Exhibit 10.1
SECURITIES PURCHASE AGREEMENT
     This Securities Purchase Agreement (this “Agreement”) is dated as of
April 23, 2010, by and among Oriental Financial Group Inc., a financial holding
company and corporation organized in the Commonwealth of Puerto Rico (the
“Company”), and each purchaser identified on the signature pages hereto (each,
including its successors and assigns, a “Purchaser” and collectively, the
“Purchasers”).
RECITALS
     A. The Company and each Purchaser is executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by Section 4(2) of the Securities Act of 1933, as amended (the “Securities
Act”), and Rule 506 of Regulation D (“Regulation D”) as promulgated by the
United States Securities and Exchange Commission (the “Commission”) under the
Securities Act.
     B. Each Purchaser, severally and not jointly, wishes to purchase, and the
Company wishes to sell, upon the terms and conditions stated in this Agreement,
that aggregate number of shares of the Company’s mandatorily convertible
non-cumulative non-voting perpetual preferred stock, $1,000 liquidation
preference per share (the “Preferred Stock”), set forth below such Purchaser’s
name on the signature page of this Agreement (which aggregate amount for all
Purchasers together shall be 200,000 shares of Preferred Stock and shall be
collectively referred to herein as the “Preferred Shares”). When purchased, the
Preferred Stock will have the terms set forth in a certificate of designations
for the Preferred Stock in the form attached as Exhibit A hereto (the
“Certificate of Designations”) made a part of the Company’s Certificate of
Incorporation, as amended, by the filing of the Certificate of Designations with
the Secretary of State of the Commonwealth of Puerto Rico (the “Secretary of
State”). The Preferred Stock will be convertible into shares of common stock,
par value $1.00 per share (the “Common Stock”), of the Company (the “Underlying
Shares” and, together with the Preferred Shares, the “Securities”), subject to
and in accordance with the terms and conditions of the Certificate of
Designations.
     C. The Company has engaged Keefe, Bruyette & Woods, Inc. as its exclusive
placement agent (the “Placement Agent”) for the offering of the Securities.
     D. Contemporaneously with the execution and delivery of this Agreement, the
parties hereto are executing and delivering a Registration Rights Agreement,
substantially in the form attached hereto as Exhibit B (the “Registration Rights
Agreement”), pursuant to which, among other things, the Company will agree to
provide certain registration rights with respect to the Securities under the
Securities Act and the rules and regulations promulgated thereunder and
applicable state securities laws.
     NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this
Agreement, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the Company and the Purchasers hereby
agree as follows:

 

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ARTICLE 1:
DEFINITIONS
     1.1 Definitions. In addition to the terms defined elsewhere in this
Agreement, for all purposes of this Agreement, the following terms shall have
the meanings indicated in this Section 1.1:
     “Action” means any action, suit, inquiry, notice of violation, proceeding
(including any partial proceeding such as a deposition) or investigation pending
or, to the Company’s Knowledge, threatened in writing against the Company, any
Subsidiary or any of their respective properties or any officer, director or
employee of the Company or any Subsidiary acting in his or her capacity as an
officer, director or employee before or by any federal, state, county, local or
foreign court, arbitrator, governmental or administrative agency, regulatory
authority, stock market, stock exchange or trading facility.
     “Affiliate” means, with respect to any Person, any other Person that,
directly or indirectly through one or more intermediaries, Controls, is
controlled by or is under common control with such Person, as such terms are
used in and construed under Rule 405 under the Securities Act.
     “Agreement” shall have the meaning ascribed to such term in the Preamble.
     “AST” has the meaning set forth in Section 2.1(b).
     “AST Escrow Agreement” has the meaning set forth in Section 2.1(b).
     “Bank” has the meaning set forth in Section 6.17.
     “BHCA” has the meaning set forth in Section 3.1(b).
     “Business Day” means a day, other than a Saturday or Sunday, on which banks
in New York City are open for the general transaction of business.
     “Certificate of Designations” has the meaning set forth in the Recitals.
     “Certificate of Incorporation” means the Certificate of Incorporation of
the Company and all amendments and certificates of determination thereto, as the
same may be amended from time to time.
     “Closing” means the closing of the purchase and sale of the Preferred
Shares pursuant to this Agreement.
     “Closing Date” means the Trading Day when all of the Transaction Documents
have been executed and delivered by the applicable parties thereto, and all of
the conditions set forth in Sections 2.1, 2.2, 5.1 and 5.2 hereof are satisfied,
or such other date as the parties may agree.
     “Code” means the Internal Revenue Code of 1986, as amended, including the
regulations and published interpretations thereunder.
     “Commission” has the meaning set forth in the Recitals.
     “Common Stock” has the meaning set forth in the Recitals, and also includes
any securities into which the Common Stock may hereafter be reclassified or
changed.
     “Company Deliverables” has the meaning set forth in Section 2.2(a).

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     “Company Puerto Rican Counsel” means McConnell Valdes LLC.
     “Company Reports” has the meaning set forth in Section 3.1(kk).
     “Company U.S. Counsel” means Skadden, Arps, Slate, Meagher & Flom LLP.
     “Company’s Knowledge” means with respect to any statement made to the
knowledge of the Company, that the statement is based upon the actual knowledge
of the executive officers of the Company having responsibility for the matter or
matters that are the subject of the statement after reasonable investigation.
     “Control” (including the terms “controlling”, “controlled by” or “under
common control with”) means the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or otherwise.
     “Custodian” has the meaning set forth in Section 2.1(b).
     “Custodian Agreement” has the meaning set forth in Section 2.1(b).
     “DTC” means The Depository Trust Company.
     “Effectiveness Date” has the meaning set forth in Section 6.16.
     “Environmental Laws” has the meaning set forth in Section 3.1(l).
     “ERISA” means the Employee Retirement Income Security Act of 1974, as
amended, including the regulations and published interpretations thereunder.
     “ERISA Affiliate”, as applied to the Company, means any Person under common
control with the Company, who together with the Company, is treated as a single
employer within the meaning of Section 414(b), (c), (m) or (o) of the Code.
     “Escrow Agent” has the meaning set forth in Section 2.1(b).
     “Escrow Agreement” has the meaning set forth in Section 2.1(b).
     “Exchange Act” means the Securities Exchange Act of 1934, as amended, or
any successor statute, and the rules and regulations promulgated thereunder.
     “Failed Bank” has the meaning set forth in Section 6.17.
     “FDIC” means the Federal Deposit Insurance Corporation.
     “FRB” means the Board of Governors of the Federal Reserve System.
     “GAAP” means U.S. generally accepted accounting principles, as applied by
the Company.
     “Indemnified Person” has the meaning set forth in Section 4.8(b).
     “Intellectual Property” has the meaning set forth in Section 3.1(r).
     “Lien” means any lien, charge, claim, encumbrance, security interest, right
of first refusal, preemptive right or other restrictions of any kind.
     “Material Adverse Effect” means any of (i) a material and adverse effect on
the legality, validity or enforceability of this Agreement, the Registration
Rights Agreement, the Certificate of Designations or the Escrow Agreement,
(ii) a material and adverse effect on the results of operations, assets,
properties, business, condition (financial or otherwise) of the Company and the

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Subsidiaries, taken as a whole, or (iii) any adverse impairment to the Company’s
ability to perform in any material respect on a timely basis its obligations
under this Agreement, the Registration Rights Agreement, the Certificate of
Designations or the Escrow Agreement; provided, that in determining whether a
Material Adverse Effect has occurred, there shall be excluded any effect to the
extent resulting from the following: (A) changes, after the date hereof, in U.S.
GAAP or regulatory accounting principles generally applicable to banks, savings
associations or their holding companies, (B) changes, after the date hereof, in
applicable laws, rules and regulations or interpretations thereof by any court,
administrative agency or other governmental authority, whether federal, state,
local or foreign, or any applicable industry self-regulatory organization,
(C) actions or omissions of the Company expressly required by the terms of this
Agreement or taken with the prior written consent of an affected Purchaser,
(D) changes, after the date hereof, in general economic, monetary or financial
conditions, (E) changes in the market price or trading volumes of the Common
Stock (but not the underlying causes of such changes), (F) changes in global or
national political conditions, including the outbreak or escalation of war or
acts of terrorism and (G) the public disclosure of this Agreement or the
transactions contemplated hereby; except, with respect to clauses (A), (B),
(D) and (F), to the extent that the effects of such changes have a
disproportionate effect on the Company and the Subsidiaries, taken as a whole,
relative to other similarly situated banks, savings associations or their
holding companies generally.
     “Material Contract” means any contract of the Company that was filed as an
exhibit to the SEC Reports pursuant to Item 601 of Regulation S-K.
     “Material Permits” has the meaning set forth in Section 3.1(p).
     “Multiemployer Plan” means a “multiemployer plan” as defined in
Section 4001(a)(3) of ERISA to which the Company or any ERISA Affiliate is
making, or is accruing an obligation to make, contributions or has made, or been
obligated to make, contributions within the preceding six (6) years.
     “New York Court” means the courts of the State of New York and the United
States District Courts located in the city of New York.
     “NYSE” means the New York Stock Exchange.
     “OCFI” means the Office of the Commissioner of Financial Institutions of
Puerto Rico.
     “P&A Agreement” has the meaning set forth in Section 6.17.
     “P&A Closing” has the meaning set forth in Section 6.17.
     “Pension Plan” means any employee pension benefit plan within the meaning
of Section 3(2) of ERISA, other than a Multiemployer Plan, which is subject to
the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of
ERISA and which (i) is maintained for employees of the Company or any of its
ERISA Affiliates or (ii) has at any time during the last six (6) years been
maintained for the employees of the Company or any current or former ERISA
Affiliate.
     “Person” means an individual, corporation, partnership, limited liability
company, trust, business trust, association, joint stock company, joint venture,
sole proprietorship, unincorporated organization or governmental authority.
     “Placement Agent” has the meaning set forth in the Recitals.
     “Preferred Shares” has the meaning set forth in the Recitals.

