EXHIBIT 1
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ORIENTAL FINANCIAL GROUP INC.
A Puerto Rico Corporation
1,200,000 Shares
of
______% Noncumulative Monthly Income Preferred Stock, Series B
UNDERWRITING AGREEMENT
Dated: ____________, 2003
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TABLE OF CONTENTS
Page
UNDERWRITING AGREEMENT........................................................................................1
SECTION 1. Representations and Warranties.........................................................2
(a) Representations and Warranties by the Company..........................................2
(b) Officer's Certificates................................................................11
SECTION 2. Sale and Delivery to Underwriters; Closing............................................11
(a) Initial Securities....................................................................11
(b) Option Securities.....................................................................12
(c) Payment...............................................................................12
(d) Denominations; Registration...........................................................13
SECTION 3. Covenants of the Company..............................................................13
(a) Compliance with Securities Regulations and Commission Requests........................13
(b) Filing of Amendments..................................................................14
(c) Delivery of Registration Statements...................................................14
(d) Delivery of Prospectuses..............................................................14
(e) Continued Compliance with Securities Laws.............................................14
(f) Blue Sky Qualifications...............................................................15
(g) Rule 158..............................................................................15
(h) Use of Proceeds.......................................................................15
(i) Listing...............................................................................15
(j) Restriction on Sale of Securities.....................................................15
(k) Reporting Requirements................................................................16
(l) Compliance with Undertakings..........................................................16
(m) Additional Information................................................................16
SECTION 4. Payment of Expenses...................................................................16
(a) Expenses..............................................................................16
(b) Termination of Agreement..............................................................16
SECTION 5. Conditions of Underwriters' Obligations...............................................17
(a) Effectiveness of Registration Statement...............................................17
(b) Opinion of Counsel for Company........................................................17
(c) Opinion of Counsel for Underwriters...................................................17
(d) Officers' Certificate.................................................................17
(e) Accountants' Comfort Letter...........................................................18
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(f) Bring-down Comfort Letter.............................................................18
(g) Approval of Listing...................................................................18
(h) No Objection..........................................................................18
(i) Conditions to Purchase of Option Securities...........................................18
(j) Additional Documents..................................................................19
(k) Termination of Agreement..............................................................19
SECTION 6. Indemnification.......................................................................19
(a) (1) Indemnification of Underwriters..................................................19
(b) Indemnification of Company, Directors and Officers by Underwriters....................20
(c) Actions against Parties; Notification.................................................21
(d) Settlement without Consent if Failure to Reimburse....................................21
SECTION 7. Contribution..........................................................................22
SECTION 8. Representations, Warranties and Agreements to Survive Delivery........................23
SECTION 9 Termination of Agreement..............................................................23
(a) Termination; General..................................................................23
(b) Liabilities...........................................................................24
SECTION 10. Default by One or More of the Underwriters............................................24
SECTION 11. Notices...............................................................................25
SECTION 12. Parties...............................................................................25
SECTION 13. GOVERNING LAW AND TIME................................................................25
SECTION 14. Effect of Headings....................................................................25
SECTION 15. Counterparts..........................................................................25
SCHEDULES
Schedule A - List of Underwriters............................................................Sch A-1
Schedule B - Pricing Information.............................................................Sch B-1
EXHIBITS
Exhibit A - List of Subsidiaries...............................................................A-1
Exhibit B - Form of Opinion of XxXxxxxxx Xxxxxx................................................B-1
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ORIENTAL FINANCIAL GROUP INC.
(A Puerto Rico Corporation)
1,200,000 Shares
of
_______% Noncumulative Monthly Income Preferred Stock, Series B
UNDERWRITING AGREEMENT
________________, 2003
Oriental Financial Services Corp.
Santander Securities Corporation,
As Representatives of the several
underwriters named on Schedule A hereto
Xxx Xxxx, Xxxxxx Xxxx 00000
Ladies and Gentlemen:
ORIENTAL FINANCIAL GROUP INC., a Puerto Rico corporation (the
"Company"), confirms its agreement with you (collectively, the "Underwriters",
which term shall also include any underwriter substituted as hereinafter
provided in Section 10 hereof), for whom you are acting as representatives (in
such capacity, the "Representatives"), with respect to the issue and sale by
the Company and the purchase by the Underwriters, acting severally and not
jointly, of the respective numbers of shares of the Company's ______%
Noncumulative Monthly Income Preferred Stock, Series B set forth in Schedule A
hereto, and with respect to the grant by the Company to the Underwriters,
acting severally and not jointly, of the option described in Section 2(b)
hereof to purchase all or any part of 180,000 additional shares of such
preferred stock to cover over-allotments, if any. The aforesaid 1,200,000
shares of preferred stock (the "Initial Securities") to be purchased by the
Underwriters and all or any part of the 180,000 shares of preferred stock
subject to the option described in Section 2(b) hereof (the "Option
Securities") are hereinafter called, collectively, the "Securities".
The Company understands that the Underwriters propose to make a public
offering of the Securities as soon as the Representatives deem advisable after
this Agreement has been executed and delivered.
The Company hereby confirms as follows its agreements with the
Representatives and the several other Underwriters.
SECTION 1. 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.
The Company has filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-3
(No. 333-______) covering the registration of the Securities under the
Securities Act of 1933, as amended (the "1933 Act"), including the
related preliminary prospectus. Promptly after execution and delivery
of this Agreement, the Company will 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. The information included in such prospectus 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 pursuant to paragraph (b) of Rule 430A
is referred to as "Rule 430A Information". Each prospectus used before
such registration statement became effective, and any prospectus that
omitted, as applicable, the Rule 430A 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, the documents
incorporated therein by reference and schedules thereto at the time it
became effective and including the Rule 430A Information 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." For purposes of
this Agreement, all references to the Registration Statement, any
preliminary prospectus, the Prospectus 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
mean and include all such financial statements and schedules and other
information which is incorporated by
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reference in the Registration Statement, 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 the filing of any document under the Securities Exchange
Act of 1934, as amended (the "1934 Act") which is incorporated by
reference in the Registration Statement, such preliminary prospectus
or the Prospectus, as the case may be.
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.
Neither the Prospectus nor any amendments or supplements thereto, at
the time the Prospectus or any such amendment or supplement was issued
and at the Closing 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. The
representations and warranties in this subsection shall not apply to
statements in or omissions from the Registration Statement or
Prospectus made in reliance upon and in conformity with information
furnished to the Company in writing by any Underwriter through the
Representatives 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 of the Commission ("Regulation S-T").
There are no contracts or other documents required to be
filed as exhibits to the Registration Statement by the 1933 Act or the
1933 Act Regulations that have not been so filed.
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The documents which are incorporated by reference in any preliminary
prospectus or the Prospectus or from which information is so
incorporated by reference, when they became effective or were filed
with the Commission, as the case may be, complied in all material
respects with the requirements of the 1933 Act and the 1933 Act
Regulations or the 1934 Act and the rules and regulations thereunder,
as applicable, and did not, when such documents were so filed, contain
any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they
were made, not misleading, and any documents so filed and incorporated
by reference subsequent to the effective date of the Registration
Statement shall, when they are filed with the Commission, conform in
all material respects with the requirements of the 1933 Act and the
1933 Act Regulations and the 1934 Act and the rules and regulations
thereunder, as applicable, and will not contain any untrue statement
of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein,
in light of the circumstances under which they were made, not
misleading.
