EXHIBIT 1.0
4,000,000 Shares
R&G FINANCIAL CORPORATION
Class B Common Stock
UNDERWRITING AGREEMENT
___________, 2002
UBS WARBURG LLC
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, INC.
As representatives of the several Underwriters
named in Schedule I hereto,
c/o UBS Warburg LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
R&G FINANCIAL CORPORATION, a Puerto Rico corporation (the "COMPANY"),
proposes to sell an aggregate of 2,000,000 shares (the "COMPANY SHARES") of the
Company's Class B Common Stock, par value $.01 per share (the "CLASS B COMMON
STOCK"), which are to be issued and sold by the Company to you (collectively,
the "UNDERWRITERS"), and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, the majority shareholder of the
Company (the "SELLING SHAREHOLDER"), propose to sell an aggregate of 2,000,000
shares (the "SELLING SHAREHOLDER SHARES") of Class B Common Stock to you. The
Selling Shareholder also has agreed to grant to you an option (the "SELLING
SHAREHOLDER OPTION") to purchase up to an additional 300,000 shares (the
"SELLING SHAREHOLDER OPTION SHARES") of Class B Common Stock on the terms and
for the purposes set forth in Section 1(b) hereto. The Company also has agreed
to grant to you an option (the "COMPANY OPTION", and, with the Selling
Shareholder Option, the "OPTION") to purchase up to an additional 300,000 shares
(the "COMPANY OPTION SHARES" and, with the Selling Shareholder Option Shares,
the "OPTION SHARES") of Class B Common Stock on the terms and for the purposes
set forth in Section 1(b) hereto. The Company Shares and the Selling Shareholder
Shares are hereinafter collectively referred to as the "FIRM SHARES." The Firm
Shares and the Option Shares are hereinafter collectively referred to as the
"SHARES."
The Company and the Selling Shareholder hereby confirm as follows each
of their agreements with the Underwriters.
1. Agreement to Sell and Purchase.
(a) On the basis of the representations, warranties, and
agreements of each of the Company and the Selling Shareholder herein contained
and subject to all the terms and conditions of this underwriting agreement (this
"AGREEMENT"), the Company and the Selling Shareholder agree, severally and not
jointly, to sell to each Underwriter and each Underwriter, severally and not
jointly, agrees to purchase at a purchase price of $______ per Share, from the
Company the number of Firm Shares determined by multiplying the aggregate number
of Firm Shares to be sold by the Company and from the Selling Shareholder the
number of Selling Shareholder Shares set forth opposite the Selling
Shareholder's name in Schedule I hereto by a fraction, the numerator of which is
the aggregate number of Firm Shares to be purchased by such Underwriter as set
forth opposite the name of such Underwriter in Schedule I hereto and the
denominator of which is the aggregate
number of Firm Shares to be purchased by all of the Underwriters from the
Company and the Selling Shareholder hereunder.
(b) Subject to all the terms and conditions of this
Agreement, the Selling Shareholder grants the Selling Shareholder Option and the
Company grants the Company Option to the several Underwriters to purchase,
severally and not jointly, the Selling Shareholder Option Shares and the Company
Option Shares, respectively, at the same price per Share as the Underwriters
shall pay for the Firm Shares. Each Option may be exercised only to cover
overallotments in the sale of the Firm Shares by the Underwriters and may be
exercised in whole or in part at any time and from time to time on or before the
thirtieth (30th) day after the date of this Agreement (or on the next business
day if the thirtieth (30th) day is not a business day), upon notice (the "OPTION
SHARES NOTICE") in writing or by telephone (confirmed in writing) by the
Underwriters to the Selling Shareholder and the Company, no later than 5:00
p.m., New York City time, at least two (2) and no more than five (5) business
days before the date specified for closing in the Option Shares Notice (the
"OPTION CLOSING DATE") setting forth the aggregate number of Option Shares to be
purchased and the time and date for such purchase. On each Option Closing Date,
the Selling Shareholder and the Company will sell to the Underwriters the number
of Option Shares set forth in the Option Shares Notice, in each case in an
amount equal to the respective percentage of Firm Shares that the Company and
the Selling Shareholder are purchasing hereunder, and each Underwriter will
purchase such percentage of the Option Shares as is equal to the percentage of
Firm Shares that such Underwriter is purchasing hereunder, as adjusted by the
Underwriters in such manner as they deem advisable to avoid fractional Shares.
2. Delivery and Payment. Delivery of the Firm Shares shall be
made to the Underwriters for the accounts of the Underwriters at the office of
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, counsel to the Underwriters, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇, ▇▇▇▇▇, against payment of the purchase price by wire transfer of immediately
available funds to the bank accounts designated by the Company and the Selling
Shareholder in accordance with their respective interests. Such payment shall be
made at 10:00 a.m., New York City time, on the third full business day following
the date of this Agreement, or at such other time on such other date, not later
than seven (7) business days after the date of this Agreement, as may be agreed
upon by the Company, the Selling Shareholder, and the Underwriters (such date is
hereinafter referred to as the "CLOSING DATE") (the Closing Date and each Option
Closing Date, if any, being sometimes referred to as an "APPLICABLE CLOSING
DATE"). Time shall be of the essence and delivery at the time and place
specified pursuant to this Agreement is a further condition of the obligation of
each Underwriter hereunder. The Firm Shares to be purchased by each Underwriter
hereunder will be represented by one or more definitive certificates registered
in the name of Cede & Co., which will be deposited by or on behalf of the
Company and the Selling Shareholder with the Depository Trust Company ("DTC") or
its designated custodian.
To the extent an Option is exercised, delivery of the Option Shares
against payment by the Underwriters (in the manner specified above) will take
place at the offices specified above for the Closing Date at the time and date
(which may be the Closing Date) specified in the Option Shares Notice.
Certificates evidencing the Shares shall be in definitive form and
shall be registered in such names and in such denominations as the Underwriters
shall request at least two (2) business days prior to the Closing Date or the
Option Closing Date, as the case may be, by written notice to the Company or the
Selling Shareholder, as applicable. For the purpose of expediting the checking
and packaging of certificates for the Shares, the Company and the Selling
Shareholder agree to make such certificates available for inspection at least
twenty-four (24) hours prior to the Closing Date or the Option Closing Date, as
the case may be, at the office of DTC or its designated custodian.
The cost of original issue tax stamps, if any, in connection with the
issuance, sale, and delivery of the Firm Shares and Option Shares by the Company
and the Selling Shareholder to the respective Underwriters shall be borne by the
Company and the Selling Shareholder, proportionately to their respective
interests. The Company and the Selling Shareholder will pay and save each
Underwriter and
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any subsequent holder of the Shares harmless from any and all liabilities with
respect to or resulting from any failure or delay in paying federal, state, or
Commonwealth of Puerto Rico stamp and other transfer taxes, if any, which may be
payable or determined to be payable in connection with the original issuance,
sale, or delivery to such Underwriter of the Firm Shares and Option Shares.
3. Representations and Warranties of the Company. The Company
represents, warrants, and covenants to each Underwriter that:
(a) A registration statement on Form S-3 (Registration
No. 333-______) relating to the Shares, including a preliminary prospectus
relating to the Shares and such amendments to such registration statement as may
have been required to the date of this Agreement, has been prepared by the
Company under the provisions of the Securities Act of 1933, as amended (the
"ACT"), and the rules and regulations (collectively referred to as the "RULES
AND REGULATIONS") of the Securities and Exchange Commission (the "COMMISSION")
thereunder, and has been filed with the Commission. The Commission has not
issued any order preventing or suspending the use of the Prospectus (as defined
below) or any Preliminary Prospectus (as defined below) or instituted or, to the
knowledge of the Company, threatened any proceeding for that purpose. The term
"PRELIMINARY PROSPECTUS" as used herein means a preliminary prospectus relating
to the Shares included at any time as part of the foregoing registration
statement or any amendment thereto before it became effective under the Act and
any prospectus filed with the Commission by the Company pursuant to Rule 424(a)
of the Rules and Regulations. Copies of such registration statement and
amendments and of each related Preliminary Prospectus have been delivered to the
Underwriters. If such registration statement has not become effective, a further
amendment to such registration statement, including a form of final prospectus,
necessary to permit such registration statement to become effective will be
filed promptly by the Company with the Commission. If such registration
statement has become effective, a final prospectus relating to the Shares
containing information permitted to be omitted at the time of effectiveness by
Rule 430A will be filed by the Company with the Commission in accordance with
Rule 424(b) of the Rules and Regulations promptly after execution and delivery
of this Agreement. The term "Registration Statement" means the registration
statement as amended at the time it becomes or became effective, including all
financial statements and schedules and all exhibits, documents incorporated
therein by reference, and all information contained in any final prospectus
filed with the Commission pursuant to Rule 424(b) of the Rules and Regulations
or in a term sheet described in Rule 434 of the Rules and Regulations in
accordance with Section 4 hereof and deemed to be included therein as of the
effective date by Rule 430A of the Rules and Regulations and including any
registration statement filed pursuant to Rule 462(b) of the Rules and
Regulations (a "RULE 462 REGISTRATION STATEMENT") increasing the size of the
offering. The term "Prospectus" means the prospectus relating to the Shares as
first filed with the Commission pursuant to Rule 424(b) of the Rules and
Regulations or, if no such filing is required, the form of final prospectus
relating to the Shares included in the Registration Statement at the effective
date. References herein to any document or other information incorporated by
reference in the Registration Statement shall include documents or other
information incorporated by reference in the Prospectus (or, if the Prospectus
is not in existence, in the most recent Preliminary Prospectus). References
herein to any Preliminary Prospectus or the Prospectus shall be deemed to
include all documents and information incorporated by reference therein and
shall be deemed to refer to and include any documents and information filed
after the date of such Preliminary Prospectus or Prospectus, as the case may be,
and so incorporated by reference, under the Securities Exchange Act of 1934, as
amended (the "EXCHANGE ACT").
(b) At the respective times the Registration Statement,
any Rule 462 Registration Statement and any post-effective amendments thereto
became effective and at the Closing Date (and, if any Option Shares are
purchased, at the Option Closing Date), the Registration Statement, the Rule 462
Registration Statement and any amendments and supplements thereto complied and
will comply in all material respects with the requirements of the Act and the
Rules and Regulations and did not and will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading. Neither the Prospectus
nor any amendments or supplements thereto, at the time the Prospectus or any
such amendment or supplement was issued and at the Closing Date (and, if any
Option Shares are purchased, at the Option Closing Date), included or will
include an untrue statement of a
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material fact or omitted or will omit to state a material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading. The representations and warranties in this
subsection shall not apply to statements in or omissions from the Registration
Statement or Prospectus made in reliance upon and in conformity with information
furnished to the Company in writing by any Underwriter expressly for use in the
Registration Statement or Prospectus.
Each Preliminary Prospectus and the Prospectus filed as part of the
Registration Statement as originally filed or as part of any amendment thereto,
or filed pursuant to Rule 424 under the Act, complied when so filed in all
material respects with the Rules and Regulations and each Preliminary Prospectus
and the Prospectus delivered to the Underwriters for use in connection with this
offering was identical to the electronically transmitted copies thereof filed
with the Commission pursuant to the Commission's Electronic Data Gathering,
Analysis and Retrieval system, except to the extent permitted by Regulation S-T.
There are no contracts or other documents required to be filed as
exhibits to the Registration Statement by the Act or the Rules and Regulations
that have not been so filed. The documents which are incorporated by reference
in any Preliminary Prospectus or the Prospectus or from which information is so
incorporated by reference, when they became effective or were filed with the
Commission, as the case may be, complied in all material respects with the
requirements of the Act and the Rules and Regulations or the Exchange Act and
the rules and regulations thereunder, as applicable, and did not, when such
documents were so filed, contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading, and any documents so filed and incorporated by reference
subsequent to the effective date of the Registration Statement shall, when they
are filed with the Commission, conform in all material respects with the
requirements of the Act and the Rules and Regulations and the Exchange Act and
the rules and regulations thereunder, as applicable.
(c) The accountants who certified the financial
statements and supporting schedules included in the Registration Statement are
independent public accountants as required by the Act and the Rules and
Regulations.
(d) The consolidated financial statements of the Company
included or incorporated by reference in the Registration Statement and the
Prospectus (or, if the Prospectus is not in existence, in the most recent
Preliminary Prospectus), together with the related schedules and notes, present
fairly the financial position of the Company and its Subsidiaries (as defined in
Section 3(g) hereof) at the dates indicated and the consolidated statement of
operations, stockholders' equity and cash flows of the Company and its
Subsidiaries for the periods specified; said financial statements have been
prepared in conformity with generally accepted accounting principles ("GAAP")
applied on a consistent basis throughout the periods involved. The supporting
schedules, if any, included in the Registration Statement present fairly in
accordance with GAAP the information required to be stated therein. The selected
financial data and the summary financial information included in the Prospectus
present fairly the information shown and have been compiled on a basis
consistent with that of the audited financial statements included or
incorporated by reference in the Registration Statement.
