EXHIBIT 1
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EUROBANCSHARES, INC.
(a Puerto Rico corporation)
3,894,988 Shares of Common Stock
(Par Value $.01 Per Share)
PURCHASE AGREEMENT
August [ ], 2004
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TABLE OF CONTENTS
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SECTION 1.0 REPRESENTATIONS AND WARRANTIES...............................................................3
(a) Representations and Warranties by the Company.....................................................3
(i) Compliance with Registration Requirements.....................................................3
(ii) Independent Registered Public Accounting Firm.................................................4
(iii) Financial Statements..........................................................................4
(iv) No Material Adverse Change in Business........................................................5
(v) Good Standing of the Company..................................................................5
(vi) Good Standing of Subsidiaries.................................................................6
(vii) Capitalization................................................................................7
(viii) Authorization of Agreement....................................................................7
(ix) Authorization and Description of Securities...................................................7
(x) Absence of Defaults and Conflicts.............................................................7
(xi) Absence of Labor Dispute......................................................................8
(xii) Absence of Proceedings........................................................................8
(xiii) Accuracy of Exhibits..........................................................................8
(xiv) Possession of Intellectual Property...........................................................9
(xv) Absence of Further Requirements...............................................................9
(xvi) Possession of Licenses and Permits............................................................9
(xvii) Title to Property............................................................................10
(xviii) Compliance with Cuba Act.....................................................................10
(xix) Investment Company Act.......................................................................10
(xx) Environmental Laws...........................................................................10
(xxi) Taxes........................................................................................11
(xxii) Compliance with Laws.........................................................................11
(xxiii) Compliance with the Xxxxxxxx-Xxxxx Act.......................................................12
(xxiv) Bank Regulations.............................................................................12
(xxv) International Banking Entity.................................................................12
(xxvi) Regulatory Enforcement Matters...............................................................12
(xxvii) Regulatory Reports...........................................................................13
(xxviii) Deposit Insurance............................................................................14
(xxix) Insurance Licenses...........................................................................14
(xxx) Registration Rights..........................................................................14
(xxxi) Warrants, Options and Other Rights...........................................................15
(xxxii) No Unauthorized Use of Prospectus............................................................15
(xxxiii) Insurance....................................................................................15
(xxxiv) No Illegal Payment or Influence..............................................................15
(xxxv) Sales of Securities/No Integration...........................................................15
(xxxvi) No Affiliation or Association with NASD......................................................16
(xxxvii) Lock-up Agreements...........................................................................16
(xxxviii) Internal Control Over Financial Reporting....................................................16
(xxxix) Disclosure Controls and Procedures...........................................................17
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(xl) Data in Registration Statement and Prospectus................................................17
(xli) No Stabilization or Manipulation.............................................................17
(xlii) Related Party Transactions...................................................................17
(xliii) Fees.........................................................................................17
(xliv) ERISA........................................................................................18
(b) Representations and Warranties by the Selling Stockholders.......................................18
(i) Accurate Disclosure..........................................................................18
(ii) Authorization of Agreements..................................................................18
(iii) Good and Marketable Title....................................................................19
(iv) Due Execution of Power of Attorney and Custody Agreement.....................................19
(v) Absence of Manipulation......................................................................20
(vi) Absence of Further Requirements..............................................................20
(vii) Lock-up Agreements...........................................................................20
(viii) Certificates Suitable for Transfer...........................................................20
(ix) No Affiliation or Association with NASD......................................................20
(c) Officer's Certificates...........................................................................21
SECTION 2.0 SALE AND DELIVERY TO UNDERWRITERS; CLOSING..................................................21
(a) Initial Securities...............................................................................21
(b) Option Securities................................................................................21
(c) Payment..........................................................................................22
(d) Denominations; Registration......................................................................22
SECTION 3.0 COVENANTS OF THE COMPANY....................................................................23
(a) Compliance with Securities Regulations and Commission Requests...................................23
(b) Filing of Amendments.............................................................................23
(c) Delivery of Registration Statements..............................................................23
(d) Delivery of Prospectuses.........................................................................23
(e) Continued Compliance with Securities Laws........................................................24
(f) Blue Sky Qualifications..........................................................................24
(g) Rule 158.........................................................................................24
(h) Use of Proceeds..................................................................................25
(i) Listing..........................................................................................25
(j) Restriction on Sale of Securities................................................................25
(k) Reporting Requirements...........................................................................26
(l) Restrictions on Reserved Securities..............................................................26
(m) Compliance with Rule 463.........................................................................26
(n) Compliance with the Xxxxxxxx-Xxxxx Act...........................................................26
(o) Compliance with the Cuba Act.....................................................................26
SECTION 4.0 PAYMENT OF EXPENSES.........................................................................26
(a) Expenses.........................................................................................26
(b) Expenses of the Selling Stockholders.............................................................27
(c) Termination of Agreement.........................................................................27
(d) Allocation of Expenses...........................................................................27
SECTION 5.0 CONDITIONS OF UNDERWRITERS' OBLIGATIONS.....................................................27
(a) Effectiveness of Registration Statement..........................................................27
(b) Opinions of Counsel for the Company..............................................................28
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(c) Opinions of Counsel for the Selling Stockholders.................................................28
(d) Opinion of Counsel for the Underwriters..........................................................29
(e) Officers' Certificate............................................................................29
(f) Certificate of Selling Stockholders..............................................................29
(g) Accountant's Comfort Letter......................................................................29
(h) Bring-down Comfort Letter........................................................................29
(i) Management Comfort Letter........................................................................30
(j) Approval of Listing and Effectiveness of Registration Statement on Form 8-A......................30
(k) No Objection.....................................................................................30
(l) Lock-up Agreements...............................................................................30
(m) Conditions to Purchase of Option Securities......................................................30
(i) Officers' Certificate........................................................................30
(ii) Certificate of Selling Stockholders..........................................................30
(iii) Opinions of Counsel for the Company..........................................................30
(iv) Opinions of Counsel for the Selling Stockholders.............................................31
(v) Opinion of Counsel for the Underwriters......................................................31
(vi) Bring-down Comfort Letter....................................................................31
(vii) Bring-down Management Comfort Letter.........................................................31
(n) Additional Documents.............................................................................31
(o) Termination of Agreement.........................................................................31
(p) Confirmation Letters.............................................................................32
SECTION 6.0 INDEMNIFICATION.............................................................................32
(a) Indemnification of the Underwriters..............................................................32
(b) Indemnification of the Company, Directors and Officers and the Selling Stockholders..............33
(c) Actions against Parties; Notification............................................................34
(d) Settlement without Consent if Failure to Reimburse...............................................34
SECTION 7.0 CONTRIBUTION................................................................................35
SECTION 8.0 REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO
SURVIVE DELIVERY............................................................................36
SECTION 9.0 TERMINATION OF AGREEMENT....................................................................36
(a) Termination; General.............................................................................36
(b) Liabilities......................................................................................37
SECTION 10.0 DEFAULT BY ONE OR MORE OF THE UNDERWRITERS..................................................37
SECTION 11.0 DEFAULT BY ONE OR MORE OF THE SELLING STOCKHOLDERS
OR THE COMPANY..............................................................................38
SECTION 12.0 NOTICES.....................................................................................38
SECTION 13.0 PARTIES.....................................................................................40
SECTION 14.0 GOVERNING LAW; REFERENCES TO TIME...........................................................40
SECTION 15.0 SUBMISSION TO JURISDICTION..................................................................41
SECTION 16.0 EFFECT OF HEADINGS..........................................................................41
SCHEDULE A
SCHEDULE B
SCHEDULE C
SCHEDULE D
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SCHEDULE E
Exhibit A
Exhibit B
Exhibit C
Exhibit D
Annex A
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EUROBANCSHARES, INC.
(a Puerto Rico corporation)
3,894,988 Shares of Common Stock
(Par Value $.01 Per Share)
PURCHASE AGREEMENT
August [ ], 2004
XXXXX, XXXXXXXX & XXXXX, INC.
UBS SECURITIES LLC
XXXXX XXXXXX & CO., INC.
as Representatives of the several Underwriters
c/o Keefe, Xxxxxxxx & Xxxxx, Inc.
000 Xxxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
EuroBancshares, Inc., a Puerto Rico corporation (the "Company"), Eurobank,
a Puerto Rico chartered commercial bank and a wholly-owned subsidiary of the
Company (the "Bank"), and the persons listed in Schedule B hereto (the "Selling
Stockholders"), confirm their respective agreements with Xxxxx, Xxxxxxxx &
Xxxxx, Inc. ("Xxxxx Xxxxxxxx") and each of the other Underwriters named in
Schedule A hereto (collectively, the "Underwriters," which term shall also
include any underwriter substituted as hereinafter provided in Section 10
hereof), for whom Xxxxx Xxxxxxxx, UBS Securities LLC and Xxxxx Xxxxxx & Co.,
Inc. are acting as representatives (in such capacity, the "Representatives"),
with respect to (i) the sale by the Company and the Selling Stockholders, acting
severally and not jointly, and the purchase by the Underwriters, acting
severally and not jointly, of the respective numbers of shares of Common Stock,
par value $.01 per share, of the Company (the "Common Stock") set forth in
Schedules A and B hereto and (ii) the grant by the Company and the Selling
Stockholders to the Underwriters, acting severally and not jointly, of the
option described in Section 2(b) hereof to purchase all or any part of 584,248
additional shares of Common Stock to cover over-allotments, if any. The
aforesaid 3,894,988 shares of Common Stock (the "Initial Securities") to be
purchased by the Underwriters and all or any part of the 584,248 shares of
Common Stock subject to the option described in Section 2(b) hereof (the "Option
Securities") are hereinafter called, collectively, the "Securities."
The Company, the Bank and the Selling Stockholders understand that the
Underwriters propose to make an initial public offering of the Securities as
soon as the Representatives deem advisable after this Agreement has been
executed and delivered.
The Company, the Bank, the Selling Stockholders and the Underwriters agree
that up to 86,250 shares of the Securities to be purchased by the Underwriters
(the "Reserved Securities")
shall be reserved for sale by the Underwriters to certain directors, officers,
employees and persons having business relationships with the Company, as part of
the distribution of the Securities by the Underwriters, subject to the terms of
this Agreement, the applicable rules, regulations and interpretations of NASD,
Inc. (formerly, the National Association of Securities Dealers, Inc.) and all
other applicable laws, rules and regulations. To the extent that such Reserved
Securities are not orally confirmed for purchase by such directors, officers,
employees and persons having business relationships with the Company by the end
of the first business day after the date of this Agreement, such Reserved
Securities may be offered to the public as part of the initial public offering
contemplated hereby.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-1 (No. 333-115510) covering the
registration of the Securities under the Securities Act of 1933, as amended (the
"1933 Act"), including the related preliminary prospectus or prospectuses.
Promptly after execution and delivery of this Agreement, the Company will either
(i) prepare and file a prospectus in accordance with the provisions of Rule 430A
("Rule 430A") of the rules and regulations of the Commission under the 1933 Act
(the "1933 Act Regulations") and paragraph (b) of Rule 424 ("Rule 424(b)") of
the 1933 Act Regulations or (ii) if the Company has elected to rely upon Rule
434 ("Rule 434") of the 1933 Act Regulations, prepare and file a term sheet (a
"Term Sheet") in accordance with the provisions of Rule 434 and Rule 424(b). The
information included in such prospectus or in such Term Sheet, as the case may
be, that was omitted from such registration statement at the time it became
effective but that is deemed to be part of such registration statement at the
time it became effective (a) pursuant to paragraph (b) of Rule 430A is referred
to as "Rule 430A Information" or (b) pursuant to paragraph (d) of Rule 434 is
referred to as "Rule 434 Information." Each prospectus used before such
registration statement became effective, and any prospectus that omitted, as
applicable, the Rule 430A Information or the Rule 434 Information, that was used
after such effectiveness and prior to the execution and delivery of this
Agreement, is herein called a "preliminary prospectus." Such registration
statement, including the exhibits thereto and the schedules thereto, if any, at
the time it became effective and including the Rule 430A Information and the
Rule 434 Information, as applicable, is herein called the "Registration
Statement." Any registration statement filed pursuant to Rule 462(b) of the 1933
Act Regulations is herein referred to as the "Rule 462(b) Registration
Statement," and after such filing the term "Registration Statement" shall
include the Rule 462(b) Registration Statement. The final prospectus in the form
first furnished to the Underwriters for use in connection with the offering of
the Securities is herein called the "Prospectus." If Rule 434 is relied on, the
term "Prospectus" shall refer to the preliminary prospectus dated August 2, 2004
together with the Term Sheet and all references in this Agreement to the date of
the Prospectus shall mean the date of the Term Sheet. For purposes of this
Agreement, all references to the Registration Statement, any preliminary
prospectus, the Prospectus or any Term Sheet or any amendment or supplement to
any of the foregoing shall be deemed to include the copy filed with the
Commission pursuant to its Electronic Data Gathering, Analysis and Retrieval
system ("XXXXX").
All references in this Agreement to financial statements and schedules and
other information which is "contained," "included" or "stated" in the
Registration Statement, any preliminary prospectus or the Prospectus (or other
references of like import) shall be deemed to
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mean and include any preliminary prospectus or the Prospectus, as the case may
be; and all references in this Agreement to amendments or supplements to the
Registration Statement, any preliminary prospectus or the Prospectus shall be
deemed to mean and include such preliminary prospectus or the Prospectus, as the
case may be.
SECTION 1.0 Representations and Warranties.
(a) Representations and Warranties by the Company. The Company represents
and warrants to each Underwriter as of the date hereof, as of the Closing Time
referred to in Section 2(c) hereof, and as of each Date of Delivery (if any)
referred to in Section 2(b) hereof, and agrees with each Underwriter, as
follows:
(i) Compliance with Registration Requirements. Each of the
Registration Statement and any Rule 462(b) Registration Statement has
become effective under the 1933 Act and no stop order suspending the
effectiveness of the Registration Statement or any Rule 462(b)
Registration Statement has been issued under the 1933 Act and no
proceedings for that purpose have been instituted or are pending or, to
the knowledge of the Company, are contemplated by the Commission, and any
request on the part of the Commission for additional information has been
complied with.
