EXHIBIT 1
$100,000,000
R&G CAPITAL TRUST V
[ ]% CUMULATIVE MONTHLY INCOME TRUST PREFERRED SECURITIES
AGENCY AGREEMENT
March __, 2004
POPULAR SECURITIES, INC.
UBS FINANCIAL SERVICES INCORPORATED OF PUERTO RICO
R-G INVESTMENTS CORPORATION
San ▇▇▇▇, Puerto Rico
Ladies and Gentlemen:
R&G CAPITAL TRUST V (the "Issuer" or the "Trust"), a statutory trust
created under the Delaware Statutory Trust Act (the "Delaware Act"), proposes to
sell an aggregate principal amount of $100,000,000 of its [ ]% Cumulative
Monthly Income Trust Preferred Securities (the "Preferred Securities") to the
Puerto Rico Conservation Trust Fund ("Conservation Trust"), in connection with
the issuance by Conservation Trust of its [ ]% Secured Notes Due 2034 (the "CT
Notes"). The Preferred Securities shall be dated, shall bear interest at the
rates per annum and shall be subject to mandatory redemption, as described in
the Prospectus (as defined below). The CT Notes will be payable solely from
amounts payable by the Trust on the Preferred Securities and the Preferred
Securities will be pledged as collateral to the trustee of the CT Notes. The
Preferred Securities shall be guaranteed by R&G Financial Corporation (the
"Company" or the "Guarantor") with respect to the distributions and amounts
payable upon liquidation and redemption, pursuant to the Preferred Securities
Guarantee Agreement (the "Guarantee Agreement"), to be dated as of the Closing
Date (as defined below), executed and delivered by the Guarantor and Wilmington
Trust Company, a Delaware banking corporation, as trustee (the "Guarantee
Trustee"), for the benefit of the holder of the Preferred Securities. The
proceeds from the sale of the Preferred Securities to the Conservation Trust
will be aggregated with the entire proceeds from the sale by the Issuer to the
Company of the Common Securities of the Issuer (the "Common Securities") and
will be used by the Issuer to purchase the [ ]% subordinated debentures (the
"Debentures") issued by the Company. The Preferred Securities and the Common
Securities will be issued pursuant to the Amended and Restated Declaration of
Trust (the "Declaration"), among the Company and the trustees named
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therein (the "Trustees"). The Debentures will be issued pursuant to a Junior
Subordinated Indenture (the "Indenture"), among the Company and Wilmington Trust
Company, as trustee (the "Indenture Trustee"). You have agreed to act as
placement agents (collectively the "Agents") in connection with the sale of the
Preferred Securities to Conservation Trust, and as representatives of the
underwriters (the "Underwriters") in connection with the sale of the CT Notes to
the public. References to the Agents shall be deemed to include the Agents in
their role as representatives of the Underwriters.
The Issuer and the Company jointly and severally hereby confirm as
follows its agreements with you:
1. Sale of Notes: Compensation of Agents.
(a) The Issuer will sell the Preferred Securities to
Conservation Trust at a purchase price of $[ ]. Conservation Trust will in turn
issue and sell the CT Notes to the Underwriters in accordance with the terms of
a Purchase Agreement being executed simultaneously herewith (the "Purchase
Agreement"). The CT Notes will be offered by the Underwriters by means of an
offering circular of Conservation Trust (the "Offering Circular") that will
include as an attachment a Prospectus of the Issuer described below. Prior to
the date hereof, Conservation Trust and the Issuer have delivered to the Agents
a preliminary offering circular of Conservation Trust (the "Preliminary Offering
Circular") that includes as an attachment a preliminary prospectus dated
[_____________].
(b) Because the proceeds from the sale of the Preferred
Securities shall be used to purchase the Debentures from the Company, as
compensation for its services hereunder, the Company will pay to the Agents a
nonrefundable fee equal to $250,000.00, which shall be fully earned upon the
delivery of the Preferred Securities on the Closing Date (as such term is
defined below) and shall be allocated among the Agents in accordance with the
percentages set forth in Schedule 2 opposite the name of each Agent.
2. Delivery and Payment. Delivery of the Preferred Securities
shall be made to Banco Popular de Puerto Rico, as trustee for the CT Notes,
against payment of the purchase price by wire transfer of immediately available
funds to the bank account designated by the Company. Such payment shall be made
at 10:00 a.m., New York City time, on the third full business day following the
date of this Agreement, or at such other time on such other date, not later than
seven business days after the date of this Agreement, as may be agreed upon by
the Company and Conservation Trust (such date is hereinafter referred to as the
"Closing Date"). Delivery of the other documents, required to be delivered as
provided herein, shall be made at the offices of ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
LLP, Banco Popular Center, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
3. Representations and Warranties. Each of the Issuer and the
Company, jointly and severally, represents, warrants and covenants to the Agents
and each of the Underwriters that:
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(a) The Company and the Issuer, as co-registrant with the
Company, meet the requirements for use of Form S-3 and a registration statement
(Registration Nos. [ ] and [ ]-01) on Form S-3 with respect to the Preferred
Securities, including a preliminary prospectus and such amendments to such
registration statement as may have been required to the date of this Agreement,
has been prepared by the Company in conformity with the requirements of the
Securities Act of 1933, as amended (the "Act"), and the rules and regulations of
the Securities and Exchange Commission (the "Rules and Regulations") thereunder,
and has been filed with the Securities and Exchange Commission (the
"Commission"). No stop order preventing or suspending the use of the Prospectus
(as defined below) or any Preliminary Prospectus (as defined below) has been
issued, and, to the Company's knowledge, no proceeding for that purpose has been
instituted or threatened by the Commission. The term "Preliminary Prospectus" as
used herein means a preliminary prospectus relating to the Preferred Securities
included at any time as part of the foregoing registration statement or any
amendment thereto before it became effective under the Act and any prospectus
filed with the Commission by the Company pursuant to Rule 424(a) of the Rules
and Regulations. Copies of such registration statement and amendments and of the
related Preliminary Prospectus have been delivered to the Agents. If such
registration statement has not become effective, a further amendment to such
registration statement, including a form of final prospectus, necessary to
permit such registration statement to become effective will be filed promptly by
the Company with the Commission. If such registration statement has become
effective, a final prospectus relating to the Preferred Securities containing
information permitted to be omitted at the time of effectiveness by Rule 430A of
the Rules and Regulations has been or will be so prepared and filed with the
Commission pursuant to Rule 424(b) of the Rules and Regulations on or before the
second business day after the date hereof (or such earlier time as may be
required by the Rules and Regulations). The term "Registration Statement" means
such registration statement as amended at the time it becomes or became
effective (the "Effective Date"), including financial statements and all
exhibits and any information deemed by virtue of Rule 430A of the Rules and
Regulations to be included in such Registration Statement at the Effective Date
and any prospectus supplement filed thereafter with the Commission and shall
include the documents incorporated by reference therein pursuant to Item 12 of
Form S-3 which were filed under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). The term "Prospectus" means, collectively, the prospectus
together with any prospectus supplement, in the respective forms they are filed
with the Commission pursuant to Rule 424(b) of the Rules and Regulations. Any
references herein to the terms "amend," "amendment" or "supplement" with respect
to the Registration Statement, the Prospectus or any Preliminary Prospectus
shall be deemed to refer to and include the filing of any document under the
Exchange Act after the Effective Date, or the date of any Preliminary Prospectus
or the Prospectus, as the case may be, that is incorporated therein by
reference. For purposes of this Agency Agreement, all references to the
Registration Statement, the Prospectus, any preliminary prospectus or any
amendment or supplement thereto shall be deemed to include any copy filed with
the Commission pursuant to its Electronic Data Gathering Analysis and Retrieval
System (▇▇▇▇▇), and such copy shall be identical (except to the extent permitted
by Regulation S-T) to any Prospectus
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delivered to the Agents for use in connection with the offering of the Preferred
Securities by the Company.
