EXHIBIT 1
$100,000,000
R&G CAPITAL TRUST III
_% CUMULATIVE MONTHLY INCOME TRUST PREFERRED SECURITIES
AGENCY AGREEMENT
August _, 2003
POPULAR SECURITIES, INC.
Xxxxx Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxxx Xxx, Xxxxxx Xxxx 00000
Ladies and Gentlemen:
R&G CAPITAL TRUST III, (the "Issuer" or the "Trust") a statutory trust
created under the Delaware Statutory Trust Act, proposes to sell an aggregate
principal amount of $100,000,000 of its Trust Preferred Securities (the
"Preferred Securities") to the Puerto Rico Conservation Trust Fund
("Conservation Trust"), in connection with the issuance by Conservation Trust of
its Secured Notes Due 2033 (the "CT Notes"). The Preferred Securities shall be
dated, shall bear interest at the rates per annum and shall be subject to
mandatory redemption, as described in the Prospectus (as defined below). The CT
Notes will be payable solely from amounts payable by the Trust on the Preferred
Securities and the Preferred Securities will be pledged as collateral to the
trustee of the CT Notes. The Preferred Securities shall be guaranteed by R&G
Financial Corporation (the "Company" and the "Guarantor") to the extent set
forth in the Prospectus (as defined below), with respect to the distributions
and amounts payable upon liquidation and redemption, pursuant to the Preferred
Securities Guarantee Agreement (the "Guarantee Agreement"), to be dated as of
the Closing Date (as defined below), executed and delivered by the Guarantor and
the Wilmington Trust Company, a Delaware banking corporation as trustee (the
"Guarantee Trustee"), for the benefit of the holder of the Preferred Securities.
The proceeds from the sale of the Preferred Securities to the Conservation Trust
will be aggregated with the entire proceeds from the sale by the Issuer to the
Company of the Common Securities of the Issuer (the "Common Securities") and
will be used by the Issuer to purchase the _____% subordinated debentures (the
"Debentures") issued by the Company. The Preferred Securities and the Common
Securities will be issued pursuant to the Amended and Restated Declaration of
Trust (the "Declaration"), among the Company and the trustees named therein (the
"Trustees"). The Debentures will be issued pursuant to a Junior Subordinated
Indenture (the "Indenture"), among the Company and the Wilmington Trust Company,
as trustee (the
2
"Indenture Trustee"). You have agreed to act as placement agent (the "Agent") in
connection with the sale of the Preferred Securities to Conservation Trust, and
as representative of the underwriters (the "Underwriters") in connection with
the sale of the CT Notes to the public. References to the Agent shall be deemed
to include the Agent in its role as representative of the Underwriters.
The Issuer and the Company jointly and severally hereby confirm as
follows its agreements with you:
1. Sale of Notes: Compensation of Agent.
(a) The Issuer will sell the Preferred Securities to
Conservation Trust at a purchase price of $___________. Conservation Trust will
in turn issue and sell the CT Notes to the Underwriters in accordance with the
terms of a Purchase Agreement being executed simultaneously herewith (the
"Purchase Agreement"). The CT Notes will be offered by the Underwriters by means
of an offering circular of Conservation Trust (the "Offering Circular") that
will include as an attachment a Prospectus of the Issuer described below. Prior
to the date hereof, Conservation Trust and the Issuer have delivered to the
Agent a preliminary offering circular of Conservation Trust (the "Preliminary
Offering Circular") that includes as an attachment a preliminary prospectus
dated July _____, 2003.
(b) Because the proceeds from the sale of the Preferred
Securities shall be used to purchase the Debentures from the Company, as
compensation for its services hereunder, the Company will pay to the Agent a
nonrefundable fee equal to $_________, which shall be fully earned upon the
delivery of the Preferred Securities on the Closing Date (as such term is
defined below).
2. Delivery and Payment. Delivery of the Preferred Securities
shall be made to Banco Popular de Puerto Rico, as trustee for the CT Notes,
against payment of the purchase price by wire transfer of immediately available
funds to the bank account designated by the Company. 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 business days after the date of this Agreement, as may be agreed upon by
the Company and Conservation Trust (such date is hereinafter referred to as the
"Closing Date"). Delivery of the other documents, required to be delivered as
provided herein, shall be made at the offices
of______________________________________ _________,_____________________, San
Xxxx, Puerto Rico.
3. Representations and Warranties. Each of the Issuer and the
Company, jointly and severally represents, warrants and covenants to the Agent
and each of the Underwriters that:
(a) The Company and the Issuer as co-registrant with the
Company, meet the requirements for use of Form S-3 and a registration statement
(Registration No. 333-_________________________) on Form S-3 with respect to the
Preferred Securities, including a preliminary prospectus and such amendments to
such registration statement as may have been required to the date of this
Agreement,
3
has been prepared by the Company in conformity with the requirements of the
Securities Act of 1933, as amended (the "Act"), and the rules and regulations
(the "Rules and Regulations") of the Securities and Exchange Commission (the
"Commission") thereunder, and has been filed with the Commission. No stop order
preventing or suspending the use of the Prospectus (as defined below) or any
Preliminary Prospectus (as defined below) has been issued, and, to the Company's
knowledge, no proceeding for that purpose has been instituted or threatened by
the Commission. The term "Preliminary Prospectus" as used herein means a
preliminary prospectus relating to the Preferred Securities included at any time
as part 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 Agent. 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 Preferred Securities containing information
permitted to be omitted at the time of effectiveness by Rule 430A of the Rules
and Regulations has been or will be so prepared and filed with the Commission
pursuant to Rule 424(b) of the Rules and Regulations on or before the second
business day after the date hereof (or such earlier time as may be required by
the Rules and Regulations). The term "Registration Statement" means such
registration statement as amended at the time it becomes or became effective
(the "Effective Date"), including financial statements and all exhibits and any
information deemed by virtue of Rule 430A of the Rules and Regulations to be
included in such Registration Statement at the Effective Date and any prospectus
supplement filed thereafter with the Commission and shall include the documents
incorporated by reference therein pursuant to Item 12 of Form S-3 which were
filed under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). The term "Prospectus" means, collectively, the prospectus together with
any prospectus supplement, in the respective forms they are filed with the
Commission pursuant to Rule 424(b) of the Rules and Regulations. Any references
herein to the terms "amend," "amendment" or "supplement" with respect to the
Registration Statement, the Prospectus or any Preliminary Prospectus shall be
deemed to refer to and include the filing of any document under the Exchange Act
after the Effective Date, or the date of any Preliminary Prospectus or the
Prospectus, as the case may be, that is incorporated therein by reference. For
purposes of this Agency Agreement, all references to the Registration Statement,
the Prospectus, any preliminary prospectus or any amendment or supplement
thereto shall be deemed to include any copy filed with the Commission pursuant
to its Electronic Data Gathering Analysis and Retrieval System (XXXXX), and such
copy shall be identical (except to the extent permitted by Regulation S-T) to
any Prospectus delivered to the Agent for use in connection with the offering of
the Preferred Securities by the Company.