At the respective times the Registration Statement, any Rule
462(b) Registration Statement and any post-effective amendments thereto
became effective and at the Closing Time (and, if any Option Securities
are purchased, at the Date of Delivery), the Registration Statement, the
Rule 462(b) Registration Statement and any amendments and supplements
thereto complied and will comply in all material respects with the
requirements of the 1933 Act and the 1933 Act 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, and the Prospectus, any preliminary
prospectus and any supplement thereto or prospectus wrapper prepared in
connection therewith, at their respective times of issuance and at the
Closing Time, complied and will comply in all material respects with any
applicable laws or regulations of foreign jurisdictions in which the
Prospectus and such preliminary prospectus, as amended or supplemented, if
applicable, are distributed in connection with the offer and sale of
Reserved Securities. Neither the Prospectus nor any amendments or
supplements thereto (including any prospectus wrapper), at the time the
Prospectus or any such amendment or supplement was issued and at the
Closing Time (and, if any Option Securities are purchased, at the Date of
Delivery), included or will include an untrue statement of a 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. If Rule 434 is used, the Company will
comply with the requirements of Rule 434. The representations and
warranties in this subsection shall not apply to statements in or
omissions from the Registration
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Statement or Prospectus made in reliance upon and in conformity with
information furnished to the Company in writing by any Underwriter through
Xxxxx Xxxxxxxx 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 1933 Act,
complied when so filed in all material respects with the 1933 Act
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 XXXXX, except to the extent permitted by Regulation S-T.
(ii) Independent Registered Public Accounting Firm. The
accounting firm that certified the financial statements and supporting
schedules of the Company included in the Registration Statement and the
Prospectus is an independent registered public accounting firm (or, in the
case of Xxxxxx Xxxxxxxx LLP, were independent auditors during the periods
covered by their report included in the Registration Statement and the
Prospectus through the date of such report) as required by the 1933 Act
and the 1933 Act Regulations. KPMG LLP, the accounting firm that certified
the financial statements and supporting schedules of The Bank & Trust
Company of Puerto Rico ("Bank & Trust") included in the Registration
Statement and the Prospectus is an independent registered public
accounting firm as required by the 1933 Act and the 1933 Act Regulations.
Other than Xxxxxx Xxxxxxxx LLP, the registered public accounting firms
that certified the financial statements and supporting schedules of each
of the Company and Bank & Trust are not in violation of the auditor
independence requirements of the Xxxxxxxx-Xxxxx Act of 2002 (the
"Xxxxxxxx-Xxxxx Act") and the related rules and regulations of the
Commission. Any statements required to be included in the Prospectus by
the 1933 Act or the 1933 Act Regulations to reflect that the Company
terminated its engagement with Xxxxxx Xxxxxxxx LLP and engaged KPMG LLP as
its independent auditors have been included in the Prospectus.
(iii) Financial Statements. The financial statements of the
Company included in the Registration Statement and the Prospectus,
together with the related schedules and notes, present fairly in all
material respects the financial position of the Company and its
consolidated subsidiaries at the dates indicated and the statement of
operations, stockholders' equity and cash flows of the Company and its
consolidated subsidiaries for the periods specified; said financial
statements have been prepared in conformity with United States 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 all material
respects in accordance with GAAP the information required to be stated
therein. The selected financial data
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and the summary financial information of the Company included in the
Prospectus present fairly in all material respects the information shown
therein and have been compiled on a basis consistent with that of the
audited financial statements included in the Registration Statement. The
financial statements of Bank & Trust included in the Registration
Statement and the Prospectus, together with the related schedules and
notes, present fairly in all material respects the financial position of
Bank & Trust at the dates indicated and the statement of operations,
stockholders' equity and cash flows of Bank & Trust for the periods
specified; said financial statements have been prepared in conformity with
GAAP applied on a consistent basis throughout the periods involved. The
supporting schedules, if any, of Bank & Trust included in the Registration
Statement present fairly in all material respects in accordance with GAAP
the information required to be stated therein. The selected financial data
and the summary financial information of Bank & Trust included in the
Prospectus present fairly in all material respects the information shown
therein and have been compiled on a basis consistent with that of the
audited financial statements included in the Registration Statement. The
pro forma financial statements and the related notes thereto included in
the Registration Statement and the Prospectus present fairly in all
material respects the information shown therein, have been prepared in
accordance with the Commission's rules and guidelines with respect to pro
forma financial statements and have been properly compiled on the bases
described therein, and the assumptions used in the preparation thereof are
reasonable and the adjustments used therein are appropriate to give effect
to the transactions and circumstances referred to therein. All disclosures
contained in the Registration Statement or the Prospectus regarding
"non-GAAP financial measures" (as such term is defined by the rules and
regulations of the Commission) comply with Regulation G of the Securities
Exchange Act of 1934, as amended (the "1934 Act"), the rules and
regulations of the Commission under the 1934 Act (the "1934 Act
Regulations") and Item 10 of Regulation S-K under the 1933 Act, to the
extent applicable.
(iv) No Material Adverse Change in Business. 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 (any such change, 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) there
has been no dividend or distribution of any kind declared, paid or made by
the Company on any class of its capital stock.
(v) Good Standing of the Company. The Company has been duly
organized and is validly existing as a corporation in good standing under
the
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laws of the Commonwealth of Puerto Rico and has the corporate power and
authority to own, lease and operate its properties and to 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 as a
foreign corporation to transact business and is in good standing in each
other 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 or failures so to qualify or to be in good
standing would not, individually or in the aggregate, result in a Material
Adverse Effect; the Company is duly registered as a bank holding company
under the Bank Holding Company Act of 1956, as amended (the "BHCA"), and
has duly elected to become, and meets the applicable requirements for
qualification as, a financial holding company under the BHCA, and is in
good standing with the Board of Governors of the Federal Reserve System
(the "Federal Reserve Board").
(vi) Good Standing of Subsidiaries. The only subsidiaries of
the Company are the subsidiaries listed on Schedule D hereto (each a
"Subsidiary" and, collectively, the "Subsidiaries"). The Bank has been
duly organized and is validly existing as a Puerto Rico chartered
commercial bank and is in good standing under the laws of the Commonwealth
of Puerto Rico. Each of EBS Overseas, Inc. and EuroSeguros, Inc. has been
duly organized as a corporation and is validly existing and is in good
standing under the laws of the Commonwealth of Puerto Rico. Each of
Eurobank Statutory Trust I and Eurobank Statutory Trust II has been duly
formed and is validly existing as a statutory trust under the Connecticut
Statutory Trust Act, Chapter 615 of Title 34 of the Connecticut General
Statutes, Section 500, et seq. and is in good standing under the laws of
the State of Connecticut. Each Subsidiary has the corporate or banking
power and authority to own, lease and operate its properties and to
conduct its business as described in the Prospectus and is duly qualified
as a foreign corporation to transact business and is in good standing 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 or failures so to qualify or to be in good
standing would not, individually or in the aggregate, result in 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 preemptive or
similar rights of any securityholder of such Subsidiary. Except as set
forth in the 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 any shares of
stock or any other equity securities of any corporation or has any equity
interest in any firm, partnership, trust, association, joint venture or
other business entity.
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(vii) Capitalization. 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, pursuant to
reservations, agreements or employee benefit plans referred to in the
Prospectus or pursuant to the exercise of convertible securities or
options referred to in the Prospectus). The shares of issued and
outstanding capital stock, including the Securities to be purchased by the
Underwriters from the Selling Stockholders, have been duly authorized and
validly issued and are fully paid and non-assessable; none of the
outstanding shares of capital stock, including the Securities to be
purchased by the Underwriters from the Selling Stockholders, was issued in
violation of preemptive or other similar rights of any securityholder of
the Company.
(viii) Authorization of Agreement. This Agreement has been
duly authorized, executed and delivered by the Company.
(ix) Authorization and Description of Securities. The
Securities to be purchased by the Underwriters from the Company 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 herein, will be
validly issued and fully paid and non-assessable; the Common Stock
conforms to all statements relating thereto contained in the Prospectus
and such description conforms to the rights set forth in the instruments
defining the same; no holder of the Securities will be subject to personal
liability by reason of being such a holder; and the issuance of the
Securities is not subject to preemptive or other similar rights of any
securityholder of the Company.
(x) Absence of Defaults and Conflicts. Neither the Company nor
any of the Subsidiaries is in violation of its respective charter or
bylaws 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 the 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, the "Agreements and Instruments") except for such defaults
that would not, individually or in the aggregate, 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
Securities and the use of the proceeds from the sale of the Securities 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 a default or Repayment
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Event (as defined below) under, give rise to any right of termination
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 of the Agreements and Instruments (except for such
conflicts, breaches or defaults or Repayment Events or liens, charges or
encumbrances that would not, individually or in the aggregate, result in a
Material Adverse Effect), nor will such action result in any violation of
the provisions of the charter or bylaws 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.
(xi) Absence of Labor Dispute. No labor dispute with the
employees of the Company or any Subsidiary exists or, to the knowledge of
the Company, is imminent, and the Company is not aware of any existing or
imminent labor disturbance by the employees of any of its or any
Subsidiary's principal suppliers, manufacturers, customers or contractors,
which, in either case, may reasonably be expected, individually or in the
aggregate, to result in a Material Adverse Effect.
(xii) Absence of Proceedings. 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 could reasonably be
expected to result in a Material Adverse Effect, or which could 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 that 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.
(xiii) Accuracy of Exhibits. There are no contracts or
documents that are required to be described in the Registration Statement,
the Prospectus or the documents to be filed as exhibits thereto that have
not been so described and filed as required.
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(xiv) Possession of Intellectual Property. The Company and the
Subsidiaries own or possess, or can acquire on reasonable terms, adequate
patents, patent rights, licenses, inventions, copyrights, know how
(including trade secrets and 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 the Subsidiaries
has received any 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 the Subsidiaries therein, and which infringement or
conflict (if the subject of any unfavorable decision, ruling or finding)
or invalidity or inadequacy, individually or in the aggregate, would
result in a Material Adverse Effect.
(xv) Absence of Further Requirements. 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 Securities and the Reserved Securities hereunder or the
consummation of the transactions contemplated by this Agreement, except
(i) such as have been already obtained or as may be required under the
1933 Act or the 1933 Act Regulations or the securities laws of any state
or territory and (ii) such as have been obtained under the laws and
regulations of jurisdictions outside the United States in which the
Reserved Securities are offered.
(xvi) Possession of Licenses and Permits. The Company and the
Subsidiaries possess such certificates, authorities, permits, licenses,
approvals, consents and other authorizations (collectively, "Governmental
Licenses") issued by the appropriate federal, state, territorial, local or
foreign regulatory agencies or bodies necessary to conduct the businesses
now operated by them, except for such Governmental Licenses the absence of
which, individually or in the aggregate, would not result in a Material
Adverse Effect; the Company and the Subsidiaries are in compliance with
the terms and conditions of all such Governmental Licenses, except where
the failure or failures so to comply would not, individually 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 or failures of
such Governmental Licenses to be in full force and effect would not,
individually or in the aggregate, have a Material Adverse Effect; and
neither the Company nor any of the Subsidiaries has received any notice of
proceedings relating to the revocation or modification of any such
Governmental Licenses which, individually or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would result in a
Material Adverse Effect.
9
(xvii) Title to Property. Each of the Company and the
Subsidiaries have good and marketable title to all real property owned by
the Company or the Subsidiaries and good title to all other properties
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) do not,
individually or in the aggregate, materially affect the value of such
property and do not interfere with the use made and proposed to be made of
such property by the Company or any of the Subsidiaries; and all of the
leases and subleases material to the business of the Company and the
Subsidiaries, considered as one enterprise, and under which the Company or
any of the 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 of the Subsidiaries
under any of the leases or subleases mentioned above, or affecting or
questioning the rights of the Company or any of the Subsidiaries to the
continued possession of the leased or subleased premises under any such
lease or sublease.
(xviii) Compliance with Cuba Act. The Company has complied
with, and is and will be in compliance with, the provisions of that
certain Florida Act relating to disclosure of doing business with Cuba,
codified as Section 517.075 of the Florida statutes, and the rules and
regulations thereunder (collectively, the "Cuba Act"), or is exempt
therefrom.
(xix) Investment Company Act. The Company is not, and upon the
issuance and sale of the Securities 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").
(xx) Environmental Laws. Except as described in the
Registration Statement or except as would not, individually or in the
aggregate, reasonably be expected to result in a Material Adverse Effect,
(A) neither the Company nor any of the Subsidiaries is in violation of any
federal, state, territorial, local or foreign statute, law, rule,
regulation, ordinance, code, policy or rule of common law or any judicial
or administrative interpretation 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
10
Materials (collectively, "Environmental Laws"), (B) the Company and the
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 the
Subsidiaries and (D) there are no events or circumstances that could
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
the Subsidiaries relating to Hazardous Materials or any Environmental
Laws.
(xxi) Taxes. The Company and each of the Subsidiaries has (a)
timely filed all foreign, United States federal, state and local tax
returns, information returns, and similar reports that are required to be
filed (taking into account valid extensions), and all tax returns are
true, correct and complete, (b) paid in full all taxes required to be paid
by it and any other assessment, fine or penalty levied against it, except
for any such assessment, fine or penalty that is currently being contested
in good faith or as would not have, individually or in the aggregate, a
Material Adverse Effect, and (c) established on the most recent balance
sheet reserves that are adequate for the payment of all taxes not yet due
and payable.
(xxii) Compliance with Laws. Except as set forth in the
Prospectus, the Company and each Subsidiary is in compliance in all
material respects, in the conduct of its business, with all applicable
federal, state, territorial, local and foreign statutes, laws,
regulations, ordinances, permits, licenses, franchises, certificates of
authority, rules, judgments, orders or decrees applicable thereto or to
the employees conducting such businesses, including the Equal Credit
Opportunity Act, the Fair Housing Act, the Community Reinvestment Act, the
Home Mortgage Disclosure Act, the Uniting and Strengthening America by
Providing Appropriate Tools Required to Intercept and Obstruct Terrorism
(USA PATRIOT ACT) Act of 2001, the laws and rules administered by the
Office of Foreign Assets Control, all other applicable fair lending and
fair housing laws or other laws relating to discrimination (including,
without limitation, anti-redlining, equal credit opportunity and fair
credit reporting), truth-in-lending, real estate settlement procedures,
adjustable rate mortgages disclosures or consumer credit (including,
without limitation, the federal Consumer Credit Protection Act, the
federal Truth-in Lending Act and Regulation Z thereunder, the federal Real
Estate Settlement Procedures Act of 1974 and Regulation X thereunder, and
the federal Equal Credit Opportunity Act and Regulation B thereunder) or
with respect to the Flood Disaster Protection Act and the Bank Secrecy
Act, and, as of the date hereof, the Bank has a Community Reinvestment Act
rating of "satisfactory" or better. Without limiting the
11
generality of the foregoing, the Bank has been approved by (a) the Federal
Housing Administration ("FHA") as a mortgagee and servicer for FHA loans,
(b) Veterans Affairs ("VA") as a lender and servicer for VA loans, (c) the
Federal National Mortgage Association ("FNMA") as a seller of
[single-family][multi-family] mortgage loans and participation interests
and as a servicer of [single-family][multi-family] mortgage loans, (d) the
Federal Home Loan Mortgage Corporation ("FHLMC") as a seller/servicer of
[single-family][multi-family] mortgage loans to FHLMC and (e) the
Government National Mortgage Association ("GNMA") as an authorized issuer
and servicer of GNMA-guaranteed mortgage-backed securities, and as a
servicer of private insured loans and conventional loans.