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     “Preferred Stock” has the meaning set forth in the Recitals.
     “Principal Trading Market” means the Trading Market on which the Common
Stock is primarily listed on and quoted for trading, which, as of the date of
this Agreement and the Closing Date, shall be the NYSE.
     “Proceeding” means an action, claim, suit, investigation or proceeding
(including, without limitation, an investigation or partial proceeding, such as
a deposition), whether commenced or threatened.
     “Purchase Price” means $1,000 per Preferred Share.
     “Purchaser Deliverables” has the meaning set forth in Section 2.2(b).
     “Purchaser Party” has the meaning set forth in Section 4.8(a).
     “Registration Rights Agreement” has the meaning set forth in the Recitals.
     “Registration Statement” means a registration statement meeting the
requirements set forth in the Registration Rights Agreement and covering the
resale by the Purchasers of the Registrable Securities (as defined in the
Registration Rights Agreement).
     “Regulation D” has the meaning set forth in the Recitals.
     “Regulatory Agreement” has the meaning set forth in Section 3.1(mm).
     “Required Approvals” has the meaning set forth in Section 3.1(e).
     “Rule 144” means Rule 144 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.
     “Scheduled Date” has the meaning set forth in Section 6.16.
     “SEC Reports” has the meaning set forth in Section 3.1(h).
     “Secretary of State” has the meaning set forth in the Recitals.
     “Section 2.1(c)(iii) Purchaser” has the meaning set forth in
Section 2.1(c)(iii).
     “Secretary’s Certificate” has the meaning set forth in Section 2.2(a)(v).
     “Securities” has the meaning set forth in the Recitals.
     “Securities Act” has the meaning set forth in the Recitals.
     “Stockholder Approvals” has the meaning set forth in Section 4.11.
     “Stockholder Proposals” has the meaning set forth in Section 4.11.
     “Subscription Amount” means with respect to each Purchaser, the aggregate
amount to be paid for the Preferred Shares purchased hereunder as indicated on
such Purchaser’s signature page to this Agreement next to the heading “Aggregate
Purchase Price (Subscription Amount)”.
     “Subsidiary” means any entity in which the Company, directly or indirectly,
owns sufficient capital stock or holds a sufficient equity or similar interest
such that it is consolidated with the Company in the financial statements of the
Company.
     “Trading Day” means (i) a day on which the Common Stock is listed or quoted
and traded on its Principal Trading Market (other than the OTC Bulletin Board),
or (ii) if the Common Stock is

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not listed on a Trading Market (other than the OTC Bulletin Board), a day on
which the Common Stock is traded in the over-the-counter market, as reported by
the OTC Bulletin Board, or (iii) if the Common Stock is not quoted on any
Trading Market, a day on which the Common Stock is quoted in the
over-the-counter market as reported in the “pink sheets” by Pink Sheets LLC (or
any similar organization or agency succeeding to its functions of reporting
prices); provided , that in the event that the Common Stock is not listed or
quoted as set forth in (i), (ii) and (iii) hereof, then Trading Day shall mean a
Business Day.
     “Trading Market” means whichever of the NYSE, the NYSE Amex, the NASDAQ
Global Select Market, the NASDAQ Global Market, the NASDAQ Capital Market or the
OTC Bulletin Board on which the Common Stock is listed or quoted for trading on
the date in question.
     “Transaction Documents” means this Agreement, the schedules and exhibits
attached hereto, the Registration Rights Agreement, the Certificate of
Designations, the Escrow Agreement and any other documents or agreements
executed in connection with the transactions contemplated hereunder.
     “Transfer Agent” means The Registrar and Trust Company, or any successor
transfer agent for the Company.
     “Underlying Shares” has the meaning set forth in the Recitals.
ARTICLE 2:
PURCHASE AND SALE
     2.1 Closing.
          (a) Purchase of Preferred Shares. Subject to the terms and conditions
set forth in this Agreement, at the Closing the Company shall issue and sell to
each Purchaser, and each Purchaser shall, severally and not jointly, purchase
from the Company, the number of Preferred Shares set forth below such
Purchaser’s name on the signature page of this Agreement at a per Preferred
Share price equal to the Purchase Price.
          (b) Escrow. Unless Purchaser is a Section 2.1(c)(iii) Purchaser,
concurrent with the signing hereof, (i) each Purchaser has (A) deposited the
Subscription Amount with American Stock Transfer & Trust Company, LLC, as Escrow
Agent (“AST” and, collectively with any Custodians, the "Escrow Agent”),
pursuant to that certain Escrow Agreement (in the form attached hereto as
Exhibit I) between the Company and AST (as it may be amended or otherwise
modified from time to time, the “AST Escrow Agreement”, and collectively with
any Custodian Agreements, the "Escrow Agreement”) or (B) segregated cash equal
to the Subscription Amount in an account with a custodian (a “Custodian”) of
funds held on behalf of an “investment company” under the Investment Company Act
of 1940, as amended, pursuant to binding escrow instructions (“Custodian
Agreements”) for release of such funds by such Custodian to the Company, at the
direction of the Company, upon the satisfaction of conditions set forth in the
AST Escrow Agreement, and (ii) the Company has issued instructions to the
Transfer Agent authorizing the issuance, in book-entry form, of the number of
Preferred Shares specified on such Purchaser’s signature page hereto (or, if the
Company and such Purchaser shall have agreed, as indicated on such Purchaser’s
signature page hereto, that such Purchaser will receive Preferred Shares in
certificated form, then the Company shall instead instruct the Transfer Agent to
issue such specified Preferred Shares in certificated form (the "Stock
Certificates”), or as otherwise set forth on the

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Stock Certificate Questionnaire included as Exhibit C-2 hereto) concurrent with
the Escrow Agent’s release of the Subscription Amount to the Company pursuant to
the Escrow Agreement.
          (c) Closing.
               (i) The Closing of the purchase and sale of the Preferred Shares
shall take place at 10:00 a.m., New York City time, at the offices of Skadden,
Arps, Slate, Meagher & Flom LLP, on the Closing Date or at such other locations
or remotely by facsimile transmission or other electronic means as the parties
may mutually agree. The “Closing Date” shall be April 30, 2010, unless the FDIC
shall have notified the Company that the P&A Closing will not occur on April 30,
2010. In the event that the FDIC notifies the Company that the P&A Closing will
not occur on April 30, 2010 (or any other Scheduled Date as contemplated by this
paragraph), the Company will provide each Purchaser notice thereof. Upon notice
from the FDIC of a different Scheduled Date for the P&A Closing, the Company
shall promptly provide each Purchaser notice thereof. Unless the FDIC shall have
notified the Company that the P&A Closing will not occur on a particular
Scheduled Date, then the “Closing Date” shall mean such Scheduled Date. The
“Closing” means the release of funds and issuance of Preferred Shares as
contemplated hereby.
               (ii) Unless Purchaser is a Section 2.1(c)(iii) Purchaser,
pursuant to the terms of the Escrow Agreement, on the Closing Date, the Escrow
Agent shall release the Subscription Amount to the Company and the Transfer
Agent shall issue the Preferred Shares to each Purchaser as provided in the
instructions referred to in paragraph (b) above. If Purchaser and the Company
have previously agreed (as indicated on such Purchaser’s signature page hereto)
that such Purchaser may rely on Section 2.1(c)(iii) instead of on Sections 2.1
(c)(i) and (ii), such Purchaser is a “Section 2.1(c)(iii) Purchaser”.
               (iii) If Purchaser is prohibited by the terms of its
organizational or constituent documents to enter into an escrow agreement and
has provided the Company with documented evidence of such prohibition (any such
Purchaser, a “Section 2.1(c)(iii) Purchaser”), then with respect to such
Purchaser Section 2.1(c)(ii) shall not apply and shall have no force and effect,
and this Section 2.1(c)(iii) shall apply instead. This Section 2.1(c)(iii) shall
not apply and shall have no force or effect for any Purchaser that is not a
Section 2.1(c)(iii) Purchaser. If a Purchaser is a Section 2.1(c)(iii)
Purchaser, then at 9:00 a.m., New York City time, on the Closing Date (i)
Purchaser shall pay the Subscription Amount by wire transfer of immediately
available funds to an account designated by the Company and (ii) the Company
shall issue instructions to the Transfer Agent to issue in book-entry form the
number of Preferred Shares specified on such Purchaser’s signature page hereto
(or, if the Company and such Purchaser shall have agreed, as indicated on such
Purchaser’s signature page hereto, that such Purchaser will receive Preferred
Shares in certificated form, then the Company shall instead instruct the
Transfer Agent to issue such specified Preferred Shares in Stock Certificates,
or as otherwise set forth on the Stock Certificate Questionnaire included as
Exhibit C-2 hereto) concurrent with such Purchaser’s payment of the Subscription
Amount to the Company.
     2.2 Closing Deliveries.
          (a) On or prior to the Closing, the Company shall issue, deliver or
cause to be delivered to each Purchaser the following (the “Company
Deliverables”):