(b) Each part of the Registration Statement, when such
part became or becomes effective, each Preliminary Prospectus, on the date of
filing thereof with the Commission, and the Prospectus and any amendment or
supplement thereto, on the date of filing thereof with the
4
Commission and at the Closing Date conformed or will conform in all material
respects with the requirements of the Act, the Trust Indenture Act of 1939
("Trust Indenture Act") and the Rules and Regulations; each part of the
Registration Statement (excluding any prospectus supplement with respect to an
offering of securities other than the offering of the Preferred Securities
contemplated hereby), when such part became or becomes effective, did not or
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; each Preliminary Prospectus, on the date of filing
thereof with the Commission, and the Prospectus and any amendment or supplement
thereto, on the date of filing thereof with the Commission and at the Closing
Date, did not or will not include an untrue statement of a material fact or omit
to state a material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading; the foregoing
shall not apply to the statements in or omissions from any such document in
reliance upon, and in conformity with, written information relating to any
Underwriter furnished to the Company by the Agent, or by any Underwriter through
the Agent, specifically for use in the preparation thereof. The Company has not
distributed any offering material in connection with the offering or sale of the
Preferred Securities other than the Registration Statement, any Preliminary
Prospectus, the Prospectus or any other materials, if any, permitted by the Act.
(c) The documents incorporated by reference in the
Registration Statement, the Preliminary Prospectus and any amendment or
supplement to such Registration Statement or such Prospectus, when they became
or become effective under the Act or were or are filed with the Commission under
the Exchange Act, as the case may be, conformed or will conform in all material
respects with the requirements of the Act, the Trust Indenture Act, the Rules
and Regulations, the Exchange Act and the rules and regulations of the
Commission thereunder (the "Exchange Act Rules and Regulations"), as applicable.
(d) The issuer has been duly formed and is validly
existing in good standing as a statutory trust under Delaware law with power and
authority to own property and conduct its business as described in the
Preliminary Prospectus. All of the outstanding beneficial interests of the
Issuer have been duly authorized and validly issued and are fully paid and
nonassessable undivided beneficial interests in the assets of the Issuer; the
holders of such beneficial interests of the Issuer have no preemptive or other
rights to acquire Preferred Securities or Common Securities and there are no
restrictions on transfers of the securities.
(e) The Declaration has been duly authorized; and when
the Preferred Securities are delivered and paid for pursuant to this Agreement
on the Closing Date, the Declaration will have been duly executed and delivered
and will constitute a valid and legally binding instrument enforceable in
accordance with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity principles.
5
(f) The Guarantee Agreement has been duly authorized; and
when the Preferred Securities are delivered and paid for pursuant to this
Agreement on the Closing Date, the Guarantee Agreement will have been duly
executed and delivered and will constitute a valid and legally binding
instrument enforceable in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights and to general
equity principles.
(g) The Preferred Securities have been duly authorized;
when the Preferred Securities are delivered and paid for pursuant to this
Agreement on the Closing Date, such Preferred Securities will (i) have been
validly issued and fully paid, (ii) represent nonassessable undivided beneficial
interest in the assets of the Issuer, (iii) be entitled to the benefits set
forth in the Declaration and (iv) conform to the description thereof contained
in the Registration Statement, the Preliminary Prospectus and any amendment or
supplement to such Registration Statement or such Prospectus; the issuance of
the Preferred Securities is not subject to preemptive or other similar rights;
and the holders of the Preferred Securities will be entitled to the same
limitation of personal liability extended to stockholders of private
corporations for profit incorporated under the General Corporation Law of the
State of Delaware.
(h) The Common Securities have been duly authorized; when
the Common Securities are delivered and paid for pursuant to this Agreement on
the Closing Date, such Common Securities will (i) have been validly issued and
fully paid, (ii) represent nonassessable undivided beneficial interest in the
assets of the Issuer, (iii) be entitled to the benefits set forth in the
Declaration and (iv) conform to the description thereof contained in the
Registration Statement, the Preliminary Prospectus and any amendment or
supplement to such Registration Statement or such Prospectus; the issuance of
the Common Securities is not subject to preemptive or other similar rights; and
the holders of the Common Securities will be entitled to the same limitation of
personal liability extended to stockholders of private corporations for profit
incorporated under the General Corporation Law of the State of Delaware; and at
the Closing Date, all of the issued and outstanding Common Securities of the
Issuer will be directly owned by the Company free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or equity.
(i) The only directly or indirectly controlled
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, the most recent
Preliminary Prospectus) or as acquired 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, or at the Closing Date, will own an
interest in any corporation, partnership, trust, joint venture or other business
entity. The Company has been and, at the Closing Date, will be duly organized
and validly existing as a corporation under the laws of the Commonwealth of
Puerto Rico and is and, at the Closing Date, will be in good standing with the
Commonwealth of Puerto Rico. The Company is and will be as of the Closing Date
registered with the Board of Governors of the Federal Reserve System (the
"Federal Reserve") as a bank holding company under the Bank Holding Company Act
of 1936
6
(the "BHCA") and its election to be treated as a financial holding company under
the BHCA is and will remain in full force and effect. Each of the Subsidiaries
is and, at the Closing Date, will be a corporation duly organized, validly
existing and in good standing under the laws of its respective jurisdiction of
incorporation. Each of the Company and its Subsidiaries is and, at the Closing
Date, will be duly qualified and in good standing as a foreign corporation in
each jurisdiction in which the character or location of its properties (owned,
leased or licensed) or the nature or conduct of its business or use of its
property and assets, makes such qualification necessary, except where the
failure to so qualify would not have a material adverse effect on the condition,
financial or otherwise, or the earnings, prospects or business affairs of the
Company and its Subsidiaries taken as a whole (a "Material Adverse Effect").