(xxiii) Compliance with the Xxxxxxxx-Xxxxx Act. The Company
has actively taken all necessary actions to ensure that, upon and at all
times after the effectiveness of the Registration Statement, the Company
and the Subsidiaries and any of the officers and directors of the Company
and the Subsidiaries, in their capacities as such, will be in compliance
with the provisions of the Xxxxxxxx-Xxxxx Act, the related rules and
regulations promulgated thereunder by the Commission and the rules of The
Nasdaq Stock Market, Inc. upon the effectiveness of such provisions, rules
and regulations with respect to the Company, the Subsidiaries or any of
the officers and directors of the Company and the Subsidiaries. The
Company is actively taking steps to ensure that it will be in compliance
with other applicable provisions of the Xxxxxxxx-Xxxxx Act and the related
rules and regulations promulgated thereunder by the Commission and The
Nasdaq Stock Market, Inc. not currently in effect upon and at all times
after the effectiveness of such provisions.
(xxiv) Bank Regulations. The Company is duly registered as a
bank holding company with the Federal Reserve Board, and has duly elected
to become, and meets the applicable requirements for qualification as, a
financial holding company under the BHCA; and the Bank continues to hold a
valid charter to do business as a Puerto Rico chartered commercial bank.
The Bank is well capitalized according to the capital standards set forth
by the Federal Deposit Insurance Corporation, and the activities of each
of the Subsidiaries are permissible for subsidiaries of a financial
holding company.
(xxv) International Banking Entity. The International Banking
Center Regulatory Act of Puerto Rico, as amended, does not subject the
assets of the Company's international banking entity subsidiary EBS
Overseas, Inc. and the Bank's international banking entity division BT
International, to taxation under United States federal or Puerto Rico
laws.
(xxvi) Regulatory Enforcement Matters. The Bank has complied
in all material respects with all applicable rules and regulations of the
Commissioner of Financial Institutions of Puerto Rico, the Federal Deposit
12
Insurance Corporation and the Federal Reserve Board. Neither the Company
nor any Subsidiary is subject or is party to, or has received any notice
or advice that any of them may become subject or party to, any
investigation with respect to any cease-and-desist order, agreement,
consent agreement, memorandum of understanding or other regulatory
enforcement action, proceeding or order with or by, or is a party to any
commitment letter or similar undertaking to, or is subject to any
directive by, or has been a recipient of any supervisory letter from, or
has adopted any board resolutions at the request of, any Regulatory Agency
(as defined below) that currently restricts in any material respect the
conduct of their business or that in any material manner relates to their
capital adequacy, their credit policies, their management or their
business (each, a "Regulatory Agreement"), nor has the Company or any
Subsidiary been advised by any Regulatory Agency that it is considering
issuing or requesting any such Regulatory Agreement or that they may be
subject to an investigation, audit or other examination which is likely to
lead to the imposition of any civil, monetary or other penalties, and
there is no unresolved violation, criticism or exception by any Regulatory
Agency with respect to any report or statement relating to any
examinations of the Company or of any Subsidiary which, in the reasonable
judgment of the Company, is expected to result in a Material Adverse
Effect. As used herein, the term "Regulatory Agency" means any federal,
Puerto Rican or state agency charged with the supervision or regulation of
depositary institutions or holding companies of depository institutions,
or engaged in the insurance of depositary institution deposits, or any
court, administrative agency or commission or other governmental agency,
authority or instrumentality having supervisory or regulatory authority
with respect to the Company or any Subsidiary.
(xxvii) Regulatory Reports. The Company and the Bank have duly
filed with the Federal Reserve Board and the Federal Deposit Insurance
Corporation (and, if necessary, the Commissioner of Financial Institutions
of Puerto Rico), as the case may be, in correct form the reports required
to be filed under applicable laws and regulations and such reports were in
all material respects complete and accurate and in compliance with the
requirements of applicable laws and regulations, provided that information
as of a later date shall be deemed to modify information as of an earlier
date; and the Company has previously delivered or made available to each
Underwriter which has requested the same in writing directly to the
Company accurate and complete copies of all such reports. Neither the
Company nor the Bank is subject to, or expects to be subject to, any
formal or informal enforcement or supervisory action by the Federal
Reserve Board, the Federal Deposit Insurance Corporation, or the
Commissioner of Financial Institutions of Puerto Rico. In connection with
any examinations of the Company or the Bank by the Federal Reserve Board,
the Federal Deposit Insurance Corporation or the Commissioner of Financial
Institutions of Puerto Rico completed within the last five years or
currently in process, neither the Company nor the Bank was required to
correct or change any
13
action, procedure or proceeding which has not been substantially corrected
or changed as required.
(xxviii) Deposit Insurance. The deposit accounts of the Bank
are insured by the Federal Deposit Insurance Corporation to the legal
maximum, the Bank has paid all premiums and assessments required by the
Federal Deposit Insurance Corporation and the regulations thereunder and
no proceeding for the termination or revocation of such insurance is
pending or threatened. The Bank is a member in good standing of the
Federal Home Loan Bank of New York.
(xxix) Insurance Licenses. The Company and EuroSeguros, Inc.
("EuroSeguros") hold such insurance licenses, certificates and permits
from any governmental authority, agency, instrumentality, self-regulatory
body, commission (including departments of insurance) or other body,
federal, state, territorial, local or foreign (including, without
limitation, from the insurance regulatory agencies of the various
jurisdictions where it conducts business) (the "Insurance Licenses") as
are necessary to the conduct of its business as described in the
Prospectus, except where the failure or failures to have such licenses,
certificates and permits would not, individually or in the aggregate, have
a Material Adverse Effect; the Company and EuroSeguros have fulfilled and
performed all obligations necessary to maintain such Insurance Licenses,
except where the failure or failures to have fulfilled and performed such
obligations would not, individually or in the aggregate, have a Material
Adverse Effect; there is no pending or, to the knowledge of the Company,
threatened action, suit, proceeding or investigation that would result in
the revocation, termination or suspension of any Insurance License or that
would otherwise restrict EuroSeguros from engaging in the insurance
business it currently conducts, the effect of which would, individually or
in the aggregate, result in a Material Adverse Effect; except as set forth
in the Prospectus, no insurance regulatory agency or body has issued, or
commenced any proceeding for the issuance of, any order or decree
impairing, restricting or prohibiting the payment of dividends by
EuroSeguros to the Company; and neither the Company nor EuroSeguros has
received any notice of proceedings relating to the revocation or
modification of any such Insurance Licenses that, individually or in the
aggregate, if the subject of an unfavorable decision, ruling or finding,
would result in a Material Adverse Effect.
(xxx) Registration Rights. There are no persons with
registration or other similar rights to have any equity or debt
securities, including securities which are convertible into or
exchangeable for equity securities, registered pursuant to the
Registration Statement or otherwise registered by the Company under the
1933 Act, except for those registration or similar rights which have been
waived with respect to the offering contemplated by this Agreement, all of
which registration or similar rights are fairly summarized in the
Prospectus.
14
(xxxi) Warrants, Options and Other Rights. Except as disclosed
in the Prospectus, there are no outstanding options, warrants or other
rights calling for the issuance of, and no commitments, plans or
arrangements to issue, any shares of capital stock of the Company or any
Subsidiary or any security convertible into or exchangeable for capital
stock of the Company or any Subsidiary.
(xxxii) No Unauthorized Use of Prospectus. The Company has not
distributed and, prior to the later to occur of (i) the Closing Time and
(ii) completion of the distribution of the Securities, will not distribute
any prospectus (as such term is defined in the 1933 Act and the 1933 Act
Regulations) in connection with the offering and sale of the Securities
other than the Registration Statement, any preliminary prospectus, the
Prospectus or other materials, if any, permitted by the 1933 Act or by the
1933 Act Regulations and approved by the Representatives.
(xxxiii) Insurance. The Company and the Subsidiaries maintain
insurance of the types and in the amounts consistent with insurance
coverage maintained by similar companies and businesses, all of which
insurance is in full force and effect; the Company and the Subsidiaries
are insured by insurers of recognized financial responsibility; all
policies of insurance and fidelity or surety bonds insuring the Company or
any Subsidiary or the Company's or the Subsidiary's respective businesses,
assets, employees, officers and directors are in full force and effect;
the Company and each Subsidiary are in compliance with the terms of such
policies and instruments in all material respects; and neither the Company
nor any Subsidiary has any reason to believe that it will not be able to
renew its existing insurance coverage as and when such coverage expires or
to obtain similar coverage from similar insurers as may be necessary to
continue its business at a cost that would not reasonably be expected to
have a Material Adverse Effect.
(xxxiv) No Illegal Payment or Influence. To the knowledge of
the Company, neither the Company nor any Subsidiary nor 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 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. The Company has not offered, or caused the Underwriters to
offer, Reserved Securities to any person with the intent to unlawfully
influence (i) a customer or supplier of the Company to alter the
customer's or supplier's level or type of business with the Company, or
(ii) a trade journalist or publication to write or publish favorable
information about the Company or its products or services.
(xxxv) Sales of Securities/No Integration. The offering of
rights to purchase the Company's Common Stock (the "Rights Offering"),
pursuant to
15
which the Company issued 369,231 shares of its Common Stock on May 12,
2004, satisfied all conditions of Section 3(a)(11) of the 1933 Act for
exemption from the registration requirements of the 1933 Act and was
exempt from the registration requirements of the Puerto Rico Securities
Act. The exchange of 344,192 shares of the Company's Common Stock and
433,337 shares of its Noncumulative Preferred Stock, Series A as partial
consideration for the Company's acquisition of all the outstanding shares
of the capital stock of Bank & Trust (the "Bank & Trust Securities
Issuance"), which was consummated on May 3, 2004, satisfied all conditions
of Section 3(a)(11) of the 1933 Act for exemption from the registration
requirements of the 1933 Act and was exempt from the registration
requirements of the Puerto Rico Securities Act. Except for shares sold or
issued in connection with the Rights Offering and the Bank & Trust
Securities Issuance, the Company has not sold or issued any shares of
Common Stock during the six-month period preceding the date of the
Prospectus, including any sales pursuant to Rule 144A under, or
Regulations D or S of, the 1933 Act, other than shares issued pursuant to
employee benefit plans, qualified stock options plans or other employee
compensation plans or pursuant to outstanding options, rights or warrants.
(xxxvi) No Affiliation or Association with NASD. There are no
direct or indirect affiliations or associations with (within the meaning
of Article I, Section 1 of the By-Laws of the NASD) any member firm of the
NASD among the Company's or any Subsidiary's officers or directors or, to
the knowledge of the Company, any stockholder of the Company, except as
disclosed in writing to the Representatives.
(xxxvii) Lock-up Agreements. Each of the Company's executive
officers and directors, each of the Selling Stockholders and substantially
all of the Company's other stockholders, in each case as listed on
Schedule E hereto, has executed and delivered lock-up agreements as
contemplated by Section 5(l) hereof.
(xxxviii) Internal Control Over Financial Reporting. The
Company and the Subsidiaries maintain a system of internal control over
financial reporting (as such term is defined in Rules 13a-15(f) and
15d-15(f) under the 0000 Xxx) sufficient to provide reasonable assurances
that (A) transactions are executed in accordance with management's general
or specific authorizations, (B) transactions are recorded as necessary to
permit preparation of financial statements in conformity with GAAP and to
maintain accountability for assets, (C) access to assets is permitted only
in accordance with management's general or specific authorization and (D)
the recorded accounting for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences. The Company's independent registered public accounting firm
and the Audit Committee of the Board of Directors have been advised of:
(A) any significant deficiencies and material weaknesses in the design or
operation of
16
internal control over financial reporting which could adversely affect the
Company's ability to record, process, summarize, and report financial
data; and (B) any fraud, whether or not material, that involves management
or other employees who have a significant role in the Company's internal
control over financial reporting.
(xxxix) Disclosure Controls and Procedures. The Company has
actively taken all necessary actions to ensure that, upon and at all times
after the effectiveness of the Registration Statement, the Company will
have established disclosure controls and procedures (as such term is
defined in Rule 13a-15(e) and 15d-15(e) under the 1934 Act); such
disclosure controls and procedures will have been designed to ensure that
material information relating to the Company, including its consolidated
subsidiaries, is made known to the Company's Chief Executive Officer and
its Chief Financial Officer by others within the Company.
(xl) Data in Registration Statement and Prospectus. The
statistical, industry-related and market-related data included in the
Registration Statement and the Prospectus are based on or derived from
sources that the Company reasonably and in good faith believes are
reliable and accurate, and such data agree with the sources from which
they are derived.
(xli) No Stabilization or Manipulation. 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 could reasonably be expected in the future to cause or
result in, under the 1933 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 Securities or otherwise.
(xlii) Related Party Transactions. No relationship, direct or
indirect, exists between or among the Company or any affiliate of the
Company, on the one hand, and any director, officer, stockholder, customer
or supplier of the Company or any affiliate of the Company, on the other
hand, which is required by the 1933 Act or the 1933 Act Regulations to be
described in the Prospectus, which is not so described as required in the
Prospectus. All loans, guarantees of indebtedness or other extensions of
credit by the Company to or for the benefit of any of the Company's
directors and executive officers are made in conformity with the insider
lending restrictions of Section 22(h) of the Federal Reserve Act of 1913,
as amended, and Section 402 of the Xxxxxxxx-Xxxxx Act.