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               (i) this Agreement, duly executed by the Company;
               (ii) as the Company and such Purchaser agree, the Company shall
cause the Transfer Agent to issue, in book-entry form the number of Preferred
Shares specified on such Purchaser’s signature page hereto (or, if the Company
and such Purchaser shall have agreed, as indicated on such Purchaser’s signature
pages hereto, that such Purchaser will receive Stock Certificates for their
Preferred Shares, then the Company shall instead instruct the Transfer Agent to
issue such specified Stock Certificates registered in the name of such Purchaser
or as otherwise set forth on the Stock Certificate Questionnaire);
               (iii) a legal opinion of Company Puerto Rican Counsel, dated as
of the Closing Date and in the form attached hereto as Exhibit D, executed by
such counsel and addressed to the Purchasers;
               (iv) a legal opinion of Company U.S. Counsel, dated as of the
Closing Date and in the form attached hereto as Exhibit E, executed by such
counsel and addressed to the Purchasers;
               (v) the Registration Rights Agreement, duly executed by the
Company (which shall be delivered on the date hereof);
               (vi) the AST Escrow Agreement, duly executed by the Company and
AST (which shall be delivered on the date hereof);
               (vii) a certificate of the Secretary of the Company, in the form
attached hereto as Exhibit F (the “Secretary’s Certificate”), dated as of the
Closing Date, (a) certifying the resolutions adopted by the Board of Directors
of the Company or a duly authorized committee thereof approving the transactions
contemplated by this Agreement and the other Transaction Documents and the
issuance of the Securities, (b) certifying the current versions of the
Certificate of Incorporation, as amended, and by-laws, as amended, of the
Company and (c) certifying as to the signatures and authority of persons signing
the Transaction Documents and related documents on behalf of the Company; and
               (viii) the Compliance Certificate referred to in Section 5.1(f).
          (b) Each Purchaser shall deliver or cause to be delivered to the
Company or the Escrow Agent, as applicable, the following (the “Purchaser
Deliverables”):
               (i) On or prior to the date hereof:
                    a) this Agreement, duly executed by such Purchaser;
                    b) the Registration Rights Agreement, duly executed by such
Purchaser;
                    c) a Custodian Agreement, if applicable, duly executed by
such Purchaser;

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                    d) a fully completed and duly executed Accredited Investor
Questionnaire, reasonably satisfactory to the Company, and the Stock Certificate
Questionnaire in the forms attached hereto as Exhibits C-1 and C-2 ,
respectively; and
                    e) if such Purchaser is not a Section 2.1(c)(iii) Purchaser,
its Subscription Amount, in United States dollars and in immediately available
funds, in the amount indicated below such Purchaser’s name on the applicable
signature page hereto under the heading “Aggregate Purchase Price (Subscription
Amount)” by wire transfer to the Escrow Account in accordance with the Escrow
Agent’s written instructions.
               (ii) On or prior to the Closing Date:
                    a) if such Purchaser is a Section 2.1(c)(iii) Purchaser,
then such Purchaser shall deliver or cause to be delivered to the Company on or
prior to the Closing Date, its Subscription Amount, in United States dollars and
in immediately available funds, in the amount indicated below such Purchaser’s
name on the applicable signature page hereto under the heading “Aggregate
Purchase Price (Subscription Amount)” by wire transfer in accordance with the
Company’s written instructions.
ARTICLE 3:
REPRESENTATIONS AND WARRANTIES
     3.1 Representations and Warranties of the Company. The Company hereby
represents and warrants as of the date hereof and the Closing Date (except for
the representations and warranties that speak as of a specific date, which shall
be made as of such date), to each of the Purchasers that:
          (a) Subsidiaries. The Company has no direct or indirect Subsidiaries
other than as set forth in Exhibit H. The Company owns, directly or indirectly,
all of the capital stock or comparable equity interests of each Subsidiary free
and clear of any and all Liens, and all the issued and outstanding shares of
capital stock or comparable equity interest of each Subsidiary are validly
issued and are fully paid, non-assessable and free of preemptive and similar
rights to subscribe for or purchase securities.
          (b) Organization and Qualification. The Company and each of its
“Significant Subsidiaries” (as defined in Rule 1-02 of Regulation S-X) is an
entity duly incorporated or otherwise organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or organization
(as applicable), with the requisite power and authority to own or lease and use
its properties and assets and to carry on its business as currently conducted.
Neither the Company nor any Significant Subsidiary is in violation of any of the
provisions of its respective articles or certificate of incorporation, bylaws or
other organizational or charter documents. The Company and each of its
Subsidiaries is duly qualified to conduct business and is in good standing as a
foreign corporation or other entity in each jurisdiction in which the nature of
the business conducted or property owned by it makes such qualification
necessary, except where the failure to be so qualified or in good standing, as
the case may be, would not in the reasonable judgment of the Company be expected
to have a Material Adverse Effect. The Company is duly registered as a bank
holding company under the Bank Holding Company Act of 1956, as amended (the
“BHCA”), and a financial holding company under the Gramm-Leach-Bliley Act of
1999, as amended. The

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Company’s depository institution Subsidiary’s deposit accounts are insured up to
applicable limits by the FDIC. The Company has conducted its business in
compliance with all applicable federal, state and foreign laws, orders,
judgments, decrees, rules, regulations and applicable stock exchange
requirements, including all laws and regulations restricting activities of bank
holding companies and banking organizations, except for any noncompliance that,
individually or in the aggregate, has not had and would not be reasonably
expected to have a Material Adverse Effect.
          (c) Authorization; Enforcement; Validity. The Company has the
requisite corporate power and authority to enter into and to consummate the
transactions contemplated by each of the Transaction Documents to which it is a
party and otherwise to carry out its obligations hereunder and thereunder,
including, without limitation, to issue the Preferred Shares in accordance with
the terms hereof and, subject to the Stockholder Approvals, to issue the
Underlying Shares in accordance with the Certificate of Designations. The
Company’s execution and delivery of each of the Transaction Documents to which
it is a party and the consummation by it of the transactions contemplated hereby
and thereby (including, but not limited to, the sale and delivery of the
Preferred Shares and the Underlying Shares) have been duly authorized by all
necessary corporate action on the part of the Company, and no further corporate
action is required by the Company, its Board of Directors or its stockholders in
connection therewith other than in connection with the Required Approvals. Each
of the Transaction Documents to which it is a party has been (or upon delivery
will have been) duly executed by the Company and is, or when delivered in
accordance with the terms hereof, will constitute the legal, valid and binding
obligation of the Company enforceable against the Company in accordance with its
terms, except (i) as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws
relating to, or affecting generally the enforcement of, creditors’ rights and
remedies or by other equitable principles of general application, (ii) as
limited by laws relating to the availability of specific performance, injunctive
relief or other equitable remedies and (iii) insofar as indemnification and
contribution provisions may be limited by applicable law. Except for Material
Contracts, there are no stockholder agreements, voting agreements, or other
similar arrangements with respect to the Company’s capital stock to which the
Company is a party or, to the Company’s Knowledge, between or among any of the
Company’s stockholders.
          (d) No Conflicts. The execution, delivery and performance by the
Company of the Transaction Documents to which it is a party and the consummation
by the Company of the transactions contemplated hereby or thereby (including,
without limitation, the issuance of the Preferred Shares and the Underlying
Shares) do not and will not (i) conflict with or violate any provisions of the
Company’s or any Subsidiary’s articles or certificate of incorporation, bylaws
or otherwise result in a violation of the organizational documents of the
Company or any Subsidiary, (ii) conflict with, or constitute a default (or an
event that with notice or lapse of time or both would result in a default)
under, result in the creation of any Lien upon any of the properties or assets
of the Company or give to others any rights of termination, amendment,
acceleration or cancellation (with or without notice, lapse of time or both) of,
any Material Contract, or (iii) subject to the Required Approvals, conflict with
or result in a violation of any law, rule, regulation, order, judgment,
injunction, decree or other restriction of any court or governmental authority
to which the Company is subject (including federal and state securities laws and
regulations and the rules and regulations, assuming the correctness of the
representations and warranties made by the Purchasers herein, of any
self-regulatory organization to which the Company or its securities are subject,
including all applicable Trading Markets), or by which any property or asset of
the Company is

