for loan losses; operating efficiency; loan chargeoffs; loan writedowns; non-performing or impaired loans; return measures (including, but not limited to, return on assets, risk-adjusted return on capital or return on equity); return on net assets; return on actual or proforma assets; return on average assets; return on capital; return on investment; return on working capital; return on net capital employed; working capital; asset turnover; economic value added; total stockholder return; fee income; net income; net income before capital costs; net income before taxes; operating income; operating profit margin; net income margin; net interest margin; sales margin; market share; inventory turnover; days sales outstanding; sales growth; capacity utilization; increase in customer base; book value; stock price (including, but not limited to, growth measures and total shareholder return); earnings per share (actual or targeted growth); stock price earnings ratio; margins; earnings before interest; taxes; depreciation and amortization expenses (“EBITDA”); earnings before interest and taxes (“EBIT”); earnings before interest (“EBI”); or EBITDA, EBIT, EBI or earnings before taxes and unusual or nonrecurring items as measured either against the annual budget or as a ratio to revenue.

 

In addition to the foregoing, the Committee may consider the following individual unit/production Performance Measures: cost per dollar loan growth; cost per dollar deposit growth; revenue per personnel; operating expense to group budget; service levels (group); and personal performance.

 

Any Performance Measure(s) may be designated to apply on a “core” basis, where at the discretion of the Committee certain non-recurring items may be excluded for purposes of determining the attainment of the Performance Measure(s). In addition, any Performance Measure(s) may be used to measure the performance of the Company as a whole, or any subsidiary, affiliate, business unit of the Company, in comparison with peer group performance or to an index, or any combination thereof, as the Committee may deem appropriate, or any of the above Performance Measures as compared to the performance of a group of comparator companies, or published or special index that the Committee, in its sole discretion, deems appropriate. The Committee also has the authority to provide for accelerated vesting of any Award based on the achievement of performance goals pursuant to the Performance Measures specified in this Article 11.

 

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The Committee may provide in any such Award that any evaluation of performance may include or exclude any of the following events that occurs during a Performance Period: (a) asset write-downs; (b) litigation or claim judgments or settlements; (c) the effect of changes in tax laws, accounting principles, or other laws or provisions affecting reported results; (d) reorganization or restructuring programs; (e) extraordinary or nonrecurring items as described in Accounting Principles Board Opinion No. 30 and/or in management’s discussion and analysis of financial condition and results of operations appearing in the Company’s annual report to shareholders for the applicable year; (f) acquisitions or divestitures; and (g) foreign exchange gains and losses. To the extent such inclusions or exclusions affect Awards to Covered Employees, they shall be prescribed in a form that meets the requirements of Code Section 162(m) for deductibility.

 

Awards that are designed to qualify as Performance-Based Compensation, and that are held by Covered Employees, may not be adjusted upward. The Committee shall retain the discretion to adjust such Awards downward.

 

In the event that applicable tax and/or securities laws change to permit Committee discretion to alter the governing Performance Measures without obtaining shareholder approval of such changes, the Committee shall have sole discretion to make such changes without obtaining shareholder approval. In addition, in the event that the Committee determines that it is advisable to grant Awards that shall not qualify as Performance-Based Compensation, the Committee may make such grants without satisfying the requirements of Code Section 162(m).

 

Article 12.

 

Beneficiary Designation

 

A Participant’s “beneficiary” is the person or persons entitled to receive payments or other benefits or exercise rights that are available under the Plan in the event of the Participant’s death. A Participant may designate a beneficiary or change a previous beneficiary designation at any time by using forms and following procedures approved by the Committee for that purpose. If no beneficiary designated by the Participant is eligible to receive payments or other benefits or exercise rights that are available under the Plan at the Participant’s death the beneficiary shall be the Participant’s estate.

 

Notwithstanding the provisions above, the Committee may in its discretion, after notifying the affected Participants, modify the foregoing requirements, institute additional requirements for beneficiary designations, or suspend the existing beneficiary designations of living Participants or the process of determining beneficiaries under this Article 12, or both. If the Committee suspends the process of designating beneficiaries on forms and in accordance with procedures it has approved pursuant to this Article 12, the determination of who is a Participant’s beneficiary shall be made under the Participant’s will and applicable state law.

 

Article 13.

 

Deferrals and Share Settlements

 

Notwithstanding any other provision under the Plan, the Committee may permit or require a Participant to defer such Participant’s receipt of the payment of cash or the delivery of Shares that would otherwise be due to such Participant by virtue of the exercise of an Option or SAR, or with respect to the lapse or waiver of restrictions with respect to Restricted Stock or Restricted Stock Units or the satisfaction of any requirements or performance goals with respect to Performance Shares, Performance Units, or Stock-Based Awards. If any such deferral election is required or permitted, the Committee shall, in its sole discretion, establish rules and procedures for such payment deferrals, provided that such rules and procedures for any deferrals or deferral elections pursuant to this Article 13 shall comply in all respects with Section 409A of the Code.

 

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Article 14.

 

Rights of Employees and Independent Contractors

 

14.1           Employment.   Nothing in the Plan or an Award Agreement shall interfere with or limit in any way the right of the Company, its Affiliates, and/or its Subsidiaries to terminate any Participant’s employment or other service relationship at any time, nor confer upon any Participant any right to continue in the capacity in which he or she is employed or otherwise serves the Company, its Affiliates, and/or its Subsidiaries.

 

Neither an Award nor any benefits arising under this Plan shall constitute part of an employment contract with the Company, its Affiliates, and/or its Subsidiaries and, accordingly, subject to Articles 3 and 16, this Plan and the benefits hereunder may be terminated at any time in the sole and exclusive discretion of the Committee without giving rise to liability on the part of the Company, its Affiliates, and/or its Subsidiaries for severance payments.

 

For purposes of the Plan, transfer of employment of a Participant between the Company, its Affiliates, and/or its Subsidiaries shall not be deemed a termination of employment. Additionally, the Committee shall have the ability to stipulate in a Participant’s Award Agreement that a transfer to a company that is spun-off from the Company shall not be deemed a termination of employment with the Company for purposes of the Plan until the Participant’s employment is terminated with the spun-off company.

 

14.2           Participation.   No Employee or Independent Contractor shall have the right to be selected to receive an Award under this Plan, or, having been so selected, to be selected to receive a future Award.

 

14.3           Rights as a Shareholder.   A Participant shall have none of the rights of a shareholder with respect to Shares covered by any Award until the Participant becomes the record holder of such Shares.

 

Article 15.

 

Change in Control

 

In the event of a Change in Control, unless an Award is assumed or substituted by the successor corporation, then (i) such Awards shall become fully exercisable as of the date of the Change in Control, whether or not otherwise then exercisable and (ii) all restrictions and conditions on any Award then outstanding shall lapse as of the date of the Change in Control. Notwithstanding the foregoing, unless otherwise specifically prohibited under applicable laws, or by the rules and regulations of any governing governmental agencies or national securities exchanges, the Committee may provide in the Award Agreement for immediate vesting of an Award upon or following the occurrence of a Change in Control.

 

Article 16.

 

Amendment, Modification, Suspension, and Termination

 

16.1           Amendment, Modification, Suspension, and Termination.   The Committee or Board may, at any time and from time to time, alter, amend, modify, suspend, or terminate the Plan in whole or in part, provided that any such alteration, amendment, modification, suspension or termination of the Plan pursuant to this Article 16 shall be effected in a manner compliant with Section 409A of the Code. Notwithstanding anything herein to the contrary, without the prior approval of the Company’s shareholders, Options issued under the Plan will not be repriced, replaced, or regranted through cancellation, or by lowering the exercise price of a previously granted Option. No amendment of the Plan shall be made without shareholder approval if shareholder approval is required by law, regulation, or stock exchange rule.

 

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16.2           Adjustment of Awards Upon the Occurrence of Certain Unusual or Nonrecurring Events.   The Committee may make adjustments in the terms and conditions of, and the criteria included in, Awards in recognition of unusual or nonrecurring events (including, without limitation, the events described in Section 4.2 hereof) affecting the Company or the financial statements of the Company or of changes in applicable laws, regulations, or accounting principles, whenever the Committee determines that such adjustments are appropriate in order to prevent unintended dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan. The determination of the Committee as to the foregoing adjustments, if any, shall be conclusive and binding on Participants under the Plan. Notwithstanding anything to the contrary, any adjustments pursuant to this Section 16.2 shall be effected in a manner compliant with Section 409A of the Code.

 

16.3           Awards Previously Granted.   Notwithstanding any other provision of the Plan to the contrary, no termination, amendment, suspension, or modification of the Plan shall adversely affect in any material way any Award previously granted under the Plan, without the written consent of the Participant holding such Award.