(xliii) Fees. Other than as contemplated by this Agreement,
except as disclosed in the Prospectus or except for any bonus payments to
employees in connection with the offering, there is no broker, finder or
other party that is entitled to receive from the Company or any Subsidiary
any brokerage or
17
finder's fee or any other fee, commission or payment as a result of the
transactions contemplated by this Agreement.
(xliv) ERISA. The Company and each of the Subsidiaries or
their "ERISA Affiliates" (as defined below) are in compliance in all
material respects with all presently applicable provisions of the Employee
Retirement Income Security Act of 1974, as amended, including the
regulations and published interpretations thereunder ("ERISA"); no
"reportable event" (as defined in ERISA) has occurred with respect to any
"employee benefit plan" (as defined in ERISA) for which the Company or any
of the Subsidiaries or ERISA Affiliates would have any liability; the
Company and each of the Subsidiaries or their ERISA Affiliates have not
incurred and do not expect to incur liability under (i) Title IV of ERISA
with respect to termination of, or withdrawal from, any "employee benefit
plan" or (ii) Sections 412, 4971, 4975 or 4980B of the United States
Internal Revenue Code of 1986, as amended, and the regulations and
published interpretations thereunder (collectively the "Code"); and each
"employee benefit plan" for which the Company and each of its Subsidiaries
or any of their ERISA Affiliates would have any liability that is intended
to be qualified under Section 401(a) of the Code or Section 1165(e) of the
Puerto Rico Internal Revenue Code of 1994, as amended, is so qualified in
all material respects and nothing has occurred, whether by action or by
failure to act, which would cause the loss of such qualification. "ERISA
Affiliate" means, with respect to the Company or a Subsidiary, any member
of any group of organizations described in Sections 414(b), (c), (m) or
(o) of the Code or Section 4001(b) of ERISA of which the Company or such
Subsidiary is a member.
(b) Representations and Warranties by the Selling Stockholders. Each
Selling Stockholder severally represents and warrants to each Underwriter as of
the date hereof, as of the Closing Time, and, if the Selling Stockholder is
selling Option Securities on a Date of Delivery, as of each such Date of
Delivery, and agrees with each Underwriter, as follows:
(i) Accurate Disclosure. To the best knowledge of such Selling
Stockholder, the representations and warranties of the Company contained
in Section 1(a) hereof are true and correct; such Selling Stockholder has
reviewed and is familiar with the Registration Statement and the
Prospectus and neither the Prospectus nor any amendments or supplements
thereto (including any prospectus wrapper) includes any untrue statement
of a material fact 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; such Selling Stockholder is not prompted
to sell the Securities to be sold by such Selling Stockholder hereunder by
any information concerning the Company or any Subsidiary of the Company
which is not set forth in the Prospectus.
(ii) Authorization of Agreements. Each Selling Stockholder has
the full right, power and authority to enter into this Agreement and a
Power of
18
Attorney and Custody Agreement (the "Power of Attorney and Custody
Agreement") and to sell, transfer and deliver the Securities to be sold by
such Selling Stockholder hereunder. The execution and delivery of this
Agreement and the Power of Attorney and Custody Agreement and the sale and
delivery of the Securities to be sold by such Selling Stockholder and the
consummation of the transactions contemplated herein and under the Power
of Attorney and Custody Agreement and compliance by such Selling
Stockholder with its obligations hereunder and under the Power of Attorney
and Custody Agreement have been duly authorized by such Selling
Stockholder 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 a default under, or result in the creation or imposition of any
tax, lien, charge or encumbrance upon the Securities to be sold by such
Selling Stockholder or any property or assets of such Selling Stockholder
pursuant to any contract, indenture, mortgage, deed of trust, loan or
credit agreement, note, license, lease or other agreement or instrument to
which such Selling Stockholder is a party or by which such Selling
Stockholder may be bound, or to which any of the property or assets of
such Selling Stockholder is subject, nor will such action result in any
violation of the provisions of the charter or by-laws or other
organizational instrument of such Selling Stockholder, if applicable, or
any applicable treaty, law, statute, rule, regulation, judgment, order,
writ or decree of any government, government instrumentality or court,
domestic or foreign, having jurisdiction over such Selling Stockholder or
any of its properties.
(iii) Good and Marketable Title. Such Selling Stockholder has
and will at the Closing Time and, if any Option Securities are purchased,
on the Date of Delivery have good and marketable title to the Securities
to be sold by such Selling Stockholder hereunder, free and clear of any
security interest, mortgage, pledge, lien, charge, claim, equity or
encumbrance of any kind, other than pursuant to this Agreement; and upon
delivery of such Securities and payment of the purchase price therefor as
herein contemplated, assuming each such Underwriter has no notice of any
adverse claim, each of the Underwriters will receive good and marketable
title to the Securities purchased by it from such Selling Stockholder,
free and clear of any security interest, mortgage, pledge, lien, charge,
claim, equity or encumbrance of any kind.
(iv) Due Execution of Power of Attorney and Custody Agreement.
Such Selling Stockholder has duly executed and delivered, in the form
heretofore furnished to the Representatives, the Power of Attorney and
Custody Agreement with Xxxxxx Xxxxxxxxx-Xxxxxxx, Xx. and Xxxxxx X.
Xxxxxxx, or either of them, as attorney(s)-in-fact (the
"Attorney(s)-in-Fact") and American Stock Transfer & Trust Company, as
custodian (the "Custodian"); the Custodian is authorized to deliver the
Securities to be sold by such Selling Stockholder hereunder and to accept
payment therefor; and each Attorney-in-Fact is authorized to execute and
deliver this Agreement and the certificate referred to in Section 5(f) or
that may be required pursuant to Section(s) 5(m) and 5(n) on behalf of
such
19
Selling Stockholder, to sell, assign and transfer to the Underwriters the
Securities to be sold by such Selling Stockholder hereunder, to determine
the purchase price to be paid by the Underwriters to such Selling
Stockholder, as provided in Section 2(a) hereof, to authorize the delivery
of the Securities to be sold by such Selling Stockholder hereunder, to
accept payment therefor, and otherwise to act on behalf of such Selling
Stockholder in connection with this Agreement.
(v) Absence of Manipulation. Such Selling Stockholder has not
taken, and will not take, directly or indirectly, any action which is
designed, or which could reasonably be expected in the future to cause or
result in, under the 1933 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 Securities or otherwise.
(vi) Absence of Further Requirements. No filing with, or
consent, approval, authorization, order, registration, qualification or
decree of, any court or governmental authority or agency, domestic or
foreign, is necessary or required for the performance by each Selling
Stockholder of its obligations hereunder or in the Power of Attorney and
Custody Agreement, or in connection with the sale and delivery of the
Securities hereunder or the consummation of the transactions contemplated
by this Agreement, except (i) such as may have previously been made or
obtained or as may be required under the 1933 Act or the 1933 Act
Regulations or state or territorial securities laws and (ii) such as have
been obtained under the laws and regulations of jurisdictions outside the
United States in which the Reserved Securities are offered.
(vii) Lock-up Agreements. Such Selling Stockholder has
executed and delivered a lock-up agreement as contemplated by Section 5(l)
hereof.
(viii) Certificates Suitable for Transfer. Certificates for
all of the Securities to be sold by such Selling Stockholder pursuant to
this Agreement, in suitable form for transfer by delivery or accompanied
by duly executed instruments of transfer or assignment in blank with
signatures guaranteed, have been placed in custody with the Custodian with
irrevocable conditional instructions to deliver such Securities to the
Underwriters pursuant to this Agreement.
(ix) No Affiliation or Association with NASD. Neither such
Selling Stockholder nor any of such Selling Stockholder's affiliates
directly, or indirectly through one or more intermediaries, controls, or
is controlled by, or is under common control with, or has any other
affiliation or association with (within the meaning of Article I, Section
1 of the By-Laws of the NASD), any member firm of the NASD.
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(c) Officer's Certificates. Any certificate signed by any officer of the
Company or of any Subsidiary delivered to the Representatives or to counsel for
the Underwriters shall be deemed a representation and warranty by the Company to
each Underwriter as to the matters covered thereby; and any certificate signed
by or on behalf of the Selling Stockholders as such and delivered to the
Representatives or to counsel for the Underwriters pursuant to the terms of this
Agreement shall be deemed a representation and warranty by such Selling
Stockholder to the Underwriters as to the matters covered thereby.
SECTION 2.0 Sale and Delivery to Underwriters; Closing.
(a) Initial Securities. On the basis of the representations and warranties
herein contained and subject to the terms and conditions herein set forth, the
Company and each Selling Stockholder, severally and not jointly, agree to sell
to each Underwriter, severally and not jointly, and each Underwriter, severally
and not jointly, agrees to purchase from the Company and each Selling
Stockholder, at the price per share set forth in Schedule C, that proportion of
the number of Initial Securities set forth in Schedule B opposite the name of
the Company or such Selling Stockholder, as the case may be, which the number of
Initial Securities set forth in Schedule A opposite the name of such
Underwriter, plus any additional number of Initial Securities which such
Underwriter may become obligated to purchase pursuant to the provisions of
Section 10 hereof, bears to the total number of Initial Securities, subject, in
each case, to such adjustments among the Underwriters as the Representatives in
their sole discretion shall make to eliminate any sales or purchases of
fractional securities.
(b) Option Securities. In addition, on the basis of the representations
and warranties herein contained and subject to the terms and conditions herein
set forth, the Company and the Selling Stockholders, acting severally and not
jointly, hereby grant an option to the Underwriters, severally and not jointly,
to purchase up to an additional 584,248 shares of Common Stock, as set forth in
Schedule B, at the price per share set forth in Schedule C, less an amount per
share equal to any dividends or distributions declared by the Company and
payable on the Initial Securities but not payable on the Option Securities. The
option hereby granted will expire 30 days after the date hereof and may be
exercised in whole or in part from time to time only for the purpose of covering
over-allotments which may be made in connection with the offering and
distribution of the Initial Securities upon notice by the Representatives to the
Company and the Selling Stockholders setting forth the aggregate number of
Option Securities as to which the several Underwriters are then exercising the
option and the time and date of payment and delivery for such Option Securities.
Any such time and date of delivery (a "Date of Delivery") shall be determined by
the Representatives, but shall not be later than seven full business days after
the exercise of said option, nor in any event prior to the Closing Time, as
hereinafter defined. If the Underwriters elect to exercise the option hereby
granted by the Company and the Selling Stockholders in part, the Underwriters
hereby agree to purchase all of the Options Securities of the Selling
Stockholders prior to purchasing any Option Securities of the Company. If less
than all of the Option Securities of the Selling Stockholders are to be
purchased, then the Underwriters shall purchase from each Selling Stockholder a
number of Option Securities equal to the portion of the total number of Option
Securities then being purchased which the number of Option Securities set forth
in Schedule B opposite the name of such Selling Stockholder bears to
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the total number of Option Securities of all Selling Stockholders, subject in
each case to such adjustments as the Representatives in their discretion shall
make to eliminate any sales or purchases of fractional shares. If the option is
exercised as to all or any portion of the Option Securities, then each of the
Underwriters, acting severally and not jointly, will purchase that proportion of
the total number of Option Securities then being purchased which the number of
Initial Securities set forth in Schedule A opposite the name of such Underwriter
bears to the total number of Initial Securities, subject in each case to such
adjustments as the Representatives in their discretion shall make to eliminate
any sales or purchases of fractional shares.
(c) Payment. Payment of the purchase price for, and delivery of
certificates for, the Initial Securities shall be made at the offices of
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, 0 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000, or at such other place as shall be agreed upon by the Representatives and
the Company and the Selling Stockholders, at 9:00 A.M. (Eastern time) on the
third (fourth, if the pricing occurs after 4:30 P.M. (Eastern time) on any given
day) business day after the date hereof (unless postponed in accordance with the
provisions of Section 10), or such other time not later than ten business days
after such date as shall be agreed upon by the Representatives and the Company
and the Selling Stockholders (such time and date of payment and delivery being
herein called the "Closing Time").
In addition, in the event that any or all of the Option Securities are
purchased by the Underwriters, payment of the purchase price for, and delivery
of certificates for, such Option Securities shall be made at the above mentioned
offices, or at such other place as shall be agreed upon by the Representatives
and the Company and the Selling Stockholders, on each Date of Delivery as
specified in the notice from the Representatives to the Company and the Selling
Stockholders.
Payment shall be made to the Company and each of the Selling Stockholders
by wire transfer of immediately available funds to bank accounts designated by
the Company and the Custodian pursuant to each Selling Stockholder's Power of
Attorney and Custody Agreement, as the case may be, against delivery to the
Representatives for the respective accounts of the Underwriters of certificates
for the Securities to be purchased by them. It is understood that each
Underwriter has authorized the Representatives, for its account, to accept
delivery of, receipt for, and make payment of the purchase price for, the
Initial Securities and the Option Securities, if any, which it has agreed to
purchase. Xxxxx Xxxxxxxx, individually and not as representative of the
Underwriters, may (but shall not be obligated to) make payment of the purchase
price for the Initial Securities or the Option Securities, if any, to be
purchased by any Underwriter whose funds have not been received by the Closing
Time or the relevant Date of Delivery, as the case may be, but such payment
shall not relieve such Underwriter from its obligations hereunder.
(d) Denominations; Registration. Certificates for the Initial Securities
and the Option Securities, if any, shall be in such denominations and registered
in such names as the Representatives may request in writing at least one full
business day before the Closing Time or the relevant Date of Delivery, as the
case may be. The certificates for the Initial Securities and the Option
Securities, if any, will be made available for examination and packaging by the
22
Representatives in The City of New York not later than 10:00 A.M. (Eastern time)
on the business day prior to the Closing Time or the relevant Date of Delivery,
as the case may be.
SECTION 3.0 Covenants of the Company. The Company covenants with each
Underwriter as follows:
(a) Compliance with Securities Regulations and Commission Requests. The
Company, subject to Section 3(b), will comply with the requirements of Rule 430A
or Rule 434, as applicable, and will notify the Representatives immediately, and
confirm the notice in writing, (i) when any post-effective amendment to the
Registration Statement shall become effective, or any supplement to the
Prospectus or any amended Prospectus shall have been filed, (ii) of the receipt
of any comments from the Commission, (iii) of any request by the Commission for
any amendment to the Registration Statement or any amendment or supplement to
the Prospectus or for additional information, and (iv) of the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement or of any order preventing or suspending the use of any preliminary
prospectus, or of the suspension of the qualification of the Securities or the
Reserved Securities for offering or sale in any jurisdiction, or of the
initiation or threatening of any proceedings for any of such purposes. The
Company will promptly effect the filings necessary pursuant to Rule 424(b) and
will take such steps as shall be reasonably necessary to ascertain promptly
whether the form of prospectus transmitted for filing under Rule 424(b) was
received for filing by the Commission and, in the event that it was not, it will
promptly file such prospectus. The Company will make every reasonable effort to
prevent the issuance of any stop order and, if any stop order is issued, to
obtain the lifting thereof at the earliest possible moment.
