Exhibit 10.1
 
 
SUBSCRIPTION AGREEMENT
 
 
Central Pacific Financial Corp.
220 South King Street
Honolulu, HI 96813
 
Ladies and Gentlemen:
 
The undersigned (the “Investor”) hereby confirms its agreement with you as
follows:
 
1. This Subscription Agreement (this “Agreement”) is between Central Pacific
Financial Corp., a Hawaii corporation (the “Company”), and the Investor listed
on the signature page hereto and is made as of the date of the Company’s
acceptance hereof (the “Acceptance Date”).
 
2. The Company is proposing to issue and sell to certain investors in a private
offering shares of the Company’s common stock, no par value per share (the
“Common Stock” or “Common Shares”), at a purchase price of U.S. $0.50 per share
or, following a 1-for-20 reverse stock split to be effected by the Company (the
“Reverse Stock Split”), $10 per share (the “Per Share Purchase Price”). The
Common Shares are being offered only to persons who are accredited investors
within the meaning of Rule 501 of Regulation D promulgated under the Securities
Act of 1933, as amended (the “Securities Act”), pursuant to a private placement
exemption from registration under the Securities Act.
 
3. The Company and the Investor agree that, upon the terms and subject to the
conditions set forth herein, the Investor will purchase from the Company and the
Company will issue and sell to the Investor, the number of Common Shares equal
to one of the following as indicated on the signature page hereto:  (i) 4.9% of
the Common Shares outstanding at the Closing Date on a basis assuming the
issuance of Common Shares in the Other Private Placements and in the TARP
Exchange but excluding any issuance of Common Shares pursuant to outstanding
Company Options, Company Stock Appreciation Rights and the TARP Warrant (“Pro
Forma Basis”) (rounded down to the nearest whole share) or (ii) the dollar
amount subscribed as indicated on the signature page hereto divided by the Per
Share Purchase Price, in each case pursuant to the Terms and Conditions for the
Purchase of Common Shares attached hereto as Annex A and incorporated herein by
reference as if fully set forth herein. The Common Shares purchased by the
Investor will be delivered in certificated form, registered in the Investor’s
name and address as set forth below, and will be released by Wells Fargo Bank,
National Association, the Company’s transfer agent (the “Transfer Agent”), to
the Investor at the Closing (as defined in the Terms and Conditions for the
Purchase of Common Shares), or if uncertificated, the Transfer Agent for the
Common Shares will register such shares in the name of the Investor and deliver
evidence of such registration to the Investor.
 
4. In agreeing to purchase Common Shares pursuant hereto, the Investor is making
the representations and warranties set forth in the Terms and Conditions for the
Purchase of Common Shares, including a representation and warranty that the
Investor does not own Common Shares in excess of specified levels as set forth
in Section 2.3(h) and has not taken certain actions regarding a coordinated
acquisition as set forth in Section 2.3(k).
 
 Please confirm that the foregoing correctly sets forth the agreement between us
by signing in the space provided below for that purpose.
 
Please select one of the following to indicate the Investor’s subscription:

 
£
4.9% of the Common Shares outstanding at the Closing Date on a Pro Forma Basis
(rounded down to the nearest whole share)

 
£
a subscription amount in U.S. dollars of U.S.$_______________________

Name of Investor:  _______________________

By:  _______________________

Print Name:  _______________________

Title:  _______________________

Mailing Address:  _______________________
_____________________________________
_____________________________________
 
Type of Entity:  _______________________

 
Jurisdiction of Organization:  _______________________

Tax ID No.:  _______________________

Contact Name:  _______________________

Telephone:  _______________________

Facsimile:  _______________________

Email Address:  _______________________
 
Name under which Common Shares should be issued (if different from above): 
_______________________
 
Address to which share certificates or statement of ownership should be sent (if
different from mailing address above):  _______________________

 
 
 
 

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Agreed and Accepted as of December __, 2010:
     
CENTRAL PACIFIC FINANCIAL CORP.
 
     
By: ___________________________
 
Name:         John C. Dean
 
Title:           Executive Chairman
 

 
 

 
 
 

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INSTRUCTION SHEET FOR INVESTOR
 
(to be read in conjunction with the entire Agreement)
 
Complete the following items in the Agreement:
 
1. Provide the information regarding the Investor requested on the signature
page to the Agreement. The Agreement must be executed by an individual
authorized to bind the Investor.
 
2. If the Investor is purchasing Common Shares for more than one investor
account, it may either (i) complete a separate Agreement for each such account,
in which case a separate wire transfer (or other acceptable forms of payment)
must be made by or on behalf of such account for the Common Shares it will
purchase and a separate issuance of Common Shares will be made by the Transfer
Agent to each account, or (ii) complete a single Agreement for all such
accounts, in which case only one wire transfer (or other acceptable forms of
payment) need be made for the Common Shares to be purchased for all such
accounts (but all such Common Shares will be issued to a single account
specified by the Investor) and the information called for on the signature page
hereof must be completed for each account.
 
3. Return the signed Agreement to:
 
Sandler O’Neill + Partners, L.P.
Email: CPFsubscription@sandleroneill.com
 
4. Please note that all payments must be made in U.S. dollars by wire transfer
of immediately available funds to the account provided to the Investor by the
Company at least one (1) Business Day prior to the Closing Date pursuant to
Section 1.2(b)(ii) of the attached Terms and Conditions for the Purchase of
Common Shares.
 
An executed Agreement or a facsimile transmission thereof must be received by
such time on such date as you are advised. The Company reserves all rights to
reject any subscription before it is accepted by the Company.
 
 
 

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ANNEX A TO THE SUBSCRIPTION AGREEMENT
TERMS AND CONDITIONS FOR THE PURCHASE OF COMMON SHARES
TABLE OF CONTENTS
 
ARTICLE 1 PURCHASE; CLOSING
 
1.1
Issuance, Sale and Purchase
 

 
1.2
Closing; Deliverables for the Closing; Conditions of the Closing
 

 
ARTICLE 2 REPRESENTATIONS AND WARRANTIES
 
2.1
Certain Terms
 

 
2.2
Representations and Warranties of the Company
 

 
2.3
Representations and Warranties of the Investor
 

 
ARTICLE 3 COVENANTS
 
3.1
Conduct of Business Prior to Closing
 

 
3.2
Confidentiality
 

 
3.3
Avoidance of Control
 

 
3.4
Commercially Reasonable Efforts
 

 
3.5
Preemptive Rights
 

 
3.6
Most Favored Nation
 

 
3.7
Transfer Taxes
 

 
3.8
Legend
 

 
3.9
Reverse Stock Split
 

 
3.10
Certain Other Transactions
 

 
3.11
Exchange Listing
 

 
3.12
Registration Rights
 

 
ARTICLE 4 TERMINATION
 
4.1
Termination
 

 
4.2
Effects of Termination
 

 
ARTICLE 5 INDEMNITY 
 
5.1
Indemnification by the Company
 

 
5.2
Indemnification by the Investor
 

 
5.3
Notification of Claims
 

 
5.4
Indemnification Payment
 

 
5.5
Exclusive Remedies
 

 
ARTICLE 6 MISCELLANEOUS
 
6.1
Survival
 

 
6.2
Other Definitions
 

 
6.3
Amendment and Waivers
 

 
6.4
Counterparts and Facsimile
 

 
6.5
Governing Law
 

 
6.6
Jurisdiction
 

 
6.7
WAIVER OF JURY TRIAL
 

 
6.8
Notices
 

 
6.9
Entire Agreement
 

 
6.10
Successors and Assigns
 

 
6.11
Captions
 

 
6.12
Severability
 

 
6.13
Third Party Beneficiaries
 

 
6.14
Public Announcements
 

 
6.15
Specific Performance
 

 
6.16
No Recourse 
 

 
APPENDIX I                          Selling Shareholder Questionnaire
 
 

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INDEX OF DEFINED TERMS
 

Defined Term Section

 
Acceptance Date 
Subscription Agreement

Action
2.2(f)

Affiliate 
6.2(a)

Agency 
6.2(b)

Agreement
Subscription Agreement

Agreements
Recitals

Anchorage
Recitals

Anchorage Investment
Recitals

Anchorage Investment Agreement
Recitals

Bank
2.2(a)

Benefit Plans
 2.2(v)(i)

BHC Act
 2.2(a)

Board of Directors
 6.2(c)

Business Combination
 6.2(f)(B)

Business Day
 6.2(d)

Capital Stock
 6.2(e)

Capitalization Date
 2.2(c)

Carlyle
Recitals

Carlyle Investment
Recitals

Carlyle Investment Agreement
Recitals

Change in Control
 6.2(f)

Closing
1.2(a)

Closing Date
 1.2(a)

Code 
6.2(g)

Common Shares
Subscription Agreement

Common Stock
Subscription Agreement

Company
Subscription Agreement

Company Employees
2.2(v)(i)

Company Financial Statements
 2.2(g)

Company Indemnified Parties
 5.2(a)

Company Insurance Policies
 2.2(s)

Company Option
 2.2(c)

Company Preferred Stock
 2.2(c)

Company Reports
 2.2(h)

Company Restricted Stock
 2.2(c)

Company Specified Representations
 6.2(h)

Company Stock Appreciation Right
2.2(c)

Company Subsidiaries
2.2(b)

Company Subsidiary
 2.2(b)

Confidentiality Agreement
3.2

Continuing Directors
 6.2(i)

control, controlling, controlled by and under common control with
 6.2(a)

Controlled Group Liability
 6.2(j)

De Minimis Amount
 5.1(b)

Deductible 
5.1(b)

DFI
2.2(p)

Disclosure Schedule
6.2(k)

EESA
2.2(v)(ix)

Effective Date
3.12(j)(i)

Effectiveness Deadline
3.12(j)(ii)

employee benefit plan
 2.2(v)(i)

Environmental Laws
 6.2(l)

ERISA
2.2(v)(i)

Exchange Act
2.2(h)

Exchange Agreement
Recitals

FDI Act
2.2(b)

FDIC
2.2(b)

Federal Reserve
 2.2(p)

Filing Deadline
3.12(a)(i)

finally determined
 5.4

GAAP 
6.2(m)

Governmental Consent 
6.2(n)

Governmental Entity
 6.2(o)

Hazardous Substance 
6.2(p)

Holder
3.12(j)(iii)

Indemnified Party 
5.3(a)

Indemnifying Party
 5.3(a)

Indemnitee
3.12(g)(i)

Insider
2.2(dd)

Insurer 
6.2(q)

Intellectual Property Rights
 2.2(u)

Interim Financials
2.2(g)

Investment
Recitals

Investment Agreements
Recitals

Investment Manager
 2.3(f)

Investor
Subscription Agreement

Investor Indemnified Parties
 5.1(a)

Investor Specified Representations
 6.2(r)

Investors
Recitals

Knowledge 
6.2(s)

Law
2.2(p)

Lead Investor
2.3(k)

Liens
2.2(d)(ii)

Loan Investor 
6.2(t)

Losses 
6.2(u)

Material Adverse Effect
2.1(a)

Material Contract
2.2(r)

New Security
3.5(a)

New TARP Preferred Stock
Recitals

Non-Qualifying Transaction 
6.2(f)(B)

NYSE
1.2(c)(ii)(E)

NYSE Exception Application
 2.2(d)(i)

OFAC
2.2(m)

Other Investors
Recitals

Other Private Placements
Recitals

Parent Corporation
 6.2(f)(B)

PBGC
2.2(v)(vi)

Per Share Purchase Price
Subscription Agreement

Person 
6.2(v)

Placement Agent
 2.2(z)

Potential Investor
2.3(k)

Previously Disclosed
2.1(b)

Pro Forma Basis
Subscription Agreement

Purchase Price
1.1

Register, registered and registration
3.12(j)(iv)

Registrable Securities
3.12(j)(v)

Registration Expenses
3.12(j)(vi)

Registration Termination Date
3.12(a)(i)

Regulatory Agreement
2.2(q)

Regulatory Order or Regulatory Orders
 2.2(p)

Reverse Stock Split
Subscription Agreement

Rights Offering
Recitals

Rights Plan
2.3(h)

Rule 158, Rule 159A, Rule 405 and Rule 415
3.12(j)(vii)

SEC
2.1(b)

Securities Act
Subscription Agreement

Selling Expenses
3.12(j)(viii)

Shelf Registration Statement
3.12(a)(ii)

Stock Plans
2.2(c)

Subsidiary 
6.2(w)

Surviving Corporation 
6.2(f)(B)

Suspension Period
3.12(d)

TARP Exchange
Recitals

TARP Preferred Stock
Recitals

TARP Warrant
Recitals

Tax or Taxes
6.2(x)

Tax Return
 6.2(y)

Third Party Claim 
5.3(a)

Threshold Holder
2.3(h)

Transfer Agent
Subscription Agreement

Treasury
Recitals

Voting Debt
2.2(c)

Voting Securities
6.2(z)

 
 
 

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RECITALS
 
A. The Investment. The Company intends to issue and sell to the Investor, and
the Investor intends to purchase from the Company, on the terms and conditions
described herein, the number of Common Shares set forth on such Investor’s
signature page hereto at the aggregate purchase price set forth on such
signature page (the “Investment”).
 
B. Carlyle Investment. The Company also intends to sell a number of shares of
Common Stock specified in the Carlyle Investment Agreement (as defined below) to
Carlyle Financial Services Harbor, L.P. (“Carlyle”) pursuant to the Investment
Agreement between Carlyle and the Company dated as of November 4, 2010 (the
“Carlyle Investment Agreement”), with the closing of such transaction to occur
simultaneously with the Closing (the “Carlyle Investment”).
 
C. Anchorage Investment. The Company also intends to sell a number of shares of
Common Stock specified in the Anchorage Investment Agreement (as defined below)
to ACMO-CPF, LLC ( “Anchorage”) pursuant to the Investment Agreement between
Anchorage and the Company dated as of November 4, 2010 (the “Anchorage
Investment Agreement” and, together with the Carlyle Investment Agreement, the
“Investment Agreements”), with the closing of such transaction to occur
simultaneously with the Closing (the “Anchorage Investment”).
 
D. Other Private Placements. The Company also intends to enter into agreements
similar to this Agreement with certain other investors (together with Carlyle
and Anchorage, the “Other Investors”) and expects to complete sales of Common
Shares to them, with the closing of such sales to occur simultaneous with the
Closing (together with the Carlyle Investment and the Anchorage Investment, the
“Other Private Placements”). The Investor and the Other Investors are
hereinafter sometimes collectively referred to as the “Investors”, and this
Agreement and the subscription agreements executed by the Other Investors are
hereinafter sometimes collectively referred to as the “Agreements.”
 
E. TARP Exchange. The United States Department of Treasury (the “Treasury”)
holds (i) 135,000 shares of Fixed Rate Cumulative Perpetual Preferred Stock, no
par value per share and liquidation preference $1,000 per share (the “TARP
Preferred Stock”) and (ii) a warrant, dated January 9, 2009, to purchase
1,585,748 shares of the Common Stock at an exercise price of $12.77 per share
(the “TARP Warrant”). On the terms and subject to the conditions to be set forth
in an Exchange Agreement to be executed by the Company and the Treasury (the
“Exchange Agreement”), the Company intends to exchange the TARP Preferred Stock
for a new series of mandatorily convertible preferred stock (the “New TARP
Preferred Stock”), which shares the Company shall then convert into Common
Shares having an aggregate value (valuing the Common Shares at $0.50 per share)
of the sum of (x) 32.5% of the aggregate liquidation preference of the TARP
Preferred Stock and (y) 100% of the amount of accrued and unpaid dividends on
the TARP Preferred Stock as of the Closing Date, and to amend the TARP Warrant
to, among other things, modify the exercise price thereof to $0.50 per share
(or, following the Reverse Stock Split, $10 per share) (collectively, the “TARP
Exchange”), each to occur simultaneously with the Closing.
 
F. The Rights Offering. Following the Closing, the Company will commence a
rights offering (the “Rights Offering”) providing holders of record of the
Common Stock as of the close of business on the Business Day immediately
preceding the Closing Date with the right to purchase Common Stock at the same
price per share paid by the Investor. The rights will be transferable and will
provide for the purchase of up to $20,000,000 of Common Stock by such existing
shareholders.
 
ARTICLE 1

 
PURCHASE; CLOSING
 
1.1 Issuance, Sale and Purchase. On the terms and subject to the conditions set
forth herein, the Company agrees to issue and sell to the Investor, and the
Investor agrees to purchase from the Company, free and clear of any Liens, a
number of Common Shares (including any associated preferred share purchase
rights issuable with respect to such Common Shares pursuant to the Rights Plan)
equal to one of the following as indicated on the signature page
hereto:  (i) 4.9% of the Common Shares outstanding at the Closing Date on a Pro
Forma Basis (rounded down to the nearest whole share) or (ii) the dollar amount
subscribed as indicated on the signature page hereto divided by the Per Share
Purchase Price, in each case at a purchase price of $0.50 per share (or,
following the Reverse Stock Split, $10 per share) payable by the Investor to the
Company (the aggregate purchase price payable pursuant to this Section 1.1, the
“Purchase Price”).
 
1.2 Closing; Deliverables for the Closing; Conditions of the Closing.
 
(a) Closing. Unless this Agreement has been terminated pursuant to Article 4,
and subject to the satisfaction (or, to the extent permitted, the waiver) of the
conditions set forth in Section 1.2(c), the closing of the transactions
contemplated by this Agreement (the “Closing”) shall take place at the offices
of Sullivan & Cromwell LLP, located at 1888 Century Park East, Los Angeles,
California 90067, or remotely via the electronic or other exchange of documents
and signature pages, on a date to be specified by the Company on no less than
five Business Days’ notice to the Investor (which date shall be the same date as
the date of closing of the Carlyle Investment, the Anchorage Investment and the
TARP Exchange), or at such other place or such other date as agreed to in
writing by the parties hereto (the “Closing Date”).
 
(b) Closing Deliverables. Subject to the satisfaction or waiver on the Closing
Date of the conditions to the Closing in Section 1.2(c) at the Closing, the
parties shall make the following deliveries:
 
(i) the Company shall deliver to the Investor one or more certificates
evidencing the Common Shares to be purchased pursuant to Section 1.1 registered
in the name of the Investor (or if shares of the Company’s capital stock are
uncertificated, cause the transfer agent for the Common Shares to register such
shares in the name of the Investor and deliver evidence of such registration to
the Investor); and
 
(ii) the Investor shall deliver the Purchase Price, by wire transfer of
immediately available funds to the account set forth in the Instruction Sheet
for Investor provided with this Agreement.
 
(c) Closing Conditions.
 
(i) The obligations of the Investor, on the one hand, and the Company, on the
other hand, to consummate the Closing are each subject to the satisfaction or
written waiver by the Company and the Investor of the following conditions prior
to the Closing:
 
(A) No provision of any Law and no judgment, injunction, order or decree shall
prohibit the Closing or shall prohibit or restrict the Investor from owning or
voting any Common Shares to be purchased pursuant to this Agreement; and
 
(B) All Governmental Consents required to have been obtained at or prior to the
Closing Date in connection with the execution, delivery or performance of this
Agreement and the consummation of the transactions contemplated hereby shall
have been obtained and shall be in full force and effect.
 