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bound or affected, except in the case of clauses (ii) and (iii) such as would
not have or reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect.
          (e) Filings, Consents and Approvals. Neither the Company nor any of
its Subsidiaries is required to obtain any consent, waiver, authorization or
order of, give any notice to, or make any filing or registration with, any court
or other federal, state, local or other governmental authority or other Person
in connection with the execution, delivery and performance by the Company of the
Transaction Documents (including, without limitation, the issuance of the
Preferred Shares and the Underlying Shares), other than (i) obtaining the
Stockholder Approvals to issue the Underlying Shares in accordance with the
terms of the Certificate of Designations, (ii) the filing of the Certificate of
Designations with the Secretary of State, (iii) the filing with the Commission
of one or more Registration Statements in accordance with the requirements of
the Registration Rights Agreement, (iv) filings required by applicable state
securities laws, (v) the filing of a Notice of Sale of Securities on Form D with
the Commission under Regulation D of the Securities Act, (vi) the filing of any
requisite notices and/or application(s) to the Principal Trading Market for the
issuance and sale of the Underlying Shares and the listing of the Underlying
Shares for trading or quotation, as the case may be, thereon in the time and
manner required thereby, (vii) the filings required in accordance with
Section 4.6 of this Agreement and (viii) those that have been made or obtained
prior to the date of this Agreement (collectively, the “Required Approvals”).
          (f) Issuance of the Preferred Shares. The issuance of the Preferred
Shares has been duly authorized and the Preferred Shares, when issued and paid
for in accordance with the terms of the Transaction Documents, will be duly and
validly issued, fully paid and non-assessable and free and clear of all Liens,
other than restrictions on transfer provided for in the Transaction Documents or
imposed by applicable securities laws, and shall not be subject to preemptive or
similar rights. The issuance of the Underlying Shares has been duly authorized
and the Underlying Shares, when issued in accordance with the terms of the
Certificate of Designations, will be duly and validly issued, fully paid and
non-assessable and free and clear of all Liens, other than restrictions on
transfer provided for in the Transaction Documents or imposed by applicable
securities laws, and shall not be subject to preemptive or similar rights.
Assuming the accuracy of the representations and warranties of the Purchasers in
this Agreement, the Securities will be issued in compliance with all applicable
federal and state securities laws.
          (g) Capitalization. The number of shares and type of all authorized,
issued and outstanding capital stock, options and other securities of the
Company (whether or not presently convertible into or exercisable or
exchangeable for shares of capital stock of the Company) has been set forth in
the SEC Reports and has changed since the date of such SEC Reports only due to
(i) the sale and issuance of 8,740,000 shares of Common Stock in March 2010, and
(ii) stock grants or other equity awards or stock option and warrant exercises
that do not, individually or in the aggregate, have a material effect on the
issued and outstanding capital stock, options and other securities. All of the
outstanding shares of capital stock of the Company are duly authorized, validly
issued, fully paid and non-assessable, have been issued in compliance in all
material respects with all applicable federal and state securities laws, and
none of such outstanding shares was issued in violation of any preemptive rights
or similar rights to subscribe for or purchase any capital stock of the Company.
Except as specified in the SEC Reports: (i) no shares of the Company’s
outstanding capital stock are subject to preemptive rights or any other similar
rights; (ii) there are no outstanding options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever

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relating to, or securities or rights convertible into, or exercisable or
exchangeable for, any shares of capital stock of the Company, or contracts,
commitments, understandings or arrangements by which the Company is or may
become bound to issue additional shares of capital stock of the Company or
options, warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into, or
exercisable or exchangeable for, any shares of capital stock of the Company,
other than those issued or granted pursuant to Material Contracts or equity or
incentive plans or arrangements described in the SEC Reports; (iii) there are no
material outstanding debt securities, notes, credit agreements, credit
facilities or other agreements, documents or instruments evidencing indebtedness
of the Company or by which the Company is bound; (iv) except for the
Registration Rights Agreement, there are no agreements or arrangements under
which the Company is obligated to register the sale of any of its securities
under the Securities Act; (v) there are no outstanding securities or instruments
of the Company that contain any redemption or similar provisions, and there are
no contracts, commitments, understandings or arrangements by which the Company
is or may become bound to redeem a security of the Company; (vi) the Company
does not have any stock appreciation rights or “phantom stock” plans or
agreements or any similar plan or agreement; and (vii) the Company has no
liabilities or obligations required to be disclosed in the SEC Reports but not
so disclosed in the SEC Reports, which, individually or in the aggregate, will
have or would reasonably be expected to have a Material Adverse Effect. There
are no securities or instruments containing anti-dilution or similar provisions
that will be triggered by the issuance of the Securities.
          (h) SEC Reports. The Company has filed all reports, schedules, forms,
statements and other documents required to be filed by it under the Exchange
Act, including pursuant to Section 13(a) or 15(d) thereof, since January 1, 2009
(the foregoing materials, including the exhibits thereto and documents
incorporated by reference therein, being collectively referred to herein as the
“SEC Reports”), on a timely basis or has received a valid extension of such time
of filing and has filed any such SEC Reports prior to the expiration of any such
extension. As of their respective filing dates, the SEC Reports complied in all
material respects with the requirements of the Securities Act and the Exchange
Act and the rules and regulations of the Commission promulgated thereunder, and
none of the SEC Reports, when filed, contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. On March 19, 2010, the
Company issued 8,740,000 shares of Common Stock pursuant to a prospectus
supplement and an accompanying prospectus, each filed with the Commission
pursuant to Rule 424(b); such prospectus supplement and the accompanying
prospectus contain important information about the Company’s Common Stock and
certain other material information about the Company. The Company advises any
Purchaser to read such prospectus supplement and accompanying prospectus, in
particular the sections entitled “Risk Factors,” “Description of Capital Stock”
and “Material United States Federal Income Tax Consideration.”
          (i) Financial Statements. The financial statements of the Company and
its Subsidiaries included in the SEC Reports comply in all material respects
with applicable accounting requirements and the rules and regulations of the
Commission with respect thereto as in effect at the time of filing. Such
financial statements have been prepared in accordance with GAAP applied on a
consistent basis during the periods involved, except as may be otherwise
specified in such financial statements or the notes thereto and except that
unaudited financial statements may not contain all footnotes required by GAAP,
and fairly present in all material respects the balance sheet of the