(b) Each part of the Registration Statement, when such
part became or becomes effective, each Preliminary Prospectus, on the date of
filing thereof with the Commission, and the Prospectus and any amendment or
supplement thereto, on the date of filing thereof with the Commission and at the
Closing Date conformed or will conform in all material respects with the
requirements of the Act, the Trust Indenture Act of 1939 ("Trust Indenture Act")
and the Rules and Regulations thereunder; each part of the Registration
Statement (excluding any prospectus supplement with respect to an offering of
securities other than the offering of the Preferred Securities contemplated
hereby), when such part became or becomes effective, did not or will not contain
an untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not misleading;
each Preliminary Prospectus, on the date of filing thereof with the Commission,
and the Prospectus and any amendment or supplement thereto, on the date of
filing thereof with the Commission and at the Closing Date, did not or will not
include an untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; the foregoing shall not apply to the
statements in or omissions from any such document in reliance upon, and in
conformity with, written information relating to any Underwriter furnished to
the Company by the Agents, or by any Underwriter through the Agents,
specifically for use in the preparation thereof. The Company has not distributed
any offering material in connection with the offering or sale of the Preferred
Securities other than the Registration Statement, any Preliminary Prospectus,
the Prospectus or any other materials, if any, permitted by the Act.
(c) The documents incorporated by reference in the
Registration Statement, the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus) and any amendment or
supplement to such Registration Statement or such Prospectus, when they became
or become effective under the Act or were or are filed with the Commission under
the Exchange Act, as the case may be, conformed or will conform in all material
respects with the requirements of the Act, the Trust Indenture Act, the Exchange
Act and the Rules and Regulations thereunder, as applicable.
(d) The Issuer has been duly formed and is validly
existing in good standing as a statutory trust under the Delaware Act with power
and authority to own property and conduct its business as described in the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus). All of the outstanding beneficial interests of the
Issuer have been duly authorized and validly issued and are fully paid and
nonassessable undivided beneficial interests in the assets of the Issuer; the
holders of such beneficial interests of the Issuer have no preemptive or other
rights to acquire Preferred Securities or Common Securities and there are no
restrictions on transfers of the securities.
(e) The Declaration has been duly authorized; and when
the Preferred Securities are delivered and paid for pursuant to this Agreement
on the Closing Date, the Declaration will have
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been duly executed and delivered and will constitute a valid and legally binding
instrument enforceable in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights and to general
equity principles.
(f) The Guarantee Agreement has been duly authorized;
when the Preferred Securities are delivered and paid for pursuant to this
Agreement on the Closing Date, the Guarantee Agreement will have been duly
executed and delivered and will constitute a valid and legally binding
instrument enforceable in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights and to general
equity principles.
(g) The Preferred Securities have been duly authorized;
when the Preferred Securities are delivered and paid for pursuant to this
Agreement on the Closing Date, such Preferred Securities will (i) have been
validly issued and fully paid, (ii) represent nonassessable undivided beneficial
interest in the assets of the Issuer, (iii) be entitled to the benefits set
forth in the Declaration and (iv) conform to the description thereof contained
in the Registration Statement, the Preliminary Prospectus, the Prospectus and
any amendment or supplement to such Registration Statement or such Prospectus;
the issuance of the Preferred Securities is not subject to preemptive or other
similar rights; and the holders of the Preferred Securities will be entitled to
the same limitation of personal liability extended to stockholders of private
corporations for profit incorporated under the General Corporation Law of the
State of Delaware.
(h) The Common Securities have been duly authorized; when
the Common Securities are delivered and paid for pursuant to this Agreement on
the Closing Date, such Common Securities will (i) have been validly issued and
fully paid, (ii) represent nonassessable undivided beneficial interest in the
assets of the Issuer, (iii) be entitled to the benefits set forth in the
Declaration and (iv)conform to the description thereof contained in the
Registration Statement, the Preliminary Prospectus, the Prospectus and any
amendment or supplement to such Registration Statement or such Prospectus; the
issuance of the Common Securities is not subject to preemptive or other similar
rights; and the holders of the Common Securities will be entitled to the same
limitation of personal liability extended to stockholders of private
corporations for profit incorporated under the General Corporation Law of the
State of Delaware; and at the Closing Date, all of the issued and outstanding
Common Securities of the Issuer will be directly owned by the Company free and
clear of any security interest, mortgage, pledge, lien, encumbrance, claim or
equity.
(i) The only directly or indirectly controlled
subsidiaries of the Company (each, a "Subsidiary" and collectively, the
"Subsidiaries") are those listed on Exhibit A hereto. In addition, each
Subsidiary of the Company which is a "significant subsidiary" as defined in Rule
405 of Regulation C of the Rules and Regulations under the Act (each a
"Significant Subsidiary") is listed on Exhibit A hereof. The Company has been
and, at the Closing Date, will be duly organized and validly existing as a
corporation under the laws of the Commonwealth of Puerto Rico and is and, at
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the Closing Date, will be in good standing with the Commonwealth of Puerto Rico.
The Company is and will be as of the Closing Date registered with the Board of
Governors of the Federal Reserve System (the "Federal Reserve") as a bank
holding company under the Bank Holding Company Act of 1956 (the "BHCA") and its
election to be treated as a financial holding company under the BHCA is and will
remain in full force and effect. Each of the Subsidiaries is and, at the Closing
Date, will be a corporation duly organized, validly existing and in good
standing under the laws of its respective jurisdiction of incorporation. Each of
the Company and its Subsidiaries is and, at the Closing Date, will be duly
qualified and in good standing as a foreign corporation in each jurisdiction in
which the character or location of its properties (owned, leased or licensed) or
the nature or conduct of its business or use of its property and assets, makes
such qualification necessary, except where the failure to so qualify would not
have a material adverse effect on the condition, financial or otherwise, or the
earnings, prospects or business affairs of the Company and its Subsidiaries
taken as a whole (a "Material Adverse Effect").
(j) The outstanding shares of capital stock of the
Company have been duly authorized and validly issued and are fully paid and
nonassessable and are not subject to any preemptive or similar rights. The
Debentures to be issued and sold by the Company will be, upon such issuance and
payment therefor, duly authorized, valid, binding and enforceable obligations of
the Company. The Company has, and, upon completion of the sale of the
Debentures, will have, an authorized, issued and outstanding capitalization as
set forth in the Registration Statement and the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus in the
"As Adjusted" column).
(k) The consolidated financial statements and the related
notes of the Company included in the Registration Statement or incorporated
therein by reference and the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus) present fairly the financial
condition of the Company and its Subsidiaries as of the dates indicated and the
consolidated results of operations, and cash flows of the Company and its
Subsidiaries for the periods covered thereby, all in conformity with generally
accepted accounting principles ("GAAP") applied on a consistent basis throughout
the entire periods involved. PricewaterhouseCoopers LLP (the "Accountants"), who
have reported on those financial statements and related notes which have been
audited, are independent accountants with respect to the Company and its
Subsidiaries within the meaning of the Act and the applicable and published
rules and regulations.
(l) 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.
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(m) Except as set forth in the Registration Statement,
the Preliminary Prospectus and the Prospectus, subsequent to the respective
dates as of which information is given in the Registration Statement the
Preliminary Prospectus and the Prospectus (if required) and prior to the Closing
Date, (i) there has not been, and will not have been, any Material Adverse
Effect, (ii) neither the Company nor any of its Subsidiaries have entered into,
or will have entered into any material transactions other than pursuant to this
Agreement, and (iii) the Company has not, and will not have, paid or declared
any dividends or other distributions of any kind on any class of its capital
stock, except for the payment or declaration of quarterly dividends on the
Company's common stock (the "Common Stock") and the payment and declaration of
monthly dividends on each of the Company's series of outstanding preferred stock
in the ordinary course of its business.
(n) The Company and each of its Subsidiaries have good
and marketable title to all properties and assets described in the Registration
Statement, including the documents incorporated by reference therein, and the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus), as owned by it, free and clear of all liens, security
interests, restrictions, pledges, encumbrances, charges, equities, claims,
easements, leases and tenancies (collectively, "Encumbrances") other than those
described in the Registration Statement, or in the documents incorporated by
reference therein, and Prospectus (or, if the Prospectus is not in existence,
the most recent Preliminary Prospectus) or those that will not have a Material
Adverse Effect. The Company and each of its Subsidiaries have valid, subsisting
and enforceable leases for the properties and assets described in the
Registration Statement, or in the documents incorporated by reference therein,
and Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus) as leased by them, free and clear of all Encumbrances,
other than those described in the Registration Statement, or in the documents
incorporated by reference therein, and the Prospectus (or, if the Prospectus is
not in existence, the most recent Preliminary Prospectus), or those that will
not have a Material Adverse Effect.