(b) Filing of Amendments. The Company will give the Representatives notice
of its intention to file or prepare any amendment to the Registration Statement
(including any filing under Rule 462(b)), any Term Sheet or any amendment,
supplement or revision to either the prospectus included in the Registration
Statement at the time it became effective or to the Prospectus, will furnish the
Representatives with copies of any such documents a reasonable amount of time
prior to such proposed filing or use, as the case may be, and will not file or
use any such document to which the Representatives or counsel for the
Underwriters shall object.
(c) Delivery of Registration Statements. The Company has furnished or will
deliver to the Representatives and counsel for the Underwriters, without charge,
signed copies of the Registration Statement as originally filed and of each
amendment thereto (including the exhibits filed therewith) and signed copies of
all consents and certificates of experts, and will also deliver to the
Underwriters, without charge, a conformed copy of the Registration Statement as
originally filed and of each amendment thereto (without exhibits) for each of
the Underwriters. The copies of the Registration Statement and each amendment
thereto furnished to the Underwriters will be identical to the electronically
transmitted copies thereof filed with the Commission pursuant to XXXXX, except
to the extent permitted by Regulation S-T.
(d) Delivery of Prospectuses. The Company has delivered to each
Underwriter, without charge, as many copies of each preliminary prospectus as
such Underwriter reasonably
23
requested, and the Company hereby consents to the use of such copies for
purposes permitted by the 1933 Act. The Company will furnish to each
Underwriter, without charge, during the period when the Prospectus is required
to be delivered under the 1933 Act or the 1934 Act, such number of copies of the
Prospectus (as amended or supplemented) as such Underwriter may reasonably
request. The Prospectus and any amendments or supplements thereto furnished to
the Underwriters will be identical to the electronically transmitted copies
thereof filed with the Commission pursuant to XXXXX, except to the extent
permitted by Regulation S-T.
(e) Continued Compliance with Securities Laws. The Company will comply
with the 1933 Act and the 1933 Act Regulations so as to permit the completion of
the distribution of the Securities as contemplated in this Agreement and in the
Prospectus. If at any time when a prospectus is required by the 1933 Act to be
delivered in connection with sales of the Securities, any event shall occur or
condition shall exist as a result of which it is necessary, in the opinion of
counsel for the Underwriters or for the Company, to amend the Registration
Statement or amend or supplement the Prospectus in order that the Prospectus
will not include any untrue statements of a material fact or omit to state a
material fact necessary in order to make the statements therein not misleading
in the light of the circumstances existing at the time it is delivered to a
purchaser, or if it shall be necessary, in the opinion of such counsel, at any
such time to amend the Registration Statement or amend or supplement the
Prospectus in order to comply with the requirements of the 1933 Act or the 1933
Act Regulations, the Company will promptly prepare and file with the Commission,
subject to Section 3(b), such amendment or supplement as may be necessary to
correct such statement or omission or to make the Registration Statement or the
Prospectus comply with such requirements, and the Company will furnish to the
Underwriters such number of copies of such amendment or supplement as the
Underwriters may reasonably request. The Company further agrees to comply with
all applicable securities and other applicable laws, rules and regulations in
each jurisdiction in which the Reserved Securities are offered.
(f) Blue Sky Qualifications. The Company will use its best efforts, in
cooperation with the Underwriters, to qualify the Securities and the Reserved
Securities for offering and sale under the applicable securities laws of such
states and other jurisdictions (domestic or foreign) as the Representatives may
designate and to maintain such qualifications in effect for a period of not less
than one year from the later of the effective date of the Registration Statement
and any Rule 462(b) Registration Statement; provided, however, that the Company
shall not be obligated to file any general consent to service of process or to
qualify as a foreign corporation or as a dealer in securities in any
jurisdiction in which it is not so qualified or to subject itself to taxation in
respect of doing business in any jurisdiction in which it is not otherwise so
subject. In each jurisdiction in which the Securities or the Reserved Securities
have been so qualified, the Company will file such statements and reports as may
be required by the laws of such jurisdiction to continue such qualification in
effect for a period of not less than one year from the effective date of the
Registration Statement and any Rule 462(b) Registration Statement.
(g) Rule 158. The Company will timely file such reports pursuant to the
1934 Act as are necessary in order to make generally available to its
securityholders as soon as practicable an
24
earnings statement for the purposes of, and to provide the benefits contemplated
by, the last paragraph of Section 11(a) of the 1933 Act.
(h) Use of Proceeds. The Company will use the net proceeds received by it
from the sale of the Securities in the manner specified in the Prospectus under
"Use of Proceeds".
(i) Listing. The Company will use its best efforts to effect and maintain
the quotation of the Securities 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 for which are reported by the Nasdaq
National Market.
(j) Restriction on Sale of Securities. During a period of 180 days from
the date of the Prospectus (the "Restricted Period"), the Company will not,
directly or indirectly, (i) offer, sell, contract to sell, pledge, grant any
option to purchase, make any short sale or otherwise dispose of, any shares of
Common Stock, or any options or warrants to purchase any shares of Common Stock,
or any securities convertible into, exchangeable for or that represent the right
to receive shares of Common Stock, or file or cause to be filed any registration
statement under the 1933 Act with respect to any of the foregoing, or (ii)
engage in any hedging or other transaction that is designed to or that
reasonably could be expected to lead to or result in a sale or disposition of
Common Stock even if such Common Stock would be disposed of by someone other
than the Company, including without limitation any short sale or grant of any
right (including without limitation any put or call option) with respect to any
shares of Common Stock or with respect to any security that includes, relates
to, or derives any significant part of its value from shares of Common Stock.
The foregoing sentence shall not apply to (A) the Securities to be sold
hereunder, (B) any shares of Common Stock issued by the Company upon the
exercise of an option or warrant or the conversion of a security outstanding on
the date hereof and referred to in the Prospectus, (C) any shares of Common
Stock issued or options to purchase Common Stock granted pursuant to existing
employee benefit plans of the Company referred to in the Prospectus, (D) any
shares of Common Stock issued pursuant to any non-employee director stock plan
or dividend reinvestment plan or (E) any transfer, sale or other disposition
with the prior written consent of Xxxxx, Xxxxxxxx & Xxxxx, Inc. (which consent
may be withheld in its sole discretion), provided that Xxxxx, Xxxxxxxx & Xxxxx,
Inc., for the benefit of each of the other Representatives, agrees not to
provide such consent without providing notice to each Representative to permit
compliance with applicable provisions of NASD Conduct Rule 2711(f) restricting
publication and distribution of research and public appearances by research
analysts before and after the expiration, waiver or termination of a lock-up
agreement and agrees only to provide consent in circumstances that will permit
such compliance by the Representatives. Notwithstanding the foregoing, if (1)
during the period that begins on the date that is 15 calendar days plus 3
business days before the last day of the Restricted Period and ends on the last
day of the Restricted Period, the Company issues an earnings release or material
news or a material event relating to the Company occurs; or (2) prior to the
expiration of the Restricted Period, the Company announces that it will release
earnings results during the 16-day period beginning on the last day of the
Restricted Period, the restrictions imposed by this Section 3(j) shall continue
to apply until the expiration of the date that is 15 calendar days plus 3
business days after the date
25
on which the earnings release is issued or the material news or material event
relating to the Company occurs.
(k) Reporting Requirements. The Company, during the period when the
Prospectus is required to be delivered under the 1933 Act or the 1934 Act, will
file all documents required to be filed with the Commission pursuant to the 1934
Act within the time periods required by the 1934 Act and the rules and
regulations of the Commission thereunder.
(l) Restrictions on Reserved Securities. The Company hereby agrees that it
will ensure that the Reserved Securities will be restricted from sale, transfer,
assignment, pledge or hypothecation for a period of 180 days following the date
of this Agreement. The Underwriters will notify the Company as to which persons
will need to be so restricted. At the request of the Underwriters, the Company
will direct the transfer agent to place a stop transfer restriction upon such
Reserved Securities for such period of time. Should the Company release, or seek
to release, from such restrictions any of the Reserved Securities, the Company
agrees to reimburse the Underwriters for any reasonable expenses (including,
without limitation, legal expenses) they incur in connection with such release.
(m) Compliance with Rule 463. The Company will report the use of proceeds
as may be required pursuant to Rule 463 of the 1933 Act Regulations.
(n) Compliance with the Xxxxxxxx-Xxxxx Act. The Company shall at all times
comply with all applicable provisions of the Xxxxxxxx-Xxxxx Act, including the
related rules and regulations promulgated thereunder by the Commission and The
Nasdaq Stock Market, Inc., in effect from time to time.
(o) Compliance with the Cuba Act. In accordance with the Cuba Act and
without limitation to the provisions of Sections 6 and 7 hereof, the Company
agrees to indemnify and hold harmless each Underwriter from and against any and
all loss, liability, claim, damage and expense whatsoever (including fees and
disbursements of counsel), as incurred, arising out of any violation by the
Company of the Cuba Act.
SECTION 4.0 Payment of Expenses.
(a) Expenses. The Company, the Bank and the Selling Stockholders will pay
or cause to be paid all expenses incident to the performance of their
obligations under this Agreement, including (i) the preparation, printing and
filing of the Registration Statement (including financial statements and
exhibits) as originally filed and of each amendment thereto, (ii) the
preparation, printing and delivery to the Underwriters of this Agreement, any
Agreement among Underwriters and such other documents as may be required in
connection with the offering, purchase, sale, issuance or delivery of the
Securities, (iii) the preparation, issuance and delivery of the certificates for
the Securities to the Underwriters, including any stock or other transfer taxes
and any stamp, capital or other duties payable upon the sale, issuance or
delivery of the Securities to the Underwriters, (iv) the fees and disbursements
of the Company's counsel, accountants and other advisors, (v) the qualification
of the Securities and the Reserved Securities under securities laws in
accordance with the provisions of Section 3(f) hereof, including filing fees and
the
26
reasonable fees and disbursements of counsel for the Underwriters in connection
therewith and in connection with the preparation of the Blue Sky Survey and any
supplement thereto, (vi) the printing and delivery to the Underwriters of copies
of each preliminary prospectus, any Term Sheets and of the Prospectus and any
amendments or supplements thereto, (vii) the preparation, printing and delivery
to the Underwriters of copies of the Blue Sky Survey and any supplement thereto,
(viii) the fees and expenses of any transfer agent or registrar for the
Securities, (ix) the filing fees incident to, and the fees and disbursements of
counsel to the Underwriters in connection with, the review by the NASD of the
terms of the sale of the Securities, (x) the fees and expenses incurred in
connection with the inclusion of the Securities in the Nasdaq National Market
and (xi) all costs and expenses incurred by the Underwriters in connection with
matters related to the Reserved Securities that are designated by the Company
for sale to directors, officers, employees and persons having business
relationships with the Company, including without limitation (A) the fees and
disbursements of counsel for the Underwriters, and (B) stamp duties, similar
taxes or duties or other taxes, if any.
(b) Expenses of the Selling Stockholders. The Selling Stockholders,
jointly and severally, will pay all expenses incident to the performance of
their respective obligations under, and the consummation of the transactions
contemplated by this Agreement, including (i) any stamp duties, capital duties
and stock transfer taxes, if any, payable upon the sale of the Securities to the
Underwriters, and their transfer between the Underwriters pursuant to an
agreement between such Underwriters, and (ii) the fees and disbursements of
their respective counsel and accountants.
(c) Termination of Agreement. If this Agreement is terminated by the
Representatives in accordance with the provisions of Section 5, Section 9(a)(i)
or Section 11 hereof, the Company, the Bank and the Selling Stockholders shall
reimburse the Underwriters for all of their out of pocket expenses incurred,
including the fees and disbursements of counsel for the Underwriters.
(d) Allocation of Expenses. The provisions of this Section shall not
affect and, as between the Underwriters, on the one hand, and the Company, the
Bank and/or the Selling Stockholders, on the other hand, shall not be affected
by, any agreement that the Company, the Bank and/or the Selling Stockholders may
make for the sharing of such costs and expenses.
SECTION 5.0 Conditions of Underwriters' Obligations. The obligations of
the several Underwriters hereunder are subject to the accuracy of the
representations and warranties of the Company and the Selling Stockholders
contained in Section 1 hereof or in certificates of any officer of the Company
or any Subsidiary or on behalf of any Selling Stockholder delivered pursuant to
the provisions hereof, to the performance by the Company, the Bank and the
Selling Stockholders of their respective covenants and other obligations
hereunder, and to the following further conditions:
(a) Effectiveness of Registration Statement. The Registration Statement,
including any Rule 462(b) Registration Statement, shall have become effective
and at the Closing Time no stop order suspending the effectiveness of the
Registration Statement shall have been issued under the
27
1933 Act or proceedings therefor initiated or threatened by the Commission, and
any request on the part of the Commission for additional information shall have
been complied with to the reasonable satisfaction of counsel to the
Underwriters. A prospectus containing the Rule 430A Information shall have been
filed with the Commission in accordance with Rule 424(b) (or a post-effective
amendment providing such information shall have been filed and declared
effective in accordance with the requirements of Rule 430A) or, if the Company
has elected to rely upon Rule 434, a Term Sheet shall have been filed with the
Commission in accordance with Rule 424(b).
(b) Opinions of Counsel for the Company. At the Closing Time, the
Representatives shall have received:
(i) the favorable opinion, dated as of the Closing Time, of
Jenkens & Xxxxxxxxx, P.C., counsel for the Company, in form and substance
satisfactory to counsel for the Underwriters, together with signed or
reproduced copies of such opinion for each of the other Underwriters,
substantially to the effect set forth in Exhibit A hereto and to such
further effect as counsel to the Underwriters may reasonably request; and
(ii) the favorable opinion, dated as of the Closing Time, of
Fiddler Xxxxxxxx & Xxxxxxxxx, P.S.C., special Puerto Rico counsel for the
Company, in form and substance satisfactory to counsel for the
Underwriters, together with signed or reproduced copies of such opinion
for each of the other Underwriters, substantially to the effect set forth
in Exhibit A hereto and to such further effect as counsel to the
Underwriters may reasonably request.
