Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - POPULAR, INC. | g22962e8vk.htm |
| EX-10 - EX-10 - POPULAR, INC. | g22962exv10.htm |
| EX-5.1 - EX-5.1 - POPULAR, INC. | g22962exv5w1.htm |
| EX-5.2 - EX-5.2 - POPULAR, INC. | g22962exv5w2.htm |
| EX-3.1 - EX-3.1 - POPULAR, INC. | g22962exv3w1.htm |
Exhibit 1
Execution Copy
POPULAR, INC.
40,000,000 DEPOSITARY SHARES, EACH REPRESENTING
1/40th OF A SHARE OF CONTINGENT CONVERTIBLE PERPETUAL
NON-CUMULATIVE PREFERRED STOCK, SERIES D
NON-CUMULATIVE PREFERRED STOCK, SERIES D
(no par value, $1,000 liquidation preference per share)
UNDERWRITING AGREEMENT
April 13, 2010
April 13, 2010
| To | Morgan Stanley & Co. Incorporated for the Underwriters named in Schedule II hereto |
Ladies and Gentlemen:
Popular, Inc., a Puerto Rico corporation (the “Company”), proposes to issue and sell
to the several underwriters named in Schedule II hereto (the “Underwriters”), for whom you
are acting as Manager (the “Manager”), the number of depositary shares (the “Depositary
Shares”) set forth in Schedule I hereto (the “Firm Shares”), as evidenced by depositary
receipts (the “Depositary Receipts”), and each representing 1/40th of a share of
its Contingent Convertible Perpetual Non-Cumulative Preferred Stock, Series D (no par
value, $1,000 liquidation preference per share) (the “Preferred Stock”). The Company also
proposes to issue and sell to the several Underwriters not more than the number of
additional Depositary Shares set forth in Schedule I hereto (the “Additional Shares”) if
and to the extent that you, as Manager of the offering, shall have determined to exercise,
on behalf of the Underwriters, the right to purchase such Depositary Shares granted to the
Underwriters in Section 2 hereof. The Company will deposit the Preferred Stock with The
Bank of New York Mellon, as depositary (the “Depositary”), pursuant to a Deposit Agreement,
dated as of April 19, 2010, between the Company and the Depositary (the “Deposit
Agreement”). The Firm Shares and the Additional Shares are hereinafter collectively
referred to as the “Shares.” Upon the occurrence of certain conditions, the Shares will be
mandatorily convertible into shares of the Company’s common stock, par value $0.01 per
share (the “Common Stock”). If the firm or firms listed in Schedule II hereto include only
the Manager listed in Schedule I hereto, then the terms “Underwriters” and “Manager” as
used herein shall each be deemed to refer to such firm or firms.
The Company has filed with the Securities and Exchange Commission (the “Commission”) a
Registration Statement on Form S-3 (File No. 333-159960, relating to certain securities
(the “Shelf Securities”), including the Preferred Stock and the Shares, to be issued from
time to time by the Company and certain subsidiaries of the Company. The registration
statement as amended to the date of this Agreement, including the information (if any)
deemed to be part of the registration statement at the time of effectiveness pursuant to
Rule 430A or Rule 430B under the Securities Act of 1933, as amended (the “Securities Act”),
is hereinafter referred to as the “Registration Statement,” and the related prospectus
covering the Shelf Securities dated June 12, 2009 in the form first used
to confirm sales of the Shares (or in the form first made available to the Underwriters by
the Company to meet requests of purchasers pursuant to Rule 173 under the Securities Act)
is hereinafter referred to as the “Basic Prospectus.” The Basic Prospectus, as supplemented
by the prospectus supplement specifically relating to the Shares in the form first used to
confirm sales of the Shares (or in the form first made available to the Underwriters by the
Company to meet requests of purchasers pursuant to Rule 173 under the Securities Act) is
hereinafter referred to as the “Prospectus,” and the term “preliminary prospectus” means
any preliminary form of the Prospectus relating to the Shares filed with the Commission.
For purposes of this Agreement, “free writing prospectus” has the meaning set forth in Rule
405 under the Securities Act, “Time of Sale Prospectus” means the preliminary prospectus
together with the free writing prospectuses, if any, each identified in Schedule I hereto,
and “broadly available road show” means a “bona fide electronic road show” as defined in
Rule 433(h)(5) under the Securities Act that has been made available without restriction to
any person. As used herein, the terms “Registration Statement,” “Basic Prospectus,”
“preliminary prospectus,” “Time of Sale Prospectus” and “Prospectus” shall include the
documents, if any, incorporated by reference therein. The terms “supplement,” “amendment,”
and “amend” as used herein with respect to the Registration Statement, the Basic
Prospectus, the Time of Sale Prospectus, any preliminary prospectus or free writing
prospectus shall include all documents subsequently filed by the Company with the
Commission pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), that are deemed to be incorporated by reference therein.
1. Representations and Warranties. The Company represents and warrants to and agrees with each
of the Underwriters that:
(a) The Registration Statement has become effective under the Securities
Act and no stop order suspending the effectiveness of the Registration Statement has been issued by
the Commission, and no proceedings for that purpose are pending before or, to the knowledge of the
Company, threatened by the Commission. At the time of the filing of the Registration Statement ,
the Company was a well-known seasoned issuer (as defined in Rule 405 under the Securities Act) and
is eligible to use the Registration Statement as an automatic shelf registration statement. The
Company has not received notice that the Commission objects to the use of the Registration
Statement as an automatic shelf registration statement.
(b) (i) Each document filed or to be filed pursuant to the Exchange Act and
incorporated by reference in the Time of Sale Prospectus or the Prospectus complied or will
comply when so filed in all material respects with the Exchange Act and the applicable
rules and regulations of the Commission thereunder, (ii)
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each part of the Registration Statement, when such part became effective, did not contain,
and each such part, as amended or supplemented, if applicable, will not contain any 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, (iii) the Registration
Statement as of the date hereof does not contain any 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, (iv) the Registration Statement and the Prospectus
comply, and as amended or supplemented, if applicable, will comply in all material
respects with the Securities Act and the applicable rules and regulations of the
Commission thereunder, (v) the Time of Sale Prospectus does not contain and, at the time
of each sale of the Shares in connection with the offering when the Prospectus is not yet
available to prospective purchasers and at the Closing Date (as defined in Section 4), as
then amended or supplemented by the Company, if applicable, will not, contain any 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, (vi) each broadly available road show, if any, when considered together with
the Time of Sale Prospectus, does not contain any 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 and (vii) the Prospectus does
not contain and, as amended or supplemented, if applicable, will not contain any 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, except that the representations and warranties set forth in this paragraph do
not apply to statements or omissions in the Registration Statement, the Time of Sale
Prospectus, each broadly available road show or the Prospectus based upon information
relating to any Underwriter furnished to the Company in writing by an Underwriter through
the Manager expressly for use therein, it being understood and agreed that the only
information furnished by any Underwriter, consists of the information described as such in
Section 8(a) hereof.
(c) The Company is not an “ineligible issuer” in connection with the offering
pursuant to Rules 164, 405 and 433 under the Securities Act. Any free writing prospectus
that the Company is required to file pursuant to Rule 433(d) under the Securities Act has
been, or will be, filed with the Commission in accordance with the requirements of the
Securities Act and the applicable rules and regulations of the Commission thereunder.
Each free writing prospectus that the Company has filed, or is required to file, pursuant
to Rule 433(d) under the Securities Act or that was prepared by or behalf of or used or
referred to by the Company complies or will comply in all material respects with the
requirements of the Securities Act and the applicable rules and regulations of the
Commission thereunder. Except for the free writing prospectuses, if any, identified in
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Schedule I hereto forming part of the Time of Sale Prospectus, and electronic road shows,
if any, each furnished to you before first use, the Company has not prepared, used or
referred to, and will not, without your prior consent, prepare, use or refer to, any free
writing prospectus.