 

16.4           Clawback and Other Provisions for Recovery or Termination of Awards.   Subject to Section 16.3, Central Pacific Financial Corp., Central Pacific Bank, Central Pacific HomeLoans, and each and every of their respective affiliates and subsidiaries (hereinafter individually and collectively referred to as the “Company”) reserves the right, in its sole and absolute discretion, and at any time, and for any reason, to make any changes to this plan or agreement, or to suspend or terminate this plan or agreement either partially or in its entirety, or to interpret any of the terms and provisions of this plan or agreement. In addition, and without in any way limiting the foregoing statements in this paragraph and notwithstanding anything else stated in this plan or agreement, this plan or agreement shall be subject to the following conditions:

 

16.5           Any term or provision in this plan that is interpreted, deemed or found by any governmental agency or by the Company to be in violation or potential violation of any law, guidance, rule, regulation, regulatory action, order or decree (hereinafter individually and collectively referred to as “Law”) will be modified to conform to the Law.

 

(a)                        Any bonus, retention award, incentive compensation or any other payment paid under this plan or agreement is subject to recovery (clawback) by any governmental agency or by the Company if it is based on materially inaccurate statements of earnings, revenues or gains, or any performance criteria/metric or other criteria or metric that is found by any governmental agency or the Company to be materially inaccurate or to have encouraged unnecessary and/or excessive risk taking.

 

(b)                        Golden parachute payments are prohibited under this plan or agreement.

 

(c)                         Payments that require regulatory or other approval are prohibited unless and until such approval is obtained, and the Company shall have no obligation to seek such approval.

 

(d)                        The Company will not grant Awards that may constitute excessive compensation under Law or by the Company.

 

(e)                         The Company will not grant Awards that threaten the Company’s safety and soundness.

 

(f)                          The Company will not grant Awards that encourage excessive risk taking.

 

Participation in this plan or agreement shall not be construed as a promise or guarantee of future or continued employment, or as stating provisions or terms of employment. The Company and its employees recognize their mutual right to end their employment relationship at any time, and acknowledge that such relationship is one of employment-at-will. Regardless of this plan or agreement, the Company may terminate your employment in its sole and absolute discretion and at any time and for any reason.

 

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Except and unless specifically stated otherwise elsewhere in the plan or agreement document to which this section is made a part of, this section and everything stated in this section shall prevail and control in the event of any ambiguity or inconsistency between what’s stated in this section and what may be stated elsewhere in the plan or agreement document.

 

Article 17.

 

Withholding

 

17.1           Tax Withholding.   The Company shall have the power and the right to deduct or withhold, or require a Participant to remit to the Company, an amount sufficient to satisfy federal, state, and local taxes, domestic or foreign (including the Participant’s FICA obligation), required by law or regulation to be withheld with respect to any taxable event arising or as a result of this Plan.

 

17.2           Share Withholding.   With respect to withholding required upon the exercise of Options or SARs, upon the lapse of restrictions on Restricted Stock or Restricted Stock Units, or upon the achievement of performance goals related to Performance Shares, or any other taxable event arising as a result of Awards granted hereunder, the Company may require or Participants may elect, subject to the approval of the Committee, to satisfy the withholding requirement, in whole or in part, by having the Company withhold Shares having a FMV of a Share on the date the tax is to be determined equal to the tax that could be imposed on the transaction, provided that if required by the accounting rules and regulations to maintain favorable accounting treatment for the Awards, the tax is to be determined equal to the minimum statutory total tax that could be imposed on the transaction. All elections shall be irrevocable, made in writing, and signed by the Participant, and shall be subject to any restrictions or limitations that the Committee, in its sole discretion, deems appropriate.

 

Article 18.

 

Successors

 

All obligations of the Company under the Plan with respect to Awards granted hereunder, shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company.

 

Article 19.

 

General Provisions

 

19.1           Forfeiture Events.   The Committee may specify in an Award Agreement that the Participant’s rights, payments, and benefits with respect to an Award shall be subject to reduction, cancellation, forfeiture, or recoupment upon the occurrence of certain specified events, in addition to any otherwise applicable vesting or performance conditions of an Award. Such events shall include, but shall not be limited to, termination of employment for Cause, violation of material Company, Affiliate, and/or Subsidiary policies, breach of noncompetition, confidentiality, or other restrictive covenants that may apply to the Participant, or other conduct by the Participant that is detrimental to the business or reputation of the Company, its Affiliates, and/or its Subsidiaries.

 

19.2           Legend.   The certificates for Shares may include any legend that the Committee deems appropriate to reflect any restrictions on transfer of such Shares.

 

19.3           Delivery of Title.   The Company shall have no obligation to issue or deliver evidence of title for Shares issued under the Plan prior to:

 

(a)                        Obtaining any approvals from governmental agencies that the Company determines are necessary or advisable; and

 

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(b)                        Completion of any registration or other qualification of the Shares under any applicable national or foreign law or ruling of any governmental body that the Company determines to be necessary or advisable.

 

19.4           Investment Representations.   The Committee may require each Participant receiving Shares pursuant to an Award under this Plan to represent and warrant in writing that the Participant is acquiring the Shares for investment and without any present intention to sell or distribute such Shares.

 

19.5           Employees Based Outside of the United States.   Notwithstanding any provision of the Plan to the contrary, in order to comply with the laws in other countries in which the Company, its Affiliates, and/or its Subsidiaries operate or have Employees or Independent Contractors, the Committee, in its sole discretion, shall have the power and authority to:

 

(a)                        Determine which Affiliates and Subsidiaries shall be covered by the Plan;

 

(b)                        Determine which Employees and Independent Contractors outside the United States are eligible to participate in the Plan;

 

(c)                         Modify the terms and conditions of any Award granted to Employees or Independent Contractors outside the United States to comply with applicable foreign laws:

 

(d)                        Establish subplans and modify exercise procedures and other terms and procedures, to the extent such actions may be necessary or advisable. Any subplans and modifications to Plan terms and procedures established under this Section 19.5 by the Committee shall be attached to this Plan document as appendices; and

 

(e)                         Take any action, before or after an Award is made that it deems advisable to obtain approval or comply with any necessary local government regulatory exemptions or approvals.

 

Notwithstanding the above, the Committee may not take any actions hereunder, and no Awards shall be granted, that would violate the Exchange Act, the Code, any securities law, or governing statute or any other applicable law.

 

19.6           Uncertificated Shares.   To the extent that the Plan provides for issuance of certificates to reflect the transfer of Shares, the transfer of such Shares may be effected on a noncertificated basis, to the extent not prohibited by applicable law or the rules of any stock exchange.

 

19.7           Unfunded Plan.   Participants shall have no right, title, or interest whatsoever in or to any investments that the Company, its Affiliates, and/or its Subsidiaries may make to aid it in meeting its obligations under the Plan. Nothing contained in the Plan, 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 Company, its Affiliates, and/or its Subsidiaries and any Participant, beneficiary, legal representative, or any other person. To the extent that any person acquires a right to receive payments from the Company, its Affiliates, and/or its Subsidiaries under the Plan, such right shall be no greater than the right of an unsecured general creditor of the Company. All payments to be made hereunder shall be paid from the general funds of the Company and no special or separate fund shall be established and no segregation of assets shall be made to assure payment of such amounts except as expressly set forth in the Plan. The Plan is not intended to be subject to ERISA.

 

19.8           No Fractional Shares.   No fractional Shares shall be issued or delivered pursuant to the Plan or any Award. The Committee shall determine whether cash, Awards, or other property shall be issued or paid in lieu of fractional Shares or whether such fractional Shares or any rights thereto shall be forfeited or otherwise eliminated.

 

19.9           Retirement and Welfare Plans.   The Awards under this Plans will not be included as “compensation” for purposes of computing benefits payable to any Participant under the Company’s retirement plans (both qualified and nonqualified) or welfare benefit plans unless such other plan

 

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expressly provides that such compensation shall be taken into account in computing a Participant’s benefit.

 

Article 20.

 

Legal Construction

 

20.1           Gender and Number.   Except where otherwise indicated by the context, any masculine term used herein also shall include the feminine, the plural shall include the singular, and the singular shall include the plural.

 

20.2           Severability.   In the event any provision of the Plan shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of the Plan, and the Plan shall be construed and enforced as if the illegal or invalid provision had not been included.

 

20.3           Requirements of Law.   The granting of Awards and the issuance of Shares under the Plan shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required. The Company shall receive the consideration required by law for the issuance of Awards under the Plan.

 

20.4           The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority shall not have been obtained.

 

20.5                         Securities Law Compliance.   The Company may use reasonable endeavors to register Shares allotted pursuant to the exercise of an Award with the United States Securities and Exchange Commission or to effect compliance with the registration, qualification, and listing requirements of any national or foreign securities laws, stock exchange, or automated quotation system. With respect to Insiders, transactions under this Plan are intended to comply with all applicable conditions of Rule 16b-3 or its successors under the Exchange Act. To the extent any provision of the Plan or action by the Committee fails to so comply, it shall be deemed null and void, to the extent permitted by law and deemed advisable by the Committee.