(j) The outstanding shares of capital stock of the
Company have been duly authorized and validly issued and are fully paid and
nonassessable and are not subject to any preemptive or similar rights. The
Debentures to be issued and sold by the Company will be, upon such issuance and
payment therefor, duly authorized, valid, binding and enforceable obligations of
the Company. The Company has, and, upon completion of the sale of the
Debentures, will have, an authorized, issued and outstanding capitalization as
set forth in the Registration Statement and the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus). The
description of the securities of the Company in the Registration Statement, the
Preliminary Prospectus and the Prospectus (if required) is, and at the
Closing Date will be, complete and accurate in all respects. No holders of
securities of the Company are entitled to have such securities registered under
the Registration Statement, except where such rights have been waived.
(k) The consolidated financial statements and the related
notes of the Company included in the Registration Statement or incorporated
therein by reference and the Prospectus present fairly the financial condition
of the Company and its Subsidiaries as of the dates indicated and the
consolidated results of operations, and cash flows of the Company and its
Subsidiaries for the periods covered thereby, all in conformity with generally
accepted accounting principles ("GAAP") applied on a consistent basis throughout
the entire periods involved. PricewaterhouseCoopers LLP (the "Accountants"), who
have reported on those financial statements and related notes which have been
audited, are independent accountants with respect to the Company and its
Subsidiaries within the meaning of the Act and the applicable and published
rules and regulations.
(1) 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.
7
(m) Except as set forth in the Registration Statement and
the Prospectus, subsequent to the respective dates as of which information is
given in the Registration Statement the Preliminary Prospectus and the
Prospectus (if required) and prior to the Closing Date, (i) there has not been,
and will not have been, any material adverse change in the business, properties,
financial condition, net worth or results of operations of the Company and its
Subsidiaries considered as one enterprise, (ii) neither the Company nor any of
its Subsidiaries have entered into, or will have entered into any material
transactions other than pursuant to this Agreement, 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 (the "Common
Stock") and the payment and declaration of monthly dividends on the Company's
outstanding preferred stock in the ordinary course of its business.
(n) The Company and each of its Subsidiaries have good
and marketable title to all properties and assets described in the Registration
Statement, including the documents incorporated by reference therein, and the
Prospectus, as owned by it, free and clear of all liens, security interests,
restrictions, pledges, encumbrances, charges, equities, claims, easements,
leases and tenancies (collectively, "Encumbrances") other than those described
in the Registration Statement, or in the documents incorporated by reference
therein, and Prospectus or those that will not materially affect the value of
such properties and assets or will not interfere with the use made and proposed
to be made of such properties and assets. The Company and each of its
Subsidiaries have valid, subsisting and enforceable leases for the properties
and assets described in the Registration Statement, or in the documents
incorporated by reference therein, and Prospectus as leased by them, free and
clear of all Encumbrances, other than those described in the Registration
Statement, or in the documents incorporated by reference therein, and the
Prospectus, or those that will not materially affect the value of such
properties and assets or will not interfere with the use made and proposed to be
made of such properties and assets.
(o) Neither the Issuer nor the Company is and, after
giving effect to the offering and sale of the Preferred Securities and the
Debentures and the application of the proceeds thereof as described in the
Prospectus, neither of them will be, required to be registered under the
Investment Company Act of 1940, as amended (the "Investment Company Act").
(p) Except as set forth in the Registration Statement, or
incorporated therein by reference, and the Prospectus (or, if the Prospectus is
not in existence, the most recent Preliminary Prospectus), there are no actions,
suits, arbitrations, claims, governmental or other proceedings (formal or
informal), or investigations pending or threatened against or affecting the
Company or any of its Subsidiaries, or any directors, officers or shareholders
of the Company or any of its Subsidiaries in their respective capacities as
such, or any of the properties or assets owned or leased by the Company or any
of its Subsidiaries, before or by any Federal, state or Commonwealth of Puerto
Rico court, commission, regulatory body, administrative agency or other
governmental body, domestic or foreign (collectively, a "Governmental Body"),
wherein an unfavorable ruling, decision
8
or finding would adversely affect the business, prospects, financial condition,
net worth or results of operations of the Company and its Subsidiaries taken as
a whole and would be required to be disclosed in the Registration Statement and
the Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus). Neither the Company nor any Subsidiary is in violation
of, or in default with respect to, any law, rule, or regulation, or any order,
judgment, or decree, except as described in the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus) or when
such violations or defaults, in the aggregate, do not now have and can
reasonably be expected in the future not to have a material adverse effect upon
the operations, business, properties, or assets of the Company and its
Subsidiaries taken as a whole; nor is the Company or any Subsidiary presently
required under any order, judgment or decree to take any action in order to
avoid any such violation or default.
(q) The Company and each of its Subsidiaries have and, at
the Closing Date, will have all governmental licenses, permits, consents,
orders, approvals, franchises, certificates and other authorizations
(collectively, "Licenses") necessary to carry on their respective businesses and
own or lease their respective properties as contemplated in the Registration
Statement and the Prospectus (or, if the Prospectus is not in existence, the
most recent Preliminary Prospectus). The Company and each of its Subsidiaries
have and, at the Closing Date, will have complied in all material respects with
all laws, regulations and orders applicable to it or its business, assets and
properties, except for such violations, individually or in the aggregate which
are not reasonably expected to have a material adverse effect upon the
operations, business properties or assets of the Company and its Subsidiaries
taken as a whole. Neither the Company nor any of its Subsidiaries is, nor, at
the Closing Date, will be in default (nor has any event occurred which, with
notice or lapse of time or both, would constitute a default) in the due
performance and observation of any term, covenant or condition of any indenture,
mortgage, deed of trust, voting trust agreement, loan agreement, bond,
debenture, note agreement or other evidence of indebtedness, lease, contract or
other agreement or instrument (collectively, a "contract or other agreement") to
which they are a party or by which their respective properties are bound or
affected, the violation of which would individually or in the aggregate have a
material adverse effect on the condition, financial or otherwise, or the
earnings, prospects or business affairs of the Company and its Subsidiaries
taken as a whole. There are no governmental proceedings or actions pending or
threatened for the purpose of suspending, modifying or revoking any License held
by the Company or its Subsidiaries.