(e) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, except as otherwise
stated therein, (A) there has been no material adverse change in the condition,
financial or otherwise, or in the earnings, business affairs or business
prospects of the Company and its Subsidiaries considered as one enterprise,
whether or not arising in the ordinary course of business (a "MATERIAL ADVERSE
EFFECT"), (B) there have been no transactions entered into by the Company or any
of its Subsidiaries, other than those in the ordinary course of business, which
are material with respect to the Company and its subsidiaries considered as one
enterprise, and (C) except for regular quarterly dividends on the Company's
Class A common stock, par value $.01 per share (the "CLASS A COMMON STOCK"), for
regular quarterly dividends on the Company's Class B Common Stock, and
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collectively with the Class A Common Stock, the "COMMON STOCK") and for the
regular monthly dividends on the Company's 7.4% Noncumulative Perpetual Monthly
Income Preferred Stock, Series A ("SERIES A PREFERRED STOCK"), 7.75%
Noncumulative Perpetual Monthly Income Preferred Stock, Series B ("SERIES B
PREFERRED STOCK"), 7.60% Noncumulative Perpetual Monthly Income Preferred Stock,
Series C ("SERIES C PREFERRED STOCK") and 7.25% Noncumulative Perpetual Monthly
Income Preferred Stock, Series D ("SERIES D PREFERRED STOCK"); there has been no
dividend or distribution of any kind declared, paid or made by the Company on
any class of its capital stock.
(f) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the Commonwealth of
Puerto Rico with full corporate power and authority to own, lease and operate
its properties and conduct its business as described in the Prospectus and to
enter into and perform its obligations under this Agreement; and the Company is
duly qualified to transact business as a foreign corporation and is in good
standing under the laws of each jurisdiction in which the conduct of its
business or ownership or leasing of its properties requires such qualification
and where the failure to be so qualified would, individually or in the
aggregate, have a Material Adverse Effect. The Company is registered as a
financial holding company under the Bank Holding Company Act of 1956, as amended
(the "BHCA") and is in good standing with the Board of Governors of the Federal
Reserve System.
(g) The only subsidiaries of the Company (each a
"SUBSIDIARY" and collectively the "SUBSIDIARIES") are those listed on Exhibit A
hereto. Except as set forth in the Prospectus (or if the Prospectus is not in
existence, in the most recent Preliminary Prospectus) or as required in
connection with the exercise of its rights as a creditor, or pursuant to a bona
fide collateral pledge arrangement, neither the Company nor any Subsidiary owns,
nor at the Closing Date or the Option Closing Date (if any Option Shares are
purchased), will own an interest in any corporation, partnership, trust, joint
venture or other business entity. Each Subsidiary has been duly incorporated and
is validly existing as a corporation or a statutory business trust in good
standing under the laws of the jurisdiction in which it is chartered or
organized, with full corporate power and authority to own, lease and operate its
properties and conduct its business as described in the Prospectus, and is duly
qualified to transact business as a foreign corporation and is in good standing
under the laws of each jurisdiction in which the conduct of its business or
ownership or leasing of its properties requires such qualification and where the
failure to be so qualified would, individually or in the aggregate, have a
Material Adverse Effect. Except as otherwise disclosed in the Registration
Statement, all of the issued and outstanding capital stock of each Subsidiary
has been duly authorized and validly issued, is fully paid and non-assessable
and is owned by the Company, directly or through Subsidiaries, free and clear of
any security interest, mortgage, pledge, lien, encumbrance, claim or equity;
none of the outstanding shares of capital stock of any Subsidiary was issued in
violation of the preemptive or similar rights of any securityholder of such
Subsidiary.
(h) The authorized, issued and outstanding capital stock
of the Company is as set forth in the Prospectus in the column entitled "Actual"
under the caption "Capitalization" (except that the authorized capital stock of
the Company as of the Closing Date shall be as set forth under the heading "As
Adjusted" therein and except for subsequent issuances, if any, described therein
and the issuance of the Company Shares pursuant to this Agreement). The shares
of issued and outstanding capital stock of the Company have been duly authorized
and validly issued and are fully paid and non-assessable; none of the
outstanding shares of capital stock of the Company was issued in violation of
the preemptive or other similar rights of any securityholder of the Company. The
description of the securities of the Company in the Registration Statement and
the Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus) is, and at the Closing Date and, if later, as of each
Option Closing Date, will be, complete and accurate in all material respects.
(i) This Agreement has been duly authorized, executed and
delivered by the Company.
(j) The description of the Common Stock of the Company
contained in the Prospectus conforms in all material respects to the rights set
forth in the instruments defining the same.
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(k) The Shares have been duly authorized for issuance and
sale to the Underwriters pursuant to this Agreement, and, when issued and
delivered by the Company or the Selling Shareholder, as the case may be,
pursuant to this Agreement against payment of the consideration set forth herein
will be validly issued and fully paid and non-assessable Shares of capital stock
of the Company; the description of the Shares contained in the Prospectus
conforms in all material respects to the rights set forth in the instruments
defining the same; no holder of the Shares will be subject to personal liability
solely by reason of being such a holder; and the issuance of the Shares is not
subject to the preemptive or other similar rights of any security holder of the
Company.
(l) Neither the Company nor any of its Subsidiaries is in
violation of its articles of incorporation, certificate or declaration of trust,
charter or by-laws or in default in the performance or observance of any
obligation, agreement, covenant or condition contained in any contract,
indenture, mortgage, deed of trust, loan or credit agreement, note, lease or
other agreement or instrument to which the Company or any of its Subsidiaries is
a party or by which it or any of them may be bound, or to which any of the
property or assets of the Company or any Subsidiary is subject (collectively,
"AGREEMENTS AND INSTRUMENTS") except for such defaults that would not result in
a Material Adverse Effect; and the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated herein and in
the Registration Statement (including the issuance and sale of the Shares and
the use of the proceeds from the sale of the Company Shares as described in the
Prospectus under the caption "Use of Proceeds") and compliance by the Company
with its obligations hereunder have been duly authorized by all necessary
corporate action and do not and will not, whether with or without the giving of
notice or passage of time or both, conflict with or constitute a breach of, or
default or Repayment Event (as defined below) under, or result in the creation
or imposition of any lien, charge or encumbrance upon any property or assets of
the Company or any Subsidiary pursuant to the Agreements and Instruments (except
for such conflicts, breaches or defaults or liens, charges or encumbrances that
would not result in a Material Adverse Effect), nor will such action result in
any violation of the provisions of the articles of incorporation, declaration of
trust, charter or by-laws of the Company or any Subsidiary or any applicable
law, statute, rule, regulation, judgment, order, writ or decree of any
government, government instrumentality or court, domestic or foreign, having
jurisdiction over the Company or any Subsidiary or any of their assets,
properties or operations. As used herein, a "REPAYMENT EVENT" means any event or
condition which gives the holder of any note, debenture or other evidence of
indebtedness (or any person acting on such holder's behalf) the right to require
the repurchase, redemption or repayment of all or a portion of such indebtedness
by the Company or any Subsidiary.
(m) No labor dispute with the employees of the Company or
any Subsidiary exists or, to the knowledge of the Company, is imminent. Neither
the Company nor any Subsidiary is a party to a collective bargaining agreement.
(n) There is no action, suit, proceeding, inquiry or
investigation before or brought by any court or governmental agency or body,
domestic or foreign, now pending, or, to the knowledge of the Company,
threatened, against or affecting the Company or any Subsidiary, which is
required to be disclosed in the Registration Statement (other than as disclosed
therein), or which might reasonably be expected to result in a Material Adverse
Effect, or which might reasonably be expected to materially and adversely affect
the properties or assets thereof or the consummation of the transactions
contemplated in this Agreement or the performance by the Company of its
obligations hereunder; the aggregate of all pending legal or governmental
proceedings to which the Company or any Subsidiary is a party or of which any of
their respective property or assets is the subject which are not described in
the Registration Statement, including ordinary routine litigation incidental to
the business, could not reasonably be expected to result in a Material Adverse
Effect.
(o) There are no contracts or documents which are
required to be described in the Registration Statement or the Prospectus (or if
the Prospectus is not in existence, in the most recent Preliminary Prospectus)
or to be filed as exhibits thereto which have not been so described and filed as
required.
(p) The Company and its Subsidiaries own or possess, or
can acquire on reasonable terms, adequate patents, patent rights, licenses,
inventions, copyrights, know-how (including trade secrets and
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other unpatented and/or unpatentable proprietary or confidential information,
systems or procedures), trademarks, service marks, trade names or other
intellectual property (collectively, "INTELLECTUAL PROPERTY") necessary to carry
on the business now operated by them, and neither the Company nor any of its
Subsidiaries has received any actual notice or is otherwise aware of any
infringement of or conflict with asserted rights of others with respect to any
Intellectual Property or of any facts or circumstances which would render any
Intellectual Property invalid or inadequate to protect the interest of the
Company or any of its Subsidiaries therein, and which infringement or conflict
(if the subject of any unfavorable decision, ruling or finding) or invalidity or
inadequacy, singly or in the aggregate, would result in a Material Adverse
Effect.
(q) No filing with, or authorization, approval, consent,
license, order, registration, qualification or decree of, any court or
governmental authority or agency is necessary or required for the performance by
the Company of its obligations hereunder, in connection with the offering,
issuance or sale of the Shares hereunder or the consummation of the transactions
contemplated by this Agreement, except such as have been already obtained or as
may be required under the Act or the Rules and Regulations, state securities
laws or the bylaws and rules of the National Association of Securities Dealers,
Inc. (the "NASD") in connection with the purchase and distribution by the
Underwriters of the Shares to be sold hereby.
(r) The Company and its Subsidiaries possess such
permits, licenses, approvals, consents and other authorizations (collectively,
"GOVERNMENTAL LICENSES") issued by the appropriate federal, state, local or
foreign regulatory agencies or bodies necessary to conduct the business now
operated by them, except where the lack of such Governmental Licenses would not,
singly or in the aggregate, have a Material Adverse Effect; the Company and its
Subsidiaries are in compliance with the terms and conditions of all such
Governmental Licenses, except where the failure so to comply would not, singly
or in the aggregate, have a Material Adverse Effect; all of the Governmental
Licenses are valid and in full force and effect, except when the invalidity of
such Governmental Licenses or the failure of such Governmental Licenses to be in
full force and effect would not have a Material Adverse Effect; and neither the
Company nor any of its Subsidiaries has received any notice of proceedings
relating to the revocation or modification of any such Governmental Licenses
which, singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would result in a Material Adverse Effect.
(s) The Company and its Subsidiaries have good and
marketable title to all real property owned by the Company and its Subsidiaries
and good title to all other properties and assets owned by them, in each case,
free and clear of all mortgages, pledges, liens, security interests, claims,
restrictions or encumbrances of any kind except such as (a) are described in the
Prospectus or (b) would not, singly or in the aggregate, have a Material Adverse
Effect; and all of the leases and subleases material to the business of the
Company and its Subsidiaries, considered as one enterprise, and under which the
Company or any of its Subsidiaries holds properties described in the Prospectus,
are in full force and effect, and neither the Company nor any Subsidiary has any
notice of any material claim of any sort that has been asserted by anyone
adverse to the rights of the Company or any Subsidiary under any of the leases
or subleases mentioned above, or affecting or questioning the rights of the
Company or such Subsidiary to the continued possession of the leased or
subleased premises under any such lease or sublease.
(t) The Company is not, and upon the issuance and sale of
the Shares as herein contemplated and the application of the net proceeds
therefrom as described in the Prospectus will not be, an "investment company" or
an entity "controlled" by an "investment company" as such terms are defined in
the Investment Company Act of 1940, as amended (the "1940 ACT").
(u) The Company meets the requirements for use of Form
S-3 under the Rules and Regulations.