(ii) The obligation of the Investor to consummate the Closing is also subject to
the satisfaction or written waiver by the Investor of the following conditions
prior to the Closing:
 
(A) The representations and warranties of the Company set forth in this
Agreement shall be true and correct in all respects on and as of the date of
this Agreement and on and as of the Closing Date as though made on and as of the
Closing Date, except where the failure to be true and correct (without regard to
any materiality or Material Adverse Effect qualifications contained therein),
would not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect (and except that representations and warranties made as
of a specified date shall be true and correct as of such date);
 
(B) The Company shall have performed and complied with, in all material
respects, all agreements, covenants and conditions required by this Agreement to
be performed by it on or prior to the Closing Date;
 
(C) The Investor shall have received a certificate, dated as of the Closing
Date, signed on behalf of the Company by a senior executive officer certifying
to the effect that the conditions set forth in Section 1.2(c)(ii)(A) and Section
1.2(c)(ii)(B) have been satisfied on and as of the Closing Date;
 
(D) Since the date of this Agreement, a Material Adverse Effect shall not have
occurred and no change or other event shall have occurred that would reasonably
be expected to have, individually or in the aggregate, a Material Adverse
Effect;
 
(E) The Common Shares to be purchased pursuant to this Agreement shall have been
authorized for listing on the New York Stock Exchange (the “NYSE”) or such other
market on which the Common Shares are then listed or quoted, subject to official
notice of issuance;
 
(F) The Company shall have received (or shall receive concurrently with the
Closing) gross proceeds from the Other Private Placements in an aggregate
amount, together with the Purchase Price, of not less than $325,000,000; and
 
(G) The Company shall have completed the TARP Exchange in accordance in all
material respects with the terms and conditions set forth in the Exchange
Agreement.
 
(iii) The obligation of the Company to consummate the Closing is also subject to
the satisfaction or written waiver by the Company of the following conditions
prior to the Closing:
 
(A) The representations and warranties of the Investor set forth in this
Agreement shall be true and correct in all respects on and as of the date of
this Agreement and on and as of the Closing Date as though made on and as of the
Closing Date except where the failure to be true and correct (without regard to
any materiality qualifications contained therein) would not materially adversely
affect the ability of the Investor to perform its obligations hereunder (and
except that (1) representations and warranties made as of a specified date shall
be true and correct as of such date and (2) the representations and warranties
of the Investor set forth in Sections 2.3(d), 2.3(h) and 2.3(k) shall be true
and correct in all respects);
 
(B) The Investor shall have performed and complied with, in all material
respects, all agreements, covenants and conditions required by this Agreement to
be performed by it on or prior to the Closing Date;
 
(C) The Company shall have received a certificate, dated as of the Closing Date,
signed on behalf of the Investor by a duly authorized person certifying to the
effect that the conditions set forth in Section 1.2(c)(iii)(A) and Section
1.2(c)(iii)(B) have been satisfied on and as of the Closing Date; and
 
(D) The Investor would not own or control in excess of 4.9% of the outstanding
Common Shares (or securities or other instruments that are immediately
convertible at the option of the Investor into Common Shares) immediately
following the Closing.
 
ARTICLE 2

 
REPRESENTATIONS AND WARRANTIES
 
2.1 Certain Terms.
 
(a) As used in this Agreement, the term “Material Adverse Effect” means any
circumstance, event, change, development or effect that, individually or in the
aggregate, would reasonably be expected to (i) result in a material adverse
effect on the assets, liabilities, business, financial condition or results of
operations of the Company and the Company Subsidiaries, taken as a whole, or
(ii) materially impair or delay the ability of the Company or any of the Company
Subsidiaries to perform its or their obligations under this Agreement to
consummate the Closing or any of the transactions contemplated hereby; provided,
however, that in determining whether a Material Adverse Effect has occurred
under clause (i), there shall be excluded any effect to the extent resulting
from (A) actions or omissions of the Company or any Company Subsidiary expressly
required or contemplated by the terms of this Agreement, (B) changes after the
date hereof in general economic conditions in the United States, including
financial market volatility or downturn, (C) changes after the date hereof
affecting generally the industries or markets in which the Company and the
Company Subsidiaries operate, (D) acts of war, sabotage or terrorism, military
actions or the escalation thereof, or outbreak of hostilities, (E) any changes
after the date hereof in applicable Laws or accounting rules or principles,
including changes in GAAP, (F) the announcement or pendency of the transactions
contemplated by this Agreement, (G) changes in the market price or trading
volume of the Common Stock or the Company’s other outstanding securities (but
not the underlying causes of such changes) or (H) any failure by the Company or
any of the Company Subsidiaries to meet any internal projections or forecasts
with regard to the assets, liabilities, business, financial condition or results
of operations of the Company and the Company Subsidiaries, taken as a whole (but
not the underlying causes of such failure), in each case to the extent that such
circumstance, event, change, development or effect referred to in clauses (B),
(C), (D) and (E) do not have a disproportionate effect on the Company and the
Company Subsidiaries compared to other participants in the industries or markets
in which the Company and the Company Subsidiaries operate.
 
(b) As used in this Agreement, the term “Previously Disclosed” (i) with regard
to any party, means information set forth on its Disclosure Schedule
corresponding or responsive to the provision of this Agreement to which such
information relates; provided, however, that if such information is disclosed in
such a way as to make its relevance or applicability to another provision of
this Agreement reasonably apparent on its face, such information shall be deemed
to be responsive to such other provision of this Agreement and (ii) with regard
to the Company, includes information publicly disclosed by the Company in (A)
the Company’s Annual Report on Form 10-K for the fiscal year ended December 31,
2009, as filed by it with the Securities and Exchange Commission (the “SEC”),
(B) the Company’s Quarterly Reports on Form 10-Q for the quarters ended
March 31, 2010, June 30, 2010 and September 30, 2010 as filed by it with the
SEC, (C) the Company’s Definitive Proxy Statement on Schedule 14A, as filed by
it with the SEC on March 29, 2010, or (D) any Current Report on Form 8-K filed
or furnished by it with the SEC since January 1, 2010, in each case available
prior to the date of this Agreement (excluding any risk factor disclosures
contained in such documents under the heading “Risk Factors” and any disclosure
of risks included in any “forward-looking statements” disclaimer or other
statements that are similarly non-specific and are predictive or forward-looking
in nature). Notwithstanding anything in this Agreement to the contrary, the mere
inclusion of an item in a Disclosure Schedule shall not be deemed an admission
that such item represents a material exception or material fact, event or
circumstance or that such item has had or would reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.
 
2.2 Representations and Warranties of the Company. Except as Previously
Disclosed, the Company hereby represents and warrants to the Investor, as of the
date of this Agreement and as of the Closing Date (except for the
representations and warranties that are as of a specific date which shall be
made as of that date) that:
 
(a) Organization and Authority. Each of the Company and the Company Subsidiaries
is a corporation or other entity duly organized and validly existing under the
laws of the jurisdiction of its incorporation or organization, is duly qualified
to do business and is in good standing in all jurisdictions where its ownership
or leasing of property or the conduct of its business requires it to be so
qualified except where any failure to be so qualified would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect,
and has the corporate or other organizational power and authority to own its
properties and assets and to carry on its business as it is now being conducted.
The Company has furnished to the Investor correct and complete copies of the
articles of incorporation and bylaws (or similar governing documents) as amended
through the date of this Agreement for the Company and Central Pacific Bank (the
“Bank”).  The Company is duly registered as a bank holding company under the
Bank Holding Company Act of 1956, as amended (the “BHC Act”).
 
(b) Company Subsidiaries. The Company has Previously Disclosed a true, complete
and correct list of all of its subsidiaries as of the date of this Agreement
(each, a “Company Subsidiary” and, collectively, the “Company Subsidiaries”).
Except for the Company Subsidiaries, the Company does not own beneficially,
directly or indirectly, more than 5% of any class of equity securities or
similar interests of any corporation, bank, business trust, association or
similar organization, and is not, directly or indirectly, a partner in any
partnership or party to any joint venture. The Company owns, directly or
indirectly, all of its interests in each Company Subsidiary free and clear of
any and all Liens. The deposit accounts of the Bank are insured by the Federal
Deposit Insurance Corporation (“FDIC”) to the fullest extent permitted by the
Federal Deposit Insurance Act, as amended (the “FDI Act”), and the rules and
regulations of the FDIC thereunder, and all premiums and assessments required to
be paid in connection therewith have been paid when due (after giving effect to
any applicable extensions). The Company beneficially owns all of the outstanding
capital securities of, and has sole control of, the Bank.
 
(c) Capitalization. As of the date hereof, the authorized Capital Stock of the
Company consists of (i) 185,000,000 shares of Common Stock and (ii) 1,000,000
shares of preferred stock, no par value (including shares of TARP Preferred
Stock) (the “Company Preferred Stock”). As of the close of business on
October 29, 2010 (the “Capitalization Date”), there were 30,364,809 shares of
Common Stock outstanding and 135,000 shares of TARP Preferred Stock and no other
Company Preferred Stock outstanding. In addition, the TARP Warrant allows for
the purchase of 1,585,748 shares of Common Stock by the Treasury at an exercise
price of $12.77 per share. Since the Capitalization Date and through the date of
this Agreement, except in connection with this Agreement and the transactions
contemplated hereby, including the Investment, the Other Private Placements, the
TARP Exchange, and the Rights Offering, the Company has not (i) issued or
authorized the issuance of any shares of Common Stock or Company Preferred
Stock, or any securities convertible into or exchangeable or exercisable for
shares of Common Stock or Company Preferred Stock, (ii) reserved for issuance
any shares of Common Stock or Company Preferred Stock or (iii) repurchased or
redeemed, or authorized the repurchase or redemption of, any shares of Common
Stock or Company Preferred Stock. As of the close of business on the
Capitalization Date, other than in respect of the TARP Warrant and awards
outstanding under or pursuant to the Benefit Plans in respect of which an
aggregate of 2,875,729 shares of Common Stock have been reserved for issuance,
no shares of Common Stock or Company Preferred Stock were reserved for issuance.
All of the issued and outstanding shares of Common Stock and Company Preferred
Stock have been duly authorized and validly issued and are fully paid,
nonassessable and free of preemptive rights. None of the outstanding shares of
Capital Stock or other securities of the Company or any of the Company
Subsidiaries was issued, sold or offered by the Company or any Company
Subsidiary in violation of the Securities Act or the securities or blue sky laws
of any state or jurisdiction, or any applicable securities laws in the relevant
jurisdictions outside of the United States. No bonds, debentures, notes or other
indebtedness having the right to vote on any matters on which the shareholders
of the Company may vote (“Voting Debt”) are issued and outstanding. Section
2.2(c) of the Disclosure Schedule sets forth the following information with
respect to each outstanding option to purchase shares of Common Stock (a
“Company Option”), stock appreciation right to receive shares of Common Stock (a
“Company Stock Appreciation Right”) or right (or unit) to acquire shares of
Common Stock (“Company Restricted Stock”) under the Central Pacific Financial
Corp. 1997 Stock Option Plan, as amended and the Central Pacific Financial Corp.
2004 Stock Compensation Plan, as amended (the “Stock Plans”): (A) the name of
each holder of Company Options, Company Stock Appreciation Rights or Company
Restricted Stock; (B) the number of shares of Common Stock subject to such
Company Option, Company Stock Appreciation Right or the number of shares of
Company Restricted Stock held by such holder, and as applicable for each Company
Option, Company Stock Appreciation Rights or Company Restricted Stock, the date
of grant, exercise or reference price, number of shares vested or not otherwise
subject to repurchase rights, reacquisition rights or other applicable
restrictions as of the date of this Agreement, vesting schedule or schedule
providing for the lapse of repurchase rights, reacquisition rights or other
applicable restrictions, the type of Company Option and the Stock Plan or other
plan under which such Company Options, Company Stock Appreciation Rights or
shares of Company Restricted Stock were granted or purchased; and (C) whether,
in the case of a Company Option, such Company Option is an Incentive Stock
Option (within the meaning of the Code). The Company has made available to the
Investor copies of each form of stock option agreement, stock appreciation
rights agreement or stock award agreement evidencing outstanding Company
Options, Company Stock Appreciation Rights or Company Restricted Stock, as
applicable, and has also delivered any other stock option agreements, stock
appreciation rights agreement or stock award agreements to the extent there are
variations from the applicable form of agreement, specifically identifying the
holder(s) to whom such variant forms apply. As of the date of this Agreement,
except for (x) the outstanding Company Options and Company Stock Appreciation
Rights described in this Section 2.2(c) and listed on Section 2.2(c) of the
Disclosure Schedule, (y) as set forth elsewhere in this Section 2.2(c) and (z)
the Carlyle Investment Agreement, the Anchorage Investment Agreement, the other
Agreements and the Exchange Agreement, the Company does not have and is not
bound by any outstanding subscriptions, options, warrants, calls, commitments or
agreements of any character calling for the purchase or issuance of, or
securities or rights convertible into or exchangeable or exercisable for, any
shares of Common Stock or Company Preferred Stock or any other equity securities
of the Company or Voting Debt or any securities representing the right to
purchase or otherwise receive any shares of Capital Stock of the Company
(including any rights plan or agreement).  Each Company Option and Company Stock
Appreciation Right under the Stock Plans (i) was granted in compliance with all
applicable Laws and all of the terms and conditions of the Stock Plans pursuant
to which it was issued, (ii) has an exercise or reference price equal to or
greater than the fair market value of a share of Common Stock at the close of
business on the date of such grant, (iii) has a grant date identical to or
following the date on which the Board of Directors or compensation committee
actually awarded such Company Option or Company Stock Appreciation Right, (iv)
otherwise is exempt from or complies with Section 409A of the Code so that the
recipient of such Company Option or Company Stock Appreciation Right is not
subject to the additional taxes and interest pursuant to Section 409A of the
Code and (v) except for disqualifying dispositions, qualifies for the tax and
accounting treatment afforded to such Company Option and Company Stock
Appreciation Right in the Company’s Tax Returns and the Company’s financial
statements, respectively.
 
(d) Authorization; No Conflicts; Shareholder Approval.
 
(i) The Company has the corporate power and authority to execute and deliver
this Agreement and to perform its obligations hereunder.  Except for the
approval by the NYSE of the Company’s application pursuant to Section 312.05 of
the NYSE Listed Company Manual to issue Common Shares in the Investment, the
Other Private Placements and the TARP Exchange without prior shareholder
approval (the “NYSE Exception Application”), which approval has been received,
the execution, delivery and performance of this Agreement by the Company and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of the Company and no further
approval or authorization is required on the part of the Company or its
shareholders.  The Board of Directors has unanimously approved the transactions
contemplated by this Agreement, including the Investment, the Other Private
Placements, the TARP Exchange and the Rights Offering. No other corporate
proceedings are necessary for the execution and delivery by the Company of this
Agreement, the performance by it of its obligations hereunder or the
consummation by it of the transactions contemplated hereby. This Agreement has
been duly and validly executed and delivered by the Company and, assuming due
authorization, execution and delivery by the Investor, is the valid and binding
obligation of the Company enforceable against the Company in accordance with its
terms, except as enforcement may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer and similar laws of
general applicability relating to or affecting creditors’ rights or by general
equity principles (whether applied in equity or at law).
 
(ii) Neither the execution and delivery by the Company of this Agreement nor the
consummation of the transactions contemplated hereby, nor compliance by the
Company with any of the provisions hereof, will (A) violate, conflict with, or
result in a breach of any provision of, or constitute a default (or an event
which, with notice or lapse of time or both, would constitute a default) under,
or result in the termination of, or result in the loss of any benefit or
creation of any right on the part of any third party under, or accelerate the
performance required by, or result in a right of termination or acceleration of,
or result in the creation of any liens, charges, adverse rights or claims,
pledges, covenants, title defects, security interests and other encumbrances of
any kind (“Liens”) upon any of the properties or assets of the Company or any
Company Subsidiary, under any of the terms, conditions or provisions of (1) the
articles of incorporation or bylaws (or similar governing documents) of the
Company and each Company Subsidiary or (2) any note, bond, mortgage, indenture,
deed of trust, license, lease, agreement or other instrument or obligation to
which the Company or any of the Company Subsidiaries is a party or by which it
may be bound, or to which the Company or any of the Company Subsidiaries, or any
of the properties or assets of the Company or any of the Company Subsidiaries
may be subject, or (B) violate any Law applicable to the Company or any of the
Company Subsidiaries or any of their respective properties or assets except in
the case of clauses (A)(2) and (B) for such violations, conflicts and breaches
as would not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect.
 
(e) Governmental Consents. No Governmental Consents are necessary for the
execution and delivery of this Agreement or for the sale by the Company of the
Common Shares to the Investor pursuant to this Agreement.
 
(f) Litigation and Other Proceedings. Except as would not reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect, there is
no pending or, to the Knowledge of the Company, threatened claim, action, suit,
arbitration, complaint, charge or investigation or proceeding (each an “Action”)
against the Company or any Company Subsidiary or any of its assets, rights or
properties, nor is the Company or any Company Subsidiary a party or named as
subject to the provisions of any order, writ, injunction, settlement, judgment
or decree of any court, arbitrator or government agency, or
instrumentality.  There has not been, and to the Knowledge of the Company, there
is not pending or contemplated, any investigation by the SEC involving the
Company or any current or former director or officer of the Company in his or
her capacity as such.
 
(g) Financial Statements. Each of the consolidated balance sheets of the Company
and the Company Subsidiaries and the related consolidated statements of income,
operations, changes in shareholders’ equity and cash flows, together with the
notes thereto, for the last five (5) years included in any Company Report filed
with the SEC and the unaudited consolidated balance sheets of the Company and
the Company Subsidiaries as of September 30, 2010 and the related consolidated
statements of operations, changes in shareholders’ equity and cash flows for the
period ending September 30, 2010, together with the notes thereto, included in
the Company’s Form 10-Q filed with the SEC (the “Interim Financials” and,
collectively, the “Company Financial Statements”), (i) have been prepared from,
and are in accordance with, the books and records of the Company and the Company
Subsidiaries, (ii) complied, as of their respective date of such filing, in all
material respects with applicable accounting requirements and with the published
rules and regulations of the SEC with respect thereto, (iii) have been prepared
in accordance with GAAP applied on a consistent basis and (iv) present fairly in
all material respects the consolidated financial position of the Company and the
Company Subsidiaries at the dates and the consolidated results of operations,
changes in shareholders’ equity and cash flows of the Company and the Company
Subsidiaries for the periods stated therein (subject to the absence of notes and
normal and recurring year-end audit adjustments not material to the financial
condition of the Company and the Company Subsidiaries in the case of the Interim
Financials).
 