(d) 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 Registration Statement, the Time of Sale Prospectus and the Prospectus and
to execute and deliver this Agreement; the Company has the full corporate power and
authority to issue, sell and deliver the Preferred Stock as contemplated herein; and the
Company is duly registered as a bank holding company under the Bank Holding Company Act of
1956, as amended (the “Bank Holding Company Act”).
(e) The Company is duly qualified to do business as a foreign corporation and is in
good standing in each jurisdiction where the ownership or leasing of its properties or
the conduct of its business requires such qualification, except where the failure to be
so qualified and in good standing would not, individually or in the aggregate, have a
material adverse effect on the business, financial condition or results of operations of
the Company and its subsidiaries taken as a whole (a “Material Adverse Effect”).
(f) Each Significant Subsidiary (as defined below) has been duly incorporated or
organized and is validly existing in good standing under the laws of the jurisdiction of
its organization, has full corporate or other organizational power and authority to own,
lease and operate its properties and conduct its business as described in the Registration
Statement, the Time of Sale Prospectus and the Prospectus and is duly qualified as a
foreign entity to transact business and is in good standing in each jurisdiction in which
such qualification is required, whether by reason of the ownership or leasing of property
or the conduct of business, except where the failure to so qualify and be in good standing
would not have a Material Adverse Effect; all of the issued and outstanding shares of
capital stock of each Significant Subsidiary have been duly authorized and validly issued,
are fully paid and non-assessable (subject to the provisions of Section 55 of Title 12 of
the United States Code in the case of Significant Subsidiaries which are national banking
associations), were not issued in violation of any preemptive or similar right and, except
as otherwise disclosed in the Registration Statement, the Time of Sale Prospectus and the
Prospectus and, except for directors’ qualifying shares, are owned by the Company, directly
or through subsidiaries, free and clear of any security interest, mortgage, pledge, lien,
encumbrance, claim or equity or, if such is not the case, that any such security interest,
mortgage, pledge, lien, encumbrance, claim or equity, when exercised, enforced or otherwise
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asserted, will not have a Material Adverse Effect; and the Company has no “significant
subsidiaries” (as defined in Rule 1-02(w) of Regulation S-X under the Securities Act) other than
Banco Popular de Puerto Rico, Banco Popular North America, Popular North America, Inc. and Popular
International Bank, Inc. (each, a “Significant Subsidiary” and collectively, the “Significant
Subsidiaries”).
(g) This Agreement has been duly authorized, executed and delivered by the Company.
(h) The Deposit Agreement has been duly authorized, and when executed and delivered
by the Company, will constitute a valid and legally binding obligation of the Company,
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.
(i) As of December 31, 2009, the Company had an authorized and outstanding capitalization as
set forth in the section of the Time of Sale Prospectus and the Prospectus entitled
“Capitalization—Actual,” and, subject to the grant, issuance, exercise, forfeiture or surrender of
options or shares of Common Stock in connection with the Company’s existing stock plans or upon
exercise warrants and rights disclosed as outstanding in the Time of Sale Prospectus and the
Prospectus, as of the Closing Date the Company shall have in all material respects an authorized
and outstanding capitalization as set forth in the section of the Time of Sale Prospectus and the
Prospectus entitled “Capitalization.”
(j) 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.
(k) The issuance of the Preferred Stock has been duly and validly authorized by the
Company. When issued and delivered against payment therefor in accordance with this
Agreement, the Preferred Stock will be validly issued, fully paid and non-assessable and
none of the Preferred Stock will have been issued in violation of the preemptive or other
similar rights of any securityholder of the Company, and will have the powers,
designations, preferences and rights set forth in the restated certificate of
incorporation of the Company, as amended, including by the relevant Certificate of
Designations; the certificates for the Preferred Stock and the Common Stock into which the
Preferred Stock is convertible are in due and proper form.
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(l) Upon execution and delivery of the Depositary Receipts pursuant to the terms of
the Deposit Agreement, the persons in whose names such Depositary Receipts are registered
will be entitled to the rights specified therein and in the Deposit Agreement, 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.
(m) The Shares, the Preferred Stock and the Common Stock into which the Preferred
Stock is convertible conform in all material respects to the respective statements
relating thereto contained in the Registration Statement, the Time of Sale Prospectus and
the Prospectus.
(n) The shares of Common Stock issuable upon the conversion of the Preferred Stock
will, upon receipt of the approval by the Company’s stockholders of an amendment to the
Company’s restated certificate of incorporation increasing the number of authorized shares
of Common Stock, have been duly authorized and, when so issued upon such conversion, will
be validly issued, fully paid and non-assessable and none of such shares of Common Stock
will have been issued in violation of the preemptive or other similar rights of any
securityholder of the Company.
(o) Except as set forth in the Registration Statement, the Time of Sale Prospectus
and the Prospectus, no person has the right to cause the Company to issue or sell to it
any shares of capital stock or other equity interests of the Company (other than pursuant
to the Company’s stock plans in existence on the date hereof or pursuant to options,
rights, warrants or other convertible or exchangeable securities outstanding on the date
hereof which, in each case, are disclosed in the Time of Sale Prospectus and the
Prospectus), and no person has the right, contractual or otherwise, to cause the Company
to register the resale under the Securities Act of any shares of capital stock of or
other equity interests in the Company or to include any such shares or interests in the
Registration Statement.
(p) Except as has been disclosed in the Registration Statement, the Time of Sale
Prospectus and the Prospectus, the issuance of the Preferred Stock or the Shares will not
cause any holder of any shares of capital stock of the Company, securities of the Company
convertible into or exchangeable or exercisable for capital stock of the Company or
options, warrants or other rights to purchase capital stock or any other securities of the
Company to have any right to acquire any securities of the Company.
(q) Neither the Company nor any of the Significant Subsidiaries is in breach or
violation of or in default under (nor has any event occurred which with notice, lapse of
time or both would result in any breach or violation of, constitute
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a default under or give the holder of any indebtedness (or a person acting on such holder’s
behalf) the right to require the repurchase, redemption or repayment of all or a part of
such indebtedness under) (A) its respective charter or bylaws or other organizational
document, or (B) any indenture, mortgage, deed of trust, bank loan or credit agreement or
other evidence of indebtedness, or any license, lease, contract or other agreement or
instrument to which the Company or any of the Significant Subsidiaries is a party or by
which any of them or any of their respective properties may be bound or affected, or (C)
any federal, state, local or foreign law, regulation or rule, or (D) any rule or regulation
of any self-regulatory organization or other non-governmental regulatory authority
(including, without limitation, the rules and regulations of the Nasdaq Stock Market), or
(E) any decree, judgment or order applicable to the Company or any of the Significant
Subsidiaries or any of their respective properties which breach, violation or default,
other than under clause (A), would have a Material Adverse Effect or prevent consummation
of the transactions contemplated under this Agreement; and the execution, delivery and
performance of this Agreement, the issuance of the Preferred Stock or the Shares and the
consummation of the transactions contemplated hereby will not conflict with, result in any
breach or violation of or constitute a default under (nor constitute any event which with
notice, lapse of time or both would result in any breach or violation of or constitute a
default under or give the holder of any indebtedness (or a person acting on such holder’s
behalf) the right to require the repurchase, redemption or repayment of all or a part of
such indebtedness under) (or result in the creation or imposition of a lien, charge or
encumbrance on any property or assets of the Company or any Significant Subsidiary pursuant
to) (I) the charter or bylaws or other organizational document of the Company or any of the
Significant Subsidiaries, (II) any indenture, mortgage, deed of trust, bank loan or credit
agreement or other evidence of indebtedness, or any license, lease, contract or other
agreement or instrument to which the Company or any of the Significant Subsidiaries is a
party or by which any of them or any of their respective properties may be bound or
affected, (III) any federal, state, local or foreign law, regulation or rule, (IV) any rule
or regulation of any self-regulatory organization or other non-governmental regulatory
authority (including, without limitation, the rules and regulations of the Nasdaq Stock
Market), or (V) any decree, judgment or order applicable to the Company or any of the
Significant Subsidiaries or any of their respective properties, that, in the case of
clauses (II) through (IV), would have a Material Adverse Effect or prevent consummation of
the transactions contemplated under this Agreement.