(o) Neither the Issuer nor the Company is and, after
giving effect to the offering and sale of the Preferred Securities and the
Debentures and the application of the proceeds thereof as described in the
Prospectus, neither of them will be, required to be registered under the
Investment Company Act of 1940, as amended (the "Investment Company Act").
(p) Except as set forth in the Registration Statement, or
incorporated therein by reference, and the Prospectus (or, if the Prospectus is
not in existence, the most recent Preliminary Prospectus), there are no actions,
suits, arbitrations, claims, governmental or other proceedings (formal or
informal), or investigations pending or threatened against or affecting the
Company or any of its Subsidiaries, or, to the knowledge of the Company, any
directors, executive officers or shareholders of the Company or any of its
Subsidiaries in their respective capacities as such, or any of the properties or
assets owned or leased by the Company or any of its Subsidiaries, before or by
any federal, state or Commonwealth of Puerto Rico court, commission, regulatory
body, administrative agency or other governmental body, domestic or foreign
(collectively, a "Governmental Body"), wherein an unfavorable ruling, decision
or finding would have a Material
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Adverse Effect and would be required to be disclosed in the Registration
Statement and the Prospectus (or, if the Prospectus is not in existence, the
most recent Preliminary Prospectus). Neither the Company nor any Significant
Subsidiary is in violation of, or in default with respect to, any law, rule, or
regulation, or any order, judgment, or decree, except as described in the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus) or when such violations or defaults, in the aggregate,
do not now have and can reasonably be expected in the future not to have a
Material Adverse Effect; nor is the Company or any Significant Subsidiary
presently required under any order, judgment or decree to take any action in
order to avoid any such violation or default.
(q) The Company and each of its Significant Subsidiaries
have and, at the Closing Date will have all governmental licenses, permits,
consents, orders, approvals, franchises, certificates and other authorizations
(collectively, "Licenses") necessary to carry on their respective businesses and
own or lease their respective properties as contemplated in the Registration
Statement and the Prospectus (or, if the Prospectus is not in existence, the
most recent Preliminary Prospectus). The Company and each of its Significant
Subsidiaries have and, at the Closing Date, will have complied in all material
respects with all laws, regulations and orders applicable to it or its business,
assets and properties, except for such violations, individually or in the
aggregate which are not reasonably expected to have a Material Adverse Effect.
Neither the Company nor any of its Significant Subsidiaries is, nor, at the
Closing Date, will be in default (nor has any event occurred which, with notice
or lapse of time or both, would constitute a default) in the due performance and
observation of any term, covenant or condition of any indenture, mortgage, deed
of trust, voting trust agreement, loan agreement, bond, debenture, note
agreement or other evidence of indebtedness, lease, contract or other agreement
or instrument (collectively, a "contract or other agreement") to which they are
a party or by which their respective properties are bound or affected, the
violation of which would individually or in the aggregate have a Material
Adverse Effect. There are no governmental proceedings or actions pending or
threatened for the purpose of suspending, modifying or revoking any License held
by the Company or its Significant Subsidiaries.
(r) No consent, approval, authorization or order
of, or any filing or declaration with, any Governmental Body is required for the
consummation of the transactions contemplated by this Agreement or in connection
with the issuance and sale of the Preferred Securities by the Issuer or in
connection with the issuance and sale of Debentures by the Company, except such
as have been obtained and such as may be required under the bylaws and rules of
the National Association of Securities Dealers, Inc. (the "NASD") in connection
with the purchase and distribution of the Preferred Securities.
(s) Both the Issuer and the Company have full power
(corporate and other) and authority to enter into this Agreement and to carry
out all the terms and provisions hereof to be carried out by it. This Agreement
has been duly authorized, executed and delivered by each of the Issuer and the
Company and constitutes a valid and binding agreement of each of them and is
enforceable against any of them in accordance with its terms, except as rights
to indemnity and
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contribution which may be limited by federal, state or Commonwealth of Puerto
Rico securities laws or the public policy underlying such laws. Except as
disclosed in the Registration Statement and the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus), the
execution, delivery and the performance of this Agreement and the consummation
of the transactions contemplated hereby will not result in the creation or
imposition of any Encumbrance upon any of the properties or assets of the
Issuer, the Company or any of the Significant Subsidiaries pursuant to the terms
or provisions of, or result in a breach or violation of, or conflict with any of
the terms or provisions of, or constitute a default under, or give any other
party a right to terminate any of the Issuer's or the Company's obligations
under, or result in the acceleration of any obligation under, (i) the
Certificate of Incorporation or By-laws of the Company, in each case as amended,
or the Declaration or (ii) any contract or other agreement to which the Issuer,
the Company or any of the Significant Subsidiaries is a party or by which it or
any of the respective assets or properties are bound or affected, the violation
of which would individually or in the aggregate have a Material Adverse Effect,
or (iii) any judgment, ruling, decree, order, law, statute, rule or regulation
of any Governmental Body applicable to the Issuer, the Company or any of the
Significant Subsidiaries or their respective businesses or properties, the
violation of which would individually or in the aggregate have a Material
Adverse Effect.
(t) No statement, representation, or warranty made by
each of the Issuer and the Company in this Agreement or made in any certificate
or document required by this Agreement to be delivered to the Agents was or will
be, when made, inaccurate, untrue or incorrect in any material respect.
(u) Neither the Issuer, the Company nor, to the knowledge
of the Company, any of its directors, or executive 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 Preferred
Stock or otherwise.
(v) Neither the Issuer, the Company nor any of its
Subsidiaries is involved in any collective labor dispute with its employees nor
is any such dispute threatened or imminent.
(w) The Company has filed all applicable foreign,
federal, state and Commonwealth of Puerto Rico tax returns that are required to
be filed or has requested extensions thereof and has paid all taxes required to
be paid by it and any other assessment, fine or penalty levied against it, to
the extent that any of the foregoing is due and payable, except for any failure
to file which would not have a Material Adverse Effect.
(x) The Company meets the requirements for use of Rule
415 under the Rules and Regulations under the Act.
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(y) The deposit accounts of R&G Premier Bank, a
Subsidiary of the Company ("R&G Premier") and R-G Crown Bank, a Subsidiary of
the Company ("R-G Crown"), are insured by the Federal Deposit Insurance
Corporation ("FDIC") to the legal maximum, and no proceeding for the termination
or revocation of such insurance is pending or threatened. R&G Premier and R-G
Crown are members in good standing of the Federal Home Loan Bank of New York and
the Federal Home Loan Bank of Atlanta, respectively.
(z) None of the Issuer, the Company or its Significant
Subsidiaries, or any of their respective directors or executive officers, is
subject to any order or directive of, or party to any agreement with, any
regulatory agency having jurisdiction with respect to its business or operations
except as disclosed in the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus).
(aa) The Company is engaged in trade or business in the
Commonwealth of Puerto Rico. The Company derived more than 20% of its gross
income from sources within the Commonwealth of Puerto Rico for the three year
period ending with the close of the Company's taxable year ended on December 31,
2003.
4. Agreements of the Company and the Issuer. Each of the Company
and the Issuer jointly and severally agree with the Agents and each of the
Underwriters as follows:
(a) The Company and the Issuer will not during such
period as the Prospectus is required by law to be delivered in connection with
sales of the CT Notes by any underwriter or dealer (the "Prospectus Delivery
Period"), file any amendment or supplement to the Registration Statement or the
Prospectus, unless a copy thereof shall first have been submitted to the Agents
within a reasonable period of time prior to the filing thereof and the Agents
shall not have objected thereto in good faith.