(h) Reports. Since December 31, 2007, the Company and each Company Subsidiary
have filed all material reports, registrations, documents, filings, statements
and submissions, together with any required amendments thereto, that they were
required to file with any Governmental Entity (the foregoing, collectively, the
“Company Reports”) and have paid all material fees and assessments due and
payable in connection therewith.  As of their respective filing dates, the
Company Reports complied in all material respects with all statutes and
applicable rules and regulations of the applicable Governmental Entities, as the
case may be. As of the date of this Agreement, there are no outstanding comments
from the SEC or any other Governmental Entity with respect to any Company Report
that were enumerated within such report or otherwise were the subject of written
correspondence with respect thereto. The Company Reports, including the
documents incorporated by reference in each of them, each contained all the
information required to be included in it and, when it was filed and, as of the
date of each such Company Report filed with or furnished to the SEC, or if
amended prior to the date of this Agreement, as of the date of such amendment,
did not contain an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements made in it, in light of
the circumstances under which they were made, not misleading and complied as to
form in all material respects with the applicable requirements of the Securities
Act and the Securities Exchange Act of 1934, as amended (the “Exchange Act”). No
executive officer of the Company has failed in any respect to make the
certifications required of him or her under Section 302 or 906 of the
Sarbanes-Oxley Act of 2002. Copies of all of the Company Reports not otherwise
publicly filed have, to the extent allowed by applicable Law, been made
available to the Investor by the Company.
 
(i) Internal Accounting and Disclosure Controls. The records, systems, controls,
data and information of the Company and the Company Subsidiaries are recorded,
stored, maintained and operated under means (including any electronic,
mechanical or photographic process, whether computerized or not) that are under
the exclusive ownership and direct control of the Company or the Company
Subsidiaries or accountants (including all means of access thereto and
therefrom), except for any non-exclusive ownership and non-direct control that
would not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on the system of internal accounting controls described
below in this Section 2.2(i). The Company (i) has implemented and maintains
disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange
Act) to ensure that material information relating to the Company, including its
consolidated Subsidiaries, is made known to the chief executive officer or
executive chairman and the chief financial officer of the Company by others
within those entities, and (ii) has disclosed, based on its most recent
evaluation prior to the date of this Agreement, to the Company’s outside
auditors and the audit committee of the Board of Directors (A) any significant
deficiencies and material weaknesses in the design or operation of internal
control over financial reporting (as defined in Rule 13a-15(f) of the Exchange
Act) that are reasonably likely to adversely affect the Company’s ability to
record, process, summarize and report financial information, and (B) any fraud,
whether or not material, that involves management or other employees who have a
significant role in the Company’s internal controls over financial reporting. As
of the date of this Agreement, the Company has no Knowledge of any reason that
its outside auditors and its chief executive officer or executive chairman and
chief financial officer shall not be able to give the certifications and
attestations required pursuant to the rules and regulations adopted pursuant to
Section 404 of the Sarbanes-Oxley Act of 2002, without qualification, when next
due. Since December 31, 2007, (1) neither the Company nor any Company Subsidiary
nor, to the Knowledge of the Company, any director, officer, employee, auditor,
accountant or representative of the Company or any Company Subsidiary has
received or otherwise had or obtained knowledge of any material complaint,
allegation, assertion or claim, whether written or oral, regarding the
accounting or auditing practices, procedures, methodologies or methods of the
Company or any Company Subsidiary or their respective internal accounting
controls, including any material complaint, allegation, assertion or claim that
the Company or any Company Subsidiary has engaged in questionable accounting or
auditing practices, and (2) no attorney representing the Company or any Company
Subsidiary, whether or not employed by the Company or any Company Subsidiary,
has reported evidence of a material violation of securities laws, breach of
fiduciary duty or similar violation by the Company or any of its officers,
directors, employees or agents to the Board of Directors or any committee
thereof or to any director or officer of the Company.
 
(j) Risk Management Instruments. All material derivative instruments, including
swaps, caps, floors and option agreements entered into for the Company’s or any
of the Company Subsidiaries’ own account were entered into (i) only in the
ordinary course of business, (ii) in accordance with prudent practices and in
all material respects with all applicable Laws and (iii) with counterparties
believed to be financially responsible at the time; and each of them constitutes
the valid and legally binding obligation of the Company or any Company
Subsidiary, as applicable, enforceable in accordance with its terms. Neither the
Company nor, to the Knowledge of the Company, any other party thereto is in
breach of any of its material obligations under any such agreement or
arrangement.
 
(k) No Undisclosed Liabilities. There are no liabilities of the Company or any
of the Company Subsidiaries of any kind whatsoever, whether accrued, contingent,
absolute, determined, determinable or otherwise, except for (i) liabilities
adequately reflected or reserved against in accordance with GAAP in the
Company’s audited balance sheet as of December 31, 2009 and (ii) liabilities
that have arisen in the ordinary and usual course of business and consistent
with past practice since December 31, 2009 and that have not or would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect.
 
(l) Mortgage Banking Business. The Company and each of the Company Subsidiaries
have complied with, and all documentation in connection with the origination,
processing, underwriting and credit approval of any mortgage loan originated,
purchased or serviced by the Company or any Company Subsidiary has satisfied, in
all material respects (i) all Laws with respect to the origination, insuring,
purchase, sale, pooling, servicing, subservicing, or filing of claims in
connection with mortgage loans, including all Laws relating to real estate
settlement procedures, consumer credit protection, truth in lending laws, usury
limitations, fair housing, transfers of servicing, collection practices, equal
credit opportunity and adjustable rate mortgages, (ii) the responsibilities and
obligations relating to mortgage loans set forth in any agreement between the
Company and any Agency, Loan Investor or Insurer, (iii) the applicable rules,
regulations, guidelines, handbooks and other requirements of any Agency, Loan
Investor or Insurer and (iv) the terms and provisions of any mortgage or other
collateral documents and other loan documents with respect to each mortgage
loan. No Agency, Loan Investor or Insurer has (x) claimed in writing that the
Company or any of the Company Subsidiaries has violated or has not complied with
the applicable underwriting standards with respect to mortgage loans sold by the
Company or any of the Company Subsidiaries to a Loan Investor or Agency, or with
respect to any sale of mortgage servicing rights to a Loan Investor, (y) imposed
in writing material restrictions on the activities (including commitment
authority) of the Company or any of the Company Subsidiaries or (z) indicated in
writing to the Company or any of the Company Subsidiaries that it has terminated
or intends to terminate its relationship with the Company or any of the Company
Subsidiaries for poor performance, poor loan quality or concern with respect to
the Company’s or any of the Company Subsidiaries’ compliance with Laws.
 
(m) Bank Secrecy Act; Anti-Money Laundering; OFAC; and Customer Information. The
Company is not aware of, has not been advised of, and, to the Knowledge of the
Company, has no reason to believe that any facts or circumstances exist that
would cause it or any Company Subsidiary to be deemed to be not operating in
compliance, in all material respects, with the Bank Secrecy Act of 1970, as
amended, the Uniting and Strengthening America by Providing Appropriate Tools
Required to Intercept and Obstruct Terrorism Act of 2001 (also known as the USA
PATRIOT Act), any order or regulation issued by the U.S. Department of the
Treasury’s Office of Foreign Assets Control (“OFAC”), or any other applicable
anti-money laundering or anti-terrorist-financing statute, rule or
regulation.  The Company is not aware of any facts or circumstances that would
cause it to believe that any nonpublic customer information has been disclosed
to or accessed by an unauthorized third party in a manner that would cause it to
undertake any material remedial action.  The Company and each of the Company
Subsidiaries have adopted and implemented an anti-money laundering program that
contains adequate and appropriate customer identification verification
procedures that comply with the USA PATRIOT Act and such anti-money laundering
program meets the requirements in all material respects of Section 352 of the
USA PATRIOT Act and the regulations thereunder, and they have complied in all
respects with any requirements to file reports and other necessary documents as
required by the USA PATRIOT Act and the regulations thereunder. The Company will
not knowingly directly or indirectly use the proceeds of the sale of the Common
Shares pursuant to transactions contemplated by this Agreement, or lend,
contribute or otherwise make available such proceeds to any Company Subsidiary,
joint venture partner or other Person, towards any sales or operations in any
country sanctioned by OFAC or for the purpose of financing the activities of any
Person currently subject to any U.S. sanctions administered by OFAC.
 
(n) Certain Payments. Neither the Company nor any of the Company Subsidiaries,
nor any directors, officers, nor to the Knowledge of the Company, employees or
any of their Affiliates or any other Person who to the Knowledge of the Company
is associated with or acting on behalf of the Company or any of the Company
Subsidiaries has directly or indirectly (i) made any contribution, gift, bribe,
rebate, payoff, influence payment, kickback, or other payment in material
violation of any Law to any Person, private or public, regardless of form,
whether in money, property, or services (A) to obtain favorable treatment in
securing business for the Company or any of the Company Subsidiaries, (B) to pay
for favorable treatment for business secured by the Company or any of the
Company Subsidiaries, or (C) to obtain special concessions or for special
concessions already obtained, for or in respect of the Company or any of the
Company Subsidiaries or (ii) established or maintained any fund or asset with
respect to the Company or any of the Company Subsidiaries that was required by
Law or GAAP to have been recorded and was not recorded in the books and records
of the Company or any of the Company Subsidiaries.
 
(o) Absence of Certain Changes. Since December 31, 2009 and except as Previously
Disclosed, (i) the Company and the Company Subsidiaries have conducted their
respective businesses in all material respects in the ordinary and usual course
of business consistent with past practices, (ii) none of the Company or any
Company Subsidiary has issued any securities (other than Common Stock and
Company Options and other equity-based awards issued prior to the date of this
Agreement pursuant to Benefit Plans and reflected in the numbers set forth in
Section 2.2(c)) or incurred any liability or obligation, direct or contingent,
for borrowed money, except borrowings in the ordinary course of business, (iii)
the Company has not made or declared any distribution in cash or in kind to its
shareholders or issued or repurchased any shares of its Capital Stock (other
than pursuant to the Rights Plan or the Rights Offering), (iv) through (and
including) the date of this Agreement, no fact, event, change, condition,
development, circumstance or effect has occurred that has had or would
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect and (v) no material default (or event which, with notice or lapse
of time, or both, would constitute a material default) exists on the part of the
Company or any Company Subsidiary or, to the Knowledge of the Company, on the
part of any other party, in the due performance and observance of any term,
covenant or condition of any agreement to which the Company or any Company
Subsidiary is a party and which would reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.
 
(p) Compliance with Laws. The Company and each Company Subsidiary have all
material permits, licenses, franchises, authorizations, orders and approvals of,
and have made all filings, applications and registrations with, Governmental
Entities that are required in order to permit them to own or lease their
properties and assets and to carry on their business as presently conducted and
that are material to the business of the Company and each Company Subsidiary.
The Company and each Company Subsidiary have complied in all material respects
and (i) are not in default or violation in any respect of, (ii) are not under
investigation with respect to, and (iii) have not been threatened to be charged
with or given notice of any material violation of, any applicable material
domestic (federal, state or local) or foreign law, statute, ordinance, license,
rule, regulation, policy or guideline, order, demand, writ, injunction, decree
or judgment of any Governmental Entity (each, a “Law”), other than such
noncompliance, defaults or violations that would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect. Except for
statutory or regulatory restrictions of general application, restrictions
applicable to recipients of funds under the Troubled Asset Relief Program, the
written agreement of the Company with the Board of Governors of the Federal
Reserve System (the “Federal Reserve”) and the Hawaii Division of Financial
Institutions (the “DFI”) entered into on July 2, 2010, and the Consent Order
between the Bank and the FDIC and the DFI entered into on December 8, 2009
(each, individually a “Regulatory Order” and, together, the “Regulatory
Orders”), no Governmental Entity has placed any material restriction on the
business or properties of the Company or any of the Company Subsidiaries.  As of
the date hereof, the Bank has a Community Reinvestment Act rating of
“satisfactory” or better.
 
(q) Agreements with Regulatory Agencies. Except for the Regulatory Orders, (i)
the Company and the Company Subsidiaries (A) are not subject to any
cease-and-desist or other similar order or enforcement action issued by, (B) are
not a party to any written agreement, consent agreement or memorandum of
understanding with, (C) are not a party to any commitment letter or similar
undertaking to, and (D) are not subject to any capital directive by, and
(ii) since December 31, 2009, each of the Company and the Company Subsidiaries
has not adopted any board resolutions at the request of, any Governmental Entity
that currently restricts in any material respect the conduct of its business or
that in any material manner relates to its capital adequacy, its liquidity and
funding policies and practices, its ability to pay dividends, its credit, risk
management or compliance policies, its internal controls, its management or its
operations or business (each item in this sentence, a “Regulatory Agreement”),
nor has the Company nor any of the Company Subsidiaries been advised since
December 31, 2009 by any Governmental Entity that it is considering issuing,
initiating, ordering, or requesting any such Regulatory Agreement. Except as set
forth in the Disclosure Schedule, the Company and the Company Subsidiaries are
in compliance in all material respects with each Regulatory Agreement to which
they are party or subject, and the Company and the Company Subsidiaries have not
received any notice from any Governmental Entity indicating that either the
Company or any of the Company Subsidiaries is not in compliance in all material
respects with any such Regulatory Agreement.
 
(r) Contracts. The Company has Previously Disclosed or provided (by hard copy,
electronic data room or otherwise) to the Investor or its representatives true,
correct and complete copies of each of the following to which the Company or any
Company Subsidiary is a party (each, a “Material Contract”):
 
(i) any contract or agreement relating to indebtedness for borrowed money,
letters of credit, capital lease obligations, obligations secured by a Lien or
interest rate or currency hedging agreements (including guarantees in respect of
any of the foregoing, but in any event excluding trade payables, securities
transactions and brokerage agreements arising in the ordinary course of
business, intercompany indebtedness and immaterial leases for telephones, copy
machines, facsimile machines and other office equipment) in excess of $500,000,
except for those issued in the ordinary course of business;
 
(ii) any contract or agreement that constitutes a collective bargaining or other
arrangement with any labor union;
 
(iii) any contract or agreement that is a “material contract” within the meaning
of Item 601(b)(10) of Regulation S-K;
 
(iv) any lease or agreement under which the Company or any of the Company
Subsidiaries is lessee of, or holds or operates, any property owned by any other
Person with annual rent payments in excess of $500,000;
 
(v) any lease or agreement under which the Company or any of the Company
Subsidiaries is lessor of, or permits any Person to hold or operate, any
property owned or controlled by the Company or any of the Company Subsidiaries;
 
(vi) any contract or agreement limiting, in any material respect, the ability of
the Company or any of the Company Subsidiaries to engage in any line of business
or to compete, whether by restricting territories, customers or otherwise, or in
any other material respect, with any Person;
 
(vii) any settlement, conciliation or similar agreement, the performance of
which will involve payment after the Closing Date of consideration in excess of
$500,000;
 
(viii) any contract or agreement that relates to Intellectual Property Rights
(other than a license granted to the Company for commercially available software
licensed on standard terms with a total replacement cost of less than $500,000);
 
(ix) any contract or agreement that concerns the sale or acquisition of any
material portion of the Company’s business;
 
(x) any alliance, cooperation, joint venture, shareholders, partnership or
similar agreement involving a sharing of profits or losses relating to the
Company or any Company Subsidiary;
 
(xi) any contract or agreement involving annual payments in excess of $500,000
that cannot be cancelled by the Company or a Company Subsidiary without penalty
on not more than 90 days’ notice;
 
(xii) any material hedge, collar, option, forward purchasing, swap, derivative
or similar agreement, understanding or undertaking;
 
(xiii) any contract or agreement with respect to the employment or service of
any current or former directors, officers, employees or consultants of the
Company or any of the Company Subsidiaries other than, with respect to
non-executive employees and consultants, in the ordinary course of business;
 
(xiv) any contract or agreement containing any (x) non-competition or exclusive
dealing obligations or other obligation which purports to limit or restrict in
any respect the ability of the Company or any Company Subsidiary to solicit
customers or the manner in which, or the localities in which, all or any portion
of the business of the Company or the Company Subsidiaries is or can be
conducted, or (y) right of first refusal or right of first offer or similar
right or that limits or purports to limit the ability of the Company or any of
the Company Subsidiaries to own, operate, sell, transfer, pledge or otherwise
dispose of any material assets or business; and
 
(xv) any material contract or agreement that would require any consent or
approval of a counterparty as a result of the consummation of the transactions
contemplated by this Agreement.
 
Each Material Contract (A) is legal, valid and binding on the Company and the
Company Subsidiaries which are a party to such contract, (B) is in full force
and effect and enforceable in accordance with its terms and (C) will continue to
be legal, valid, binding, enforceable, and in full force and effect in all
material respects following the consummation of the transactions contemplated by
this Agreement. Neither the Company nor any of the Company Subsidiaries, nor to
the Knowledge of the Company, any other party thereto is in material violation
or default under any Material Contract.  No benefits under any Material Contract
will be increased, and no vesting of any benefits under any Material Contract
will be accelerated, by the occurrence of any of the transactions contemplated
by this Agreement, nor will the value of any of the benefits under any Material
Contract be calculated on the basis of any of the transactions contemplated by
this Agreement.  The Company and the Company Subsidiaries, and to the Knowledge
of the Company, each of the other parties thereto, have performed in all
material respects all material obligations required to be performed by them
under each Material Contract, and to the Knowledge of the Company, no event has
occurred that with notice or lapse of time would constitute a material breach or
default or permit termination, modification, or acceleration, under the Material
Contracts.
 
(s) Insurance. The Company and each of the Company Subsidiaries are presently
insured, and have been insured for at least the past two years, for reasonable
amounts with financially sound and reputable insurance companies against such
risks as companies engaged in a similar business would, in accordance with good
business practice, customarily be insured.  All of the policies, bonds and other
arrangements providing for the foregoing (the “Company Insurance Policies”) are
in full force and effect, the premiums due and payable thereon have been or will
be timely paid through the Closing Date, and there is no material breach or
default (and no condition exists or event has occurred that, with the giving of
notice or lapse of time or both, would constitute such a material breach or
default) by the Company or any of the Company Subsidiaries under any of the
Company Insurance Policies or, to the Knowledge of the Company, by any other
party to the Company Insurance Policies.  Neither the Company nor any of the
Company Subsidiaries has received any written notice of cancellation or
non-renewal of any Company Insurance Policy nor, to the Knowledge of the
Company, is the termination of any such policies threatened in writing by the
insurer, and there is no material claim for coverage by the Company, or any of
the Company Subsidiaries, pending under any of such Company Insurance Policies
as to which coverage has been denied or disputed by the underwriters of such
Company Insurance Policies or in respect of which such underwriters have
reserved their rights.
 
(t) Title. The Company and the Company Subsidiaries have good and marketable
title in fee simple to all real property owned by them and good and valid title
to all material personal property owned by them, in each case free and clear of
all Liens, except for Liens which do not materially affect the value of such
property or do not interfere with the use made and proposed to be made of such
property by the Company or any Company Subsidiary. Any real property and
facilities held under lease by the Company or the Company Subsidiaries are
valid, subsisting and enforceable leases with such exceptions that are not
material and do not interfere with the use made and proposed to be made of such
property and facilities by the Company or the Company Subsidiaries.
 