(ii) Independent Accountants. The accountants who
certified the financial statements and supporting schedules included
in the Registration Statement are independent public accountants with
respect to the Company and its Subsidiaries within the meaning and as
required by the 1933 Act and the 1933 Act Regulations.
(iii) Financial Statements. The consolidated financial
statements of the Company included or incorporated by reference in the
Registration Statement and the Prospectus (or, if the Prospectus is
not in existence, in the most recent preliminary prospectus), together
with the related schedules and notes, present fairly the financial
position of the Company and its Subsidiaries (as defined in Section
1(a)(vi) hereof) at the dates indicated and the consolidated statement
of operations, stockholders' equity and cash flows of the Company and
its Subsidiaries for the periods specified; said financial statements
have been prepared in conformity with accounting principles generally
accepted in the United States of America ("GAAP") applied on a
consistent basis throughout the periods involved. The supporting
schedules, if any, included in the Registration Statement present
fairly in accordance with GAAP the information required to be stated
therein. The selected financial data and the summary financial
information included in the Prospectus present fairly the information
shown and have been compiled on a basis consistent with that of the
audited financial statements included or incorporated by reference in
the Registration Statement.
(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, properties, net worth. business
affairs or business prospects of the Company and its Subsidiaries
considered as a single enterprise, whether or not arising in the
ordinary course of business (a "Material Adverse Effect"), (B) there
have been no transactions entered into by the Company or any of its
Subsidiaries, other than those in the ordinary course of business,
which are
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material with respect to the Company and its Subsidiaries considered
as a single enterprise, and (C) except for regular quarterly dividends
on the Company's Common Stock, par value $1.00 per share (the "Common
Stock") and monthly dividends on the Company's 7.125% Noncumulative
Monthly Income Preferred Stock, Series A, par value $1.00 per share
(the "Series A Preferred Stock"), there has been no dividend or
distribution of any kind declared, paid or made by the Company on any
class of its capital stock.
(v) Good Standing of Company. The Company has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the Commonwealth of Puerto Rico with full corporate
power and authority to own, lease and operate its properties and
conduct its business as described in the Prospectus and to enter into
and perform its obligations under this Agreement; and the Company is
duly qualified to transact business as a foreign corporation and is in
good standing under the laws of each jurisdiction in which the conduct
of its business or ownership or leasing of its properties requires
such qualification and where the failure to be so qualified would,
individually or in the aggregate, have a Material Adverse Effect. The
Company is registered as a bank holding company under the Bank Holding
Company Act of 1956 (the "BHCA") in good standing with the Board of
Governors of the Federal Reserve System (the "Federal Reserve") and
its election to be treated as a financial holding company under the
BHCA, as amended by the Xxxxx-Xxxxx-Xxxxxx Act is and will remain in
full force and effect.
(vi) Subsidiaries. The only subsidiaries of the Company
(each a "Subsidiary and collectively the "Subsidiaries") are those
listed on Exhibit A hereto. Except as set forth in the Prospectus (or
if the Prospectus is not in existence, in the most recent preliminary
prospectus) or as required in connection with the exercise of its
rights as a creditor, or pursuant to a bona fide collateral pledge
arrangement, neither the Company nor any Subsidiary owns, nor at the
Closing Time or the Date of Delivery (if any Option Securities are
purchased), will own an interest in any corporation, partnership,
trust, joint venture or other business entity. Each Subsidiary (other
than Oriental Financial (PR) Statutory Trust I) has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the jurisdiction in which it is chartered or
organized, with full corporate power and authority to own, lease and
operate its properties and conduct its business as described in the
Prospectus, and is duly qualified to transact business as a foreign
corporation and is in good standing under the laws of each
jurisdiction in which the conduct of its business or ownership or
leasing of its properties requires such qualification and where the
failure to be so qualified would, individually or in the aggregate,
have a Material Adverse Effect. Except as otherwise disclosed in the
Registration Statement, all of the issued and outstanding capital
stock of each Subsidiary has been duly authorized and validly issued,
is fully paid and non-assessable and is owned by the Company,
directly or through subsidiaries, free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or equity; none
of the outstanding shares of capital stock of any Subsidiary was
issued in violation of the preemptive or similar rights of any
securityholder of such Subsidiary. Oriental Financial (PR)
Statutory Trust I ("OFG Trust I") has been duly formed and is validly
existing in good standing as a statutory trust under the
5
laws of the State of Connecticut with the power and authority to own
property and to conduct its business as described in the Prospectus.
All filings required as of the date hereof under the laws of the State
of Connecticut with respect to the creation and valid existence of the
OFG Trust I as a statutory trust have been made.
(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, described
therein and the issuance of the Securities pursuant to this
Agreement). The shares of issued and outstanding capital stock of the
Company have been duly authorized and validly issued and are fully
paid and non-assessable; none of the outstanding shares of capital
stock of the Company was issued in violation of the preemptive or
other similar rights of any securityholder of the Company. The
description of the securities of the Company in the Registration
Statement and the Prospectus (or, if the Prospectus is not in
existence, the most recent preliminary prospectus) is, and at the
Closing Time and, if later, as of each Date of Delivery, will be,
complete and accurate in all material respects.
(viii) Authorization of Agreement. This Agreement has been
duly authorized, executed and delivered by the Company.
(ix) Authorization and Description of Common Stock and
Series A Preferred Stock. The description of the Common Stock and the
Series A Preferred Stock of the Company contained in the Prospectus
conforms in all material respects to the rights set forth in the
instruments defining the same.
(x) Authorization and Description of Securities. The
Securities 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 shares of capital stock of the Company; the
description or the Securities contained in the Prospectus conforms in
all material respects to the rights set forth in the instruments
defining the same; no holder of the Securities will be subject to
personal liability solely by reason of being such a holder; and the
issuance of the Securities is not subject to the preemptive or other
similar rights of any security holder of the Company.
(xi) Absence of Defaults and Conflicts. Neither the
Company nor any of its Subsidiaries is in violation of its articles of
incorporation, charter (declaration of trust in the case of OFG Trust
I) or by-laws or in default in the performance or observance of any
obligation, agreement, covenant or condition contained in any
contract, indenture, mortgage, deed of trust, loan or credit
agreement, note, lease or other agreement or instrument to which the
Company or any of its Subsidiaries is a party or by which it or any of
them may be bound, or to which any of the property or assets of the
Company or any Subsidiary is subject (collectively, "Agreements and
6
Instruments") except for such defaults that would not result in a
Material Adverse Effect; and the execution, delivery and performance
of this Agreement and the consummation of the transactions
contemplated herein and in the Registration Statement (including the
issuance and sale of the 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 default or Repayment Event (as defined
below) under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company or
any Subsidiary pursuant to, the Agreements and Instruments (except for
such conflicts, breaches or defaults or liens, charges or encumbrances
that would not result in a Material Adverse Effect), nor will such
action result in any violation of the provisions of the articles of
incorporation, charter (declaration of trust in the case of OFG Trust
I) or by-laws of the Company or any Subsidiary or any applicable law,
statute, rule, regulation, judgment, order, writ or decree of any
government, government instrumentality or court, domestic or foreign,
having jurisdiction over the Company or any Subsidiary or any of their
assets, properties or operations. As used herein, a "Repayment Event"
means any event or condition which gives the holder of any note,
debenture or other evidence of indebtedness (or any person acting on
such holder's behalf) the right to require the repurchase, redemption
or repayment of all or a portion of such indebtedness by the Company
or any Subsidiary.