(r) No approval, authorization, consent, or order of or filing with any governmental
body, authority or agency is required in connection with the issuance and sale of the
Shares or the consummation by the Company of the transactions contemplated hereby other
than as may be required by the Securities
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Act, or the securities or blue sky laws of the Commonwealth of Puerto Rico or under
the rules and regulations of the Financial Industry Regulatory Authority (“FINRA”).
(s) Each of the Company and the Significant Subsidiaries has all necessary licenses,
authorizations, consents and approvals and has made all necessary filings required under
any federal, state, local or foreign law, regulation or rule, authorizations, consents and
approvals from other persons, in order to conduct its respective business; neither the
Company nor any of the Significant Subsidiaries is in violation of, or in default under, or
has received notice of any proceedings relating to revocation or modification of, any such
license, authorization, certificate, permit, consent or approval or any federal, state,
local or foreign law, regulation or rule or any decree, order or judgment applicable to the
Company or any of the Significant Subsidiaries, except where such violation, default,
revocation or modification would not, individually or in the aggregate, have a Material
Adverse Effect.
(t) All affiliate transactions, off-balance sheet transactions (including, without
limitation, transactions related to, and the existence of, “variable interest entities”
within the meaning of Financial Accounting Standards Board Interpretation No. 46),
contracts, licenses, agreements, properties, leases or documents of a character required
to be described in the Registration Statement, the Time of Sale Prospectus and the
Prospectus or to be filed as an exhibit to the Registration Statement or any documents
incorporated or deemed incorporated by reference therein or otherwise deemed to be a part
thereof or included therein have been so described or filed as required.
(u) Except as set forth in the Registration Statement, the Time of Sale Prospectus and
the Prospectus, there are no actions, suits, claims, investigations or proceedings pending
or, to the Company’s knowledge, threatened against the Company or any of its subsidiaries
or any of their respective directors or officers to which the Company or any such
subsidiaries or any such directors or officers is or would be a party or of which any of
their respective properties is or would be subject at law or in equity, before or by any
court or governmental body, authority or agency, that would have a Material Adverse Effect
or prevent consummation of the transactions contemplated under this Agreement.
(v) PricewaterhouseCoopers LLP, whose report on the consolidated financial statements
of the Company and its subsidiaries is incorporated by reference in the Registration
Statement, the Time of Sale Prospectus and the Prospectus, is an independent registered
public accounting firm as required by the Securities Act and by the rules of the Public
Company Accounting Oversight Board.
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(w) The consolidated financial statements incorporated by reference in the
Registration Statement, the Time of Sale Prospectus and the Prospectus present fairly in
all material respects the consolidated financial position 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 specified and have been prepared
in compliance with the requirements of the Securities Act and the Exchange Act and in
conformity with generally accepted accounting principles in the United States (“GAAP”)
applied on a consistent basis during the periods involved; there are no financial
statements (historical or pro forma) that are required to be included or incorporated by
reference in the Registration Statement, the Time of Sale Prospectus or the Prospectus
(including, without limitation, as required by Rules 3-12 or 3-05 or Article 11 of
Regulation S-X promulgated under the Securities Act) that are not included or incorporated
by reference as required; the Company has disclosed all material commitments and
contingencies in the footnotes of its consolidated financial statements to the extent such
commitments and contingencies are required to be disclosed in the footnotes of consolidated
financial statements prepared in accordance with GAAP; except as disclosed in the
Registration Statement, the Time of Sale Prospectus and the Prospectus, neither the Company
nor any subsidiary is, together with its “related parties,” the “primary beneficiary” of
any “variable interest entity” (as such terms are used in Financial Accounting Standards
Board Interpretation No. 46).
(x) Subsequent to the execution of this Agreement or, if earlier, the respective dates
as of which information is given in the Registration Statement, the Time of Sale Prospectus
and the Prospectus, except as may otherwise be stated in, or contemplated by, the
Registration Statement, the Time of Sale Prospectus and the Prospectus, there has not been
(i) any material adverse change, or any development involving a prospective material
adverse change, in the business, management, financial condition or results of operations
of the Company and its subsidiaries taken as a whole, (ii) any obligation, direct or
contingent (including any off-balance sheet obligations), incurred by the Company or any
subsidiary, which is material to the Company and its subsidiaries taken as a whole, (iii)
any change in the capital stock or outstanding indebtedness of the Company or any
subsidiary, which is material to the Company and its subsidiaries taken as a whole or (iv)
any dividend or distribution of any kind declared, paid or made on the capital stock of the
Company.
(y) Neither the Company nor any of the Significant Subsidiaries is or, after giving
effect to the transactions contemplated in this Agreement, will 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.
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(z) The Company and its subsidiaries own, or have obtained valid and enforceable licenses for,
or other rights to use, the inventions, patent applications, patents, trademarks (both registered
and unregistered), trade names, service names, copyrights, trade secrets and other proprietary
information described in the Registration Statement, the Time of Sale Prospectus and the Prospectus
as being owned or licensed by them or which are necessary for the conduct of their respective
businesses as currently conducted or as proposed to be conducted, except where the failure to own,
license or have such rights would not, individually or in the aggregate, have a Material Adverse
Effect (collectively, “Intellectual Property”).
(aa) Except as would not have a Material Adverse
Effect, (i) all tax returns required to be filed by the Company or any of its subsidiaries have
been timely filed, and (ii) all taxes and other assessments of a similar nature (whether imposed
directly or through withholding), including any interest, additions to tax or penalties applicable
thereto due or claimed to be due from such entities, shown on such tax returns have been timely
paid, other than those being contested in good faith and for which adequate reserves have been
provided.
(bb) The statements in the Time of Sale Prospectus and the Prospectus under the
heading “Taxation,” insofar as such statements constitute statements or summaries of
matters of Puerto Rico and United States Federal tax consequences to certain holders and
beneficial owners of the Shares, provide a fair and accurate summary of such consequences
under current law in all material respects.
(cc) The Company maintains a system of internal accounting controls meeting the
requirements of Section 13(b)(2) of the Exchange Act.
(dd) The Company has established and maintains and evaluates “disclosure controls and
procedures” (as such term is defined in Rule 13a-15 and 15d-15 under the Exchange Act) and
“internal control over financial reporting” (as such term is defined in Rule 13a-15 and
15d-15 under the Exchange Act); such disclosure controls and procedures are designed to
ensure that material information relating to the Company, including its consolidated
subsidiaries, is made known to the Company’s Chief Executive Officer and its Chief
Financial Officer by others within those entities, and such disclosure controls and
procedures are effective in all material respects to perform the functions for which they
were established; the Company’s auditors and the Audit Committee of the Board of Directors
of the Company have been advised of: (i) any significant deficiencies in the design or
operation of internal controls that have been identified by the Company’s management and
which could adversely affect the Company’s ability to record, process, summarize, and
report financial data; and (ii) any fraud, whether or not material, that has been
identified by the Company’s
10
management and that involves management or other employees who have a role in the Company’s
internal controls; such internal controls over financial reporting are effective and any
past material weaknesses in internal controls have been identified for the Company’s
auditors; since the date of the most recent evaluation of such disclosure controls and
procedures, there have been no significant changes in internal controls or in other factors
that could significantly affect internal controls, including any corrective actions with
regard to significant deficiencies and material weaknesses; the principal executive
officers (or their equivalents) and principal financial officers (or their equivalents) of
the Company have made all certifications required by the Sarbanes Oxley Act of 2002 (the
“Sarbanes Oxley Act”) and any related rules and regulations promulgated by the Commission,
and the statements contained in any such certification are complete and correct in all
material respects; and the Company, its subsidiaries and the Company’s directors and
officers in such person’s capacity as a director or officer serving the Company, are in
compliance in all material respects with all applicable effective provisions of the
Sarbanes-Oxley Act and the rules and regulations of the Commission and the Nasdaq Stock
Market promulgated thereunder.
