FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Current Report Pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934
Date of Report (Date Earliest Event reported)- March 28, 1996
Commission File Number 2-67419
CB BANCSHARES, INC.
(Exact name of registrant as specified in its charter)
Hawaii 99-0197163
(State of Incorporation) (IRS Employer Identification No.)
201 Merchant Street, Honolulu, Hawaii 96813
(Address of principal executive offices)
(808) 546-2411
(Registrant's Telephone Number)
<PAGE>
Item 5. Other Events
On March 28, 1996, the Board of directors of CB Bancshares, Inc.
(the"Company") approved and adopted (i) a Change of Control Agreement between
the Company and James M. Morita, Chairman of the Board and Chief Executive
Officer of the Company (the "Chairman's Agreement"); and (ii) Change of
Control Agreements with five senior executives of the Company (the "CBBI
Executives' Agreement"). On March 28, 1996, The Board of directors of the
Company's wholly-owned subsidiary, City Bank (the "Bank") approved and
adopted a Change of Control Agreement between the Bank and eight of its senior
executives (the "Bank Executives' Agreement"). On March 28, 1996, the Board
of Directors of the Company's wholly-owned subsidiary, International Savings
and Loan Association ("ISL") approved and adopted Change of Control
Agreements between ISL and five of its senior executives (the "ISL Executives'
Agreement"). The Chairman's Agreement, the CBBI Executives' Agreement, the
Bank Executives' Agreement and the ISL Executives' Agreement are collectively
referred to herein as the "Change of Control Agreements". The executives who
are parties to the Change of Control Agreements are described under Item 7
below and are referred to herein as the "Executives". The Company, Bank and
ISL are sometimes referred to herein as the "Employer".
The Change of Control Agreements were adopted by the Board of
Directors of the Bank, ISL and the Company to encourage continuity of
management in the event of a change of control of the Company by granting
certain benefits to certain senior executives, including Mr. Morita. The
Change of Control Agreements become operational upon the occurrence of a
"Change of Control". For purposes of the Change of Control Agreements, a
"change of control" is deemed to occur when (i) a person becomes the
beneficial owner of 20% or more of the Company's voting stock; (ii) the
Company's shareholders approve a merger, consolidation or other business
combination, or a sale of substantially all of its assets or enters into a
similar business transaction (a "Transaction"), unless after such
Transaction, the shareholders immediately prior to the Transaction continue to
control a majority of the Company's voting power in the resulting entity; or
(iii) within any 24 month period beginning on or after December 31, 1995, the
persons who are directors immediately prior to such period shall cease (for any
reason other than death) to constitute at least a majority of the Board of
Directors of the Company.
The Chairman's Agreement also provides that certain provisions become
operative upon the occurrence of a "Potential Change of Control." A
Potential Change of Control is deemed to occur under the Chairman's Agreement
if: (i) a person commences a tender offer for 20% or more of the Company's
voting stock; (ii) approval of a Transaction is requested of the Company's
shareholders; (iii) the Company enters into an agreement that will result in a
"change of control", (iv) any person becomes the beneficial owner of 9.9% or
more of the Company's outstanding voting securities, (v) proxies for the
election of the Company's directors are solicited by anyone other than the
Company, or (vi) the Board of Directors of the Company deems any other event to
be a Potential Change of Control. Notwithstanding the occurrence of a
Potential Change of Control under the Chairman's Agreement, if the Company's
Board of Directors determines in good faith that the events giving rise to
Potential Change of Control will not result in the occurrence of a Change of
Control, or if no Change of Control occurs within 12 months after occurrence of
a Potential Change of Control, neither the Company nor the Chairman have any
obligations to the other under the Change of Control Agreement, unless and
until the agreement again becomes effective by reason of the occurrence of
another Potential Change of Control or Change of Control.
2
<PAGE>
In the even of a Change of Control or, in the case of the Chairman's
Agreement, a Potential Change of Control, the benefits that will be provided to
the Executives include: (i) employment with the Employer for a three year
period commencing on the effective Date (the "Employment Period"), in a
commensurate position, with commensurate duties, as held 90-days prior to the
Effective Date (or in the case of the Chairman's Agreement immediately prior to
a Potential Change of Control); (ii) during the Employment Period, a base
salary equal to the highest monthly salary paid during they year prior to the
Effective Date; (iii) for each of the years during the Employment Period, a
bonus equal to the highest bonus paid with respect to the three fiscal years
prior to the Effective Date; (iv) during the Employment Period, participation
in all health and welfare, incentive, savings plans and programs, including
stock option, retirement and life insurance plans, all on a basis equal to the
highest level of participation received during the 90-day period prior to the
Effective Date (one year in the Chairman's Agreement). The Chairman's
Agreement also provides for payment by the Company of certain excise taxes (and
any income or excise taxes thereon) that may be imposed on payments to him
pursuant to Section 4999 of the Internal Revenue Code, as amended.
The Change of Control Agreements will automatically terminate upon the
Executive's death. The Employer may terminate the Change of Control Agreements
after having established the Executive's disability and giving the Executive
required notice. Following a Change of Control, the Executive may terminate
the Change of Control Agreements for any reason on 30-days written notice. The
Employer may terminate the Change of Control Agreements for cause and the
Chairman may terminate the Chairman's Agreement for "good reason", as such
term is defined in the Chairman's Agreement.
The Employer is required to make certain payments to the Executives
upon termination of the Change of Control Agreements. If a Change of Control
Agreement is terminated for death or disability, the Executive will receive
those payments that have accrued under the Change of Control Agreement to the
date of death or termination for disability including base salary through the
date of termination, a prorated annual bonus based on the previous fiscal year,
any deferred compensation not yet paid, and any other amounts owed under the
Employer's employee benefit plans then in effect. If a Change of Control
Agreement is terminated for cause or is voluntary terminated by the Executive,
the Executive will also receive those payments that have accrued under the
Change of Control Agreement to the date of termination other than the prorated
bonus.
If the Change of Control Agreement is terminated by the Employer,
other than for cause, or terminated by the Chairman for good reason, the
Employer must pay to the Executive in a lump sum in cash the aggregate of the
following amounts: (1) the Executive's base salary through the date of
termination; (2) a cash amount equal to 2.99 times the sum of: (a) the
Executive's average annual base salary, as defined (based on the average of the
five most recent taxable years);(b) the higher of the (x) annual bonus earned
by the Executive for the last fiscal year, or (y) the higher of the annual
bonus earned by the Executive for the fiscal year of the Employer including the
Effective Date or the last fiscal year of the Employer ended before the
Effective Date; and (c) the present value, calculated using an 8% discount
rate, of the annual cost to the Employer of obtaining life insurance coverage
and benefit plans for the Executive and certain other fringe benefits, all of
such amount being subject to proration based on the number of months remaining
in the Employment Period; (3) a cash amount equal to the difference between (x)
3
<PAGE>
the maximum payments the Executive would have received under any long-term
incentive compensation or performance plan of the Employer if he had continued
in the employ of the Employer, for the remainder of the Employment Period and
(y) any amounts actually paid under any such plan with respect to such awards;
(4) a cash amount equal to the present value of the incremental retirement
benefits that would have been payable or available to the Executive had the
Executive continued in the Employer's employ for the remainder of the
Employment Period; and (5) a cash amount equal to any deferred compensation and
any other amounts owing to the Executive under the then applicable employee
benefit plans. Any amount paid or payable under (2)(a), (2)(b) and (4) above
is reduced by any amount paid to the Executive under the Company's severance
procedures and guidelines or any agreement related thereto.
With respect to any stock options or restricted stock held by the
Executive, upon the earlier of the merger of the Company with or into another
corporation following a Change of Control or six months after termination of
the change of Control Agreements, the Executive will be paid an amount equal to
the sum of (1) the product of (a) the excess of (x) the greater of (I) the
highest price offered for a share of common stock of the Company in conjunction
with any tender offer or during the 60-day period immediately preceding the
date of the Change of Control, if the Change of Control occurs other than
pursuant to a tender offer or (II) the then fair market value of such a share
of common stock over (y) the exercise price of any stock option held by the
Executive on the date of the Change of Control times (b) the number of shares
of common stock of the Company's subject to such options and (2) the product of
(a) the excess of (x) the amount determined under sub-clause (1)(a)(x) above
over (y) the amount, if any, paid to acquire any shares of restricted common
stock of the Company held by the Executive at the date of the Change of Control
times (b) the number of such shares of restricted stock. If the Executive
otherwise receives the value of any such stock option or restricted stock under
the general provisions of any such award or any generally applicable provisions
of any plan under which such options or restricted stock are issued, the number
of shares of common stock taken into account above shall be appropriately
reduced.
Item 7. Financial Statements and Exhibits
EXHIBITS
99.1 Change of Control Agreement, dated March 28, 1996 between CB
Bancshares, Inc. and James M. Morita.
99.2 Change of Control Agreement between CB Bancshares, Inc. and
Ronald K. Migita.