 

20.6           Governing Law.   The Plan and each Award Agreement shall be governed by the laws of the State of Hawaii, excluding any conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of the Plan to the substantive law of another jurisdiction. Unless otherwise provided in the Award Agreement, recipients of an Award under the Plan are deemed to submit to the exclusive jurisdiction and venue of the federal or state courts of Hawaii, to resolve any and all issues that may arise out of or relate to the Plan or any related Award Agreement.

 

20.7           Section 409A of the Code.   It is the Company’s intent that payments under the Plan are exempt from, and do not constitute “deferred compensation” subject to, Section 409A of the Code and that the Plan be administered accordingly. If and to the extent that any payment is determined by the Company to constitute “non-qualified deferred compensation” subject to Section 409A of the Code and is payable hereunder to a Participant by reason of his termination of employment, then (a) such payment or benefit shall be made or provided to the Participant only upon a “separation from service” as defined for purposes of Section 409A of the Code under applicable regulations and (b) if the Participant is a “specified employee” (within the meaning of Section 409A of the Code and as determined by the Company), such payment shall not be made or provided before the date that is six months after the date of the Participant’s separation from service (or his earlier death). Neither the Company nor its affiliates shall have any liability to any Participant, Participant’s spouse or other beneficiary of any Participant’s spouse or other beneficiary of any Participant or otherwise if the Plan or any amounts paid or payable hereunder are subject to the additional tax and penalties under Section 409A of the Code.

 

A-19

 

Exhibit 10.2

 

Central Pacific Financial Corp. 2013 Stock Compensation Plan

 

Stock Option Grant Agreement

 

This Stock Option Grant Agreement (“ Agreement ”) is effective as of the “ Date of Grant ” stated in the accompanying Notice of Stock Option Grant (“ Notice ”), between Central Pacific Financial Corp., a Hawaii corporation (“ Company ”) with its registered office at 220 South King Street, Honolulu, Hawaii 96813, and the Grantee stated in the Notice (“ Grantee ”), who is an employee of the Company or one of its subsidiaries.

 

1.                                         Grant of Stock Option.   The Company hereby grants to Grantee an option (“ Option ”) to purchase the number of shares of the Company’s common stock stated in the Notice (“ Shares ” or “ Option Shares ”).  This grant is subject to the terms and conditions of this Agreement and the applicable terms and conditions of the Central Pacific Financial Corp. 2013 Stock Compensation Plan (“ Plan ”).

 

2.                                         Type of Option.   The Option granted under this Agreement is intended to constitute an incentive stock option (“ ISO ”), as defined in Section 422 of the Internal Revenue Code of 1986, as amended, (“ Code ”).  To the extent the Option does not comply with the applicable ISO exercise limitations or other ISO qualification requirements, the Option shall be deemed to be a nonqualified stock option (“ NQSO ”) instead of an ISO.

 

3.                                         Exercise Price.   The Exercise Price is stated in the Notice (“ Exercise Price ”) and shall be the fair market value per share of Company common stock on the Date of Grant.

 

4.                                         Vesting.   The Option shall vest and become exercisable on the earlier of (a) pursuant to the “ Vesting Date ” and/or “ Vesting Schedule ” set forth in the Notice.

 

5.                                       Exercise of Option .

 

a.                                         Notice of Exercise .  Grantee may exercise this Option by written notice to the Company in a form satisfactory to the Company stating that Grantee has elected to exercise this Option and stating the number of Option Shares that Grantee has elected to purchase.  The date of the Company’s actual receipt of the notice shall be treated as the date of exercise of the Option for the Shares being purchased.

 

b.                                        Payment .  When Grantee gives notice of exercise of the Option, Grantee must pay the full Exercise Price for the Option Shares being purchased.  Grantee may make the payment (a) by certified check or bank check payable to the order of the Company, or (b) by delivering (either by actual delivery or attestation) previously acquired shares of Company common stock held by Grantee for at least six months or acquired by Grantee on the open market and having an aggregate fair market value at the time of exercise equal to the full Exercise Price, (c) by a combination of (a) and (b), or (d) or any other method approved by the Committee in its sole discretion.  In addition, with the Company’s approval, the Company may cooperate with Grantee in arranging a “cashless exercise” of the Option through a broker approved by the Company, under which the broker will sell Shares acquired by Grantee upon exercise of the Option and remit to the Company a sufficient portion of the sales proceeds to pay the full Exercise Price and any tax withholding required upon such exercise.

 

c.                                         Miscellaneous .  This Option may not be exercised for any fractional shares, and no fractional shares will be issued or delivered.  Not less than ten shares may be purchased at any one time unless the number purchased is the total number that may be purchased under this Option.  If Grantee fails to pay for any Option Shares specified in the notice or fails to accept delivery of the Option Shares, the Company may terminate Grantee’s right to purchase the Option Shares.

 

6.                                       Term of Option .  Subject to Section 7 below, the Option shall terminate on the tenth anniversary of the Date of Grant (the “ Expiration Date ”).  Thereafter, the Option shall not be exercisable.

 

7.                                       Termination of Employment .  Except as otherwise provided in this Section 7, the Option shall terminate and not be exercisable following Grantee’s termination of employment with the Company and its subsidiaries.  The following subsections prescribe time periods during which the Option, to the extent vested, will continue to be exercisable following Grantee’s termination of employment for specific reasons.  All the prescribed time periods are subject to the Option term and Expiration Date, that is, the Option shall cease to be exercisable upon the earlier of the end of the Option term/Expiration Date, as described in Section 6 above, or the prescribed time period.

 

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a.                            Change in Control .  If Grantee is terminated for any reason other than “Cause” as defined in the Plan, within twelve (12) months following a “Change in Control Event”, as defined in the Plan, the Option shall continue to be exercisable for twelve (12) months after such termination.

 

b.                            Death or Disability .  If Grantee’s employment terminates because of Grantee’s death or “Disability” as defined in Section 409A(a)(2)(C) of the Code, the Option shall continue to be exercisable for twelve (12) months after such termination.

 

c.                             Retirement .  If Grantee’s employment terminates because of Grantee’s retirement on or after age sixty-five (65), the Option shall continue to be exercisable for twelve (12) months after the date of such retirement.

 

d.                            General Rule .  If Grantee’s employment terminates for any reason other than those described in sections 7.a. through 7.c. above, the Option shall continue to be exercisable for three (3) months after such termination.

 

e.                             Death Following Termination of Employment .  If Grantee dies within the three (3) or twelve (12) month exercise periods following termination of employment, as applicable above, the Option shall continue to be exercisable for twelve (12) months following Grantee’s date of death.

 

Grantee’s employment shall not be treated as terminated in the case of a transfer of employment within or between the Company and its subsidiaries or in the case of sick leave or other approved leave of absence.

 

8.                                       Notice of Disposition .  Grantee shall notify the Company upon the disposition of Shares acquired upon exercise of an ISO.  The Company will use such information to determine whether a disqualifying disposition as described in Section 421(b) of the Code has occurred.

 

9.                                       Issuance of Shares; Registration; Withholding Taxes.   As soon as practicable after the exercise date of the Option, the Company shall cause to be issued and delivered to Grantee, or for Grantee’s account, a certificate or certificates for the Option Shares purchased.  The Company may postpone the issuance or delivery of the Option Shares until: (a) the completion of registration or other qualification of such Option Shares or transaction under any state or federal law, rule or regulation, or any listing on any securities exchange, as the Company shall determine to be necessary or desirable; (b) the receipt by the Company of such written representations or other documentation as the Company deems necessary to establish compliance with all applicable laws, rules, and regulations, including applicable federal and state securities laws and listing requirements, if any; and (c) the payment to the Company, upon its demand, of any amount requested by the Company to satisfy any federal, state, or other governmental withholding tax requirements related to the exercise of the Option.  The Company shall have the right to withhold with respect to the payment of any Option Shares any taxes required to be withheld because of such payment, including the withholding of Shares otherwise payable due to exercise of the Option.  Grantee shall comply with any and all legal requirements relating to Grantee’s resale or other disposition of any Shares acquired under this Agreement.  The certificates representing the Shares acquired pursuant to the Option may bear such legend as described in Section 13 below or as the Company otherwise deems appropriate to ensure compliance with applicable law.

 

10.                                Nontransferability of Option .  The Option shall not be assignable or transferable by Grantee other than by will or by the laws of descent and distribution.  During Grantee’s lifetime, the Option and all rights of Grantee under this Agreement may be exercised only by Grantee.  If the Option is exercised after Grantee’s death, the Company may require evidence reasonably satisfactory to it of the appointment and qualification of Grantee’s personal representatives or executors and their authority and of the right of any heir or distributee to exercise the Option.  Any purported transfer or assignment of this Option shall be void and of no effect, and shall give the Company the right to terminate this Option as of the date of such purported transfer or assignment.

 

11.                                Share Adjustments .  The number of Shares and the Exercise Price shall be adjusted proportionately for any increase or decrease in the number of issued shares of Company common stock by reason of a reorganization, merger, recapitalization, reclassification, stock split, stock dividend, or other like change in the capital structure of the Company.  The adjustment required shall be made by the Compensation Committee of the Board of Directors of the Company (“Committee”), whose determination shall be conclusive.  In no event shall the adjusted Exercise Price be less than the fair market value of the adjusted Shares on the Date of Grant.