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Company and its consolidated Subsidiaries taken as a whole as of and for the
dates thereof and the results of operations and cash flows for the periods then
ended, subject, in the case of unaudited statements, to normal, year-end audit
adjustments, which would not be material, either individually or in the
aggregate.
          (j) Tax Matters. The Company and each of its Subsidiaries has
(i) filed all material foreign, U.S. federal, Puerto Rico and local tax returns,
information returns and similar reports that are required to be filed, and all
such tax returns are true, correct and complete in all material respects, and
(ii) paid all material taxes required to be paid by it and any other material
assessment, fine or penalty levied against it other than taxes (x) currently
payable without penalty or interest, or (y) being contested in good faith by
appropriate proceedings.
          (k) Material Changes. Since the date of the latest audited financial
statements included within the SEC Reports, except as disclosed in subsequent
SEC Reports filed prior to the date hereof, (i) there have been no events,
occurrences or developments that have had or would reasonably be expected to
have, either individually or in the aggregate, a Material Adverse Effect,
(ii) the Company has not incurred any material liabilities (contingent or
otherwise) other than (A) trade payables, accrued expenses and other liabilities
incurred in the ordinary course of business consistent with past practice and
(B) liabilities not required to be reflected in the Company’s financial
statements pursuant to GAAP or required to be disclosed in filings made with the
Commission, (iii) the Company has not altered materially its method of
accounting or the manner in which it keeps its accounting books and records,
(iv) the Company has not declared or made any dividend or distribution of cash
or other property to its stockholders or purchased, redeemed or made any
agreements to purchase or redeem any shares of its capital stock (other than in
connection with repurchases of unvested stock issued to employees of the Company
and a quarterly cash dividend of $0.04 per share of Common Stock on April 15,
2010), (v) the Company has not issued any equity securities to any officer,
director or Affiliate, except (A) Common Stock issued pursuant to existing
Company option plans or equity based plans disclosed in the SEC Reports and
(B) 8,740,000 shares of Common Stock issued in March 2010, and (vi) there has
not been any material change or amendment to, or any waiver of any material
right by the Company under, any Material Contract under which the Company or any
of its Subsidiaries is bound or subject. Except for the transactions
contemplated by this Agreement (including, for the avoidance of doubt, the
execution of any P&A Agreement and the consummation of any of the transactions
contemplated thereunder, including any purchase of the Failed Bank or portion
thereof), no event, liability or development has occurred or exists with respect
to the Company or its Subsidiaries or their respective business, properties,
operations or financial condition that would be required to be disclosed by the
Company under applicable securities laws at the time this representation is made
that has not been publicly disclosed at least one Trading Day prior to the date
that this representation is made.
          (l) Environmental Matters. Except as disclosed in the SEC Reports,
neither the Company nor any of its Subsidiaries (i) is in violation of any
statute, rule, regulation, decision or order of any governmental agency or body
or any court, domestic or foreign, relating to the use, disposal or release of
hazardous or toxic substances or relating to the protection or restoration of
the environment or human exposure to hazardous or toxic substances
(collectively, “Environmental Laws”), (ii) is liable for any off-site disposal
or contamination pursuant to any Environmental Laws, or (iii) is subject to any
claim relating to any Environmental Laws; in each case, which violation,
contamination, liability or claim has had or would reasonably be expected to
have, individually or in

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the aggregate, a Material Adverse Effect; and, to the Company’s Knowledge, there
is no pending or threatened investigation that might lead to such a claim.
          (m) Litigation. There is no Action which (i) adversely affects or
challenges the legality, validity or enforceability of any of the Transaction
Documents or the issuance of the Preferred Shares or (ii) except as disclosed in
the SEC Reports, is reasonably likely to have a Material Adverse Effect,
individually or in the aggregate, if there were an unfavorable decision. Neither
the Company nor any Subsidiary, nor any director or officer thereof, is or has
been the subject of any Action involving a claim of violation of or liability
under federal or state securities laws or a claim of breach of fiduciary duty.
There has not been, and to the Company’s knowledge there is not pending or
contemplated, any investigation by the Commission involving the Company or any
current or former director or officer of the Company.
          (n) Employment Matters. No material labor dispute exists or, to the
Company’s Knowledge, is imminent with respect to any of the employees of the
Company which would have or reasonably be expected to have a Material Adverse
Effect. To the Company’s Knowledge, no executive officer is, or is now expected
to be, in violation of any material term of any employment contract,
confidentiality, disclosure or proprietary information agreement or
non-competition agreement, or any other contract or agreement or any restrictive
covenant in favor of a third party, and to the Company’s Knowledge, the
continued employment of each such executive officer does not subject the Company
or any Subsidiary to any liability with respect to any of the foregoing matters.
The Company is in compliance with all U.S. federal, state, local and foreign
laws and regulations relating to employment and employment practices, terms and
conditions of employment and wages and hours, except where the failure to be in
compliance would not have or reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect.
          (o) Compliance. Neither the Company nor any of its Subsidiaries (i) is
in default under or in violation of (and no event has occurred that has not been
waived that, with notice or lapse of time or both, would result in a default by
the Company or any of its Subsidiaries under), nor has the Company or any of its
Subsidiaries received written notice of a claim that it is in default under or
that it is in violation of, any Material Contract (whether or not such default
or violation has been waived), (ii) is in violation of any order of which the
Company has been made aware in writing of any court, arbitrator or governmental
body having jurisdiction over the Company or its properties or assets, or
(iii) is in violation of, or in receipt of written notice that it is in
violation of, any statute, rule or regulation of any governmental authority
applicable to the Company, or which would have the effect of revoking or
limiting FDIC deposit insurance, except in each case as would not have or
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect.
          (p) Regulatory Permits. The Company and each of its Subsidiaries
possess or have applied for all certificates, authorizations, consents and
permits issued by the appropriate federal, state, local or foreign regulatory
authorities necessary to conduct their respective businesses as currently
conducted and as described in the SEC Reports, except where the failure to
possess such permits, individually or in the aggregate, has not and would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect (“Material Permits”), and (i) neither the Company nor any of its
Subsidiaries has received any notice in writing of proceedings relating to the
revocation or material adverse modification of any such Material Permits

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and (ii) the Company is unaware of any facts or circumstances that would give
rise to the revocation or material adverse modification of any Material Permits.
          (q) Title to Assets. The Company and its Subsidiaries have good and
marketable title to all real property and tangible personal property owned by
them which is material to the business of the Company and its Subsidiaries,
taken as a whole, in each case free and clear of all Liens except such as do not
materially affect the value of such property or do not interfere with the use
made and proposed to be made of such property by the Company and any of its
Subsidiaries. Any real property and facilities held under lease by the Company
and any of its Subsidiaries are held by them under valid, subsisting and
enforceable leases with such exceptions as are not material and do not interfere
with the use made and proposed to be made of such property and buildings by the
Company and its Subsidiaries.
          (r) Patents and Trademarks. The Company and its Subsidiaries own,
possess, license, or can acquire on reasonable terms, or have other rights to
use all foreign and domestic patents, patent applications, trade and service
marks, trade and service mark registrations, trade names, copyrights,
inventions, trade secrets, technology, Internet domain names, know-how and other
intellectual property (collectively, the “Intellectual Property”) necessary for
the conduct of their respective businesses as now conducted, except where the
failure to own, possess, license or have such rights would not have or
reasonably be expected to have a Material Adverse Effect. Except as set forth in
the SEC Reports and except where such violations or infringements would not have
or reasonably be expected to have, either individually or in the aggregate, a
Material Adverse Effect, (a) there are no rights of third parties to any such
Intellectual Property; (b) there is no infringement by third parties of any such
Intellectual Property; (c) there is no pending or threatened action, suit,
proceeding or claim by others challenging the Company’s and its Subsidiaries’
rights in or to any such Intellectual Property; (d) there is no pending or
threatened action, suit, proceeding or claim by others challenging the validity
or scope of any such Intellectual Property; and (e) there is no Proceeding by
others that the Company and/or any Subsidiary infringes or otherwise violates
any patent, trademark, copyright, trade secret or other proprietary rights of
others.
          (s) Insurance. The Company and each of the Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as the Company believes to be prudent and customary in the
businesses and locations in which the Company and the Subsidiaries are engaged.
Neither the Company nor any of its Subsidiaries has received any notice of
cancellation of any such insurance, nor, to the Company’s Knowledge, will it or
any Subsidiary be unable to renew their respective existing insurance coverage
as and when such coverage expires or to obtain similar coverage from similar
insurers as may be necessary to continue its business at a cost that would not
have a Material Adverse Effect.
          (t) Transactions With Affiliates and Employees. Except as set forth in
the SEC Reports and other than the grant of stock options or other equity awards
that are not individually or in the aggregate material in amount, none of the
officers or directors of the Company and, to the Company’s Knowledge, none of
the employees of the Company, is presently a party to any transaction with the
Company or to a presently contemplated transaction (other than for services as
employees, officers and directors) that would be required to be disclosed
pursuant to Item 404 of Regulation S-K promulgated under the Securities Act.