99.3 The following lists additional Executive Officers who have
entered into a Change of Control Agreement similar in form
to that included as Exhibit 99.2:
Agreement between CB Bancshares, Inc. and Executive:
Caryn S. Morita
Daniel Motohiro
Henry L. Wong
Jack H. Ogami, Jr.
4
<PAGE>
Agreement between City Bank and Executive:
Randall O. Chang Raymond T. Matsuo
Allan A. Higashi Wayne T. Miyao
Michael K. Kawamoto Sidney B. Tanaka
Randall T. Kawano Yasunori Sato
Agreement between International Savings and Loan Association
Executive:
Lionel Y. Tokioka
Richard C. Lim
Jasen H. Takei
Warren Y. Kunimoto
Helen H.K. Kwok
5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
CB BANCSHARES, INC.
Date: April 18, 1996 \s\ Daniel Motohiro
Daniel Motohiro
Senior Vice President and
Chief Financial Officer
6
<PAGE>
CHANGE OF CONTROL AGREEMENT
THIS AGREEMENT between CB BANCSHARES, INC., a Hawaii corporation (the
"Corporation"), and James M. Morita (the "Executive"), dated this 28th day of
March, 1996.
W I T N E S S E T H :
WHEREAS, Executive is in the employ of the Corporation serving in the
capacity of Chairman of the Board and of Chief Executive Officer; and
WHEREAS, in order to assure the Corporation of continuity of
management in the event of any Change of Control or Potential Change of Control
(as defined in Section 2) the Board of Directors of the Corporation have deemed
it in the best interests of the Corporation to enter into an agreement
providing the Corporation and the Executive with certain rights and obligations
upon the occurrence of a Change of Control or Potential Change of Control;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is hereby agreed by and between the Corporation and the
Executive as follows:
1. Operation of Agreement. This Agreement shall be effective
immediately upon its execution by the parties hereto, but, anything in this
Agreement to the contrary notwithstanding, neither the Agreement nor any
provision thereof shall be operative until the date on which a Potential Change
of Control or Change of Control occurs (the "Effective Date"), provided that if
the Executive is not employed by the Corporation or a subsidiary of the
Corporation on the Effective Date this Agreement shall be void and without
effect. Notwithstanding the foregoing, if the Board of Directors of the
Corporation ("Board") determines in good faith that the events giving rise to a
Potential Change of Control will not result in the occurrence of a Change of
Control, or if no Change of Control occurs within 12 months after the
occurrence of a Potential Change of Control, this Agreement shall automatically
cease to be
effective and, following such a determination by the Board or the end of such
12 month period, neither the Corporation nor the Executive shall have any
obligation to the other under this Agreement, unless and until it again becomes
effective by reason of the occurrence of another Potential Change of Control or
Change of Control.
2. Definitions.
(a) Change of Control. For the purpose of this Agreement, a
"Change of Control" shall be deemed to have occurred if: (i) any person (as
defined in Section 3[a][9] of the Securities Exchange Act of 1934, as amended
from time to time [the "Exchange Act"] and as used in Sections 13[d] and 14[d]
thereof), excluding the Corporation, any majority owned subsidiary of the
Corporation (a "Subsidiary") and any employee benefit plan sponsored or
7
<PAGE>
maintained by the Corporation or any Subsidiary (including any trustee of such
plan acting as trustee), but including a "group" as defined in Section 13(d)(3)
of the Exchange Act (a "Person"), becomes the beneficial owner of shares of the
Corporation having at least 20% of the total number of votes that may be cast
for the election of directors of the Corporation (the "Voting Shares"); (ii)
the shareholders of the Corporation shall approve any merger, consolidation or
other business combination of the Corporation, sale of the Corporation's assets
or combination of the foregoing transactions (a "Transaction") other than a
Transaction involving only the Corporation and one or more of its Subsidiaries,
or a Transaction immediately following which the shareholders of the
Corporation immediately prior to the Transaction continue to have a majority of
the voting power in the resulting entity excluding for this purpose any
shareholder owning directly or indirectly more than 10% of the shares of the
other company involved in the merger, or (iii) within any 24 month period
beginning on or after December, 1995, the persons who were directors of the
Corporation immediately before the beginning of such period (the "Incumbent
Directors") shall cease (for any reason other than death) to constitute at
least a majority of the Board or the Board of Directors of any successor to the
Corporation, provided that any director who was not a director as of December,
1995, shall be deemed to be an Incumbent Director if such director was elected
to the Board by, or on the recommendation of or with the approval of, at least
two-thirds of the directors who then qualified as Incumbent Directors either
actually or by prior operation of this Section 2(a)(iii).
(b) Potential Change of Control. For the purpose of this
Agreement, a Potential Change of Control shall be deemed to have occurred if:
(i) a Person commences a tender offer for at least 20% of the Voting Shares;
(ii) approval of any Transaction (excluding any transaction that is excluded
for purposes of Section 2[a][ii] above) is requested of shareholders; (iii) the
Corporation enters into an agreement, the consummation of which would result in
the occurrence of a Change of Control; (iv) any person becomes the beneficial
owner, directly or indirectly, of securities of the Corporation representing
9.9% or more of the combined voting power of the Corporation's then outstanding
securities; (v) proxies for the election of directors of this Corporation are
solicited by anyone other than the Corporation; or (iv) any other event occurs
which is deemed to be a Potential Change of Control by the Board.
(c) Participation by Executive. Notwithstanding the foregoing,
no Change of Control or Potential Change of Control shall be deemed to have
occurred for the purposes of this Agreement by reason of any actions or events
in which the Executive participates in a capacity other than in his capacity as
Executive (or as a director of the Corporation or a Subsidiary, where
applicable).
3. Employment Period. Subject to Section 6 of this Agreement, if
the Executive is employed on the Effective Date, the Corporation agrees to
continue the Executive in its employ, and the Executive agrees to remain in the
employ of the Corporation, for the period (the "Employment Period") commencing
on the Effective Date and ending on the earlier to occur of (i) the third
anniversary of the date on which a Change of Control occurs (the "Change of
Control Date"); or (ii) in the event of a Potential Change in Control, any
earlier date on which this Agreement ceases to be effective pursuant to Section
1 above.
Notwithstanding the foregoing, if, prior to a Change of Control
or Potential Change of Control, the Executive is demoted to a lower position
8
<PAGE>
than the position held on the date first set forth above, the Board may declare
that this Agreement shall be without force and effect by written notice
delivered to the Executive within 30 days following such demotion and prior to
the occurrence of a Potential Change of Control or a Change of Control.
4. Position and Duties
(a) No Reduction in Position. During the Employment Period,
the Executive's position (including titles), authority and responsibilities
shall be at least commensurate with the highest of those held, exercised and
assigned (i) immediately prior to the Effective Date, if this Agreement became
effective on the date a Potential Change of Control occurs and no Change of
Control has occurred (the "Pre-Change Effective Period") and (ii) in all other
cases, at any time during the 90-day period immediately preceding the Change of
Control Date, and the Executive's services shall be performed at the location
where the Executive was employed immediately preceding (1) the Effective Date,
during the Pre-Change Effective Period, or (2) the Change of Control Date
following a Change of Control. It is understood that, for purposes of this
Agreement, such position, authority and responsibilities shall not be regarded
as not commensurate merely by virtue of the fact that a successor shall have
acquired all or substantially all of the business and/or assets of the
Corporation as contemplated by Section 12(b) of this Agreement, provided that
the Executive shall continue to have a position and authority and
responsibilities with respect to such successor or affiliated company
substantially corresponding to that of the Executive with respect to the
Corporation prior to such acquisition. As used in this Agreement, the term
"affiliated company" means any company controlling, controlled by, or under
common control with the Corporation.
(b) Business Time. From and after the Effective Date, the
Executive agrees to devote his full business time during normal business hours
to the business and affairs of the Corporation and to use his best efforts to
perform faithfully and efficiently the responsibilities assigned to him
hereunder, to the extent necessary to discharge such responsibilities, except
for
(i) time spent in managing his personal, financial and
legal affairs and serving on corporate, civic or charitable
boards or committees, in each case only if and to the extent not
substantially interfering with the performance of such
responsibilities, and
(ii) periods of vacation and sick leave to which he is
entitled.
It is expressly understood and agreed that the Executive's continuing to serve
on any boards and committees on which the Executive is serving or with which he
is otherwise associated immediately preceding the Change of Control Date or the
date that a Potential Change of Control occurs shall not be deemed to interfere
with the performance of the Executive's services to the Corporation unless the
Corporation shall have objected in writing to such service prior to the
Effective Date.
5. Compensation.
(a) Base Salary. During the Employment Period, the Executive
shall receive a base salary ("Base Salary") at a monthly rate at least equal to
9
<PAGE>
the highest monthly salary paid to the Executive by the Corporation and any of
its affiliated companies within one year prior to the Change of Control Date
except that, if this Agreement becomes effective upon the occurrence of a
Potential Change of Control, during the Pre-Change Effective Period, Executive
shall be paid a base salary at a monthly rate at least equal to the rate in
effect immediately prior to the Effective Date. The Base Salary shall be
reviewed at least once each year after the Effective Date, and may be increased
(but not decreased) at any time and from time to time by action of the Board or
any committee thereof or any individual having authority to take such action in
accordance with the Corporation's regular practices. Neither the Base Salary
nor any increase in Base Salary after the Effective Date shall serve to limit
or reduce any other obligation of the Corporation hereunder.