 

12.                                No Rights as Shareholder .  Grantee shall acquire none of the rights of a shareholder of the Company with respect to the Option until a certificate for Shares is issued to Grantee following the exercise of the Option.  Except as otherwise provided in Section 11 above, no adjustments shall be made for dividends, distributions, or other rights (whether ordinary or extraordinary, and whether in cash, securities or other property) for which the record date is prior to the

 

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date such certificate is issued.

 

13.                                Registration of Shares .  If a registration statement under the Securities Act of 1933 (the “ Act ”) with respect to Shares issuable upon exercise of the Option is not in effect at the time of exercise, or if a registration statement with respect to the Shares is in effect but not with respect to Grantee’s resale thereof and Grantee is an “affiliate” of the Company, then, in either such case, (a) as a condition of the issuance of the Shares, the person exercising such Option shall give the Company a written statement, satisfactory in form and substance to the Company, acknowledging that such Shares may be reoffered or resold by Grantee only pursuant to Rule 144 or a separate registration statement under the Act, and (b) the Company may place upon any stock certificate for Shares the following legend or such other legend as the Company may prescribe to prevent disposition of the shares in violation of the Act:

 

THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE “ACT”) AND MAY NOT BE OFFERED, SOLD, PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT WITH RESPECT TO THEM UNDER THE ACT OR THE AVAILABILITY OF AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS.  FURTHERMORE, NO OFFER, SALE, TRANSFER, PLEDGE, OR HYPOTHECATION MAY BE MADE WITHOUT APPROVAL OF COUNSEL FOR CENTRAL PACIFIC FINANCIAL CORP. AFFIXED TO THIS CERTIFICATE.  THE STOCK TRANSFER AGENT HAS BEEN ORDERED TO EFFECTUATE TRANSFERS OF THIS CERTIFICATE ONLY IN ACCORDANCE WITH THE ABOVE INSTRUCTIONS.

 

14.                                Grantee Bound by Plan .  Grantee hereby acknowledges receipt of a copy of the Plan and acknowledges that Grantee shall be bound by its terms, regardless of whether such terms have been set forth in this grant document.  If there is any inconsistency between the terms of the Plan and the terms of this grant document, Grantee shall be bound by the terms of the Plan.

 

15.                                Employment Rights .  Neither the Plan nor the granting of the Option shall be a contract of employment with the Company or any of its subsidiaries.  Subject to other applicable agreements with Grantee, the Company or a subsidiary may discharge Grantee from employment at any time.

 

16.                                Amendment .  This Agreement may be amended by the Committee at any time based on its determination that the amendment is necessary or advisable in light of any addition to, or change in, the Code or regulations issued thereunder, or any federal or state securities law or other law or regulation, or the Plan, or based on any discretionary authority of the Committee under the Plan.  However, unless necessary or advisable due to a change in law, any amendment to this Agreement which has a material adverse effect on the interest of Grantee under this Agreement shall be effective only with the consent of Grantee.

 

17.                                No Advice, Warranties, or Representations .  The Company is not providing Grantee with advice, warranties, or representations regarding any of the legal or tax effects to Grantee with respect to this Option.  Grantee is encouraged to seek legal and tax advice from Grantee’s own legal and tax advisors.

 

18.                                Code Section 409A .  This grant of Option has been structured to meet the requirements for a stock option that does not provide for a “deferral of compensation” as defined in Treas. Reg. 1.409A-1.

 

19.                                Miscellaneous .  This Agreement and the Plan set forth the final and entire agreement between the parties with respect to the subject matter hereof, which shall be governed by and construed in accordance with the laws of the State of Hawaii applicable to contracts made and to be performed in Hawaii.  This Agreement shall bind and benefit Grantee, the heirs, distributees, and personal representative of Grantee, and the Company and its successors and assigns.

 

BY ACCEPTING THIS AGREEMENT AND THE STOCK OPTION GRANT PURSUANT TO THIS AGREEMENT, GRANTEE AGREES TO ALL THE TERMS AND CONDITIONS DESCRIBED IN THIS AGREEMENT AND IN THE PLAN.

 

3

Exhibit 10.3

 

Central Pacific Financial Corp. 2013 Stock Compensation Plan

 

Restricted Stock Grant Agreement

 

This Restricted Stock Grant Agreement (“ Agreement ”) is effective as of the “ Date of Grant ” stated in the accompanying Notice of Restricted Stock Grant (“ Notice ”), between Central Pacific Financial Corp., a Hawaii corporation, (“ Company ”) with its registered office at 220 South King Street, Honolulu, Hawaii 96813 and the Participant stated in the Notice (the “ Participant ”), who is an employee of the Company or one of its Subsidiaries.

 

1.                            Grant of Restricted Stock .  The Company hereby grants to the Participant the number of restricted shares (“ Restricted Shares ”) of the Company’s common stock stated in the Notice.  This grant is subject to the terms and conditions of this Agreement and the applicable terms and conditions of the Central Pacific Financial Corp. 2013 Stock Compensation Plan (“ Plan ”).  Capitalized terms not otherwise defined in this Agreement shall have meaning ascribed to such terms in the Plan.

 

2.         Restrictions during Restriction Period .

 

a.                Service Restriction .  The Restricted Shares shall be forfeited and transferred to the Company upon the Participant’s termination of employment with the Company and its Subsidiaries for any reason prior to the “ Vesting Date ” stated in the Notice.

 

b.                Transfer Restriction .  None of the Restricted Shares may be sold, assigned, pledged, or otherwise transferred, voluntarily or involuntarily, by the Participant during the Restriction Period.

 

c.                 Restriction Period .  For purposes of this grant, the term “ Restriction Period ” means with respect to all of the Restricted Shares, the period commencing on the Date of Grant and ending on the “ Vesting Date ” stated in the Notice.

 

d.                Lapse of Restrictions .  The restrictions set forth in Sections 2.a. and 2.b. above shall lapse and no longer apply upon the expiration of the Restriction Period.

 

3.                            Issuance of Shares; Registration; Withholding Taxes .  As part of this grant, certificates for the Restricted Shares shall be issued in the Participant’s name and shall be held in escrow by the Company until all restrictions lapse or such Shares are forfeited as provided herein.  A certificate or certificates representing the Restricted Shares as to which restrictions have lapsed (“ Unrestricted Shares ”) shall be delivered to the participant upon such lapse.  The Company may postpone the issuance or delivery of the Unrestricted Shares until (i) the completion of registration or other qualification of such Unrestricted Shares or transaction under any state or federal law, rule or regulation, or any listing on any securities exchange, as the Company shall determine to be necessary or desirable; (ii) the receipt by the Company of such written representations or other documentation as the Company deems necessary to establish compliance with all applicable laws, rules, and regulations, including applicable federal and state securities laws and listing requirements, if any; and (iii) the payment to the Company, upon its demand, of any amount requested by the Company to satisfy any federal, state, or other governmental tax withholding requirements related to the issuance or delivery of the Unrestricted Shares.  The Company shall have the right to withhold with respect to the payment of any Unrestricted Shares any taxes required to be withheld because of such payment, including the withholding of Unrestricted Shares otherwise payable due to the lapse of the restrictions.  The Participant shall comply with any and all legal requirements relating to the Participant’s resale or other disposition of any Unrestricted Shares acquired under this Agreement.

 

4.                            Share Adjustments .  The number of Restricted Shares shall be adjusted proportionately for any increase or decrease in the number of issued shares of common stock of the Company by reason of a reorganization, merger, recapitalization, reclassification, stock split, stock dividend, or other like change in the capital structure of the Company.  The adjustment required shall be made by the Compensation Committee of the Board of Directors (the “ Committee ”), whose determination shall be conclusive.

 

5.                            Rights as Shareholder .  Subject to the terms of the Plan and this Agreement, the Participant shall be entitled to all the rights of a shareholder with respect to the Restricted Shares, including the right to vote such Shares and to receive dividends and other distributions payable with respect to such Shares after the Date of Grant, but such dividends and other distributions shall not be paid unless and until the restrictions lapse with respect to such Shares.  The Participant’s rights as a shareholder shall terminate in the event of the Participant’s forfeiture of the Restricted Shares.

 

 

6.                            Legends .  All certificates evidencing Restricted Shares issued under this Agreement shall bear the following legend (and such other restrictive legends as are required or the Company deems advisable under the provisions of any applicable law):

 

THE SALE OR OTHER TRANSFER OF THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE, WHETHER VOLUNTARY, INVOLUNTARY, OR BY OPERATION OF LAW, IS SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AS SET FORTH IN THE CENTRAL PACIFIC FINANCIAL CORP. 2013 STOCK COMPENSATION PLAN (THE “PLAN”) AND IN THE ASSOCIATED RESTRICTED STOCK GRANT AGREEMENT UNDER WHICH THESE SHARES WERE GRANTED (THE “AGREEMENT”).  A COPY OF THE PLAN AND THE AGREEMENT MAY BE OBTAINED FROM CENTRAL PACIFIC FINANCIAL CORP.