(r) No consent, approval, authorization or order of, or
any filing or declaration with, any Governmental Body is required for the
consummation of the transactions contemplated by this Agreement or in connection
with the issuance and sale of the Preferred Securities by the Issuer or in
connection with the issuance and sale of Debentures by the Company, except such
as have been obtained and such as may be required under the bylaws and rules of
the National Association of Securities Dealers, Inc. (the "NASD") in connection
with the purchase and distribution of the Preferred Securities.
9
(s) Both the Issuer and the Company have full power
(corporate and other) and authority to enter into this Agreement and to carry
out all the terms and provisions hereof to be carried out by it. This Agreement
has been duly authorized, executed and delivered by each of the Issuer and the
Company and constitutes a valid and binding agreement of each of them and is
enforceable against any of them in accordance with its terms, except as rights
to indemnity and contribution which may be limited by federal, state or
Commonwealth of Puerto Rico securities laws or the public policy underlying such
laws. Except as disclosed in the Registration Statement and the Prospectus, the
execution, delivery and the performance of this Agreement and the consummation
of the transactions contemplated hereby will not result in the creation or
imposition of any Encumbrance upon any of the properties or assets of the
Issuer, the Company or any of the Subsidiaries pursuant to the terms or
provisions of, or result in a breach or violation of, or conflict with any of
the terms or provisions of, or constitute a default under, or give any other
party a right to terminate any of the Issuer's or the Company's obligations
under, or result in the acceleration of any obligation under, (i) the
Certificate of Incorporation or By-laws of the Company, in each case as amended,
or the Declaration or (ii) any contract or other agreement to which the Issuer,
the Company or any of the Subsidiaries is a party or by which it or any of the
respective assets or properties are bound or affected, the violation of which
would individually or in the aggregate have a material adverse effect on the
condition, financial or otherwise, or the earnings, prospects or business
affairs of the Issuer, the Company and its Subsidiaries, taken as a whole, or
(iii) any judgment, ruling, decree, order, law, statute, rule or regulation of
any Governmental Body applicable to the Issuer, the Company or any of the
Subsidiaries or their respective businesses or properties, the violation of
which would individually or in the aggregate have a material adverse effect on
the financial condition, or the earnings, prospects or business affairs of the
Issuer, the Company and its Subsidiaries, taken as a whole.
(t) No statement, representation, or warranty made by
each of the Issuer and the Company in this Agreement or made in any certificate
or document required by this Agreement to be delivered to the Agent was or will
be, when made, inaccurate, untrue or incorrect in any material respect.
(u) Neither the Issuer, the Company nor any of its
directors, officers or affiliates, 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 Notes or
otherwise.
(v) Neither the Issuer, the Company nor any of its
Subsidiaries is involved in any collective labor dispute with its employees nor
is any such dispute threatened or imminent.
(w) Neither the Issuer, the Company nor any of its
Subsidiaries nor, to their best knowledge, any employee or agent of the Issuer,
the Company or any Subsidiary has made, received or retained any payment of
funds of the Issuer, the Company or any Subsidiary in violation of any
10
law, rule or regulation which payment, receipt or retention of funds is of a
character required to be disclosed in the Prospectus.
(x) The business, operations and facilities of the
Issuer, the Company and its Subsidiaries have been and are being conducted in
compliance with all applicable laws, ordinances, rules, regulations, licenses,
permits, approvals, plans, authorizations or requirements relating to
occupational safety and health, or pollution, or protection of health or the
environment (including, without limitation, those relating to emissions,
discharges, releases or threatened releases of pollutants, contaminants or
hazardous or toxic substances, materials or wastes into ambient air, surface
water, groundwater or land, or relating to the manufacture, processing,
distribution, use, treatment storage, disposal, transport or handling of
chemical substances, pollutants, contaminants or hazardous or toxic substances,
materials or wastes, whether solid, gaseous or liquid in nature) of any
governmental department, commission, board, bureau, agency or instrumentality of
the United States, any state, or the Commonwealth of Puerto Rico or political
subdivision thereof, and all applicable judicial or administrative agency or
regulatory decrees, awards, judgments and orders relating thereto; and neither
the Issuer, the Company nor any of its Subsidiaries has received any notice from
any governmental instrumentality or any third party alleging any violation
thereof or liability thereunder (including without limitation, liability for
costs of investigating or remediating sites containing hazardous substances
and/or damages to natural resources), except where failure to so comply would
not have a material adverse effect on the financial condition, or the earnings
or business affairs of the Issuer, the Company and its Subsidiaries taken as a
whole. The intended use and occupancy of each of the facilities owned or
operated by the Issuer, the Company and its Subsidiaries complies in all
material respects with all applicable codes and zoning laws and regulations, and
there is no pending or threatened condemnation, zoning change, environmental or
other proceeding or action that will in any material respect adversely affect
the size of, use of, improvements on, construction on, or access to such
facilities.
(y) The Company has filed all foreign, federal, state 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, except for any failure to file which would not
have a material adverse effect on the financial condition of the Company.
(z) The Company meets the requirements for use of Rule
415 under the Rules and Regulations.
(aa) The deposit accounts of R&G Premier Bank, a
Subsidiary of the Company ("R&G Premier") and R&G Crown Bank, a Subsidiary of
the Company ("R&G Crown"), are insured by the Savings Association Insurance Fund
("SAIF") of 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 and R&G Crown are members in good standing
of the Federal Home Loan Bank of New York.
11
(bb) None of the Issuer, the Company or their affiliates,
or any of their respective directors or officers, 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, the most recent
Preliminary Prospectus).