(v) To the knowledge of the Company, except as described
in the Registration Statement and except as would not, singly or in the
aggregate, result in a Material Adverse Effect, (A) neither the Company nor any
of its Subsidiaries is in violation of any federal, state, local or foreign
statute, law, rule, regulation, ordinance, code, policy or rule of common law or
any judicial or administrative interpretation
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thereof, including any judicial or administrative order, consent, decree or
judgment, relating to pollution or protection of human health, the environment
(including, without limitation, ambient air, surface water, groundwater, land
surface or subsurface strata) or wildlife, including, without limitation, laws
and regulations relating to the release or threatened release of chemicals,
pollutants, contaminants, wastes, toxic substances, hazardous substances,
petroleum or petroleum products (collectively, "HAZARDOUS MATERIALS") or to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials (collectively, "ENVIRONMENTAL
LAWS"), (B) the Company and its Subsidiaries have all permits, authorizations
and approvals required under any applicable Environmental Laws and are each in
compliance with their requirements, (C) there are no pending or threatened
administrative, regulatory or judicial actions, suits, demands, demand letters,
claims, liens, notices of noncompliance or violation, investigation or
proceedings relating to any Environmental Law against the Company or any of its
Subsidiaries and (D) there are no events or circumstances known to the Company
that might reasonably be expected to form the basis of an order for clean-up or
remediation, or an action, suit or proceeding by any private party or
governmental body or agency, against or affecting the Company or any of its
Subsidiaries relating to Hazardous Materials or any Environmental Laws.
(w) No court, supervisory or regulatory authority or
arbitrator has, by order or otherwise, prohibited or suspended, or, to the
knowledge of the Company, threatened to prohibit or suspend, the use of the
Prospectus.
(x) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurance that (i) transactions are
executed in accordance with management's general or specific authorization, (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with GAAP and to maintain accountability for assets,
(iii) access to assets is permitted only in accordance with management's general
or specific authorization, and (iv) the recorded accountability for assets is
compared with existing assets at reasonable intervals and appropriate action is
taken with respect to any differences.
(y) Except as set forth in the Registration Statement and
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus), subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus and prior
to the Closing Date and, if later, each Option Closing Date, (i) there has not
been, and will not have been, any Material Adverse Effect, (ii) neither the
Company nor any of its Subsidiaries has entered into, or will have entered into
any material transactions other than pursuant to this Agreement or in the
ordinary course of its business, and (iii) the Company has not, and will not
have, paid or declared any dividends or other distributions of any kind on any
class of its capital stock, except for the payment or declaration of quarterly
dividends, on the Company's Common Stock and its Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock and Series D Preferred Stock,
each in the ordinary course of its business.
(z) No statement, representation, or warranty made by the
Company in this Agreement or made in any certificate or document required by
this Agreement to be delivered to the Underwriters was or will be, when made,
inaccurate, untrue or incorrect in any material respect. Each certificate signed
by an officer of the Company and delivered to the Underwriters or counsel for
the Underwriters shall be deemed to be a representation and warranty by the
Company to each Underwriter as to the matters covered thereby.
(aa) Neither the Company, its Subsidiaries nor any of
their respective directors or officers has taken, nor will he, she or it take,
directly or indirectly, any action designed, or which might reasonably be
expected in the future, to cause or result in, under the Act or otherwise, or
which has constituted, stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the Shares or
otherwise.
(bb) The Shares have been approved for quotation on the
Nasdaq Stock Market, subject only to notice of issuance.
-8-
(cc) Neither the Company nor any of its Subsidiaries nor,
to the Company's best knowledge, any employee or agent of the Company or any
Subsidiary has made any payment of funds of the Company or any Subsidiary or
received or retained any funds of the Company or any Subsidiary in violation of
any law, rule or regulation which payment, receipt or retention of funds is of a
character required to be disclosed in the Prospectus (or, if the Prospectus is
not in existence, in the most recent Preliminary Prospectus).
(dd) Each of the Company and its Subsidiaries has filed
all foreign, federal, Puerto Rico and local tax returns that are required to be
filed or has requested extensions thereof and has paid all taxes required to be
paid by it and any other assessment, fine or penalty levied against it, to the
extent that any of the foregoing is due and payable.
(ee) The deposit accounts of R-G Premier Bank of Puerto
Rico ("R-G PREMIER BANK") and Crown Bank, a Federal Savings Bank ("CROWN BANK"),
each a Subsidiary of the Company (the "BANKS") are insured by the Federal
Deposit Insurance Corporation ("FDIC") to the legal maximum, and no proceeding
for the termination or revocation of such insurance is pending or threatened.
R-G Premier Bank and Crown Bank are members in good standing of the Federal Home
Loan Bank of New York and the Federal Home Loan Bank of Atlanta, respectively.
(ff) None of the Company or its Subsidiaries or any of
their respective directors, officers or trustees is subject to any order or
directive of, or party to any agreement with, any regulatory agency having
jurisdiction with respect to its business or operations except as disclosed in
the Prospectus (or if the Prospectus is not in existence, in the most recent
Preliminary Prospectus).
(gg) Except as disclosed in the Prospectus, there are no
contracts, agreements or understandings between the Company and any person that
would give rise to a valid claim against the Company or any Underwriter for a
brokerage commission, finder's fee or other like payment.
(hh) There are no contracts, agreements or understandings
between the Company and any person granting such person the right to require the
Company to file a registration statement under the Act with respect to any
securities of the Company owned or to be owned by such person or to require the
Company to include such securities in the securities registered pursuant to a
Registration Statement or in any securities being registered pursuant to any
other registration statement filed by the Company under the Act.
(ii) The Company has obtained agreements substantially in
the form included in Exhibit B hereto of the senior executive officers of the
Company named in the Preliminary Prospectus included in the Registration
Statement and directors of the Company to the extent that such officers and
directors not sell, offer or agree to sell, hypothecate, contract to sell, grant
any option to sell or otherwise dispose of, directly or indirectly, or enter
into any agreement or arrangement that has the effect of transferring the
economic effects of holding, any shares of Common Stock or securities
convertible into or exchangeable or exercisable for Common Stock or warrants or
other rights to purchase Common Stock or any other securities of the Company
that are substantially similar to Common Stock or permit the registration under
the Act of any shares of Common Stock for the period beginning from the date
hereof and continuing to and including the date ninety (90) days after the
Closing Date (the "LOCK-UP PERIOD") without the prior written consent of the
Underwriters.
4. Representations and Warranties of the Selling Shareholder. The
Selling Shareholder represents, warrants and covenants, solely with respect to
himself and the number of Selling Shareholder Shares and the Selling Shareholder
Option Shares set forth opposite his name on Schedule I hereto, to each
Underwriter that:
(a) The Selling Shareholder has valid and unencumbered
title to 2,300,000 shares of Class A Common Stock of the Company, that are
convertible into 2,300,000 Shares.
-9-
(b) Such Selling Shareholder will have, valid and
unencumbered title to the Shares on each Applicable Closing Date, to be
delivered by the Selling Shareholder on such Applicable Closing Date and full
right, power and authority to enter into this Agreement and to sell, assign,
transfer and deliver the Shares to be delivered by the Selling Shareholder on
such Applicable Closing Date hereunder; and upon the delivery of and payment for
such Shares on each Applicable Closing Date hereunder, the several Underwriters
will acquire valid and unencumbered title to the Shares to be delivered by the
Selling Shareholder on such Applicable Closing Date.
(c) No filing with, or authorization, approval, consent,
license, order, registration, qualification or decree of, any court or
governmental authority or agency is necessary or required for the performance by
the Selling Shareholder of his obligations hereunder, in connection with the
offering, issuance or sale of the Selling Shareholder Shares hereunder or the
consummation of the transactions contemplated by this Agreement, except such as
has been already obtained or may be required under the Act or the Rules and
Regulations, state securities laws or the bylaws and rules of the NASD in
connection with the purchase and distribution by the Underwriters of the Selling
Shareholder Shares and the Selling Shareholder Option Shares to be sold hereby;
(d) The Selling Shareholder has the legal right, power
and all authorizations and approvals required by law to enter into the Custody
Agreement (as defined in Section 4(j) hereof). This Agreement and the Custody
Agreement have been duly executed and delivered by the Selling Shareholder and
each such agreement is a legal, valid and binding agreement of the Selling
Shareholder;
(e) The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated by this
Agreement and in the Registration Statement (including the issuance and sale of
such Selling Shareholder Shares and the Selling Shareholder Option Shares, if
applicable) and compliance by the Selling Shareholder with his obligations under
this Agreement and the Custody Agreement, do not and will not, whether with or
without the giving of notice or lapse of time or both, conflict with or
constitute a breach of, or default or Repayment Event under, or result in the
creation or imposition of any lien, charge or encumbrance upon any property or
assets of the Selling Shareholder pursuant to any contract, indenture, mortgage,
deed of trust, loan or credit agreement, note, lease or any other agreements or
instrument, to which the Selling Shareholder is a party or by which he may be
bound, or to which any of the property or assets of the Selling Shareholder is
subject (except for such conflicts, breaches, defaults, liens, charges or
encumbrances that would not have a material adverse effect on the transactions
contemplated herein), nor will such action result in any violation of any
applicable law, statute, rule, regulation, judgment, order, writ or decree, of
any government, government instrumentality or court, domestic or foreign, having
jurisdiction over the Selling Shareholder or any respective properties, assets
or operations;
(f) The Selling Shareholder has not taken and will not
take, directly or indirectly, any action which is designed to or which has
constituted stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Shares;
(g) Neither the Registration Statement, any Preliminary
Prospectus, the Prospectus or any amendment or supplement thereto contains any
untrue statement of a material fact or omits to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that such untrue
statement or omission was made in the Registration Statement, any Preliminary
Prospectus, the Prospectus or any amendment or supplement thereto in reliance
upon and in conformity with written information furnished to the Company by the
Selling Shareholder pertaining, as such, for use therein;
(h) The Selling Shareholder has no reason to believe that
the representations and warranties of the Company set forth in Section 3 are not
true and correct in all material respects;
-10-
(i) The Selling Shareholder will deliver to you prior to
or at each Applicable Closing Date a properly completed and executed Internal
Revenue Service Form W-8BEN (or other applicable Form W-8;
(j) Certificates in negotiable form representing all of
the Selling Shareholder Shares and the Selling Shareholder Option Shares to be
sold by the Selling Shareholder have been placed in custody under a Custody
Agreement, in the form heretofore furnished to you (the "CUSTODY AGREEMENT"),
duly executed and delivered by the Selling Shareholder to American Stock
Transfer & Trust Company as custodian (the "CUSTODIAN");
(k) The Selling Shareholder is not subject to any order
or directive of, or party to any agreement with, any regulatory agency having
jurisdiction with respect to him;
(l) The Shares represented by the certificates held in
custody for the Selling Shareholder under the Custody Agreement are subject to
the interests of the Underwriters hereunder and the arrangements made by the
Selling Shareholder for such custody are to that extent irrevocable; the
obligations of the Selling Shareholder hereunder shall not be terminated by
operation of law, whether by the death or incapacity of the Selling Shareholder
or, in the case of an estate or trust, by the death or incapacity of any
executor or trustee or the termination of such estate or trust, or in the case
of a partnership or corporation, by the dissolution of such partnership or
corporation, or by the occurrence of any other event; if the Selling Shareholder
or any such executor or trustee should die or become incapacitated, or if any
such estate or trust should be terminated, or if any such partnership or
corporation should be dissolved, or if any other such event should occur, before
the delivery of the Shares hereunder, certificates representing the Shares shall
be delivered by or on behalf of the Selling Shareholder in accordance with the
terms and conditions of this Agreement and the Custody Agreement and shall be as
valid as if such death, incapacity, termination, dissolution or other event had
not occurred, regardless of whether or not the Custodian shall have received
notice of such death, incapacity, termination, dissolution or other event.
5. Agreements of the Company. The Company covenants and agrees
with each of the several Underwriters as follows:
(a) The Company will not, either prior to the effective
date or thereafter during such period as the Prospectus is required by law to be
delivered in connection with sales of the Shares by an Underwriter or dealer,
file any amendment or supplement to the Registration Statement or the
Prospectus, unless a copy thereof shall first have been submitted to the
Underwriters within a reasonable period of time prior to the filing thereof and
the Underwriters shall not have objected thereto in good faith.
(b) If the Registration Statement is not yet effective,
the Company will use its best efforts to cause the Registration Statement to
become effective not later than the time indicated in Section 8(a) hereof. The
Company will notify the Underwriters promptly, and will confirm in writing, (i)
when the Registration Statement has become effective and when any post-effective
amendment thereto becomes effective; (ii) of any request by the Commission for
amendments or supplements to the Registration Statement or the Prospectus or for
additional information; (iii) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose or the threat thereof; (iv) of
the happening of any event during the period mentioned in the first sentence of
Section 5(g) that in the judgment of the Company makes any statement of a
material fact made in the Registration Statement or the Prospectus untrue or
that requires the making of any changes in the Registration Statement or the
Prospectus in order to make the statements therein, in light of the
circumstances in which they are made, not misleading; and (v) of receipt by the
Company or any representative or attorney of the Company of any other
communication from the Commission relating to the Company, the Registration
Statement, any Preliminary Prospectus, or the Prospectus. If at any time the
Commission shall issue any order suspending the effectiveness of the
Registration Statement, the Company will make every reasonable effort to obtain
the withdrawal of such order at the earliest possible moment. The Company will
prepare the Prospectus in a form
-11-
approved by the Underwriters and will file such Prospectus pursuant to Rule
424(b) under the Act not later than the Commission's close of business on the
second business day following the execution and delivery of this Agreement or,
if applicable, such earlier time as may be required by Rule 430A(a)(3) under the
Act. If the Company has omitted any information from the Registration Statement
pursuant to Rule 430A, the Company will use its best efforts to comply with the
provisions of and make all requisite filings with the Commission pursuant to
said Rule 430A and to notify the Underwriters promptly of all such filings.