(b) Annual Bonus. In addition to the Base Salary, the
Executive shall be awarded for each fiscal year of the Corporation ending
during the Employment Period an annual bonus ("Annual Bonus") (either pursuant
to a bonus plan or program of the Corporation or otherwise) in cash at least
equal to the highest bonus earned by or awarded to the Executive in respect of
any of the three fiscal years of the Corporation ending immediately prior to
the Effective Date or, if higher, for the fiscal year of the Corporation in
which such Effective Date occurs. If a fiscal year of the Corporation begins,
but does not end, during the Employment Period, the Executive shall receive an
amount with respect to such fiscal year at least equal to the amount payable as
an Annual Bonus multiplied by a fraction, the numerator of which is the number
of days of such fiscal year occurring during the Employment Period and the
denominator of which is 365. Each such Annual Bonus (or portion thereof) shall
be paid in February of the year next following the year for which the Annual
Bonus (or prorated portion) is earned or awarded, unless electively deferred by
the Executive pursuant to any deferral programs or arrangements that the
Corporation may make available to the Executive.
(c) Incentive and Savings Plans; Retirement and Life Insurance
Programs. In addition to the Base Salary and Annual Bonus payable as
hereinabove provided, during the Employment Period, the Executive shall be
entitled to participate in all incentive and savings plans and programs,
including stock option plans and other equity based compensation plans, and in
all retirement and life insurance plans, on a basis providing him with the
opportunity to receive compensation (without duplication of the Annual Bonus)
and benefits equal to the highest level of those provided by the Corporation to
the Executive on an annualized basis under such plans and programs as in effect
(i) immediately prior to the Effective Date, during the Pre-Change Effective
Period or (ii) in all other cases, (1) at any time during the one-year period
immediately preceding the Change of Control Date or, (2) if more favorable to
Executive, as in effect at any time thereafter with respect to the Executive or
other executives with comparable responsibilities.
(d) Benefit Plans. During the Employment Period, the Executive
and his spouse, as the case may be, shall be entitled to participate in or be
covered under all medical, dental, disability, group life, accidental death and
travel accident insurance plans and programs of the Corporation and its
affiliated companies (at the most favorable level of participation and
providing highest levels of benefits available to him) as in effect (i)
immediately prior to the Effective Date, during the Pre-Change Effective Period
or (ii) in all other cases, (1) at any time during the 90-day period
immediately preceding the Change of Control Date or, (2) if more favorable to
the Executive, as in effect at any time thereafter with respect to the
10
<PAGE>
Executive or other executives with comparable responsibilities.
(e) Expenses. During the Employment Period, the Executive
shall be entitled to receive prompt reimbursement for all reasonable expenses
incurred by the Executive in accordance with the policies and procedures of the
corporation providing the highest level of reimbursement on the least
restrictive basis available to him as in effect (i) immediately prior to the
Effective Date, during the Pre-Change Effective Period or (ii) in all other
cases, (1) at any time during the 90-day period immediately preceding the
Change of Control Date or, (2) if more favorable to the Executive, as in effect
at any time thereafter with respect to the Executive or other executives with
comparable responsibilities.
(f) Vacation and Fringe Benefits. During the Employment
Period, the Executive shall be entitled to be paid vacation and fringe benefits
in accordance with the most favorable policies of the Corporation as in effect
(i) immediately prior to the Effective Date, during the Pre-Change Effective
Period or (ii) in all other cases, (1) at any time during the 90-day period
immediately preceding the Change of Control Date or, (2) if more favorable to
the Executive, as in effect at any time thereafter with respect to the
Executive or other executives with comparable responsibilities.
(g) Office and Support Staff. During the Employment Period,
the Executive shall be entitled to an office or offices of a size and with
furnishings and other appointments, and to secretarial and other assistance, at
least equal to the most favorable of the foregoing provided to the Executive
(i) immediately prior to the Effective Date, during the Pre-Change Effective
Period or (ii) in all other cases, (1) at any time during the 90-day period
immediately preceding the Change of Control Date or, (2) if more favorable to
the Executive, as provided at any time thereafter with respect to the Executive
or other executives with comparable responsibilities.
6. Termination.
(a) Death or Disability. Subject to the provisions of Section
1 hereof this Agreement shall terminate automatically upon the Executive's
death. The Corporation may terminate this Agreement, after having established
the Executive's Disability, by giving to the Executive written notice of its
intention to terminate his employment, and his employment with the Corporation
shall terminate effective on the 90th day after receipt of such notice if,
within 90 days after such receipt, the Executive shall fail to return to full-
time performance of his duties. For purposes of this Agreement, "Disability"
means disability which would entitle the Executive to receive long-term
disability benefits under the Corporation's long-term disability plan.
(b) Voluntary Termination. Notwithstanding anything in this
Agreement to the contrary, following a Change of Control the Executive may,
upon not less than 30 days' written notice to the Corporation, voluntarily
terminate employment for any reason; provided that any termination by Executive
pursuant to Section 6(d) on account of Good Reason (as defined therein) shall
not be treated as a voluntary termination under this Section 6(b).
(c) Cause. The Corporation may terminate the Executive's
employment for Cause. For purposes of this Agreement, "Cause" means (i) an act
or acts of dishonesty or gross misconduct on the Executive's part which result
or are intended to result in material damage to the Corporation's business or
11
<PAGE>
reputation or (ii) repeated material violations by the Executive of his
obligations under Section 4 of this Agreement which violations are demonstrably
willful and deliberate on the Executive's part and which result in material
damage to the Corporation's business or reputation.
(d) Good Reason. The Executive may terminate his employment
for Good Reason. For purpose of this Agreement, "Good Reason" means
(I) without the express written consent of the Executive,
(A) the assignment to the Executive of any duties inconsistent
in any substantial respect with the Executive's position,
authority or responsibilities as contemplated by Section 4 of
this Agreement, or (B) any other substantial change in such
position, including titles, authority or responsibilities;
(ii) any failure by the Corporation to comply with any of
the provisions of Section 5 of this Agreement, other than an
insubstantial or inadvertent failure remedied by the Corporation
promptly after receipt of notice thereof given by the Executive;
(iii) the Corporation's requiring the Executive to be
based at any office or location other than that specified under
the provisions of Section 4 except for travel
reasonably required in the performance of the Executive's
responsibilities; or
(iv) Any failure by the Corporation to obtain the
assumption and agreement to perform this Agreement by a
successor as contemplated by Section 12(b), provided that the
successor has had actual written notice of the existence of this
Agreement and its terms and an opportunity to assume the
Corporation's responsibilities under this Agreement during a
period of 10 business days after receipt of such notice.
(e) Notice of Termination. Any termination by the Corporation
for Cause or by the Executive for Good Reason shall be communicated by Notice
of Termination to the other party hereto given in accordance with Section
13(c). For purposes of this Agreement, a "Notice of Termination" means a
written notice given, in the case of a termination for Cause, within 10
business days of the Corporation's having actual knowledge of the events giving
rise to such termination, and in the case of a termination for Good Reason,
within 180 days of the Executive's having actual knowledge of the events giving
rise to such termination, and which (i) indicates the specific termination
provision in this Agreement relied upon, (ii) sets forth in reasonable detail
the facts and circumstances claimed to provide a basis for termination of the
Executive's employment under the provision so indicated, and (iii) if the
termination date is other than the date of receipt of such notice, specifies
the termination date of this Agreement (which date shall be not more than 15
days after the giving of such notice). The failure by the Executive to set
forth in the Notice of Termination any fact or circumstance which contributes
to a showing of Good Reason shall not waive any right of the Executive
hereunder or preclude the Executive from asserting such fact or circumstance in
enforcing his rights hereunder.
(f) Date of Termination. For the purpose of this Agreement,
the term "Date of Termination" means (i) the case of a termination for which a
12
<PAGE>
Notice of Termination is required, the date of receipt of such Notice of
Termination, or, if later, the date specified therein, as the case may be and
(ii) in all other cases, the actual date on which the Executive's employment
terminates during the Employment Period.
7. Obligations of the Corporation upon Termination.
(a) Death. If the Executive's employment is terminated during
the Employment Period by reason of the Executive's death, this Agreement shall
terminate without further obligations to the Executive's legal representatives
under this Agreement other than those obligations accrued hereunder at the date
of his death, including, for this purpose (i) the Executive's full Base Salary
through the Date of Termination, (ii) the product of the Annual Bonus paid to
the Executive for the last full fiscal year of the Corporation and a fraction,
the numerator of which is the number of days in the current fiscal year of the
Corporation through the Date of Termination, and the denominator of which is
365 (the "Pro-rated Bonus Obligation"), (iii) any compensation previously
deferred by the Executive (together with any accrued earnings thereon) and not
yet paid by the Corporation and any accrued vacation pay not yet paid by the
Corporation and (iv) any other amounts or benefits owing to the Executive under
the then applicable employee benefit plans or policies of the Corporation (such
amounts specified in clauses (i), (ii), (iii) and (iv) are hereinafter referred
to as "Accrued Obligations"). Unless otherwise directed by the Executive (or,
in the case of any employee benefit plan qualified [a "Qualified Plan"] under
Section 401[a] of the Internal Revenue Code of 1986, as amended [the "Code"],
as may be required by such plan) all such Accrued Obligations shall be paid to
the Executive in a lump sum in cash within 30 days of the Date of Termination.