(cc) The Company is engaged in trade or business in Puerto
Rico. The Company derived more than 20% of its gross income from Puerto Rico
sources for the three year period ending with the close of the Company's taxable
year ended on December 31, 2002.
(dd) The Company and each subsidiary has fulfilled its
respective obligations, if any, under the minimum funding standards of Xxxxxxx
000 xx xxx Xxxxxx Xxxxxx Employee Retirement Income Security Act of 1974
("ERISA") and the regulations and published interpretations thereunder with
respect to each "plan" (as defined in Section 3(3) of ERISA and such regulations
and published interpretations) in which employee of the Company or any
subsidiary are eligible to participate and each such plan is in compliance with
the presently applicable provisions of ERISA and such regulations and published
interpretations, except for any failure to fulfill any such obligations, or
failure to comply, that singly or in the aggregate would not have a material
adverse effect upon the operations, business, properties, or assets of the
Company and its Subsidiaries taken as a whole. Non of the Company or any
subsidiary has incurred any unpaid liability to the Pension Benefit Guaranty
Corporation (other than for payment of premiums in the ordinary course) or to
any plan under Title IV of ERISA, except for any such liability that would not
have a material adverse effect upon the operations, business, properties, or
assets of the Company and its Subsidiaries taken as a whole.
(ee) The Company is not a "passive foreign investment
company"("PFIC") within the meaning of Section 1296 of the United States
Internal Revenue Code of 1986, as amended, and does not anticipate that it will
become a PFIC in the foreseeable future.
4. Agreements of the Company and the Issuer. Each of the Company
and the Issuer jointly and severally agree with the Agent and each of the
Underwriters as follows:
(a) The Company and the Issuer will not during such
period as the Prospectus is required by law to be delivered in connection with
sales of the CT Notes by any underwriter or dealer (the "Prospectus Delivery
Period"), file any amendment or supplement to the Registration Statement or the
Prospectus, unless a copy thereof shall first have been submitted to the Agent
within a reasonable period of time prior to the filing thereof and the Agent
shall not have objected thereto in good faith.
(b) The Company and the Issuer will use their best
efforts to cause the Registration Statement to become or remain effective
through the completion of the Underwriters' distribution of the CT Notes, and
will notify the Agent promptly, and will confirm such advice in writing, (i) of
the preparation and filing (subject to Section 4(a)) of any post-effective
amendment
12
and when any such post-effective amendment to the Registration Statement 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 suspension of the
qualification or registration of the Preferred Securities for offering or sale
in any jurisdiction, or of the initiation or threat of any proceeding for any
such purpose, (v) of the happening of any event during the Prospectus Delivery
Period that in the judgment of the Company or the Issuer makes any statement
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 (vi) 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 or any jurisdiction shall
threaten to issue, or shall issue, any order suspending the effectiveness of the
Registration Statement or suspending the qualification or registration of the
Preferred Securities for sale in any jurisdiction, the Company and the Issuer
will make every reasonable effort to prevent the issuance of such order and, if
such an order should be issued, to obtain the withdrawal of such order at the
earliest possible moment. The Company and the Issuer will use their best efforts
to comply with the provisions of and make all requisite filings with the
Commission pursuant to Rule 430A and to notify the Agent promptly of all such
filings.
(c) If, at any time when a Prospectus relating to the
Preferred Securities is required to be delivered under the Act, any event occurs
as a result of which, in the judgment of the Company or the Issuer or in the
opinion of counsel to the Underwriters, 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 the
Registration Statement, as then amended or supplemented, would include any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements therein not misleading, or if for any other reason it is
necessary at any time to amend or supplement the Prospectus or the Registration
Statement to comply with the Act or the Rules and Regulations, the Company will
promptly notify the Agent thereof and, subject to Section 4(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.
(d) The Company will furnish to the Agent, without
charge, two 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 Agent, without charge, for
transmittal to each of the Underwriters, copies of the Registration Statement
and any post-effective amendment thereto, including financial statements and
schedules but without exhibits.
13
(e) The Company and the Issuer will comply with all the
provisions of all undertakings contained in the Registration Statement.
(f) During the Prospectus Delivery Period, the Company
will promptly furnish to the Underwriters, without charge, as many copies of
each preliminary prospectus, the Prospectus (containing the Prospectus
Supplement) and any amendment or supplement thereto as the Underwriters may from
time to time reasonably request. The Company consents to the use of the
Prospectus, as amended or supplemented from time to time, by the Underwriters
and by all dealers to whom the CT Notes may be sold, both in connection with the
offering or sale of the CT Notes and, thereafter, during the Prospectus Delivery
Period, if during the Prospectus Delivery Period any event shall occur which in
the judgment of the Company or counsel to the Underwriters should be set forth
in the Prospectus in order to make any statement therein, in the light of the
circumstances under which it was made, not misleading, or if, in the reasonable
opinion of counsel to the Underwriters, it is necessary to supplement or amend
the Prospectus to comply with law, the Company will forthwith prepare and duly
file with the Commission an appropriate supplement or amendment thereto. Except
as required by the Exchange Act or the Exchange Act Rules and Regulations, the
Company shall not file any document under the Exchange Act before the
termination of the Prospectus Delivery Period if such document would be deemed
to be incorporated by reference into the Prospectus to which the Agent
reasonably objects.
(g) During the period of five years commencing on the
Closing Date, the Company will furnish to the Agent, 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 Agent, 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.
(h) The Company will make generally available to its
security holders as soon as practicable, but not later than ninety (90) days
after the close of the period covered thereby, an earnings statement (in form
complying with the provisions of Section 11(a) of the Act and Rule 158 of the
Rules and Regulations) covering a twelve-month period beginning not later than
the first day of the Company's fiscal quarter next following the "effective
date" (as defined in said Rule 158) of the Registration Statement.
(i) The Issuer and the Company will apply the net
proceeds from the offering and sale of the Preferred Securities and the
Debentures, respectively, in the manner set forth in the Prospectus under "Use
of Proceeds."
(j) The Issuer and the Company will enter into a
Supplement to Agency Agreement in the form attached hereto as Exhibit B.