(c) If the Company elects to rely upon Rule 462(b) of the
Rules and Regulations, the Company shall file the Rule 462(b) Registration
Statement with the Commission in compliance with Rule 462(b) of the Rules and
Regulations by 10:00 p.m., Washington, D.C. time, on the date of this Agreement,
and the Company shall at the time of filing, either pay to the Commission the
filing fee for the Rule 462(b) Registration Statement or give irrevocable
instructions for the payment of such fee pursuant to Rule 111(b) of the Rules
and Regulations.
(d) If, at any time when a Prospectus relating to the
Shares is required to be delivered under the Act, any event occurs as a result
of which, in the judgment of the Company or in the opinion of counsel for the
Underwriters, the Registration Statement or the Prospectus, as then amended or
supplemented, would include any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading, or if for
any other reason it is necessary at any time to amend or supplement the
Registration Statement or the Prospectus to comply with the Act or the Rules and
Regulations, the Company will promptly notify the Underwriters thereof and,
subject to Section 5(b) hereof, will prepare and file with the Commission, at
the Company's expense, an amendment to the Registration Statement or an
amendment or supplement to the Prospectus that corrects such statement or
omission or effects such compliance.
(e) The Company will furnish to the Underwriters, without
charge, three (3) signed copies of the Registration Statement and of any
post-effective amendment thereto, including financial statements and schedules,
and all exhibits thereto and will furnish to the Underwriters, without charge,
for transmittal to each of the other Underwriters, copies of the Registration
Statement and any post-effective amendment thereto, including financial
statements and schedules but without exhibits.
(f) The Company will comply with all the provisions of
all undertakings contained in the Registration Statement.
(g) On the effective date, and thereafter from time to
time for such period as the Prospectus is required by the Act to be delivered,
the Company will deliver to each of the Underwriters, without charge, as many
copies of the Prospectus or any amendment or supplement thereto as the
Underwriters may reasonably request. The Company consents to the use of the
Prospectus or any amendment or supplement thereto by the several Underwriters
and by all dealers to whom the Shares may be sold, both in connection with the
offering or sale of the Shares and for any period of time thereafter during
which the Prospectus is required by law to be delivered in connection therewith.
If during such period of time any event shall occur which in the judgment of the
Company or counsel to the Underwriters should be set forth in the Registration
Statement or the Prospectus in order to make any statement therein, in the light
of the circumstances under which it was made, not misleading, or if it is
necessary to supplement or amend the Registration Statement or the Prospectus to
comply with law, the Company will forthwith prepare and duly file with the
Commission an appropriate supplement or amendment thereto, and deliver to each
of the Underwriters, without charge, such number of copies thereof as the
Underwriters may reasonably request.
(h) Prior to any public offering of the Shares by the
Underwriters, the Company will cooperate with the Underwriters and its counsel
in connection with the registration or qualification of the Shares for offer and
sale under the securities or blue sky laws of such jurisdictions as the
Underwriters may reasonably request; provided, however, that in no event shall
the Company be obligated to qualify to do business in any jurisdiction where it
is not now so qualified or to take any action which would subject it to general
service of process in any jurisdiction where it is not now so subject.
-12-
(i) During the period of five (5) years commencing on the
effective date, the Company will furnish to the Underwriters and each other
Underwriter who may so request copies of such financial statements and other
periodic and special reports as the Company may from time to time distribute
generally to the holders of any class of its capital stock, and will furnish to
the Underwriters and each other Underwriter who may so request a copy of each
annual or other report it shall be required to file with the Commission.
(j) The Company will make generally available to holders
of its securities, as soon as may be practicable, but in no event later than the
last day of the fifteenth (15th) full calendar month following the calendar
quarter in which the effective date falls, a consolidated earnings statement
(which need not be audited but shall be in reasonable detail) for a period of
twelve (12) months commencing after the effective date, and satisfying the
provisions of Section 11(a) of the Act (including Rule 158 of the Rules and
Regulations).
(k) The Company will apply the net proceeds from the
offering and sale of the Shares in the manner set forth in the Prospectus under
"Use of Proceeds."
(l) The Company will not at any time, directly or
indirectly, take any action intended, or which might reasonably be expected, to
cause or result in, or which will constitute, stabilization of the price of the
shares of Common Stock to facilitate the sale or resale of any of the Shares.
(m) The Company will use its best efforts to effect and
maintain the quotation of the Shares on the Nasdaq National Market and will file
with the Nasdaq National Market all documents and notices required by the Nasdaq
National Market of companies that have securities that are traded in the
over-the-counter market and quotations which are reported by the Nasdaq National
Market.
(n) The Company, during the period when the Prospectus is
required to be delivered under the Act, will file all documents required to be
filed with the Commission pursuant to the 1934 Act within the periods required
by the 1934 Act and the rules and regulations of the Commission thereunder.
(o) The Company will not sell, offer or agree to sell,
hypothecate, contract to sell, grant any option to sell or otherwise dispose of,
directly or indirectly, or enter into any agreement or arrangement that has the
effect of transferring the economic effects of holding, any shares of Common
Stock or securities convertible into or exchangeable or exercisable for Common
Stock or warrants or other rights to purchase Common Stock or any other
securities of the Company that are substantially similar to Common Stock or
permit the registration under the Act of any shares of Common Stock, except for
the registration of the Shares and the sales to the Underwriters pursuant to
this Agreement, for the Lock-up Period, without the prior consent of the
Underwriters.
6. Agreements of the Selling Shareholder. The Selling Shareholder
covenants and agrees with each of the several Underwriters as follows:
(a) Not to sell, offer or agree to sell, hypothecate,
contract to sell, grant any option to sell or otherwise dispose of, directly or
indirectly, or enter into any agreement or arrangement that has the effect of
transferring the economic effects of holding, any shares of Common Stock or
securities convertible into or exchangeable or exercisable for Common Stock or
warrants or other rights to purchase Common Stock or any other securities of the
Company that are substantially similar to Common Stock for the Lock-up Period,
without the prior written consent of the Underwriters.
(b) To advise the Underwriters promptly of the happening
of any event known to the Selling Shareholder within the time during which a
Prospectus relating to the Shares is required to be delivered under the Act
which, in the judgment of the Selling Shareholder, would require the making of
any change in the Prospectus then being used so that the Prospectus would not
include an untrue statement of material fact or omit
-13-
to state a material fact necessary to make the statements therein, in the light
of the circumstances under which they are made, not misleading.
(c) To pay all federal and other taxes, if any, on the
transfer and sale of the Shares being sold by the Selling Shareholder to the
Underwriters.
(d) To the extent not deposited into custody on or prior
to the date hereof, to duly deposit, prior to the date of purchase, with the
Custodian, pursuant to and under the Custody Agreement, Selling Shareholder
Shares and the Selling Shareholder Option Shares.
7. Expenses. Whether or not the transactions contemplated by this
Agreement are consummated or this Agreement is terminated, the Company will pay,
or reimburse if paid by the Underwriters, all costs and expenses incidental to
the performance of the obligations of the Company under this Agreement,
including, but not limited to, costs and expenses of or relating to (i) the
preparation, printing, and filing by the Company of the Registration Statement
and amendments and exhibits thereto, each Preliminary Prospectus prior to or
during the period specified in the first sentence of Section 5(g) but not
exceeding nine (9) months after the effective date, the Prospectus and
amendments or supplements; (ii) the preparation and delivery of certificates
representing the Shares; (iii) the furnishing (including costs of shipping and
mailing) of such copies of the Registration Statement, the Prospectus, and any
Preliminary Prospectus, and all amendments and supplements thereto, as may be
requested for use in connection with the offering and sale of the Shares by the
Underwriters or by dealers to whom Shares may be sold; (iv) the filing fees
incident to, and the disbursements of counsel to the Underwriters in connection
with, the review by the NASD of the terms of the sale of the Shares and the fees
and expenses incurred in connection with the inclusion of the Shares in the
Nasdaq National Market System; (v) the fees and disbursements of the Company's
counsel, accountants and other advisers (vi) the registration or qualification
of the Shares for offer and sale under the securities or blue sky laws of such
jurisdictions designated pursuant to Section 5(h) and the preparation and
printing of preliminary, supplemental, and final blue sky memoranda; and the
fees and expenses of any transfer agent or registrar for the Shares. The Selling
Shareholder will pay all costs and expenses incident to the performance of his
obligations hereunder which are not otherwise specifically provided for in this
Section, including (i) any fees and expenses of counsel for such Selling
Shareholder, (ii) the fees and expenses of the Custodian, and (iii) all expenses
and taxes incident to the sale and delivery of the Shares to be sold by the
Selling Shareholder to the Underwriters hereunder.
8. Conditions of the Obligations of the Underwriters. The
obligations of each Underwriter hereunder to purchase and pay for the Firm
Shares on the Closing Date and Option Shares on each Option Closing Date, are
subject to the following conditions:
(a) Notification that the Registration Statement has
become effective shall be received by the Underwriters not later than 3:00 p.m.,
New York City time, on the date of this Agreement or at such later date and time
as shall be consented to in writing by the Underwriters and all filings required
by Rule 424 and Rule 430A of the Rules and Regulations shall have been made. If
the Company has elected to rely upon Rule 462(b) of the Rules and Regulations,
the Company has filed the Rule 462(b) Registration Statement by 10:00 p.m.,
Washington D.C. time, on the date of this Agreement.
(b) (i) No stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall be pending or threatened by the Commission; (ii) no order
suspending the effectiveness of the Registration Statement or the qualification
or registration of the Shares under the securities or blue sky laws of any
jurisdiction shall be in effect, and no proceeding for such purpose shall be
pending before or threatened or contemplated by the Commission or the
authorities of any such jurisdiction; (iii) any request for additional
information on the part of the staff of the Commission or any such authorities
shall have been complied with to the satisfaction of the staff of the Commission
or such authorities; and (iv) after the date hereof no amendment or supplement
to the Registration Statement or the Prospectus shall
-14-
have been filed unless a copy thereof was first submitted to the Underwriters
and the Underwriters did not object thereto in good faith.
(c) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, (i) there shall not have
been a Material Adverse Effect, and (ii) the Company shall not have sustained
any material loss or interference with its business, assets, or properties from
fire, explosion, flood, or other casualty, or from any labor dispute or any
court or legislative or other governmental action, order, or decree, which is
not set forth in the Registration Statement, including the documents
incorporated by reference therein, and the Prospectus.
(d) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, there shall have been no
litigation or other proceeding instituted against the Company or any of its
officers, directors, or shareholders in their capacities as such, or any of its
assets or properties, before or by any Governmental Body in which litigation or
proceeding an unfavorable ruling, decision, or finding would have a Material
Adverse Effect.
(e) Each of the representations and warranties of the
Company and the Selling Shareholders contained herein shall be true and correct
on each Applicable Closing Date, as if made on such date, and all covenants and
agreements herein contained to be performed on the part of the Company or
Selling Shareholder and all conditions herein contained to be fulfilled or
complied with by the Company or Selling Shareholder at or prior to each
Applicable Closing Date, shall have been fully performed, fulfilled, or complied
with.
(f) The Underwriters shall have received an opinion,
dated such Applicable Closing Date, from ▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇ LLP, special
counsel for the Company, to the following effect:
(i) The Company is registered as a financial
holding company under the BHCA.
(ii) The Company has corporate power and
authority to own, lease and operate its properties and to conduct its
business as described in the Prospectus.
(iii) The Company is duly qualified as a foreign
corporation to transact business in each jurisdiction in which such
qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business, except where the
failure so to qualify would not result in a Material Adverse Effect.
