Exhibit 4.8
Central Pacific Financial
Corp.
2004 Stock Compensation Plan
Contents
Central Pacific Financial Corp.
2004 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. 2004 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.
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.
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) Individuals who, on the date of adoption of this
Plan, constitute the Board (the “Incumbent Directors”)
cease for any reason to constitute at least a majority of the
Board, provided that any person becoming a director subsequent to
such date, whose election or nomination for election was approved
by a vote of at least two-thirds of the Incumbent Directors then on
the Board (either by a specific vote or by approval of the proxy
statement of the Company in which such person is named as a nominee
for director, without written objection to such nomination) shall
be an Incumbent Director; provided, however, that no individual
initially elected or nominated as a director of the Company as a
result of an actual or threatened election contest with respect to
directors or as a result of any other actual or threatened
solicitation of proxies or consents by or on behalf of any person
other than the Board shall be deemed to be an Incumbent
Director;
(b) Any “person” (as such term is
defined in Section 3(a)(9) of the Exchange Act and as used in
Sections 13(d)(3) and 14(d)(2) of the Exchange Act) is or becomes a
“beneficial owner” (as defined in Rule 13d 3 under the
Exchange Act), directly or indirectly, of securities of the Company
representing 25% or more of the combined voting power of the
Company’s then outstanding securities eligible to vote for
the election of the Board (the “Company Voting
Securities”); provided, however, that the event described in
this paragraph (ii) shall not be deemed to be a Change in Control
by virtue of any of the following acquisitions: (A) by the
Company or any
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Subsidiary, (B) by any employee
benefit plan (or related trust) sponsored or maintained by the
Company or any Subsidiary, (C) by any underwriter temporarily
holding securities pursuant to an offering of such securities or
(D) pursuant to a Non-Qualifying Transaction (as defined in
paragraph (c)); or
(c) The consummation of a merger, consolidation,
statutory share exchange, sale of all or substantially all of the
Company’s assets, a plan of liquidation or dissolution of the
Company or similar form of corporate transaction involving the
Company or any of its Subsidiaries that requires the approval of
the Company’s shareholders, whether for such transaction or
the issuance of securities in the transaction (a “Business
Transaction”), unless immediately following such Business
Transaction: (A) more than 50% of the total voting power of
(x) the corporation resulting from such Business Transaction (the
“Surviving Corporation”), or (y) if applicable, the
ultimate parent corporation that directly or indirectly has
beneficial ownership of at least 95% of the voting securities
eligible to elect directors of the Surviving Corporation (the
“Parent Corporation”), is represented by Company Voting
Securities that were outstanding immediately prior to such Business
Transaction (or, if applicable, is represented by shares into which
such Company Voting Securities were converted pursuant to such
Business Transaction), and such voting power among the holders
thereof is in substantially the same proportion as the voting power
of such Company Voting Securities among the holders thereof
immediately prior to the Business Transaction, (B) no person (other
than any employee benefit plan (or related trust) sponsored or
maintained by the Surviving Corporation or the Parent Corporation),
is or becomes the beneficial owner, directly or indirectly, of 25%
or more of the total voting power of the outstanding voting
securities eligible to elect directors of the Parent Corporation
(or, if there is no Parent Corporation, the Surviving Corporation)
and (C) at least a majority of the members of the board of
directors of the Parent Corporation (or, if there is no Parent
Corporation, the Surviving Corporation) following the consummation
of the Business Transaction were Incumbent Directors at the time of
the Board’s approval of the execution of the initial
agreement providing for such Business Transaction (any Business
Transaction which satisfies all of the criteria specified in (A),
(B) and (C) above shall be deemed to be a “Non-Qualifying
Transaction”).
Notwithstanding the foregoing, a
Change in Control of the Company shall not be deemed to occur
solely because any person acquires beneficial ownership of more
than 25% of the Company Voting Securities as a result of the
acquisition of Company Voting Securities by the Company which
reduces the number of Company Voting Securities outstanding;
provided , that if after such acquisition by the
Company such person becomes the beneficial owner of additional
Company Voting Securities that increases the percentage of
outstanding Company Voting Securities beneficially owned by such
person, a Change in Control of the Company shall then
occur.
2.8
“Code”
means the U.S. Internal Revenue
Code of 1986, as amended from time to time, or any successor
thereto.
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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.
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.
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
2.14 “Exchange Act”
means the Securities Exchange Act of
1934, as amended from time to time, or any successor act
thereto.
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2.15 “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.
2.16 “Fiscal Year”
means the year commencing on January
1 and ending December 31 or other time period as approved by the
Board.
2.17 “Freestanding SAR”
means an SAR that is granted
independently of any Options, as described in Article 7
herein.
2.18 “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.
2.19 “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.
2.20 “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.
2.21 “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 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.
2.22 “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
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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.
2.23 “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.
2.24 “Option” means an Incentive Stock Option or a
Nonqualified Stock Option, as described in Article 6
herein.
2.25 “Option Price”
means the price at which a Share may
be purchased by a Participant pursuant to an Option, as determined
by the Committee.
2.26 “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.
2.27 “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.
2.28 “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.
2.29 “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.
2.30 “Performance Share”
means an Award granted to a
Participant, as described in Article 9 herein.
2.31 “Performance Unit”
means an Award granted to a
Participant, as described in Article 9 herein.
2.32 “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.
2.33 “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.
2.34 “Restricted Stock”
means an Award of Shares granted to
a Participant pursuant to Article 8 herein.
2.35 “Restricted Stock Unit”
means an Award granted to a
Participant pursuant to Article 8 herein.
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2.36 “Shares” or
“Stock” means
the Shares of common stock of the Company.
2.37 “Stock Appreciation
Right” or
“SAR” means an Award, designated as an SAR,
pursuant to the terms of Article 7 herein.
2.38 “Stock-Based Award”
means an Award granted pursuant to
the terms of Section 10.2 herein.
2.39 “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.
2.40 “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.
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)
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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 1,500,000
Shares. 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 200,000 Shares.
The maximum number of Shares that may be issued for Full Value
Awards shall be limited to 50% of the Share Authorization.
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 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.
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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.
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.
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 (10 th ) 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.
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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 at the time of grant and as set forth in the Award
Agreement.
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 ex