14
5. Expenses.
(a) 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 Agent, 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 and
filing by the Company of the Registration Statement and exhibits thereto, each
Preliminary Prospectus prior to or during the period specified in the first
sentence of Section 4(f) but not exceeding nine (9) months after the Effective
Date, the Prospectus and any amendment or supplement to the Registration
Statement or the Prospectus, (ii) furnishing (including costs of shipping and
mailing) such copies of the Registration Statement, the Prospectus and any
Preliminary Prospectus, and all amendments and supplements thereto, as maybe
requested for use in connection with the offering and sale of the CT Notes by
the Underwriters or by dealers to whom CT Notes may be sold, (iii) any filings
required to be made by the Underwriters with the NASD, (iv) counsel and
accountants to the Company, (v) the reasonable fees and disbursements of the
trustee for the Notes, including its legal expenses, and (vi) the transfer agent
for the CT Notes; it being understood that the Company and Conservation Trust
will share the costs of printing the Preliminary Offering Circular and the
Offering Circular (including the Prospectus) and all amendments thereto.
(b) If the transactions contemplated by this Agreement
are not consummated or if this Agreement is terminated by the Company pursuant
to any of the provisions hereof, the Company will reimburse the Agent and the
Underwriters for all of their accountable out-of-pocket fees and expenses
(including the fees, disbursements and other charges of their counsel) incurred
by them in connection herewith.
6. Conditions of the Obligations of the Underwriters. The
obligations of each Underwriter under the Purchase Agreement and the
consummation of the transaction contemplated hereunder are subject to the
following conditions:
(a) All filings required under Rule 424 and 430A of the
Rules and Regulations to be made by the Company and the Issuer prior to the
Closing shall have been made by the Company or the Issuer, as the case may be.
(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 Preferred Securities under the securities or blue sky
laws of any jurisdiction shall be in effect, and no proceeding for such purposes
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
15
Prospectus shall have been filed unless a copy thereof was first submitted to
and approved by the Agent, and the Agent shall have received certificates, dated
the Closing Date and signed by the Chief Executive Officer or President of the
Company and the Chief Financial Officer of the Company or Treasurer (who may, as
to proceedings threatened, rely upon the best of their information and belief),
to the effect of the foregoing clauses (i), (ii) and (iii).
(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 change in the general affairs, business, properties,
management, financial condition or results of operations of the Company whether
or not arising from transactions in the ordinary course of business, 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 or 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 the Issuer or
any of their respective 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 materially and adversely affect the business, properties, financial
condition, net worth or results of operations of the Company or the Issuer.
(e) Each of the representations and warranties of each of
the Issuer and the Company contained herein shall be true and correct at the
Closing Date, as if made on such date, and all covenants and agreements herein
contained to be performed on the part of the Company and all conditions herein
contained to be fulfilled or complied with by the Company at or prior to the
Closing Date, shall have been fully performed, fulfilled or complied with.
(f) The Agent shall have received an opinion from Xxxxxx
Xxxxx, Xxxxxxxxxx, XX Counsel for the Company, each dated as of the Closing
Date, in form and substance satisfactory to the Agent.
(g) The Agent shall have received an opinion, dated the
Closing Date, from Xxxxxxxxxxx Xxxxxx & Xxxxxxx LLP, counsel to the
Underwriters, which opinion shall be satisfactory in all respects to the Agent.
(h) The Agent shall have received an opinion, dated the
Closing Date of [________________], counsel to the Wilmington Trust Company in
form and substance reasonably satisfactory to counsel.
16
(i) Concurrently with the execution and delivery of this
Agreement the Accountants shall have furnished to the Agent a letter, dated the
date of its delivery (the "Original Letter"), addressed to the Agent and in form
and substance satisfactory to the Agent, to the effect that:
(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 Prospectus 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
thereunder with respect to registration statements on Form S-3;
(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,
2002 as set forth in the minute books through a specified date not more
than five business days prior to the date of delivery of the Original
Letter; (b) reading the unaudited interim financial data for the period
from the date of the latest balance sheet incorporated by reference in
the Prospectus 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 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) at the
date of the latest available interim financial data and at a specified
date not more than five business days prior to the date of delivery of
the Original Letter there was any change in the capital stock,
deposits, federal funds purchased or securities sold under agreements
to repurchase 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 December 31, 2002
balance sheet incorporated by reference in the Prospectus and (2) for
the period from December 31, 2002, to the latest interim financial data
available which should be no later than forty (40) 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, other 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) they have compared specific amounts
expressed in dollars (or percentages derived from such dollar amounts)
and other financial information contained or
17
incorporated by reference in the Prospectus or Prospectus Supplement,
which has been obtained from accounting records that 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
computation, with the results obtained from inquiries or reading of
such general accounting records and other procedures specified in such
letter and have found such dollar amounts, percentages and other
financial information to be in agreement with such results.
At the Closing Date, the Accountants shall have
furnished to the Agent 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 business days prior to the Closing
Date, which would require any change in the Original Letter if it were required
to be dated and delivered at the Closing Date.
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 Agent deems such explanation unnecessary, and (B) such
changes, decreases or increases do not, in the sole judgment of the Agent, make
it impractical or inadvisable to proceed with the purchase and delivery of the
Preferred Securities as contemplated by the Registration Statement and the
Prospectus, as amended as of the date hereof.
(j) At the Closing Date, there shall be furnished to the
Agent an officer's certificate, dated the date of its delivery, signed by each
of the Chief Executive Officer or President and the Chief Financial Officer or
Treasurer of the Company and the Trustees of the Trust, in form and substance
satisfactory to the Agent, 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 each of the Issuer and 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 any of them on or prior to
the date of such certificate has
18
been duly, timely and fully performed and each condition herein
required to be complied with, 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.
(k) The Company and the Issuer shall have furnished to the
Agent such certificates, letters and other documents, in addition to those
specifically mentioned herein, as the Agent may have reasonably requested as to
the accuracy and completeness at the Closing Date, of any statement in the
Registration Statement or the Prospectus, as to the accuracy at the Closing Date
of the representations and warranties of the Company, as to the performance by
the Company of its obligations hereunder, or as to the fulfillment of the
conditions concurrent and precedent to the obligations hereunder of the
Underwriters.