(ee) Except as (i) would not, individually or in the aggregate, have a Material
Adverse Effect, or (ii) has been disclosed in the Registration Statement, the Time of Sale
Prospectus and the Prospectus, (x) none of the Company or any of its subsidiaries or each
of the Company’s or its subsidiaries’ directors, officers, agents, employees or
affiliates, in such person’s capacity as a director, officer, agent, employee or
affiliates of the Company or any of its respective subsidiaries, is aware of or has taken
any action, directly or indirectly, that would result in a violation by such persons of
the Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations
thereunder (the “Foreign Corrupt Practices Act”) and any other applicable anti-corruption
laws to which they may be subject, (y) the Company, its subsidiaries and, to the knowledge
of the Company, its affiliates have conducted their businesses in compliance with the
Foreign Corrupt Practices Act and any other applicable anti-corruption laws to which they
may be subject, and (z) the Company and its subsidiaries have instituted and maintain
policies and procedures designed to ensure, and which are reasonably expected to continue
to ensure, continued compliance therewith.
(ff) The operations of the Company and its subsidiaries are and have been conducted
at all times in material compliance with all applicable financial recordkeeping and
reporting requirements, including those of the Currency and Foreign Transactions
Reporting Act of 1970, as amended, the Bank Secrecy Act, as amended by Title III of the
Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept
and Obstruct Terrorism Act of 2001 (USA PATRIOT Act), and the applicable anti-money
laundering statutes of
11
jurisdictions where the Company and its subsidiaries conduct business, the rules and
regulations thereunder and any related or similar rules, regulations or guidelines,
issued, administered or enforced by any governmental agency (collectively, the “Anti-Money
Laundering Laws”), and no action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving the Company or any of
its subsidiaries with respect to the Anti-Money Laundering Laws is pending or, to the best
knowledge of the Company, threatened.
(gg) The Company will not directly or indirectly use the proceeds of the offering of
the Shares, or lend, contribute or otherwise make available such proceeds to any
subsidiary, joint venture partner or other agent, employee or affiliate of the Company or
any of its subsidiaries, in such person’s capacity as a director, officer, agent, employee
or affiliate of the Company or any of its subsidiaries, or any individual or entity
(“Person”), to finance any activities of or with any Person, or in any country or
territory, that, at the time of such financing, is a Person with whom or is in a country or
territory where transactions or dealings would be prohibited for U.S. persons to engage in
under the economic sanctions of the United States administered by the Office of Foreign
Assets Control by the U.S. Treasury Department.
(hh) No Significant Subsidiary is currently party to any contract, is currently
subject to any regulatory order or has received any notice (directed at such Significant
Subsidiary and not other similarly situated entities) from a regulatory body, authority or
agency, in any case that prohibits, directly or indirectly, it from paying any dividends
to the Company, from making any other distribution on such subsidiary’s capital stock,
from repaying to the Company any loans or advances to such subsidiary from the Company or
from transferring any of such subsidiary’s property or assets to the Company or any other
subsidiary of the Company, except as described in the Time of Sale Prospectus and the
Prospectus.
(ii) Neither the Company nor any of the Company’s subsidiaries or any other
affiliates have taken, directly or indirectly, any action that has constituted or is
designed to or that could reasonably be expected to cause or result in any
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Preferred Stock or the Shares.
In addition, any certificate signed by any officer of the Company or any of its
subsidiaries and delivered to the Underwriters or counsel for the Underwriters in
connection with the offer and sale of the Shares and the transactions contemplated herein
shall be deemed to be a representation and warranty by the
12
Company or such subsidiary, as the case may be, as to matters covered thereby, to each
Underwriter.
2. Agreements to Sell and Purchase. The Company hereby agrees to sell to the several
Underwriters, and each Underwriter, upon the basis of the representations and warranties herein
contained, but subject to the conditions hereinafter stated, agrees, severally and not jointly, to
purchase from the Company the respective number of Firm Shares set forth in Schedule II hereto
opposite its name at the purchase price set forth in Schedule I hereto (the “Purchase Price”).
On
the basis of the representations and warranties contained in this Agreement, and subject to its
terms and conditions, the Company agrees to sell to the Underwriters the Additional Shares, and the
Underwriters shall have the right to purchase, severally and not jointly, up to the number of
Additional Shares set forth in Schedule I hereto at the Purchase Price, provided, however, that the
amount paid by the Underwriters for any Additional Shares shall be reduced by an amount per share
equal to any dividends declared by the Company and payable on the Firm Shares but not payable on
such Additional Shares. You may exercise this right on behalf of the Underwriters in whole or from
time to time in part by giving written notice not later than 30 days after the date of the
Prospectus. Any exercise notice shall specify the number of Additional Shares to be purchased by
the Underwriters and the date on which such shares are to be purchased. Each purchase date must be
at least two business days after the written notice is given and may not be earlier than the
closing date for the Firm Shares nor later than ten business days after the date of such notice.
Additional Shares may be purchased as provided in Section 4 hereof solely for the purpose of
covering over-allotments made in connection with the offering of the Firm Shares. On each day, if
any, that Additional Shares are to be purchased (an “Option Closing Date”), each Underwriter
agrees, severally and not jointly, to purchase the number of Additional Shares (subject to such
adjustments to eliminate fractional shares as you may determine) that bears the same proportion to
the total number of Additional Shares to be purchased on such Option Closing Date as the number of
Firm Shares set forth in Schedule II hereto opposite the name of such Underwriter bears to the
total number of Firm Shares.
3. Public Offering. The Company is advised by you that the
Underwriters propose to make a public offering of their respective portions of the Shares
as soon after the Registration Statement and this Agreement have become effective as in
your judgment is advisable. The Company is further advised by you that the Shares are to
be offered to the public upon the terms set forth in the Prospectus.
13
4. Payment and Delivery. Payment for the Firm Shares shall be made to the Company in Federal
funds immediately available in New York City on the closing date and time set forth in Schedule I
hereto, or at such other time on the same or such other date, not later than the fifth business day
thereafter, as may be agreed by the Company and you. The time and date of such payment are
hereinafter referred to as the “Closing Date.”
Payment for any Additional Shares shall be made to
the Company in Federal funds immediately available in New York City on the date specified in the
corresponding notice described in Section 2 or at such other time on the same or on such other
date, in any event not later than the tenth business day thereafter, as may be designated in
writing by you.
The Depositary Receipts representing the Firm Shares and the Additional Shares shall
be registered in such names and in such denominations as you shall request in writing not
later than one full business day prior to the Closing Date or the applicable Option
Closing Date, as the case may be, for the respective accounts of the several Underwriters,
with any transfer taxes payable in connection with the transfer of the Shares to the
Underwriters duly paid, against payment of the Purchase Price therefor.
5. Conditions to the Underwriters’ Obligations. The several obligations of the Underwriters
are subject to the following conditions:
(a) Subsequent to the execution and delivery of this
Agreement and prior to the Closing Date:
(i) there shall not have occurred any downgrading, nor
shall any notice have been given of any intended or potential downgrading or of any review for a
possible change that does not indicate the direction of the possible change, in the rating accorded
any of the securities of the Company or any of its subsidiaries by any “nationally recognized
statistical rating organization,” as such term is defined for purposes of Rule 436(g)(2) under the
Securities Act; and
(ii) there shall not have occurred any change, or any development involving a
prospective change, in the business, financial condition or results of operations of the Company
and its subsidiaries, taken as a whole, from that set forth in the Time of Sale Prospectus as of
the date of this Agreement that, in your judgment, is material and adverse and that makes it, in
your judgment, impracticable to market the Shares on the terms and in the manner contemplated in
the Time of Sale Prospectus.