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          (u) Internal Control Over Financial Reporting. Except as set forth in
the SEC Reports, the Company maintains internal control over financial reporting
(as such term is defined in Rule 13a-15(f) under the Exchange Act) designed to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles and such internal control over
financial reporting was effective as of the date of the most recent SEC Report.
          (v) Sarbanes-Oxley; Disclosure Controls. The Company is in compliance
in all material respects with all of the provisions of the Sarbanes-Oxley Act of
2002 which are applicable to it. Except as disclosed in the SEC Reports, the
Company maintains disclosure controls and procedures (as such term is defined in
Rule 13a-15(e) and 15d-15(e) under the Exchange Act), and such disclosure
controls and procedures are effective.
          (w) Certain Fees. No person or entity will have, as a result of the
transactions contemplated by this Agreement, any valid right, interest or claim
against or upon the Company or a Purchaser for any commission, fee or other
compensation pursuant to any agreement, arrangement or understanding entered
into by or on behalf of the Company, other than the Placement Agent with respect
to the offer and sale of the Preferred Shares (which placement agent fees are
being paid by the Company). The Company shall indemnify, pay, and hold each
Purchaser harmless against, any liability, loss or expense (including, without
limitation, attorneys’ fees and out-of-pocket expenses) arising in connection
with any such right, interest or claim.
          (x) Private Placement. Assuming the accuracy of the Purchasers’
representations and warranties set forth in Section 3.2 of this Agreement and
the accuracy of the information disclosed in the Accredited Investor
Questionnaires, no registration under the Securities Act is required for the
offer and sale of the Securities by the Company to the Purchasers under the
Transaction Documents. The issuance and sale of the Preferred Shares hereunder
does not contravene the rules and regulations of the Principal Trading Market
and, upon the receipt of the Stockholder Approvals, the issuance of the
Underlying Shares in accordance with the Certificate of Designations will not
contravene the rules and regulations of the Principal Trading Market.
          (y) Registration Rights. Other than each of the Purchasers, no Person
has any right to cause the Company to effect the registration under the
Securities Act of any securities of the Company other than those securities
which are currently registered on an effective registration statement on file
with the Commission.
          (z) Listing and Maintenance Requirements. The Company’s Common Stock
is registered pursuant to Section 12(b) of the Exchange Act, and the Company has
taken no action designed to terminate the registration of the Common Stock under
the Exchange Act nor has the Company received any notification that the
Commission is contemplating terminating such registration. The Company has not,
in the 12 months preceding the date hereof, received written notice from any
Trading Market on which the Common Stock is listed or quoted to the effect that
the Company is not in compliance with the listing or maintenance requirements of
such Trading Market. The Company is, and has no reason to believe that it will
not in the foreseeable future continue to be, in compliance in all material
respects with the listing and maintenance requirements for continued trading of
the Common Stock on the Principal Trading Market.

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          (aa) Investment Company. Neither the Company nor any of its
Subsidiaries is required to be registered as, and immediately following the
Closing will not be required to register as, an “investment company” within the
meaning of the Investment Company Act of 1940, as amended.
          (bb) Unlawful Payments. Neither the Company nor any of its
Subsidiaries, nor to the Company’s Knowledge, any directors, officers,
employees, agents or other Persons acting at the direction of or on behalf of
the Company or any of its Subsidiaries has, in the course of its actions for, or
on behalf of, the Company: (a) directly or indirectly, used any corporate funds
for unlawful contributions, gifts, entertainment or other unlawful expenses
relating to foreign or domestic political activity; (b) made any direct or
indirect unlawful payments to any foreign or domestic governmental officials or
employees or to any foreign or domestic political parties or campaigns from
corporate funds; (c) violated any provision of the Foreign Corrupt Practices Act
of 1977, as amended, or (d) made any other unlawful bribe, rebate, payoff,
influence payment, kickback or other material unlawful payment to any foreign or
domestic government official or employee.
          (cc) Application of Takeover Protections; Rights Agreements. The
Company has not adopted any stockholder rights plan or similar arrangement
relating to accumulations of beneficial ownership of Common Stock or a change in
control of the Company. The Company and its Board of Directors have taken all
necessary action, if any, in order to render inapplicable any control share
acquisition, business combination, poison pill (including any distribution under
a rights agreement) or other similar anti-takeover provision under the Company’s
Certificate of Incorporation or other organizational documents or the laws of
the jurisdiction of its incorporation or otherwise which is or could become
applicable to any Purchaser solely as a result of the transactions contemplated
by this Agreement, including, without limitation, the Company’s issuance of the
Securities and any Purchaser’s ownership of the Securities.
          (dd) Disclosure. The Company confirms that neither it nor, to the
Company’s Knowledge, any of its officers or directors nor any other Person
acting on its or their behalf has provided, including the Placement Agent to
provide, any Purchaser or its respective agents or counsel with any information
that it believes constitutes or could reasonably be expected to constitute
material, non-public information except insofar as the existence, provisions and
terms of the Transaction Documents and the proposed transactions hereunder may
constitute such information, all of which will be disclosed by the Company in
the Press Release as contemplated by Section 4.6 hereof. The Company understands
and confirms that each of the Purchasers will rely on the representations in
this Section 3.1(dd) in effecting transactions in securities of the Company. No
event or circumstance has occurred or information exists with respect to the
Company or any of its Subsidiaries or its or their business, properties,
operations or financial conditions, which, under applicable law, rule or
regulation, requires public disclosure or announcement by the Company but which
has not been so publicly announced or disclosed, except for the announcement of
this Agreement and related transactions and as may be disclosed on the Form 8-K
filed pursuant to Section 4.6.
          (ee) Off Balance Sheet Arrangements. There is no transaction,
arrangement, or other relationship between the Company (or any Subsidiary) and
an unconsolidated or other off balance sheet entity that is required to be
disclosed by the Company in its Exchange Act filings and is not so disclosed and
would have or reasonably be expected to have a Material Adverse Effect.

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          (ff) Acknowledgment Regarding Purchasers’ Purchase of Preferred
Shares. The Company acknowledges and agrees that each of the Purchasers is
acting solely in the capacity of an arm’s length purchaser with respect to the
Transaction Documents and the transactions contemplated hereby and thereby. The
Company further acknowledges that no Purchaser is acting as a financial advisor
or fiduciary of the Company (or in any similar capacity) with respect to the
Transaction Documents and the transactions contemplated thereby and any advice
given by any of the Purchasers or any of their respective representatives or
agents in connection with the Transaction Documents and the transactions
contemplated thereby is merely incidental to the Purchasers’ purchase of the
Preferred Shares.
          (gg) Absence of Manipulation. The Company has not, and to the
Company’s Knowledge no one acting on its behalf has, taken, directly or
indirectly, any action designed to cause or to result in the stabilization or
manipulation of the price of any security of the Company to facilitate the sale
or resale of any of the Securities.
          (hh) OFAC. Neither the Company nor any Subsidiary nor, to the
Company’s Knowledge, any director, officer, agent, employee, Affiliate or Person
acting on behalf of the Company or any Subsidiary is currently subject to any
U.S. sanctions administered by the Office of Foreign Assets Control of the U.S.
Treasury Department (“OFAC”); and the Company will not knowingly use the
proceeds of the sale of the Preferred Shares, towards any sales or operations in
Cuba, Iran, Syria, Sudan, Myanmar or any other country sanctioned by OFAC or for
the purpose of financing the activities of any Person currently subject to any
U.S. sanctions administered by OFAC.
          (ii) Money Laundering Laws. The operations of each of the Company and
any Subsidiary are in compliance in all material respects with the money
laundering statutes of applicable jurisdictions, the rules and regulations
thereunder and any related or similar rules, regulations or guidelines, issued,
administered or enforced by any applicable governmental agency (collectively,
the “Money Laundering Laws”) and to the Company’s Knowledge, no action, suit or
proceeding by or before any court or governmental agency, authority or body or
any arbitrator involving the Company and/or any Subsidiary with respect to the
Money Laundering Laws is pending or threatened.
          (jj) Reports, Registrations and Statements. Since December 31, 2008,
the Company and each Subsidiary have filed all material reports, registrations
and statements, together with any required amendments thereto, that it was
required to file with the FRB, the FDIC, the OCFI and any other applicable
federal or state securities or banking authorities, except where the failure to
file any such report, registration or statement would not have or reasonably be
expected to have a Material Adverse Effect. All such reports and statements
filed with any such regulatory body or authority are collectively referred to
herein as the “Company Reports.” As of their respective dates, the Company
Reports complied as to form in all material respects with all the rules and
regulations promulgated by the FRB, the FDIC, the OCFI and any other applicable
foreign, federal or state securities or banking authorities, as the case may be.
          (kk) Adequate Capitalization. As of December 31, 2009, the Company’s
Subsidiary insured depository institutions meet or exceed the standards
necessary to be considered