(iii) the favorable opinion, dated as of the Closing Time, of
Xxxxxx & Xxxxxxx C.S.P., special Puerto Rico tax counsel for the Company,
in form and substance satisfactory to counsel for the Underwriters,
together with signed or reproduced copies of such opinion for each of the
other Underwriters, substantially to the effect set forth in Exhibit A
hereto and to such further effect as counsel to the Underwriters may
reasonably request.
(c) Opinions of Counsel for the Selling Stockholders. At the Closing Time,
the Representatives shall have received:
(i) the favorable opinion, dated as of the Closing Time, of
Jenkens & Xxxxxxxxx, P.C., counsel for the Selling Stockholders Xxxxx X.
Xxxxxx and Parques de Atraccionnes, S.A., in form and substance
satisfactory to counsel for the Underwriters, together with signed or
reproduced copies of such opinion for each of the other Underwriters
substantially to the effect set forth in Exhibit B hereto and to such
further effect as counsel to the Underwriters may reasonably request; and
(ii) the favorable opinion, dated as of the Closing Time, of
Totti & Xxxxxxxxx-Xxxx, counsel for the Selling Stockholder Xxxxxxxx
Xxxxx-
28
Xxxxxxxx, in form and substance satisfactory to counsel for the
Underwriters, together with signed or reproduced copies of such opinion
for each of the other Underwriters substantially to the effect set forth
in Exhibit B hereto and to such further effect as counsel to the
Underwriters may reasonably request.
(d) Opinion of Counsel for the Underwriters. At the Closing Time, the
Representatives shall have received the favorable opinion, dated as of the
Closing Time, of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, special counsel for
the Underwriters, together with signed or reproduced copies of such opinion for
each of the other Underwriters in form and substance satisfactory to the
Representatives.
(e) Officers' Certificate. At the Closing Time, there shall not have been,
since the date hereof or since the respective dates as of which information is
given in the Prospectus, any 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, and the Representatives shall have
received a certificate of the President or a Vice President of the Company and
of the chief financial officer or chief accounting officer of the Company, dated
as of the Closing Time, to the effect that (i) there has been no such material
adverse change, (ii) the representations and warranties in Section 1(a) hereof
are true and correct in all respects with the same force and effect as though
expressly made at and as of the Closing Time, (iii) the Company has complied
with all agreements and satisfied all conditions on its part to be performed or
satisfied at or prior to the Closing Time, and (iv) no stop order suspending the
effectiveness of the Registration Statement has been issued and no proceedings
for that purpose have been instituted or are pending or are, to such officer's
knowledge, contemplated by the Commission.
(f) Certificate of Selling Stockholders. At the Closing Time, the
Representatives shall have received a certificate of an Attorney-in-Fact on
behalf of each Selling Stockholder, dated as of the Closing Time, to the effect
that (i) the representations and warranties of each Selling Stockholder
contained in Section 1(b) hereof are true and correct in all respects with the
same force and effect as though expressly made at and as of the Closing Time and
(ii) each Selling Stockholder has complied with all agreements and satisfied all
conditions on its part to be performed or satisfied under this Agreement at or
prior to the Closing Time.
(g) Accountant's Comfort Letter. At the time of the execution of this
Agreement, the Representatives shall have received from KPMG LLP a letter or
letters dated such date, in form and substance satisfactory to the
Representatives, together with signed or reproduced copies of such letter or
letters for each of the other Underwriters containing statements and information
of the type ordinarily included in accountants' "comfort letters" to
underwriters with respect to the financial statements and certain financial
information of the Company and Bank & Trust contained in the Registration
Statement and the Prospectus.
(h) Bring-down Comfort Letter. At the Closing Time, the Representatives
shall have received from KPMG LLP a letter or letters, dated as of the Closing
Time, in form and substance satisfactory to the Representatives, to the effect
that they reaffirm the statements made in the
29
letter or letters furnished by them pursuant to subsection (g) of this Section,
except that the specified date referred to shall be a date not more than three
business days prior to the Closing Time.
(i) Management Comfort Letter. At the time of the execution of this
Agreement, the Representatives shall have received from the Company a
certificate of its Chief Executive Officer and Chief Financial Officer, dated
such date, in form and substance satisfactory to the Representatives, with
respect to the financial statements and certain financial information contained
in the Registration Statement and the Prospectus audited by Xxxxxx Xxxxxxxx LLP,
providing "Management Comfort" with respect to such information to the extent
KPMG LLP is unable to provide such comfort, substantially to the effect set
forth in Exhibit D hereto and to such further effect as counsel to the
Underwriters may reasonably request.
(j) Approval of Listing and Effectiveness of Registration Statement on
Form 8-A. At the Closing Time, the Securities shall have been approved for
inclusion in the Nasdaq National Market, subject only to official notice of
issuance, and the Company's Registration Statement on Form 8-A, providing for
the registration of the Securities under the 1934 Act, shall have been declared
effective by the Commission.
(k) No Objection. The NASD shall have confirmed that it has not raised any
objection with respect to the fairness and reasonableness of the underwriting
terms and arrangements.
(l) Lock-up Agreements. At the date of this Agreement, the Representatives
shall have received an agreement substantially in the form of Exhibit C hereto
signed by the persons listed on Schedule E hereto.
(m) Conditions to Purchase of Option Securities. In the event that the
Underwriters exercise their option provided in Section 2(b) hereof to purchase
all or any portion of the Option Securities, the representations and warranties
of the Company and the Selling Stockholders contained herein and the statements
in any certificates furnished by the Company, any Subsidiary and the Selling
Stockholders hereunder shall be true and correct as of each Date of Delivery
and, at the relevant Date of Delivery, the Representatives shall have received:
(i) Officers' Certificate. A certificate, dated such Date of
Delivery, of the President or a Vice President of the Company and of the
chief financial officer or chief accounting officer of the Company
confirming that the certificate delivered at the Closing Time pursuant to
Section 5(e) hereof remains true and correct as of such Date of Delivery.
(ii) Certificate of Selling Stockholders. A certificate, dated
such Date of Delivery, of an Attorney-in-Fact on behalf of each Selling
Stockholder confirming that the certificate delivered at the Closing Time
pursuant to Section 5(f) remains true and correct as of such Date of
Delivery.
(iii) Opinions of Counsel for the Company. The favorable
opinions of (A) Jenkens & Xxxxxxxxx, P.C., counsel for the Company, (B)
Fiddler
30
Xxxxxxxx & Xxxxxxxxx, P.S.C., special Puerto Rico counsel for the Company
and (C) Xxxxxx & Xxxxxxx C.S.P., special Puerto Rico tax counsel for the
Company, each in form and substance satisfactory to counsel for the
Underwriters, dated such Date of Delivery, relating to the Option
Securities to be purchased on such Date of Delivery and otherwise to the
same effect as the opinions required by Section 5(b) hereof.
(iv) Opinions of Counsel for the Selling Stockholders. The
favorable opinions of (A) Jenkens & Xxxxxxxxx, P.C., counsel for the
Selling Stockholders Xxxxx X. Xxxxxx and Parques de Atraccionnes, S.A.,
and (B) Totti & Xxxxxxxxx-Xxxx, counsel for the Selling Stockholder
Xxxxxxxx Xxxxx-Xxxxxxxx, in form and substance satisfactory to counsel for
the Underwriters, dated such Date of Delivery, relating to the Option
Securities to be purchased on such Date of Delivery and otherwise to the
same effect as the opinions required by Section 5(c) hereof.
(v) Opinion of Counsel for the Underwriters. The favorable
opinion of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, special counsel for
the Underwriters, dated such Date of Delivery, relating to the Option
Securities to be purchased on such Date of Delivery and otherwise to the
same effect as the opinion required by Section 5(d) hereof.
(vi) Bring-down Comfort Letter. A letter or letters from KPMG
LLP, in form and substance satisfactory to the Representatives and dated
such Date of Delivery, substantially in the same form and substance as the
letter or letters furnished by them to the Representatives pursuant to
Section 5(g) hereof, except that the "specified date" in the letter
furnished pursuant to this paragraph shall be a date not more than five
days prior to such Date of Delivery.
(vii) Bring-down Management Comfort Letter. A certificate of
the Chief Executive Officer and Chief Financial Officer of the Company,
dated such Date of Delivery, substantially in the same form and substance
as the certificate furnished by such officers to the Representatives
pursuant to Section 5(i) hereof.
(n) Additional Documents. At the Closing Time and at each Date of Delivery
counsel for the Underwriters shall have been furnished with such documents and
opinions as they may require for the purpose of enabling them to pass upon the
issuance and sale of the Securities as herein contemplated, or in order to
evidence the accuracy of any of the representations or warranties, or the
fulfillment of any of the conditions, herein contained; and all proceedings
taken by the Company and the Selling Stockholders in connection with the
issuance and sale of the Securities as herein contemplated shall be satisfactory
in form and substance to the Representatives and counsel for the Underwriters.
(o) Termination of Agreement. If any condition specified in this Section
shall not have been fulfilled when and as required to be fulfilled, this
Agreement, or, in the case of any
31
condition to the purchase of Option Securities on a Date of Delivery which is
after the Closing Time, the obligations of the several Underwriters to purchase
the relevant Option Securities, may be terminated by the Representatives by
notice to the Company at any time at or prior to the Closing Time or such Date
of Delivery, as the case may be, and such termination shall be without liability
of any party to any other party except as provided in Section 4 and except that
Sections 1, 3(o), 6, 7 and 8 shall survive any such termination and remain in
full force and effect.
(p) Confirmation Letters. At the Closing Time, the Representatives shall
have received letters, in form and substance acceptable to the Representatives
in their sole discretion, from each Selling Stockholder confirming the
effectiveness of the powers-of-attorney executed by such Selling Stockholder and
ratifying all actions previously taken by the Attorneys-in-Fact in connection
with this Agreement.
SECTION 6.0 Indemnification.
(a) Indemnification of the Underwriters. The Company and the Bank, jointly
and severally, and the Selling Stockholders, severally and not jointly, agree to
indemnify and hold harmless each Underwriter and each person, if any, who
controls any Underwriter within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in the Registration
Statement (or any amendment thereto), including the Rule 430A Information
and the Rule 434 Information, if applicable, or the omission or alleged
omission therefrom of a material fact required to be stated therein or
necessary to make the statements therein not misleading or arising out of
any untrue statement or alleged untrue statement of a material fact
included in any preliminary prospectus or the Prospectus (or any amendment
or supplement thereto), or the omission or alleged omission therefrom of a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of (A) the violation of any
applicable laws or regulations of foreign jurisdictions where Reserved
Securities have been offered and (B) any untrue statement or alleged
untrue statement of a material fact included in the supplement or
prospectus wrapper material distributed in connection with the reservation
and sale of the Reserved Securities to directors, officers, employees and
persons having business relationships with the Company or the omission or
alleged omission therefrom of a material fact necessary to make the
statements therein, when considered in conjunction with the Prospectus or
preliminary prospectus, not misleading;
(iii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or
32
omission, or any such alleged untrue statement or omission or in
connection with any violation of the nature referred to in Section
6(a)(1)(ii)(A) hereof; provided that (subject to Section 6(d) below) any
such settlement is effected with the written consent of the Company and
the Selling Stockholders; and
(iv) against any and all expense whatsoever (including the fees and
disbursements of counsel chosen by Xxxxx Xxxxxxxx), as incurred in
investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced
or threatened, or any claim whatsoever based upon any such untrue
statement or omission, or any such alleged untrue statement or omission or
in connection with any violation of the nature referred to in Section
6(a)(ii) (A) hereof, to the extent that any such expense is not paid under
(i), (ii) or (iii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by any
Underwriter through Xxxxx Xxxxxxxx expressly for use in the Registration
Statement (or any amendment thereto), including the Rule 430A Information and
the Rule 434 Information, if applicable, or any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto); and provided, further,
however, that the liability of each Selling Stockholder pursuant to this Section
6(a) shall not exceed the product of the number of Shares sold by such Selling
Stockholder and the purchase price for the Shares paid by the Underwriters as
set forth on Schedule C; and provided, further, however, that each Selling
Stockholder shall only be subject to liability pursuant to this Section 6(a) to
the extent that any untrue statement or alleged untrue statement of a material
fact, or omission or alleged omission therefrom of a material fact, was made in
reliance upon and in conformity with the information furnished or confirmed (in
each case orally or in writing) by or on behalf of such Selling Stockholder.
(b) Indemnification of the Company, Directors and Officers and the Selling
Stockholders. Each Underwriter severally agrees to indemnify and hold harmless
the Company, its directors, each of its officers who signed the Registration
Statement, and each person, if any, who controls the Company within the meaning
of Section 15 of the 1933 Act or Section 20 of the 1934 Act, and each Selling
Stockholder and each person, if any, who controls any Selling Stockholder within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act against
any and all loss, liability, claim, damage and expense described in the
indemnity contained in subsection (a) of this Section, as incurred, but only
with respect to untrue statements or omissions, or alleged untrue statements or
omissions, made in the Registration Statement (or any amendment thereto),
including the Rule 430A Information and the Rule 434 Information, if applicable,
or any preliminary prospectus or the Prospectus (or any amendment or supplement
thereto) in reliance upon and in conformity with written information furnished
to the Company by such Underwriter through Xxxxx Xxxxxxxx expressly for use in
the Registration Statement (or any amendment thereto) or such preliminary
prospectus or the Prospectus (or any amendment or supplement thereto), it being
understood and agreed upon that the only such information furnished by any
Underwriter consists of the following information in the Prospectus furnished
33
on behalf of each Underwriter: the expected delivery date for the shares
included in the last sentence at the bottom of the front cover and the last
sentence of the third paragraph under the caption "Underwriting"; the list of
Underwriters and their respective participation in the sale of the Shares in the
first paragraph under the caption "Underwriting"; the information concerning the
offering price, selling concessions and reallowances in the third paragraph
under the caption "Underwriting"; and the information concerning stabilization
of the market price of the Shares, short positions and penalty bids in the ninth
paragraph under the caption "Underwriting."