 

If, in the opinion of the Company and its counsel, any legend placed on a stock certificate representing Restricted Shares granted under this Agreement is no longer required, the Participant under such certificate shall be entitled to exchange such certificate for a certificate representing the same number of Unrestricted Shares but without such legend.

 

7.                            Participant Bound by Plan .  The Participant hereby acknowledges receipt of a copy of the Plan and acknowledges that the Participant shall be bound by its terms, regardless of whether such terms have been set forth in this Agreement.  If there is any inconsistency between the terms of the Plan and the terms of this Agreement, the Participant shall be bound by the terms of the Plan.

 

8.                            Amendment .  This Agreement may be amended by the Committee at any time based on its determination that the amendment is necessary or advisable in light of any addition to, or change in, the Code or regulations issued thereunder, or any federal or state securities law or other law or regulation, or the Plan, or based on any discretionary authority of the Committee under the Plan.  However, unless necessary or advisable due to a change in law, any amendment to this Agreement which has a material adverse effect on the interest of the Participant under this Agreement shall be effective only with the consent of the Participant.

 

9.                            No Advice, Warranties, or Representations .  The Company is not providing the Participant with advice, warranties, or representations regarding any of the legal or tax effects to the Participant with respect to the Restricted Shares or Unrestricted Shares.  The Participant is encouraged to seek legal and tax advice from the Participant’s own legal and tax advisers.

 

10.                     Continued Service .  Neither the Plan nor the grant of Restricted Shares confers upon the Participant the right to continue as an employee of the Company or any of its Subsidiaries.  Subject to other applicable agreements with the Participant, the Company or a Subsidiary may discharge the Participant from employment at any time.

 

11.                     Section 83(b) Election .  The Participant hereby acknowledges that he or she has been informed that, with respect to the grant of the Restricted Shares, an election (“ Election ”) may be filed by the Participant with the Internal Revenue Service, within 30 days of the grant of the Restricted Shares, electing pursuant to Section 83(b) of the Code to be taxed currently on the fair market value of the Restricted Shares on the Date of Grant, where such fair market value shall be based on the closing price per Share on the Date of Grant (“ Fair Market Value ”). This will result in a recognition of taxable income to the Participant on the Date of Grant, equal to the Fair Market Value per Share of the Restricted Shares on such date.  Absent such an Election, taxable income will be measured and recognized by the Participant at the time or times on which the Restricted Shares vest.  The Participant is strongly encouraged to seek the advice of his or her own tax consultants in connection with this award of Restricted Shares and the advisability of filing of the Election under Section 83(b) of the Code.  The Participant understands that any taxes paid as a result of the filing of the Election might not be recovered if Restricted Shares are forfeited to the Company because they do not vest.  The Participant acknowledges that it is the Participant’s sole responsibility and the Company’s to file timely the Election.  The Participant must notify the Company within 10 days of filing any such Election.  If the Participant files the Election, the Participant shall be required to pay all taxes with respect to the Election in cash.

 

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12.                     Code Section 409A .  This grant of Restricted Shares is intended to be exempt from Section 409A of the Code, and this Agreement is intended to, and shall be interpreted, administered and construed consistent therewith.  The Committee shall have full authority to give effect to the intent of this Section 12.

 

13.                     Miscellaneous .  This Agreement and the Plan set forth the final and entire agreement between the parties with respect to the subject matter hereof, which shall be governed by and construed in accordance with the laws of the State of Hawaii applicable to contracts made and to be performed in Hawaii.  This Agreement shall bind and benefit the Participant, the heirs, distributees, and personal representative of the Participant, and the Company and its successors and assigns.

 

BY ACCEPTING THIS AGREEMENT AND THE GRANT OF RESTRICTED SHARES PURSUANT TO THIS AGREEMENT, THE PARTICIPANT AGREES TO ALL THE TERMS AND CONDITIONS DESCRIBED IN THIS AGREEMENT AND IN THE PLAN.

 

3

Exhibit 10.4

 

Central Pacific Financial Corp. 2013 Stock Compensation Plan

 

Restricted Stock Unit Agreement

 

This Restricted Stock Unit Agreement (“ Agreement ”) is effective as of the “ Date of Grant ” stated in the accompanying Notice of Restricted Stock Unit Grant (“ Notice ”), between Central Pacific Financial Corp., a Hawaii corporation (“ Company ”), with its registered office at 220 South King Street, Honolulu, Hawaii, 96813 and the Participant stated in the Notice (the “ Participant ”), who is an employee of the Company or one of its Subsidiaries.

 

1)              Grant of Restricted Stock Units

 

a)              Amount.  The Company hereby grants to the Participant the number of restricted stock units stated in the Notice (“Restricted Stock Units”), where each Restricted Stock Unit represents an unfunded and unsecured right to receive one share of common stock of the Company (“Share”).  This grant is subject to the terms and conditions set forth below and is being made pursuant to the Central Pacific Financial Corp. 2013 Stock Compensation Plan (“Plan”).  Capitalized terms not otherwise defined in this Agreement shall have the meaning ascribed to such terms in the Plan.

 

b)              Vesting.  This grant shall become vested and nonforfeitable on the dates or at such time as stated in the Notice (“Vesting Date”).

 

c)               Settlement.  Except as provided below, within 30 days following a Vesting Date, the portion of the Restricted Stock Units that vested on a particular Vesting Date shall be settled by the Company delivering one Share to the Participant for each Restricted Stock Unit that vested.

 

2)              Restrictions during Restriction Period

 

a)              Service Restriction.  The Restricted Stock Units shall be forfeited and transferred to the Company upon the Participant’s termination of employment with the Company and its Subsidiaries, for any reason prior to the “Vesting Dates” stated in the Notice.  In the event a Participant’s status changes among the positions of Employee, Director and Independent Contractor, any such change in status shall not constitute a “termination of employment” for purposes of earning, vesting, forfeiture or otherwise.

 

b)              Transfer Restriction.  None of the Restricted Stock Units may be sold, assigned, pledged, or otherwise transferred, voluntarily or involuntarily, by the Participant during the Restriction Period.

 

c)               Restriction Period.  For purposes of this grant, the term “Restriction Period” means the later of (i) with respect to all of the Restricted Stock Units, the period commencing on the Date of Grant and ending on the “Vesting Dates” stated in the Notice.

 

d)              Lapse of Restrictions.  The restrictions set forth in Sections 2.a. and 2.b. above shall lapse and no longer apply upon the expiration of the Restriction Period.

 

3)              Forfeiture

 

If the Participant’s employment with the Company and its Subsidiaries terminates for any reason prior to the final Vesting Date, the unvested Restricted Stock Units will automatically be forfeited and cancelled by the Company upon such termination of employment.

 

4)              Issuance of Shares; Registration; Withholding Taxes

 

The Company may postpone the issuance or delivery of the Shares underlying the Restricted Stock Units until:

 

a)              The completion of registration or other qualification of such shares or transaction under any state or federal law, rule, or regulation, or any listing on any securities exchange, as the Company shall determine to be necessary or desirable;

 

 

b)              The receipt by the Company of such written representations or other documentation as the Company deems necessary to establish compliance with all applicable laws, rules, and regulations, including applicable federal and state securities laws and listing requirements, if any; and

 

c)               The satisfaction of any amount necessary to satisfy any federal, state, or other governmental tax withholding requirements relating to the issuance of the Shares.  The Participant shall comply with any and all legal requirements relating to the Participant’s resale or other disposition of any Shares acquired under this Agreement.  The Company shall have the right to withhold with respect to the payment of any Share any taxes required to be withheld because of such payment, including the withholding of Shares otherwise payable due to the lapse of the restrictions.  The Participant shall comply with any and all legal requirements relating to the Participant’s resale or other disposition of any Shares acquired under this Agreement.  With respect to the settlement of any Restricted Stock Units, the Company shall withhold any amount of taxes required to be withheld because of such settlement or any allowable amount of taxes elected to be withheld by the Participant.  The Participant shall make arrangements satisfactory to the Company for the satisfaction of withholding obligations.  With the consent of the Company, withholding arrangements may include the following: (a) payment of cash by the Participant; (b) withholding of Shares that would be issued when the Restricted Stock Units are settled; and (c) payment from the proceeds of the sale of the Shares through a Company-approved broker.  Unless another arrangement applies, withholding obligations for the settlement of the Restricted Stock Units shall be satisfied by having the Company withhold Shares that otherwise would be issued to the Participant.  The Shares shall be valued at their “Fair Market Value” on the Vesting Date, where for this purpose, the term “Fair Market Value” shall mean the NYSE closing price on the Vesting Date or, if the Vesting Date is not a trading day, the next trading date following the Vesting Date.  Notwithstanding that settlement with respect to the Restricted Stock Units shall be made in the form of Shares, any applicable withholding of taxes shall be paid and remitted to the appropriate governmental authorities in the form of cash.