Anything in this Agreement to the contrary notwithstanding, the Executive's
family shall be entitled to receive benefits at least equal to the most
favorable level of benefits available to surviving families of executives of
the Corporation and its affiliates under such plans, programs and policies
relating to family death benefits, if any, in accordance with the most
favorable policies of the Corporation and its affiliates in effect (i)
immediately prior to the Effective Date, during the Pre-Change Effective Period
or (ii) in all other cases, (1) at any time during the 90-day period
immediately preceding the Change of Control Date or, (2) if more favorable to
the Executive and/or the Executive's family, as in effect on the date of the
Executive's death with respect to the Executive's family or the families of
other executives with comparable responsibilities.
(b) Disability. If the Executive's employment is terminated by
reason of the Executive's Disability, the Executive shall be entitled, after
the Date of Termination until the date when the Employment period would
otherwise have terminated, to continue to participate in or be covered under
the benefit plans and programs referred to in Section 5(d) or, at the
Corporation's option, to receive equivalent benefits by alternate means, at
least equal to those provided in accordance with Section 5(d). Unless
otherwise directed by Executive (or, in the case of any Qualified Plan, as may
be required by such plan), the Executive shall also be paid all Accrued
Obligations in a lump sum in cash within 30 days of the Date of Termination.
Anything in this Agreement to the contrary notwithstanding, the Executive shall
be entitled to receive disability and other benefits at least equal to the most
favorable level of benefits available in accordance with the plans, programs
and policies maintained by the Corporation or its affiliates relating to
disability (i) immediately prior to the Effective Date, during the Pre-Change
Effective Period or, (ii) in all other cases, (1) at any time during the 90-day
period immediately preceding the Change of Control Date or, (2) if more
13
<PAGE>
favorable to the Executive and/or the Executive's family, as in effect at any
time thereafter with respect to the Executive or his family or other executives
with comparable responsibilities and their families.
(c) Cause and Voluntary Termination. If, during the Employment
Period, the Executive's employment shall be terminated for Cause or voluntarily
terminated by the Executive (other than on account of Good Reason), the
Corporation shall pay the Executive the Accrued Obligations other than the Pro-
Rated Bonus Obligation. Unless otherwise directed by the Executive (or, in the
case of any Qualified Plan, as may be required by such plan), the Executive
shall be paid all such Accrued Obligations in a lump sum in cash within 30 days
of the Date of Termination and the Corporation shall have no further
obligations to the Executive under this Agreement.
(d) Termination by Corporation other than for Cause or
Disability and Termination by the Executive for Good Reason.
(I) Lump Sum Payments. If, during the Employment Period,
the Corporation terminates the Executive's employment other than
for Cause or Disability; or the Executive terminates his
employment for Good Reason, the Corporation shall pay to the
Executive in a lump sum in cash within 15 days after the Date of
Termination the aggregate of the following amounts:
(A) if not theretofore paid, the Executive's Base
Salary through the Date of Termination at the higher of the
rate in effect at the time the Notice of Termination was
given or the rate in effect at the time of the Change of
Control (or the Potential Change of Control, if
applicable);
(B) a cash amount equal to 2.99 times the sum of
(1) the Executive's average annual base salary
for the five taxable years immediately preceding
the date of Change of Control;
(2) the higher of the (x) Annual Bonus earned by
or awarded to the Executive for the last fiscal
year of the Corporation commencing during the
Employment Period, or (y) the higher of the
Annual Bonus earned by or awarded to the
Executive for the fiscal year of the Corporation
including the Effective Date or the last fiscal
year of the Corporation ended before the
Effective Date; and
(3) the present value, calculated using an 8%
discount rate, of (without duplication) (x) the
annual cost to the Corporation (based on the
premium rates and costs to it) of obtaining
coverage for the Executive under the life
insurance plans described in Section 5(c), (y) the
annual cost to the Corporation (based on the
premium rates and costs to it) of obtaining
coverage equivalent to the coverage under the
plans and programs described in Section 5(d), and
14
<PAGE>
(z) the annualized value of the fringe benefits
described under Section 5(f) of this Agreement,
provided, however, that in no event shall the Executive be
entitled to receive under this clause (B) more than the
product obtained by multiplying the amount determined as
hereinabove provided in this clause by a fraction whose
numerator shall be the number of months (including
fractions of a month) which at the Date of Termination
remain until the date on which the Employment Period shall
end, and whose denominator shall be 36, and provided
further that, with respect to the life and medical
insurance coverage referred to in Sections 5(c) and 5(d)
above, at the Executive's election made prior to the Date
of Termination, the Corporation shall use its best efforts
to secure equivalent conversion coverage and shall pay the
cost of such coverage in lieu of paying the lump sum amount
attributable to such life or medical insurance coverage;
(C) a cash amount equal to the difference between (x)
the sum of the maximum payments the Executive would have
received for all awards (or other similar rights)
outstanding at the Date of Termination and granted to the
Executive under any long-term incentive compensation or
performance plan of the Corporation if he had continued in
the employ of the Corporation through the end of the
Employment Period and the Corporation had met its maximum
performance goals under each such award and the maximum
amount payable under each such award was paid and (y) any
amounts actually paid under any such plan with respect to
such awards.
(D) a cash amount equal to the present value of the
incremental retirement benefits (including, without
limitation, any pension, retiree life or retiree medical
benefits) that would have been payable or available to the
Executive under any Qualified Plan, under the Corporation's
Supplemental Executive Retirement Plan, Supplemental Life
Insurance Plan, or under any other supplemental retirement,
life or medical plan or arrangement, whether or not
qualified, maintained by the Corporation or a Subsidiary
based on the age and service the Executive would have
attained or completed had the Executive continued in the
Corporation's employ until the expiration of the Employment
Period, determined using, where compensation is a relevant
factor, his pensionable compensation at the Date of
Termination, with such present value being calculated using
an 8% discount rate; provided, however, that in lieu of any
cash payment in respect of retiree life, medical or
supplemental coverage for which the Executive would have
qualified by remaining in the Corporation's employ until
the expiration of the Employment Period, the Corporation
may arrange for such coverage to continue for the Executive
(or may secure equivalent conversion coverage) and shall
pay the cost of such coverage; an
15
<PAGE>
(E) a cash amount equal to any amounts (other than
amounts payable to the Executive under any Qualified Plans)
described in Sections 7(a)(iii) and (iv);
provided, that notwithstanding any other provision of this
Section 7(d)(i), any amount paid or payable under Section
7(d)(i)(B)(1) and (2) and Section 7(d)(i)(D) shall be reduced by
any amount paid to the Executive under the Corporation's
Severance Procedures and Guidelines and/or any agreement related
thereto
(ii) Relocation Expenses. The Corporation shall also,
promptly upon submission by the Executive of supporting
documentation, pay or reimburse to the Executive any costs and
expenses (including moving and relocation expenses) paid or
incurred by the Executive which would have been payable under
Section 5(e) if his employment had not terminated
(iii) Payments with respect to stock Options and
Restricted Stock held by Executive. Upon the earlier to occur
of (A) the merger of the Corporation with or into another
corporation following a Change of Control, or (B) the date which
is six months after the Date of Termination, the Executive shall
be paid an amount equal to the sum of (i) the product of (a) the
excess of (x) the greater of (I) the highest price offered for a
share of common stock of the Corporation in conjunction with any
tender offer or during the 60-day period immediately preceding
the Change of Control Date, if the Change of Control occurs
other than pursuant to a tender offer or (II) the then fair
market value of such a share of common stock over (y) the
exercise price of any stock option held by the Executive at the
Change of Control Date times (b) the number of shares of common
stock of the Corporation subject to such options and (2) the
product of (a) the excess of (x) the amount determined under
sub-clause (1)(a) above over (y) the amount, if any, paid to
acquire any shares of restricted common stock of the Corporation
held by the Executive at the Change of Control Date times (b)
the number of such shares of restricted stock. Notwithstanding
the foregoing, if the Executive otherwise receives the value of
any such stock option or shares of restricted stock under the
general provisions of any such award or any generally applicable
provisions of any plan under which options or restricted stock
are issued, the number of shares of common stock taken into
account in determining the amount payable under this Section
7(d)(iii) shall be appropriately reduced
(iv) Discharge of corporation's Obligations. Subject to
the performance of its obligations under this Section 7(d) and
Section 7(e) below, the Corporation shall have no further
obligations to the Executive in respect of any termination by
the Executive for Good Reason or by the Corporation other than
for Cause or Disability, except to the extent expressly provided
under any of the plans referred to in Section 5(c) or 5(d)
(e) Certain Further Payments by the Corporation.