(u) Intellectual Property Rights. The Company and the Company Subsidiaries own
or possess adequate rights or licenses to use all trademarks, service marks and
all applications and registrations therefor, trade names, patents, patent
rights, copyrights, original works of authorship, inventions, trade secrets and
other intellectual property rights (“Intellectual Property Rights”) used in
their businesses as conducted on the date of this Agreement, except as would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect.  To the Knowledge of the Company, no product or service of the
Company or the Company Subsidiaries infringes the Intellectual Property Rights
of others, except as would not reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect. Except as would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect,
the Company and the Company Subsidiaries have not received notice of any claim
being made or brought, or, to the Knowledge of the Company, being threatened,
against the Company or any of the Company Subsidiaries regarding (i) their
Intellectual Property Rights, or (ii) that the products or services of the
Company or the Company Subsidiaries infringe the Intellectual Property Rights of
others. To the Knowledge of the Company, there are no facts or circumstances
that would reasonably be expected to give rise to any of the claims in the
preceding sentence.  The computers, computer software, firmware, middleware,
servers, workstations, routers, hubs, switches, data communications lines, and
all other information technology equipment, and all associated documentation
used in the business of the Company and the Company Subsidiaries operate and
perform in all material respects in accordance with their documentation and
functional specifications and otherwise as required in connection with the
business of the Company and the Company Subsidiaries. The Company and the
Company Subsidiaries have implemented reasonable backup and disaster recovery
technology consistent with industry practices. The Company and the Company
Subsidiaries take reasonable measures, directly or indirectly, to ensure the
confidentiality, privacy and security of customer, employee and other
confidential information.
 
(v) Employee Benefits.
 
(i) Section 2.2(v) of the Disclosure Schedule sets forth a correct and complete
list of each “employee benefit plan” (within the meaning of Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended (“ERISA”),
including, without limitation, multiemployer plans within the meaning of Section
3(37) of ERISA), and all stock purchase, stock option, severance, employment,
change-in-control, fringe benefit, bonus, incentive, deferred compensation and
all other employee benefit plans, agreements, programs, policies or other
arrangements, whether or not subject to ERISA (including any funding mechanism
therefor now in effect or required in the future as a result of the transactions
contemplated by this Agreement or otherwise), whether formal or informal, oral
or written, under which (A) any current or former employee or director of the
Company or any of the Company Subsidiaries (the “Company Employees”) has any
present or future right to benefits and which are contributed to, sponsored by
or maintained by the Company or any of the Company Subsidiaries or (B) the
Company or any Company Subsidiary has had or has any present or future
liability. All such plans, agreements, programs, policies and arrangements shall
be collectively referred to as the “Benefit Plans.”
 
(ii) With respect to each Benefit Plan, the Company has provided to the Investor
a current, correct and complete copy (or, to the extent no such copy exists, an
accurate description) thereof and, to the extent applicable: (A) any related
trust agreement or other funding instrument; (B) the most recent determination
letter, if applicable; (C) any summary plan description and other written
communications, other than individual pension benefit statements provided in
accordance with Section 105 of ERISA, (or a description of any oral
communications) by the Company and the Company Subsidiaries to the Company
Employees or other beneficiaries concerning the extent of the benefits provided
under a Benefit Plan; (D) a summary of any proposed material amendments or
material changes anticipated to be made to the Benefit Plans at any time within
the twelve months immediately following the date hereof; and (E) for the three
most recent years (x) the Form 5500 and attached schedules, (y) audited
financial statements and (z) actuarial valuation reports.
 
(iii) (A) Each Benefit Plan has been established and administered in all
material respects in accordance with its terms, and in compliance with the
applicable provisions of ERISA, the Code and other Laws; (B) each Benefit Plan
which is intended to be qualified within the meaning of Section 401(a) of the
Code has received a favorable determination letter as to its qualification, and
nothing has occurred, whether by action or failure to act, that could reasonably
be expected to cause the loss of such qualification; (C) no “reportable event”
(as such term is defined in Section 4043 of ERISA) that could reasonably be
expected to result in liability has occurred with respect to any Benefit Plan,
no non-exempt “prohibited transaction” (as such term is defined in Section 406
of ERISA and Section 4975 of the Code) has been engaged in by the Company or any
Company Subsidiary with respect to any Benefit Plan that has or is expected to
result in any material liability or “accumulated funding deficiency” (as such
term is defined in Section 302 of ERISA and Section 412 of the Code (whether or
not waived)) has occurred with respect to any Benefit Plan; no liability under
Subtitle C or D of Title IV of ERISA has been or is expected to be incurred by
the Company or any Company Subsidiary with respect to any ongoing, frozen or
terminated “single-employer plan,” within the meaning of Section 4001(a)(15) of
ERISA, currently or formerly maintained by any of them, or the single-employer
plan of any entity which is considered one employer with the Company under
Section 4001 of ERISA or Section 414 of the Code; (D) there does not now exist,
nor do any circumstances exist that would reasonably be expected to result in,
any Controlled Group Liability that would be a liability of the Company or any
Company Subsidiary; (E) for each Benefit Plan with respect to which a Form 5500
has been filed, no material change has occurred with respect to the matters
covered by the most recent Form 5500 since the end of the period covered by such
Form 5500; (F) except as expressly contemplated by this Agreement, there is no
present intention that any Benefit Plan be materially amended, suspended or
terminated, or otherwise modified to change benefits (or the levels thereof) in
a manner that results in an increased cost to the Company or any Company
Subsidiary (other than an immaterial increase in administrative costs)  under
any Benefit Plan at any time within the twelve months immediately following the
date hereof; and (G) the Company and the Company Subsidiaries have not incurred
any current or projected liability in respect of post-employment or
post-retirement health, medical or life insurance benefits for current, former
or retired employees of the Company or the Company Subsidiaries, except as
required to avoid an excise tax under Section 4980B of the Code or otherwise
except as may be required pursuant to any other Laws.
 
(iv) With respect to each of the Benefit Plans that is not a multiemployer plan
within the meaning of Section 4001(a)(iii) of ERISA but is subject to Title IV
of ERISA, as of the Closing Date, the assets of each such Benefit Plan are at
least equal in value to the present value of the accrued benefits (vested and
unvested) of the participants in such Benefit Plan on a termination and
projected benefit obligation basis, based on the actuarial methods and
assumptions indicated in the most recent applicable actuarial valuation reports.
 
(v) No Benefit Plan is a “multiemployer plan” within the meaning of Section
4001(a)(iii) of ERISA) or a plan that has two or more contributing sponsors, at
least two of whom are not under common control, within the meaning of Section
4063 of ERISA.  Neither the Company nor any member of any organization which is
a member of a controlled group of organizations within the meaning of
Section 414(b), (c), (m) or (o) of the Code has at any time sponsored or
contributed to, or has or had any liability or obligation in respect of, any
multiemployer plan.
 
(vi) With respect to any Benefit Plan, (A) no material actions, suits or claims
(other than routine claims for benefits in the ordinary course) are pending or,
to the Knowledge of the Company, threatened, (B) no facts or circumstances exist
that could give rise to any such actions, suits or claims, (C) no written or
oral communication has been received from the Pension Benefit Guaranty
Corporation (the “PBGC”) in respect of any Benefit Plan subject to Title IV of
ERISA concerning the funded status of any such plan or any transfer of assets
and liabilities from any such plan in connection with the transactions
contemplated herein and (D) no administrative investigation, audit or other
administrative proceeding by the Department of Labor, the PBGC, the Internal
Revenue Service or other governmental agencies are pending, threatened or in
progress (including, without limitation, any routine requests for information
from the PBGC).  With respect to each Benefit Plan that is subject to Title IV
or Section 302 of ERISA or Section 412, 430 or 4971 of the Code: (i) no Benefit
Plan has failed to satisfy minimum funding standards (within the meaning of
Section 412 or 430 of the Code or Section 302 of ERISA), whether or not waived;
and (ii) there has been no determination that any Benefit Plan is, or is
expected to be, in “at risk” status (within the meaning of Section 430 of the
Code or Section 303 of ERISA).
 
(vii) Neither the execution and delivery of this Agreement, nor the consummation
of the transactions contemplated hereby, taking into account any other related
event, including the Other Private Placements, could (A) result in any payment
(including severance, unemployment compensation or “excess parachute payment”
(within the meaning of Section 280G of the Code), forgiveness of indebtedness or
otherwise) becoming due to any current or former employee, officer or director
of the Company or any Company Subsidiaries from the Company or any of the
Company Subsidiaries under any Benefit Plan or otherwise, (B) increase any
compensation or benefits otherwise payable under any Benefit Plan, (C) result in
any acceleration of the time of payment or vesting of any such benefits, (D)
require the funding or increase in the funding of any such benefits (through a
grantor trust or otherwise), (E) result in any limitation on the right of the
Company or any of the Company Subsidiaries to (1) amend, merge or terminate any
Benefit Plan or related trust or (2) receive a reversion of assets from any
Benefit Plan or related trust, or (F) result in payments under any of the
Benefit Plans or otherwise which would not be deductible under Section 280G of
the Code. Neither the Company nor any of the Company Subsidiaries have taken, or
permitted to be taken, any action that required, and no circumstances exist that
will require, the funding, or the increase in the funding, of any benefits or
resulted, or will result, in any limitation on the right of the Company or any
of the Company Subsidiaries to amend, merge, terminate or receive a reversion of
assets from any Benefit Plan or related trust.
 
(viii) Each Benefit Plan that is in any part a “nonqualified deferred
compensation plan” subject to Section 409A of the Code (A) materially complies
and, at all times after December 31, 2008 has materially complied, both in form
and operation, with the requirements of Section 409A of the Code and the final
regulations thereunder and (B) between January 1, 2005 and December 31, 2008 was
operated in good faith compliance with Section 409A of the Code, as determined
under applicable guidance of the Treasury and the Internal Revenue Service. No
compensation payable by the Company or any of the Company Subsidiaries has been
reportable as nonqualified deferred compensation in the gross income of any
individual or entity as a result of the operation of Section 409A of the Code.
 
(ix) The Company and the Company Subsidiaries will be in compliance, as of the
Closing Date, with Sections 111 and 302 of the Emergency Economic Stabilization
Act of 2008, as amended by the U.S. American Recovery and Reinvestment Act of
2009, including all guidance issued thereunder by a Governmental Entity
(collectively “EESA”).
 
(w) Environmental Laws. The Company and the Company Subsidiaries (i) are in
compliance with any and all Environmental Laws, (ii) have received all permits,
licenses or other approvals required of it under applicable Environmental Laws
to conduct their business, (iii) are in compliance with all terms and conditions
of any such permit, license or approval, (iv) have not owned or operated any
property that has been contaminated with any Hazardous Substance that would
reasonably be expected to result in liability pursuant to any Environmental Law,
(v) to the Knowledge of the Company, are not liable for Hazardous Substance
disposal or contamination on any third party property, (vi) have received any
notice, demand, letter, claim or request for information indicating that it may
be in violation of or subject to liability under any Environmental Law and (vii)
are not subject to any circumstances or conditions that could reasonably be
expected to result in any claims, liability, investigations, costs or
restrictions on the ownership, use or transfer of any property in connection
with any Environmental Law, except where, in each of the foregoing clauses, the
failure to so comply would reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect.
 
(x) Taxes.  All material Tax Returns required to be filed by, or on behalf of,
Company or the Company Subsidiaries have been timely filed, or will be timely
filed, in accordance with all Laws, and all such Tax Returns are, or shall be at
the time of filing, complete and correct in all material respects. The Company
and the Company Subsidiaries have timely paid all material Taxes due and payable
(whether or not shown on such Tax Returns), or, where payment is not yet due,
have made adequate provisions in accordance with GAAP. There are no Liens with
respect to Taxes upon any of the assets or properties of either the Company or
the Company Subsidiaries other than with respect to Taxes not yet due and
payable.
 
(y) Labor.
 
(i) Employees of the Company and the Company Subsidiaries are not represented by
any labor union nor are any collective bargaining agreements otherwise in effect
with respect to such employees. No labor organization or group of employees of
the Company or any Company Subsidiary has made a pending demand for recognition
or certification, and there are no representation or certification proceedings
or petitions seeking a representation proceeding presently pending or threatened
to be brought or filed with the National Labor Relations Board or any other
labor relations tribunal or authority, nor have there been in the last three
years. There are no strikes, work stoppages, slowdowns, labor picketing
lockouts, material arbitrations or material grievances, or other material labor
disputes pending or, to the Knowledge of the Company, threatened against or
involving the Company or any Company Subsidiary, nor have there been any in the
past year.
 
(ii) Except as would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect, the Company and the Company Subsidiaries
are in compliance with all federal and state Laws and requirements respecting
employment and employment practices, terms and conditions of employment,
collective bargaining, disability, immigration, health and safety, wages, hours
and benefits, non-discrimination in employment, workers’ compensation and the
collection and payment of withholding and/or payroll taxes and similar taxes.
 
(iii) Except as would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect, there is no charge or complaint pending or
threatened before any Governmental Entity alleging unlawful discrimination in
employment practices, unfair labor practices or other unlawful employment
practices by the Company or any Company Subsidiary.
 
(z) Brokers and Finders. Except for Sandler O’Neill & Partners, L.P. (“Placement
Agent”) and the fees payable thereto (which fees are to be paid by the Company),
neither the Company nor any of its officers, directors, employees or agents has
employed any broker or finder or incurred any liability for any financial
advisory fees, brokerage fees, commissions or finder’s fees, and no broker or
finder has acted directly or indirectly for the Company in connection with this
Agreement or the transactions contemplated hereby. A copy of the Company’s
agreement with Sandler O’Neill & Partners, L.P. has been made available to the
Investor.
 
(aa) Loan Portfolio. As of the date of this Agreement, the characteristics of
the loan portfolio of the Company have not materially and adversely changed from
the characteristics of the loan portfolio as of September 30, 2010.
 
(bb) Offering of Securities. Neither the Company nor any Person acting on its
behalf has taken any action (including any offering of any securities of the
Company under circumstances which would require the integration of such offering
with the offering of any of the Common Shares to be issued pursuant to this
Agreement under the Securities Act and the rules and regulations of the SEC
promulgated thereunder) which would subject the offering, issuance or sale of
any of such securities to the registration requirements of the Securities Act.
Neither the Company nor any Person acting on its behalf has engaged or will
engage in any form of general solicitation or general advertising (within the
meaning of Regulation D under the Securities Act) in connection with any offer
or sale of the Common Shares pursuant to the transactions contemplated by this
Agreement.  Assuming the accuracy of the Investor’s representations and
warranties set forth in this Agreement, no registration under the Securities Act
is required for the offer and sale of the Common Shares by the Company to the
Investor.
 
(cc) Investment Company Status. The Company is not, and upon consummation of the
transactions contemplated by this Agreement will not be, an “investment
company,” a company controlled by an “investment company” or an “affiliated
Person” of, or “promoter” or “principal underwriter” of, an “investment
company,” as such terms are defined in the Investment Company Act of 1940, as
amended.
 
(dd) Affiliate Transactions. No officer, director, five percent (5%) shareholder
or other Affiliate of the Company (or any Company Subsidiary), or any individual
who, to the Knowledge of the Company, is related by marriage or adoption to or
shares the same home as any such Person, or any entity which, to the Knowledge
of the Company, is controlled by any such Person (collectively, an “Insider”),
is a party to any contract or transaction with the Company (or any Company
Subsidiary) which pertains to the business of the Company (or any Company
Subsidiary) or has any interest in any property, real or personal or mixed,
tangible or intangible, used in or pertaining to the business of the Company (or
any Company Subsidiary). The foregoing representation and warranty does not
cover deposits at the Company (or any Company Subsidiary) or loans of $250,000
or less made in the ordinary course of business in compliance with Regulation O
and other applicable Law.
 
(ee) Anti-takeover Provisions Not Applicable. The Board of Directors has taken
all necessary action to ensure that the transactions contemplated by this
Agreement and the consummation of the transactions contemplated hereby will be
exempt from any anti-takeover or similar provisions of the Company’s articles of
incorporation and bylaws, and any other provisions of any applicable
“moratorium”, “control share”, “fair price”, “interested shareholder” or other
anti-takeover Laws and regulations of any jurisdiction.
 
(ff) Issuance of the Common Shares. The issuance of the Common Shares in
connection with the transactions contemplated by this Agreement has been duly
authorized and such Common Shares, when issued and paid for in accordance with
the terms of this Agreement, will be duly and validly issued, fully paid and
nonassessable and free and clear of all Liens, other than restrictions on
transfer imposed by applicable securities Laws, and shall not be subject to
preemptive or similar rights.
 
2.3 Representations and Warranties of the Investor. Except as Previously
Disclosed, the Investor hereby represents and warrants to the Company, as of the
date hereof and as of the Closing Date (except for the representations and
warranties that are as of a specific date which shall be made as of that date)
that:
 
(a) Organization and Authority. The Investor is duly organized, validly existing
and in good standing under the laws of the jurisdiction of its organization, is
duly qualified to do business and is in good standing in all jurisdictions where
its ownership or leasing of property or the conduct of its business requires it
to be so qualified and where failure to be so qualified would be reasonably
expected to materially and adversely impair or delay its ability to perform its
obligations under this Agreement or to consummate the transactions contemplated
hereby.
 
(b) Authorization; No Conflicts.
 
(i) The Investor has the necessary power and authority to execute and deliver
this Agreement and to perform its obligations hereunder. The execution, delivery
and performance of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by its board of directors, general
partner or managing members, investment committee, investment adviser or other
authorized person, as the case may be, and no further approval or authorization
by any of its shareholders, partners or other equity owners, as the case may be,
is required. This Agreement has been duly and validly executed and delivered by
the Investor and, assuming due authorization, execution and delivery by the
Company is the valid and binding obligation of the Investor enforceable against
the Investor in accordance with its terms (except as enforcement may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer and similar laws of general applicability relating to or affecting
creditors’ rights or by general equity principles).
 
(ii) Neither the execution, delivery and performance by the Investor of this
Agreement nor the consummation of the transactions contemplated hereby, nor
compliance by the Investor with any of the provisions hereof, will (A) violate,
conflict with, or result in a breach of any provision of, or constitute a
default (or an event which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination of, or accelerate the
performance required by, or result in a right of termination or acceleration of,
or result in the creation of any Liens upon any of the properties or assets of
the Investor under any of the terms, conditions or provisions of (1) its
articles of incorporation or bylaws, its certificate of limited partnership or
partnership agreement or its similar governing documents or (2) any note, bond,
mortgage, indenture, deed of trust, license, lease, agreement or other
instrument or obligation to which the Investor is a party or by which the
Investor may be bound, or to which the Investor or any of the properties or
assets of the Investor may be subject, or (B) violate any Law applicable to the
Investor or any of its properties or assets except in the case of clauses (A)(2)
and (B) for such violations, conflicts and breaches as would not reasonably be
expected to materially adversely affect the Investor’s ability to perform its
obligations under this Agreement or consummate the transactions contemplated
hereby on a timely basis.
 
(c) Governmental Consents. No Governmental Consents are necessary for the
execution and delivery of this Agreement or for the purchase by the Investor of
the Common Shares pursuant to this Agreement.
 
(d) Purchase for Investment. The Investor acknowledges that the Common Shares
have not been registered under the Securities Act or under any state securities
laws. The Investor (i) is acquiring the Common Shares pursuant to an exemption
from registration under the Securities Act and other applicable securities laws
solely for investment with no present intention to distribute any of the Common
Shares to any Person, (ii) will not sell or otherwise dispose of any of the
Common Shares, except in compliance with the registration requirements or
exemption provisions of the Securities Act and any other applicable securities
laws, (iii) has such knowledge and experience in financial and business matters
and in investments of this type that it is capable of evaluating the merits and
risks of its investment in the Common Shares and of making an informed
investment decision and (iv) is an “accredited investor” (as that term is
defined by Rule 501 of the Securities Act).
 