 

5)              Nonassignability

 

The Restricted Stock Units may not be sold, assigned, pledged, or transferred by the Participant.  Further, the Restricted Stock Units are not subject to attachment, execution, or other similar process.  In the event of any attempt by the Participant to alienate, assign, pledge, hypothecate, or otherwise dispose of the Restricted Stock Units, or the levy of any attachment, execution, or other similar process of the Restricted Stock Units, the Committee may terminate the Restricted Stock Units by notice to the Participant.

 

6)              Share Adjustments

 

The number of Restricted Stock Units shall be adjusted proportionately for any increase or decrease in the number of issued Shares by reason of a reorganization, merger, recapitalization, reclassification, stock split, stock dividend, or other like change in the capital structure of the Company.  The adjustment required shall be made by the Committee, whose determination shall be conclusive.

 

7)              Shareholder Rights

 

Neither the Participant nor any other person shall be, or have any of the rights and privileges of, a shareholder of the Company with respect to the Restricted Stock Units and, accordingly, the Restricted Stock Units carry no voting rights.  The Restricted Stock Units are mere bookkeeping entries that represent the Company’s unfunded and unsecured obligation to issue Shares on a future date following satisfaction of the applicable service condition.  The Participant shall have no rights other than the rights of a general creditor of the Company.

 

8)              Dividend Equivalent Rights

 

The Participant shall have the right to accrue “dividend equivalents” with respect to the Restricted Stock Units (“Corresponding Restricted Stock Units”) in the same manner as dividends are paid to common shareholders of the Company.  All accrued dividend equivalents shall be subject to forfeiture while the Corresponding Restricted Stock Units are held by the Participant.  Upon vesting of the Corresponding Restricted Stock Units, the accrued dividend equivalents shall be paid to the Participant.  Dividend equivalents may be paid in cash or Shares in the same manner

 

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as dividends are paid to the common shareholders of the Company (including both ordinary dividends and extraordinary dividends).

 

9)              Participant Bound by Plan

 

The Participant hereby acknowledges receipt of a copy of the Plan and acknowledges that the Participant shall be bound by its terms, regardless of whether such terms have been set forth in this Agreement.  If there is any inconsistency between the terms of the Plan and the terms of this Agreement, the Participant shall be bound by the terms of the Plan.

 

10)       Amendment and Regulatory Limitations

 

This Agreement may be amended by the Committee at any time based on its determination that the amendment is necessary or advisable in light of any addition to, or change in, the Code or regulations issued thereunder, or any federal or state securities law or other law or regulation, or the Plan, or based on any discretionary authority of the Committee under the Plan.  However, unless necessary or advisable due to regulatory direction or a change in law, any amendment to this Agreement which has a material adverse effect on the interest of the Participant under this Agreement shall be effective only with the consent of the Participant.

 

11)       No Advice, Warranties, or Representations

 

The Company is not providing the Participant with advice, warranties, or representations regarding any of the legal or tax effects to the Participant with respect to the Restricted Stock Units or the settlement of Shares.  The Participant is encouraged to seek legal and tax advice from the Participant’s own legal and tax advisers.

 

12)       Continued Service

 

Neither the Plan nor this grant of Restricted Stock Units confers upon the Participant the right to continue as an employee of the Company or any of its Subsidiaries.  Subject to other applicable agreements with the Participant, the Company or a Subsidiary may discharge the Participant from employment at any time.

 

13)       Code Section 409A

 

This grant of Restricted Stock Units is intended to be exempt from Section 409A of the Code, and this Agreement is intended to, and shall be interpreted, administered and construed consistent therewith.  The Committee shall have full authority to give effect to the intent of this Section 12.

 

14)       Miscellaneous

 

This Agreement and the Plan set forth the final and entire agreement between the parties with respect to the subject matter hereof, which shall be governed by and construed in accordance with the laws of the State of Hawaii applicable to contracts made and to be performed in Hawaii.  This Agreement shall bind and benefit the Participant, the heirs, distributees, and personal representative of the Participant, and the Company and its successors and assigns.

 

BY ACCEPTING THIS AGREEMENT AND THE GRANT OF RESTRICTED STOCK UNITS PURSUANT TO THIS AGREEMENT, THE PARTICIPANT AGREES TO ALL THE TERMS AND CONDITIONS DESCRIBED IN THIS AGREEMENT AND IN THE PLAN.

 

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Exhibit 10.5

 

Central Pacific Financial Corp. 2013 Stock Compensation Plan

 

Stock Appreciation Rights Grant Agreement

 

This Stock Appreciation Rights Grant Agreement (“ Agreement ”) is effective as of the Date of Grant stated in the accompanying Notice of Stock Appreciation Rights Grant (“ Notice ”), between Central Pacific Financial Corp., a Hawaii corporation (“ Company ” and “ CPF ”) with its registered office at 220 South King Street, Honolulu, Hawaii 96813, and the Grantee stated in the Notice (“ Grantee ”), who is an employee of the Company or one of its subsidiaries.  The Notice is incorporated herein by this reference and made a part of this Agreement.

 

1.                                       Grant of Stock Appreciation Rights .   The Company hereby grants to Grantee stock appreciation rights (“ SARs ”) with respect to the number of CPF Shares stated in the Notice (“ Shares ”).  In addition to continuous status as an employee of the Company, this grant may be conditioned on the achievement of performance goals during the Performance Period stated in the Notice (“ Performance Period ”).  Except as provided in Section 8 below, the SARs shall neither vest nor become exercisable unless Grantee is employed by the Company or one of its subsidiaries continuously from the Date of Grant stated in the Notice (“ Date of Grant ”) until the Vesting Date(s) stated in the Notice (“ Vesting Date ”).  This grant is subject to the terms and conditions of this Agreement, the Notice and the applicable terms and conditions of the Central Pacific Financial Corp. 2013 Stock Compensation Plan (“ Plan ”).

 

2.                                       Grant Price .   The Grant Price is stated in the Notice (“ Grant Price ”) and shall be the fair market value per share of Company common stock on the Date of Grant.  Fair market value shall be based on the closing price of a share of the Company’s common stock on the Date of Grant.

 

4.                                       Value of the SARs; Payment in Whole Shares .  Upon exercise of the SARs, for each Share with respect to which a SAR is exercised, Grantee shall be entitled to receive value equal to the difference between the fair market value of a Share on the date of exercise minus the Grant Price.  The Company shall pay the value owing to Grantee upon exercise in whole Shares, rounded down.  No cash will be awarded upon exercise, and no fractional shares will be issued or delivered.

 

5.                                       Vesting .   Except as provided in Section 8 , the SARs that are available for exercise in accordance with Section 2 shall vest and become exercisable on the Vesting Date.

 

6.                                       Term of SARs .   The SARs shall terminate on the Expiration Date stated in the Notice (“ Expiration Date ”).  Thereafter, the SARs shall not be exercisable.

 

7.                                       Method of Exercise .   Grantee may exercise the SARs by written notice to the Company in a form satisfactory to the Company stating that Grantee has elected to exercise the SARs and stating the number of Shares as to which the SARs are to be exercised.  The date of the Company’s actual receipt of the notice shall be treated as the date of exercise of the SARs.

 

8.                                       Termination of Employment .

 

a.                                        General Rule .  In consideration of this grant, Grantee agrees that, while the Company or a subsidiary employs Grantee, Grantee shall devote Grantee’s entire time, energy, and skills to the service of the Company or a subsidiary and for the promotion of its interests and the achievement of the performance goals.  Except as otherwise provided in this Section, if Grantee does not remain continuously in the employ of the Company or a subsidiary until the Vesting Date (e.g., voluntary or involuntary termination of employment or retirement), this grant shall terminate immediately and become null and void, all rights hereunder shall cease, and Grantee shall not be entitled to exercise the SARs with respect to any Shares.

 

b.                                        Death or Disability after Performance Period .  In the event of Grantee’s termination of employment due to death or “disability”, as defined in Section 409A(a)(2)(C) of the Code after the Performance Period, if any, the SARs shall become immediately vested and exercisable for

 

 

the number of Shares with respect to which the SARs are exercisable.  The SARs shall be exercisable for the lesser of twelve (12) months from the date of death or disability or until the Expiration Date.

 

c.                                         Change in Control .  In the event of a “Change in Control Event” as described in Section 1.409A-3(i)(5) of the Treasury Regulations, the Performance Period, if any, shall be deemed to have ended as of the date of the Change in Control Event if the Performance Period has not already ended, and the maximum number of SARs shall immediately become vested and exercisable.  The SARs shall be exercisable for the lesser of twelve (12) months from the date of the Change in Control Event or until the Expiration Date.