16
<PAGE>
(I) In the event that any amount or benefit paid or
distributed to the Executive pursuant to this Agreement, taken
together with any amounts or benefits otherwise paid or
distributed to the Executive by the Corporation or by affiliated
company (collectively, the "Covered Payments"), are or become
subject to the tax (the "Excise Tax") imposed under Section
4999 of the Code or any similar tax that may hereafter be
imposed, the Corporation shall pay to the Executive at the time
specified in Section 7(e)(v) below an additional amount (the
"Tax Reimbursement Payment") such that the net amount retained
by the Executive with respect to such Covered Payments, after
deduction of any Excise Tax on the Covered Payments and any
Federal, state and local income tax and Excise Tax on the Tax
Reimbursement Payment provided for by this Section 7(e), but
before deduction for any Federal, state or local income or
employment tax withholding on such Covered Payments, shall be
equal to the amount of the Covered Payments.
(ii) For purposes of determining whether any of the
Covered Payments will be subject to the Excise Tax and the
amount of such Excise Tax,
(A) such Covered Payments will be treated as
"parachute payments" within the meaning of Section 280G of
the Code, and all "parachute payments" in excess of the
"base amount" (as defined under Section 280G[b][3] of the
Code) shall be treated as subject to the Excise Tax,
unless, and except to the extent that, in the opinion of
the Corporation's independent certified public accountants
appointed prior to the Effective Date or tax counsel
selected by such Accountants (the "Accountants"), such
Covered Payments (in whole or in part) either do not
constitute "parachute payments" or represent reasonable
compensation for services actually rendered (within the
meaning of Section 280G[b][4] of the Code) in excess of the
"base amount," or such "parachute payments" are otherwise
not subject to such Excise Tax, and
(B) the value of any non-cash benefits or any
deferred payment of benefit shall be determined by the
Accountants in accordance with the principles of Section
280G of the Code
(iii) For purposes of determining the amount of the Tax
Reimbursement Payment, the Executive shall be deemed to pay:
(A) Federal income taxes at the highest applicable
marginal rate of Federal income taxation for the calendar
year in which the Tax Reimbursement Payment is to be made,
and
(B) any applicable state and local income taxes at
the highest applicable marginal rate of taxation for the
calendar year in which the Tax Reimbursement Payment is to
be made, net of the maximum reduction in Federal income
taxes which could be obtained from the deduction of such
state or local taxes if paid in such year
17
<PAGE>
(iv) In the event that the Excise Tax is subsequently
determined by the Accountants to be less than the amount taken
into account hereunder in calculating the Tax Reimbursement
Payment made, the Executive shall repay to the Corporation, at
the time that the amount of such reduction in the Excise Tax is
finally determined, the portion of such prior Tax Reimbursement
Payment that would not have been paid if such Excise Tax had
been applied in initially calculating such Tax Reimbursement
Payment, plus interest on the amount of such repayment at the
rate provided in Section 1274(b)(2)(B) of the Code.
Notwithstanding the foregoing, in the event any portion of the
Tax Reimbursement Payment to be refunded to the Corporation has
been paid to any Federal, state or local tax authority,
repayment thereof shall not be required until actual refund or
credit of such portion has been made to the Executive, and
interest payable to the Corporation shall not exceed interest
received or credited to the Executive by such tax authority for
the period it held such portion. The Executive and the
Corporation shall mutually agree upon the course of action to be
pursued (and the method of allocating the expenses thereof) if
the Executive's good faith claim for refund or credit is denied.
In the event that the Excise Tax is later determined by the
Accountants to exceed the amount taken into account hereunder at
the time the Tax Reimbursement Payment is made (including, but
not limited, by reason of any payment the existence or amount of
which cannot be determined at the time of the Tax Reimbursement
Payment), the Corporation shall make an additional Tax
Reimbursement Payment in respect of such excess (plus any
interest or penalty payable with respect to such excess) at the
time that the amount of such excess is finally determined.
(v) The Tax Reimbursement Payment (or portion thereof)
provided for in Section 7(e)(i) above shall be paid to the
Executive not later than 10 business days following the payment
of the Covered Payments; provided, however, that if the amount
of such Tax Reimbursement Payment (or portion thereof) cannot be
finally determined on or before the date on which payment is
due, the Corporation shall pay to the Executive by such date an
amount estimated in good faith by the Accountants to be the
minimum amount of such Tax Reimbursement Payment and shall pay
the remainder of such Tax Reimbursement Payment (together with
interest at the rate provided in Section 1274[b][2][B] of the
Code) as soon as the amount thereof can be determined, but in no
event later than 45 calendar days after payment of the related
Covered Payment. In the event that the amount of the estimated
Tax Reimbursement Payment exceeds the amount subsequently
determined to have been due, such excess shall constitute a loan
by the Corporation to the Executive, payable on the fifth
business day after written demand by the Corporation for
payment (together with interest at the rate provided in Section
1274[b][2][B] of the Code).
8. Non-execlusivity of Rights. Nothing in this Agreement shall
prevent or limit the Executive's continuing or future participation in any
benefit, bonus, incentive or other plan or program provided by the Corporation
or any of its affiliated companies and for which the Executive may qualify, nor
18
<PAGE>
shall anything herein limit or otherwise prejudice such rights as the Executive
may have under any other agreements with the Corporation or any of its
affiliated companies, including employment agreements, salary continuation
agreements, or stock option agreements. Amounts which are vested benefits or
which the Executive is otherwise entitled to receive under any plan or program
of the Corporation or any of its affiliated companies at or subsequent to the
Date of Termination shall be payable in accordance with such plan or program.
9. Full Settlement. The Corporation's obligation to make the
payments provided for in this Agreement and otherwise to perform its
obligations hereunder shall not be affected by any circumstances, including,
without limitation, any set-off, counterclaim, recoupment, defense or other
right which the Corporation may have against the Executive or others whether by
reason of the subsequent employment of the Executive or otherwise. In no event
shall the Executive be obligated to seek other employment by way of mitigation
of the amounts payable to the Executive under any of the provisions of this
Agreement. In the event that the Executive shall in good faith give a Notice
of Termination for Good Reason and it shall thereafter be determined that Good
Reason did not exist, the employment of the Executive shall, unless the
Corporation and the Executive shall otherwise mutually agree, be deemed to have
terminated, at the date of giving such purported Notice of Termination, by
mutual consent of the Corporation and the Executive and, except as provided in
the last preceding sentence, the Executive shall be entitled to receive only
those payments and benefits which he would have been entitled to receive at
such date otherwise than under this Agreement.
10. Legal Fees and Expenses. In the event that a claim for payment
or benefits under this Agreement is disputed, the Corporation shall pay all
reasonable attorney fees and expenses incurred by the Executive in pursuing
such claim, provided that the Executive is successful as to at least part of
the disputed claim by reason of litigation, arbitration or settlement.
11. Confidential Information. The Executive shall hold in a
fiduciary capacity for the benefit of the Corporation all secret or
confidential information, knowledge or data relating to the Corporation or any
of its affiliated companies, and their respective businesses, (i) obtained by
the Executive during his employment by the Corporation or any of its affiliated
companies and (ii) not otherwise public knowledge (other than by reason of an
unauthorized act by the Executive). After termination of the Executive's
employment with the Corporation, the Executive shall not, without the prior
written consent of the Corporation, unless compelled pursuant to an order of a
court or other body having jurisdiction over such matter, communicate or
divulge any such information, knowledge or data to anyone other than the
Corporation and those designated by it. In no event shall an asserted
violation of the provisions of this Section 11 constitute a basis for deferring
or holding any amounts otherwise payable to the Executive under this Agreement.
12. Successors.
(a) This Agreement is personal to the Executive and, without
the prior written consent of the Corporation, shall not be assignable by the
Executive otherwise than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Executive's
legal representatives.
19
<PAGE>
(b) This Agreement shall inure to the benefit of and be binding
upon the Corporation and its successors. The Corporation shall require any
successor to all or substantially all of the business and/or assets of the
Corporation, whether direct or indirect, by purchase, merger, liquidation,
acquisition of stock, or otherwise, by an agreement in form and substance
satisfactory to the Executive, expressly to assume and agree to perform this
Agreement in the same manner and to the same extent as the Corporation would be
required to perform if no such succession had taken place.
13. Miscellaneous.
(a) Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Hawaii, applied without
reference to principles of conflict of laws.
(b) Amendments. This Agreement may not be amended or modified
otherwise than by a written agreement executed by the parties hereto or their
respective successors and legal representatives.
(c) Notices. All notices and other communications hereunder
shall be in writing and shall be given by hand-delivery to the other party or
by registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
If to the Executive: at the address listed on the last page hereof
If to the Corporation: CB Bancshares, Inc.
201 Merchant Street
Honolulu, Hawaii 96813
Attention: Secretary
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(d) Tax Withholding. The Corporation may withhold from any
amounts payable under this Agreement such Federal, state or local taxes as
shall be required to be withheld pursuant to any applicable law or regulation.
(e) Severability. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement.