(xii) 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. Neither the Company nor any Subsidiary is
a party to a collective bargaining agreement.
(xiii) 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
might reasonably be expected to result in a Material Adverse Effect,
or which might reasonably be expected to materially and adversely
affect the properties or assets thereof or the consummation of the
transactions contemplated in this Agreement or the performance by the
Company of its obligations hereunder; the aggregate of all pending
legal or governmental proceedings to which the Company or any
Subsidiary is a party or of which any of their respective property or
assets is the subject which are not described in the Registration
Statement, including ordinary routine litigation incidental to the
business, could not reasonably be expected to result in a Material
Adverse Effect.
(xiv) Accuracy of Exhibits. There are no contracts or
documents which are required to be described in the Registration
Statement or the Prospectus (or if the Prospectus is not in
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existence, in the most recent preliminary prospectus) or to be filed
as exhibits thereto which have not been so described and filed as
required.
(xv) Possession of Intellectual Property. The Company and
its Subsidiaries own or possess, or can acquire on reasonable terms,
adequate patents, patent rights, licenses, inventions, copyrights,
know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or
procedures), trademarks, service marks, trade names or other
intellectual property (collectively, "Intellectual Property")
necessary to carry on the business now operated by them, and neither
the Company nor any of its Subsidiaries has received any actual notice
or is otherwise aware of any infringement of or conflict with asserted
rights of others with respect to any Intellectual Property or of any
facts or circumstances which would render any Intellectual Property
invalid or inadequate to protect the interest of the Company or any of
its Subsidiaries therein, and which infringement or conflict (if the
subject of any unfavorable decision, ruling or finding) or invalidity
or inadequacy, singly or in the aggregate, would result in a Material
Adverse Effect.
(xvi) 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 hereunder or the consummation of the
transactions contemplated by this Agreement, except such as have been
already obtained or as may be required under the 1933 Act or the 1933
Act Regulations, state securities laws or the bylaws and rules of the
National Association of Securities Dealers, Inc. (the "NASD") in
connection with the purchase and distribution by the Underwriters of
the Securities to be sold hereby and the filing by the Company of the
Certificate of Designation and Preferences with respect to the
Securities with the Secretary of State of the Commonwealth of Puerto
Rico ("Puerto Rico").
(xvii) Possession of Licenses and Permits. The Company and
its Subsidiaries possess such permits, licenses, approvals, consents
and other authorizations (collectively, "Governmental Licenses")
issued by the appropriate federal, state, Puerto Rico, local or
foreign regulatory agencies or bodies necessary to conduct the
business now operated by them, except where the lack of such
Governmental Licenses would not, singly or in the aggregate, have a
Material Adverse Effect; the Company and its Subsidiaries are in
compliance with the terms and conditions of all such Governmental
Licenses, except where the failure so to comply would not, singly or
in the aggregate, have a Material Adverse Effect; all of the
Governmental Licenses are valid and in full force and effect, except
when the invalidity of such Governmental Licenses or the failure of
such Governmental Licenses to be in full force and effect would not
have a Material Adverse Effect; and neither the Company nor any of its
Subsidiaries has received any notice of proceedings relating to the
revocation or modification of any such Governmental Licenses which,
singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would result in a Material Adverse Effect.
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(xviii) Title to Property. The Company and its Subsidiaries
have good and marketable title to all real property owned by the
Company and its Subsidiaries and good title to all other properties
and assets owned by them, in each case, free and clear of all
mortgages, pledges, liens, security interests, claims, restrictions or
encumbrances of any kind except such as (a) are described in the
Prospectus or (b) would not, singly or in the aggregate, have a
Material Adverse Effect; and all of the leases and subleases material
to the business of the Company and its Subsidiaries, considered as one
enterprise, and under which the Company or any of its Subsidiaries
holds properties described in the Prospectus, are in full force and
effect, and neither the Company nor any Subsidiary has any notice of
any material claim of any sort that has been asserted by anyone
adverse to the rights of the Company or any Subsidiary under any of
the leases or subleases mentioned above, or affecting or questioning
the rights of the Company or such Subsidiary to the continued
possession of the leased or subleased premises under any such lease or
sublease.
(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) Form S-3. The Company meets the requirements for use
of Form S-3 under the 1933 Act Regulations.
(xxi) Environmental Laws. To the knowledge of the Company,
except as described in the Registration Statement and except as would
not, singly or in the aggregate, result in a Material Adverse Effect,
(A) neither the Company nor any of its Subsidiaries is in violation of
any federal, state, local or foreign statute, law, rule, regulation,
ordinance, code, policy or rule of common law or any judicial or
administrative interpretation thereof, including any judicial or
administrative order, consent, decree or judgment, relating to
pollution or protection of human health, the environment (including,
without limitation, ambient air, surface water, groundwater, land
surface or subsurface strata) or wildlife, including, without
limitation, laws and regulations relating to the release or threatened
release of chemicals, pollutants, contaminants, wastes, toxic
substances, hazardous substances, petroleum or petroleum products
(collectively, "Hazardous Materials") or to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport
or handling of Hazardous Materials (collectively, "Environmental
Laws"), (B) the Company and its Subsidiaries have all permits,
authorizations and approvals required under any applicable
Environmental Laws and are each in compliance with their requirements,
(C) there are no pending or threatened administrative, regulatory or
judicial actions, suits, demands, demand letters, claims, liens,
notices of noncompliance or violation, investigation or proceedings
relating to any Environmental Law against the Company or any of its
Subsidiaries and (D) there are no events or circumstances known to the
Company that might reasonably be expected to form the basis of an
order for clean-up or remediation, or an action, suit or proceeding by
any private party or governmental body or agency,
9
against or affecting the Company or any of its Subsidiaries relating
to Hazardous Materials or any Environmental Laws.
(xxii) Registration Rights. There are no persons with
registration rights or other similar rights to have any securities
included in the offering described in the Registration Statement.
(xxiii) Stop Orders. No court, supervisory or regulatory
authority or arbitrator has, by order or otherwise, prohibited or
suspended, or, to the knowledge of the Company, threatened to prohibit
or suspend, the use of the Prospectus.
(xxiv) Internal Accounting Controls. The Company maintains
a system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in accordance
with management's general or specific authorization, (ii) transactions
are recorded as necessary to permit preparation of financial
statements in conformity with GAAP and to maintain accountability for
assets, (iii) access to assets is permitted only in accordance with
management's general or specific authorization, and (iv) the recorded
accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to
any differences.
(xxv) No Material Changes. Except as set forth in the
Registration Statement and Prospectus (or, if the Prospectus is not in
existence, the most recent preliminary prospectus), subsequent to the
respective dates as of which information is given in the Registration
Statement and the Prospectus and prior to Closing Time and, if later,
each Date of Delivery, (i) there has not been, and will not have been,
any material adverse change in the business, properties, financial
condition, net worth or results of operations of the Company and its
Subsidiaries considered as one enterprise, (ii) neither the Company
nor any of its Subsidiaries has entered into, or will have entered
into any material transactions other than pursuant to this Agreement
or in the ordinary course of its business, and (iii) the Company has
not, and will not have, paid or declared any dividends or other
distributions of any kind on any class of its capital stock, except
for the payment or declaration of quarterly dividends on the Company's
Common Stock and monthly dividends on the Company's Series A Preferred
Stock in the ordinary course of its business.