(c) Actions against Parties; Notification. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement. In the case of parties indemnified pursuant to Section 6(a) above,
counsel to the indemnified parties shall be selected by Xxxxx Xxxxxxxx, and, in
the case of parties indemnified pursuant to Section 6(b) above, counsel to the
indemnified parties shall be selected by the Company. An indemnifying party may
participate at its own expense in the defense of any such action; provided,
however, that counsel to the indemnifying party shall not (except with the
consent of the indemnified party) also be counsel to the indemnified party. In
no event shall the indemnifying parties be liable for fees and expenses of more
than one counsel (in addition to any local counsel) separate from their own
counsel for all indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances No indemnifying party shall,
without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever in respect of which
indemnification or contribution could be sought under this Section 6 or Section
7 hereof (whether or not the indemnified parties are actual or potential parties
thereto), unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liability arising out
of such litigation, investigation, proceeding or claim and (ii) does not include
a statement as to or an admission of fault, culpability or a failure to act by
or on behalf of any indemnified party.
(d) Settlement without Consent if Failure to Reimburse. If at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel to which the indemnified
party is entitled under Section 6(a) or 6(b) as the case may be, such
indemnifying party agrees that it shall be liable for any settlement of the
nature contemplated by Section 6(a)(iii) effected without its written consent if
(i) such settlement is entered into more than 45 days after receipt by such
indemnifying party of the aforesaid request, (ii) such indemnifying party shall
have received notice of the terms of such settlement at least 30 days prior to
such settlement being entered into and (iii) such indemnifying party shall not
have reimbursed such indemnified party in accordance with such request prior to
the date of such settlement.
34
(e) Indemnification for Reserved Securities. In connection with the offer
and sale of the Reserved Securities, the Company and the Bank agree, promptly
upon a request in writing, to indemnify and hold harmless the Underwriters from
and against any and all losses, liabilities, claims, damages and expenses
incurred by them as a result of the failure of directors, officers, employees
and persons having business relationships with the Company to pay for and accept
delivery of Reserved Securities which, by the end of the first business day
following the date of this Agreement, were subject to a properly confirmed
agreement to purchase.
(f) Other Agreements with Respect to Indemnification. The provisions of
this Section shall not affect any agreement among the Company, the Bank and the
Selling Stockholders with respect to indemnification.
SECTION 7.0 Contribution. If the indemnification provided for in Section 6
hereof is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company, the Bank
and the Selling Stockholders on the one hand and the Underwriters on the other
hand from the offering of the Securities pursuant to this Agreement or (ii) if
the allocation provided by 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 Company, the
Bank and the Selling Stockholders on the one hand and of the Underwriters on the
other hand in connection with the statements or omissions, or in connection with
any violation of the nature referred to in Section 6(a)(ii)(A) hereof, which
resulted in such losses, liabilities, claims, damages or expenses, as well as
any other relevant equitable considerations.
The relative benefits received by the Company, the Bank and the Selling
Stockholders on the one hand and the Underwriters on the other hand in
connection with the offering of the Securities pursuant to this Agreement shall
be deemed to be in the same respective proportions as the total net proceeds
from the offering of the Securities pursuant to this Agreement (before deducting
expenses) received by the Company and the Selling Stockholders and the total
underwriting discount received by the Underwriters, in each case as set forth on
the cover of the Prospectus, or, if Rule 434 is used, the corresponding location
on the Term Sheet bear to the aggregate initial public offering price of the
Securities as set forth on such cover.
The relative fault of the Company, the Bank and the Selling Stockholders
on the one hand and the Underwriters on the other hand shall be determined by
reference to, among other things, whether any such untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a material
fact relates to information supplied by the Company, the Bank or the Selling
Stockholders or by the Underwriters and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission or any violation of the nature referred to in Section 6(a)(ii)(A)
hereof.
35
The Company, the Bank, the Selling Stockholders and the Underwriters agree
that it would not be just and equitable if contribution pursuant to this Section
7 were 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 account of the equitable considerations referred to above in this
Section 7. The aggregate amount of losses, liabilities, claims, damages and
expenses incurred by an indemnified party and referred to above in this Section
7 shall be deemed to include any legal or other expenses reasonably incurred by
such indemnified party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue or alleged untrue statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Securities underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages that such
Underwriter has otherwise been required to pay by reason of any such untrue or
alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 0000 Xxx) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall 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 or any
Selling Stockholder within the meaning of Section 15 of the 1933 Act or Section
20 of the 1934 Act shall have the same rights to contribution as the Company or
such Selling Stockholder, as the case may be. The Underwriters' respective
obligations to contribute pursuant to this Section 7 are several in proportion
to the number of Initial Securities set forth opposite their respective names in
Schedule A hereto and not joint.
The provisions of this Section shall not affect any agreement among the
Company, the Bank and the Selling Stockholders with respect to contribution.
SECTION 8.0 Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement or in certificates of officers of the Company or the Subsidiaries or
the Selling Stockholders submitted pursuant hereto, shall remain operative and
in full force and effect, regardless of any investigation made by or on behalf
of any Underwriter or controlling person, or by or on behalf of the Company or
the Selling Stockholders, and shall survive delivery of the Securities to the
Underwriters.
SECTION 9.0 Termination of Agreement.
(a) Termination; General. The Representatives may terminate this
Agreement, by notice to the Company, the Bank and the Selling Stockholders, at
any time at or prior to the Closing Time (i) if there has been, since the time
of execution of this Agreement or since the
36
respective dates as of which information is given in the Prospectus, any
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Company and the
Subsidiaries considered as one enterprise, whether or not arising in the
ordinary course of business, or (ii) if there has occurred any material adverse
change in the financial markets in the United States or the international
financial markets, any outbreak or escalation of hostilities or a declaration by
the United States of a national emergency or war, or any major act of terrorism
involving the United States, or any other substantial national or international
calamity, emergency or crisis involving a prospective change in national or
international political, financial or economic conditions, the effect of which
on the financial markets of the United States is such as to make it, in the
judgment of the Representatives, impracticable or inadvisable to market the
Securities on the terms and in the manner contemplated in the Prospectus, or
(iii) if trading in any securities of the Company has been suspended or
materially limited by the Commission or the Nasdaq National Market, or if
trading generally on the American Stock Exchange or the New York Stock Exchange
or in the Nasdaq National Market has been suspended or materially limited, or
minimum or maximum prices for trading have been fixed, or maximum ranges for
prices have been required, by any of said exchanges or national securities
associations or by such system or by order of the Commission, the NASD or any
other governmental authority, or (iv) if a banking moratorium has been declared
by either Federal, New York or Puerto Rico authorities.
(b) Liabilities. If this Agreement is terminated pursuant to this Section,
such termination shall be without liability of any party to any other party
except as provided in Section 4 hereof, and provided further that Sections 1,
3(o), 6, 7 and 8 shall survive such termination and remain in full force and
effect.
SECTION 10.0 Default by One or More of the Underwriters. If one or more of
the Underwriters shall fail at the Closing Time or a Date of Delivery to
purchase the Securities which it or they are obligated to purchase under this
Agreement (the "Defaulted Securities"), the Representatives shall have the
right, but not the obligation, within 24 hours thereafter, to make arrangements
for one or more of the non-defaulting Underwriters, or any other underwriters,
to purchase all, but not less than all, of the Defaulted Securities in such
amounts as may be agreed upon and upon the terms herein set forth; if, however,
the Representatives shall not have completed such arrangements within such
24-hour period, then this Agreement shall terminate without liability on the
part of any non-defaulting Underwriter.
No action pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of its default.
In the event of any such default which does not result in a termination of
this Agreement, either (i) the Representatives or (ii) the Company and any
Selling Stockholder shall have the right to postpone the Closing Time or a Date
of Delivery for a period not exceeding seven days in order to effect any
required changes in the Registration Statement or Prospectus or in any other
documents or arrangement.
37
SECTION 11.0 Default by one or more of the Selling Stockholders or the
Company.
(a) If a Selling Stockholder shall fail at the Closing Time or at a Date
of Delivery to sell and deliver the number of Securities which such Selling
Stockholder or Selling Stockholders are obligated to sell hereunder, and the
remaining Selling Stockholders do not exercise the right hereby granted to
increase, pro rata or otherwise, the number of Securities to be sold by them
hereunder to the total number to be sold by all Selling Stockholders as set
forth in Schedule B hereto, then the Underwriters may, at option of the
Representatives, by notice from the Representatives to the Company and the
non-defaulting Selling Stockholders, either (a) terminate this Agreement without
any liability on the fault of any non-defaulting party except that the
provisions of Sections 1, 3(o), 4, 6, 7 and 8 shall remain in full force and
effect or (b) elect to purchase the Securities which the non-defaulting Selling
Stockholders and the Company have agreed to sell hereunder. No action taken
pursuant to this Section 11 shall relieve any Selling Stockholder so defaulting
from liability, if any, in respect of such default.
In the event of a default by any Selling Stockholder as referred to in
this Section 11, each of the Representatives, the Company and the non-defaulting
Selling Stockholders shall have the right to postpone the Closing Time or Date
of Delivery for a period not exceeding seven days in order to effect any
required change in the Registration Statement or Prospectus or in any other
documents or arrangements.
(b) If the Company shall fail at the Closing Time or at the Date of
Delivery to sell the number of Securities that it is obligated to sell
hereunder, then this Agreement shall terminate without any liability on the part
of any nondefaulting party; provided, however, that the provisions of Sections
1, 3(o), 4, 6, 7 and 8 shall remain in full force and effect. No action taken
pursuant to this Section shall relieve the Company or the Bank from liability,
if any, in respect of such default.
SECTION 12.0 Notices. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication.
Notices to the Underwriters shall be directed to:
Xxxxx Xxxxxxxx & Xxxxx, Inc.
UBS Securities LLC
Xxxxx Xxxxxx & Co., Inc.
as Representatives of the several Underwriters
c/o Keefe, Xxxxxxxx & Xxxxx, Inc.
000 Xxxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxxxx, Esq., General Counsel
Fax: (000) 000-0000
with a copy to:
38
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
0000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxx Xx Xxxxxxx XX, Esq.
Fax: (000) 000-0000
Notices to the Company and the Bank shall be directed to:
EuroBancshares, Inc.
000 Xxxxx Xxxxxx Xxxxxx
Xxx Xxxx, Xxxxxx Xxxx 00000
Attention: Xxxxxx Xxxxxxxxx-Xxxxxxx, Xx., President and Chief
Executive Officer
Fax: (000) 000-0000
with a copy to:
Jenkens & Xxxxxxxxx, P.C.
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxxxxxx, Esq.
Xxxxxx X. Xxxxxxxx, Esq.
Fax: (000) 000-0000
Notices to the Selling Stockholders shall be directed to:
Xxxxxxxx Xxxxx-Xxxxxxxx
Xxxxx X. Xxxxxx
Parques de Atracciones, S.A.
c/o EuroBancshares, Inc.
000 Xxxxx Xxxxxx Xxxxxx
Xxx Xxxx, Xxxxxx Xxxx 00000
Attention: Xxxxxx Xxxxxxxxx-Xxxxxxx, Xx. and Xxxxxx X.
Xxxxxxx, As attorneys-in-fact for the Selling
Stockholders
Fax: (000) 000-0000
with a copy to:
Jenkens & Xxxxxxxxx, P.C.
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxxxxxx, Esq.
Xxxxxx X. Xxxxxxxx, Esq.
Fax: (000) 000-0000
39
SECTION 13.0 Parties. This Agreement shall each inure to the benefit of
and be binding upon the Underwriters, the Company, the Bank and the Selling
Stockholders and their respective successors. Nothing expressed or mentioned in
this Agreement is intended or shall be construed to give any person, firm or
corporation, other than the Underwriters, the Company, the Bank and the Selling
Stockholders and their respective successors and the controlling persons and
officers and directors referred to in Sections 6 and 7 and their heirs and legal
representatives, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision herein contained. This Agreement and
all conditions and provisions hereof are intended to be for the sole and
exclusive benefit of the Underwriters, the Company, the Bank and the Selling
Stockholders and their respective successors, and said controlling persons and
officers and directors and their heirs and legal representatives, and for the
benefit of no other person, firm or corporation. No purchaser of Securities from
any Underwriter shall be deemed to be a successor by reason merely of such
purchase.
SECTION 14.0 Governing Law; References to Time. This Agreement and any
claim, counterclaim or dispute of any kind or nature whatsoever arising out of
or in any way relating to this Agreement ("Claim"), directly or indirectly,
shall be governed by, and construed in accordance with, the laws of the State of
New York, without regard to principles of conflicts of laws.
Except as otherwise set forth herein, specified times of day refer
to New York City time.
40
SECTION 15.0 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, the Bank and the Selling Stockholders consent to the jurisdiction of
such courts and personal service with respect thereto. The Company, the Bank and
the Selling Stockholders hereby consent 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 any indemnified party. Each
of the Underwriters, the Company (on its behalf and, to the extent permitted by
applicable law, on behalf of its stockholders and affiliates), the Bank and the
Selling Stockholders waive all rights 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, the Bank and the
Selling Stockholders agree that a final judgment in any such action, proceeding
or counterclaim brought in any such court shall be conclusive and binding upon
the Company, the Bank or the Selling Stockholders, as the case may be, and may
be enforced in any other court to the jurisdiction of which the Company, the
Bank or the Selling Stockholders is or may be subject, by suit upon such
judgment. Each of the Company, the Bank and the Selling Stockholders hereby
appoints, without power of revocation, [SPECIFY AGENT] as its agent to accept
and acknowledge on its behalf service of any and all process which may be served
in any action, proceeding or counterclaim in any way relating to or arising out
of this Agreement.
SECTION 16.0 Effect of Headings. The Article and Section headings herein
and the Table of Contents are for convenience only and shall not affect the
construction hereof.
41
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company, the Bank and the
Attorney-in-Fact for the Selling Stockholders a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
among the Underwriters, the Company, the Bank and the Selling Stockholders in
accordance with its terms.
Very truly yours,
EUROBANCSHARES, INC.
By:
------------------------------------
Name:
Title:
EUROBANK
By:
------------------------------------
Name:
Title:
Xxxxxxxx Xxxxx-Xxxxxxxx
Xxxxx X. Xxxxxx
Parques de Atracciones, S.A.
By:
------------------------------------
Xxxxxx Xxxxxxxxx-Xxxxxxx, Xx.
As Attorney-in-Fact for the Selling
Stockholders
42
CONFIRMED AND ACCEPTED, as of the date first above written:
XXXXX, XXXXXXXX & XXXXX, INC.
UBS SECURITIES LLC
XXXXX XXXXXX & CO., INC.
By: XXXXX, XXXXXXXX & XXXXX, INC.