(f) Captions. The captions of this Agreement are not part of
the provisions hereof and shall have no force or effect.
(g) Compliance with Law. Any payments made to Executive
pursuant to this Agreement or otherwise, are subject to and conditioned upon
their compliance with 12 U.S.C. Sec. 1828(k) and applicable regulations
promulgated thereunder.
IN WITNESS WHEREOF, the Executive has hereunto set his hand and the
Corporation has caused this Agreement to be executed in its name on its behalf,
and its corporate seal to be hereunto affixed and attested by its Secretary,
all as of the day and year first above written.
20
<PAGE>
ATTEST: CB BANCSHARES, INC.
By: By:
---------------------- ---------------------
JAMES H. KAMO ROBERT R. TAIRA
Secretary Vice Chairman of the
Board of Directors
(Seal)
EXECUTIVE:
------------------------
JAMES M. MORITA
Chairman of the Board
of Directors
Chief Executive Officer
Address:
4219 Alae Street
Honolulu, Hawaii 96816
21
<PAGE>
CHANGE OF CONTROL AGREEMENT
THIS AGREEMENT between CB BANCSHARES, INC., a Hawaii corporation (the
"Corporation" or "CBBI") and RONALD K. MIGITA (the "Executive"), dated this
28th day of March, 1996.
W I T N E S S E T H :
WHEREAS, Executive is currently in the employ of the Corporation
serving in the capacity of Senior Executive; and
WHEREAS, in order to assure the Corporation of continuity of
management in the event of any Change of Control of the Corporation (as defined
in Section 2) the Board of Directors of the Corporation have deemed it in the
best interests of the Corporation to enter into an agreement providing the
Corporation and the Executive with certain rights and obligations upon the
occurrence of a Change of Control;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is hereby agreed by and between the Corporation and the
Executive as follows:
1. Operation of Agreement. This Agreement shall be effective
immediately upon its execution by the parties hereto, but, anything in this
Agreement to the contrary notwithstanding, neither the Agreement nor any
provision thereof shall be operative until the date on which a Change of
Control occurs (the "Effective Date"), provided that if the Executive is not
employed by the Corporation or a subsidiary of the Corporation on the Effective
Date this Agreement shall be void and without effect.
3. Definitions.
(a) Change of Control. For the purpose of this Agreement, a
"Change of Control" shall be deemed to have occurred if: (i) any person (as
defined in Section 3[a][9] of the Securities Exchange Act of 1934, as amended
from time to time [the "Exchange Act"] and as used in Sections 13[d] and 14[d]
thereof), excluding CBBI, any majority owned subsidiary of CBBI (a
"Subsidiary"), and any employee benefit plan sponsored or maintained by CBBI or
any Subsidiary (including any trustee of such plan acting as trustee), but
including a "group" as defined in Section 13(d)(3) of the Exchange Act (a
"Person"), becomes the beneficial owner of shares of CBBI having at least 20%
of the total number of votes that may be cast for the election of directors of
CBBI (the "Voting Shares"); (ii) the shareholders of CBBI shall approve any
merger, consolidation or other business combination of CBBI, sale of CBBI's
assets or combination of the foregoing transactions (a "Transaction") other
than a Transaction involving only CBBI and one or more of its Subsidiaries, or
a Transaction immediately following which the shareholders of CBBI immediately
prior to the Transaction continue to have a majority of the voting power in the
resulting entity excluding for this purpose any shareholder owning directly or
indirectly more than 10% of the shares of the other company involved in the
merger, or (iii) within any 24 month period beginning on or after December,
1995, the persons who were directors of CBBI immediately before the beginning
of such period (the "Incumbent Directors") shall cease (for any reason other
than death) to constitute at least a majority of the Board or the board of
22
<PAGE>
directors of any successor to CBBI, provided that any director who was not a
director as of December, 1995, shall be deemed to be an Incumbent Director if
such director was elected to the Board by, or on the recommendation of or with
the approval of, at least two-thirds of the directors who then qualified as
Incumbent Directors either actually or by prior operation of this Section
2(a)(iii).
(b) Participation by Executive. Notwithstanding the foregoing,
no Change of Control shall be deemed to have occurred for the purposes of this
Agreement by reason of any actions or events in which the Executive
participates in a capacity other than in the capacity as Executive (or as a
director of CBBI or a Subsidiary, where applicable).
3. Employment Period. Subject to Section 6 of this Agreement, if
the Executive is employed on the Effective Date, the Corporation agrees to
continue the Executive in its employ, and the Executive agrees to remain in the
employ of the Corporation, for the period (the "Employment Period") commencing
on the Effective Date and ending on the third anniversary of the date on which
a Change of Control occurs (the "Change of Control Date").
Notwithstanding the foregoing, if, prior to a Change of Control,
the Executive is demoted to a lower position than the position held on the date
first set forth above, the Board may declare that this Agreement shall be
without force and effect by written notice delivered to the Executive within 30
days following such demotion and prior to the occurrence of a Change of
Control.
4. Position and Duties.
(a) No Reduction in Position. During the Employment Period,
the Executive's position (including titles), authority and responsibilities
shall be at least commensurate with the highest of those held, exercised and
assigned at any time during the 90-day period immediately preceding the Change
of Control Date, and the Executive's services shall be performed at the
location where the Executive was employed immediately preceding the Change of
Control Date. It is understood that, for purposes of this Agreement, such
position, authority and responsibilities shall not be regarded as not
commensurate merely by virtue of the fact that a successor shall have acquired
all or substantially all of the business and/or assets of CBBI as contemplated
by Section 12(b) of this Agreement, provided that the Executive shall continue
to have a position and authority and responsibilities with respect to such
successor or affiliated company substantially corresponding to that of the
Executive with respect to the Corporation prior to such acquisition. As used
in this Agreement, the term "affiliated company" means any company controlling,
controlled by, or under common control with CBBI.
(b) Business Time. From and after the Effective Date, the
Executive agrees to devote the Executive's full business time during normal
business hours to the business and affairs of the Corporation and to use the
Executive's best efforts to perform faithfully and efficiently the
responsibilities assigned to the Executive hereunder, to the extent necessary
to discharge such responsibilities, except for
(i) time spent in managing the Executive's personal,
financial and legal affairs and serving on corporate, civic or charitable
boards or committees, in each case only if and to the extent not substantially
interfering with the performance of such responsibilities, and
23
<PAGE>
(ii) periods of vacation and sick leave to which the
Executive is entitled.
It is expressly understood and agreed that the Executive's continuing to serve
on any boards and committees on which the Executive is serving or with which
the Executive is otherwise associated immediately preceding the Change of
Control Date shall not be deemed to interfere with the performance of the
Executive's services to the Corporation unless the Corporation shall have
objected in writing to such service prior to the Effective Date.
5. Compensation.
(a) Base Salary. During the Employment Period, the Executive
shall receive a base salary ("Base Salary") at a monthly rate at least equal to
the highest monthly salary paid to the Executive by the Corporation and any of
its affiliated companies within one year prior to the Change of Control Date.
The Base Salary shall be reviewed at least once each year after the Effective
Date, and may be increased (but not decreased) at any time and from time to
time by action of the Board or any committee thereof or any individual having
authority to take such action in accordance with the Corporation's regular
practices. Neither the Base Salary nor any increase in Base Salary after the
Effective Date shall serve to limit or reduce any other obligation of the
Corporation hereunder.
(b) Annual Bonus. In addition to the Base Salary, the
Executive shall be awarded for each fiscal year of the Corporation ending
during the Employment Period an annual bonus ("Annual Bonus") (either pursuant
to a bonus plan or program of the Corporation or otherwise) in cash at least
equal to the highest bonus earned by or awarded to the Executive in respect of
any of the three fiscal years of the Corporation ending immediately prior to
the Effective Date or, if higher, for the fiscal year of the Corporation in
which such Effective Date occurs. If a fiscal year of the Corporation begins,
but does not end, during the Employment Period, the Executive shall receive an
amount with respect to such fiscal year at least equal to the amount payable as
an Annual Bonus multiplied by a fraction, the numerator of which is the number
of days of such fiscal year occurring during the Employment Period and the
denominator of which is 365. Each such Annual Bonus (or portion thereof) shall
be paid in February of the year next following the year for which the Annual
Bonus (or prorated portion) is earned or awarded, unless electively deferred by
the Executive pursuant to any deferral programs or arrangements that the
Corporation may make available to the Executive.
(c) Incentive and Savings Plans; Retirement and Life Insurance
Programs. In addition to the Base Salary and Annual Bonus payable as
hereinabove provided, during the Employment Period, the Executive shall be
entitled to participate in all incentive and savings plans and programs,
including stock option plans and other equity based compensation plans, and in
all retirement and life insurance plans, on a basis providing the Executive
with the opportunity to receive compensation (without duplication of the Annual
Bonus) and benefits equal to the highest level of those provided by the
Corporation to the Executive on an annualized basis under such plans and
programs as in effect (i) at any time during the one-year period immediately
preceding the Change of Control Date or, (ii) if more favorable to Executive,
as in effect at any time thereafter with respect to the Executive or other
executives with comparable responsibilities.