(b) The Company and the Issuer will use their best
efforts to cause the Registration Statement to become or remain effective
through the completion of the Underwriters' distribution of the CT Notes, and
will notify the Agents promptly, and will confirm such advice in writing, (i) of
the preparation and filing (subject to Section 4(a)) of any post-effective
amendment and when any such post-effective amendment to the Registration
Statement becomes effective, (ii) of any request by the Commission for
amendments or supplements to the Registration Statement or the Prospectus or for
additional information, (iii) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose or the threat thereof, (iv) of
the suspension of the qualification or registration of the Preferred Securities
for offering or sale in the Commonwealth of Puerto Rico, or of the initiation or
threat of any proceeding for any such purpose, (v) of the happening of any event
during the Prospectus Delivery Period that in the judgment of the Company or the
Issuer makes any statement made in the Registration Statement or the Prospectus
untrue or that requires the making of any changes in the Registration Statement
or the Prospectus in order to make the statements therein, in
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light of the circumstances in which they are made, not misleading, and (vi) of
receipt by the Company or any representative or attorney of the Company of any
other communication from the Commission relating to the Company, the
Registration Statement, any preliminary prospectus or the Prospectus. If at any
time the Commission or any jurisdiction shall threaten to issue, or shall issue,
any order suspending the effectiveness of the Registration Statement or
suspending the qualification or registration of the Preferred Securities for
sale in any jurisdiction, the Company and the Issuer will make every reasonable
effort to prevent the issuance of such order and, if such an order should be
issued, to obtain the withdrawal of such order at the earliest possible moment.
The Company and the Issuer will use their best efforts to comply with the
provisions of and make all requisite filings with the Commission pursuant to
Rule 430A and to notify the Agents promptly of all such filings.
(c) If, at any time when a Prospectus relating to the
Preferred Securities is required to be delivered under the Act, any event occurs
as a result of which, in the judgment of the Company or the Issuer or in the
opinion of counsel to the Underwriters, the Prospectus, as then amended or
supplemented, would include any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading, or the
Registration Statement, as then amended or supplemented, would include any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements therein not misleading, or if for any other reason it is
necessary at any time to amend or supplement the Prospectus or the Registration
Statement to comply with the Act or the Rules and Regulations thereunder, the
Company will promptly notify the Agents thereof and, subject to Section 4(b)
hereof, will prepare and file with the Commission, at the Company's expense, an
amendment to the Registration Statement or an amendment or supplement to the
Prospectus that corrects such statement or omission or effects such compliance.
(d) The Company will furnish to the Agents, without
charge, two signed copies of the Registration Statement and of any
post-effective amendment thereto, including financial statements and schedules,
and all exhibits thereto and will furnish to the Agents, without charge, for
transmittal to each of the Underwriters, copies of the Registration Statement
and any post-effective amendment thereto, including financial statements and
schedules but without exhibits.
(e) The Company and the Issuer will comply with all the
provisions of all undertakings contained in the Registration Statement.
(f) During the Prospectus Delivery Period, the Company
will promptly furnish to the Underwriters, without charge, as many copies of
each preliminary prospectus, the Prospectus and any amendment or supplement
thereto as the Underwriters may from time to time reasonably request. The
Company consents to the use of the Prospectus, as amended or supplemented from
time to time, by the Underwriters and by all dealers to whom the CT Notes may be
sold, both in connection with the offering or sale of the CT Notes and,
thereafter, during the Prospectus Delivery Period; if during the Prospectus
Delivery Period any event shall occur which in the judgment of the Company or
counsel to the Underwriters should be set forth in the Prospectus in order to
make any statement
11
therein, in the light of the circumstances under which it was made, not
misleading, or if, in the reasonable opinion of counsel to the Underwriters, it
is necessary to supplement or amend the Prospectus to comply with law, the
Company will forthwith prepare and duly file with the Commission an appropriate
supplement or amendment thereto. Except as required by the Exchange Act or the
Rules and Regulations thereunder, the Company shall not file any document under
the Exchange Act before the termination of the Prospectus Delivery Period if
such document would be deemed to be incorporated by reference into the
Prospectus to which the Agents reasonably object.
(g) During the period of five years commencing on the
Closing Date, the Company will furnish to the Agents, 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 Agents, and
each other Underwriter who may so request, a copy of each annual or other report
it shall be required to file with the Commission.
(h) The Company will make generally available to its
security holders as soon as practicable, but not later than ninety (90) days
after the close of the period covered thereby, an earnings statement (in form
complying with the provisions of Section 11(a) of the Act and Rule 158 of the
Rules and Regulations) covering a twelve-month period beginning not later than
the first day of the Company's fiscal quarter next following the "effective
date" (as defined in said Rule 158) of the Registration Statement.
(i) The Company and the Issuer will apply the net
proceeds from the offering and sale of the Preferred Securities and the
Debentures, respectively, in the manner set forth in the Prospectus under "Use
of Proceeds."
(j) The Company and the Issuer will enter into a
Supplement to Agency Agreement in the form attached hereto as Exhibit B.
(k) The Company will, for each taxable year, up to and
including the taxable year when all interest on and principal of the Debentures
are paid in full, not later than the 120th day following the close of each such
taxable year, beginning with the first taxable year ending after the original
issuance of the Debentures (1) furnish to the Trustee and the Company's
independent accountants a certificate (the "Source of Income Certificate")
addressed to the trustee of the CT Notes and the Company's independent
accountants: (i) stating, for the three immediately preceding taxable years of
the Company (or for such part of such period as may be applicable), the
percentage of the Company's gross income that was derived from sources within
the Commonwealth of Puerto Rico under the general sourcing rules of the United
States Internal Revenue Code as in effect on the date of the original issuance
of the Debentures (the "Code"); (ii) stating the percentage of the Company's
gross income that was attributable to the active conduct of (A) its trade or
business in the Commonwealth of Puerto Rico and (B) any trade or business
outside the Commonwealth of Puerto Rico, in each case as determined under
Section 861(c)(1)(B) of the Code; (iii) making an assertion as
12
to whether or not the Company has met the following tests (the "Source of Income
Tests"): that (x) during the three taxable years (or for such part of such
period as may be applicable) immediately preceding the taxable year during which
interest is paid on the Debentures, more than 20% of the Company's total gross
income was attributable to its trade or business in the Commonwealth of Puerto
Rico, as determined under Section 861(c)(1)(B) of the Code, as in effect on the
date of the original issuance of the Debentures, and was derived from sources
within the Commonwealth of Puerto Rico under the general source of income rules
of the Code, as in effect on the date of original issuance of the Debentures;
and (y) no part of the interest paid on the Debentures was treated, under the
Code, as paid by a trade or business of the Company conducted outside the
Commonwealth of Puerto Rico, such determination to be made in accordance with
Section 884(f)(1)(A) of the Code and Treas. Regs. Section 1.884-4(b)(1)(i)(A) or
(B) issued thereunder, as in effect on the date of original issuance of the
Debentures; and (iv) making an assertion as to whether the Company has taken any
other action which shall cause interest on the Debentures to become subject to
federal income taxation for individuals who are bona fide residents of the
Commonwealth of Puerto Rico for the entire taxable year or to corporations
organized under the laws of the Commonwealth of Puerto Rico.
(l) The Company and the Issuer acknowledge that, pursuant
to Section 609 of the trust agreement between Conservation Trust and Banco
Popular de Puerto Rico, as trustee (the "Trustee"), under which the CT Notes are
issued and secured (the "Trust Agreement"), Conservation Trust and the Trustee
have assigned to the holders of the CT Notes their rights against the Issuer and
the Company under United States federal and applicable state securities laws
with respect to the Preferred Securities. Accordingly, purchasers of the CT
Notes may proceed directly against the Issuer and the Company to enforce those
rights without first proceeding against Conservation Trust, the Trustee or any
other entity. The Company and the Issuer acknowledge, for the benefit of the
holders of the CT Notes, the existence of such assignment and agree not to
contest its enforceability.
5. Agreement of the Agents.
The Agents acknowledge that, pursuant to Section 609 of the Trust
Agreement, Conservation Trust and the Trustee have assigned to the holders of
the CT Notes their rights against the Agents under United States federal and
applicable state securities laws with respect to the Preferred Securities.
Accordingly, purchasers of the CT Notes may proceed directly against the Agents
to enforce those rights without first proceeding against Conservation Trust, the
Trustee or any other entity. The Agents acknowledge, for the benefit of the
holders of the CT Notes, the existence of such assignment and agree not to
contest its enforceability.