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“adequately capitalized” under the Federal Deposit Insurance Company’s
regulatory framework for prompt corrective action.
          (ll) Agreements with Regulatory Agencies; Compliance with Certain
Banking Regulations. Neither the Company nor any Subsidiary is subject to any
cease-and-desist or other similar order or enforcement action issued by, or is a
party to any written agreement, consent agreement or memorandum of understanding
with, or is a party to any commitment letter or similar undertaking to, or is
subject to any capital directive by, or since December 31, 2007, has adopted any
board resolutions at the request of, any governmental entity that currently
restricts in any material respect the conduct of its business or that in any
material manner relates to its capital adequacy, its liquidity and funding
policies and practices, its ability to pay dividends, its credit, risk
management or compliance policies, its internal controls, its management or its
operations or business (each item in this sentence, a “Regulatory Agreement”),
nor has the Company or any Subsidiary been advised since December 31, 2008 by
any governmental entity that it intends to issue, initiate, order, or request
any such Regulatory Agreement.
          The Company has no knowledge of any facts and circumstances, and has
no knowledge of any facts or circumstances exist, that would cause its
Subsidiary banking institutions: (i) to be operating in violation, in any
material respect, of the Bank Secrecy Act, the Patriot Act, any order issued
with respect to anti-money laundering by OFAC, or any other anti-money
laundering statute, rule or regulation; or (ii) not to be in satisfactory
compliance, in any material respect, with all applicable privacy of customer
information requirements contained in any applicable federal and state privacy
laws and regulations as well as the provisions of all information security
programs adopted by the Subsidiary.
          (mm) No General Solicitation or General Advertising. Neither the
Company nor, to the Company’s Knowledge, any Person acting on its behalf has
engaged or will engage in any form of general solicitation or general
advertising (within the meaning of Regulation D under the Securities Act) in
connection with any offer or sale of the Preferred Shares.
          (nn) Risk Management Instruments. Except as has not had or would not
reasonably be expected to have a Material Adverse Effect, since January 1, 2009,
all material derivative instruments, including, swaps, caps, floors and option
agreements, whether entered into for the Company’s own account, or for the
account of one or more of the Company Subsidiaries, were entered into (1) only
in the ordinary course of business, (2) in accordance with prudent practices and
in all material respects with all applicable laws, rules, regulations and
regulatory policies, and (3) with counterparties believed to be financially
responsible at the time; and each of them constitutes the valid and legally
binding obligation of the Company or one of the Subsidiaries, enforceable in
accordance with its terms. Neither the Company or the Subsidiaries, nor, to the
knowledge of the Company, any other party thereto, is in breach of any of its
material obligations under any such agreement or arrangement.
          (oo) ERISA. The Company and each ERISA Affiliate is in compliance in
all material respects with all presently applicable provisions of ERISA; no
“reportable event” described in Section 4043 of ERISA (other than an event for
which the 30-day notice requirement has been waived by applicable regulation)
has occurred with respect to any Pension Plan for which the Company would have
any liability that would reasonably be expected to have a Material Adverse

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Effect; the Company has not incurred and does not expect to incur liability
under (i) Title IV of ERISA with respect to termination of, or withdrawal from,
any Pension Plan; or (ii) Sections 412 or 4971 of the Code that would reasonably
be expected to have a Material Adverse Effect; and each Pension Plan for which
the Company would have liability that is intended to be qualified under Section
401(a) of the Code is so qualified in all material respects and nothing has
occurred, whether by action or by failure to act, which would cause the loss of
such qualification.
          (pp) Reservation of Underlying Shares. Assuming the Stockholder
Approvals have been obtained, the Company will reserve, free of any preemptive
or similar rights of stockholders of the Company, a number of unissued shares of
Common Stock, sufficient to issue and deliver the Underlying Shares into which
the Preferred Shares are convertible.
          (qq) Shell Company Status. The Company is not, and has never been, an
issuer identified in Rule 144(i)(1).
          (rr) Registration Eligibility. The Company is eligible to register the
resale of the Securities by the Purchasers using Form S-3 promulgated under the
Securities Act.
          (ss) FDIC Policy Statement. The Company and the Bank are not subject
to, and do not expect that, as a result of the issuance of Preferred Shares
provided herein or otherwise arising in connection with the Bank’s acquisition
of the Failed Bank, they will become subject to, the FDIC Statement of Policy on
Qualifications for Failed Bank Acquisitions (as in effect and interpreted on the
date hereof) (the “FDIC Policy Statement”).
          (tt) No Additional Agreements. The Company has no other agreements or
understandings (including, without limitation, side letters) with any Purchaser
to purchase Preferred Shares on terms that are different from those set forth
herein.
     3.2 Representations and Warranties of the Purchasers. Each Purchaser
hereby, for itself and for no other Purchaser, represents and warrants as of the
date hereof and as of the Closing Date to the Company as follows:
          (a) Organization; Authority. If such Purchaser is an entity, it is
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization with the requisite corporate or partnership
power and authority to enter into and to consummate the transactions
contemplated by the applicable Transaction Documents and otherwise to carry out
its obligations hereunder and thereunder. If such Purchaser is an entity, the
execution, delivery and performance by such Purchaser of the transactions
contemplated by this Agreement have been duly authorized by all necessary
corporate or, if such Purchaser is not a corporation, such partnership, limited
liability company or other applicable like action, on the part of such
Purchaser. If such Purchaser is an entity, each of this Agreement, the
Registration Rights Agreement and the Escrow Agreement has been duly executed by
such Purchaser, and when delivered by such Purchaser in accordance with the
terms hereof, will constitute the valid and legally binding obligation of such
Purchaser, enforceable against it in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally the enforcement of, creditors’ rights and remedies or by
other equitable principles of general application.

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          (b) No Conflicts. The execution, delivery and performance by such
Purchaser of this Agreement, the Registration Rights Agreement and the Escrow
Agreement and the consummation by such Purchaser of the transactions
contemplated hereby and thereby will not (i) result in a violation of the
organizational documents of such Purchaser (if such Purchaser is an entity),
(ii) conflict with, or constitute a default (or an event which with notice or
lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of, any
agreement, indenture or instrument to which such Purchaser is a party, or
(iii) result in a violation of any law, rule, regulation, order, judgment or
decree (including federal and state securities laws) applicable to such
Purchaser, except in the case of clauses (ii) and (iii) above, for such
conflicts, defaults, rights or violations which would not, individually or in
the aggregate, reasonably be expected to have a material adverse effect on the
ability of such Purchaser to perform its obligations hereunder.
          (c) Investment Intent. Such Purchaser understands that the Preferred
Shares are “restricted securities” and have not been registered under the
Securities Act or any applicable state securities law and is acquiring the
Preferred Shares as principal for its own account and not with a view to, or for
distributing or reselling such Preferred Shares or any part thereof in violation
of the Securities Act or any applicable state securities laws, provided, that by
making the representations herein, other than as set forth herein, such
Purchaser does not agree to hold any of the Preferred Shares for any minimum
period of time and reserves the right at all times to sell or otherwise dispose
of all or any part of such Preferred Shares pursuant to an effective
registration statement under the Securities Act or under an exemption from such
registration and in compliance with applicable federal and state securities
laws. Such Purchaser is acquiring the Preferred Shares hereunder in the ordinary
course of its business. Such Purchaser does not presently have any agreement,
plan or understanding, directly or indirectly, with any Person to distribute or
effect any distribution of any of the Securities (or any securities which are
derivatives thereof) to or through any Person or entity.
          (d) Purchaser Status. At the time such Purchaser was offered the
Preferred Shares, it was, and at the date hereof it is, an “accredited investor”
as defined in Rule 501(a) under the Securities Act. Such Purchaser has provided
the information in the Accredited Investor Questionnaire attached hereto as
Exhibit C-1.
          (e) Reliance. The Company and the Placement Agent (on behalf of its
client) will be entitled to rely upon this Agreement and are irrevocably
authorized to produce this Agreement or a copy hereof to (A) any regulatory
authority having jurisdiction over the Company and its affiliates and (B) any
interested party in any administrative or legal proceeding or official inquiry
with respect to the matters covered hereby, in each case, to the extent required
by any court or governmental authority to which the Company is subject, provided
that the Company provides the Purchaser with prior written notice of such
disclosure.
          (f) General Solicitation. Purchaser: (i) became aware of the offering
of the Preferred Shares, and the Preferred Shares were offered to Purchaser,
solely by direct contact between Purchaser and the Company or Placement Agent,
and not by any other means, including any form of “general solicitation” or
“general advertising” (as such terms are used in Regulation D promulgated under
the Securities Act and interpreted by the Commission); (ii) reached its decision
to invest in the Company independently from any other Purchaser; (iii) has
entered into no