(e) Brokers and Finders. Neither the Investor, nor its respective Affiliates nor
any of their respective officers or directors has employed any broker or finder
or incurred any liability for any financial advisory fees, brokerage fees,
commissions or finder’s fees, and no broker or finder has acted directly or
indirectly for the Investor in connection with this Agreement or the
transactions contemplated hereby. The Investor acknowledges that it is
purchasing the Common Shares directly from the Company and not from the
Placement Agent.
 
(f) Investment Decision. The Investor, or the duly appointed investment manager
to the Investor (the “Investment Manager”), if applicable, has independently
evaluated the merits of its decision to purchase the Common Shares pursuant to
this Agreement, and the Investor confirms that neither it, nor its Investment
Manager (if applicable), has relied on the advice of any other person’s business
and/or legal counsel in making such decision. The Investor understands that
nothing in this Agreement or any other materials presented by or on behalf of
the Company to the Investor in connection with the purchase of the Common Shares
constitutes legal, tax or investment advice. The Investor has consulted such
accounting, legal, tax and investment advisors as it has deemed necessary or
appropriate in connection with its purchase of the Common Shares. The Investor
understands that the Placement Agent has acted solely as the agent of the
Company in this placement of the Common Shares and the Investor has not relied
on the business or legal advice of the Placement Agent or any of its agents,
counsel or Affiliates in making its investment decision hereunder, and confirms
that none of such persons has made any representations or warranties to the
Investor in connection with the transactions contemplated by this Agreement.
Except as Previously Disclosed and except for this Agreement, there are no
agreements or understandings with respect to the transactions contemplated by
this Agreement between the Investor or any of its Affiliates, on the one hand,
and (i) any of the Other Investors or any of their respective Affiliates,
(ii) the Company or (iii) the Company Subsidiaries, on the other hand.
 
(g) Financial Capability. At the Closing, the Investor shall have available
funds necessary to consummate the Closing on the terms and conditions
contemplated by this Agreement.
 
(h) Ownership. Giving effect to the Investment, the Other Private Placements and
the TARP Exchange and assuming the Company has not and will not have repurchased
any Common Shares since the Capitalization Date, as of the Closing Date, the
Investor, together with its "Affiliates" (as such term is defined in the Rights
Plan), will not be a “Threshold Holder" pursuant to the Tax Benefits
Preservation Plan adopted by the Company on November 23, 2010 (the “Rights
Plan”), for the avoidance of doubt taking into account (i) any formal or
informal understanding with any Other Investor to acquire Common Stock that
would cause the Investor and such other person to be treated as an “entity”
described in Treasury Regulations Section 1.382-3(a) and (ii) any direct or
indirect investment in any Other Investor.
 
(i) Access to Information. The Investor acknowledges that it has been afforded
(i) the opportunity to ask such questions as it has deemed necessary of, and to
receive answers from, representatives of the Company concerning the terms and
conditions of the offering of the Common Shares and the merits and risks of
investing in the Common Shares; (ii) access to information about the Company and
the Company Subsidiaries and their respective financial condition, results of
operations, business, properties, management and prospects sufficient to enable
it to evaluate its investment; (iii) the opportunity to obtain such additional
information that the Company possesses or can acquire without unreasonable
effort or expense that is necessary to make an informed investment decision with
respect to the Investment; and (iv) the opportunity to ask questions of
management.
 
(j) No Reliance. The Investor has not relied on any representation or warranty
in connection with the Investment other than those contained in this Agreement.
 
(k) No Coordinated Acquisition. The Investor (i) is not affiliated with Carlyle
or Anchorage (for purposes of this section only, a “Lead Investor”),
(ii) reached its decision to invest in the Common Shares independently from any
Lead Investor and any other Person known by the Investor to be a potential
investor in the Company, other than any Affiliates of the Investor that are also
investing in the Other Private Placements (any such person, a “Potential
Investor”), (iii) is not advised or managed by an advisor or manager that
advises or manages any Lead Investor or any other Potential Investor, other than
any Affiliates of the Investor that are also investing in the Other Private
Placements, (iv) has not entered into any agreement or understanding with any
Lead Investor or any other Potential Investor to act in concert for the purpose
of exercising a controlling influence over the Company or any Company
Subsidiaries, including, but not limited to, any agreements or understandings
regarding the voting or transfer of shares of the Company, (v) has not shared
due diligence materials prepared by such Investor or any of its advisors or
representatives with respect to the Company or any Company Subsidiaries with any
Lead Investor or any other Potential Investor, (vi) has not been induced, nor
has induced any Lead Investor or any other Potential Investor, to enter into the
transactions contemplated by this Agreement by any Lead Investor or any other
Potential Investor, (vii) was not notified of or provided the opportunity to
enter into the transactions contemplated by this Agreement pursuant to the
terms of any agreement or informal understanding with any Lead Investor or any
other Potential Investor and was not required by the terms of any agreement or
informal understanding to so notify any Lead Investor or other Potential
Investor, (viii) is not a party to any formal or informal understanding with any
Lead Investor or other Potential Investor to make a coordinated acquisition of
stock of the Company, and the investment decision of the Investor is not based
on the investment decision of any Lead Investor or any other Potential Investor,
(ix) is not a party to any formal or informal agreement or understanding
concerning the appointment of any individual to the Board of Directors, (x) will
not, by reason of the Investment, file, be required to file, or be required to
be included in a Schedule 13D or Schedule 13G pursuant to the United States
federal securities laws, (xi) has not engaged as part of a group consisting of
substantially the same entities as the Potential Investors, in substantially the
same combination of interests, in any additional banking or nonbanking
activities or business ventures in the United States and (xii) will not pay any
Lead Investor or any other Potential Investor any fee in connection with the
transactions contemplated hereby. The Investor does not presently hold any
capital stock of the Company.
 
(l) Offering of Securities.  The Investor was not contacted by means of any
general solicitation or general advertising (within the meaning of Regulation D
under the Securities Act) in connection with the offer and sale of the Common
Shares to be purchased pursuant to this Agreement.
 
ARTICLE 3

 
COVENANTS
 
3.1 Conduct of Business Prior to Closing. Except as otherwise expressly required
by this Agreement or applicable Law or by the performance of any Material
Contract that was Previously Disclosed, or with the prior written consent of the
Investor, between the date of this Agreement and the Closing, the Company shall,
and the Company shall cause each Company Subsidiary to:
 
(a) use commercially reasonable efforts to conduct its business only in the
ordinary course of business; and
 
(b) use commercially reasonable efforts to (i) preserve the present business
operations, organization (including officers and employees) and goodwill of the
Company and any Company Subsidiary and (ii) preserve business relationships with
customers, suppliers, consultants and others having business dealings with the
Company; provided, however, that nothing in this clause (b) shall limit or
require any actions that the Board of Directors may, in good faith, determine to
be inconsistent with their duties or the Company’s obligations under applicable
Law or imposed by any Governmental Entity.
 
3.2 Confidentiality. The Investor acknowledges that the information being
provided to it in connection with the transactions contemplated hereby is
subject to the terms of the Confidentiality Agreement heretofore entered into
between the Investor and the Company (the “Confidentiality Agreement”), the
terms of which are incorporated herein by reference.
 
3.3 Avoidance of Control.
 
(a) Notwithstanding anything to the contrary in this Agreement, neither the
Company nor any Company Subsidiary shall take any action (including any
redemption, repurchase, or recapitalization of Common Stock, or securities or
rights, options or warrants to purchase Common Stock, or securities of any type
whatsoever that are, or may become, convertible into or exchangeable into or
exercisable for Common Stock in each case, where the Investor is not given the
right to participate in such redemption, repurchase or recapitalization to the
extent of the Investor’s pro rata proportion), that would cause the Investor’s
ownership of Voting Securities (together with the ownership by the Investor’s
Affiliates (as such term is used under the BHC Act) of Voting Securities) to
increase to an amount that would constitute “control” under the BHC Act, or
otherwise cause the Investor to “control” the Company under and for purposes of
the BHC Act; provided, however, that the Company shall not be deemed to have
violated this Section 3.3(a) if it has given the Investor the opportunity to
participate in such redemption, repurchase or recapitalization to the extent of
the Investor’s pro rata proportion on the same terms as the other participants
in such redemption, repurchase or recapitalization and the Investor fails to so
participate.
 
(b) In the event that the Company breaches its obligations under this
Section 3.3 or believes that it is reasonably likely to breach such obligations,
it shall notify the Investor as promptly as practicable and shall cooperate in
good faith with the Investor to modify any ownership or other arrangements or
take any other action, in each case, as is necessary to cure or avoid such
breach.
 
3.4 Commercially Reasonable Efforts. Upon the terms and subject to the
conditions herein provided, except as otherwise provided in this Agreement, each
of the parties hereto agrees to use its commercially reasonable efforts to take
or cause to be taken all action, to do or cause to be done and to assist and
cooperate with the other parties hereto in doing all things necessary, proper or
advisable under Laws to consummate and make effective the transactions
contemplated hereby, including but not limited to: (a) the satisfaction of the
conditions precedent to the obligations of the parties hereto; (b) the obtaining
of applicable Governmental Consents, and consents, waivers and approvals of any
third parties; (c) the defending of any claim, action, suit, investigation or
proceeding, whether judicial or administrative, challenging this Agreement or
the performance of the obligations hereunder; and (d) the execution and delivery
of such instruments, and the taking of such other actions as the other parties
hereto may reasonably request in order to carry out the intent of this
Agreement. Notwithstanding the foregoing, under no circumstances will the
Investor be required to disclose to the Company, the Company Subsidiaries or any
third party any information pertaining to the Investor’s beneficial owners or
any information the disclosure of which is prohibited by Law.
 
3.5 Preemptive Rights.
 
(a) Sale of New Securities.  After the Closing, until the earlier of (x) the
date on which the Investor no longer owns, in the aggregate with its Affiliates,
one and one-half percent (1.5%) of the outstanding Common Shares (as adjusted
from time to time for any reorganization, recapitalization, stock dividend,
stock split, reverse stock split, or other like changes in the Company’s
capitalization) (before giving effect to any issuances triggering provisions of
this Section 3.5) and (y) the second anniversary of the Closing Date, at any
time that the Company proposes to make any public or nonpublic offering or sale
of any equity (including Common Stock, preferred stock or restricted stock), or
any securities, options or debt that is convertible or exchangeable into equity
or that includes an equity component (such as an “equity” kicker) (including any
hybrid security) (any such security, a “New Security”) (other than the issuance
and sale of securities (i) in connection with the Rights Offering; (ii) upon
conversion of convertible securities issued in compliance with this Section 3.5,
(iii) to employees, officers, directors or consultants of the Company pursuant
to employee benefit plans or compensatory arrangements approved by the Board of
Directors (including upon the exercise of employee stock options granted
pursuant to any such plans or arrangements), (iv) pursuant to any rights plan or
(v) as consideration in connection with any bona fide, arm’s-length, direct or
indirect merger, acquisition or similar transaction or joint venture, strategic
alliance, license agreement or other similar commercial transactions) the
Investor shall first be afforded the opportunity to acquire from the Company for
the same price (net of any underwriting discounts or sales commissions) and on
the same terms as such securities are proposed to be offered to others, up to
the amount of such New Securities to be offered in the aggregate required to
enable it to maintain its proportionate equivalent interest in the Common Stock
immediately prior to any such issuance of New Securities.  The New Securities
that the Investor shall be entitled to purchase in the aggregate shall be
determined by multiplying (x) the total number or principal amount of such
offered New Securities by (y) a fraction, the numerator of which is the number
of Common Shares held by the Investor and the denominator of which is the number
of shares of Common Stock then outstanding.
 
(b) Notice.  In the event the Company proposes to offer or sell New Securities
that are subject to the Investor’s rights under Section 3.5(a), it shall give
the Investor written notice of its intention, specifying the price (or range of
prices), anticipated amount of securities, timing and other terms upon which the
Company proposes to offer the same (including, in the case of a registered
public offering and to the extent possible, a copy of the prospectus included in
the registration statement filed with respect to such offering), at least ten
(10) Business Days prior to the proposed offer, issuance or sale.  The Investor
shall have five (5) Business Days from the date of receipt of such a notice to
notify the Company in writing that it intends to exercise its rights provided in
this Section 3.5 and as to the amount of New Securities the Investor desires to
purchase, up to the maximum amount calculated pursuant to Section 3.5(a).  Such
notice shall constitute a nonbinding agreement of the Investor to purchase the
amount of New Securities so specified at the price and other terms set forth in
the Company’s notice to it.  The failure of the Investor to respond within such
five (5) Business Day period shall be deemed to be a waiver of the Investor’s
rights under this Section 3.5 only with respect to the offering described in the
applicable notice.
 
(c) Purchase Mechanism.  If the Investor exercises its rights provided in this
Section 3.5, the closing of the purchase of the New Securities with respect to
which such right has been exercised shall take place within thirty (30) days
after the giving of notice of such exercise; provided that, if such issuance is
subject to regulatory approval, such thirty (30)-day period shall be extended
until the expiration of ten (10) Business Days after all such approvals have
been received, but in no event later than 90 days from the date of the Company’s
initial notice pursuant to Section 3.5(b).  Each of the Company and the Investor
agrees to use commercially reasonable efforts to secure any regulatory or
shareholder approvals or other consents, and to comply with any Law necessary in
connection with the offer, sale and purchase of such New Securities.
 
(d) Failure of Purchase.  In the event the Investor fails to exercise its rights
provided in this Section 3.5 within the five (5) Business Day period described
in Section 3.5(b) or, if so exercised, the Investor is unable to consummate such
purchase within the time period specified in Section 3.5(c) because of its
failure to obtain any required regulatory or shareholder consent or approval,
the Company shall thereafter be entitled (during the period of 120 days
following the conclusion of the applicable period) to sell or enter into an
agreement (pursuant to which the sale of the New Securities covered thereby
shall be consummated, if at all, within 120 days from the date of said
agreement) to sell the New Securities not elected to be purchased pursuant to
this Section 3.5 or that the Investor is unable to purchase because of such
failure to obtain any such consent or approval, at a price and upon terms, taken
together in the aggregate, no more materially favorable to the purchasers of
such New Securities than were specified in the Company’s notice to the
Investor.  Notwithstanding the foregoing, if such sale is subject to the receipt
of any regulatory or shareholder approval or consent or the expiration of any
waiting period, the time period during which such sale may be consummated shall
be extended until the expiration of ten (10) Business Days after all such
approvals or consents have been obtained or waiting periods expired, but in no
event shall such time period exceed 150 days from the date of the applicable
agreement with respect to such sale.  In the event the Company has not sold the
New Securities or entered into an agreement to sell the New Securities within
said 120-day period (or sold and issued New Securities in accordance with the
foregoing within 120 days from the date of said agreement (as such period may be
extended in the manner described above for a period not to exceed 150 days from
the date of said agreement)), the Company shall not thereafter offer, issue or
sell such New Securities without first offering such securities to the Investor
in the manner provided above.
 
(e) Non-Cash Consideration.  In the case of the offering of securities for
consideration in whole or in part other than cash, including securities acquired
in exchange therefor (other than securities by their terms so exchangeable), the
consideration other than cash shall be deemed to be the fair value thereof as
determined by the Board of Directors; provided, however, that such fair value as
reasonably determined by the Board of Directors shall not exceed the aggregate
market price of the securities being offered as of the date the Board of
Directors authorizes the offering of such securities.
 
(f) Cooperation.  The Company and the Investor shall cooperate in good faith to
facilitate the exercise of the Investor’s rights under this Section 3.5,
including securing any required approvals or consents.
 
3.6 Most Favored Nation. The Company shall not offer any investors in the Other
Private Placements, or any other capital raising transaction occurring at the
same time as the transactions contemplated by this Agreement (excluding the
Carlyle Investment and the Anchorage Investment), terms more favorable, in form
or substance, than those offered in connection with the Investment, unless the
Investor is also provided with such terms.
 
3.7 Transfer Taxes. On the Closing Date, all stock transfer or other taxes
(other than income or similar taxes) that are required to be paid in connection
with the sale and transfer of the Common Shares to be sold to the Investor
hereunder will be, or will have been, fully paid or provided for by the Company,
and all Laws imposing such taxes will be or will have been complied with.
 
3.8 Legend.
 
(a) The Investor agrees that all certificates or other instruments representing
the Common Shares subject to this Agreement shall bear a legend substantially to
the following effect, until such time as they are not required under Section
3.8(b):
 
“THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR SECURITIES LAWS OF ANY STATE AND MAY
NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT WHILE A REGISTRATION
STATEMENT RELATING THERETO IS IN EFFECT UNDER SUCH ACT AND APPLICABLE STATE
SECURITIES LAWS OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT OR
SUCH LAWS.”
 
(b) Upon request of the Investor, the Company shall promptly cause such legend
to be removed from any certificate for any Common Shares to be so transferred if
(i) such Common Shares are being transferred pursuant to a registration
statement in effect thereto or (ii) such Common Shares are being transferred
pursuant to an exemption from registration under the Securities Act and
applicable state laws subject to receipt by the Company of an opinion of counsel
for the Investor reasonably satisfactory to the Company to the effect that such
legend is no longer required under the Securities Act and applicable state
laws.  The Investor acknowledges that the Common Shares have not been registered
under the Securities Act or under any state securities laws and agrees that it
shall not sell or otherwise dispose of any of the Common Shares, except in
compliance with the registration requirements or exemption provisions of the
Securities Act and any other applicable securities laws.
 
3.9 Reverse Stock Split. No later than the Closing Date, the Company shall file
an amendment to its articles of incorporation to effect the Reverse Stock Split,
for which shareholder approval was obtained on May 24, 2010.
 
3.10 Certain Other Transactions.
 
(a) Prior to the Closing, notwithstanding anything in this Agreement to the
contrary, the Company shall not directly or indirectly effect or cause to be
effected any transaction with a third party that would reasonably be expected to
result in a Change in Control unless such third party shall have provided prior
assurance in writing to the Investor (in a form that is reasonably satisfactory
to the Investor) that the terms of this Agreement shall be fully performed (i)
by the Company or (ii) by such third party if it is the successor of the Company
or if the Company is its direct or indirect Subsidiary. For the avoidance of
doubt, it is understood and agreed that, in the event that a Change in Control
occurs on or prior to the Closing, the Investor shall maintain the right under
this Agreement to acquire, pursuant to the terms and conditions of this
Agreement, the Common Shares (or such other securities or property (including
cash) into which the Common Shares may have become exchangeable as a result of
such Change in Control), as if the Closing had occurred immediately prior to
such Change in Control.
 
(b) In the event that, at or prior to the Closing, (i) the number of shares of
Common Stock or securities convertible or exchangeable into or exercisable for
shares of Common Stock issued and outstanding is changed as a result of any
reclassification, stock split (including reverse split), stock dividend or
distribution (including any dividend or distribution of securities convertible
or exchangeable into or exercisable for shares of Common Stock), merger, tender
or exchange offer or other similar transaction, including the Reverse Stock
Split, or (ii) the Company fixes a record date that is at or prior to the
Closing Date for the payment of any non-stock dividend or distribution on the
Common Stock, then the number of Common Shares to be issued to the Investor at
the Closing under this Agreement, together with the applicable implied per share
price (and the number of shares and per share price pursuant to the Rights
Offering), shall be equitably adjusted and/or the shares of Common Stock to be
issued to the Investor at the applicable Closing under this Agreement shall be
equitably substituted with shares of other stock or securities or property
(including cash), in each case, to provide the Investor with substantially the
same economic benefit from this Agreement as the Investor had prior to the
applicable transaction. Notwithstanding anything in this Agreement to the
contrary, in no event shall the Purchase Price or any component thereof, or the
aggregate percentage of shares to be purchased by the Investor, be changed by
the foregoing.
 
