EX-1.1 AGENCY AGREEMENT

 

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                                                                     EXHIBIT 1.1

 

                                  $125,000,000

 

                              R&G CAPITAL TRUST VI

 

           6.62% CUMULATIVE MONTHLY INCOME TRUST PREFERRED SECURITIES

 

                                AGENCY AGREEMENT

 

                                                        November 26, 2004

 

UBS FINANCIAL SERVICES INCORPORATED OF PUERTO RICO

R-G INVESTMENTS CORPORATION

San Juan, Puerto Rico

 

Ladies and Gentlemen:

 

      R&G CAPITAL TRUST VI (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 $125,000,000 of its 6.62% 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 6.00% 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 Final 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 6.62% 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 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

 

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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 UBS Financial Services Incorporated of Puerto Rico has

agreed to act as representative (the "Representative") 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 Representative in its

role as representative 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 $121,653,750. 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 supplement and the Base 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 supplement dated November 18, 2004, and the

Base Prospectus of the Issuer.

 

            (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 $312,500.00, 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 Pietrantoni Mendez & Alvarez

LLP, Banco Popular Center 19th Floor, 209 Munoz Rivera Avenue, San Juan, Puerto

Rico 00918.

 

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      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:

 

            (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. 333-118920, 333-118920-01, 333-118920-02 and 333-113321-03)

on Form S-3 with respect to the Preferred Securities, including a prospectus

(the "Base 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") and has become

effective. No stop order preventing or suspending the effectiveness of the

registration statement has been issued, and, to the Company's knowledge, no

proceeding for that purpose has been instituted or threatened by the Commission.

A prospectus supplement and a final prospectus containing information 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); and the Rules and Regulations do not require the Company to, and,

without the Agents' consent, the Company will not, file a post-effective

amendment after the time of execution of this Agreement and prior to the filing

of such final form of prospectus. The registration statement may be supplemented

by one or more forms of preliminary prospectus supplement, as contemplated by

Rule 430 or Rule 430A of the Rules and Regulations, to be used in connection

with the offering and sale of the Preferred Securities (each a "Preliminary

Prospectus"). Copies of such registration statement, and such amendments, and

each related Preliminary Prospectus and all documents incorporated therein by

reference that were filed with the Commission on or prior to the date of this

Agreement have been delivered to the Agents and their counsel. 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 "Final Prospectus" means,

collectively, the Base 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 Base

Prospectus any Preliminary Prospectus or the Final 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 Final

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 Final 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

 

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Analysis and Retrieval System (EDGAR), and such copy shall be identical (except

to the extent permitted by Regulation S-T) to any prospectus 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 (excluding any

prospectus supplement with respect to an offering of securities other that the

Preferred Securities contemplated hereby), when such part became or becomes

effective, each Preliminary Prospectus, on the date of filing thereof with the

Commission, and the Final 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 Final

Prospectus, 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 Final Prospectus or any other materials, if any,

permitted by the Act.

 

            (c) The documents incorporated by reference in the Registration

Statement, the Final Prospectus (or, if the Final Prospectus is not in

existence, the most recent Preliminary Prospectus) and any amendment or

supplement to such Registration Statement or such Final 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 Final Prospectus (or,

if the Final 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.

 

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            (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 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 Final Prospectus and any amendment or supplement to

such Registration Statement; 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 Final Prospectus and any amendment or supplement to such Registration

Statement; 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

 

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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 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 Final Prospectus (or, if the Final 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 Final Prospectus (or, if the Final 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

 

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(iv) the recorded accountability for assets is compared with existing assets at

reasonable intervals and appropriate action is taken with respect to any

differences.

 

            (m) Except as set forth in the Registration Statement and the Final

Prospectus, subsequent to the respective dates as of which information is given

in the Registration Statement and the Final Prospectus 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

Final Prospectus (or, if the Final 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 Final Prospectus (or, if the Final

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 Final Prospectus (or, if the Final

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 Final Prospectus (or, if the Final 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 Final 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 Final Prospectus (or, if the Final

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

 

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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 Adverse

Effect and would be required to be disclosed in the Registration Statement and

the Final Prospectus (or, if the Final 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 Final

Prospectus (or, if the Final 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 Final Prospectus (or, if the Final 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.

 

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             (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 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 Final Prospectus (or, if the

Final 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.

 

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             (x) The Company meets the requirements for use of Rule 415 under the

Rules and Regulations under the Act.

 

            (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 Final Prospectus (or, if the Final 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 will cause the Prospectus Supplement to be filed as

contemplated by Section 3(a) hereof (but only if the Agents have not reasonably

objected thereto by notice to the Company after having been furnished a copy

within a reasonable time prior to filing) and will notify the Agents promptly of

such filing. The Company and the Issuer will not during such period as the Final

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 Final 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 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 Final Prospectus or for additional information,

(iii) of the issuance by the Commission of any stop order

 

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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 Final Prospectus

untrue or that requires the making of any changes in the Registration Statement

or the Final Prospectus in order to make the statements therein, in 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 Final 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 Final 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 Final P