6. Expenses.
(a) Whether or not the transactions contemplated by this
Agreement are consummated or this Agreement is terminated, the Company will pay,
or reimburse if paid by the Agents, all costs and expenses incidental to the
performance of the obligations of the Company under
13
this Agreement, including, but not limited to, costs and expenses of or relating
to (i) the preparation and filing by the Company of the Registration Statement
and exhibits thereto, each Preliminary Prospectus prior to or during the period
specified in the first sentence of Section 4(f) but not exceeding nine (9)
months after the Effective Date, the Prospectus and any amendment or supplement
to the Registration Statement or the Prospectus, (ii) furnishing (including
costs of shipping and mailing) such copies of the Registration Statement, the
Prospectus and any Preliminary Prospectus, and all amendments and supplements
thereto, as may be requested for use in connection with the offering and sale of
the CT Notes by the Underwriters or by dealers to whom CT Notes may be sold,
(iii) any filings required to be made by the Underwriters with the NASD, (iv)
counsel and accountants to the Company, and (v) the reasonable fees and
disbursements of the trustee for the Notes, including its legal expenses; it
being understood that the Company and Conservation Trust will share the costs of
printing the Preliminary Offering Circular and the Offering Circular (including
the Prospectus) and all amendments thereto.
(b) If the transactions contemplated by this Agreement
are not consummated or if this Agreement is terminated by the Company pursuant
to any of the provisions hereof, the Company will reimburse the Agents and the
Underwriters for all of their accountable out-of-pocket fees and expenses
(including the fees, disbursements and other charges of their counsel, not to
exceed $75,000) incurred by them in connection herewith.
7. Conditions to the Obligations of the Underwriters. The
obligations of each Underwriter under the Purchase Agreement and the
consummation of the transaction contemplated hereunder are subject to the
following conditions:
(a) All filings required under Rule 424 and 430A of the
Rules and Regulations to be made by the Company and the Issuer prior to the
Closing shall have been made by the Company or the Issuer, as the case may be.
(b) (i) No stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall be pending or threatened by the Commission, (ii) no order
suspending the effectiveness of the Registration Statement or the qualification
or registration of the Preferred Securities under the securities or blue sky
laws of the Commonwealth of Puerto Rico shall be in effect, and no proceeding
for such purposes shall be pending before or threatened or contemplated by the
Commission or the authorities of the Commonwealth of Puerto Rico, (iii) any
request for additional information on the part of the staff of the Commission or
any such authorities shall have been complied with to the satisfaction of the
staff of the Commission or such authorities, and (iv) after the date hereof no
amendment or supplement to the Registration Statement or the Prospectus shall
have been filed unless a copy thereof was first submitted to and approved by the
Agents, and the Agents shall have received certificates, dated the Closing Date
and signed by the Chief Executive Officer or President of the Company and the
Chief Financial Officer of the Company (who may, as to proceedings threatened,
rely upon the best of their information and belief), to the effect of the
foregoing clauses (i), (ii) and (iii).
14
(c) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, (i) there shall not have
been a Material Adverse Effect, and (ii) the Company shall not have sustained
any loss or interference with its business, assets or properties from fire,
explosion, flood or other casualty, or from any labor dispute or any court or
legislative or other governmental action, order or decree, which is not set
forth in the Registration Statement or the Prospectus.
(d) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, there shall have been no
litigation or other proceeding instituted against the Company or the Issuer or,
to the knowledge of the Company, any of their respective executive officers or
directors in their capacities as such, or any of its assets or properties,
before or by any Governmental Body in which litigation or proceeding an
unfavorable ruling, decision or finding would have a Material Adverse Effect.
(e) Each of the representations and warranties of each of
the Issuer and the Company contained herein shall be true and correct at the
Closing Date, as if made on such date, and all covenants and agreements herein
contained to be performed on the part of the Company and all conditions herein
contained to be fulfilled or complied with by the Company at or prior to the
Closing Date, shall have been fully performed, fulfilled or complied with.
(f) The Agents shall have received opinions from ▇▇▇▇▇▇
▇▇▇▇▇ LLP and ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇, counsel to the Company, each dated as
of the Closing Date, in form and substance satisfactory to the Agents.
(g) The Agents shall have received an opinion, dated the
Closing Date, from ▇▇▇▇▇▇ ▇▇▇▇▇, special United States tax counsel to the
Company, in form and substance satisfactory to counsel to the Agents, to the
effect that it confirms its opinion set forth in the Prospectus.
(h) The Agents shall have received an opinion, dated the
Closing Date, from ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, counsel to the
Underwriters, which opinion shall be satisfactory in all respects to the Agents.
(i) The Agents shall have received an opinion, dated the
Closing Date of ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & Finger, P.A., special Delaware counsel to the
Issuer, in form and substance reasonably satisfactory to the Agents.
(j) Concurrently with the execution and delivery of this
Agreement, the Accountants shall have furnished to the Agents a letter, dated
the date of its delivery (the "Original Letter"), addressed to the Agents and in
form and substance satisfactory to the Agents, to the effect that:
15
(i) they are independent accountants within the meaning
of the Act and the applicable published rules and regulations thereunder;
(ii) in their opinion, the consolidated financial
statements of the Company and its Subsidiaries audited by them and incorporated
by reference in the Prospectus comply as to form in all material respects with
the applicable accounting requirements of the Act, the Exchange Act and the
Rules and Regulations thereunder with respect to registration statements on Form
S-3;
(iii) on the basis of procedures (but not an audit in
accordance with generally accepted auditing standards) consisting of (a) reading
the minutes of meetings of the stockholders and the Board of Directors of the
Company and its Subsidiaries since December 31, 2003 as set forth in the minute
books through a specified date not more than five business days prior to the
date of delivery of the Original Letter; (b) reading the unaudited interim
financial data for the period from the date of the latest balance sheet
incorporated by reference in the Prospectus to the date of the latest available
interim financial data; and (c) making inquiries of certain officials of the
Company who have responsibility for financial and accounting matters regarding
the specific items for which representations are requested below; nothing has
come to their attention (as of a date not more than five business days prior to
the date of the delivery of such letter) as a result of the foregoing procedures
that caused them to believe that: (1) at the date of the latest available
interim financial data and at a specified date not more than five business days
prior to the date of delivery of the Original Letter there was any change in the
capital stock, deposits or any increase in long-term debt or any decreases in
total assets or consolidated stockholders' equity (only as to the latest interim
financial data) of the Company and its Subsidiaries as compared with amounts
shown in the December 31, 2003 balance sheet incorporated by reference in the
Prospectus and (2) for the period from December 31, 2003, to the latest interim
financial data available which should be no later than forty (40) days prior to
the date of delivery of the Original Letter, there were any decreases, as
compared with the corresponding period in the preceding year, in consolidated
net interest income, other income, income before taxes or in the total or per
share amounts of net income, except in all instances for changes or decreases
which the Registration Statement discloses have occurred or may occur, or they
shall state any specific changes or decreases; and
(iv) they have compared specific amounts expressed in
dollars (or percentages derived from such dollar amounts) and other financial
information contained or incorporated by reference in the Prospectus or
Prospectus Supplement, which has been obtained from accounting records that are
subject to the internal controls of the Company's accounting system or which has
been derived directly from such accounting records and analysis or computation,
with the results obtained from inquiries or reading of such general accounting
records and other procedures specified in such letter and have found such dollar
amounts, percentages and other financial information to be in agreement with
such results.
16
At the Closing Date, the Accountants shall have
furnished to the Agents a letter, dated the date of its delivery, which shall
confirm, on the basis of a review in accordance with the procedures set forth in
the Original Letter, that nothing has come to their attention during the period
from the date of the Original Letter referred to in the prior sentence to a date
(specified in the letter) not more than five business days prior to the Closing
Date, which would require any change in the Original Letter if it were required
to be dated and delivered at the Closing Date.
In the event that the letters referred to above set
forth any such changes, decreases or increases, it shall be a further condition
to the obligations of the Underwriters that (A) such letters shall be
accompanied by a written explanation of the Company as to the significance
thereof, unless the Agents deem such explanation unnecessary, and (B) such
changes, decreases or increases do not, in the sole judgment of the Agents, make
it impractical or inadvisable to proceed with the purchase and delivery of the
Preferred Securities as contemplated by the Registration Statement and the
Prospectus, as amended as of the date hereof.