(iv) The authorized, issued and outstanding
capital stock of the Company is as set forth in the Prospectus in the
column entitled "Actual" under the caption "Capitalization" (except for
subsequent issuances, if any, pursuant to this Agreement or pursuant to
reservations, agreements or employee benefit plans referred to in the
Prospectus or pursuant to the exercise of options referred to in the
Prospectus); the shares of issued and outstanding capital stock of the
Company have been duly authorized and validly issued and are fully paid
and non-assessable; and none of the outstanding shares of capital stock
of the Company was issued in violation of the preemptive or other
similar rights of any security holder of the Company granted by
applicable law or the Company's Certificate of Incorporation.
(v) The Shares have been duly authorized for
issuance and sale to the Underwriters pursuant to this Agreement and,
when issued and delivered by the Company pursuant to this Agreement
against payment of the consideration set forth in this Agreement, will
be validly issued and fully paid and non-assessable; no holder of the
Shares is or will be subject to personal liability for obligations of
the Company solely by reason of being such a holder.
-15-
(vi) The issuance of the Shares is not subject to
the preemptive or other similar rights of any security holder of the
Company.
(vii) Each of the Subsidiaries has been duly
incorporated and is validly existing as a corporation, bank or trust
under the laws of its jurisdiction of incorporation, each of the
Subsidiaries is duly qualified as a foreign corporation to transact
business in each jurisdiction in which such qualification is required,
whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure so to qualify would not
result in a Material Adverse Effect; to the best of such counsel's
knowledge, except for the trust preferred securities issued by R&G
Capital Trust I, all of the issued and outstanding capital stock of
each Subsidiary is owned by the Company, directly or through a
Subsidiary, free and clear of any security interest, mortgage, pledge,
lien, encumbrance, claim or equity; and none of the outstanding Shares
of capital stock of any Subsidiary was issued in violation of the
preemptive or similar rights of any security holder of any Subsidiary
granted by applicable law or such Subsidiary's articles of
incorporation.
(viii) The Company has full legal right, power, and
authority to enter into this Agreement and to consummate the
transactions provided for therein; this Agreement has been duly
authorized, executed and delivered by the Company, and assuming due
authorization, execution and delivery by each other party thereto, is a
valid and binding agreement of the Company, except as limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other
laws now or hereafter in effect relating to or affecting creditors'
rights generally or by general principles of equity relating to the
availability of remedies and except as rights to indemnity and
contribution may be limited by federal or state securities laws or the
public policy underlying such laws.
(ix) The Registration Statement has been declared
effective under the Act; any required filing of the Prospectus pursuant
to Rule 424(b) has been made in the manner and within the time period
required by Rule 424(b); and, to the best of such counsel's knowledge,
no stop order suspending the effectiveness of the Registration
Statement, or any amendment thereto, and no order directed at any
document incorporated by reference in the Registration Statement has
been issued under the Act and no proceedings for that purpose have been
instituted or are pending or threatened by the Commission.
(x) The Registration Statement, the Prospectus
and each amendment or supplement to the Registration Statement and
Prospectus, and the documents incorporated therein by reference, as of
their respective effective or issue dates (other than the financial
statements, notes to the financial statements, financial tables and
other financial information and supporting schedules included therein
or omitted therefrom or contained in the documents incorporated by
reference therein, as to which such counsel need express no opinion)
complied in all material respects with the requirements of the Act and
the Rules and Regulations.
(xi) The form of certificate used to evidence the
Shares complies in all material respects with all applicable
Commonwealth of Puerto Rico statutory requirements and with any
applicable requirements of the certificate of incorporation and by-laws
of the Company. The Shares have been duly authorized for quotation on
the Nasdaq Stock Market.
(xii) To the best of such counsel's knowledge,
there is not pending or threatened any action, suit, proceeding,
inquiry or investigation, to which the Company or any Subsidiary is a
party, or to which the property or assets of the Company or any
Subsidiary is subject, before or brought by any court or governmental
agency or body, domestic or foreign of a character required to be
disclosed in the Registration Statement or in the Prospectus which is
not so disclosed therein, which might reasonably be expected to result
in a Material Adverse Effect, or which might reasonably be expected to
materially and adversely affect the properties or assets thereof or the
consummation of the transactions contemplated in this Agreement or the
performance by the Company of its obligations thereunder.
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(xiii) The information in the Prospectus under
"Description of Capital Stock", "Taxation-United States Taxation" and
in the Registration Statement under Item 15, to the extent that it
constitutes a discussion of federal law, summaries of legal matters
involving federal law, the Company's Certificate of Incorporation and
Bylaws or legal proceedings, or legal conclusions, has been reviewed by
such counsel and is accurate and complete in all material respects.
(xiv) To the best of such counsel's knowledge,
there are no statutes or regulations that are required to be described
in the Prospectus that are not described as required.
(xv) All descriptions in the Registration
Statement of contracts and other documents to which the Company or its
subsidiaries are a party are accurate in all material respects; to the
best of such counsel's knowledge, there are no franchises, contracts,
indentures, mortgages, loan agreements, notes, leases, or other
instruments required to be described or referred to in the Registration
Statement or to be filed as exhibits thereto other than those described
or referred to therein or filed or incorporated by reference as
exhibits thereto.
(xvi) To the best of such counsel's knowledge,
neither the Company nor any Subsidiary is in violation of its articles
of incorporation, charter or certificate or declaration of trust or
by-laws and no default by the Company or any Subsidiary exists in the
due performance or observance of any material obligation, agreement,
covenant or condition contained in any contract, indenture, mortgage,
loan agreement, note, lease or other agreement or instrument that is
described or referred to in the Registration Statement or the
Prospectus or filed or incorporated by reference as an exhibit to the
Registration Statement.
(xvii) No filing with, or authorization, approval,
consent, license, order, registration, qualification or decree of, any
court or governmental authority or agency, domestic or foreign (other
than under the Act and the Rules and Regulations, which have been
obtained, or as may be required under the securities or blue sky laws
of the various states, as to which such counsel need express no
opinion) is necessary or required in connection with the due
authorization, execution and delivery of this Agreement or for the
offering, issuance, sale or delivery of the Shares.
(xviii) The execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated in
this Agreement and in the Registration Statement (including the
issuance and sale of the Shares and the use of the proceeds from the
sale of the Shares as described in the Prospectus under the caption
"Use of Proceeds") and compliance by the Company with its obligations
under this Agreement do not and will not, whether with or without the
giving of notice or lapse of time or both, conflict with or constitute
a breach of, or default or Repayment Event under or result in the
creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or any Subsidiary pursuant to any
contract, indenture, mortgage, deed of trust, loan or credit agreement,
note, lease or any other agreements or instrument, known to such
counsel to which the Company or any Subsidiary is a party or by which
it or any of them may be bound, or to which any of the property or
assets of the Company or any Subsidiary is subject (except for such
conflicts, breaches, or defaults or liens, charges or encumbrances that
would not have a Material Adverse Effect), nor will such action result
in any violation of the provisions of the articles of incorporation or
by-laws of the Company or any Subsidiary, or any applicable law,
statute, rule, regulation, judgment, order, writ or decree, known to
such counsel, of any government, government instrumentality or court,
domestic or foreign, having jurisdiction over the Company or any
Subsidiary or any of their respective properties, assets or operations.
(xix) To the best of such counsel's knowledge,
there are no persons with registration rights or other similar rights
to have any securities registered pursuant to the Registration
Statement or otherwise registered by the Company under the Act.
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(xx) The Company is not, and upon the issuance
and sale of the Shares as contemplated in this Agreement and the
application of the net proceeds therefrom as described in the
Prospectus will not be, an "investment company" or an entity
"controlled" by an "investment company," as such terms are defined in
1940 Act.
(xxi) The deposit accounts of the Banks are
insured by the FDIC to the legal maximum, and to the best of such
counsel's knowledge, no proceeding for the termination or revocation of
such insurance is pending or threatened. R-G Premier Bank and Crown
Bank are members of the Federal Home Loan Bank of New York and the
Federal Home Loan Bank of Atlanta, respectively.
(xxii) To the best of such counsel's knowledge,
none of the Company, its Subsidiaries, or any of their respective
directors, officers or trustees is subject to any order or directive
of, or is a party to any agreement with, any federal banking or
mortgage banking regulatory agency having jurisdiction with respect to
its business or operations, except as disclosed in the Registration
Statement or the Prospectus or which would not have a Material Adverse
Effect.
(xxiii) To the best of such counsel's knowledge, the
conduct of the respective businesses of the Company and its
Subsidiaries is not in violation of any federal banking, mortgage
banking or securities laws, which violation is likely to have a
Material Adverse Effect. Each of the Company and the Subsidiaries has
obtained and, to such counsel's knowledge, is operating in compliance
with, all authorizations, licenses, orders and directives required by
federal banking, mortgage banking or securities laws which are material
to the conduct of their respective businesses. To such counsel's
knowledge, all such authorizations, licenses, orders or directives are
valid and in full force and effect and neither the Company nor the
Subsidiaries have received any notice of any proceeding relating to the
revocation or modification of any such license, authorization or order.
Nothing has come to such counsel's attention that would lead such
counsel to believe that the Registration Statement or any amendment thereto,
including the documents incorporated therein by reference (except for financial
statements notes to the financial statements, financial tables and other
financial information and schedules and other financial data included therein or
omitted therefrom or contained in the documents incorporated therein by
reference, as to which such counsel need make no statement), at the time of such
Registration Statement or any such amendment became effective, contained an
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statement therein not misleading
or that the Prospectus or any amendment or supplement thereto (except for
financial statements, notes to the financial statements, financial tables and
other financial information and schedules and other financial data included
therein or omitted therefrom or contained in the documents therein incorporated
by reference, as to which such counsel need make no statement), at the time the
Prospectus was issued, at the time any such amended or supplemented prospectus
was issued or at the Closing Date, included or includes an untrue statement of a
material fact or omitted or omits to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.
In rendering such opinion, such counsel may rely (A) as to the matters
set forth in paragraph (v), the first clause of paragraph (vii), paragraph
(viii), the first sentence of paragraph (xi), and as to matters involving the
application of the laws of the Commonwealth of Puerto Rico in paragraphs (xiv),
(xvii), (xviii) and (xxiii), upon the opinion of ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, special
Puerto Rico counsel to the Company and its Subsidiaries (which opinion shall be
dated and furnished to the Underwriters at the Closing Date, shall be
satisfactory in form and substance to counsel for the Underwriters and shall
expressly state that the Underwriters may rely on such opinion as if it were
addressed to them), provided that ▇▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇▇ LLP shall state in
their opinion that they believe that they and the Underwriters are justified in
relying upon such opinion of special Puerto Rico counsel, and (B), as to matters
of fact (but not as to legal
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conclusions), to the extent they deem proper, on certificates of responsible
officers of the Company and public officials. Such opinion shall not state that
it is to be governed or qualified by, or that it is otherwise subject to, any
treaties, written policy or other document relating to legal opinions,
including, without limitation, the Legal Opinion Accord of the ABA Section of
Business Law (1991).
(g) The Underwriters shall have received an opinion,
dated such Applicable Closing Date, from ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, special Puerto Rico
counsel for the Company and its Subsidiaries to the following effect:
(i) The Company has been duly incorporated and
is validly existing as a corporation in good standing under the laws of
the Commonwealth of Puerto Rico, and has corporate power and authority
to own, lease and operate its properties and to conduct its business as
described in the Prospectus.
(ii) The Shares have been duly authorized for
issuance and sale to the Underwriters pursuant to this Agreement and,
when issued and delivered by the Company pursuant to this Agreement
against payment of the consideration set forth in this Agreement, will
be validly issued and fully paid and non-assessable. No holder of the
Shares is or will be subject to personal liability for obligations of
the Company solely by reason of being such a holder.
(iii) Each of the Subsidiaries (other than
Continental Capital Corp., R&G Acquisition Holdings Corporation, R&G
Capital Trust I, and Crown Bank (the "U.S. SUBSIDIARIES") as to which
no opinion need be given) has been duly incorporated and is validly
existing as a corporation (and in the case of the R-G Premier Bank as a
commercial bank) in good standing under the laws of the Commonwealth of
Puerto Rico, and has corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Prospectus.
(iv) Except as otherwise disclosed in the
Registration Statement, all of the issued and outstanding capital stock
of the Company has been duly authorized and validly issued. To the best
of such counsel's knowledge, all of the issued and outstanding capital
stock of the Subsidiaries (other than the U.S. Subsidiaries, as to
which no opinion need be given) is owned by the Company, directly or
through a Subsidiary, free and clear of any security interest,
mortgage, pledge, lien, encumbrance, claim or equity. None of the
outstanding Shares of capital stock of the Company or any Subsidiary
(other than the U.S. Subsidiaries, as to which no opinion need be
given) were issued in violation of the preemptive or similar rights of
any security holder of the Company or such Subsidiary granted by
applicable law or the Company's or such Subsidiary's certificate or
articles of incorporation.