 

d.                                        Termination of Employment after Vesting for Reasons other than Death, Disability, or Change in Control .  If Grantee’s employment terminates following vesting for any reason other than those described in Sections 8.b. and 8.c . above, the SARs that are vested and exercisable as of such termination date shall continue to be exercisable for three (3) months after such termination.  Grantee’s employment shall not be treated as terminated in the case of a transfer of employment within or between the Company and its subsidiaries or in the case of sick leave or other approved leave of absences.

 

e.                                         Death Following Termination of Employment .  If Grantee dies within the three (3) or twelve (12) month exercise periods following disability, change in control, or termination of employment other than for death, disability, or change in control, as applicable above, the SARs that are exercisable as of the employee’s date of death shall continue to be exercisable for twelve (12) months following Grantee’s date of death.

 

9.                                       Issuance of Shares; Registration; Withholding Taxes .   As soon as practicable after the exercise date of the SARs, the Company shall cause to be issued and delivered to Grantee, or for Grantee’s account, a certificate or certificates for the Shares to which Grantee is entitled.  The Company may postpone the issuance or delivery of the Shares until (a) the completion of registration or other qualification of such Shares or transaction under any state or federal law, rule or regulation, or any listing on any securities exchange, as the Company shall determine to be necessary or desirable; (b) the receipt by the Company of such written representations or other documentation as the Company deems necessary to establish compliance with all applicable laws, rules, and regulations, including applicable federal and state securities laws and listing requirements, if any; and (c) the payment to the Company, upon its demand, of any amount requested by the Company to satisfy any federal, state, or other governmental withholding tax requirements related to the exercise of the SARs.  The Company shall have the right to withhold with respect to the payment of any Shares any taxes required to be withheld because of such payment, including the withholding of Shares otherwise payable due to exercise of the SARs.  Grantee shall comply with any and all legal requirements relating to Grantee’s resale or other disposition of any Shares acquired under this Agreement.  The certificates representing the Shares acquired pursuant to the exercise of the SARs may bear such legend as described in Section 13 below or as the Company otherwise deems appropriate to ensure compliance with applicable law.

 

10.                                Nontransferability of SARs .   The SARs and this Agreement shall not be assignable or transferable by Grantee other than by will or by the laws of descent and distribution.  During Grantee’s lifetime, the SARs and all rights of Grantee under this Agreement may be exercised only by Grantee (or by Grantee’s legal guardian or legal representative).  If the SAR is exercised after Grantee’s death, the Company may require evidence reasonably satisfactory to it of the appointment and qualification of Grantee’s personal representatives or executors and their authority and of the right of any heir or distributee to exercise the SARs.  Any purported transfer or assignment of the SARs shall be void and of no effect, and shall give the Company the right to terminate the SARs as of the date of such purported transfer or assignment.  Notwithstanding the foregoing, with the consent of the Compensation Committee of the Board of Directors of the Company (“ Committee ”), Grantee may transfer the SARs to a revocable trust under which Grantee is both the trustee and the beneficiary.

 

 

11.                                SARs/Share Adjustments .   The number of SARs/Shares and the Grant Price shall be adjusted proportionately for any increase or decrease in the number of issued shares of Company common stock by reason of a reorganization, merger, recapitalization, reclassification, stock split, stock dividend, or other like change in the capital structure of the Company.  The adjustment required shall be made by the Committee, whose determination shall be conclusive.  In no event shall the adjusted Grant Price be less than the fair market value of the adjusted SARs/Shares on the Date of Grant.

 

12.                                No Rights as Shareholder .   Grantee shall acquire none of the rights of a shareholder of the Company with respect to the SARs until a certificate for Shares is issued to Grantee following the exercise of the SARs.

 

13.                                Registration of Shares .   If a registration statement under the Securities Act of 1933 (“ Act ”) with respect to Shares issuable upon exercise of the SARs is not in effect at the time of exercise, or if a registration statement with respect to the Shares is in effect but not with respect to Grantee’s resale thereof and Grantee is an “affiliate” of the Company, then, in either such case, (a) as a condition of the issuance of the Shares, the person exercising such SARs shall give the Company a written statement, satisfactory in form and substance to the Company, acknowledging that such Shares may be reoffered or resold by Grantee only pursuant to Rule 144 or a separate registration statement under the Act, and (b) the Company may place upon any stock certificate for Shares the following legend or such other legend as the Company may prescribe to prevent disposition of the Shares in violation of the Act:

 

THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE “ACT”) AND MAY NOT BE OFFERED, SOLD, PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT WITH RESPECT TO THEM UNDER THE ACT OR THE AVAILABILITY OF AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS.  FURTHERMORE, NO OFFER, SALE, TRANSFER, PLEDGE, OR HYPOTHECATION MAY BE MADE WITHOUT APPROVAL OF COUNSEL FOR CENTRAL PACIFIC FINANCIAL CORP. AFFIXED TO THIS CERTIFICATE.  THE STOCK TRANSFER AGENT HAS BEEN ORDERED TO EFFECTUATE TRANSFERS OF THIS CERTIFICATE ONLY IN ACCORDANCE WITH THE ABOVE INSTRUCTIONS.

 

14.                                Grantee Bound by Plan .  Grantee hereby acknowledges receipt of a copy of the Plan and acknowledges that Grantee shall be bound by its terms, regardless of whether such terms have been set forth in this Agreement.  If there is any inconsistency between the terms of the Plan and the terms of this Agreement, Grantee shall be bound by the terms of the Plan.

 

15.                                Employment Rights .   Neither the Plan nor the granting of the SARs shall be a contract of employment with the Company or any of its subsidiaries.  Subject to other applicable agreements with Grantee, the Company or a subsidiary may discharge Grantee from employment at any time.

 

16.                                Amendment .   This Agreement may be amended by the Committee at any time based on its determination that the amendment is necessary or advisable in light of any addition to, or change in, the Code or regulations issued thereunder, or any federal or state securities law or other law or regulation, or the Plan, or based on any discretionary authority of the Committee under the Plan.  However, unless necessary or advisable due to a change in law, any amendment to this Agreement which has a material adverse effect on the interest of Grantee under this Agreement shall be effective only with the consent of Grantee.

 

 

17.                                No Advice, Warranties, or Representations .   The Company is not providing Grantee with advice, warranties, or representations regarding any of the legal or tax effects to Grantee with respect to the SARs.  Grantee is encouraged to seek legal and tax advice from Grantee’s own legal and tax advisors.

 

18.                                Code Section 409A .   This grant of SARs has been structured to meet the requirements for a stock appreciation right that does not provide for a “deferral of compensation” as defined in Section 1.409A-1(b) of the Treasury Regulations.

 

19.                                Miscellaneous .  This Agreement, the Notice and the Plan set forth the final and entire agreement between the parties with respect to the subject matter hereof, which shall be governed by and construed in accordance with the laws of the State of Hawaii applicable to contracts made and to be performed in Hawaii.  This Agreement shall bind and benefit Grantee, the heirs, distributees, and personal representative of Grantee, and the Company and its successors and assigns.

 

BY ACCEPTING THIS AGREEMENT AND THE SARS GRANTED PURSUANT TO THIS AGREEMENT, GRANTEE AGREES TO ALL THE TERMS AND CONDITIONS DESCRIBED IN THIS AGREEMENT, IN THE NOTICE AND IN THE PLAN.

 

Exhibit 10.6

 

Central Pacific Financial Corp. 2013 Stock Compensation Plan

 

Key Employee Restricted Stock Unit Grant Agreement

 

This Restricted Stock Unit Grant Agreement (“ Agreement ”) is effective as of the “ Date of Grant ” stated in the accompanying Notice of Restricted Stock Unit Grant (“ Notice ”), between Central Pacific Financial Corp., a Hawaii corporation, (“ Company ”) with its registered office at 220 South King Street, Honolulu, Hawaii 96813 and the Participant stated in the Notice (the “ Participant ”), who is an employee of the Company or one of its Subsidiaries.

 

1.               Grant of Restricted Stock Units .

 

(a)                  Amount .  The Company hereby grants to the Participant the number of restricted stock units (“ Restricted Stock Units ”) of the Company’s common stock stated in the Notice, where each Restricted Stock Unit represents an unfunded and unsecured right to receive one share of common stock of the Company (“Share”).  This grant is subject to the terms and conditions of this Agreement and the applicable terms and conditions of the Central Pacific Financial Corp. 2004 Stock Compensation Plan (“ Plan ”).  Capitalized terms not otherwise defined in this Agreement shall have meaning ascribed to such terms in the Plan.

 

(b)                  Vesting .  The Restricted Stock Unit shall vest and become exercisable on the earlier of (a) pursuant to the “ Vesting Date ” and/or “ Vesting Schedule ” set forth in the Notice or (b) as provided under section 4 below.

 

(c)                   Settlement .  Except as provided below, within 30 days following each Vesting Date, the portion of the Restricted Stock Units that vested on a particular Vesting Date shall be settled by the Company by delivering one Share to the Participant for each Restricted Unit vested.