(k) At the Closing Date, there shall be furnished to the
Agents an officer's certificate, dated the date of its delivery, signed by each
of the Chief Executive Officer or President and the Chief Financial Officer of
the Company and the Administrative Trustees of the Trust, in form and substance
satisfactory to the Agents, to the effect that to the best of their knowledge:
(i) Each signer of such certificate has
carefully examined the Registration Statement and the Prospectus and
(A) as of the date of such certificate, (x) the Registration Statement
does not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in
order to make the statements therein not misleading, and (y) the
Prospectus does not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, and (B) since
the Effective Date no event has occurred as a result of which it is
necessary to amend or supplement the Prospectus in order to make the
statements therein not untrue or misleading in any material respect;
(ii) Each of the representations and warranties
of the each of the Issuer and the Company contained in this Agreement,
were, when originally made, and are, at the time such certificate is
delivered, true and correct in all respects; each of the covenants
required herein to be performed by any of them on or prior to the date
of such certificate has been duly, timely and fully performed and each
condition herein required to be complied with, on or prior to the
delivery of such certificate has been duly, timely and fully complied
with; and
(iii) No stop order suspending the effectiveness
of the Registration Statement or any post-effective amendment thereto
and no order directed at any document incorporated by reference in the
Registration Statement or any amendment thereto or the
17
Prospectus has been issued, and no proceedings for that purpose have
been instituted or threatened or, to the best of the Company's
knowledge, are contemplated by the Commission.
(l) The Company and the Issuer shall have furnished to
the Agents such certificates, letters and other documents, in addition to those
specifically mentioned herein, as the Agents may have reasonably requested as to
the accuracy and completeness at the Closing Date, of any statement in the
Registration Statement or the Prospectus, as to the accuracy at the Closing Date
of the representations and warranties of the Company, as to the performance by
the Company of its obligations hereunder, or as to the fulfillment of the
conditions concurrent and precedent to the obligations hereunder of the
Underwriters.
(m) The Agents shall have received copies, duly certified
by the Secretary or an Assistant Secretary of the Company of the resolutions or
other corporate actions adopted or taken by the Company in connection with the
transactions contemplated herein.
(n) The Agents shall have received a copy of the
certificate of incorporation of the Company, as amended, certified as of a
recent date by the appropriate officer of the Commonwealth, together with
certificates dated as of a recent date from the Secretary of State of the
Commonwealth of Puerto Rico as to the existence and good standing of the Company
under the laws of the Commonwealth of Puerto Rico and copies of the by-laws of
the Company certified by the Secretary or an Assistant Secretary of the Company.
The Agents shall further have received a copy of the Declaration, the Indenture
and the Guarantee Agreement relating to the Issuer.
(o) The Underwriters shall have received such other
documentation, certificates and opinions as may be reasonably required by the
Underwriters.
All such opinions, certificates, letters and other documents
will be in compliance with the provisions hereof only if they are satisfactory
in form and substance to the Agents. The Company will furnish you with such
conformed copies of such opinions, certificates, letters and other documents as
the Agents shall reasonably request.
8. Indemnification and Contribution.
(a) Each of the Issuer and the Company, joint and
severally, agree to indemnify and hold harmless the Agents, each Underwriter,
the directors, officers and employees of the Agents or each Underwriter and each
person, if any, who controls the Agents or each Underwriter within the meaning
of Section 15 of the Act or Section 20 of the Exchange Act, from and against any
and all losses, claims, damages or liabilities, joint or several (and actions in
respect thereof), to which they, or any of them, may become subject under the
Act or other federal, state or Commonwealth of Puerto Rico statutory law or
regulation, at common law or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon
(i) any untrue statement or alleged untrue statement made by the Company or the
Issuer in Section 3 of this
18
Agreement, (ii) any untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement, any Preliminary Prospectus, or the
Prospectus, or any amendment or supplement to the Registration Statement or such
Prospectus, or under the headings "Summary - R&G Capital Trust V," "Summary -
R&G Financial Corporation," "Summary - Preferred Securities" and "R&G Financial"
in the Preliminary Offering Circular and Offering Circular, or (iii) the
omission or alleged omission to state in the Registration Statement, any
Preliminary Prospectus, or the Prospectus, or any amendment or supplement to the
Registration Statement or such Prospectus, or under the headings "Summary - R&G
Capital Trust V," "Summary - R&G Financial Corporation," "Summary - Preferred
Securities" and "R&G Financial" in the Preliminary Offering Circular and
Offering Circular a material fact required to be stated therein or necessary to
make the statements therein not misleading, and will reimburse, as incurred, the
Agents and each Underwriter and each such other person for any legal or other
expenses reasonably incurred by such Agents or Underwriter or such other person
in connection with investigating defending or appearing as a third-party witness
in connection with any such loss, claim, damage, liability or action; provided,
however, that the Company and the Issuer will not be liable in any such case to
the extent that any such loss, claim, damage or liability is based solely upon
an untrue statement or omission or alleged untrue statement or omission in any
of such documents made in reliance upon and in conformity with information
relating to the Agents or any Underwriter furnished in writing to the Company by
the Agents on behalf of any Underwriter expressly for inclusion therein, or for
any information contained in the Preliminary Offering Circular or Offering
Circular for the CT Notes other than under the headings identified above and
other than in the Preliminary Prospectus or Prospectus for the Preferred
Securities attached to the Preliminary Offering Circular or the Offering
Circular, provided, further, that such indemnity with respect to any Preliminary
Prospectus or Preliminary Offering Circular shall not inure to the benefit of
any Underwriter (or any such other person) from whom the person asserting any
such loss, claim, damage, liability or action purchased Preferred Securities or
CT Notes which are the subject thereof to the extent that any such loss, claim,
damage or liability (i) results from the fact that such Underwriter failed to
send or give a copy of the Prospectus and Offering Circular (as amended or
supplemented) to such person at or prior to the confirmation of the sale of such
Preferred Securities or CT Notes to such person in any case where such delivery
is required by the Act and (ii) arises out of or is based upon an untrue
statement or omission of a material fact contained in such Preliminary
Prospectus or Preliminary Offering Circular that was corrected in the Prospectus
and Offering Circular (or any amendment or supplement thereto), unless such
failure to deliver the Prospectus and Offering Circular (as amended or
supplemented) was the result of noncompliance by the Company with Section 4(f).
This indemnity agreement will be in addition to any liability that the Company
might otherwise have. The Company will not, without the prior written consent of
the Agents and each Underwriter, settle or compromise or consent to the entry of
any judgment in any pending or threatened claim, action, suit or proceeding in
respect of which indemnification may be sought hereunder (whether or not such
Underwriter or any person who controls such Underwriter within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act is a party to each
claim, action, suit or proceeding), unless such settlement, compromise or
consent includes an unconditional release of each Underwriter and each such
other person from all liability arising out of such claim, action, suit or
proceeding.
19
(b) In addition to and without limitation of the Issuer
and the Company's obligation to indemnify Popular Securities, Inc. (the
"Independent Underwriter") as an Underwriter and Agent, each of the Issuer and
the Company, jointly and severally, also agree 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 Act or Section
20 of the Exchange Act, from and against any and all loss, 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 Notes.
(c) Each Underwriter will severally and not jointly
indemnify and hold harmless each of the Company and the Issuer, the directors,
officers and employees of the Company and each person, if any, who controls the
Company within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act from and against any losses, claims, damages or liabilities (or
actions in respect thereof) to which any of them may become subject under the
Act or other federal, state or Commonwealth of Puerto Rico statutory law or
regulation, at common law or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon
(i) any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement, any Preliminary Prospectus, or the
Prospectus, any amendment or supplement to the Registration Statement or such
Prospectus, or under the headings "Plan of Distribution" in the Preliminary
Offering Circular and Offering Circular or material fact required to be stated
therein or (ii) the omission or the alleged omission to state in the
Registration Statement, any Preliminary Prospectus or the Prospectus, any
amendment or supplement to the Registration Statement or such Prospectus or
under the headings "Plan of Distribution" in the Preliminary Offering Circular
and Offering Circular, a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with written information furnished to the Company by such Underwriter
through the Agents expressly for use therein; and, subject to the limitation set
forth immediately preceding this clause, will reimburse, as incurred, any legal
or other expenses reasonably incurred by any of them in connection with
investigating or defending any such loss, claim, damage, liability or any action
in respect thereof. The Company acknowledges that, for all purposes under this
Agreement, the statements relating to the Underwriters set forth under the
heading "Plan of Distribution" in the Prospectus and in the Offering Circular
constitute the only information relating to any Underwriter furnished in writing
to the Company by the Agents on behalf of the Underwriters expressly for
inclusion in the Registration Statement, any Preliminary Prospectus, the
Prospectus, the Preliminary Offering Circular or the Offering Circular. This
indemnity agreement will be in addition to any liability that each Underwriter
might otherwise have.