24
<PAGE>
(d) Benefit Plans. During the Employment Period, the Executive and
the Executive's spouse, as the case may be, shall be entitled to participate in
or be covered under all medical, dental, disability, group life, accidental
death and travel accident insurance plans and programs of the Corporation and
its affiliated companies (at the most favorable level of participation and
providing highest levels of benefits available to the Executive) as in effect
(i) at any time during the 90-day period immediately preceding the Change of
Control Date or, (ii) if more favorable to the Executive, as in effect at any
time thereafter with respect to the Executive or other executives with
comparable responsibilities.
(e) Expenses. During the Employment Period, the Executive
shall be entitled to receive prompt reimbursement for all reasonable expenses
incurred by the Executive in accordance with the policies and procedures of the
Corporation providing the highest level of reimbursement on the least
restrictive basis available to the Executive as in effect (i) at any time
during the 90-day period immediately preceding the Change of Control Date or,
(ii) if more favorable to the Executive, as in effect at any time thereafter
with respect to the Executive or other executives with comparable
responsibilities.
(f) Vacation and Fringe Benefits. During the Employment
Period, the Executive shall be entitled to be paid vacation and fringe benefits
in accordance with the most favorable policies of the Corporation as in effect
(i) at any time during the 90-day period immediately preceding the Change of
Control Date or, (ii) if more favorable to the Executive, as in effect at any
time thereafter with respect to the Executive or other executives with
comparable responsibilities.
(g) Office and Support Staff. During the Employment Period,
the Executive shall be entitled to an office or offices of a size and with
furnishings and other appointments, and to secretarial and other assistance, at
least equal to the most favorable of the foregoing provided to the Executive
(i) at any time during the 90-day period immediately preceding the Change of
Control Date or, (ii) if more favorable to the Executive, as provided at any
time thereafter with respect to the Executive or other executives with
comparable responsibilities.
6. Termination.
(a) Death or Disability. This Agreement shall terminate
automatically upon the Executive's death. The Corporation may terminate this
Agreement, after having established the Executive's Disability, by giving to
the Executive written notice of its intention to terminate the Executive's
employment, and the Executive's employment with the Corporation shall terminate
effective on the 90th day after receipt of such notice if, within 90 days after
such receipt, the Executive shall fail to return to full-time performance of
the Executive's duties. For purposes of this Agreement, "Disability" means
disability which would entitle the Executive to receive long-term disability
benefits under the Corporation's long-term disability plan.
(b) Voluntary Termination. Notwithstanding anything in this
Agreement to the contrary, following a Change of Control the Executive may,
upon not less than 30 days' written notice to the Corporation, voluntarily
terminate employment for any reason.
25
<PAGE>
(c) Cause. The Corporation may terminate the Executive's
employment for Cause. For purposes of this Agreement, "Cause" means (i) an act
or acts of dishonesty or gross misconduct on the Executive's part which result
or are intended to result in material damage to the Corporation's business or
reputation or (ii) repeated material violations by the Executive of the
Executive's obligations under Section 4 of this Agreement which violations are
demonstrably willful and deliberate on the Executive's part and which result in
material damage to the Corporation's business or reputation.
(d) Notice of Termination. Any termination by the Corporation
for Cause shall be communicated by Notice of Termination to the Executive given
in accordance with Section 13(c). For purposes of this Agreement, a "Notice of
Termination" means a written notice given within 10 business days of the
Corporation's having actual knowledge of the events giving rise to such
termination and which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated, and (iii) if the termination date
is other than the date of receipt of such notice, specifies the termination
date of this Agreement (which date shall be not more than 15 days after the
giving of such notice).
(e) Date of Termination. For the purpose of this Agreement,
the term "Date of Termination" means (i) the case of a termination for which a
Notice of Termination is required, the date of receipt of such Notice of
Termination, or, if later, the date specified therein, as the case may be and
(ii) in all other cases, the actual date on which the Executive's employment
terminates during the Employment Period.
7. Obligations of the Corporation upon Termination.
(a) Death. If the Executive's employment is terminated during
the Employment Period by reason of the Executive's death, this Agreement shall
terminate without further obligations to the Executive's legal representatives
under this Agreement other than those obligations accrued hereunder at the date
of the Executive's death, including, for this purpose (i) the Executive's full
Base Salary through the Date of Termination, (ii) the product of the Annual
Bonus paid to the Executive for the last full fiscal year of the Corporation
and a fraction, the numerator of which is the number of days in the current
fiscal year of the Corporation through the Date of Termination, and the
denominator of which is 365 (the "Pro-rated Bonus Obligation"), (iii) any
compensation previously deferred by the Executive (together with any accrued
earnings thereon) and not yet paid by the Corporation and any accrued vacation
pay not yet paid by the Corporation and (iv) any other amounts or benefits
owing to the Executive under the then applicable employee benefit plans or
policies of the Corporation (such amounts specified in clauses (i), (ii), (iii)
and (iv) are hereinafter referred to as "Accrued Obligations"). Unless
otherwise directed by the Executive (or, in the case of any employee benefit
plan qualified [a "Qualified Plan"] under Section 401[a] of the Internal
Revenue Code of 1986, as amended [the "Code"], as may be required by such plan)
all such Accrued Obligations shall be paid to the Executive in a lump sum in
cash within 30 days of the Date of Termination. Anything in this Agreement to
the contrary notwithstanding, the Executive's family shall be entitled to
receive benefits at least equal to the most favorable level of benefits
available to surviving families of executives of the Corporation and its
affiliates under such plans, programs and policies relating to family death
benefits, if any, in accordance with the most favorable policies of the
26
<PAGE>
Corporation and its affiliates in effect (i) at any time during the 90-day
period immediately preceding the Change of Control Date or, (ii) if more
favorable to the Executive and/or the Executive's family, as in effect on the
date of the Executive's death with respect to the Executive's family or the
families of other executives with comparable responsibilities.
(b) Disability. If the Executive's employment is terminated by
reason of the Executive's Disability, the Executive shall be entitled, after
the Date of Termination until the date when the Employment period would
otherwise have terminated, to continue to participate in or be covered under
the benefit plans and programs referred to in Section 5(d) or, at the
Corporation's option, to receive equivalent benefits by alternate means, at
least equal to those provided in accordance with Section 5(d). Unless
otherwise directed by Executive (or, in the case of any Qualified Plan, as may
be required by such plan), the Executive shall also be paid all Accrued
Obligations in a lump sum in cash within 30 days of the Date of Termination.
Anything in this Agreement to the contrary notwithstanding, the Executive shall
be entitled to receive disability and other benefits at least equal to the most
favorable level of benefits available in accordance with the plans, programs
and policies maintained by the Corporation or its affiliates relating to
disability (i) at any time during the 90-day period immediately preceding the
Change of Control Date or, (ii) if more favorable to the Executive and/or the
Executive's family, as in effect at any time thereafter with respect to the
Executive or the Executive's family or other executives with comparable
responsibilities and their families.
(c) Cause and Voluntary Termination. If, during the Employment
Period, the Executive's employment shall be terminated for Cause or voluntarily
terminated by the Executive, the Corporation shall pay the Executive the
Accrued Obligations other than the Pro-Rated Bonus Obligation. Unless
otherwise directed by the Executive (or, in the case of any Qualified Plan, as
may be required by such plan), the Executive shall be paid all such Accrued
Obligations in a lump sum in cash within 30 days of the Date of Termination and
the Corporation shall have no further obligations to the Executive under this
Agreement.
(d) Termination by Corporation other than for Cause or
Disability.
(i) Lump Sum Payments. If, during the Employment Period,
the Corporation terminates the Executive's employment other than for Cause or
Disability, the Corporation shall pay to the Executive in a lump sum in cash
within 15 days after the Date of Termination the aggregate of the following
amounts:
(A) if not theretofore paid, the Executive's Base
Salary through the Date of Termination at the higher of the rate in effect at
the time the Notice of Termination was given or the rate in effect at the time
of the Change of Control;
(B) a cash amount equal to 2.99 times the sum of
(1) the Executive's average annual base salary
for the five taxable years immediately preceding
the date of Change of Control;
27
<PAGE>
(2) the higher of the (x) Annual Bonus earned by
or awarded to the Executive for the last fiscal year
of the Corporation commencing during the Employment
Period, or (y) the higher of the Annual Bonus earned
by or awarded to the Executive for the fiscal year of
the Corporation including the Effective Date or the
last fiscal year of the Corporation ended before the
Effective Date; and
(3) the present value, calculated using an 8%
discount rate, of (without duplication) (x) the annual
cost to the Corporation (based on the premium rates
and costs to it) of obtaining coverage for the
Executive under the life insurance plans described in
Section 5(c), (y) the annual cost to the Corporation
(based on the premium rates and costs to it) of
obtaining coverage equivalent to the coverage under
the plans and programs described in Section 5(d), and
(z) the annualized value of the fringe benefits
described under Section 5(f) of this Agreement
provided, however, that in no event shall the Executive be
entitled to receive under this clause (B) more than the
product obtained by multiplying the amount determined as
hereinabove provided in this clause by a fraction whose
numerator shall be the number of months (including
fractions of a month) which at the Date of Termination
remain until the date on which the Employment Period shall
end, and whose denominator shall be 36, and provided
further that, with respect to the life and medical
insurance coverage referred to in Sections 5(c) and 5(d)
above, at the Executive's election made prior to the Date
of Termination, the Corporation shall use its best efforts
to secure equivalent conversion coverage and shall pay the
cost of such coverage in lieu of paying the lump sum amount
attributable to such life or medical insurance coverage.