By:
--------------------------------------------------
Authorized Signatory
For themselves and as Representatives of the other Underwriters named in
Schedule A hereto.
43
SCHEDULE A
Name of Underwriter Number of
Initial
Securities
Xxxxx, Xxxxxxxx & Xxxxx, Inc...........................
UBS Securities LLC.....................................
Xxxxx Xxxxxx & Co., Inc................................
Total ................................................. 3,894,988
=========
Sch A - 1
SCHEDULE B
Number of Initial Maximum Number of Option
Securities to be Sold Securities to Be Sold
--------------------- ------------------------
EuroBancshares, Inc...................... 3,450,000 517,500
Xxxxxxxx Xxxxx-Xxxxxxxx.................. 314,988 47,248
Xxxxx X. Xxxxxx.......................... 40,000 6,000
Parques de Atracciones, S.A.............. 90,000 13,500
Total ............................ 3,894,988 584,248
========= =======
Sch B - 1
SCHEDULE C
EUROBANCSHARES, INC.
3,894,988 Shares of Common Stock
(Par Value $.01 Per Share)
1. The initial public offering price per share for the Securities,
determined as provided in said Section 2, shall be $[ ].
2. The purchase price per share for the Securities to be paid by the
several Underwriters shall be $[ ], being an amount equal to the initial public
offering price set forth above less $[ ] per share; provided that the purchase
price per share for any Option Securities purchased upon the exercise of the
over-allotment option described in Section 2(b) shall be reduced by an amount
per share equal to any dividends or distributions declared by the Company and
payable on the Initial Securities but not payable on the Option Securities.
Sch C - 1
SCHEDULE D
Eurobank, a Puerto Rico chartered commercial bank
EBS Overseas, Inc., a Puerto Rico corporation
EuroSeguros, Inc., a Puerto Rico corporation
Eurobank Statutory Trust I, a Connecticut statutory trust
Eurobank Statutory Trust II, a Connecticut statutory trust
Sch D - 1
SCHEDULE E
[List of Persons and Entities Subject to the Lock-Up Agreement]
Sch E - 1
Exhibit A
[FORM OF OPINIONS OF COMPANY'S COUNSEL
TO BE DELIVERED PURSUANT TO
SECTION 5(b)]
A-1
Exhibit B
[FORM OF OPINIONS OF COUNSEL FOR THE SELLING STOCKHOLDERS
TO BE DELIVERED PURSUANT TO SECTION 5(c)]
B-1
Exhibit C
[FORM OF LOCK-UP FROM DIRECTORS, OFFICERS, SELLING STOCKHOLDERS AND
OTHER STOCKHOLDERS PURSUANT TO SECTION 5(l)]
EUROBANCSHARES, INC.
LOCK-UP AGREEMENT
_________, 2004
XXXXX, XXXXXXXX & XXXXX, INC.
UBS SECURITIES LLC
XXXXX XXXXXX & CO., INC.
as Representatives of the several
Underwriters to be named in Schedule A
to the within mentioned Purchase Agreement
c/o Keefe, Xxxxxxxx & Xxxxx, Inc.
000 Xxxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: Proposed Initial Public Offering by EuroBancshares, Inc.
Ladies and Gentlemen:
The undersigned, a stockholder of EuroBancshares, Inc., a Puerto Rico
corporation (the "Company"), understands that you, as representatives (the
"Representatives"), propose to enter into a Purchase Agreement (the "Purchase
Agreement") on behalf of the several Underwriters named in Schedule A to the
Purchase Agreement (collectively, the "Underwriters"), with the Company,
Eurobank, a Puerto Rico chartered commercial bank and a wholly-owned subsidiary
of the Company (the "Bank"), and the Selling Stockholders named in Schedule B to
the Purchase Agreement (the "Selling Stockholders"), providing for the initial
public offering (the "Initial Public Offering") of shares (the "Shares") of the
Company's common stock, par value $.01 per share (the "Common Stock"), pursuant
to a Registration Statement on Form S-1 (Registration No. 333-115510) (the
"Registration Statement") filed with the Securities and Exchange Commission (the
"SEC") on May 14, 2004.
In consideration of the agreement by the Underwriters to offer and sell
the Shares, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the undersigned agrees that, during
the period (the "Restricted Period") beginning on the date hereof and continuing
to and including the date 180 days after the date of the final prospectus
relating to the Initial Public Offering, the undersigned will not, directly or
indirectly, offer, sell, contract to sell, pledge, grant any option to purchase,
make any short sale or otherwise dispose of, any shares of Common Stock of the
Company, or any options or warrants to purchase any shares of Common Stock of
the Company, or any securities convertible into, exchangeable
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for or that represent the right to receive shares of Common Stock of the
Company, whether now owned or hereafter acquired, owned directly by the
undersigned (including holding as a custodian) or with respect to which the
undersigned has beneficial ownership within the rules and regulations of the SEC
(collectively, the "Undersigned's Shares"), or file or cause to be filed any
registration statement under the Securities Act of 1933, as amended, with
respect to any of the foregoing.
The foregoing restriction is expressly agreed to preclude the undersigned
from engaging in any hedging or other transaction that is designed to or that
reasonably could be expected to lead to or result in a sale or disposition of
the Undersigned's Shares even if such Shares would be disposed of by someone
other than the undersigned. Such prohibited hedging or other transactions would
include without limitation any short sale or grant of any right (including
without limitation any put or call option) with respect to any of the
Undersigned's Shares or with respect to any security that includes, relates to,
or derives any significant part of its value from such Shares.
If:
(1) during the period that begins on the date that is 15 calendar days
plus 3 business days before the last day of the Restricted Period and ends on
the last day of the Restricted Period, the Company issues an earnings release or
material news or a material event relating to the Company occurs; or
(2) prior to the expiration of the Restricted Period, the Company
announces that it will release earnings results during the 16-day period
beginning on the last day of the Restricted Period,
the restrictions set forth herein shall continue to apply until the expiration
of the date that is 15 calendar days plus 3 business days after the date on
which the earnings release is issued or the material news or material event
relating to the Company occurs.
Notwithstanding the foregoing, the undersigned may transfer the
Undersigned's Shares (i) as a bona fide gift or gifts in private transactions,
by will or by intestacy, provided that the donee or donees thereof agree to be
bound in writing by the restrictions set forth herein, (ii) to any trust, family
partnership or limited liability company for the direct or indirect benefit of
the undersigned and/or the immediate family of the undersigned, in the case of a
trust, or all of the partners or members of which are either the undersigned
and/or the immediate family of the undersigned, in the case of a family
partnership or limited liability company; provided, however, that in any such
case, such entity agrees to be bound in writing by the restrictions set forth
herein, and provided further that there shall be no further transfer of such
Shares of the Company or transfer of the capital stock of or transfer of or
change in the ownership interest in such trust, family partnership or limited
liability company, except in accordance with this Lock-Up Agreement, and
provided further that any such transfer shall not involve a disposition for
value, (iii) upon the death of the undersigned to his or her executors,
administrators, testamentary trustees, legatees or beneficiaries, (iv) to the
Underwriters pursuant to the Purchase Agreement, (v) in transactions relating to
shares of Common Stock or other securities acquired in open
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market transactions after the completion of the Initial Public Offering, or (vi)
with the prior written consent of Xxxxx, Xxxxxxxx & Xxxxx, Inc. (which consent
may be withheld in its sole discretion), provided that Xxxxx, Xxxxxxxx & Xxxxx,
Inc., for the benefit of each of the other Representatives, agrees not to
provide such consent without providing notice to each Representative to permit
compliance with applicable provisions of NASD Conduct Rule 2711(f) restricting
publication and distribution of research and public appearances by research
analysts before and after the expiration, waiver or termination of a lock-up
agreement and agrees only to provide consent in circumstances that will permit
such compliance by the Representatives. Notwithstanding the foregoing, the
undersigned may exercise any stock options of the undersigned to purchase
Shares, subject to any applicable provisions of the EuroBancshares, Inc. 2002
Stock Option Plan, provided that the Shares acquired upon exercise of such
options shall remain subject to the restrictions set forth herein. For purposes
of this paragraph, "immediate family" shall mean the undersigned and the spouse,
any lineal descendant, father, mother, brother or sister of the undersigned.
In addition, notwithstanding the foregoing, if the undersigned is a
corporation, partnership, limited liability company or other form of business
entity, the undersigned may transfer the Undersigned's Shares of the Company to
any wholly-owned subsidiary, partner or member of the undersigned; provided,
however, that in any such case, it shall be a condition to the transfer that the
transferee execute an agreement stating that the transferee is receiving and
holding such Shares subject to the provisions of this Lock-Up Agreement and
there shall be no further transfer of such Shares of the Company or transfer of
the capital stock of or transfer of or ownership interest in such subsidiary,
partner, member or affiliate of the undersigned, except in accordance with this
Lock-Up Agreement, and provided further that any such transfer shall not involve
a disposition for value.
The undersigned now has, and, except as contemplated by clauses (i)-(vi)
above, for the duration of this Lock-Up Agreement will have, good and marketable
title to the Undersigned's Shares, free and clear of all liens, encumbrances,
and claims whatsoever. The undersigned also agrees and consents to the entry of
stop transfer instructions with the Company's transfer agent and registrar
against the transfer of the Undersigned's Shares except in compliance with the
foregoing restrictions.
This Lock-Up Letter Agreement shall be terminated and the undersigned
shall be released from the undersigned's obligations hereunder (i) upon the date
either Xxxxx, Xxxxxxxx & Xxxxx, Inc., on the one hand, or the Company, on the
other hand, advises the other in writing, prior to the execution of the Purchase
Agreement, that it has determined not to proceed with the Initial Public
Offering, (ii) upon the date the Registration Statement is withdrawn or (iii)
upon the date the Purchase Agreement is terminated, for any reason, prior to the
Closing Time (as defined in the Purchase Agreement).
The undersigned understands that the Company, the Bank, the Selling
Stockholders and the Underwriters are relying upon this Lock-Up Agreement in
proceeding toward consummation of the Initial Public Offering. The undersigned
understands that whether or not the Initial Public Offering actually occurs
depends on a number of factors, including stock market conditions. The Initial
Public Offering will only be made pursuant to a Purchase Agreement, the terms of
which
C-3
are subject to negotiation among the Company, the Bank, the Selling Stockholders
and the Underwriters.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to enter into the agreements set forth herein, and
that, upon request, the undersigned will execute any additional documents
necessary or desirable in connection with the enforcement hereof. The
undersigned understands that this Lock-Up Agreement is irrevocable and shall be
binding upon the undersigned's heirs, legal representatives, successors and
assigns.
Very truly yours,
___________________________________
Name:
Title:
C-4
Exhibit D
[FORM OF MANAGEMENT COMFORT LETTER PURSUANT TO SECTION 5(i)]
EUROBANCSHARES, INC.
MANAGEMENT COMFORT LETTER
with respect to the consolidated financial statements
audited by Xxxxxx Xxxxxxxx LLP
Reference is made to the initial public offering by EuroBancshares, Inc.,
a Puerto Rico corporation (the "Company"), of 3,894,988 shares of the Company's
common stock, par value $.01 per share, pursuant to the terms of the Purchase
Agreement, dated August [ ], 2004 (the "Purchase Agreement"), by and among the
Company, Eurobank, a Puerto Rico chartered commercial bank and a wholly-owned
subsidiary of the Company (the "Bank"), the persons listed in Schedule B of the
Purchase Agreement, and Xxxxx, Xxxxxxxx & Xxxxx, Inc., UBS Securities LLC and
Xxxxx Xxxxxx & Co., Inc.
Each of the undersigned, Xxxxxx Xxxxxxxxx-Xxxxxxx, Xx., the duly appointed
President and Chief Executive Officer of the Company, and Xxxxxx X. Xxxxxxx, the
duly appointed Executive Vice President, Chief Financial Officer and Corporate
Secretary of the Company, pursuant to Section 5.0(i) of the Purchase Agreement,
hereby certifies on behalf of the Company and solely in their respective
capacities as officers of the Company (and not in an individual capacity) that:
1. Xxxxxx Xxxxxxxx LLP audited the consolidated balance sheets of the Bank
as of December 31, 2001 and 2000, and the related consolidated statements of
income, changes in stockholders' equity and other comprehensive income, and cash
flows for each of the three years in the period ended December 31, 2001,
included in the Company's Registration Statement on Form S-1 (Registration No.
333-115510) (as initially filed with the Securities and Exchange Commission on
May 14, 2004 and as subsequently amended, the "Registration Statement"). Xxxxxx
Xxxxxxxx LLP's report with respect thereto is also included in the Registration
Statement.
2. At all times that Xxxxxx Xxxxxxxx LLP was engaged by the Bank, Xxxxxx
Xxxxxxxx LLP was a firm of independent certified public accountants with respect
to the Bank within the meaning of the Securities Act of 1933, as amended (the
"Act"), and the applicable rules and regulations thereunder.
3. The consolidated financial statements audited by Xxxxxx Xxxxxxxx LLP
included in the Registration Statement comply as to form in all material
respects with the applicable accounting requirements of the Act and the related
rules and regulations thereunder.
D-1
4. Xxxxxx Xxxxxxxx LLP has not audited or reviewed any financial
statements of the Company or the Bank as of any date or for any period
subsequent to December 31, 2001.
5. Xxxxxx Xxxxxxxx LLP's reports on the consolidated financial statements
of the Bank as of and for the three years ended December 31, 2001 did not
contain any adverse opinion or disclaimer of opinion, nor were they qualified or
modified as to uncertainty or audit scope.
6. During the three years ended December 31, 2001, there were no
disagreements between the Bank and Xxxxxx Xxxxxxxx LLP on any matter of
accounting principle or practices, financial statement disclosure, or auditing
scope or procedure, which disagreements, if not resolved to Xxxxxx Xxxxxxxx
LLP's satisfaction, would have caused Xxxxxx Xxxxxxxx LLP to make reference to
the subject matter of the disagreement in connection with its reports, and there
were no reportable events as described in Item 304(a)(1)(v) of Regulation S-K
under the Act.
Dated as of this_____day of August, 2004.
---------------------------------------
Name: Xxxxxx Xxxxxxxxx-Xxxxxxx, Xx.
Title: President and Chief Executive
Officer
---------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Executive Vice President, Chief
Financial Officer and Corporate
Secretary
D-2
Annex A
[FORM OF ACCOUNTANTS' COMFORT LETTER PURSUANT TO SECTION 5(g)]
ANNEX A-1