(1) The Agent shall have received copies, duly certified
by the Secretary or an Assistant Secretary of the Company of the resolutions or
other corporate actions adopted or taken by the Company in connection with the
transactions contemplated herein.
(m) The Agent shall have received a copy of the
certificate of incorporation of the Company, as amended, certified as of a
recent date by the appropriate officer of the Commonwealth, together with
certificates dated as of a recent date from the Secretary of State of the
Commonwealth as to the existence and good standing of the Company under the laws
of the Commonwealth and copies of the by-laws of the Company certified by the
Secretary or an Assistant Secretary of the Company. The Agent shall further have
received a copy of the Declaration, the Indenture and the Guarantee Agreement
relating to the Issuer.
(n) The Underwriters shall have received such other
documentation, certificates and opinions as may be reasonably required by 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 the Agent. The Company will furnish you with such
conformed copies of such opinions, certificates, letters and other documents as
the Agent shall reasonably request.
19
7. Indemnification and Contribution.
(a) Each of the Issuer and the Company, joint and
severally, agree to indemnify and hold harmless the Agent, each Underwriter, the
directors, officers, employees and agents of the Agent or each Underwriter and
each person, if any, who controls the Agent or each Underwriter within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act, from and
against any and all losses, claims, damages or liabilities, joint or several
(and 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 or the Issuer in Section 3 of this Agreement, (ii) any untrue statement
or alleged untrue statement of any material fact contained in any Preliminary
Prospectus, the Registration Statement or the Prospectus, any amendment or
supplement to the Registration Statement or the Prospectus, or any application
or other document, or any amendment or supplement thereto, executed by the
Company or the Issuer or based upon written information furnished by or on
behalf of the Company filed in any jurisdiction in order to qualify the
Preferred Securities 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 or 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, the
Agent and each Underwriter and each such other person for any legal or other
expenses reasonably incurred by such Agent or 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 and the Issuer will not be liable in any such case to
the extent that any such loss, claim, damage or liability is 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 the Agent or any Underwriter furnished in writing to the Company by
the Agent on behalf of any Underwriter expressly for inclusion therein, or for
any information contained in the Preliminary Offering Circular or Offering
Circular for the CT Notes other than under the headings identified above and
other than in the preliminary prospectus supplement, prospectus supplement or
Prospectus for the Preferred Securities attached to the Preliminary Offering
Circular or the Offering Circular, provided, further, that such indemnity with
respect to any Preliminary Prospectus or Preliminary Offering Circular 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
Preferred Securities or CT Notes which are the subject thereof to the extent
that any such loss, claim, damage or liability (i) results from the fact that
such Underwriter failed to send or give a copy of the Prospectus and Offering
Circular (as amended or supplemented) to such person at or prior to the
confirmation of the sale of such Preferred Securities or CT Notes to such person
in any case where such delivery is required by the Act and (ii) arises out of or
is based upon an untrue statement or omission of a material fact contained in
such Preliminary Prospectus or Preliminary
20
Offering Circular that was corrected in the Prospectus and Offering Circular (or
any amendment or supplement thereto), unless such failure to deliver the
Prospectus and Offering Circular (as amended or supplemented) was the result of
noncompliance by the Company with Section 4(f). 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 the Agent and 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 includes an unconditional release
of each Underwriter and each such other person from all liability arising out of
such claim, action, suit or proceeding.
(b) Each Underwriter will severally and not jointly
indemnify and hold harmless each of the Company and the Issuer, the directors,
officers, employees and agents of the Company 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 from and against any losses, claims, damages or liabilities
(or actions in respect thereof) to which 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 of a material fact
contained in any Preliminary Prospectus, the Registration Statement or the
Prospectus, any amendment or supplement to the Registration Statement or the
Prospectus or any Application or under the headings "Plan of Distribution" in
the Preliminary Offering Circular and Offering Circular 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 or the
Prospectus, any amendment or supplement to the Registration Statement or the
Prospectus or under the headings "Plan of Distribution" in the Preliminary
Offering Circular and Offering Circular, 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 Agent 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 any of them in
connection with investigating or defending any such loss, claim, damage,
liability or any action in respect thereof. The Company acknowledges that, for
all purposes under this Agreement, the statements relating to the Underwriters
set forth under the heading "Plan of Distribution" in the Prospectus and in the
Offering Circular constitute the only information relating to any Underwriter
furnished in writing to the Company by the Agent on behalf of the Underwriters
expressly for inclusion in the Registration Statement, any Preliminary
Prospectus, the Prospectus, the Preliminary Offering Circular or the Offering
Circular. This indemnity agreement will be in addition to any liability that
each Underwriter might otherwise have.
21
(c) Promptly after receipt by an indemnified party under
this Section 7 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 7, 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
7 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 7 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
proviso to the next 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 Agent in the case of paragraph (a) of this
Section 7, 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 7 in which case the
indemnified party may effect such a settlement without such consent.
(d) If the indemnification provided for in the foregoing
paragraphs of this Section 7 is unavailable or insufficient to hold harmless an
indemnified party under paragraph (a) or (b) 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 losses, claims, damages or
liabilities (or actions in respect
22
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 Preferred Securities
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
Issuer, 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
Preferred Securities (before deducting expenses) received by the Company bear to
the total underwriting discounts and commissions received by the Underwriters in
connection with the sale of the CT Notes. 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 Agent on behalf of the Underwriters,
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission. The Company and the
Underwriters agree that it would not be just and equitable if contributions
pursuant to this Section 7(d) were to be determined by pro rata allocation (even
if the Underwriters were treated as one entity for such purposes) 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, liabilities (or actions in
respect thereof) referred to above in this Section 7(d) 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 7(d), no Underwriter shall be
required to contribute any amount in excess of the total underwriting discounts
received by it with respect to the CT Notes 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 7(d) are
several in proportion to their respective underwriting obligations and not
joint. For purposes of this Section 7(d), 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 (d). 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 7(d), 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
23
have hereunder or otherwise than under this paragraph (d) 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).