14
(b) The Underwriters shall have received on the Closing Date a certificate, dated the
Closing Date and signed by an executive officer of the Company, to the effect set forth in
Section 5(a)(i) above and to the effect that the representations and warranties of the
Company contained in this Agreement are true and correct as of the Closing Date (provided
that solely with respect to those representations and warranties that have not already
been qualified by materiality, such certificate may represent that such representation and
warranties are true and correct in all material respects) and that the Company has
complied with all of the agreements and satisfied all of the conditions on its part to be
performed or satisfied hereunder on or before the Closing Date.
The officer signing and delivering such certificate may rely upon the best of his or
her knowledge as to proceedings threatened.
(c) The Underwriters shall have received on the date hereof a certificate, dated the
date hereof and signed by the Chief Financial Officer of the Company, in form and
substance satisfactory to the Underwriters.
(d) The Underwriters shall have received on the Closing Date an opinion of
Pietrantoni Méndez & Alvarez LLP, special Puerto Rico counsel to the Company, dated the
Closing Date, substantially in the form set forth in Annex I hereto.
(e) The Underwriters shall have received on the Closing Date the opinion and letter
of Sullivan & Cromwell LLP, special counsel of the Company, dated the Closing Date,
substantially in the form set forth in Annex II hereto.
(f) The Underwriters shall have received on the Closing Date an opinion of Sidley
Austin LLP, counsel for the Underwriters, dated the Closing Date, covering such
matters the Manager may reasonably request.
(g) The Underwriters shall have received from
PricewaterhouseCoopers LLP, independent registered public accounting firm, on each of the
date hereof and the Closing Date, a letter dated the date hereof or the Closing Date, as
the case may be, in form and substance reasonably satisfactory to the Underwriters and
PricewaterhouseCoopers LLP, 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, the
Time of Sale Prospectus and the Prospectus; provided that the letter delivered on the
Closing Date shall use a “cut-off date” not earlier than the date hereof.
(h) The “lock-up” agreements, each substantially in the form of Exhibit A hereto,
between you and certain directors and executive officers of the
15
Company delivered to you on or before the Closing Date, shall be in full force and effect
on the Closing Date.
The several obligations of the Underwriters to purchase Additional Shares hereunder
are subject to the delivery to you on the applicable Option Closing Date of such documents
as you may reasonably request with respect to the good standing of the Company, the due
authorization and issuance of the Additional Shares to be sold on such Option Closing Date
and other matters related to the issuance of such Additional Shares.
6. Covenants of the Company. The Company covenants with each
Underwriter as follows:
(a) To furnish to you, without charge, a conformed copy of the Registration Statement
(including exhibits thereto and documents incorporated by reference therein) and to
deliver to each of the Underwriters during the period mentioned in Section 6(e) or 6(f)
below, as many copies of the Time of Sale Prospectus, the Prospectus, any documents
incorporated by reference therein and any supplements and amendments thereto or to the
Registration Statement as you may reasonably request.
(b) Before amending or supplementing the Registration Statement, the Time of Sale
Prospectus or the Prospectus during the period mentioned in Section 6(e) or 6(f) below, to
furnish to you a copy of each such proposed amendment or supplement and not to file any
such proposed amendment or supplement to which you reasonably object.
(c) To furnish to you a copy of each proposed free writing prospectus to be prepared
by or on behalf of, used by, or referred to by the Company in connection with the
offering of the Shares and not to use or refer to any such proposed free writing
prospectus to which you reasonably object.
(d) Not to take any action that would result in an Underwriter or the Company being
required to file with the Commission pursuant to Rule 433(d) under the Securities Act a
free writing prospectus prepared by or on behalf of the Underwriter that the Underwriter
otherwise would not have been required to file thereunder.
(e) If the Time of Sale Prospectus is being used to solicit offers to buy the Shares
at a time when the Prospectus is not yet available to prospective purchasers and any event
shall occur or condition exist as a result of which it is necessary to amend or supplement
the Time of Sale Prospectus in order to make the statements therein, in the light of the
circumstances, not misleading, or if any event shall occur or condition exist as a result
of which the Time of Sale
16
Prospectus conflicts with the information contained in the Registration Statement then on
file, or if, in the reasonable opinion of counsel for the Underwriters and the Company, it
is necessary to amend or supplement the Time of Sale Prospectus to comply with applicable
law, forthwith to prepare, file with the Commission and furnish, at its own expense, to the
Underwriters and to any dealer upon request, either amendments or supplements to the Time
of Sale Prospectus so that the statements in the Time of Sale Prospectus as so amended or
supplemented will not, in the light of the circumstances when the Time of Sale Prospectus
is delivered to a prospective purchaser, be misleading or so that the Time of Sale
Prospectus, as amended or supplemented, will no longer conflict with the Registration
Statement, or so that the Time of Sale Prospectus, as amended or supplemented, will comply
with applicable law.
(f) If, during such period after the first date of the public offering of the Shares
as in the reasonable opinion of counsel for the Underwriters and the Company, the
Prospectus (or in lieu thereof the notice referred to in Rule 173(a) of the Securities Act)
is required by law to be delivered in connection with sales by an Underwriter or dealer,
any event shall occur or condition exist as a result of which it is necessary to amend or
supplement the Prospectus in order to make the statements therein, in the light of the
circumstances when the Prospectus (or in lieu thereof the notice referred to in Rule 173(a)
of the Securities Act) is delivered to a purchaser, not misleading, or if, in the
reasonable opinion of counsel to the Underwriters and the Company, it is necessary to amend
or supplement the Prospectus to comply with applicable law, forthwith to prepare, file with
the Commission and furnish, at its own expense, to the Underwriters and to the dealers
(whose names and addresses you will furnish to the Company) to which Shares may have been
sold by you on behalf of the Underwriters and to any other dealers upon request, either
amendments or supplements to the Prospectus so that the statements in the Prospectus as so
amended or supplemented will not, in the light of the circumstances when the Prospectus (or
in lieu thereof the notice referred to in Rule 173(a) of the Securities Act) is delivered
to a purchaser, be misleading or so that the Prospectus, as amended or supplemented, will
comply with applicable law.
(g) To endeavor to qualify the Shares and the Common Stock into which the Preferred
Stock is convertible for offer and sale under the securities or Blue Sky laws of such
jurisdictions as you shall reasonably request.
(h) To use commercially reasonable efforts to obtain, effect and maintain the
listing of the Shares on the Nasdaq Stock Market.
(i) To use commercially reasonable efforts to obtain the approval of holders of the
Common Stock of an amendment to the Company’s restated
17
certificate of incorporation to increase the number of authorized shares of Common Stock to permit
the conversion in full of the Preferred Stock into Common Stock (“Shareholder Approval”).
(j) Until Shareholder Approval is obtained, to first reserve any additional shares of Common Stock authorized
after the issuance of the Preferred Stock and the Shares to satisfy the Company’s obligations to
deliver Common Stock pursuant to any conversion of the Preferred Stock.
(k) To make generally available to the Company’s security holders and to you as
soon as practicable an earning statement covering a period of at least twelve months
beginning with the first fiscal quarter of the Company occurring after the date of this
Agreement which shall satisfy the provisions of Section 11(a) of the Securities Act and
the rules and regulations of the Commission thereunder.