(C) a cash amount equal to the difference between (x)
the sum of the maximum payments the Executive would have
received for all awards (or other similar rights)
outstanding at the Date of Termination and granted to the
Executive under any long-term incentive compensation or
performance plan of the Corporation if he had continued in
the employ of the Corporation through the end of the
Employment Period and the Corporation had met its maximum
performance goals under each such award and the maximum
amount payable under each such award was paid and (y) any
amounts actually paid under any such plan with respect to
such awards;
(D) a cash amount equal to the present value of the
incremental retirement benefits (including, without
limitation, any pension, retiree life or retiree medical
benefits) that would have been payable or available to the
Executive under any Qualified Plan, under the Corporation's
Supplemental Executive Retirement Plan, Supplemental Life
Insurance Plan, or under any other supplemental retirement,
28
<PAGE>
life or medical plan or arrangement, whether or not
qualified, maintained by the Corporation or a Subsidiary
based on the age and service the Executive would have
attained or completed had the Executive continued in the
Corporation's employ until the expiration of the Employment
Period, determined using, where compensation is a relevant
factor, The Executive's pensionable compensation at the
Date of Termination, with such present value being
calculated using an 8% discount rate; provided, however,
that in lieu of any cash payment in respect of retiree
life, medical or supplemental coverage for which the
Executive would have qualified by remaining in the
Corporation's employ until the expiration of the Employment
Period, the Corporation may arrange for such coverage to
continue for the Executive (or may secure equivalent
conversion coverage) and shall pay the cost of such
coverage; and
(E) a cash amount equal to any amounts (other than
amounts payable to the Executive under any Qualified Plans)
described in Sections 7(a)(iii) and (iv);
provided, that notwithstanding any other provision of this
Section 7(d)(i), any amount paid or payable under Section
7(d)(i)(B)(1) and (2) and Section 7(d)(i)(D) shall be reduced by
any amount paid to the Executive under the Corporation's
Severance Procedures and Guidelines and/or any agreement related
thereto.
(ii) Relocation Expenses. The Corporation shall also,
promptly upon submission by the Executive of supporting
documentation, pay or reimburse to the Executive any costs and
expenses (including moving and relocation expenses) paid or
incurred by the Executive which would have been payable under
Section 5(e) if the Executive's employment had not terminated.
(iii) Payments with Respect to Stock Options and
Restricted Stock Held by Executive. Upon the earlier to occur
of (A) the merger of the Corporation with or into another
corporation following a Change of Control, or (B) the date which
is six months after the Date of Termination, the Executive shall
be paid an amount equal to the sum of (i) the product of (a) the
excess of (x) the greater of (I) the highest price offered for a
share of common stock of the Corporation in conjunction with any
tender offer or during the 60-day period immediately preceding
the Change of Control Date, if the Change of Control occurs
other than pursuant to a tender offer or (II) the then fair
market value of such a share of common stock over (y) the
exercise price of any stock option held by the Executive at the
Change of Control Date times (b) the number of shares of common
stock of the Corporation subject to such options and (2) the
product of (a) the excess of (x) the amount determined under
sub-clause (1)(a) above over (y) the amount, if any, paid to
acquire any shares of restricted common stock of the Corporation
held by the Executive at the Change of Control Date times (b)
the number of such shares of restricted stock. Notwithstanding
the foregoing, if the Executive otherwise receives the value of
29
<PAGE>
any such stock option or shares of restricted stock under the
general provisions of any such award or any generally applicable
provisions of any plan under which options or restricted stock
are issued, the number of shares of common stock taken into
account in determining the amount payable under this Section
7(d)(iii) shall be appropriately reduced.
(iv) Discharge of Corporation's Obligations. Subject to the
performance of its obligations under this Section 7(d), the
Corporation shall have no further obligations to the Executive
in respect of any termination by the Corporation other than for
Cause or Disability, except to the extent expressly provided
under any of the plans referred to in Section 5(c) or 5(d)
8. Non-exclusivity of Rights. Nothing in this Agreement shall
prevent or limit the Executive's continuing or future participation in any
benefit, bonus, incentive or other plan or program provided by the Corporation
or any of its affiliated companies and for which the Executive may qualify, nor
shall anything herein limit or otherwise prejudice such rights as the Executive
may have under any other agreements with the Corporation or any of its
affiliated companies, including employment agreements, salary continuation
agreements, or stock option agreements. Amounts which are vested benefits or
which the Executive is otherwise entitled to receive under any plan or program
of the Corporation or any of its affiliated companies at or subsequent to the
Date of Termination shall be payable in accordance with such plan or program.
9. Full Settlement. The Corporation's obligation to make the
payments provided for in this Agreement and otherwise to perform its
obligations hereunder shall not be affected by any circumstances, including,
without limitation, any set-off, counterclaim, recoupment, defense or other
right which the Corporation may have against the Executive or others whether by
reason of the subsequent employment of the Executive or otherwise. In no event
shall the Executive be obligated to seek other employment by way of mitigation
of the amounts payable to the Executive under any of the provisions of this
Agreement.
10. Legal Fees and Expenses. In the event that a claim for payment
or benefits under this Agreement is disputed, the Corporation shall pay all
reasonable attorney fees and expenses incurred by the Executive in pursuing
such claim, provided that the Executive is successful as to at least part of
the disputed claim by reason of litigation, arbitration or settlement.
11. Confidential Information. The Executive shall hold in a
fiduciary capacity for the benefit of the Corporation all secret or
confidential information, knowledge or data relating to the Corporation or any
of its affiliated companies, and their respective businesses, (i) obtained by
the Executive during the Executive's employment by the Corporation or any of
its affiliated companies and (ii) not otherwise public knowledge (other than by
reason of an unauthorized act by the Executive). After termination of the
Executive's employment with the Corporation, the Executive shall not, without
the prior written consent of the Corporation, unless compelled pursuant to an
order of a court or other body having jurisdiction over such matter,
communicate or divulge any such information, knowledge or data to anyone other
than the Corporation and those designated by it. In no event shall an asserted
violation of the provisions of this Section 11 constitute a basis for deferring
or withholding any amounts otherwise payable to the Executive under this
Agreement.
30
<PAGE>
12. Successors.
(a) This Agreement is personal to the Executive and, without
the prior written consent of the Corporation, shall not be assignable by the
Executive otherwise than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Executive's
legal representatives.
(b) This Agreement shall inure to the benefit of and be binding
upon the Corporation and its successors. The Corporation shall require any
successor to all or substantially all of the business and/or assets of the
Corporation, whether direct or indirect, by purchase, merger, consolidation,
acquisition of stock, or otherwise, by an agreement in form and substance
satisfactory to the Executive, expressly to assume and agree to perform this
Agreement in the same manner and to the same extent as the Corporation would be
required to perform if no such succession had taken place.
13. Miscellaneous.
(a) Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Hawaii, applied without
reference to principles of conflict of laws.
(b) Amendments. This Agreement may not be amended or modified
otherwise than by a written agreement executed by the parties hereto or their
respective successors and legal representatives.
(c) Notices. All notices and other communications hereunder
shall be in writing and shall be given by hand-delivery to the other party or
by registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
If to the Executive: at the address listed on the last page hereof
If to the Corporation: CB Bancshares, Inc.
201 Merchant Street
Honolulu, Hawaii 96813
Attention: Secretary
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(d) Tax Withholding. The Corporation may withhold from any
amounts payable under this Agreement such Federal, state or local taxes as
shall be required to be withheld pursuant to any applicable law or regulation.
(e) Severability. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement.
(f) Captions. The captions of this Agreement are not part of
the provisions hereof and shall have no force or effect.
(g) Compliance with Laws. Any payments made to Executive
pursuant to this Agreement or otherwise, are subject to and conditioned upon
their compliance with 12 U.S.C. Sec. 1828(k) and applicable regulations
promulgated thereunder.
31
<PAGE>
IN WITNESS WHEREOF the Executive has hereunto set the Executive's
hand and the Corporation has ,caused this Agreement to be executed in its name
on its behalf, and its corporate seal to be hereunto affixed and attested by
its Secretary, all as of the day and year first above written.
ATTEST: CB BANCSHARES, INC.
By: By:
--------------------- --------------------
JAMES H. KAMO JAMES M. MORITA
Secretary Chairman of the Board
of Directors
(Seal) Chief Executive Officer
Corporation
----------------------
RONALD K. MIGITA
President
Address:
98-868 Naukewai Place
Aiea, Hawaii 96701-2783
Executive
32