 

2.               Restrictions during Restriction Period .

 

(a)                  Service Restriction .  The Restricted Stock Units shall be forfeited and transferred to the Company upon the Participant’s termination of employment with the Company and its Subsidiaries, for any reason prior to the “ Vesting Dates ” stated in the Notice.  In the event a Participant’s status changes among the positions of Employee, Director and Independent Contractor, any such change in status shall not constitute a “termination of employment” for purposes of earning, vesting, forfeiture or otherwise.

 

(b)                  Transfer Restriction .  None of the Restricted Stock Units may be sold, assigned, pledged, or otherwise transferred, voluntarily or involuntarily, by the Participant during the Restriction Period.

 

(c)                   Restriction Period .  For purposes of this grant, the term “ Restriction Period ” means the later of (i) with respect to all of the Restricted Stock Units, the period commencing on the Date of Grant and ending on the “ Vesting Dates ” stated in the Notice.

 

(d)                  Lapse of Restrictions .  The restrictions set forth in Sections 2.a. and 2.b. above shall lapse and no longer apply upon the expiration of the Restriction Period.

 

3.                       Issuance of Shares; Registration; Withholding Taxes .  The Company may postpone the issuance or delivery of the Shares underlying the Restricted Stock Units until: (a) the completion of registration or other qualification of such shares or transaction under any state or federal law, rule, or regulation, or any listing on any securities exchange, as the Company shall determine to be necessary or desirable; (b) the receipt by the Company of such written representations or other documentation as the Company deems necessary to establish compliance with all applicable laws, rules, and regulations, including applicable federal and state securities laws and listing requirements, if any; and (c) the satisfaction of any amount necessary to satisfy any federal, state, or other governmental tax withholding requirements relating to the issuance of the Shares.  The Participant shall comply with any and all legal requirements relating to the Participant’s resale or other disposition of any Shares acquired under this Agreement.  The Company shall have the right to withhold with respect to the payment of any Share any taxes required to be withheld because of such payment, including the withholding of Shares otherwise payable due to the lapse of the restrictions.  The Participant shall comply with any and all legal requirements relating to the Participant’s resale or other disposition of any Shares acquired under this Agreement.

 

 

4.                       Change in Control .   In the event that within eighteen (18) months following a Change of Control (as defined in Section 4(b)), the Company or its successor causes to occur an involuntary termination of Participant without Cause (as defined in Section 4(a)) or in the event that Participant resigns from the Company with Good Reason (as defined in Section 4(c)), any unvested Restricted Stock Units awarded under this Agreement shall become immediately vested (“Accelerated Vesting”) in full.

 

(a)                  “Cause” shall mean the occurrence of any of the following: (i) indictment for, formal admission to (including a plea of Participant’s guilty or nolo contendere to), or conviction of a felony, or any criminal offence involving Participant’s moral turpitude; or (ii) gross negligence or willful misconduct by Participant in the performance of Participant’s material duties which is likely to materially damage the Company’s financial position.

 

(b)                  “Change in Control” shall mean (i) any “person” (as such term is used in Sections 13(d) and 14(d) of the 1934 Securities Exchange Act) or group becomes the “beneficial owner” (as defined in Rule 13d-3 of the 1934 Securities Exchange Act) or has the right to acquire beneficial ownership, directly or indirectly, of securities of the Company representing fifty percent (50%) or more of the total voting power represented by the Company’s then outstanding voting securities; (ii) the consummation of the sale, lease or other disposition by the Company of all or substantially all of the Company’s assets (including any equity interests in subsidiaries); or (iii) the consummation of a merger, consolidation, business combination, scheme of arrangement, share exchange or similar transaction involving the Company and any other corporation (“Business Combination”), other than (x) a Business Combination which results in both (A) the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or its parent) at least forty-five (45%) of the total voting power represented by the voting securities of the Company or such surviving entity or its parent outstanding immediately after such Business Combination and (B) the incumbent members of the Board immediately prior to the Business Combination continuing to represent not less than two thirds (2/3) of the members of the board of directors of the surviving entity or its parent, or (y) a Business Combination which results in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or its parent) at least fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity or its parent outstanding immediately after such Business Combination; or (iii) any combination of the foregoing.

 

(c)                   “Good Reason” shall mean the occurrence of any of the following: (i) a material breach of this Agreement by the Company; (ii) a material reduction in Participant’s base compensation, (iii) a material reduction in Participant’s duties and/or responsibilities, or the assignment to Participant of substantial duties inconsistent with Participant’s position; or (iv) a requirement by the Company, without Participant’s consent, that Participant relocate to a location greater than thirty-five (35) miles from Participant’s place of residence.

 

5.                       Nonassignability .  The Restricted Stock Units may not be sold, assigned, pledged, or transferred by the Participant.  Further, the Restricted Stock Units are not subject to attachment, execution, or other similar process.  In the event of any attempt by the Participant to alienate, assign, pledge, hypothecate, or otherwise dispose of the Restricted Stock Units, or the levy of any attachment, execution, or other similar process of the Restricted Stock Units, the Committee may terminate the Restricted Stock Units by notice to the Participant.

 

6.                       Share Adjustments .  The number of Restricted Stock Units shall be adjusted proportionately for any increase or decrease in the number of issued shares of common stock of the Company by reason of a reorganization, merger, recapitalization, reclassification, stock split, stock dividend, or other like change in the capital structure of the Company.  The adjustment required shall be made by the Compensation Committee of the Board of Directors (the “ Committee ”), whose determination shall be conclusive.

 

7.                       Shareholder Rights .  Neither the Participant nor any other person shall be, or have any of the rights and privileges of, a shareholder of the Company with respect to the Restricted Stock Units and, accordingly, the Restricted Stock Units carry no voting rights.  The Restricted Stock Units are mere bookkeeping entries that represent the Company’s unfunded and unsecured obligation to issue Shares on a future date following satisfaction of the applicable service condition.  The Participant shall have no rights other than the rights of a general creditor of the Company.

 

8.                       Dividend Equivalent Rights .  The Participant shall have the right to accrue “dividend equivalents” with respect to the Restricted Stock Units (“Corresponding Restricted Stock Units”) in the same manner as dividends are paid to common shareholders of the Company.  All accrued dividend equivalents shall be subject to forfeiture while the Corresponding Restricted Stock Units are held by the Participant.  Upon vesting of the Corresponding Restricted Stock Units, the accrued dividend equivalents shall be paid to the Participant.  Dividend equivalents may be paid in cash or Shares in the

 

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same manner as dividends are paid to the common shareholders of the Company (including both ordinary dividends and extraordinary dividends).

 

9.                       Participant Bound by Plan .  The Participant hereby acknowledges receipt of a copy of the Plan and acknowledges that the Participant shall be bound by its terms, regardless of whether such terms have been set forth in this Agreement.  If there is any inconsistency between the terms of the Plan and the terms of this Agreement, the Participant shall be bound by the terms of the Plan.

 

10.                Amendment .  This Agreement may be amended by the Committee at any time based on its determination that the amendment is necessary or advisable in light of any addition to, or change in, the Code or regulations issued thereunder, or any federal or state securities law or other law or regulation, or the Plan, or based on any discretionary authority of the Committee under the Plan.  However, unless necessary or advisable due to a change in law, any amendment to this Agreement which has a material adverse effect on the interest of the Participant under this Agreement shall be effective only with the consent of the Participant.

 

Notwithstanding the foregoing, the Company reserves the right to make any changes and amendments to this Agreement or to withhold or recover the grants and/or compensation hereunder (on either a retroactive or prospective basis and whether or not earned/accrued or yet to be earned/accrued) as necessary or required to comply with all applicable laws, regulations and restrictions.

 

11.                No Advice, Warranties, or Representations .  The Company is not providing the Participant with advice, warranties, or representations regarding any of the legal or tax effects to the Participant with respect to the Restricted Stock Units or Unrestricted Stock Units.  The Participant is encouraged to seek legal and tax advice from the Participant’s own legal and tax advisers.

 

12.                Continued Service .  Neither the Plan nor the grant of Restricted Stock Units confers upon the Participant the right to continue as an employee of the Company or any of its Subsidiaries.  Subject to other applicable agreements with the Participant, the Company or a Subsidiary may discharge the Participant from employment at any time.

 

13.                Code Section 409A .  This grant of Restricted Stock Units is intended to be exempt from Section 409A of the Code, and this Agreement is intended to, and shall be interpreted, administered and construed consistent therewith.  The Committee shall have full authority to give effect to the intent of this Section 13.

 

14.                Miscellaneous .  This Agreement and the Plan set forth the final and entire agreement between the parties with respect to the subject matter hereof, which shall be governed by and construed in accordance with the laws of the State of Hawaii applicable to contracts made and to be performed in Hawaii.  This Agreement shall bind and benefit the Participant, the heirs, distributees, and personal representative of the Participant, and the Company and its successors and assigns.

 

BY ACCEPTING THIS AGREEMENT AND THe GRANT of Restricted Stock Units pursuant to this agreement, the participant AGREES TO ALL THE TERMS AND CONDITIONS DESCRIBED IN THIS agreement and IN THE PLAN.

 

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