(l) Whether or not the transactions contemplated in this Agreement are consummated or
this Agreement is terminated, to pay or cause to be paid all expenses incident to the
performance of its obligations under this Agreement, including: (i) the fees, disbursements
and expenses of the Company’s counsel and the Company’s accountants in connection with the
registration and delivery of the Shares under the Securities Act and all other fees or
expenses in connection with the preparation and filing of the Registration Statement, any
preliminary prospectus, the Time of Sale Prospectus, the Prospectus, any free writing
prospectus prepared by or on behalf of, used by, or referred to by the Company and
amendments and supplements to any of the foregoing, including the filing fees payable to
the Commission relating to the Shares all printing costs associated therewith, and the
mailing and delivering of copies thereof to the Underwriters and dealers, in the quantities
hereinabove specified, (ii) all costs and expenses related to the transfer and delivery of
the Shares to the Underwriters, including any transfer or other taxes payable thereon,
(iii) the reasonable costs of printing or producing any Blue Sky or Legal Investment
memorandum in connection with the offer and sale of the Shares under state securities laws
and all expenses in connection with the qualification of the Shares for offer and sale
under state securities laws as provided in Section 6(g) hereof, including filing fees and
the reasonable fees and disbursements of counsel for the Underwriters in connection with
such qualification and in connection with the Blue Sky or Legal Investment memorandum, (iv)
all filing fees and the reasonable fees and disbursements of counsel to the Underwriters
incurred in connection with the review and qualification of the offering of the Shares by
the National Association of Securities Dealers, Inc., (v) all costs and expenses incident
to listing the Shares on NASDAQ Stock Market, if applicable, (vi) the cost of printing
certificates representing the Shares, (vii) the costs and charges of any transfer agent,
registrar
18
or depositary, (viii) the costs and expenses of the Company relating to investor
presentations on any “road show” undertaken in connection with the marketing of the
offering of the Preferred Stock or the Shares, including, without limitation, expenses
associated with the preparation or dissemination of any electronic road show, expenses
associated with the production of road show slides and graphics, and travel and lodging
expenses of the representatives and officers of the Company, and (ix) all other costs and
expenses incident to the performance of the obligations of the Company hereunder for which
provision is not otherwise made in this Section. It is understood, however, that except as
provided in this Section, Section 8 entitled “Indemnity and Contribution” and the last
paragraph of Section 10 below, the Underwriters will pay all of their costs and expenses,
including fees and disbursements of their counsel, stock transfer taxes payable on resale
of any of the Shares by them and any advertising expenses connected with any offers they
may make.
(m) To prepare a final term sheet relating to the offering of the Shares, containing
only information that describes the final terms of the offering in a form consented to by
the Manager, and to file such final term sheet within the period required by Rule
433(d)(5)(ii) under the Securities Act following the date the final terms have been
established for the offering of the Shares.
The Company also covenants with each Underwriter that, without the prior written
consent of Morgan Stanley & Co. Incorporated, it will not, during the period commencing on
the date hereof and ending 60 days after the date of the Prospectus, (1) 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, lend, or otherwise
transfer or dispose of, directly or indirectly, any shares of Preferred Stock or Common
Stock or any securities convertible into or exercisable or exchangeable for Preferred Stock
or Common Stock or (2) enter into any swap or other arrangement that transfers to another,
in whole or in part, any of the economic consequences of ownership of the Preferred Stock
or Common Stock, whether any such transaction described in clause (1) or (2) above is to be
settled by delivery of Preferred Stock or Common Stock or such other securities, in cash or
otherwise or (3) file any registration statement with the Commission relating to the
offering of any shares of Preferred Stock or Common Stock or any securities convertible
into or exercisable or exchangeable for Preferred Stock or Common Stock. The foregoing
sentence shall not apply to (a) the Shares to be sold hereunder, (b) the issuance by the
Company of shares of Preferred Stock or Common Stock or any securities convertible into or
exercisable or exchangeable for Preferred Stock or Common Stock pursuant to the Company’s
stock plans in existence on the date hereof, pursuant to options, rights, warrants or other
convertible or exchangeable securities outstanding on the date hereof or pursuant to other
agreements existing on the date hereof, which, in each
19
case, are disclosed in the Time of Sale Prospectus and the Prospectus, or (c) the
establishment of a trading plan pursuant to Rule 10b5-1 under the Exchange Act for the
transfer of shares of Preferred Stock or Common Stock, provided that such plan does not
provide for the transfer of Preferred Stock or Common Stock during the restricted period
and no public announcement or filing under the Exchange Act regarding the establishment of
such plan shall be required of or voluntarily made by or on behalf of the undersigned or
the Company.
7. Covenants of the Underwriters. Each Underwriter severally covenants with the
Company (i) to furnish to the Company a copy of each proposed free writing prospectus to
be prepared by or on behalf of, used by, or referred to by an Underwriter in connection
with the offering of the Shares and not to use or refer to any such proposed free writing
prospectus to which the Company reasonably objects and (ii) not to take any action that
would result in an Underwriter or the Company being required to file with the Commission
pursuant to Rule 433(d) under the Securities Act a free writing prospectus that the
Company otherwise would not have been required to file thereunder.
8. Indemnity and Contribution. (a) The Company agrees to indemnify and hold harmless
each Underwriter, each person, if any, who controls any Underwriter within the meaning of
either Section 15 of the Securities Act or Section 20 of the Exchange Act and each
affiliate of any Underwriter within the meaning of Rule 405 under the Securities Act from
and against any and all losses, claims, damages and liabilities (including, without
limitation, any legal or other expenses reasonably incurred in connection with defending or
investigating any such action or claim) caused by any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement or any amendment
thereof, any preliminary prospectus, the Time of Sale Prospectus, any issuer free writing
prospectus as defined in Rule 433(h) under the Securities Act, any Company information that
the Company has filed, or is required to file, pursuant to Rule 433(d) under the Securities
Act, or the Prospectus or any amendment or supplement thereto, or caused by any omission or
alleged omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as such losses,
claims, damages or liabilities are caused by any such untrue statement or omission or
alleged untrue statement or omission based upon information relating to any Underwriter
furnished to the Company in writing by an Underwriter through the Manager expressly for use
therein, it being understood and agreed that the only information furnished by any
Underwriter consists of the following information in the Time of Sale Prospectus and the
Prospectus furnished on behalf of each Underwriter: the third, seventh, eleventh,
thirteenth, fifteenth (with respect to the fourth sentence therein only) and sixteenth
paragraphs, in each case under the caption “Plan of Distribution (Conflicts of Interest)”.
20
(b) Each Underwriter agrees, severally and not jointly, to indemnify and hold harmless
the Company, its directors, its officers who sign the Registration Statement and each
person, if any, who controls the Company within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act to the same extent as the foregoing
indemnity from the Company to such Underwriter, but only with reference to information
relating to such Underwriter furnished to the Company in writing by such Underwriter
through you expressly for use in the Registration Statement, any preliminary prospectus,
the Time of Sale Prospectus, any issuer free writing prospectus or the Prospectus or any
amendment or supplement thereto, it being understood and agreed that the only information
furnished by any Underwriter, consists of the information described in Section 8(a) hereof.
(c) In case any proceeding (including any governmental investigation) shall be
instituted involving any person in respect of which indemnity may be sought pursuant to
Section 8(a) or 8(b), such person (the “indemnified party”) shall promptly notify the
person against whom such indemnity may be sought (the “indemnifying party”) in writing and
the indemnifying party, upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the indemnified party and any
others the indemnifying party may designate in such proceeding and shall pay the fees and
disbursements of such counsel related to such proceeding. In any such proceeding, any
indemnified party shall have the right to retain its own counsel, but the fees and expenses
of such counsel shall be at the expense of such indemnified party unless (i) the
indemnifying party and the indemnified party shall have mutually agreed to the retention of
such counsel or (ii) the named parties to any such proceeding (including any impleaded
parties) include both the indemnifying party and the indemnified party and representation
of both parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying party shall not,
in respect of the legal expenses of any indemnified party in connection with any proceeding
or related proceedings in the same jurisdiction, be liable for the reasonably incurred fees
and expenses of more than one separate firm (in addition to local counsel) for all such
indemnified parties and that all such reasonably incurred fees and expenses shall be
reimbursed as they are incurred. Such firm shall be designated in writing by Morgan Stanley
& Co. Incorporated, in the case of parties indemnified pursuant to Section 8(a), and by the
Company, in the case of parties indemnified pursuant to Section 8(b). The indemnifying
party shall not be liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment for the
plaintiff, the indemnifying party agrees to indemnify the indemnified party from and
against any loss or liability by reason of such settlement or judgment. No indemnifying
party shall, without the prior written consent of the indemnified party, effect any
settlement of any pending or
21
threatened proceeding in respect of which any indemnified party is or could have been a
party and indemnity could have been sought hereunder by such indemnified party, unless
such settlement includes an unconditional release of such indemnified party from all
liability on claims that are the subject matter of such proceeding.