(xxvi) No Material Misstatements. No statement,
representation, or warranty made by the Company in this Agreement or
made in any certificate or document required by this Agreement to be
delivered to the Representatives was or will be, when made,
inaccurate, untrue or incorrect in any material respect.
(xxvii) No 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 might reasonably be expected in the future, to
cause or result in, under the 1934
10
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.
(xxviii) Approval for Listing. The Securities have been
approved for listing on the New York Stock Exchange, subject only to
notice of issuance.
(xxix) Unlawful Payments. Neither the Company nor any of
its Subsidiaries nor, to the Company's best knowledge, any employee or
agent of the Company or any Subsidiary has made any payment of funds
of the Company or any Subsidiary or received or retained any funds of
the Company or any Subsidiary in violation of any law, rule or
regulation which payment, receipt or retention of funds is of a
character required to be disclosed in the Prospectus (or, if the
Prospectus is not in existence, in the most recent preliminary
prospectus).
(xxx) Taxes. Each of the Company and its Subsidiaries has
filed all foreign, federal, Puerto Rico and local tax returns that are
required to be filed or has requested extensions thereof and has paid
all taxes required to be paid by it and any other assessment, fine or
penalty levied against it, to the extent that any of the foregoing is
due and payable. The Company has derived more than 20% of its gross
income from Puerto Rico sources on an annual basis since its
incorporation in accordance with the applicable sourcing rules under
the Puerto Rico Internal Revenue Code of 1994, as amended.
(xxxi) Oriental Bank. The deposit accounts of Oriental Bank
and Trust, a Subsidiary of the Company (the "Bank"), are insured by
the Federal Deposit Insurance Corporation ("FDIC") to the legal
maximum, and no proceeding for the termination or revocation of such
insurance is pending or threatened. The Bank is a member in good
standing of the Federal Home Loan Bank of New York.
(xxxii) Regulatory Directives. None of the Company or its
Subsidiaries or any of their respective directors or officers is
subject to any order or directive of, or party to any agreement with,
any regulatory agency having jurisdiction with respect to its business
or operations except as disclosed in the Prospectus (or if the
Prospectus is not in existence, in the most recent preliminary
prospectus).
(xxxiii) No Agreements Restricting Payment of Dividends. The
Company is not a party to any agreement or order of any government
entity or court that, as of the date hereof, and assuming no material
adverse change to the Company's financial condition, restricts its
ability to pay dividends on the Securities. The Bank is not a party to
any agreement or order of any government entity or court that, as of
the date hereof, and assuming no material adverse change to the
Company's financial condition, restricts its ability to pay dividends
to the Company sufficient to allow the Company to pay dividends on the
Securities.
11
(b) Officer's Certificates. Any certificate signed by any officer
of the Company or any of its Subsidiaries delivered to the Representatives or
to counsel for the Underwriters shall be deemed a representation and warranty
by the Company to the Underwriter as to the matters covered thereby.
SECTION 2. 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 agrees to sell to each Underwriter, severally and not
jointly, and each Underwriter, severally and not jointly, agrees to purchase
from the Company, at the price per share set forth in Schedule B, 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.
(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 hereby grants an option to the
Underwriters, severally and not jointly, to purchase up to an additional
180,000 shares of the Company's Series B Preferred Stock at the price per share
set forth in Schedule B. 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 setting forth the 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 option is exercised as to all or any portion of the
Option Securities, 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
Xxxxxxxxxxx Xxxxxx & Xxxxxxx LLP, counsel to the Underwriters, 00xx Xxxxx,
Xxxxxxx Xxxxxx Xxxxxxxx, Xxx Xxxx, Xxxxxx Xxxx 00000, or at such other place as
shall be agreed upon by the Representatives and the Company, 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 date) 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 (such time and date of payment and delivery
being herein called "Closing Time"). The Initial Securities to be purchased by
each Underwriter hereunder will be represented by one or more definitive
certificates registered in the name of Cede & Co., which will be deposited by
or on behalf of the Company with The Depository Trust Company ("DTC"), New
York, New York or its designated custodian.
12
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, on each Date of Delivery as specified in the
notice from the Representatives to the Company.
Payment shall be made to the Company by wire transfer of immediately
available funds to a bank account designated by the Company against delivery to
the Representatives for the respective accounts of the Underwriters of
certificates for the Securities to be purchased by them, duly endorsed for
transfer or by causing DTC to credit the Securities to the account of each
Underwriter in the case of the Initial Securities. 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. Each Representative, individually and not as Representatives of the
Underwriters, may (but shall not be obligated to) make payment of the purchase
price for the Initial Securities and 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 definitive form and
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 Representatives in San Xxxx, Puerto Rico
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 at the office
of DTC or its designated custodian.
(e) Appointment of Qualified Independent Underwriter. The Company
hereby confirms its engagement of Santander Securities Corporation ("Santander
Securities"), and Santander Securities hereby confirms its agreement with the
Company to render services, as a "qualified independent underwriter" within the
meaning of Rule 2720 of the Conduct Rules of the NASD with respect to the
offering and sale of the Securities. Santander Securities, solely in its
capacity as qualified independent underwriter and not otherwise, is referred to
herein as the "Independent Underwriter". The sale of the Securities shall be
conducted pursuant to Rule 2720(c) of the Conduct Rules of the NASD because
Oriental Financial Services Corp., a registered broker-dealer and member of the
NASD, is an affiliate of the Company under the Rule 2720 of the Conduct Rules
of the NASD, and is participating as a co-lead managing underwriter for the
Securities. Santander Securities will act as joint lead underwriter and book-
running manager for the Securities.
SECTION 3. Covenants of the Company. The Company covenants with each
Underwriter as follows:
13
(a) Compliance with Securities Regulations and Commission
Requests. The Company, subject to Section 3(b), will comply with the
requirements of Rule 430A, 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 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 it deems
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)) or of any
amendment, supplement or revision to either the prospectus included in the
Registration Statement at the time it became effective or to the Prospectus,
and 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 exhibits filed
therewith or incorporated by reference therein) and signed copies of all
consents and certificates of experts, and will also deliver to the
Representatives, 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 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
14
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.
(f) Blue Sky Qualifications. The Company will use its best
efforts, in cooperation with the Underwriters, to qualify the Securities for
offering and sale under the applicable securities laws of such states and other
jurisdictions as the Representatives may designate and to maintain such
qualifications 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; 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 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 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, but not later than ninety (90) days
after the close of the period covered thereby, an earnings statement (in form
complying with the provisions of Section 11(a) of the 1933 Act and Rule 158 of
the 1933 Act Regulations) covering a twelve-month period beginning not later
than the first day of the Company's fiscal quarter next following the
"effective date" (as defined in said Rule 158) of the Registration Statement.
(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".
15
(i) Listing. The Company will use its best efforts to effect the
listing of the Securities on the New York Stock Exchange.
(j) Restriction on Sale of Securities. During a period of 90 days
from the date of the Prospectus, the Company will not, without the prior
written consent of the Representatives, (i) directly or indirectly, offer,
pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase or otherwise transfer or dispose of any share of the Company's
preferred stock (the "Preferred Stock") or any securities convertible into or
exercisable or exchangeable for Preferred Stock or file any registration
statement under the 1933 Act with respect to any of the foregoing or (ii) enter
into any swap or any other agreement or any transaction that transfers, in
whole or in part, directly or indirectly, the economic consequence of ownership
of the Preferred Stock, whether any such swap or transaction described in
clause (i) or (ii) above is to be settled by delivery of Preferred Stock or
such other securities, in cash or otherwise. The foregoing sentence shall not
apply to the Securities to be sold hereunder.
(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) Compliance with Undertakings. The Company will comply with
all the provisions of all undertakings contained in the Registration Statement.
(m) Additional Information. During a period of five years
commencing on the date the Registration Statement is declared effective by the
Commission, the Company will furnish to the Representatives and each other
Underwriter who may so request copies of such financial statements and other
periodic and special reports as the Company may from time to time distribute
generally to the holders of any class of its capital stock, and will furnish to
the Representatives and each other Underwriter who may so request a copy of
each annual or other report it shall be required to file with the Commission.
SECTION 4. Payment of Expenses. (a) Expenses. The Company will pay, or
reimburse, if paid by the Representatives, all expenses incident to the
performance of its 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 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 under securities laws in accordance with the
provisions of Section 3(f) hereof, including filing fees and the disbursements
16
of counsel for the Underwriters in connection therewith, (vi) the printing and
delivery to the Underwriters of copies of each preliminary prospectus and of
the Prospectus and any amendments or supplements thereto, (vii) the fees and
expenses of any transfer agent or registrar for the Securities, (viii) the
filing fees incident to, and the disbursements of counsel to the Underwriters
in connection with the review by the NASD of the terms of the sale of the
Securities and (ix) the fees and expenses incurred in connection with the
listing of the Securities in the New York Stock Exchange. Except as provided in
Sections 6 and 7 and subparagraph (b) below, the Company will reimburse the
Underwriters for all of their costs and expenses, stock transfer taxes payable
on resale of any of the Securities by them and any advertising expenses
connected with any offers they may make.
(b) Termination of Agreement. If this Agreement is terminated by
the Representatives in accordance with the provisions of Section 5 or Section
9(a)(i) hereof, the Company shall reimburse the Underwriters for all of their
out-of-pocket expenses, including the reasonable fees and disbursements of
counsel for the Underwriters.
SECTION 5. Conditions of Underwriters' Obligations. The obligations of
the several Underwriters hereunder are subject to the accuracy of the
representations and warranties of the Company contained in Section 1 hereof or
in certificates of any officer of the Company or any Subsidiary of the Company
delivered pursuant to the provisions hereof, to the performance by the Company
of its 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, has become
effective and at Closing Time no stop order suspending the effectiveness of the
Registration Statement shall have been issued under the 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).
(b) Opinion of Counsel for Company. At Closing Time, the
Representatives shall have received the favorable opinion, dated as of Closing
Time, of XxXxxxxxx Xxxxxx, counsel for the Company, in form and substance
satisfactory to counsel for the Underwriters, together with signed or
reproduced copies of such letter for each of the other Underwriters, to the
effect set forth in Exhibit B hereto and to such further effect as counsel to
the Underwriters may reasonably request. Such counsel may state that, insofar
as such opinions involve factual matters, they have relied, to the extent they
deem proper, upon certificates of officers of the Company and its Subsidiaries
and certificates of public officials.
(c) Opinion of Counsel for Underwriters. At Closing Time, the
Representatives shall have received the favorable opinion, dated as of Closing
Time of Xxxxxxxxxxx Xxxxxx & Xxxxxxx LLP, counsel for the Underwriters,
together with signed or reproduced copies of such letter for each of the other
17
Underwriters with respect to the issuance and sale to the Securities and other
related matters as the Underwriters may reasonably require. Such counsel may
also state that, insofar as such opinion involves factual matters, they have
relied, to the extent they deem proper, upon certificates of officers of the
Company and its Subsidiaries and certificates of public officials.
(d) Officers' Certificate. At 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 or chief accounting officer
of the Company, dated as of Closing Time, to the effect that (i) there has been
no Material Adverse Effect, (ii) the representations and warranties in Section
1(a) hereof are true and correct with the same force and effect as though
expressly made at and as of 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 Closing Time, and (iv) no stop order or similar
proceeding suspending the effectiveness of the Registration Statement has been
issued and no proceedings for that purpose have been instituted or are pending
or, to such officers' best knowledge, are contemplated by the Commission.
(e) Accountants' Comfort Letter. At the time of the execution of
this Agreement, the Representatives shall have received from Deloitte & Touche
LLP a letter dated such date, in form and substance satisfactory to the
Representatives, together with signed or reproduced copies of such letter for
each of the 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 contained
in the Registration Statement and the Prospectus.
(f) Bring-down Comfort Letter. At Closing Time, the
Representatives shall have received from Deloitte & Touche LLP a letter, dated
as of Closing Time, to the effect that they reaffirm the statements made in the
letter furnished pursuant to subsection (e) of this Section, except that the
specified date referred to shall be a date not more than five business days
prior to Closing Time.
(g) Approval of Listing. At Closing Time, the Securities shall
have been approved for listing on the New York Stock Exchange, subject only to
official notice of issuance.
(h) 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.
(i) 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 contained herein and the statements in any
certificates
18
furnished by the Company or any Subsidiary of the Company hereunder shall be
true and correct as of each Date of Delivery and, at the relevant Date of
Delivery, the Representatives shall have received:
Officers' Certificate. A certificate, dated such Date of
Delivery, of the President or a Vice President of the Company and of
the chief financial or chief accounting officer of the Company
confirming that the certificate delivered at Closing Time pursuant to
Section 5(d) hereof remains true and correct as of such Date of
Delivery.
Opinion of Counsel for the Company. The favorable opinion of
XxXxxxxxx Xxxxxx, 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 opinion required by Section 5(b) hereof.
Opinion of Counsel for Underwriters. The favorable opinion of
Xxxxxxxxxxx Xxxxxx & Xxxxxxx LLP, 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(c) hereof.
Bring-down Comfort Letter. A letter from Deloitte & Touche
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 furnished to the Representatives pursuant to
Section 5(e) 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.
(j) Additional Documents. At 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 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.
(k) 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 condition to the purchase of Option
Securities on a Date of Delivery which is after 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 Closing Time, 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, 6, 7 and 8 shall survive any such termination and remain in full
force and effect.
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SECTION 6. Indemnification.
(a) (1) Indemnification of Underwriters. The Company agrees
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 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, 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 omission, or any such alleged untrue statement or
omission; provided that (subject to Section 6(d) below) any such
settlement is effected with the written consent of the Company; and
(iii) against any and all expense whatsoever, as incurred
(including the fees and disbursements of counsel chosen by the
Representatives), reasonably 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, to the extent that any
such expense is not paid under (i) or (ii) 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 the Representatives expressly for use in the Registration
Statement (or any amendment thereto), including the Rule 430A Information, or
any preliminary prospectus or the Prospectus (or any amendment or supplement
thereto).
(2) In addition to and without limitation of the
Company's obligation to indemnify Santander Securities, as an Underwriter, the
Company also agrees to indemnify and hold harmless the Independent Underwriter
and each person, if any, who controls the Independent Underwriter within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act from and
against any and all loss,
20
liability, claim, damage, and expense whatsoever, as incurred, incurred as a
result of the Independent Underwriter's participation as a "qualified
independent underwriter" within the meaning of Rule 2720 of the Conduct Rules
of the NASD in connection with the offering of the Securities.
(b) Indemnification of Company, Directors and Officers by Underwriters.
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 against any and all loss,
liability, claim, damage and expense described in the indemnity contained in
subsection (a)(1) 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, 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 the
Representatives expressly for use in the Registration Statement (or any
amendment thereto) or such preliminary prospectus or the Prospectus (or any
amendment or supplement thereto). The Company acknowledges that, for all
purposes of this Agreement, the amounts of the underwriting discount, selling
concession and reallowance and the statement about the role and due diligence
investigations of Santander Securities as "qualified independent underwriter"
set forth under the heading "Underwriting" contained in the Prospectus
constitute the only information relating to any Underwriter furnished in writing
to the Company expressly for inclusion in the preliminary prospectus, the
Registration Statement (or any amendment thereto) or the Prospectus (or any
amendment or supplement thereto).
(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
Sections 6(a)(1) above, counsel to the indemnified parties shall be selected by
the Representatives, 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; provided, that, if indemnity is sought pursuant to Section
6(a)(2), then, in addition to the fees and expenses of such counsel for the
indemnified parties, the indemnifying party shall be liable for the reasonable
fees and expenses of not more than one counsel (in addition to any local
counsel) separate from its own counsel and that of the other indemnified
parties for the Independent Underwriter in its capacity as a "qualified
independent underwriter" and all persons, if any, who control the Independent
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
1934 Act in connection with any one action or separate but
21
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances if, in the reasonable judgment of the
Independent Underwriter, there may exist a conflict of interest between the
Independent Underwriter and the other indemnified parties. Any such separate
counsel for the Independent Underwriter and such control persons of the
Independent Underwriter shall be designated in writing by the Independent
Underwriter. 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, such
indemnifying party agrees that it shall be liable for any settlement of the
nature contemplated by Sections 6(a)(1)(ii) 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.
SECTION 7. 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 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 7(i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause 7(i) above but also the relative fault of the Company on the one
hand and of the Underwriters on the other hand in connection with the
statements or omissions 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 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 total underwriting discount received by the Underwriters,
in each case as set forth on the cover of the Prospectus, bear to the aggregate
initial public offering price of the Securities as set forth on such cover.
22
The relative fault of the Company 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 or by the Underwriters and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
The Company and the Underwriters agree that Santander Securities will
not receive any additional benefits hereunder for serving as the Independent
Underwriter in connection with the offering and sale of the Securities.
The Company 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, subject to the limitations set forth above, 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 which such
Underwriter has otherwise been required to pay by reason of 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 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 shall have the same rights to contribution as the Company. The
Underwriters' respective obligations to contribute pursuant to this Section 7
are several in proportion to the number of Securities set forth opposite their
respective names in Schedule A hereto and not joint.
SECTION 8. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement or in certificates of officers of the Company and its Subsidiaries
submitted pursuant hereto, shall remain operative and in full force and effect,
23
regardless of any investigation made by or on behalf of any Underwriter or
controlling person, or by or on behalf of the Company and shall survive
delivery of the Securities to the Underwriters.
SECTION 9. Termination of Agreement.
(a) Termination; General. The Representatives may terminate this
Agreement, by notice to the Company, at any time at or prior to Closing Time
(and with respect to Option Securities, any applicable Date of Delivery) (i) if
there has been, since the time of execution of this Agreement 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, 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 of hostilities or escalation thereof or other
calamity or crisis or any change or development involving a prospective change
in national or international political, financial or economic conditions, in
each case the effect of which is such as to make it, in the judgment of the
Representatives, impracticable to market the Securities or to enforce contracts
for the sale of the Securities, or (iii) if trading in any securities of the
Company has been suspended or materially limited by the Commission or the New
York Stock Exchange, 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 by such system or by the order of the Commission, the NASD or any
other governmental authority or (iv) if a banking moratorium has been declared
by Federal, New York or Puerto Rican 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, 6, 7 and 8 shall survive such termination and remain
in full force and effect.
SECTION 10. Default by One or More of the Underwriters. If one or more
of the Underwriters shall fail or refuse at Closing Time or at 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, 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:
(a) if the number of Defaulted Securities does not exceed 10% of
the number of Securities to be purchased on such date, each of the
non-defaulting Underwriters shall be obligated, severally and not jointly, to
purchase the full amount thereof in the proportions that their respective
underwriting obligations hereunder bear to the underwriting obligations of all
non-defaulting Underwriters, or
24
(b) if the number of Defaulted Securities exceeds 10% of the
number of Securities to be purchased on such date and arrangements satisfactory
to the remaining Underwriters and the Company for the purchase of such shares
are not made within 36 hours of such default, this Agreement, or with respect
to any Date of Delivery which occurs after the Closing Time, the obligation of
the Underwriters to purchase and of the Company to sell the Option Securities
to be purchased and sold on such Date of Delivery, shall terminate without
liability on the part of any non-defaulting Underwriter or the Company.
In the event of any such default which does not result in a
termination of this Agreement or, in the case of a Date of Delivery which is
after the Closing Time, which does not result in a termination of the
obligation of the Underwriters to purchase and the Company to sell the relevant
Option Securities, as the case may be, either the Representatives or the
Company shall have the right to postpone Closing Time or the relevant Date of
Delivery, as the case may be, 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 arrangements. As used herein, the term "Underwriter"
includes any person substituted for an Underwriter under this Section 10.
No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of its default.
SECTION 11. 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 the Representatives at Santander Securities
Corporation, Torre Santander, 221 Xxxxx de Xxxx Avenue, Suite 600, San Xxxx,
Puerto Rico, 00917-1825, Attention: Director of Investment Banking, and to
Oriental Financial Services Corp., Professional Offices Park SE, 4th Floor,
Marginal San Xxxxxxx 0000, Xxxxxxxxxx Xxxx, Xxx Xxxx, Xxxxxx Xxxx 00000,
Attention: Managing Director-Investment Banking; and notices to the Company
shall be directed to the Company at Professional Offices Park SE, 4th Floor,
Marginal San Xxxxxxx 1000, Monacillos Xxxx, San Xxxx, Puerto Rico, Puerto Rico
00926, Attention: President.
SECTION 12. Parties. This Agreement shall inure to the benefit of and
be binding upon the Underwriters, the Company 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
and the Company 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 and the Company 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.
25
SECTION 13. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF PUERTO RICO. EXCEPT AS
OTHERWISE SET FORTH HEREIN, SPECIFIED TIMES OF DAY REFER TO PUERTO RICO TIME.
SECTION 14. 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.
SECTION 15. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof,
whereupon this instrument, along with all counterparts, will become a binding
agreement among the Underwriters and the Company in accordance with its terms.
Very truly yours,
ORIENTAL FINANCIAL GROUP INC.
By:
------------------------------------
Name: Xxxx Xxxxxxx Xxxxxxxxx
Title: Chairman of the Board, President
and Chief Executive Officer
CONFIRMED AND ACCEPTED,
as of the date first above
written:
SANTANDER SECURITIES CORPORATION
By:
--------------------------------
Name:
Title:
ORIENTAL FINANCIAL SERVICES CORP.
By:
--------------------------------
Name:
Title:
For themselves and as Representatives of the other Underwriters named
in Schedule A hereto.
26
SCHEDULE A
UNDERWRITERS NUMBER OF
SECURITIES
Oriental Financial Services Corp.............................................................
Santander Securities Corporation.............................................................
Popular Securities, Inc......................................................................
R-G Investments Corporation..................................................................
Total...................................................................... 1,200,000
=========
SCHEDULE B
ORIENTAL FINANCIAL GROUP INC.
1,200,000 Shares
_____% Noncumulative Monthly Income Preferred Stock,
Series B
1. The initial public offering price per share for the
Securities shall be $25.00.
2. The purchase price per share for the Securities to be paid by
the several Underwriters shall be $24.15, being an amount equal to the initial
public offering price set forth above less $0.85 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.
3. The dividend rate on the Securities will be ____% per annum
of their liquidation preference.
4. The Securities will be subject to redemption at the option of
the Company commencing on ___________, at declining prices, as described in the
Prospectus.
EXHIBIT A
LIST OF SUBSIDIARIES
1. Oriental Bank and Trust
2. Oriental Financial Services Corp.
3. Oriental Insurance, Inc.
4. Oriental Financial (PR) Statutory Trust I
5. Oriental Mortgage Corporation
6. Caribbean Pension Consultants, Inc.
A-1
EXHIBIT B
FORM OF OPINION OF
XXXXXXXXX XXXXXX,
AS COMPANY COUNSEL
TO BE DELIVERED PURSUANT TO
SECTION 5(C)
(i) The Company has been duly incorporated and is
validly existing as a corporation in good standing under the laws of
the Commonwealth of Puerto Rico, and has corporate power and authority
to own, lease and operate its properties and to conduct its business
as described in the Prospectus.
(ii) Each of the Subsidiaries (other that Oriental
Financial (PR) Statutory Trust I and Caribbean Pension Consultants,
Inc.) has been duly incorporated and is validly existing as a
corporation (and in the case of the Bank as a commercial bank) in good
standing under the laws of the Commonwealth of Puerto Rico, and has
corporate power and authority to own, lease and operate its properties
and to conduct its business as described in the Prospectus.
(iii) The Company is registered as a bank holding company
under the Bank Holding Company Act of 1956.
(iv) The Company has corporate power and authority to
own, lease and operate its properties and to conduct its business as
described in the Prospectus.
(v) The Company is duly qualified as a foreign
corporation to transact business in each jurisdiction in which such
qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business, except where the
failure so to qualify would not result in a Material Adverse Effect.
(vi) 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 the Underwriting Agreement
or 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
B-1
capital stock of the Company have been duly authorized and validly
issued and are fully paid and non-assessable; and none of the
outstanding shares of capital stock of the Company was issued in
violation of the preemptive or other similar rights of any security
holder of the Company.
(vii) The Securities have been duly authorized for
issuance and sale to the Underwriters pursuant to the Underwriting
Agreement and, when issued and delivered by the Company pursuant to
the Underwriting Agreement against payment of the consideration set
forth in the Underwriting Agreement, will be validly issued and fully
paid and non-assessable; no holder of the Securities is or will be
subject to personal liability for obligations of the Company solely by
reason of being such a holder; the Securities conform to the
provisions of the certificate of designation of the Company creating
the Securities (the "Certificate of Designation") and the rights,
preferences and other terms of the Securities are as set forth in the
Certificate of Designation relating thereto, and all such provisions
are valid under the laws of the Commonwealth of Puerto Rico.
(viii) The issuance of the Securities is not subject to the
preemptive or other similar rights of any security holder of the
Company.
(ix) Each Subsidiary has been duly incorporated and
is validly existing as a corporation (and in the case of the Bank, as
a commercial bank) in good standing under the laws of the Commonwealth
of Puerto Rico (other than Oriental Financial (PR) Statutory Trust I
and Caribbean Pension Consultants, Inc., which have been organized in
Connecticut and Florida, respectively) has corporate power and
authority to own, lease and operate its properties and to conduct its
business as described in the Prospectus, and each Subsidiary is duly
qualified as a foreign corporation to transact business in each
jurisdiction in which such qualification is required, whether by
reason of the ownership or leasing of property or the conduct of
business, except where the failure so to qualify would not result in a
Material Adverse Effect; except as otherwise disclosed in the
Registration Statement, has been duly authorized and validly issued,
is fully paid and non-assessable and, to the best of our knowledge, is
owned by the Company, directly or through a Subsidiary, free and clear
of any security interest, mortgage, pledge, lien, encumbrance, claim
or equity; and none of the outstanding shares of capital stock of any
Subsidiary was issued in violation of the preemptive or similar rights
of any security holder of any Subsidiary.
(x) The Company has full legal right, power, and
authority to enter into the Underwriting Agreement and to consummate
the transactions provided for therein. The Underwriting Agreement has
been duly authorized, executed and delivered by the Company, and
assuming due authorization, execution and delivery by each other party
thereto, is a valid and binding agreement of the Company, except as
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other laws now or hereafter in effect relating to or
affecting creditors' rights generally or by general principles of
equity relating to the availability of remedies and except as rights
to indemnity and contribution may be limited by federal, state or
Puerto Rico securities laws or the public policy underlying such laws.
B-2
(xi) The Registration Statement has been declared
effective under the 1933 Act; any required filing of the Prospectus
pursuant to Rule 424(b) has been made in the manner and within the
time period required by Rule 424(b); and, to the best of our
knowledge, no stop order suspending the effectiveness of the
Registration Statement, or any amendment thereto and no order directed
at any document incorporated by reference in the Registration
Statement has been issued under the 1933 Act and no proceedings for
that purpose have been instituted or are pending or threatened by the
Commission.
(xii) The Registration Statement, the Rule 430A
Information, the Prospectus and each amendment or supplement to the
Registration Statement and Prospectus, and the documents incorporated
therein by reference, as of their respective filing, effective or
issue dates, as the case may be (other than the financial statements,
notes to the financial statements, financial tables and other
financial information and supporting schedules included therein or
omitted therefrom or contained in the documents incorporated by
reference therein, as to which we need express no opinion), complied
as to form in all material respects with the requirements of the 1933
Act and the 1933 Act Regulations and, in the case of the documents
incorporated by reference, the 1934 Act and the rules and regulations
of the Commission thereunder.
(xiii) The form of certificate used to evidence the
Securities complies in all material respects with all applicable
Commonwealth of Puerto Rico statutory requirements, with any
applicable requirements of the Certificate of Incorporation and
By-laws of the Company and the requirements of the New York Stock
Exchange. The Securities have been duly authorized for listing on the
New York Stock Exchange.
(xiv) To the best of our knowledge, there is not pending
or threatened any action, suit, proceeding, inquiry or investigation,
to which the Company or any Subsidiary is a party, or to which the
property or assets of the Company or any Subsidiary is subject, before
or brought by any court or governmental agency or body, domestic or
foreign, of a character required to be disclosed in the Registration
Statement or the Prospectus which is not so disclosed therein, which
might reasonably be expected to result in a Material Adverse Effect,
or which might reasonably be expected to materially and adversely
affect the properties or assets thereof or the consummation of the
transactions contemplated in the Underwriting Agreement or the
performance by the Company of its obligations thereunder.
(xv) The information in the Prospectus under "Risk
Factors--Dividends Will Not be Paid Unless Declared by the Board of
Directors," "Risk Factors--Banking Regulations May Restrict Oriental
Financial Group's Ability to Pay Dividends," "Summary of Certain Terms
of the Series B Preferred Stock," "Description of Capital Stock,"
"Taxation--Puerto Rico Taxation," "Taxation--United States Taxation"
and in the Registration Statement under Item 15, to the extent that it
constitutes a discussion of federal or Puerto Rico law, summaries of
legal matters involving federal or Puerto Rico law, the Company's
Certificate of Incorporation and By-laws or legal
B-3
proceedings, or legal conclusions, has been reviewed by us and is
accurate and complete in all material respects; and our opinion set
forth under "Taxation" is confirmed. The Securities conform as to
legal matters in all material respects to the descriptions thereof in
the Prospectus.
(xvi) To the best of our knowledge, there are no statutes
or regulations that are required to be described in the Prospectus
that are not described as required.
(xvii) All descriptions in the Registration Statement of
contracts and other documents to which the Company or its Subsidiaries
are a party are accurate in all material respects; to the best of our
knowledge, there are no franchises, contracts, indentures, mortgages,
loan agreements, notes, leases or other instruments required to be
described or referred to in the Registration Statement or to be filed
as exhibits thereto other than those described or referred to therein
or filed or incorporated by reference as exhibits thereto, and the
descriptions thereof or references thereto are correct in all material
respects.
(xviii) To the best of our knowledge, neither the Company nor
any Subsidiary is in violation of its articles of incorporation,
charter or by-laws and no default by the Company or any Subsidiary
exists in the due performance or observance of any material obligation,
agreement, covenant or condition contained in any contract, indenture,
mortgage, loan agreement, note, lease or other agreement or instrument
that is described or referred to in the Registration Statement or the
Prospectus or filed or incorporated by reference as an exhibit to the
Registration Statement.
(xix) No filing with, or authorization, approval, consent,
license, order, registration, qualification or decree of, any court or
governmental authority or agency, domestic or foreign (other than
under the 1933 Act and the 1933 Act Regulations, which have been
obtained, the filing of the Certificate of Designation with the Puerto
Rico Department of State which has been made, or as may be required
under the securities or blue sky laws of the various states, as to
which blue sky laws we express no opinion) is necessary or required in
connection with the due authorization, execution and delivery of the
Underwriting Agreement or for the offering, issuance, sale or delivery
of the Securities.
(xx) The execution, delivery and performance of the
Underwriting Agreement and the consummation of the transactions
contemplated in the Underwriting Agreement 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 under the Underwriting Agreement do
not and will not, whether with or without the giving of notice or
lapse of time or both, conflict with or constitute a breach of, or
default or Repayment Event (as defined in Section 1(a)(xi) of the
Underwriting Agreement) under or result in the creation or imposition
of any lien, charge or encumbrance upon any property or assets of the
Company or any Subsidiary pursuant to any contract, indenture,
mortgage, deed of trust, loan or credit agreement, note, lease or any
other
B-4
agreement or instrument, known to us, to which the Company or any
Subsidiary is a party or by which it or any of them may be bound, or to
which any of the property or assets of the Company or any Subsidiary is
subject (except for such conflicts, breaches or defaults or liens,
charges or encumbrances that would not have a Material Adverse Effect),
nor will such action result in any violation of the provisions of the
articles of incorporation, charter or by-laws of the Company or any
Subsidiary, or any applicable law, statute, rule, regulation, judgment,
order, writ or decree, known to us, of any government, government
instrumentality or court, domestic or foreign, having jurisdiction over
the Company or any Subsidiary or any of their respective properties,
assets or operations.
(xxi) To the best of our knowledge, there are no persons
with registration rights or other similar rights to have any
securities registered pursuant to the Registration Statement or
otherwise registered by the Company under the 0000 Xxx.
(xxii) The Company is not, and upon the issuance and sale
of the Securities as contemplated in the Underwriting Agreement and
the application of the net proceeds therefrom as described in the
Prospectus will not be, an "investment company" or an entity
"controlled" by an "investment company," as such terms are defined in
the 1940 Act.
(xxiii) The deposit accounts of the Bank are insured by the
FDIC to the legal maximum, and to the best of our knowledge, no
proceeding for the termination or revocation of such insurance is
pending or threatened. The Bank is a member of the Federal Home Loan
Bank of New York.
(xxiv) To the best of our knowledge, none of the Company,
its Subsidiaries, or any of their respective directors or officers is
subject to any order or directive of, or is a party to any agreement
with, any federal or Puerto Rico securities, banking or mortgage
banking regulatory agency having jurisdiction with respect to the
business or operations of the Company or the Subsidiaries except as
disclosed in the Registration Statement or the Prospectus and except
for any such order, directive or agreement which would not have a
Material Adverse Effect.
(xxv) To the best of our knowledge, the conduct of the
respective businesses of the Company and its Subsidiaries is not in
violation of any federal or Puerto Rico banking, mortgage banking or
securities law, which violation is likely to have a Material Adverse
Effect. Each of the Company and the Subsidiaries has obtained and, to
our knowledge, is operating in compliance with, all authorizations,
licenses, orders and directives required by federal and Puerto Rico
banking, mortgage banking or securities laws which are material to the
conduct of their respective businesses. To our knowledge, all such
authorizations, licenses, orders or directives are valid and in full
force and effect and neither the Company nor the Subsidiaries have
received any notice of any proceeding relating to the revocation or
modification of any such license, authorization or order.
B-5
Nothing has come to our attention that would lead us to believe that
the Registration Statement or any amendment thereto, including the documents
incorporated therein by reference and the Rule 430A Information (except for
financial statements, notes to the financial statements, financial tables and
other financial information and schedules and other financial data included
therein or omitted therefrom or contained in the documents incorporated therein
by reference, as to which we need make no statement), at the time such
Registration Statement or any such amendment became effective, contained an
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading or that the Prospectus or any amendment or supplement thereto
(except for financial statements, notes to the financial statements, financial
tables and other financial information and schedules and other financial data
included therein or omitted therefrom or contained in the documents therein
incorporated by reference, as to which we need make no statement), at the time
the Prospectus was issued, at the time any such amended or supplemented
prospectus was issued or at the Closing Time, included or includes an untrue
statement of a material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
In rendering such opinion, such counsel may rely as to matters of fact
(but not as to legal conclusions), to the extent they deem proper, on
certificates of responsible officers of the Company and public officials. Such
opinion shall not state that it is to be governed or qualified by, or that it
is otherwise subject to, any treatise, written policy or other document
relating to legal opinions, including, without limitation, the Legal Opinion
Accord of the ABA Section of Business Law (1991).
B-6