(v) The form of certificate used to evidence the
Shares complies in all material respects with all applicable
Commonwealth of Puerto Rico statutory requirements and with any
applicable requirements of the certificate of incorporation and by-laws
of the Company.
(vi) The information in the Prospectus under
"Description of Capital Stock", "Taxation-Puerto Rico Taxation" and in
the Registration Statement under Item 15, to the extent that it
constitutes a discussion of Puerto Rico law, summaries of legal matters
involving Puerto Rico law, the Company's certificate of incorporation
and by-laws or legal proceedings, or legal conclusions, has been
reviewed by such counsel and is accurate and complete in all material
respects.
(vii) To the best of such counsel's knowledge,
none of the Company or its Subsidiaries (other than the U.S.
Subsidiaries, as to which no opinion need be given) or any of their
respective directors or officers is subject to any order or directive
of, or is a party to any agreement with, any Commonwealth of Puerto
Rico securities, banking or mortgage banking regulatory agency having
jurisdiction with respect to the business or operations of the Company
or the Subsidiaries,
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except as disclosed in the Registration Statement or the Prospectus,
and except for any such order, directive or agreement which would not
have a Material Adverse Effect.
(viii) Each of the Company and the Subsidiaries
(other than the U.S. Subsidiaries, as to which no opinion need be
given) has obtained and, to the best of such counsel's knowledge, is
operating in compliance with all authorizations, licenses, directives
and orders required by Puerto Rico banking, mortgage banking or
securities laws which are material to the conduct of their respective
businesses. All of such authorizations, licenses, directives and orders
are valid and in full force and effect. To the best of such counsel's
knowledge, neither the Company nor the Subsidiaries (other than the
U.S. Subsidiaries, as to which no opinion need be given) have received
any notice of proceeding relating to the revocation or modification of
any such license, authorization, directive or order.
(ix) The Company has full legal right, power, and
authority to enter into this Agreement and to consummate the
transactions provided for therein. This Agreement has been duly
authorized, executed and delivered by the Company, and assuming due
authorization, execution and delivery by each other party thereto, is a
valid and binding agreement of the Company, except as limited by
applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer or other laws now or hereafter in effect relating
to or affecting creditors rights generally or by general principles of
equity relating to the availability of remedies and except as rights to
indemnity and contribution may be limited by federal, state or Puerto
Rico securities laws or the public policy underlying such laws.
(x) No filing with or authorization, approval,
consent, license, order, registration, qualification or decree of, any
Puerto Rico court or governmental authority or agency is necessary or
required in connection with the due authorization, execution and
delivery of this Agreement for the offering, issuance, sale or delivery
of the Shares.
(xi) The execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated in
this Agreement and in the Registration Statement (including the
issuance and sale of the Shares and the use of the proceeds from the
sale of the Shares as described in the Prospectus under the caption
"Use of Proceeds") and compliance with the Company with its obligations
under this Agreement do not and will not result in any violation of the
provisions of the certificate of articles of incorporation or by-laws
of the Company or any Subsidiary (other than the U.S. Subsidiaries, as
to which no opinion need be given), or any applicable law, statute,
rule, regulation, judgment, order, directive, writ or decree known to
such counsel, of any Puerto Rico government, government instrumentality
or court having jurisdiction over the Company or any Subsidiary (other
than the U.S. Subsidiaries, as to which no opinion need be given) or
any of their respective properties, assets or operations.
(xii) To the best of such counsel's knowledge,
there are no statutes or regulations that are required to be described
in the Prospectus that are not described as required.
(h) ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, counsel for the Underwriters,
shall have furnished to you such written opinion or opinions, dated the
Applicable Closing Date, with respect to such matters as you may reasonably
request, and such counsel shall have received such papers and information as
they may reasonably request to enable them to pass upon such matters.
(i) The Underwriters shall have received an opinion of
▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇ LLP, special counsel for the Selling Shareholder, dated the
Applicable Closing Date who may rely as to matters of Puerto Rico law on the
opinion of ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ with respect to the Selling Shareholder selling
Shares on such date, to the following effect:
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(i) This Agreement has been duly executed and delivered
by the Selling Shareholder and is a legal, valid and binding agreement of the
Selling Shareholder enforceable in accordance with its terms, except as limited
by applicable bankruptcy, insolvency, reorganization, moratorium or other laws
now or hereafter in effect relating to or affecting creditors' rights generally
or by general principles of equity relating to the availability of remedies and
except as rights to indemnify and contribution may be limited by federal or
state securities laws or the public policy underlying such laws.
(ii) No filing with, or authorization, approval, consent,
license, order, registration, qualification or decree of, any court or
governmental authority or agency, domestic or foreign (other than under the Act
and the Rules and Regulations, which have been obtained, or as may be required
under the securities or blue sky laws of the various states, as to which such
counsel need express no opinion) is necessary or required in connection with the
due authorization, execution and delivery of this Agreement or for the offering,
issuance, sale or delivery of the Selling Shareholder Shares and the Selling
Shareholder Option Shares.
(iii) The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated in this
Agreement and in the Registration Statement (including the issuance and sale of
the Selling Shareholder Shares and the Selling Shareholder Option Shares, if
any) and compliance by the Selling Shareholder with his obligations under this
Agreement and the Custody Agreement do not and will not, to the best of such
counsel's knowledge, whether with or without the giving of notice or lapse of
time or both, conflict with or constitute a breach of, or default or Repayment
Event under or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Selling Shareholder pursuant to
any contract, indenture, mortgage, deed of trust, loan or credit agreement,
note, lease or any other agreements or instrument, known to such counsel to
which the Selling Shareholder is a party or by which he may be bound, or to
which any of the property or assets of the Selling Shareholder is subject
(except for such conflicts, breaches, or defaults or liens, charges or
encumbrances that would not have a Material Adverse Effect), nor will such
action result in any violation of any applicable law, statute, rule, regulation,
judgment, order, writ or decree, known to such counsel, of any government,
government instrumentality or court, domestic or foreign, having jurisdiction
over the Selling Shareholder or the respective properties, assets or operations.
(iv) The Custody Agreement has been duly executed and
delivered by the Selling Shareholder and such agreement constitutes a valid and
binding agreement of the Selling Shareholder; except as limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws now or
hereafter in effect relating to or affecting creditors' rights generally or by
general principles of equity relating to the availability of remedies and except
as rights to indemnify and contribution may be limited by federal or state
securities laws or the public policy underlying such laws.
(v) The Selling Shareholder had valid and, to the best of
such counsel's knowledge, unencumbered title to the Selling Shareholder Shares
delivered by the Selling Shareholder on such Applicable Closing Date and had
full right, power and authority to sell, assign, transfer and deliver such
Selling Shareholder Shares in the manner provided in this Agreement and the
Custody Agreement entered into by such Selling Shareholder; good and valid title
to the Selling Shareholder's Shares to be sold by the Selling Shareholder, free
and clear of all Liens, has been transferred to each of the several Underwriters
who have purchased such Selling Shareholder Shares in good faith and without
notice of any such Lien or any other adverse claim within the meaning of the
Uniform Commercial Code.
In rendering the opinion in paragraphs (iii) and (v), such counsel may
rely upon a certificate of such Selling Shareholder in respect of matters of
fact as to ownership of, and liens, encumbrances, equities
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or claims on, the Shares sold by the Selling Shareholder, provided that such
counsel shall state that they believe that both you and they are justified in
relying upon such certificate;
(j) Concurrently with the execution and delivery of this
Agreement, or, if the Company elects to rely on Rule 430A, on the date of the
Prospectus, the Company's independent financial accountants shall have furnished
to the Underwriters a letter, dated the date of its delivery (the "ORIGINAL
LETTER"), addressed to the Underwriters and in form and substance satisfactory
to the Underwriters to the following effect:
(i) They are independent accountants within the
meaning of the Act and the applicable published rules and regulations
thereunder;
(ii) In their opinion, the consolidated financial
statements of the Company and its Subsidiaries audited by them and
incorporated by reference in the Registration Statement comply as to
form in all material respects with the applicable accounting
requirements of the Act, the Exchange Act, and the published rules and
regulations;
(iii) On the basis of procedures (but not an audit
in accordance with generally accepted auditing standards) consisting of
(A) reading the minutes of meetings of the stockholders and the Board
of Directors of the Company and its Subsidiaries since December 31,
2001 as set forth in the minute books through a specified date not more
than five (5) business days prior to the date of delivery of the
Original Letter; (B) performing the procedures specified by the
American Institute of Certified Public Accountants for a review of
interim financial information as described in SAS No. 71, "Interim
Financial Information," on the unaudited consolidated interim financial
statements of the Company and its Subsidiaries included in the
Registration Statement and reading the unaudited interim financial data
for the period from the date of the latest balance sheet incorporated
by reference in the Registration Statement to the date of the latest
available interim financial data; and (C) making inquiries of certain
officials of the Company who have responsibility for financial and
accounting matters regarding the specific items for which
representations are requested below; nothing has come to their
attention (as of a date not more than five (5) business days prior to
the date of the delivery of such letter) as a result of the foregoing
procedures that caused them to believe that: (1) the unaudited
consolidated interim financial statements, if any, incorporated by
reference in the Registration Statement do not comply as to form in all
material respects with the applicable accounting requirements of the
Exchange Act and the published rules and regulations thereunder; (2)
any material modifications should be made to the unaudited consolidated
interim financial statements, if any, incorporated by reference in the
Registration Statement for them to be in conformity with GAAP; (3) (i)
at the date of the latest available interim financial data and at a
specified date not more than five (5) business days prior to the date
of delivery of the Original Letter there was any change in the capital
stock, notes payable, advances from the Federal Home Loan Bank, Federal
Funds purchased and securities sold under repurchase agreements, and
other short term borrowings or any decreases in the consolidated
stockholders' equity (only as to the latest interim financial data) of
the Company and its Subsidiaries as compared with amounts shown in the
March 31, 2002 statement of financial condition incorporated by
reference in the Registration Statement and (ii) for the period from
the latest interim financial statements incorporated by reference in
the Registration Statement, to the latest interim financial data
available which should be no later than five (5) days prior to the date
of delivery of the Original Letter, there were any decreases, as
compared with the corresponding period in the preceding year, in
consolidated net interest income, non-interest income, income before
taxes, or in the total or per share amounts of net income, except in
all instances for changes or decreases which the Registration Statement
discloses have occurred or may occur, or they shall state any specific
changes or decreases; and
(iv) The information included in the Company's
Registration Statement, Annual Report on Form 10-K for the year ended
December 31, 2001, Quarterly Report on Form 10-Q for the
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quarter ended on March 31, 2002 which has been obtained from accounting
records which are subject to the internal controls of the Company's
accounting system or which has been derived directly from such
accounting records and analysis or computations, is in agreement with
such records or computations made therefrom.
On each Applicable Closing Date, the Company's independent financial
accountants shall have furnished to the Underwriters a letter, dated the date of
its delivery, which shall confirm, on the basis of a review in accordance with
the procedures set forth in the Original Letter, that nothing has come to their
attention during the period from the date of the Original Letter referred to in
the prior sentence to a date (specified in the letter) not more than five (5)
business days prior to the Closing Date or Option Closing Date, as the case may
be, which would require any change in the Original Letter if it were required to
be dated and delivered at the Closing Date or the Option Closing Date, as the
case may be.
In the event that the letters referred to above set forth any such
changes, decreases, or increases, it shall be a further condition to the
obligations of the Underwriters that (A) such letters shall be accompanied by a
written explanation of the Company as to the significance thereof, unless the
Underwriters deem such explanation unnecessary, and (B) such changes, decreases,
or increases do not, in the sole judgment of the Underwriters, make it
impractical or inadvisable to proceed with the purchase and delivery of the
Shares as contemplated by the Registration Statement, as amended as of the date
hereof.
(k) At the Closing Date and, as to the Option Shares, the
Option Closing Date, there shall be furnished to the Underwriters an accurate
certificate, dated the date of its delivery, signed by each of the Chief
Executive Officer and the Chief Financial Officer of the Company, in form and
substance satisfactory to the Underwriters, to the effect that to the best of
their knowledge:
(i) Each signer of such certificate has
carefully examined the Registration Statement and the Prospectus and
(A) as of the date of such certificate, (x) the Registration Statement
does not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in
order to make the statements therein not misleading and (y) the
Prospectus does not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading and (B) since
the effective date no event has occurred as a result of which it is
necessary to amend or supplement the Prospectus in order to make the
statements therein not untrue or misleading, in any material respect;
(ii) Each of the representations and warranties
of the Company contained in this Agreement were, when originally made,
and are, at the time such certificate is delivered, true and correct in
all respects; each of the covenants required herein to be performed by
the Company on or prior to the date of such certificate has been duly,
timely, and fully performed and each condition herein required to be
complied with by the Company on or prior to the delivery of such
certificate has been duly, timely, and fully complied with; and
(iii) No stop order suspending the effectiveness
of the Registration Statement or any post-effective amendment thereto
and no order directed at any document incorporated by reference in the
Registration Statement or any amendment thereto or the Prospectus has
been issued, and no proceedings for that purpose have been instituted
or threatened or, to the best of the Company's knowledge, are
contemplated by the Commission.