(d) To the extent the indemnification provided for in Section 8(a) or 8(b) is
unavailable to an indemnified party or insufficient in respect of any losses, claims,
damages or liabilities referred to therein, then each indemnifying party under such
paragraph, in lieu of indemnifying such indemnified party thereunder, shall contribute to
the amount paid or payable by such indemnified party as a result of such losses, claims,
damages or liabilities (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 Shares or (ii) if the allocation provided by clause 8(d)(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 8(d)(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 that resulted in such losses, claims, damages or
liabilities, 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 Shares shall be deemed to be in the same respective
proportions as the net proceeds from the offering of the Shares (before deducting
expenses) received by the Company and the total underwriting discounts and commissions
received by the Underwriters bear to the aggregate initial public offering price of the
Shares set forth in the Prospectus. 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 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 by the Underwriters and the parties’ relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission. The
Underwriters’ respective obligations to contribute pursuant to this Section 8 are several
in proportion to the respective number of Shares they have purchased hereunder, and not
joint.
(e) The Company and the Underwriters agree that it would not be just or equitable if
contribution pursuant to this Section 8 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 that does not take account of the equitable considerations referred to in
Section 8(d). The amount paid or payable by an indemnified party as a result of the losses,
claims, damages and liabilities referred to in Section 8(d) shall be deemed to include,
subject to the limitations set forth
22
above, 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, no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at which the Shares
underwritten by it and distributed to the public were offered to the public exceeds the
amount of any damages that such Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The remedies provided for in this Section 8 are not exclusive and shall
not limit any rights or remedies which may otherwise be available to any indemnified party
at law or in equity.
(f) The indemnity and contribution provisions contained in this Section 8 and the
representations, warranties and other statements of the Company contained in this Agreement
shall remain operative and in full force and effect regardless of (i) any termination of
this Agreement, (ii) any investigation made by or on behalf of any Underwriter, any person
controlling any Underwriter or any affiliate of any Underwriter or by or on behalf of the
Company, its officers or directors or any person controlling the Company and (iii)
acceptance of and payment for any of the Shares.
9. Termination. The Underwriters may terminate this Agreement by notice given by you
to the Company, if after the execution and delivery of this Agreement and prior to the
Closing Date (i) trading generally shall have been suspended or materially limited on, or
by, as the case may be, any of the New York Stock Exchange, the NASDAQ Global Select Market
or the Nasdaq Global Market, (ii) trading of any securities of the Company shall have been
suspended on any exchange or in any over-the-counter market, (iii) a material disruption in
securities settlement, payment or clearance services in the United States shall have
occurred, (iv) any moratorium on commercial banking activities shall have been declared by
Federal or New York State authorities or (v) there shall have occurred any outbreak or
escalation of hostilities, or any change in financial markets or any calamity or crisis
that, in your judgment, is material and adverse and which, singly or together with any
other event specified in this clause (v), makes it, in your judgment, impracticable or
inadvisable to proceed with the offer, sale or delivery of the Shares on the terms and in
the manner contemplated in the Time of Sale Prospectus or the Prospectus.
10. Effectiveness; Defaulting Underwriters. This Agreement shall become effective
upon the execution and delivery hereof by the parties hereto.
23
If, on the Closing Date or an Option Closing Date, as the case may be, any one or more
of the Underwriters shall fail or refuse to purchase Shares that it has or they have agreed
to purchase hereunder on such date, and the aggregate number of Shares which such
defaulting Underwriter or Underwriters agreed but failed or refused to purchase is not more
than one-tenth of the aggregate number of the Shares to be purchased on such date, the
other Underwriters shall be obligated severally in the proportions that the number of Firm
Shares set forth opposite their respective names in Schedule II bears to the aggregate
number of Firm Shares set forth opposite the names of all such non-defaulting Underwriters,
or in such other proportions as you may specify, to purchase the Shares which such
defaulting Underwriter or Underwriters agreed but failed or refused to purchase on such
date; provided that in no event shall the number of Shares that any Underwriter has agreed
to purchase pursuant to this Agreement be increased pursuant to this Section 10 by an
amount in excess of one-ninth of such number of Shares without the written consent of such
Underwriter. If, on the Closing Date, any Underwriter or Underwriters shall fail or refuse
to purchase Firm Shares and the aggregate number of Firm Shares with respect to which such
default occurs is more than one-tenth of the aggregate number of Firm Shares to be
purchased on such date, and arrangements satisfactory to you and the Company for the
purchase of such Firm Shares are not made within 36 hours after such default, this
Agreement shall terminate without liability on the part of any non-defaulting Underwriter
or the Company. In any such case either you or the Company shall have the right to postpone
the Closing Date, but in no event for longer than seven days, in order that the required
changes, if any, in the Registration Statement, in the Time of Sale Prospectus, in the
Prospectus or in any other documents or arrangements may be effected. If, on an Option
Closing Date, any Underwriter or Underwriters shall fail or refuse to purchase Additional
Shares and the aggregate number of Additional Shares with respect to which such default
occurs is more than one-tenth of the aggregate number of Additional Shares to be purchased
on such Option Closing Date, the non-defaulting Underwriters shall have the option to (i)
terminate their obligation hereunder to purchase the Additional Shares to be sold on such
Option Closing Date or (ii) purchase not less than the number of Additional Shares that
such non-defaulting Underwriters would have been obligated to purchase in the absence of
such default. Any action taken under this paragraph shall not relieve any defaulting
Underwriter from liability in respect of any default of such Underwriter under this
Agreement.
If this Agreement shall be terminated by the Underwriters, or any of them, because of
any failure or refusal on the part of the Company to comply with the terms or to fulfill
any of the conditions of this Agreement, or if for any reason the Company shall be unable
to perform its obligations under this Agreement, the Company will reimburse the
Underwriters or such Underwriters as have so terminated this Agreement with respect to
themselves, severally, for all
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out-of-pocket expenses (including the fees and disbursements of their counsel)
reasonably incurred by such Underwriters in connection with this Agreement or the
offering contemplated hereunder.
11. Entire Agreement. (a) This Agreement, together with any contemporaneous written
agreements and any prior written agreements (to the extent not superseded by this
Agreement) that relate to the offering of the Shares, represents the entire agreement
between the Company and the Underwriters with respect to the preparation of any
preliminary prospectus, the Time of Sale Prospectus, the Prospectus, the conduct of the
offering, and the purchase and sale of the Shares.
(b) The Company acknowledges that in connection with the offering of the Shares: (i)
the Underwriters have acted at arms length, are not agents of, and owe no fiduciary
duties to, the Company or any other person, (ii) the Underwriters owe the Company only
those duties and obligations set forth in this Agreement and prior written agreements (to
the extent not superseded by this Agreement), if any, and (iii) the Underwriters may have
interests that differ from those of the Company. The Company waives to the full extent
permitted by applicable law any claims it may have against the Underwriters arising from
an alleged breach of fiduciary duty in connection with the offering of the Shares.
12. Counterparts. This Agreement may be signed in two or more counterparts, each
of which shall be an original, with the same effect as if the signatures thereto and
hereto were upon the same instrument.
13. Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
14. Headings. The headings of the sections of this Agreement have been inserted for
convenience of reference only and shall not be deemed a part of this Agreement.
15. Notices. All communications hereunder shall be in writing and effective only upon
receipt and if to the Underwriters shall be delivered, mailed or sent to you at the address
set forth in Schedule I hereto; and if to the Company shall be delivered, mailed or sent to
the address set forth in Schedule I hereto.