(c) Notwithstanding anything in the foregoing, the provisions of this
Section 3.10 shall not be implicated by (i) the transactions contemplated by
this Agreement, the Other Private Placements and the TARP Exchange (other than
the Reverse Stock Split and related matters) or (ii) any issuances of options,
restricted stock units or other equity-based awards granted to newly-appointed
directors, employees or consultants of the Company at or around the same time as
the transactions contemplated by this Agreement to such Persons, including upon
exercise of any such options.
 
3.11 Exchange Listing. The Company shall use its reasonable best efforts to
cause the Common Shares to be issued pursuant to this Agreement to be approved
for listing on the NYSE or such other market on which the Common Shares are then
listed or quoted, subject to official notice of issuance, as promptly as
possible and in any event prior to the Closing.
 
3.12 Registration Rights.
 
(a) Registration.
 
(i) Subject to the terms and conditions of this Agreement, the Company covenants
and agrees that as promptly as practicable after (and in any event no more than
thirty (30) days after) the Closing Date (the “Filing Deadline”), the Company
shall have prepared and filed with the SEC one or more Shelf Registration
Statements covering the resale of all of the Registrable Securities (or, if
permitted by the rules of the SEC, otherwise designated an existing Shelf
Registration Statement filed with the SEC to cover such Registrable Securities),
and, to the extent the Shelf Registration Statement has not theretofore been
declared effective or is not automatically effective upon such filing, the
Company shall use reasonable best efforts to cause such Shelf Registration
Statement to be declared or become effective as soon as practicable (and in any
event no later than the Effectiveness Deadline) and to keep such Shelf
Registration Statement continuously effective and in compliance with the
Securities Act and usable for resale of such Registrable Securities until the
date that is six months from the Closing Date (the “Registration Termination
Date”) (including by refiling such Shelf Registration Statement (or a new Shelf
Registration Statement) if the initial Shelf Registration Statement
expires).  The Company shall register the resale of the Registrable Securities
on Form S-1 or such other form it is eligible to use.
 
(ii) Any registration pursuant to this Section 3.12(a) shall be effected by
means of a shelf registration under the Securities Act (a “Shelf Registration
Statement”) in accordance with the methods and distribution set forth in the
Shelf Registration Statement and Rule 415.
 
(b) Expenses of Registration. All Registration Expenses incurred in connection
with any registration, qualification or compliance hereunder shall be borne by
the Company. All Selling Expenses incurred in connection with any registrations
hereunder shall be borne by the Holders selling in such registration pro rata on
the basis of the aggregate number of securities or shares being sold.
 
(c) Obligations of the Company. The Company shall use its reasonable best
efforts, for so long as there are Registrable Securities outstanding, to take
such actions as are under its control to not become an ineligible issuer (as
defined in Rule 405 under the Securities Act). In addition, whenever required to
effect the registration of any Registrable Securities or facilitate the
distribution of Registrable Securities pursuant to an effective Shelf
Registration Statement, the Company shall, as expeditiously as reasonably
practicable:
 
(i) Prepare and file with the SEC a prospectus supplement with respect to a
proposed offering of Registrable Securities pursuant to an effective
registration statement and, subject to this Section 3.12(c), keep such
registration statement effective or such prospectus supplement current.
 
(ii) Prepare and file with the SEC such amendments and supplements to the
applicable registration statement and the prospectus or prospectus supplement
used in connection with such registration statement as may be necessary to
comply with the provisions of the Securities Act with respect to the disposition
of all securities covered by such registration statement.
 
(iii) Furnish to the Holders such number of correct and complete copies of the
applicable registration statement and each such amendment and supplement thereto
(including in each case all exhibits) and of a prospectus, including a
preliminary prospectus, in conformity with the requirements of the Securities
Act, and such other documents as they may reasonably request in order to
facilitate the disposition of Registrable Securities owned or to be distributed
by them.
 
(iv) Use its reasonable best efforts to register and qualify the securities
covered by such registration statement under such other securities or blue sky
laws of such jurisdictions as shall be reasonably requested by the Holders, to
keep such registration or qualification in effect for so long as such
registration statement remains in effect, and to take any other action which may
be reasonably necessary to enable such seller to consummate the disposition in
such jurisdictions of the securities owned by such Holder; provided, that the
Company shall not be required in connection therewith or as a condition thereto
to qualify to do business or to file a general consent to service of process in
any such states or jurisdictions.
 
(v) Notify each Holder of Registrable Securities at any time when a prospectus
relating thereto is required to be delivered under the Securities Act of the
happening of any event as a result of which the applicable prospectus, as then
in effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances then existing (which notice
shall not contain any material non-public information).
 
(vi) Give written notice to the Holders (which notice shall not contain any
material, non-public information):
 
(A) when any registration statement filed pursuant to Section 3.12(a) or any
amendment thereto has been filed with the SEC (except for any amendment effected
by the filing of a document with the SEC pursuant to the Exchange Act) and when
such registration statement or any post-effective amendment thereto has become
effective;
 
(B) of any request by the SEC for amendments or supplements to any registration
statement or the prospectus included therein or for additional information;
 
(C) of the issuance by the SEC of any stop order suspending the effectiveness of
any registration statement or the initiation of any proceedings for that
purpose;
 
(D) of the receipt by the Company or its legal counsel of any notification with
respect to the suspension of the qualification of the Common Stock for sale in
any jurisdiction or the initiation or threatening of any proceeding for such
purpose; and
 
(E) of the happening of any event that requires the Company to make changes in
any effective registration statement or the prospectus related to the
registration statement in order to make the statements therein not misleading
(which notice shall be accompanied by an instruction to suspend the use of the
prospectus until the requisite changes have been made).
 
(vii) Use its reasonable best efforts to prevent the issuance or obtain the
withdrawal of any order suspending the effectiveness of any registration
statement referred to in Section 3.12(c)(vi)(C) at the earliest practicable
time.
 
(viii) Upon the occurrence of any event contemplated by Section 3.12(c)(v) or
3.12(c)(vi)(E) and subject to the Company’s rights under Section 3.12(d), the
Company shall promptly prepare a post-effective amendment to such registration
statement or a supplement to the related prospectus or file any other required
document so that, as thereafter delivered to the Holders, the prospectus shall
not contain an untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading.
 
(ix) Cause all such Registrable Securities to be listed on each securities
exchange on which the same class of securities issued by the Company are then
listed or, if the same class of securities is not then listed on any securities
exchange, use its reasonable best efforts to cause all such Registrable
Securities of such class to be listed on the NYSE.
 
(x) If requested by Holders of a majority of the Registrable Securities being
registered and/or sold in connection therewith, promptly include in a prospectus
supplement or amendment such information as the Holders of a majority of the
Registrable Securities being registered and/or sold in connection therewith may
reasonably request in order to permit the intended method of distribution of
such securities and make all required filings of such prospectus supplement or
such amendment as soon as practicable after the Company has received such
request.
 
(xi) Timely provide to its security holders earning statements satisfying the
provisions of Section 11(a) of the Securities Act and Rule 158 thereunder.
 
(d) Suspension of Sales. Upon receipt of written notice from the Company that a
registration statement, prospectus or prospectus supplement contains or may
contain an untrue statement of a material fact or omits or may omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading or that circumstances exist that make inadvisable use of
such registration statement, prospectus or prospectus supplement, each Holder of
Registrable Securities shall forthwith discontinue disposition of Registrable
Securities pursuant to such registration statement until such Holder has
received copies of a supplemented or amended prospectus or prospectus
supplement, or until such Holder is advised in writing by the Company that the
use of the prospectus and, if applicable, prospectus supplement may be resumed,
and, if so directed by the Company, such Holder shall deliver to the Company (at
the Company’s expense) all copies, other than permanent file copies then in such
Holder’s possession, of the prospectus and, if applicable, prospectus supplement
covering such Registrable Securities current at the time of receipt of such
notice (each such suspension, a “Suspension Period”). No single Suspension
Period shall exceed thirty (30) consecutive days and the aggregate of all
Suspension Periods shall not exceed ninety (90) days during any twelve (12)
month period.
 
(e) Termination of Registration Rights. A Holder’s registration rights as to any
securities held by such Holder (and its Affiliates, partners, members and former
members) shall not be available unless such securities are Registrable
Securities.
 
(f) Furnishing Information.
 
(i) Neither the Investor nor any Holder shall use any free writing prospectus
(as defined in Rule 405) in connection with the sale of Registrable Securities
without the prior written consent of the Company.
 
(ii) It shall be a condition precedent to the obligations of the Company to take
any action pursuant to Section 3.12(c) as to a selling Holder that such selling
Holder shall furnish to the Company such information regarding themselves, the
Registrable Securities held by them and the intended method of disposition of
such securities as shall be required to effect the registered offering of their
Registrable Securities.
 
(g) Indemnification.
 
(i) The Company agrees to indemnify each Holder and, if a Holder is a person
other than an individual, such Holder’s officers, directors, employees, agents,
representatives and Affiliates, and each Person, if any, that controls a Holder
within the meaning of the Securities Act (each, an “Indemnitee”), against any
and all Losses, joint or several, arising out of or based upon any untrue
statement or alleged untrue statement of material fact contained in any
registration statement, including any preliminary prospectus or final prospectus
contained therein or any amendments or supplements thereto or any documents
incorporated therein by reference or contained in any free writing prospectus
(as such term is defined in Rule 405) prepared by the Company or authorized by
it in writing for use by such Holder (or any amendment or supplement thereto),
or any omission to state therein a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; provided that the Company shall not be
liable to such Indemnitee in any such case to the extent that any such Loss is
based solely upon (i) an untrue statement or omission made in such registration
statement, including any such preliminary prospectus or final prospectus
contained therein or any such amendments or supplements thereto or contained in
any free writing prospectus (as such term is defined in Rule 405) prepared by
the Company or authorized by it in writing for use by such Holder (or any
amendment or supplement thereto), in reliance upon and in conformity with
information regarding such Indemnitee or its plan of distribution or ownership
interests which was furnished in writing to the Company by such Indemnitee
expressly for use in connection with such registration statement, including any
such preliminary prospectus or final prospectus contained therein or any such
amendments or supplements thereto, or (ii) offers or sales effected by or on
behalf such Indemnitee “by means of” (as defined in Rule 159A) a “free writing
prospectus” (as defined in Rule 405) that was not authorized in writing by the
Company. Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of an Indemnitee and shall survive the
transfer of the Registrable Securities by the Holders.
 
(ii) If any proceeding shall be brought or asserted against any Indemnitee, such
Indemnitee shall promptly notify the Company in writing, and the Company shall
have the right to assume the defense thereof, including the employment of
counsel reasonably satisfactory to the Indemnitee and the payment of all
reasonable fees and expenses incurred in connection with defense thereof;
provided, that the failure of any Indemnitee to give such notice shall not
relieve the Company of its obligations or liabilities pursuant to this
Agreement, except to the extent that it shall be finally determined by a court
of competent jurisdiction that such failure shall have materially and adversely
prejudiced the Company.  An Indemnitee shall have the right to employ separate
counsel in any such proceeding and to participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of such Indemnitee
or Indemnitees unless: (1) the Company has agreed in writing to pay such fees
and expenses; (2) the Company shall have failed promptly to assume the defense
of such proceeding and to employ counsel reasonably satisfactory to such
Indemnitee in any such proceeding; or (3) the named parties to any such
proceeding (including any impleaded parties) include both such Indemnitee and
the Company, and such Indemnitee shall have been advised by counsel that a
conflict of interest exists if the same counsel were to represent such
Indemnitee and the Company; provided, that the Company shall not be liable for
the fees and expenses of more than one separate firm of attorneys at any time
for all Indemnitees. The Company shall not be liable for any settlement of any
such proceeding effected without its written consent, which consent shall not be
unreasonably withheld or delayed. The Company shall not, without the prior
written consent of the Indemnitee, effect any settlement of any pending
proceeding in respect of which any Indemnitee is a party, unless such settlement
includes an unconditional release of such Indemnitee from all liability on
claims that are the subject matter of such proceeding.  Subject to the terms of
this Agreement, all fees and expenses of the Indemnitee (including reasonable
fees and expenses to the extent incurred in connection with investigating or
preparing to defend such proceeding in a manner not inconsistent with this
Section 3.12(g)(ii)) shall be paid to the Indemnitee, as incurred, within thirty
(30) days of written notice thereof to the Company; provided, that the
Indemnitee shall promptly reimburse the Company for that portion of such fees
and expenses applicable to such actions for which such Indemnitee is finally
judicially determined to not be entitled to indemnification hereunder).  The
failure to deliver written notice to the Company within a reasonable time of the
commencement of any such action shall not relieve the Company of any liability
to the Indemnitee under this Section 3.12(g), except to the extent that the
Company is materially and adversely prejudiced in its ability to defend such
action.
 
(iii) If the indemnification provided for in Section 3.12(g)(i) is unavailable
to an Indemnitee with respect to any Losses or is insufficient to hold the
Indemnitee harmless as contemplated therein, then the Company, in lieu of
indemnifying such Indemnitee, shall contribute to the amount paid or payable by
such Indemnitee as a result of such Losses in such proportion as is appropriate
to reflect the relative fault of the Indemnitee, on the one hand, and the
Company, on the other hand, in connection with the statements or omissions which
resulted in such Losses as well as any other relevant equitable considerations.
The relative fault of the Company, on the one hand, and of the Indemnitee, on
the other hand, shall be determined by reference to, among other factors,
whether the untrue statement of a material fact or omission to state a material
fact relates to information supplied by the Company or by the Indemnitee and the
parties’ relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission; the Company and each Holder agree
that it would not be just and equitable if contribution pursuant to this Section
3.12(g)(iii) were determined by pro rata allocation or by any other method of
allocation that does not take account of the equitable considerations referred
to in Section 3.12(g)(i). No Indemnitee guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from the Company if the Company was not guilty of such fraudulent
misrepresentation.
 
(iv) The indemnity and contribution agreements contained in this Section 3.12(g)
are in addition to any liability that the Company may have to the Indemnitees
and are not in diminution or limitation of the indemnification provisions under
Article 5 of this Agreement.
 
(h) Assignment of Registration Rights. The rights of the Investor to
registration of Registrable Securities pursuant to Section 3.12(a) may be
assigned by the Investor to a transferee or assignee of Registrable Securities
to which (i) there is transferred to such transferee no less than $1,000,000 in
Registrable Securities and (ii) such transfer is permitted under the terms
hereof; provided, however, that the transferor shall, within ten (10) days after
such transfer, furnish to the Company written notice of the name and address of
such transferee or assignee and the number and type of Registrable Securities
that are being assigned.
 
(i) Rule 144 Reporting. With a view to making available to the Investor and
Holders the benefits of certain rules and regulations of the SEC which may
permit the sale of the Registrable Securities to the public without
registration, the Company agrees to use its reasonable best efforts to:
 
(i) make and keep adequate current public information with respect to the
Company available, as those terms are understood and defined in Rule 144(c)(1)
or any similar or analogous rule promulgated under the Securities Act, at all
times after the effective date of this Agreement;
 
(ii) so long as the Investor or a Holder owns any Registrable Securities,
furnish to the Investor or such Holder forthwith upon request: (A) a written
statement by the Company as to its compliance with the reporting requirements of
Rule 144 under the Securities Act, and of the Exchange Act; (B) a copy of the
most recent annual or quarterly report of the Company; and (C) such other
reports and documents as the Investor or Holder may reasonably request in
availing itself of any rule or regulation of the SEC allowing it to sell any
such securities without registration; and
 
(iii) to take such further action as any Holder may reasonably request, all to
the extent required from time to time to enable such Holder to sell Registrable
Securities without registration under the Securities Act.
 
(j) As used in this Section 3.12, the following terms shall have the following
respective meanings:
 
(i) “Effective Date” means the date that the Shelf Registration Statement filed
pursuant to Section 3.12(a)(i) is first declared effective by the SEC.
 
(ii) “Effectiveness Deadline” means, with respect to the initial Shelf
Registration Statement required to be filed pursuant to Section 3.12(a)(i), the
earlier of (i) the 60th calendar day following the Filing Deadline and (ii) the
5th Business Day after the date the Company is notified (orally or in writing,
whichever is earlier) by the SEC that such Shelf Registration Statement will not
be “reviewed” or will not be subject to further review; provided, that if the
Effectiveness Deadline falls on a Saturday, Sunday or other day that the SEC is
closed for business, the Effectiveness Deadline shall be extended to the next
Business Day on which the SEC is open for business.
 
(iii) “Holder” means the Investor and any other holder of Registrable Securities
to whom the registration rights conferred by this Agreement have been
transferred in compliance with Section 3.12(h) hereof.
 
(iv) “Register,” “registered” and “registration” shall refer to a registration
effected by preparing and (A) filing a registration statement in compliance with
the Securities Act and applicable rules and regulations thereunder, and the
declaration or ordering of effectiveness of such registration statement or (B)
filing a prospectus and/or prospectus supplement in respect of an appropriate
effective registration statement.
 
(v) “Registrable Securities” means (A) all Common Stock purchased by the
Investor pursuant to this Agreement and (B) any equity securities issued or
issuable directly or indirectly with respect to the securities referred to in
clause (A) by way of conversion, exercise or exchange thereof or stock dividend
or stock split or in connection with a combination of shares, recapitalization,
reclassification, merger, amalgamation, arrangement, consolidation or other
reorganization, provided that, once issued, such securities shall not be
Registrable Securities when (1) they are sold pursuant to an effective
registration statement under the Securities Act, (2) they may be sold pursuant
to Rule 144 without limitation thereunder on volume or manner of sale and
without the requirement for the Company to be in compliance with the current
public information required under Rule 144(e)(1) (or Rule 144(i)(2), if
applicable), (3) they shall have ceased to be outstanding or (4) they have been
sold in a private transaction in which the transferor’s rights under this
Agreement are not assigned to the transferee of the securities.  No Registrable
Securities may be registered under more than one registration statement at one
time.
 
(vi) “Registration Expenses” means all expenses incurred by the Company in
effecting any registration pursuant to this Agreement (whether or not any
registration or prospectus becomes effective or final) or otherwise complying
with its obligations under this Section 3.12, including, without limitation, all
registration, filing and listing fees, printing expenses, fees and disbursements
of counsel for the Company and blue sky fees and expenses, but shall not include
Selling Expenses and the compensation of regular employees of the Company, which
shall be paid in any event by the Company.
 
(vii) “Rule 158,” “Rule 159A,” “Rule 405” and “Rule 415” mean, in each case,
such rule promulgated under the Securities Act (or any successor provision), as
the same shall be amended from time to time.
 
(viii) “Selling Expenses” means all discounts, selling commissions and stock
transfer taxes applicable to the sale of Registrable Securities and fees and
disbursements of counsel for any Holder.
 