(d) Promptly after receipt by an indemnified party under
this Section 8 of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be
20
made against an indemnifying party or parties under this Section 8, notify such
indemnifying party or parties of the commencement thereof, but the omission so
to notify the indemnifying party or parties will not relieve it or them from any
liability which it or they may have to any indemnified party under the foregoing
provisions of this Section 8 or otherwise unless, and only to the extent that,
such omission results in the forfeiture of substantive rights or defenses by the
indemnifying party. If any such action is brought against an indemnified party
and it notifies an indemnifying party or parties of its commencement, the
indemnifying party or parties against which a claim is made will be entitled to
participate therein and, to the extent that it or they may wish, to assume the
defense thereof with counsel reasonably satisfactory to such indemnified party;
provided, however, that if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be one or more legal defenses available
to it and/or other indemnified parties which are different from or additional to
those available to the indemnifying party, the indemnifying party shall not have
the right to direct the defense of such action on behalf of such indemnified
party or parties and such indemnified party or parties shall have the right to
select separate counsel to defend such action on behalf of such indemnified
party or parties. After notice from the indemnifying party to such indemnified
party of its election so to assume the defense thereof and approval by such
indemnified party of counsel appointed to defend such action, the indemnifying
party will not be liable to such indemnified party under this Section 8 for any
legal or other expenses other than reasonable costs of investigation
subsequently incurred by such indemnified party in connection with the defense
thereof, unless (i) the indemnified party shall have employed separate counsel
in accordance with the proviso to the next preceding sentence (it being
understood, however, that in connection with such action the indemnifying party
shall not be liable for the reasonable fees and expenses of more than one
separate counsel (in addition to the fees and expenses of local counsel
necessary in connection with any such proceedings) in any one action or separate
but substantially similar actions in the same jurisdiction arising out of the
same general allegations or circumstances, designated by the Agents in the case
of paragraph (a) of this Section 8, representing the indemnified parties under
paragraph (a) who are parties to such action or actions), or (ii) the
indemnifying party has authorized in writing the employment of counsel for the
indemnified party at the expense of the indemnifying party. If indemnity is
sought pursuant to Section 8(b), 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 Act or Section
20 of the Exchange Act 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 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. After such notice
from the indemnifying party to such indemnified party, the indemnifying party
will not be liable for the costs and expenses of any settlement of such action
effected by such indemnified party without the written consent of the
21
indemnifying party, unless such indemnified party waived its rights under this
Section 8 in which case the indemnified party may effect such a settlement
without such consent.
(e) If the indemnification provided for in the foregoing
paragraphs of this Section 8 is unavailable or insufficient to hold harmless an
indemnified party under paragraph (a), (b), (c) or (d) above in respect of any
losses, claims, damages or liabilities (or actions in respect thereof) referred
to therein, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages or
liabilities (or actions in respect thereof) (i) in such proportion as is
appropriate to reflect the relative benefits received by the indemnifying party
or parties, on the one hand, and the indemnified party, on the other, from the
offering of the Preferred Securities or (ii) if, but only if, the allocation
provided by the foregoing clause (i) is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the indemnifying party or
parties on the one hand, and the indemnified party, on the other, in connection
with the statements or omissions or alleged statements or omissions that
resulted in such losses, claims, damages or liabilities (or actions in respect
thereof), as well as any other relevant equitable considerations. The relative
benefits received by the Company and the Issuer, on the one hand, and the
Underwriters, on the other, shall be deemed to be in the same proportion as the
total proceeds from the offering of the Preferred Securities (before deducting
expenses) received by the Company bear to the total underwriting discounts and
commissions received by the Underwriters in connection with the sale of the CT
Notes. Relative fault shall be determined by reference to whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Company or the
Agents on behalf of the Underwriters, the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The Company and the Underwriters agree that it would not be just and
equitable if contributions pursuant to this Section 8(e) were to be determined
by pro rata allocation (even if the Underwriters were treated as one entity for
such purposes) or by any other method of allocation which does not take into
account the equitable considerations referred to herein. The amount paid or
payable by an indemnified party as a result of the losses, claims, damages,
liabilities (or actions in respect thereof) referred to above in this Section
8(e) shall be deemed to include any legal or other expenses reasonably incurred
by such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 8(e), no
Underwriter shall be required to contribute any amount in excess of the total
underwriting discounts received by it with respect to the CT Notes purchased by
such Underwriter under this Agreement, less the aggregate amount of any damages
that such Underwriter has otherwise been required to pay in respect of the same
or any substantially similar claim. No person found guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) will be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute as provided in
this Section 8(e) are several in proportion to their respective underwriting
obligations and not joint. For purposes of this Section 8(e), each person, if
any, who controls an Underwriter within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act will have the same rights to contribution as such
Underwriter, and
22
each director of the Company, each officer of the Company who signed the
Registration Statement and each person, if any, who controls the Company within
the meaning of Section 15 of the Act or Section 20 of the Exchange Act, will
have the same rights to contribution as the Company, subject in each case to the
provisions of this paragraph (e). Any party entitled to contribution will,
promptly after receipt of notice of commencement of any action, suit or
proceeding against such party in respect of which a claim for contribution may
be made under this Section 8(e), notify any such party or parties from whom
contribution may be sought, but the omission so to notify will not relieve the
party or parties from whom contribution may be sought from any other
obligation(s) it or they may have hereunder or otherwise than under this
paragraph (e) or to the extent that such party or parties were not adversely
affected by such omission. The contribution agreement set forth above shall be
in addition to any liabilities which any indemnifying party may otherwise have.
No party will be liable for contribution with respect to any action or claim
settled without its written consent (which consent will not be unreasonably
withheld).
(f) The indemnity and contribution agreements contained
in this Section 8 and the representations and warranties of each of the Company
and the Issuer contained in this Agreement shall remain operative and in full
force and effect regardless of (i) any investigation made by or on behalf of the
Underwriters, (ii) acceptance of any of the Preferred Securities or the CT Notes
and payment therefor or (iii) any termination of this Agreement.
9. Termination. This Agreement may be terminated by the Agents at
any time prior to the Closing Date, by notice to the Company, without liability
on the part of the Agents or any Underwriter to the Company if, prior to
delivery and payment for the Preferred Securities, in the sole judgment of the
Agents, (i) trading in the common stock or the preferred stock of the Company or
securities generally shall have been suspended by the Commission or by The
Nasdaq Stock Market, Inc. or the New York Stock Exchange, Inc. (the "NYSE"),
(ii) minimum or maximum prices shall have been established for the common stock
or the preferred stock of the Company or securities generally on either the
National Association of Securities Dealers Automated National Market Quotation
System ("NASDAQ") or the NYSE, or additional material governmental restrictions,
not in force on the date of this Agreement, shall have been imposed upon trading
in securities generally by any of such market or exchange or by order of the
Commission or any court or other Governmental Authority, (iii) a general banking
moratorium shall have been declared by the United States, New York State, or
Commonwealth of Puerto Rico authorities, or (iv) any material adverse change in
the financial or securities markets in the United States or any outbreak or
material escalation of hostilities or declaration by the United States of a
national emergency or war or other calamity or crisis shall have occurred, the
effect of any of which is such as to make it, in the sole judgment of the
Agents, impracticable or inadvisable to market the CT Notes on the terms and in
the manner contemplated by the Offering Circular. Any termination pursuant to
Section 9 shall be without liability of any party to any other party except as
provided in Sections 6(a) and 8.
10. Survival. The respective representations, warranties,
agreements, covenants, indemnities and other statements of each of the Company,
its officers, the Issuer, and the several
23
Underwriters set forth in this Agreement or made by or on behalf of them,
respectively, pursuant to this Agreement shall remain in full force and effect,
regardless of (i) any investigation made by or on behalf of the Company, any of
its officers or directors, any Underwriter or any controlling person referred to
in Section 8 hereof and (ii) delivery of and payment for the Preferred
Securities. The respective agreements, covenants, indemnities and other
statements set forth in Sections 7 and 9 hereof shall remain in full force and
effect, regardless of any termination or cancellation of this Agreement.