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| Very truly yours, | ||||||
| POPULAR, INC. | ||||||
| By: | /s/ Richard Barrios
|
|||||
| Title: SENIOR VICE PRESIDENT | ||||||
[Signature page to Underwriting Agreement]
Accepted as of the date hereof
Morgan Stanley & Co. Incorporated
Acting severally on behalf of themselves
and the several Underwriters named
in Schedule II hereto.
and the several Underwriters named
in Schedule II hereto.
By: Morgan
Stanley & Co. Incorporated
By:
|
/s/ Kenneth G. Pott
|
|||
| Title: Managing Director |
Popular,
Inc. Underwriting Agreement
SCHEDULE I
Time of Sale Prospectus |
Prospectus dated June 12, 2009 relating | |
| to the Shelf Shares | ||
| the preliminary prospectus supplement | ||
| dated April 12, 2010 relating to | ||
| the Shares | ||
| the Pricing Term Sheet, dated April 13, | ||
| 2010 filed by the Company under | ||
| Rule 433(d) of the Securities Act | ||
Title of Shares to be purchased: |
Depositary Shares, as evidenced by | |
| Depositary Receipts, each representing | ||
| 1/40th of a share of Contingent | ||
| Convertible Perpetual Non-Cumulative | ||
| Preferred Stock, Series D | ||
Number of Firm Shares: |
40,000,000 | |
Number of Additional Shares |
6,000,000 | |
Purchase Price: |
$23.9375 per Depositary Share | |
Initial Public Offering Price |
$25.00 per Depositary Share | |
Selling Concession: |
$0.6375 per Depositary Share | |
Reallowance: |
$0.2125 per Depositary Share | |
Closing Date and Time: |
April 19, 2010 10:00 a.m. | |
Closing Location: |
Sidley Austin LLP | |
| 787 Seventh Avenue | ||
| New York, New York 10019 | ||
Address for Notices to Underwriters: |
Morgan Stanley & Co. Incorporated | |
| 1585 Broadway | ||
| New York, New York 10036 | ||
Address for Notices to the Company: |
Popular, Inc. | |
| 209 Muñoz Rivera Avenue |
I - 1
9th Floor
San Juan, Puerto Rico 00918
Attn: Richard Barrios, SVP and Treasurer
San Juan, Puerto Rico 00918
Attn: Richard Barrios, SVP and Treasurer
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SCHEDULE II
| Number of Firm | ||||
| Shares To Be | ||||
| Underwriter | Purchased | |||
Morgan Stanley & Co. Incorporated |
32,800,000 | |||
Keefe, Bruyette & Woods, Inc. |
3,600,000 | |||
Popular Securities Inc. |
1,800,000 | |||
UBS Securities LLC. |
1,800,000 | |||
Total: |
40,000,000 | |||
II - 1
EXHIBIT A
[FORM OF LOCK-UP LETTER]
April 13, 2010
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, NY 10036
1585 Broadway
New York, NY 10036
Ladies and Gentlemen:
The undersigned understands that Morgan Stanley & Co. Incorporated
(“Morgan Stanley”) proposes to enter into an Underwriting Agreement (the “Underwriting Agreement”)
with Popular, Inc., a Puerto Rico corporation (the “Company”), providing for the public offering
(the “Public Offering”) by the several Underwriters, including Morgan Stanley (the “Underwriters”),
of depositary shares (the “Depositary Shares”), as evidenced by depositary receipts (the
“Depositary Receipts”), and each representing 1/40th of a share of its Contingent
Convertible Perpetual Non-Cumulative Preferred Stock, Series D (no par value, $1,000 liquidation
preference per share) (the “Preferred Stock”). Upon the occurrence of certain conditions, the
Preferred Stock will be mandatorily convertible into shares of the Company’s Common Stock, $0.01
par value per share (the “Common Stock”).
To induce the Underwriters that may participate in the
Public Offering to continue their efforts in connection with the Public Offering, the undersigned
hereby agrees that, without the prior written consent of Morgan Stanley on behalf of the
Underwriters, the undersigned will not, during the period commencing on the date hereof and ending
60 days after the date of the final prospectus relating to the Public Offering (the “Lock-Up
Period”), (1) 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, lend, or
otherwise transfer or dispose of, directly or indirectly, any Depositary Shares or shares of
Preferred Stock or Common Stock beneficially owned (as such term is used in Rule 13d-3 of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”)), by the undersigned or any other
securities beneficially owned by the undersigned convertible into or exercisable or exchangeable
for Depositary Shares, Preferred Stock or Common Stock, (2) enter into any swap or other
arrangement that transfers to another, in whole or in part, any of the economic consequences of
ownership of Depositary Shares, the Preferred Stock or Common Stock, whether
A - 1
any such transaction described in clause (1) or (2) above is to be settled by delivery of
Depositary Shares, Preferred Stock or Common Stock or such other securities, in cash or
otherwise or (3) make any demand for or exercise any right with respect to, the
registration of any Depositary Shares, Preferred Stock or Common Stock or any security
convertible into or exercisable or exchangeable for Depositary Shares, Preferred Stock or
Common Stock. The foregoing sentence shall not apply to (a) transactions relating to
Depositary Shares or shares of Preferred Stock or Common Stock or other securities acquired
in open market transactions after the completion of the Public Offering, provided that no
filing under Section 16(a) of the Exchange Act shall be required or shall be voluntarily
made in connection with subsequent sales of Common Stock or other securities acquired in
such open market transactions, (b) transfers of Depositary Shares, shares of Preferred
Stock, Common Stock or any security convertible into Depositary Shares or Preferred Stock
or Common Stock as a bona fide gift, (c) distributions of Depositary Shares or shares of
Preferred Stock or Common Stock or any security convertible into Depositary Shares,
Preferred Stock or Common Stock to limited partners or stockholders of the undersigned,
provided that in the case of any transfer or distribution pursuant to clause (b) or (c),
(i) each donee or distributee shall sign and deliver a lock-up letter substantially in the
form of this letter and (ii) no filing under Section 16(a) of the Exchange Act, reporting a
reduction in beneficial ownership of Depositary Shares or shares of Preferred Stock or
Common Stock, shall be required or shall be voluntarily made during the restricted period
referred to in the foregoing sentence, unless it identifies by footnote that the transfer
relates to a gift or distribution, (d) the establishment of a trading plan pursuant to Rule
10b5-1 under the Exchange Act for the transfer of Depositary Shares, Preferred Stock or
Common Stock, provided that such plan does not provide for the transfer of Depositary
Shares, Preferred Stock or Common Stock during the restricted period and no public
announcement or filing under the Exchange Act regarding the establishment of such plan
shall be required of or voluntarily made by or on behalf of the undersigned or the Company,
(e) shares of Common Stock sold pursuant to a 10b5-1 trading plan adopted before the date
of this agreement and (f) the delivery of Depositary Shares, Preferred Stock or Common
Stock for the purpose of paying the exercise price of options to purchase Common Stock and
taxes imposed on such exercise of options, provided that such options expire during the
Lock-Up Period. The undersigned also agrees and consents to the entry of stop transfer
instructions with the Company’s transfer agent and registrar against the transfer of the
undersigned’s Depositary Shares, Preferred Stock or Common Stock except in compliance with
the foregoing restrictions.
The undersigned understands that the Company and the Underwriters are relying upon
this agreement in proceeding toward consummation of the Public Offering. The undersigned
further understands that, if the Underwriting Agreement is not executed prior to April
20, 2010, or if the Underwriting
A - 2
Agreement (other than the provisions thereof which survive termination) shall terminate or be terminated
prior to payment for and delivery of the Depositary Shares to be sold thereunder, the undersigned shall be
released from all obligations under this agreement. Except as provided above, this agreement is irrevocable
and shall be binding upon the undersigned’s heirs, legal representatives, successors and assigns.
Whether or not the Public Offering actually occurs depends on a number of factors, including market
conditions. Any Public Offering will only be made pursuant to an Underwriting Agreement, the terms
of which are subject to negotiation between the Company and the Underwriters.
| Very truly yours, | ||||
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