(l) The Shares shall be qualified for sale in such states
and jurisdictions as the Underwriters may reasonably request, each such
qualification shall be in effect and not subject to any stop order or other
proceeding on the Closing Date and the Option Closing Date.
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(m) Prior to the Closing Date, the Shares shall
have been accepted for listing on the Nasdaq Stock Market.
(n) The Underwriters shall have received Lock-up
Agreements, dated the date hereof, from all of the Company's executive officers
and directors, in the form and to the effect contemplated in Section 3(ii).
(o) All filings required to be made with the
NASD shall have been made and the NASD shall have raised no objections to the
terms and arrangements presented in such filings.
(p) The Company and the Selling Shareholder
shall have furnished to the Underwriters such certificates, letters, and other
documents, in addition to those specifically mentioned herein, as the
Underwriters may have reasonably requested as to the accuracy and completeness
at the Closing Date and Option Closing Date of any statement in the Registration
Statement or the Prospectus, as to the accuracy at the Closing Date and Option
Closing Date of the representations and warranties of the Company or the Selling
Shareholder, as the case may be, as to the performance by the Company or the
Selling Shareholder, as the case may be, of its obligations hereunder, or as to
the fulfillment of the conditions concurrent and precedent to the obligations
hereunder of the Underwriters.
All such opinions, certificates, letters, and other documents will be
in compliance with the provisions hereof only if they are satisfactory in form
and substance to you. The Company and the Selling Shareholder will furnish you
with such conformed copies of such opinions, certificates, letters, and other
documents as you shall reasonably request.
9. Default of Underwriter. If either Underwriter defaults in its
obligation to purchase Firm Shares or Option Shares hereunder and the aggregate
number of such Shares that such defaulting Underwriter agreed but failed to
purchase is ten percent (10%) or less of the aggregate number of Firm Shares or
Option Shares to be purchased by both Underwriters at such time hereunder, the
other Underwriter may make satisfactory arrangements for the purchase of such
Shares by other persons (who may include the nondefaulting Underwriter), but if
no such arrangements are made by the Closing Date or the related Option Closing
Date, as the case may be, the other Underwriter shall be obligated in proportion
to its respective commitments hereunder to purchase the Firm Shares or Option
Shares that such defaulting Underwriter agreed but failed to purchase. If an
Underwriter so defaults with respect to an aggregate number of Shares that is
more than ten percent (10%) of the aggregate number of Firm Shares or Option
Shares, as the case may be, to be purchased by both the Underwriters at such
time hereunder, and if satisfactory arrangements are not made within thirty-six
(36) hours after such default for the purchase (who may include the
nondefaulting Underwriter,) of the Shares with respect to which such default
occurs, this Agreement will terminate without liability on the part of the
nondefaulting Underwriter and the Company other than as provided in Section 12
hereof. In the event of any default by an Underwriter as described in this
Section 9, the non-defaulting Underwriter shall have the right to postpone the
Closing Date or Option Closing Date, as the case may be, for not more than seven
(7) business days in order that any necessary changes may be made in the
arrangements or documents for the purchase and delivery of the Firm Shares or
Option Shares, as the case may be. As used in this Agreement, the term
"Underwriter" includes any person substituted for an Underwriter under this
Section 9. Nothing herein shall relieve any defaulting Underwriter from
liability for its default.
10. Indemnification and Contribution.
(a) The Company agrees to indemnify and hold harmless
each Underwriter, the directors, officers, and employees of each Underwriter,
and each person, if any, who controls each Underwriter within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act (each, an "UNDERWRITER
INDEMNIFIED PERSON"), from and against any and all losses, claims, damages, or
liabilities, joint or several (and
-24-
actions in respect thereof), to which they, or any of them, may become subject
under the Act or other federal, state, or Commonwealth of Puerto Rico statutory
law or regulation, at common law or otherwise, insofar as such losses, claims,
damages, or liabilities (or actions in respect thereof) arise out of or are
based upon (i) any untrue statement or alleged untrue statement made by the
Company in Section 3 of this Agreement; (ii) any untrue statement or alleged
untrue statement of any material fact contained in (A) any Preliminary
Prospectus, the Registration Statement, the Prospectus, or any amendment or
supplement to the Registration Statement or the Prospectus, or (B) any
application or other document, or any amendment or supplement thereto, executed
by the Company or based upon written information furnished by or on behalf of
the Company filed in any jurisdiction in order to qualify the Shares under the
securities or blue sky laws thereof or filed with the Commission or any
securities association or securities exchange (each, an "APPLICATION"); or (iii)
the omission or alleged omission to state in any Preliminary Prospectus, the
Registration Statement, the Prospectus, any amendment or supplement to the
Registration Statement or the Prospectus, or any Application a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and will reimburse, as incurred, each Underwriter and each such
other person for any legal or other expenses reasonably incurred by such
Underwriter or such other person in connection with investigating defending or
appearing as a third-party witness in connection with any such loss, claim,
damage, liability, or action; provided, however, that the Company will not be
liable in any such case to the extent that any such loss, claim, damage, or
liability based solely upon an untrue statement or omission or alleged untrue
statement or omission in any of such documents made in reliance upon and in
conformity with information relating to any Underwriter or the Selling
Shareholder furnished in writing to the Company by the Underwriters or the
Selling Shareholder, as the case may be, on behalf of any Underwriter or the
Selling Shareholder, as the case may be, expressly for inclusion therein; and
provided, further, that such indemnity with respect to any Preliminary
Prospectus shall not inure to the benefit of any Underwriter (or any such other
person) from whom the person asserting any such loss, claim, damage, liability,
or action purchased Shares which are the subject thereof to the extent that any
such loss, claim, damage, or liability (A) results from the fact that such
Underwriter failed to send or give a copy of the Prospectus (as amended or
supplemented) to such person at or prior to the confirmation of the sale of such
Shares to such person in any case where such delivery is required by the Act,
and (B) arises out of or is based upon an untrue statement or omission of a
material fact contained in such Preliminary Prospectus that was corrected in the
Prospectus (or any amendment or supplement thereto), unless such failure to
deliver the Prospectus (as amended or supplemented) was the result of
noncompliance by the Company with Section 5(g) of this Agreement. This indemnity
agreement will be in addition to any liability that the Company might otherwise
have. The Company will not without the prior written consent of each
Underwriter, settle or compromise or consent to the entry of any judgment in any
pending or threatened claim, action, suit, or proceeding in respect of which
indemnification may be sought hereunder (whether or not such Underwriter or any
person who controls such Underwriter within the meaning of Section 15 of the Act
or Section 20 of the Exchange Act is a party to each claim, action, suit, or
proceeding), unless such settlement, compromise, or consent (i) includes an
unconditional release of the indemnified party from all liability arising out of
such action or claim and (ii) does not include a statement as to or an admission
of default, culpability or a failure to act, by or on behalf of any Underwriter.
(b) The Selling Shareholder, severally and not jointly,
agrees to indemnify and hold harmless each Underwriter and each Underwriter
Indemnified Person to the same extent as the foregoing indemnity from the
Company if and only to the extent that any loss, claim, damage, or liability,
joint or several (and actions in respect thereof) arise out of or is based upon
written information furnished to the Company by the Selling Shareholder
specifically for inclusion in the documents referred to in the foregoing
indemnity.
(c) Each Underwriter will indemnify and hold harmless the
Company and the Selling Shareholder and each person, if any, who controls the
Company within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act, each director of the Company, and each officer of the Company who
signed the Registration Statement against any losses, claims, damages, or
liabilities (or actions in respect thereof) to which the Company, the Selling
Shareholder and any such director, officer, or controlling person may become
subject under the Act or other federal, state, or Commonwealth of Puerto Rico
statutory law or regulation, at common law or otherwise, insofar as such losses,
claims, damages, or liabilities (or actions in respect thereof) arise out of or
are based upon (i) any untrue statement or alleged untrue statement of a
material fact contained in
-25-
any Preliminary Prospectus, the Registration Statement, the Prospectus, any
amendment or supplement to the Registration Statement or the Prospectus, or any
Application, or material fact required to be stated therein, or (ii) the
omission or the alleged omission to state in the Registration Statement, any
Preliminary Prospectus, the Prospectus, any amendment or supplement to the
Registration Statement or the Prospectus, or any Application, a material fact
required to be stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in reliance upon and in conformity with written information furnished to the
Company by such Underwriter through the Underwriters expressly for use therein;
and, subject to the limitation set forth immediately preceding this clause, will
reimburse, as incurred, any legal or other expenses reasonably incurred by the
Company, the Selling Shareholder and any such director, officer, or controlling
person in connection with investigating or defending any such loss, claim,
damage, liability, or any action in respect thereof. The Company and the Selling
Shareholder acknowledge that, for all purposes under this Agreement, the
statements set forth under the heading "Underwriting" constitute the only
information relating to any Underwriter furnished in writing to the Company by
the Underwriters on behalf of the Underwriters expressly for inclusion in the
Registration Statement, any Preliminary Prospectus, or the Prospectus. This
indemnity agreement will be in addition to any liability that each Underwriter
might otherwise have.
(d) Promptly after receipt by an indemnified party under
this Section 10 of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against an indemnifying
party or parties under this Section 10, notify such indemnifying party or
parties of the commencement thereof, but the omission so to notify the
indemnifying party or parties will not relieve it or them from any liability
which it or they may have to any indemnified party under the foregoing
provisions of this Section 10 or otherwise unless, and only to the extent that,
such omission results in the forfeiture of substantive rights or defenses by the
indemnifying party. If any such action is brought against an indemnified party
and it notifies an indemnifying party or parties of its commencement, the
indemnifying party or parties against which a claim is made will be entitled to
participate therein and, to the extent that it or they may wish, to assume the
defense thereof with counsel reasonably satisfactory to such indemnified party;
provided, however, that if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be one or more legal defenses available
to it and/or other indemnified parties which are different from or additional to
those available to the indemnifying party, the indemnifying party shall not have
the right to direct the defense of such action on behalf of such indemnified
party or parties and such indemnified party or parties shall have the right to
select separate counsel to defend such action on behalf of such indemnified
party or parties. After notice from the indemnifying party to such indemnified
party of its election so to assume the defense thereof and approval by such
indemnified party of counsel appointed to defend such action, the indemnifying
party will not be liable to such indemnified party under this Section 10 for any
legal or other expenses other than reasonable costs of investigation
subsequently incurred by such indemnified party in connection with the defense
thereof, unless (i) the indemnified party shall have employed separate counsel
in accordance with the preceding sentence (it being understood, however, that in
connection with such action the indemnifying party shall not be liable for the
reasonable fees and expenses of more than one separate counsel (in addition to
the fees and expenses of local counsel necessary in connection with any such
proceedings) in any one action or separate but substantially similar actions in
the same jurisdiction arising out of the same general allegations or
circumstances, designated by the Underwriters in the case of paragraph (a) of
this Section 10, representing the indemnified parties under paragraph (a) who
are parties to such action or actions), or (ii) the indemnifying party has
authorized in writing the employment of counsel for the indemnified party at the
expense of the indemnifying party. After such notice from the indemnifying party
to such indemnified party, the indemnifying party will not be liable for the
costs and expenses of any settlement of such action effected by such indemnified
party without the written consent of the indemnifying party, unless such
indemnified party waived its rights under this Section 10 in which case the
indemnified party may effect such a settlement without such consent.
(e) If the indemnification provided for in the foregoing
paragraphs of this Section 10 is unavailable or insufficient to hold harmless an
indemnified party under paragraph (a), (b) or (c) above in respect of any
losses, claims, damages, or liabilities (or actions in respect thereof) referred
to therein, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of such
-26-
losses, claims, damages, or liabilities (or actions in respect thereof) (i) in
such proportion as is appropriate to reflect the relative benefits received by
the indemnifying party or parties, on the one hand, and the indemnified party,
on the other, from the offering of the Shares, or (ii) if, but only if, the
allocation provided by the foregoing clause (i) is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault of the
indemnifying party or parties on the one hand, and the indemnified party, on the
other, in connection with the statements or omissions or alleged statements or
omissions that resulted in such losses, claims, damages, or liabilities (or
actions in respect thereof), as well as any other relevant equitable
considerations. The relative benefits received by the Company and the Selling
Shareholder, on the one hand, and the Underwriters, on the other, shall be
deemed to be in the same proportion as the total proceeds from the offering of
the Shares (before deducting expenses) received by the Company and the Selling
Shareholder bear to the total underwriting discounts and commissions received by
the Underwriters, in each case as set forth in the table on the cover page of
the Prospectus. Relative fault shall be determined by reference to whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Company
or the Underwriters, the parties' relative intent, knowledge, access to
information, and opportunity to correct or prevent such statement or omission.