(k) On or prior to the Acceptance Date, the Investor shall furnish to the
Company a fully completed Selling Shareholder Questionnaire attached as Appendix
I hereto for use in the preparation of the Registration Statement and all of the
information contained therein will be true and correct as of the Closing Date.
 
ARTICLE 4

 
TERMINATION
 
4.1 Termination. This Agreement may be terminated prior to the Closing:
 
(a) by mutual written agreement of the Company and the Investor;
 
(b) by any party, upon written notice to the other party, in the event that the
Closing does not occur on or before April 30, 2011; provided, however, that the
right to terminate this Agreement pursuant to this Section 4.1(b) shall not be
available to any party whose failure to fulfill any obligation under this
Agreement shall have been the cause of, or shall have resulted in, the failure
of the Closing to occur on or prior to such date;
 
(c) by the Investor, upon written notice to the Company, if (i) there has been a
breach of any representation, warranty, covenant or agreement made by the
Company in this Agreement, or any such representation and warranty shall have
become untrue after the date of this Agreement, such that Section 1.2(c)(ii)(A)
would not be satisfied and (ii) such breach or condition is not curable or, if
curable, is not cured prior to the date that would otherwise be the Closing Date
in absence of such breach or condition; provided that this Section 4.1(c) shall
only apply if the Investor is not in material breach of any of the terms of this
Agreement;
 
(d) by the Company, upon written notice to the Investor, if (i) there has been a
breach of any representation, warranty, covenant or agreement made by the
Investor in this Agreement, or any such representation and warranty shall have
become untrue after the date of this Agreement, such that Section 1.2(c)(iii)(A)
would not be satisfied and (ii) such breach or condition is not curable or, if
curable, is not cured prior to the date that would otherwise be the Closing Date
in absence of such breach or condition; provided that this Section 4.1(d) shall
only apply if the Company is not in material breach of any of the terms of this
Agreement; or
 
(e) by any party, upon written notice to the other parties, in the event that
any Governmental Entity shall have issued any order, decree or injunction or
taken any other action restraining, enjoining or prohibiting any of the
transactions contemplated by this Agreement, and such order, decree, injunction
or other action shall have become final and nonappealable.
 
4.2 Effects of Termination. In the event of any termination of this Agreement as
provided in Section 4.1, this Agreement (other than Section 3.2, this Article 4
and Article 6 of this Agreement, which shall remain in full force and effect)
shall forthwith become wholly void and of no further force and effect; provided
that nothing herein shall relieve any party from liability for fraud or willful
breach of this Agreement.
 
ARTICLE 5
 
INDEMNITY
 
5.1 Indemnification by the Company.
 
(a) After the Closing, and subject to Sections 5.1(b), 5.3 and 5.4, the Company
shall indemnify, defend and hold harmless to the fullest extent permitted by Law
the Investor and its Affiliates, and their successors and assigns, officers,
directors, partners, members and employees, as applicable, (the “Investor
Indemnified Parties”) against, and reimburse any of the Investor Indemnified
Parties for, all Losses that any of the Investor Indemnified Parties may at any
time suffer or incur, or become subject to, as a result of or in connection with
(1) the inaccuracy or breach of any representation or warranty made by the
Company in this Agreement or any certificate delivered pursuant hereto or (2)
any breach or failure by the Company to perform any of its covenants or
agreements contained in this Agreement.
 
(b) Notwithstanding anything to the contrary contained herein, the Company shall
not be required to indemnify, defend or hold harmless any of the Investor
Indemnified Parties against, or reimburse any of the Investor Indemnified
Parties for, any Losses pursuant to Section 5.1(a)(1) (other than Losses arising
out of the inaccuracy or breach of any Company Specified Representations)
(i) with respect to any claim (or series of related claims arising from the same
underlying facts, events or circumstances) unless such claim (or series of
related claims arising from the same underlying facts, events or circumstances)
involves Losses in excess of $50,000 (the “De Minimis Amount”) (nor shall any
such claim or series of related claims that do not meet the De Minimis Amount be
applied to or considered for purposes of calculating the aggregate amount of the
Losses by any of the Investor Indemnified Parties for which the Company has
responsibility under clause (ii) of this Section 5.1(b)); and (ii) until the
aggregate amount of the Investor Indemnified Parties’ Losses for which the
Investor Indemnified Parties are finally determined to be otherwise entitled to
indemnification under Section 5.1(a) exceeds $1,000,000 (the “Deductible”),
after which the Company shall be obligated for all of the Investor Indemnified
Parties’ Losses for which the Investor Indemnified Parties are finally
determined to be otherwise entitled to indemnification under Section 5.1(a)(1)
that are in excess of the Deductible. Notwithstanding anything to the contrary
contained herein, the Company shall not be required to indemnify, defend or hold
harmless the Investor Indemnified Parties against, or reimburse the Investor
Indemnified Parties for, any Losses pursuant to Section 5.1(a)(1) in a
cumulative aggregate amount exceeding the aggregate purchase price paid by the
Investor to the Company pursuant to Section 1.1 (other than Losses arising out
of the inaccuracy or breach of any Company Specified Representations).
 
(c) For purposes of Section 5.1(a), in determining whether there has been a
breach of a representation or warranty, the parties hereto shall ignore any
“materiality”, “Knowledge”, “Material Adverse Effect” or similar qualifications.
 
5.2 Indemnification by the Investor.
 
(a) After the Closing, and subject to Sections 5.2(b), 5.3 and 5.4, the Investor
shall indemnify, defend and hold harmless to the fullest extent permitted by Law
the Company, the Placement Agent and their respective Affiliates and their
respective successors and assigns, officers, directors, partners, members and
employees (collectively, the “Company Indemnified Parties”) against, and
reimburse any of the Company Indemnified Parties for, all Losses that the
Company Indemnified Parties may at any time suffer or incur, or become subject
to, as a result of or in connection with (1) the inaccuracy or breach of any
representation or warranty made by the Investor in this Agreement or any
certificate delivered pursuant hereto or (2) any breach or failure by such
Investor to perform any of its covenants or agreements contained in this
Agreement.
 
(b) Notwithstanding anything to the contrary contained herein, the Investor
shall not be required to indemnify, defend or hold harmless any of the Company
Indemnified Parties against, or reimburse any of the Company Indemnified Parties
for any Losses pursuant to Section 5.2(a)(1) (other than Losses arising out of
the inaccuracy or breach of any Investor Specified Representations) (i) with
respect to any claim (or series of related claims arising from the same
underlying facts, events or circumstances) unless such claim (or series of
related claims arising from the same underlying facts, events or circumstances)
involves Losses in excess of the De Minimis Amount (nor shall any such claim or
series of related claims that do not meet the De Minimis Amount be applied to or
considered for purposes of calculating the aggregate amount of the Losses by any
of the Company Indemnified Parties for which the Investor has responsibility
under clause (ii) of this Section 5.2(b)); and (ii) until the aggregate amount
of the Company Indemnified Parties’ Losses for which the Company Indemnified
Parties are finally determined to be otherwise entitled to indemnification under
Section 5.2(a) exceeds the Deductible, after which the Investor shall be
obligated for all of the Company Indemnified Parties’ Losses for which the
Company Indemnified Parties are finally determined to be otherwise entitled to
indemnification under Section 5.2(a)(1) that are in excess of such Deductible.
Notwithstanding anything to the contrary contained herein, the Investor shall
not be required to indemnify, defend or hold harmless the Company Indemnified
Parties against, or reimburse the Company Indemnified Parties for, any Losses
pursuant to Section 5.2(a)(1) in a cumulative aggregate amount exceeding the
aggregate purchase paid by the Investor to the Company pursuant to Section 1.1
hereof (other than Losses arising out of the inaccuracy or breach of any of the
Investor Specified Representations).
 
(c) For purposes of Section 5.2(a), in determining whether there has been a
breach of a representation or warranty, the parties hereto shall ignore any
“materiality” or similar qualifications.
 
5.3 Notification of Claims.
 
(a) Any Person that may be entitled to be indemnified under this Agreement (the
“Indemnified Party”) shall promptly notify the party or parties liable for such
indemnification (the “Indemnifying Party”) in writing of any claim in respect of
which indemnity may be sought hereunder, including any pending or threatened
claim or demand by a third party that the Indemnified Party has determined has
given or could reasonably give rise to a right of indemnification under this
Agreement (including a pending or threatened claim or demand asserted by a third
party against the Indemnified Party) (each, a “Third Party Claim”), describing
in reasonable detail the facts and circumstances with respect to the subject
matter of such claim or demand; provided, however, that the failure to provide
such notice shall not release the Indemnifying Party from any of its obligations
under this Agreement except to the extent that the Indemnifying Party is
materially prejudiced by such failure.  The parties agree that notices for
claims in respect of a breach of a representation, warranty, covenant or
agreement must be delivered prior to the expiration of any applicable survival
period specified in Section 6.1 for such representation, warranty, covenant or
agreement; provided, that if, prior to such applicable date, a party hereto
shall have notified the other parties hereto in accordance with the requirements
of this Section 5.3(a) of a claim for indemnification under this Agreement
(whether or not formal legal action shall have been commenced based upon such
claim), such claim shall continue to be subject to indemnification in accordance
with this Agreement notwithstanding the passing of such applicable date.
 
(b) Upon receipt of a notice of a claim for indemnity from an Indemnified Party
pursuant to Section 5.3(a) in respect of a Third Party Claim, the Indemnifying
Party may, by notice to the Indemnified Party delivered within twenty (20)
Business Days of the receipt of notice of such Third Party Claim, assume the
defense and control of any Third Party Claim, with its own counsel reasonably
acceptable to the Indemnified Party and at its own expense.  The Indemnified
Party shall have the right to employ counsel on its own behalf for, and
otherwise participate in the defense of, any such Third Party Claim, but the
fees and expenses of its counsel will be at its own expense unless (A) the
employment of counsel by the Indemnified Party at the Indemnifying Party’s
expense has been authorized in writing by the Indemnifying Party, as applicable,
(B) the Indemnified Party reasonably believes there may be a conflict of
interest between the Indemnified Party and the Indemnifying Party in the conduct
of the defense of such Third Party Claim, (C) the Indemnified Party reasonably
believes there are legal defenses available to it that are different from,
additional to or inconsistent with those available to the Indemnifying Party, or
(D) the Indemnifying Party has not in fact employed counsel to assume the
defense of such Third Party Claim within a reasonable time after receipt of
notice of the commencement of such Third Party Claim, in each of which cases the
fees and expenses of such Indemnified Party’s counsel shall be at the expense of
the Indemnifying Party; provided, however, that in the event any Investor
Indemnified Party is similarly situated with any other "Investor Indemnified
Party" under any of the other Agreements with respect to any Third Party Claim,
and does not have any conflict of interest with such Person in the conduct of
the defense of such Third Party Claim or have legal defenses available to it
that are different from, additional to or inconsistent with those available to
such Person, such Investor Indemnified Party shall be required to employ the
same counsel as such Person and the Company shall be responsible for the fees
and expenses of only one such counsel for such Investor Indemnified Party and
such other Person or Persons (assuming any of clauses (A) through (D) is
satisfied). The Indemnified Party may take any actions reasonably necessary to
defend such Third Party Claim prior to the time that it receives a notice from
the Indemnifying Party as contemplated by the immediately preceding
sentence.  The Indemnified Party shall, and shall cause each of their Affiliates
and representatives to, use reasonable best efforts to cooperate with the
Indemnifying Party in the defense of any Third Party Claim. The Indemnifying
Party shall not, without the prior written consent of the Indemnified Party
(which shall not be unreasonably withheld), consent to a settlement, compromise
or discharge of, or the entry of any judgment arising from, any Third Party
Claim, unless such settlement, compromise, discharge or entry of any judgment
does not involve any statement, finding or admission of any fault, culpability,
failure to act, violation of Law or admission of any wrongdoing by or on behalf
of the Indemnified Party, and the Indemnifying Party shall (i) pay or cause to
be paid all amounts arising out of such settlement or judgment concurrently with
the effectiveness of such settlement or judgment (unless otherwise provided in
such judgment), (ii) not encumber any of the material assets of any Indemnified
Party or agree to any restriction or condition that would apply to or materially
adversely affect any Indemnified Party or the conduct of any Indemnified Party’s
business and (iii) obtain, as a condition of any settlement, compromise,
discharge, entry of judgment (if applicable), or other resolution, a complete
and unconditional release of each Indemnified Party in form and substance
reasonably satisfactory to such  Indemnified Party from any and all liabilities
in respect of such Third Party Claim.  An Indemnified Party shall not settle,
compromise or consent to the entry of any judgment with respect to any claim or
demand for which it is seeking indemnification from the Indemnifying Party or
admit to any liability with respect to such claim or demand without the prior
written consent of the Indemnifying Party (which consent shall not be
unreasonably withheld or delayed); provided that such consent shall not be
required if the Indemnifying Party has not fulfilled any material obligations
under this Section 5.3(b).
 
(c) In the event any Indemnifying Party receives a notice of a claim for
indemnity from an Indemnified Party pursuant to Section 5.3(a) that does not
involve a Third Party Claim, the Indemnifying Party shall notify the Indemnified
Party within twenty (20) Business Days following its receipt of such notice
whether the Indemnifying Party disputes its liability to the Indemnified Party
under this Agreement. The Indemnified Party shall reasonably cooperate with and
assist the Indemnifying Party in determining the validity of any such claim for
indemnity by the Indemnified Party.
 
5.4 Indemnification Payment. In the event a claim or any Action for
indemnification hereunder has been finally determined, the amount of such final
determination shall be paid by the Indemnifying Party to the Indemnified Party
on demand in immediately available funds; provided, however, that any reasonable
and documented out-of-pocket expenses incurred by the Indemnified Party as a
result of such claim or Action shall be reimbursed promptly by the Indemnifying
Party upon receipt of an invoice describing such costs incurred by the
Indemnified Party. A claim or an Action, and the liability for and amount of
damages therefor, shall be deemed to be “finally determined” for purposes of
this Agreement when the parties hereto have so determined by mutual agreement
or, if disputed, when a final non-appealable governmental order has been entered
into with respect to such claim or Action.
 
5.5 Exclusive Remedies. Each party hereto acknowledges and agrees that following
the Closing, the indemnification provisions hereunder shall be the sole and
exclusive remedies of the parties hereto for any breach of the representations,
warranties or covenants contained in the this Agreement. No investigation of the
Company by the Investor, or of the Investor by the Company, whether prior to or
after the date of this Agreement, shall limit any Indemnified Party’s exercise
of any right hereunder or be deemed to be a waiver of any such right. The
parties agree that any indemnification payment made pursuant to this Agreement
shall be treated as an adjustment to the Purchase Price for Tax purposes, unless
otherwise required by Law.
 
ARTICLE 6

 
MISCELLANEOUS
 
6.1 Survival. The representations and warranties of the parties hereto contained
in this Agreement shall survive in full force and effect until the date that is
fifteen (15) months after the Closing Date (or until final resolution of any
claim or action arising from the breach of any such representation and warranty,
if notice of such breach was provided prior to the end of such period), at which
time they shall terminate and no claims shall be made for indemnification under
Section 5.1 or Section 5.2, as applicable, for breaches of representations or
warranties thereafter, except the Company Specified Representations (other than
the representations and warranties made in Section 2.2(x), which shall survive
until the expiration of the applicable statute of limitations) and the Investor
Specified Representations shall survive the Closing indefinitely. The covenants
and agreements set forth in this Agreement shall survive until the earliest of
the duration of any applicable statute of limitations or until performed or no
longer operative in accordance with their respective terms.
 
6.2 Other Definitions. Wherever required by the context of this Agreement, the
singular shall include the plural and vice versa, and the masculine gender shall
include the feminine and neuter genders and vice versa, and references to any
agreement, document or instrument shall be deemed to refer to such agreement,
document or instrument as amended, supplemented or modified from time to time.
In addition, the following terms shall have the meanings assigned to them below:
 
(a) the term “Affiliate” means, with respect to any Person, any Person directly
or indirectly controlling, controlled by or under common control with, such
other Person provided that no security holder of the Company shall be deemed to
be an Affiliate of any other security holder or of the Company or any of the
Company Subsidiaries solely by reason of any investment in the Company, for
purposes of this definition, “control” (including, with correlative meanings,
the terms “controlling”, “controlled by” and “under common control with”) when
used with respect to any Person, means the possession, directly or indirectly,
of the power to cause the direction of management or policies of such Person,
whether through the ownership of voting securities by contract or otherwise;
 
(b) the term “Agency” means the Federal Housing Administration, the Federal Home
Loan Mortgage Corporation, the Farmers Home Administration (now known as Rural
Housing and Community Development Services), the Federal National Mortgage
Association, the United States Department of Veterans’ Affairs, the Rural
Housing Service of the U.S. Department of Agriculture or any other federal or
state agency with authority to (i) determine any investment, origination,
lending or servicing requirements with regard to mortgage loans originated,
purchased or serviced by the Company or (ii) originate, purchase, or service
mortgage loans, or otherwise promote mortgage lending, including state and local
housing finance authorities;
 
(c) the term “Board of Directors” means the Board of Directors of the Company;
 
(d) the term “Business Day” means any day except Saturday, Sunday and any day
which shall be a legal holiday or a day on which banking institutions in the
State of New York or in the State of Hawaii generally are authorized or required
by Law or other governmental actions to close;
 
(e) the term “Capital Stock” means capital stock or other type of equity
interest in (as applicable) a Person;
 
(f) the term “Change in Control” means, with respect to the Company, the
occurrence of any one of the following events:
 
(A) any Person is or becomes a beneficial owner (as such term is defined in Rule
13d-3 and Rule 13d-5 under the Exchange Act), other than the Investors and their
Affiliates, directly or indirectly, of twenty percent (20%) of the aggregate
voting power of the Voting Securities; provided, however, that the event
described in this clause (A) will not be deemed a Change in Control by virtue of
any holdings or acquisitions: (i) by the Company or any of the Company
Subsidiaries, (ii) by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any of the Company Subsidiaries; provided that such
holdings or acquisitions by any such plan (other than any plan maintained under
Section 401(k) of the Code) do not exceed twenty percent (20%) of the then
outstanding Voting Securities, (iii) by any underwriter temporarily holding
securities pursuant to an offering of such securities or (iv) pursuant to a
Non-Qualifying Transaction;
 
(B) the consummation of a merger, consolidation, statutory share exchange or
similar transaction that requires adoption by the Company’s shareholders (a
“Business Combination”), unless immediately following such Business Combination:
(x) more than fifty percent (50%) of the total voting power of the corporation
resulting from such Business Combination (the “Surviving Corporation”), or, if
applicable, the ultimate parent corporation that directly or indirectly has
beneficial ownership (as such term is defined in Rule 13d-3 and Rule 13d-5 under
the Exchange Act), of one hundred percent (100%) of the voting securities
eligible to elect directors of the Surviving Corporation (the “Parent
Corporation”), is represented by Voting Securities that were outstanding
immediately before such Business Combination (or, if applicable, is represented
by shares into which such Voting Securities were converted pursuant to such
Business Combination), and (y) 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
Combination were Continuing Directors at the time the Board of Directors
approved the execution of the initial agreement providing for such Business
Combination (any Business Combination which satisfies all of the criteria
specified in (x) and (y) above will be deemed a “Non-Qualifying Transaction”);
 