(e) The indemnity and contribution agreements contained
in this Section 7 and the representations and warranties of each of the Company
and the Issuer 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 Preferred Securities or the CT Notes
and payment therefor or (iii) any termination of this Agreement.
8. Termination. This Agreement may be terminated by the
Agent at any time prior to the Closing Date, by notice to the Company, without
liability on the part of the Agent or any Underwriter to the Company if, prior
to delivery and payment for the Preferred Securities, in the sole judgment of
the Agent, (i) trading in the common stock or the preferred stock of the Company
or securities generally shall have been suspended by the Commission or by the
Nasdaq or NYSE, (ii) minimum or maximum prices shall have been established for
the common stock or the preferred stock of the Company or securities generally
on either the Nasdaq or the NYSE, or additional material governmental
restrictions, not in force on the date of this Agreement, shall have been
imposed upon trading in securities generally by any of such market or exchange
or by order of the Commission or any court or other Governmental Authority,
(iii) a general banking moratorium shall have been declared by the United
States, New York State, or Commonwealth of Puerto Rico authorities, or (iv) any
material adverse change in the financial or securities markets in the United
States or any outbreak or material escalation of hostilities or declaration by
the United States of a national emergency or war or other calamity or crisis
shall have occurred, the effect of any of which is such as to make it, in the
sole judgment of the Agent, impracticable or inadvisable to market the CT Notes
on the terms and in the manner contemplated by the Offering Circular. Any
termination pursuant to Section 8 shall be without liability of any party to any
other party except as provided in Sections 5(a) and 7.
9. Survival. The respective representations, warranties,
agreements, covenants, indemnities and other statements of each of the Company,
its officers, the Issuer, 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, any of its officers or
directors, any Underwriter or any controlling person referred to in Section 7
hereof and (ii) delivery of and payment for the Preferred Securities. The
respective agreements, covenants, indemnities and other statements set forth in
Sections 6 and 8 hereof shall remain in full force and effect, regardless of any
termination or cancellation of this Agreement.
24
10. Notices. Notice 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, at the office of the Company, 000 Xxxxx X.
Xxxxxx Xxxxxx, Xxx Xxxx, Xxxxxx Xxxx 00000, Attention: Xxxxxx X. Xxxxxxxx,
Executive Vice President and Chief Financial Officer, or (b) if to the
Underwriters, to the office of the Agent, Xxxxx Xxxxxxx Xxxxxx, Xxxxx 0000, Xxxx
Xxx, Xxxxxx Xxxx 00000, Attention: President. Any such notice shall be effective
only upon receipt. Any notice under Section 7 or 8 may be made by telex or
telephone, but if so made shall be subsequently confirmed in writing.
11. Successors. This Agreement shall inure to the benefit of, and
shall be binding upon the Agent, the several Underwriters, the Company, the
Issuer and their respective successors and legal representatives, 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 (i) the indemnities of each of the Company and the Issuer
contained in Section 7 of this Agreement shall also be for the benefit of any
person or persons who control the Agent or any Underwriter within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act and (ii) the indemnities
of the Underwriters contained in Section 7 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 CT Notes 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.
12. 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 COMMONWEALTH OF PUERTO RICO,
WITHOUT GIVING EFFECT TO ANY PROVISIONS RELATING TO CONFLICTS OF LAWS.
13. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Please confirm that the foregoing correctly sets forth the agreement
among the Company and the several Underwriters.
Very truly yours,
25
R&G CAPITAL TRUST III
By:
-----------------------------------
Name:
Title:
R&G FINANCIAL CORPORATION
By:
-----------------------------------
Name:
Title:
Confirmed as of the date first above mentioned:
POPULAR SECURITIES, INC.
By:
-----------------------------------------
Name:
Title:
Acting on its behalf as Agent in the placement
of the Preferred Securities with Conservation Trust
and as lead underwriter of the several Underwriters named in
Schedule 1 hereof in connection with the sale of the CT Notes.
26
SCHEDULE 1 UNDERWRITERS
CT NOTES TO BE PURCHASED
Popular Securities, Inc. $
$
$
$
$
Total:
A-l
EXHIBIT A
LIST OF SUBSIDIARIES
X-x
EXHIBIT B
SUPPLEMENT TO AGENCY AGREEMENT
SUPPLEMENT TO AGENCY AGREEMENT dated August __, 2003, among R&G
Financial Corporation ("R&G Financial"), R&G Capital Trust III ("Trust III"),
the Puerto Rico Conservation Trust Fund ("Conservation Trust"), and Popular
Securities, Inc. (the "Agent"), as agent in connection with the sale of Trust
III's ___% Commutative Monthly Income Trust Preferred Securities (the "Preferred
Securities") to Conservation Trust, and as representative of the underwriters in
connection with the purchase by such underwriters of Conservation Trust's
Secured Notes due 2033 (the "CT Notes").
Reference is made to the Agency Agreement dated as of the date hereof
(the "Agency Agreement") between R&G Financial, Trust III and the Agent, which
is hereby incorporated by reference as if fully set forth herein, and to the
Purchase Agreement dated as of the date hereof (the "Purchase Agreement")
between Conservation Trust and the Agent. In consideration of the agreements,
representations and agreements contained herein, the parties agree as follows:
1. Subject to compliance by R&G Financial and Trust III with its
agreements, and subject to the fulfillment of the conditions, set forth in the
Agency Agreement, Conservation Trust hereby agrees to purchase the Preferred
Securities on the Closing Date set forth in the Agency Agreement at a purchase
price equal to $_______________________.
2. R&G Financial and Trust III hereby agree with Conservation
Trust and with the Agent that Conservation Trust shall have the benefit of the
representations and warranties made by R&G Financial and Trust III in the Agency
Agreement.
In witness whereof, the parties have caused this supplement to be
executed by its duly authorized representatives as of the date first written
above.
R&G FINANCIAL CORPORATION
By:
---------------------------------
Name:
Title:
B-2
R&G CAPITAL TRUST III
By:
-----------------------------------------------
Name:
Title:
PUERTO RICO CONSERVATION TRUST FUND
By:
-----------------------------------------------
Name:
Title:
POPULAR SECURITIES, INC.
By:
-----------------------------------------------
Name:
Title:
