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R&G FINANCIAL CORPORATION
A Puerto Rico Corporation
2,000,000 Shares
of
____% Noncumulative Perpetual Monthly Income Preferred Stock, Series B
($25 liquidation preference per share)
UNDERWRITING AGREEMENT
Dated: November __, 1999
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TABLE OF CONTENTS
Page
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UNDERWRITING AGREEMENT............................................................................................2
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..............................................................................11
(c) PAYMENT........................................................................................12
(d) DENOMINATIONS; REGISTRATION....................................................................12
SECTION 3. COVENANTS OF THE COMPANY....................................................................12
(a) COMPLIANCE WITH SECURITIES REGULATIONS AND COMMISSION REQUESTS.................................13
(b) FILING OF AMENDMENTS...........................................................................13
(c) DELIVERY OF REGISTRATION STATEMENTS............................................................13
(d) DELIVERY OF PROSPECTUSES.......................................................................13
(e) CONTINUED COMPLIANCE WITH SECURITIES LAWS......................................................14
(f) BLUE SKY QUALIFICATIONS........................................................................14
(g) RULE 158.......................................................................................14
(h) USE OF PROCEEDS................................................................................15
(i) LISTING........................................................................................15
(j) RESTRICTION ON SALE OF SECURITIES..............................................................15
(k) REPORTING REQUIREMENTS.........................................................................15
(l) COMPLIANCE WITH UNDERTAKINGS...................................................................15
(m) ADDITIONAL INFORMATION.........................................................................15
SECTION 4. PAYMENT OF EXPENSES.........................................................................16
(a) EXPENSES.......................................................................................16
(b) TERMINATION OF AGREEMENT.......................................................................16
SECTION 5. CONDITIONS OF UNDERWRITERS' OBLIGATIONS.....................................................16
(a) EFFECTIVENESS OF REGISTRATION STATEMENT........................................................16
(b) OPINION OF COUNSEL FOR COMPANY.................................................................17
(c) OPINION OF COUNSEL FOR UNDERWRITERS............................................................17
(d) OFFICERS' CERTIFICATE..........................................................................17
(e) ACCOUNTANT'S COMFORT LETTER....................................................................17
(f) BRING-DOWN COMFORT LETTER......................................................................18
(g) APPROVAL OF LISTING............................................................................18
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(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) INDEMNIFICATION OF UNDERWRITERS................................................................19
(b) INDEMNIFICATION OF COMPANY, DIRECTORS AND OFFICERS.............................................20
(c) ACTIONS AGAINST PARTIES; NOTIFICATION..........................................................20
(d) SETTLEMENT WITHOUT CONSENT IF FAILURE TO REIMBURSE.............................................21
SECTION 7. CONTRIBUTION...............................................................................21
SECTION 8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE DELIVERY.............................22
SECTION 9 TERMINATION OF AGREEMENT...................................................................23
(a) TERMINATION; GENERAL...........................................................................23
(b) LIABILITIES....................................................................................23
SECTION 10. DEFAULT BY ONE OR MORE OF THE UNDERWRITERS.................................................23
SECTION 11. NOTICES....................................................................................24
SECTION 12. PARTIES....................................................................................24
SECTION 13. GOVERNING LAW AND TIME.....................................................................25
SECTION 14. EFFECT OF HEADINGS.........................................................................25
SECTION 15. COUNTERPARTS...............................................................................25
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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 Elias, Matz, Xxxxxxx & Xxxxxxx L.L.P..............B-1
Exhibit C - Form of Opinion of XxXxxxxxx Xxxxxx, Puerto Rico
counsel to the Company...............................................C-1
R&G FINANCIAL CORPORATION
(A Puerto Rico Corporation)
2,000,000 Shares
of
___% Noncumulative Perpetual Monthly Income Preferred Stock, Series B
($25 liquidation preference per share)
UNDERWRITING AGREEMENT
November __, 1999
Santander Securities Corporation
of Puerto Rico
Friedman, Billings, Xxxxxx & Co., Inc.
as Representatives of the Several Underwriters
c/o Santander Securities Corporation of Puerto Rico
Torre Santander
221 Xxxxxxx Xxxxx xx Xxxx, Xxxxx 000
Xxx Xxxx, Xxxxxx Xxxx 00000-0000
Ladies and Gentlemen:
R&G FINANCIAL CORPORATION, a Puerto Rico corporation (the
"Company"), confirms its agreement with Santander Securities Corporation of
Puerto Rico ("Santander Securities"), Friedman, Billings, Xxxxxx & Co., Inc.
("FBR") and each of the other Underwriters named in Schedule A hereto
(collectively, the "Underwriters", which term shall also include any
underwriter substituted as hereinafter provided in Section 10 hereof), for
whom Santander Securities and FBR 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 Perpetual Monthly Income Preferred Stock, Series B ($25
liquidation preference per share) set forth in said Schedule B, 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 200,000 additional shares of such preferred stock to cover
over-allotments, if any. The aforesaid 2,000,000 shares of preferred stock
(the "Initial Securities") to be purchased by the Underwriters and all or any
part of the 200,000
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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 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 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 (the "1934 Act") which is
incorporated by reference in the Registration Statement, such preliminary
prospectus or the Prospectus, as the case may be.
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. 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.
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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. 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 (as herein
defined) 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.
(ii) INDEPENDENT ACCOUNTANTS. The accountants who certified
the financial statements and supporting schedules included in the
Registration Statement are independent public accountants 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 generally accepted accounting
principles ("GAAP") applied on a consistent basis throughout the
periods involved. The supporting schedules, if any, included in the
Registration Statement present fairly in accordance with GAAP the
information required to be stated therein. The selected financial data
and the summary financial information included in the Prospectus
present fairly the information shown and have been compiled on
a basis consistent with that of the audited financial statements
included or incorporated by reference in the Registration Statement.
(iv) NO MATERIAL ADVERSE CHANGE IN BUSINESS. Since the
respective dates as of which information is given in the Registration
Statement and the Prospectus, except as otherwise stated therein, (A)
there has been no material adverse change in the condition, financial
or otherwise, or in the earnings, business affairs or business
prospects of the Company and its Subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business
(a "Material Adverse Effect"), (B) there have been no transactions
entered into by the Company or any of its subsidiaries, other than
those in the ordinary course of business, which are material with
respect to the Company and its subsidiaries considered as one
enterprise, and (C) except for regular quarterly dividends on
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the Company's Class A Common Stock, par value $.01 per share (the
"Class A Common Stock"), for regular quarterly dividends on the
Company's Class B Common Stock, par value $.01 per share (the
"Class B Common Stock"; and collectively with the Class A Common
Stock, the "Common Stock") and for the regular monthly dividends on
the Company's Series A Preferred Stock, since December 31, 1998,
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").
(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 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.
5
(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. The
description of the Common Stock of the Company contained in the
Prospectus conforms in all material respects to the rights set forth in
the instruments defining the same.
(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 or by-laws or in default in the performance or
observance of any obligation, agreement, covenant or condition
contained in any contract, indenture, mortgage, deed of trust, loan
or credit agreement, note, lease or other agreement or instrument to
which the Company or any of its Subsidiaries is a party or by which
it or any of them may be bound, or to which any of the property or
assets of the Company or any Subsidiary is subject (collectively,
"Agreements and Instruments") except for such defaults that would not
result in a Material Adverse Effect; and the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated herein and in the Registration Statement (including the
issuance and sale of the 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
6
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
charter or by-laws of the Company or any Subsidiary or any applicable
law, statute, rule, regulation, judgment, order, writ or decree of
any government, government instrumentality or court, domestic or
foreign, having jurisdiction over the Company or any Subsidiary or
any of their assets, properties or operations. As used herein, a
"Repayment Event" means any event or condition which gives the holder
of any note, debenture or other evidence of indebtedness (or any person
acting on such holder's behalf) the right to require the repurchase,
redemption or repayment of all or a portion of such indebtedness by the
Company or any Subsidiary.
(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 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
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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 of the Certificate of
Designation and Preferences with respect to the Securities with the
Secretary of State of the Commonwealth of 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, 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.
(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
8
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, 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.
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(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 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 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.
(xxviiii) APPROVAL FOR LISTING. The Securities have been
approved for quotation on the Nasdaq National Market, 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
10
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.
(xxxi) R-G PREMIER. The deposit accounts of R-G Premier Bank
of Puerto Rico, 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).
(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
300,000 shares of the Company's ____% Noncumulative Perpetual Monthly Income
Preferred Stock, Series B ($25 liquidation preference per share) at the price
per share set forth in Schedule B. The
11
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, Xxxxx 0000,
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") or its
designated custodian.
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. The Representatives, 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
12
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.
SECTION 3. COVENANTS OF THE COMPANY. The Company covenants with each
Underwriter as follows:
(a) COMPLIANCE WITH SECURITIES REGULATIONS AND COMMISSION
REQUESTS. The Company, subject to Section 3(b), will comply with the
requirements of Rule 430A, 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.
13
(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
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
14
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 an earnings
statement for the purposes of, and to provide the benefits contemplated
by, the last paragraph of Section 11(a) of the 1933 Act.
(h) USE OF PROCEEDS. The Company will use the net proceeds
received by it from the sale of the Securities in the manner specified
in the Prospectus under "Use of Proceeds".
(i) LISTING. The Company will use its best efforts to effect
and maintain the quotation of the Securities on the Nasdaq National
Market and will file with the Nasdaq National Market all documents and
notices required by the Nasdaq National Market of companies that have
securities that are traded in the over-the-counter market and
quotations for which are reported by the Nasdaq National Market.
(j) RESTRICTION ON SALE OF SECURITIES. During a period of
30 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
15
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 the 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
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 of counsel
in connection therewith, (vi) the printing and delivery to the Underwriters
of copies of each preliminary prospectus and any amendments or supplements
thereto, (vii) the fees and expenses of any transfer agent or registrar for
the Securities, and (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 the fees and expenses incurred in
connection with the inclusion of the Securities in the Nasdaq National
Market. 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
16
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 the 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 the Closing Time, the
Representatives shall have received the favorable opinions, dated as of
Closing Time, of Elias, Matz, Xxxxxxx & Xxxxxxx L.L.P. as special
counsel for the Company and of XxXxxxxxx Xxxxxx, as Puerto Rico 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 Exhibits
B and C hereto and to such further effect as counsel to the
Underwriters may reasonably request. Such counsels 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 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 the Closing Time, there shall
not have been, since the date hereof or since the respective dates as
of which information is given in the Prospectus, any material adverse
change in the condition, financial or otherwise, or in the earnings,
business affairs or business prospects of the Company and its
Subsidiaries considered as one enterprise, whether or not arising in
the ordinary course of business, and the Representatives shall have
received a certificate of the President or a Vice President of the
Company and of the chief financial or chief accounting officer of the
Company, dated as of the 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
17
same force and effect as though expressly made at and as of the
Closing Time, (iii) the Company has complied with all agreements
and satisfied all conditions on its part to be performed or
satisfied at or prior to the Closing Time, and (iv) no stop order
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'
knowledge, are contemplated by the Commission.
(e) ACCOUNTANT'S COMFORT LETTER. At the time of the execution
of this Agreement, the Representatives shall have received from
PricewaterhouseCoopers LLP a letter dated such date, in form and
substance reasonably 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 the Closing Time, the
Representatives shall have received from PricewaterhouseCoopers 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 the Closing Time, the Securities
shall have been approved for inclusion in the Nasdaq National Market,
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 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
the Closing Time pursuant to Section 5(d) hereof remains true
and correct as of such Date of Delivery.
18
OPINION OF COUNSEL FOR THE COMPANY. The favorable
opinions of Elias, Matz, Xxxxxxx & Xxxxxxx L.L.P. and
XxXxxxxxx Xxxxxx, each in form and substance satisfactory to
counsel for the Underwriters, dated such Date of Delivery,
relating to the Option Securities to be purchased on such Date
of Delivery and otherwise to the same effect as the 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
PricewaterhouseCoopers 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(f)
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 the Closing Time and at each Date
of Delivery counsel for the Underwriters shall have been furnished with
such documents and opinions as they may require for the purpose of
enabling them to pass upon the issuance and sale of the Securities as
herein contemplated, or in order to evidence the accuracy of any of the
representations or warranties, or the fulfillment of any of the
conditions, herein contained; and all proceedings taken by the Company
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 the Closing Time, the obligations of the several Underwriters
to purchase the relevant Option Securities, may be terminated by
the Representatives by notice to the Company at any time at or
prior to 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.
SECTION 6. INDEMNIFICATION.
(a) 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:
19
(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
Santander Securities), 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).
(b) INDEMNIFICATION OF COMPANY, DIRECTORS AND OFFICERS. 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) 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
20
supplement thereto). The Company acknowledges that, for all purposes of this
Agreement, the amounts of the selling concession and reallowance 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) above,
counsel to the indemnified parties shall be selected by Santander Securities,
and, in the case of parties indemnified pursuant to Section 6(b) above, counsel
to the indemnified parties shall be selected by the Company. An indemnifying
party may participate at its own expense in the defense of any such action;
provided, however, that counsel to the indemnifying party shall not (except with
the consent of the indemnified party) also be counsel to the indemnified party.
In no event shall the indemnifying parties be liable for fees and expenses of
more than one counsel (in addition to any local counsel) separate from their own
counsel for all indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances. No indemnifying party shall,
without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever in respect of which
indemnification or contribution could be sought under this Section 6 or Section
7 hereof (whether or not the indemnified parties are actual or potential parties
thereto), unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liability arising out
of such litigation, investigation, proceeding or claim and (ii) does not include
a statement as to or an admission of fault, culpability or a failure to act by
or on behalf of any indemnified party.
(d) SETTLEMENT WITHOUT CONSENT IF FAILURE TO REIMBURSE. If at any time
an indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Sections 6(a)(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.
21
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.
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 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.
22
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,
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 (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 Nasdaq National Market, or if trading
generally on the American Stock Exchange or the New York Stock Exchange or in
the Nasdaq National Market has been suspended or materially limited, or
minimum or maximum prices for trading have been fixed, or maximum ranges for
prices have been required, by any of said exchanges or 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.
23
(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
(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
24
Santander Securities Corporation of Puerto Rico, Torre Santander, 221 Xxxxxxx
Xxxxx xx Xxxx, Xxxxx 000, Xxx Xxxx, Xxxxxx Xxxx, 00000-0000, Attention:
Director of Investment Banking and at Friedman, Billings, Xxxxxx & Co., Inc.,
Potomac Tower 0000 Xxxxxxxxxx Xxxxxx Xxxxx, Xxxxxxxxx, Xxxxxxxx, 00000,
Attention: Xxxxxx X. Xxxxxxxxxx; and notices to the Company shall be directed
to the Company at 280 Xxxxx X. Xxxxxx Avenue, San Xxxx, Puerto Rico 00918,
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.
SECTION 13. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. EXCEPT AS
OTHERWISE SET FORTH HEREIN, SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY 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.
[Signature Page Follows]
25
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,
R&G FINANCIAL CORPORATION
By:
----------------------------
Name:
Title:
CONFIRMED AND ACCEPTED,
as of the date first above written:
SANTANDER SECURITIES CORPORATION
OF PUERTO RICO
By:
---------------------------------------
Name:
Title:
FRIEDMAN, BILLINGS, XXXXXX & CO., INC.
By:
--------------------------------------
Name:
Title:
For themselves and as Representatives of the other Underwriters named
in Schedule A hereto.
26
SCHEDULE A
UNDERWRITERS NUMBER OF
------------ SECURITIES
----------
Santander Securities Corporation of Puerto Rico...........................................
Friedman, Billings, Xxxxxx & Co., Inc.....................................................
Total................................................................... 2,000,000
---------
---------
------------------------
------------------------
SCHEDULE B
R & G FINANCIAL CORPORATION
2,000,000 Shares
____% Noncumulative Perpetual Monthly Income Preferred Stock,
Series B
($25 liquidation preference per share)
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 $________, being an amount equal to the initial
public offering price set forth above less $_______ per share; provided that the
purchase price per share for any Option Securities purchased upon the exercise
of the over-allotment option described in Section 2(b) shall be reduced by an
amount per share equal to any dividends or distributions declared by the Company
and payable on the Initial Securities but not payable on the Option Securities.
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 __________, 2004 at declining prices, as described in the
Prospectus.
EXHIBIT A
LIST OF SUBSIDIARIES
1. R&G Mortgage Corporation
2. R-G Premier Bank of Puerto Rico
3. Champion Mortgage Corporation
4. Continental Capital Corporation
5. United Mortgage Express
A-1