11. Notices. Notice given pursuant to any of the provisions of
this Agreement shall be in writing and, unless otherwise specified, shall be
mailed or delivered (a) if to the Company, at the office of the Company, ▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, Executive Vice President and Chief Financial Officer, or (b) if to the
Underwriters, to the office of the Independent Underwriter, ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: President. Any such
notice shall be effective only upon receipt. Any notice under Section 8 or 9 may
be made by telex or telephone, but if so made shall be subsequently confirmed in
writing.
12. Successors. This Agreement shall inure to the benefit of, and
shall be binding upon the Agents, the several Underwriters, the Company, the
Issuer and their respective successors and legal representatives, and nothing
expressed or mentioned in this Agreement is intended or shall be construed to
give any other person any legal or equitable right, remedy or claim under or in
respect of this Agreement, or any provisions herein contained, this Agreement
and all conditions and provisions hereof being intended to be and being for the
sole and exclusive benefit of such persons and for the benefit of no other
person except that (i) the indemnities of each of the Company and the Issuer
contained in Section 8 of this Agreement shall also be for the benefit of any
person or persons who control the Agents or any Underwriter within the meaning
of Section 15 of the Act or Section 20 of the Exchange Act and (ii) the
indemnities of the Underwriters contained in Section 8 of this Agreement shall
also be for the benefit of the directors of the Company, the officers of the
Company who have signed the Registration Statement and any person or persons who
control the Company within the meaning of Section 15 of the Act or Section 20 of
the Exchange Act. No purchaser of CT Notes from any Underwriter shall be deemed
a successor because of such purchase. This Agreement shall not be assignable by
either party hereto without the prior written consent of the other party.
13. APPLICABLE LAW. THE VALIDITY AND INTERPRETATION OF THIS
AGREEMENT, AND THE TERMS AND CONDITIONS SET FORTH HEREIN, SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF PUERTO RICO,
WITHOUT GIVING EFFECT TO ANY PROVISIONS RELATING TO CONFLICTS OF LAWS.
24
14. 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
Please confirm that the foregoing correctly sets forth the agreement
between the Company and the several Underwriters.
Very truly yours,
R&G FINANCIAL CORPORATION
By: _________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Executive Vice President
and Chief Financial Officer
R&G CAPITAL TRUST V
By: _________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Administrative Trustee
Confirmed as of the date first above mentioned:
POPULAR SECURITIES, INC.
By: _________________________________
Name:
Title:
UBS FINANCIAL SERVICES INCORPORATED OF PUERTO RICO
By: _________________________________
Name:
Title:
26
R-G INVESTMENTS CORPORATION
By: _____________________________
Name:
Title:
Each acting on its behalf as Agent in the placement
of the Preferred Securities with Conservation Trust
and as representatives of the several Underwriters
named in Schedule 1 hereof in connection with the
sale of the CT Notes.
27
SCHEDULE 1
UNDERWRITERS
NAME CT NOTES TO BE PURCHASED
---- ------------------------
Popular Securities, Inc. $
UBS Financial Services Incorporated of Puerto Rico
R-G Investments Corporation
Santander Securities Corporation
Total $100,000,000
===== ============
Sch. 1-1
SCHEDULE 2
AGENCY FEE
NAME % OF AGENCY FEE
---- ---------------
Popular Securities, Inc. 50%
UBS Financial Services Incorporated of Puerto Rico 25
R-G Investments Corporation 25
Total 100%
===== ===
Sch. 2-1
EXHIBIT A
LIST OF SUBSIDIARIES
1. R&G Mortgage Corp.
2. R&G Premier Bank of Puerto Rico
3. The Mortgage Store of Puerto Rico
4. Continental Capital Corp.
5. Home & Property Insurance Corporation
6. R-G Investments Corporation
7. R&G Acquisition Holdings Corporation
8. R-G Crown Bank
9. R&G Capital Trust I
10. R&G Capital Trust II
11. R&G Capital Trust III
12. R&G Capital Trust IV
13. R&G Capital Trust V
13. R&G International Corp.
LIST OF SIGNIFICANT SUBSIDIARIES
1. R&G Mortgage Corp.
2. R&G Premier Bank of Puerto Rico
3. R-G Crown Bank
A-1
EXHIBIT B
SUPPLEMENT TO AGENCY AGREEMENT
SUPPLEMENT TO AGENCY AGREEMENT dated March 31, 2004, among R&G
Financial Corporation ("R&G Financial"), R&G Capital Trust V ("Trust V"), the
Puerto Rico Conservation Trust Fund ("Conservation Trust"), and Popular
Securities, Inc., UBS Financial Services of Puerto Rico and R-G Investments
Corporation (the "Agents"), as agents in connection with the sale of Trust V's [
]% Cumulative Monthly Income Trust Preferred Securities (the "Preferred
Securities") to Conservation Trust, and as representative of the underwriters in
connection with the purchase by such underwriters of Conservation Trust's
Secured Notes due 2033 (the "CT Notes").
Reference is made to the Agency Agreement dated as of the date hereof
(the "Agency Agreement") between R&G Financial, Trust V and the Agents, which is
hereby incorporated by reference as if fully set forth herein, and to the
Purchase Agreement dated as of the date hereof (the "Purchase Agreement")
between Conservation Trust and the Agents which is hereby incorporated by
reference as if fully set forth herein. In consideration of the agreements,
representations and agreements contained herein, the parties agree as follows:
1. Subject to compliance by R&G Financial and Trust V with its
agreements, and subject to the fulfillment of the conditions, set forth in the
Agency Agreement, Conservation Trust hereby agrees to purchase the Preferred
Securities on the Closing Date set forth in the Agency Agreement at a purchase
price equal to $[ ].
2. R&G Financial and Trust V hereby agree with Conservation Trust
and with the Agents that Conservation Trust shall have the benefit of the
representations and warranties made by R&G Financial and Trust V in the Agency
Agreement.
3. Conservation Trust hereby agrees with R&G Financial and Trust
V that they shall have the benefit of the representations and warranties made by
Conservation Trust in subsections (a) through (j), (m) and (o) the Section 4 of
the Purchase Agreement. In addition to these, the Conservation Trust represents
and warrants to R&G Financial and Trust V the following:
(a) Conservation Trust has, and at the date of the
Closing Date will have, full right, power and authority to enter into
this Supplement to Agency Agreement and to acquire the Preferred
Securities on the Closing Date as set forth in the Agency Agreement;
(b) All authorizations, approvals, licenses, consents and
orders of, or filings, registrations, or qualifications with, any
governmental or regulatory authority which are required to be obtained
by Conservation Trust for the consummation of the transactions
contemplated by the Agency Agreement have been or will be duly and
validly obtained or performed on or before the Closing Date and, as to
those already obtained, are in full force;
B-1
(c) This Supplement to Agency Agreement, when executed
and delivered by the corresponding parties thereto, will constitute
valid and legally binding obligations of Conservation Trust,
enforceable against Conservation Trust in accordance with their
respective terms, except as such enforceability may be limited by
bankruptcy, insolvency, or other similar laws affecting creditors'
rights generally or by general principles of equity; and
(d) 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
Conservation Trust, threatened, against or affecting Conservation
Trust, which may adversely affect the consummation of the transactions
contemplated in the Agency Agreement or the performance by Conservation
Trust of its obligations under this Supplement to Agency Agreement.
[SIGNATURE PAGE FOLLOWS]
B-2
In witness whereof, the parties have caused this supplement to be
executed by its duly authorized representatives as of the date first written
above.
R&G FINANCIAL CORPORATION
By: _________________________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Executive Vice President and
Chief Financial Officer
R&G CAPITAL TRUST V
By: __________________________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Administrative Trustee
PUERTO RICO CONSERVATION TRUST FUND
By: __________________________________________
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ San ▇▇▇▇▇▇
Title: Executive Director
POPULAR SECURITIES, INC.
By: __________________________________________
Name:
Title:
UBS FINANCIAL SERVICES INCORPORATED OF PUERTO RICO
By: __________________________________________
Name:
Title:
R-G INVESTMENTS CORPORATION
By: __________________________________________
Name:
Title:
#76670 v2 - Agency Agreement - R&G Capital Trust V