(C) the shareholders of the Company approve a plan of liquidation or dissolution
of the Company or a sale of all or substantially all of the Company’s assets; or
 
(D) a majority of the members of the Board of Directors are not Continuing
Directors; provided that the changes to the membership of the Board of Directors
pursuant to Section 3.3 herein shall not be considered a Change in Control;
 
(g) the term “Code” means the Internal Revenue Code of 1986, as amended;
 
(h) the term “Company Specified Representations” means the representations and
warranties made in Section 2.2(a), Section 2.2(c), Section 2.2(d)(i), Section
2.2(x), and Section 2.2(z);
 
(i) the term “Continuing Directors” means, as of any date of determination, any
member of the Board of Directors who (i) was a member of the Board of Directors
on the date of this Agreement or (ii) was nominated for election or elected to
the Board of Directors with the approval of a majority of the Continuing
Directors who were members of the Board of Directors at the time of such new
director’s nomination or election;
 
(j) the term “Controlled Group Liability” means any and all liabilities
(i) under Title IV of ERISA, (ii) Section 302 or 4068(a) of ERISA, (iii) under
Sections 412, 430 and 4971 of the Code, and (iv) as a result of a failure to
comply with the continuation coverage requirements of Section 601 et seq. of
ERISA and Section 4980B of the Code, other than any liabilities under the
Benefit Plans;
 
(k) the term “Disclosure Schedule” shall mean a schedule delivered, on or prior
to the date of this Agreement, by (i) the Investor to the Company and (ii) the
Company to the Investor setting forth, among other things, items the disclosure
of which is necessary or appropriate either in response to an express disclosure
requirement contained in a provision hereof or as an exception to one or more
representations or warranties contained in Section 2.2 with respect to the
Company, or in Section 2.3 with respect to the Investor, or to one or more
covenants contained in Article 3;
 
(l) the term “Environmental Laws” means all federal, state or local laws
relating to pollution or protection of human health or the environment
(including, without limitation, ambient air, surface water, groundwater, land
surface or subsurface strata), including, without limitation, Laws relating to
emissions, discharges, releases or threatened releases of chemicals, pollutants,
contaminants, or toxic or hazardous substances or wastes into the environment;
 
(m) the term “GAAP” means United States generally accepted accounting principles
and practices as in effect from time to time;
 
(n) the term “Governmental Consent” means any notice to, registration,
declaration or filing with, exemption or review by, or authorization, order,
consent or approval of, any Governmental Entity, or the expiration or
termination of any statutory waiting periods;
 
(o) the term “Governmental Entity” means any court, administrative agency or
commission or other governmental authority or instrumentality, whether federal,
state, local or foreign, and any applicable industry self-regulatory
organization or securities exchange;
 
(p) the term “Hazardous Substance” means any substance that is regulated
pursuant to any Environmental Law including any waste, petroleum products,
asbestos, mold and lead products;
 
(q) the term “Insurer” means a Person who insures or guarantees for the benefit
of the mortgagee all or any portion of the risk of loss upon borrower default on
any of the mortgage loans originated, purchased or serviced by the Bank,
including the Federal Housing Administration, the United States Department of
Veterans’ Affairs, the Rural Housing Service of the U.S. Department of
Agriculture and any private mortgage insurer, and providers of hazard, title or
other insurance with respect to such mortgage loans or the related collateral;
 
(r) the term “Investor Specified Representations” means the representations and
warranties made in Section 2.3(b)(i), Section 2.3(e), Section 2.3(h) and
Section 2.3(k);
 
(s) the term “Knowledge” of the Company and words of similar import mean the
knowledge of any directors, executives or other employees of the Company listed
on Schedule I hereto;
 
(t) the term “Loan Investor” means any Person (including an Agency) having a
beneficial interest in any mortgage loan originated, purchased or serviced by
the Bank or a security backed by or representing an interest in any such
mortgage loan;
 
(u) the term “Losses” means any and all losses, damages, reasonable costs,
reasonable expenses (including reasonable attorneys’ fees and disbursements),
liabilities, settlement payments, awards, judgments, fines, obligations, claims,
and deficiencies of any kind, excluding special, consequential, exemplary and
punitive damages;
 
(v) the term “Person” means any individual, firm, corporation, partnership,
trust, incorporated or unincorporated association, joint venture, joint stock
company, limited liability company, Governmental Entity or other entity of any
kind, and shall include any successor (by merger or otherwise) of such entity;
 
(w) the term “Subsidiary” means, with respect to any Person, any corporation,
partnership, joint venture, limited liability company or other entity (x) of
which such Person or a Subsidiary of such Person is a general partner or (y) of
which a majority of the voting securities or other voting interests, or a
majority of the securities or other interests of which having by their terms
ordinary voting power to elect a majority of the board of directors or persons
performing similar functions with respect to such entity, is directly or
indirectly owned by such Person and/or one or more Subsidiaries thereof;
 
(x) the term “Tax” or “Taxes” means all United States federal, state, local or
foreign income, profits, estimated, gross receipts, windfall profits, severance,
property, intangible property, occupation, production, sales, use, license,
excise, emergency excise, franchise, capital gains, capital stock, employment,
withholding, transfer, stamp, payroll, goods and services, value added,
alternative or add-on minimum tax, or any other tax, custom, duty or
governmental fee, or other like assessment or charge of any kind whatsoever,
together with any interest, penalties, fines, related liabilities or additions
to tax that may become payable in respect thereof imposed by any Governmental
Entity, whether or not disputed;
 
(y) the term “Tax Return” means any return, declaration, report or similar
statement required to be filed with respect to any Taxes (including any attached
schedules), including, without limitation, any information return, claim or
refund, amended return and declaration of estimated Tax;
 
(z) the term “Voting Securities” means at any time shares of any class of
Capital Stock of the Company that are then entitled to vote generally in the
election of directors;
 
(aa) the word “or” is not exclusive;
 
(bb) the words “including,” “includes,” “included” and “include” are deemed to
be followed by the words “without limitation”;
 
(cc) the terms “herein,” “hereof” and “hereunder” and other words of similar
import refer to this Agreement as a whole and not to any particular section,
paragraph or subdivision; and
 
(dd) all article, section, paragraph or clause references not attributed to a
particular document shall be references to such parts of this Agreement, and all
exhibit and schedule references not attributed to a particular document shall be
references to such exhibits and schedules to this Agreement.
 
6.3 Amendment and Waivers. The conditions to each party’s obligation to
consummate the Closing are for the sole benefit of such party and may be waived
by such party in whole or in part to the extent permitted by Law. No amendment
or waiver of any provision of this Agreement will be effective against any party
hereto unless it is in a writing signed by a duly authorized officer of such
party.
 
6.4 Counterparts and Facsimile. For the convenience of the parties hereto, this
Agreement may be executed in any number of separate counterparts, each such
counterpart being deemed to be an original instrument, and all such counterparts
will together constitute the same agreement. Executed signature pages to this
Agreement may be delivered by facsimile and such facsimiles will be deemed as
sufficient as if actual signature pages had been delivered.
 
6.5 Governing Law. This Agreement will be governed by and construed in
accordance with the Laws of the State of New York applicable to contracts made
and to be performed entirely within such State.
 
6.6 Jurisdiction. The parties hereby agree that any suit, action or proceeding
seeking to enforce any provision of, or based on any matter arising out of or in
connection with, this Agreement or the transactions contemplated hereby shall be
brought in the United States District Court for the Southern District of New
York sitting in the borough of Manhattan, New York, New York, so long as such
court shall have subject matter jurisdiction over such suit, action or
proceeding or, if it does not have subject matter jurisdiction, in any New York
State court sitting in the borough of Manhattan, New York, New York, and each of
the parties hereby irrevocably consents to the jurisdiction of such courts (and
of the appropriate appellate courts therefrom) in any such suit, action or
proceeding and irrevocably waives, to the fullest extent permitted by Law, any
objection that it may now or hereafter have to the laying of the venue of any
such suit, action or proceeding in any such court or that any such suit, action
or proceeding which is brought in any such court has been brought in an
inconvenient forum. Process in any such suit, action or proceeding may be served
on any party anywhere in the world, whether within or without the jurisdiction
of any such court. Without limiting the foregoing, each party agrees that
service of process on such party as provided in Section 6.8 shall be deemed
effective service of process on such party. The parties hereby irrevocably and
unconditionally consent to submit to the exclusive jurisdiction of the state and
federal courts referred to above for any actions, suits or proceedings arising
out of or relating to this Agreement and the transactions contemplated hereby
 
6.7 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES
ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR
RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
 
6.8 Notices.  Any notice, request, instruction or other document to be given
hereunder by any party to the other will be in writing and will be deemed to
have been duly given (a) on the date of delivery if delivered personally or by
telecopy or facsimile, upon confirmation of receipt, (b) on the first Business
Day following the date of dispatch if delivered by a recognized next-day courier
service, or (c) on the third Business Day following the date of mailing if
delivered by registered or certified mail, return receipt requested, postage
prepaid. All notices hereunder shall be delivered as set forth below, or
pursuant to such other instructions as may be designated in writing by the party
to receive such notice.
 
(a) If to the Investor, at the address set forth on the signature page to this
Agreement:
 
(b) If to the Company:
 
Central Pacific Financial Corp.
220 South King Street, Suite 2200 (Legal Division)
Honolulu, Hawaii 96813
Attn:           Glenn Ching, General Counsel
Fax:           (808) 532-5165
 
with a copy (which copy alone shall not constitute notice):
 
Sullivan & Cromwell LLP
1888 Century Park East, Suite 2100
Los Angeles, California 90067
Attn:           Alison S. Ressler, Esq.
Fax:           (310) 712-8890
 
6.9 Entire Agreement. This Agreement (including the Annexes and Schedules
hereto) and the Confidentiality Agreement constitute the entire agreement, and
supersede all other prior agreements, understandings, representations and
warranties, inducements or conditions, both written and oral, among the parties,
with respect to the subject matter hereof and thereof.
 
6.10 Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the parties and their respective successors and assigns,
including any purchasers of the Common Shares to be issued pursuant to this
Agreement. The Company shall not assign this Agreement or any rights or
obligations hereunder without the prior written consent of the Investor. The
Investor may assign some or all of its rights hereunder or thereunder without
the consent of the Company to any Affiliate of the Investor, and such assignee
shall be deemed to be an Investor hereunder with respect to such assigned rights
and shall be bound by the terms and conditions of this Agreement that apply to
the Investor.
 
6.11 Captions. The article, section, paragraph and clause captions herein are
for convenience of reference only, do not constitute part of this Agreement and
will not be deemed to limit or otherwise affect any of the provisions hereof.
 
6.12 Severability. If any provision of this Agreement or the application thereof
to any Person or circumstance is determined by a court of competent jurisdiction
to be invalid, void or unenforceable, the remaining provisions hereof, or the
application of such provision to Persons or circumstances other than those as to
which it has been held invalid or unenforceable, will remain in full force and
effect and shall in no way be affected, impaired or invalidated thereby, so long
as the economic or legal substance of the transactions contemplated hereby is
not affected in any manner materially adverse to any party. Upon such
determination, the parties shall negotiate in good faith in an effort to agree
upon a suitable and equitable substitute provision to effect the original intent
of the parties.
 
6.13 Third Party Beneficiaries. Nothing contained in this Agreement, expressed
or implied, is intended to confer upon any Person (including any of the Other
Investors) other than the parties hereto, any benefit right or remedies, except
that the provisions of Sections 5.1 and 5.2 shall inure to the benefit of the
Persons referred to in such Sections. Notwithstanding the foregoing, the Company
and the Investor agree that the Placement Agent, as placement agent for the
Common Shares, shall be a third party beneficiary of the representations,
warranties and agreements made or given by the parties hereunder.
 
6.14 Public Announcements. The Investor will not make (and will use its
reasonable best efforts to ensure that its Affiliates and representatives do not
make) any news release or public disclosure with respect to this Agreement and
any of the transactions contemplated hereby, without first consulting with the
Company and, in each case, also receiving the Company’s consent (which shall not
be unreasonably withheld or delayed).
 
6.15 Specific Performance. The parties hereto agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms. It is accordingly agreed that
the parties shall be entitled to seek specific performance of the terms hereof,
this being in addition to any other remedies to which they are entitled at law
or equity.
 
6.16 No Recourse. This Agreement may only be enforced against the named parties
hereto. All claims or causes of action that may be based upon, arise out of or
relate to this Agreement, or the negotiation, execution or performance of this
Agreement may be made only against the entities that are expressly identified as
parties hereto or that are subject to the terms hereof, and no past, present or
future director, officer, employee, incorporator, member, manager, partner,
shareholder, Affiliate, agent, attorney or representative of any party hereto
(including any person negotiating or executing this Agreement on behalf of a
party hereto) shall have any liability or obligation with respect to this
Agreement or with respect to any claim or cause of action, whether in tort,
contract or otherwise, that may arise out of or relate to this Agreement, or the
negotiation, execution or performance of this Agreement and the transactions
contemplated hereby.
 
 

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SELLING SHAREHOLDER QUESTIONNAIRE
 
The undersigned beneficial owner of Common Shares (the “Common Shares”) of
Central Pacific Financial Corp. (the “Company”) understands that the Company has
filed or intends to file with the Securities and Exchange Commission (the
“Commission”) a Registration Statement for the registration and resale of Common
Shares that qualifies as Registrable Securities, in accordance with the terms of
a Subscription Agreement (the “Subscription Agreement”) between the Company and
the Investor(s) named therein. All capitalized terms used and not otherwise
defined herein shall have the meanings ascribed thereto in the Subscription
Agreement.
 
The undersigned hereby provides the following information to the Company and
represents and warrants that such information is accurate:
 
QUESTIONNAIRE
 
1.
Name.

 
(a)
Full Legal Name of Selling Securityholder

 
______________________________________________________

 
(b)
Full Legal Name of Registered Holder (if not the same as (a) above) through
which Registrable Securities Listed in Item 3 below are held:

 
______________________________________________________

 
(c)
Full Legal Name of Natural Control Person (which means a natural person who
directly or indirectly alone or with others has power to vote or dispose of the
securities covered by the questionnaire):

 
______________________________________________________

 
2.
Address for Notices to Selling Securityholder:

 
______________________________________________________

 
______________________________________________________

 
______________________________________________________

 
Telephone:  _____________________________________________________________

Fax:  _____________________________________________________________

Contact Person:  _____________________________________________________________

 
3.
Beneficial Ownership of Registrable Securities:

 
Type and Number of Shares of Registrable Securities beneficially owned1 and
purchased pursuant to the Subscription Agreement:
 
Common Stock:  _____________________________________________________________
 
4.
Broker-Dealer Status:

 
(a)
Are you a broker-dealer?

 
Yes  £                      No  £
 
Note:  If yes, the Commission’s staff has indicated that you should be
identified as an underwriter in the Registration Statement.
 
(b)
Are you an affiliate of a broker-dealer?

 
Yes  £                      No  £
 
(c)
If you are an affiliate of a broker-dealer, do you certify that you bought the
Registrable Securities in the ordinary course of business, and at the time of
the purchase of the Registrable Securities to be resold, you had no agreements
or understandings, directly or indirectly, with any person to distribute the
Registrable Securities?

 
Yes  £                      No  £
 
Note:  If no, the Commission’s staff has indicated that you should be identified
as an underwriter in the Registration Statement.
 
5.
Beneficial Ownership of Securities of the Company Other than the Registrable
Securities Owned by the Selling Securityholder.

 
Except as set forth below in this Item 5, the undersigned is not the beneficial
or registered owner of any securities of the Company other than the Registrable
Securities listed above in Item 3.
 
Type and Amount of Other Securities beneficially owned by the Selling
Securityholder:

 
______________________________________________________

 
______________________________________________________

 
______________________________________________________

 
6.
Relationships with the Company:

 
Except as set forth below, neither the undersigned nor any of its affiliates,
officers, directors or principal equity holders (owners of 5% of more of the
equity securities of the undersigned) has held any position or office or has had
any other material relationship with the Company (or its predecessors or
affiliates) during the past three years.
 
State any exceptions here:

 
______________________________________________________

 
7.
Please fill in the table below as you would like it to appear in the
Registration Statement. Include footnotes where appropriate.

 
Name of Selling
Shareholder
 
Number of Shares of
Common Stock
Beneficially Owned
Prior to Offering
 
Maximum Number of
Shares of Common Stock
to be Sold Pursuant
to this Prospectus
 
Number of Shares
of Common Stock
Beneficially Owned
After Offering

 
 
The undersigned agrees to promptly notify the Company of any inaccuracies or
changes in the information provided herein that may occur subsequent to the date
hereof and prior to the Effective Date for the Registration Statement.
 
By signing below, the undersigned consents to the disclosure of the information
contained herein in its answers to Items 1 through 7 and the inclusion of such
information in the Registration Statement and the related prospectus. The
undersigned understands that such information will be relied upon by the Company
in connection with the preparation or amendment of the Registration Statement
and the related prospectus.

--------------------------------------------------------------------------------

1 Securities “beneficially owned” would include securities held by you for your
own benefit, whether in bearer form or registered in your own name or otherwise
(regardless of whether or how they are registered), such as, for example,
securities held for you by custodians, brokers, relatives, executors,
administrators or trustees, and securities held for your account by pledgees,
securities owned by a partnership in which you are a member, and securities
owned by any corporation which is or should be regarded as a personal holding
corporation of yours. You are also considered to be the beneficial owner of a
security if you, directly or indirectly, through any contract, arrangement,
understanding, relationship or otherwise have or share: (1) voting power, which
includes the power to vote, or to direct the voting of, such security or (2)
investment power, which includes the power to dispose, or to direct the
disposition, of such security. You are also the beneficial owner of a security
if you, directly or indirectly, create or use a trust, proxy, power of attorney,
pooling arrangement or any other contract, arrangement or device with the
purpose or effect of divesting yourself of beneficial ownership of a security or
preventing the vesting of such beneficial ownership. Finally, you are deemed to
be the beneficial owner of a security if you have the right to acquire
beneficial ownership of such security at any time within sixty days, including
but not limited to any right to acquire (a) through the exercise of any option,
warrant or right, (b) through the conversion of a security, (c) pursuant to the
power to revoke a trust, discretionary account or similar arrangement or (d)
pursuant to the automatic termination of a trust, discretionary account or
similar arrangement.
 
 

--------------------------------------------------------------------------------

 
IN WITNESS WHEREOF the undersigned, by authority duly given, has caused this
Notice and Questionnaire to be executed and delivered either in person or by its
duly authorized agent.
 
Dated:  ____________________________________
Beneficial Owner:  ____________________________________
By:   ____________________________________
Name:
Title:

 

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PLEASE (1) FAX OR EMAIL A COPY OF THE COMPLETED AND EXECUTED
NOTICE AND QUESTIONNAIRE, AND (2) RETURN THE ORIGINAL BY
OVERNIGHT MAIL, TO:
 
Sullivan & Cromwell LLP
1888 Century Park East
Los Angeles, CA 90067
Attn: Ann Chen
Attn: Mark Piesner
Facsimile: (310) 712-8800
Email: chena@sullcrom.com
Email: piesnerm@sullcrom.com
 
 
 
 
 
 

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