The Company, the Selling Shareholder and the Underwriters agree that it would
not be just and equitable if contributions pursuant to this Section 10(e) were
to be determined by pro rata allocation (even if the Underwriters were treated
as one entity for such purpose) or by any other method of allocation which does
not take into account the equitable considerations referred to herein. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages, and liabilities (or actions in respect thereof) referred to
above in this Section 10(e) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 10(e), no Underwriter shall be required to contribute
any amount in excess of the total underwriting discounts received by it with
respect to the Shares purchased by such Underwriter under this Agreement, less
the aggregate amount of any damages that such Underwriter has otherwise been
required to pay in respect of the same or any substantially similar claim. No
person found guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Act) will be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation. The Underwriters'
obligations to contribute as provided in this Section 10(e) are several in
proportion to their respective underwriting obligations and not joint. For
purposes of this Section 10(e), each person, if any, who controls an Underwriter
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act
will have the same rights to contribution as such Underwriter, and each director
of the Company, each officer of the Company who signed the Registration
Statement, and each person, if any, who controls the Company within the meaning
of Section 15 of the Act or Section 20 of the Exchange Act, will have the same
rights to contribution as the Company, subject in each case to the provisions of
this paragraph (e). Any party entitled to contribution will, promptly after
receipt of notice of commencement of any action, suit, or proceeding against
such party in respect of which a claim for contribution may be made under this
Section 10(e), notify any such party or parties from whom contribution may be
sought, but the omission so to notify will not relieve the party or parties from
whom contribution may be sought from any other obligation(s) it or they may have
hereunder or otherwise than under this paragraph (e) or to the extent that such
party or parties were not adversely affected by such omission. The contribution
agreement set forth above shall be in addition to any liabilities which any
indemnifying party may otherwise have. No party will be liable for contribution
with respect to any action or claim settled without its written consent (which
consent will not be unreasonably withheld).
(f) The indemnity and contribution agreements contained
in this Section 10 and the representations and warranties of the Company and the
Selling Shareholder contained in this Agreement shall remain operative and in
full force and effect regardless of (i) any investigation made by or on behalf
of the Underwriters, (ii) acceptance of any of the Shares and payment therefor,
or (iii) any termination of this Agreement.
11. Termination. The obligations of the several Underwriters
hereunder shall be subject to termination in the absolute discretion of you or
any group of Underwriters (which may include you) which has agreed to purchase
in the aggregate at least 50% of the Firm Shares (or Option Shares, as the case
may be), if, (a) since the time of execution of this Agreement or the earlier
respective dates as of which information is given
-27-
in the Registration Statement and Prospectus, there has been any material
adverse change in the business, properties, management, financial condition,
shareholders equity or results of operation of the Company and the Subsidiaries
taken as a whole, which would, in your judgment or in the judgment of such group
of Underwriters, makes it impracticable or inadvisable to proceed with the
public offering or the delivery of the Shares on the terms and in the manner
contemplated in the Registration Statement and Prospectus, (b) there shall have
occurred: (i) a suspension or material limitation in trading in securities
generally on the New York Stock Exchange, American Stock Exchange or NASDAQ;
(ii) a suspension or material limitation in trading in the Company's securities
on NASDAQ; (iii) a general moratorium on commercial banking activities declared
by either Federal, New York State or Puerto Rico authorities or a material
disruption in commercial banking or securities settlement or clearance services
in the United States; (iv) the outbreak or escalation of hostilities or acts of
terrorism involving the United States or the declaration by the United States of
a national emergency or war; or (v) the occurrence of any other calamity or
crisis or any change in financial, political or economic conditions in the
United States or elsewhere, if the effect of any such event specified in clause
(iv) or (v) in your judgment or in the judgment of such group of Underwriters
makes it impracticable or inadvisable to proceed with the public offering or the
delivery of the Shares on the terms and in the manner contemplated in the
Registration Statement and Prospectus; (c) there shall have occurred any
downgrading, or any notice shall have been given of (i) any intended or
potential downgrading or (ii) any review or possible change that does not
indicate an improvement, in the rating accorded any securities of or guaranteed
by the Company or any Subsidiary by any "nationally recognized statistical
rating organization", as that term is defined in Rule 436(g)(2) under the Act;
or (d) the Selling Shareholder shall have died or become incapacitated or the
Selling Shareholder shall no longer serve as the Chief Executive Officer and
director of the Company.
12. Survival. The respective representations, warranties,
agreements, covenants, indemnities, and other statements of the Company, its
officers, the Selling Shareholder and the several Underwriters set forth in this
Agreement or made by or on behalf of them, respectively, pursuant to this
Agreement shall remain in full force and effect regardless of (i) any
investigation made by or on behalf of the Company, the Selling Shareholder, any
of its officers or directors, any Underwriter, or any controlling person
referred to in Section 10 hereof, and (ii) delivery of and payment for the
Shares. The respective agreements, covenants, indemnities, and other statements
set forth in Sections 7 and 10 hereof shall remain in full force and effect,
regardless of any termination or cancellation of this Agreement.
13. Notices. Notices given pursuant to any of the provisions of
this Agreement shall be in writing and, unless otherwise specified, shall be
mailed or delivered:
(a) if to the Company, to:
R&G Financial Corporation
▇▇▇ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Chairman and Chief Executive Officer
(b) if to the Selling Shareholder, to:
▇▇▇ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Chairman and Chief Executive Officer
-28-
(c) if to the Underwriters, to:
UBS Warburg LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Executive Director
Any such notice shall be effective only upon receipt. Any notice under
Section 10 or 11 may be made by telex or telephone, but if so made shall be
subsequently confirmed in writing.
14. Successors. This Agreement shall inure to the benefit of and
shall be binding upon the several Underwriters, the Company, and their
respective successors and legal Underwriters, and nothing expressed or mentioned
in this Agreement is intended or shall be construed to give any other person any
legal or equitable right, remedy, or claim under or in respect of this
Agreement, or any provisions herein contained, this Agreement and all conditions
and provisions hereof being intended to be and being for the sole and exclusive
benefit of such persons and for the benefit of no other person except that (a)
the indemnities of the Company and the Selling Shareholder contained in Section
10 of this Agreement shall also be for the benefit of any person or persons who
control any Underwriter within the meaning of Section 15 of the Act or Section
20 of the Exchange Act, and (b) the indemnities of the Underwriters contained in
Section 10 of this Agreement shall also be for the benefit of the directors of
the Company, the officers of the Company who have signed the Registration
Statement, and any person or persons who control the Company within the meaning
of Section 15 of the Act or Section 20 of the Exchange Act. No purchaser of
Shares from any Underwriter shall be deemed a successor because of such
purchase. This Agreement shall not be assignable by either party hereto without
the prior written consent of the other party.
15. APPLICABLE LAW. THE VALIDITY AND INTERPRETATION OF THIS
AGREEMENT, AND THE TERMS AND CONDITIONS SET FORTH HEREIN, SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
16. Submission to Jurisdiction. Except as set forth below, no
Claim may be commenced, prosecuted or continued in any court other than the
courts of the State of New York located in the City and County of New York or in
the United States District Court for the Southern District of New York, which
courts shall have jurisdiction over the adjudication of such matters, and the
Company consents to the jurisdiction of such courts and personal service with
respect thereto. The Company hereby consents to personal jurisdiction, service
and venue in any court in which any Claim arising out of or in any way relating
to this Agreement is brought by any third party against UBS Warburg LLC or any
indemnified party. Each of UBS Warburg LLC and the Company (on its behalf and,
to the extent permitted by applicable law, on behalf of its stockholders and
affiliates) waives all right to trial by jury in any action, proceeding or
counterclaim (whether based upon contract, tort or otherwise) in any way arising
out of or relating to this Agreement. The Company agrees that a final judgment
in any such action, proceeding or counterclaim brought in any such court shall
be conclusive and binding upon the Company and may be enforced in any other
courts in the jurisdiction of which the Company is or may be subject, by suit
upon such judgment.
17. Counterparts. This Agreement may be executed in two (2) or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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Please confirm that the foregoing correctly sets forth the agreement
among the Company and the several Underwriters.
Very truly yours,
R&G FINANCIAL CORPORATION
By
-----------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chief Executive Officer and Chairman
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------------------
Confirmed as of the date first above mentioned:
UBS WARBURG LLC
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, INC.
By UBS Warburg LLC,
On behalf of each of the Underwriters
By:
-------------------------------------
Name:
Title:
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SCHEDULE I
UNDERWRITERS
Aggregate Number of
Shares to be Purchased
UBS Warburg LLC
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, Inc.
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & Co., Inc.
Sandler ▇'▇▇▇▇▇ & Partners, L.P.
4,000,000
SELLING SHAREHOLDER
Aggregate Number of
Shares to be Offered
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 2,000,000
-31-
EXHIBIT A
LIST OF SUBSIDIARIES
1. R&G Mortgage Corp.
2. R-G Premier Bank of Puerto Rico
3. The Mortgage Store of Puerto Rico, Inc.
4. Continental Capital Corp.
5. Home & Property Insurance Corporation
6. R-G Investments Corporation
7. R&G Acquisition Holdings Corporation
8. Crown Bank, A Federal Savings Bank
9. R&G Capital Trust I
10. R&G International Corp.
EXHIBIT B
FORM OF LOCK-UP AGREEMENT
, 2002
UBS WARBURG LLC
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, INC.
As representatives of the several Underwriters
named in Schedule I hereto,
c/o UBS Warburg LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
The undersigned [director][officer] of R&G Financial Corporation, a
Puerto Rico corporation (the "COMPANY"), understands that (a) the Company
proposes to issue and sell to the Underwriters named in Schedule II hereto (the
"UNDERWRITERS") an aggregate of 2,000,000 shares of Class B Common Stock, par
value $.01 per share ("CLASS B STOCK"), of the Company, (b) the shareholder of
the Company named in Schedule I hereto (the "SELLING SHAREHOLDER") proposes to
sell to the Underwriters an aggregate of 2,000,000 shares of Class B Stock and
(c) the Company and the Selling Shareholder, have each granted the Underwriters
an over-allotment option to purchase up to 300,000 additional shares of Class B
Stock (an aggregate of 600,000 shares of Class B Stock) (collectively, the
"SHARES"), in each case subject to the terms and conditions stated in the
Underwriting Agreement (the "UNDERWRITING AGREEMENT") to be entered into by the
Company, the Underwriters and the Selling Shareholder. Shares of Class B Stock
along with shares of Class A Common Stock, par value $.01 per share, of the
Company, are referred to herein as "COMMON STOCK."
The undersigned, to facilitate the marketing of the Shares and in
consideration of the Company, the Underwriters and the Selling Shareholder
entering into the Underwriting Agreement, hereby irrevocably confirms and agrees
for the benefit of the Company, the Underwriters and the Selling Shareholder
that during the period beginning from the date hereof and continuing to and
including the date 90 days after the Closing Date (as such term is defined in
the Underwriting Agreement), the undersigned will not, except as provided
hereunder, sell, offer or agree to sell, hypothecate, contract to sell, grant
any option to sell or otherwise dispose of, directly or indirectly, or enter
into any agreement or arrangement that has the effect of transferring the
economic effects of holding, any shares of Common Stock or securities
convertible into or exchangeable or exercisable for Common Stock or warrants or
other rights to purchase Common Stock or any other securities of the Company
that are substantially similar to Common Stock or permit the registration under
the Securities Act of 1933, as amended, of any shares of Common Stock without
the written consent of UBS Warburg LLC and the undersigned agrees and consents
to the entry of stop transfer instructions with the Company's transfer agent
against the transfer of the Common Stock held by him except in compliance with
this restriction.
If the Company does not enter into the Underwriting Agreement prior to
______ , 2002, this letter agreement shall terminate on _____________, 2002.
This letter agreement shall be governed by, construed and enforced in
accordance with the laws of the State of New York without regard to its
principles of conflict of laws.
Sincerely,
[Director][Officer]
SCHEDULE II
SELLING SHAREHOLDERS
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