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agreements with stockholders of the Company or other subscribers for the purpose
of controlling the Company or any of its subsidiaries; and (iv) has entered into
no agreements with stockholders of the Company or other subscribers regarding
voting or transferring Purchaser’s interest in the Company.
          (g) Direct Purchase. Purchaser is purchasing Preferred Shares directly
from the Company and not from the Placement Agent. The Placement Agent did not
make any representations, declarations or warranties to Purchaser, express or
implied, regarding the Preferred Shares, the Company or the Company’s offering
of the Preferred Shares, and the Placement Agent did not offer to sell, or
solicit an offer to buy, any of the Preferred Shares that Purchaser proposes to
acquire from the Company hereunder.
          (h) Experience of Such Purchaser. Such Purchaser, either alone or
together with its representatives, has such knowledge, sophistication and
experience in business and financial matters so as to be capable of evaluating
the merits and risks of the prospective investment in the Preferred Shares, and
has so evaluated the merits and risks of such investment. Such Purchaser is able
to bear the economic risk of an investment in the Preferred Shares and, at the
present time, is able to afford a complete loss of such investment.
          (i) Access to Information. Such Purchaser acknowledges that it has
been afforded (i) the opportunity to ask such questions as it has deemed
necessary of, and to receive answers from, representatives of the Company
concerning the terms and conditions of the offering of the Preferred Shares and
the merits and risks of investing in the Preferred Shares; (ii) access to
information about the Company and the Subsidiaries and their respective
financial condition, results of operations, business, properties, management and
prospects sufficient to enable it to evaluate its investment; (iii) the
opportunity to obtain such additional information that the Company possesses or
can acquire without unreasonable effort or expense that is necessary to make an
informed investment decision with respect to the investment; and (iv) the
opportunity to ask questions of management. Neither such inquiries nor any other
investigation conducted by or on behalf of such Purchaser or its representatives
or counsel shall modify, amend or affect such Purchaser’s right to rely on the
truth, accuracy and completeness of the Company’s representations and warranties
contained in the Transaction Documents. Such Purchaser has sought such
accounting, legal and tax advice as it has considered necessary to make an
informed decision with respect to its acquisition of the Preferred Shares.
Purchaser acknowledges that neither the Company nor the Placement Agent has made
any representation, express or implied, with respect to the accuracy,
completeness or adequacy of any available information except, with respect to
the Company, as expressly set forth in the SEC Reports or to the extent such
information is covered by the representations and warranties of the Company
contained in Section 3.1.
          (j) Brokers and Finders. Other than the Placement Agent with respect
to the Company, no Person will have, as a result of the transactions
contemplated by the Transaction Documents, any valid right, interest or claim
against or upon the Company or any Purchaser for any commission, fee or other
compensation pursuant to any agreement, arrangement or understanding entered
into by or on behalf of the Purchaser.
          (k) Independent Investment Decision. Such Purchaser has independently
evaluated the merits of its decision to purchase Preferred Shares pursuant to
the Transaction

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Documents, and such Purchaser confirms that it has not relied on the advice of
any other Purchaser’s business and/or legal counsel in making such decision.
Such Purchaser understands that nothing in this Agreement or any other materials
presented by or on behalf of the Company to the Purchaser in connection with the
purchase of the Preferred Shares constitutes legal, regulatory, tax or
investment advice. Such Purchaser has consulted such legal, tax and investment
advisors as it, in its sole discretion, has deemed necessary or appropriate in
connection with its purchase of the Preferred Shares. Such Purchaser understands
that the Placement Agent has acted solely as the agent of the Company in this
placement of the Securities and such Purchaser has not relied on any statement,
representation or warranty including any business or legal advice of the
Placement Agent or any of its agents, counsel or Affiliates in making its
investment decision hereunder, and confirms that none of such Persons has made
any representations or warranties to such Purchaser in connection with the
transactions contemplated by the Transaction Documents.
          (l) Acquisition. The Board of Directors of the Company will control
the entry into the P&A Agreement with respect to any acquisition of the Failed
Bank or any portion thereof and stockholders of the Company will have no
opportunity to affect the investment decision regarding the potential
acquisition.
          (m) ERISA. (i) If Purchaser is, or is acting on behalf of, an ERISA
Entity (as defined below), Purchaser represents and warrants that on the date
hereof;
                    (A) The decision to invest assets of the ERISA Entity in the
Preferred Shares was made by fiduciaries independent of the Company or its
affiliates, which fiduciaries are duly authorized to make such investment
decisions and who have not relied on any advice or recommendations of the
Company or its affiliates;
                    (B) Neither the Company nor any of its agents,
representatives or affiliates have exercised any discretionary authority or
control with respect to the ERISA Entity’s investment in the Preferred Shares;
                    (C) The purchase and holding of the Preferred Shares will
not constitute a nonexempt prohibited transaction under ERISA or Section 4975 of
the Code or a similar violation under any applicable similar laws; and
                    (D) The terms of the Documents comply with the instruments
and applicable laws governing such ERISA Entity.
(ii) For the purpose of this paragraph, the term “ERISA Entity” will mean (A) an
“employee benefit plan” within the meaning of Section 3(3) of ERISA subject to
Title I of ERISA, (B) a “plan” within the meaning of Section 4975(e)(1) of the
Code and (C) any person whose assets are deemed to be “plan assets” within the
meaning of ERISA Section 3(42) and 29 C.F.R. § 2510.3-101 or otherwise under
ERISA.
          (n) Reliance on Exemptions. Such Purchaser understands that the
Securities being offered and sold to it in reliance on specific exemptions from
the registration requirements of U.S. federal and state securities laws and that
the Company is relying in part upon the truth and accuracy of, and such
Purchaser’s compliance with, the representations, warranties, agreements,

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acknowledgements and understandings of such Purchaser set forth herein in order
to determine the availability of such exemptions and the eligibility of such
Purchaser to acquire the Preferred Shares.
          (o) No Governmental Review. Such Purchaser understands that no U.S.
federal or state agency or any other government or governmental agency has
passed on or made any recommendation or endorsement of the Securities or the
fairness or suitability of the investment in the Securities nor have such
authorities passed upon or endorsed the merits of the offering of the
Securities. Purchaser understands that the Securities are not savings accounts,
deposits or other obligations of any bank and are not insured by the FDIC,
including the FDIC’s Deposit Insurance Fund, or any other governmental agency.
          (p) Antitrust. No approval, consent, exemption, authorization, or
other action by, or notice to, or filing with, any governmental entity or
authority or any other person or entity in respect of any law or regulation,
including the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended,
and the rules and regulations thereunder, is necessary or required, and no lapse
of a waiting period under law applicable to such Purchaser is necessary or
required, in each case in connection with the execution, delivery or performance
by such Purchaser of this Agreement or the purchase of the Preferred Shares
contemplated hereby.
          (q) Residency. Such Purchaser’s residence (if an individual) or office
in which its investment decision with respect to the Preferred Shares was made
(if an entity) are located at the address immediately below such Purchaser’s
name on its signature page hereto.
          (r) Regulatory Matters. Purchaser understands and acknowledges that:
(i) the Company is a registered bank holding company under the BHCA, and is
subject to regulation by the FRB; (ii) acquisitions of interests in bank holding
companies are subject to the BHCA and the Change in Bank Control Act (the
“CIBCA”) and may be reviewed by the FRB to determine the circumstances under
which such acquisitions of interests will result in Purchaser becoming subject
to the BHCA or subject to the prior notice requirements of the CIBCA. Assuming
the accuracy of the representations and warranties of the Company contained
herein, Purchaser represents that neither it nor its Affiliates will, as a
result of the transactions contemplated herein, be deemed to (i) own or control
10% or more of any class of voting securities of the Company or (ii) otherwise
control the Company for purposes of the BHCA or CIBCA. Purchaser is not
participating and has not participated with any other investor in the offering
of the Preferred Shares in any joint activity or parallel action towards a
common goal between or among such investors of acquiring control of the Company.
          (s) Trading. Purchaser acknowledges that there is no trading market
for the Preferred Stock, and no such market is expected to develop.
          (t) OFAC and Anti-Money Laundering. The Purchaser understands,
acknowledges, represents and agrees that (i) the Purchaser is not the target of
any sanction, regulation, or law promulgated by the Office of Foreign Assets
Control, the Financial Crimes Enforcement Network or any other U.S. governmental
entity (“U.S. Sanctions Laws”); (ii) the Purchaser is not owned by, controlled
by, under common control with, or acting on behalf of any person that is the
target of U.S. Sanctions Laws; (iii) the Purchaser is not a “foreign shell bank”
and is not acting on behalf of a “foreign shell bank” under applicable
anti-money laundering laws and regulations; (iv) the Purchaser’s entry into this
Agreement or consummation of the transactions

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contemplated hereby will not contravene U.S. Sanctions Laws or applicable
anti-money laundering laws or regulations; (v) the Purchaser will promptly
provide to the Company or any regulatory or law enforcement authority such
information or documentation as may be required to comply with U.S. Sanctions
Laws or applicable anti-money laundering laws or regulations; and (vi) the
Company may provide to any regulatory or law enforcement authority information
or documentation regarding, or provided by, the Purchaser for the purposes of
complying with U.S. Sanctions Laws or applicable anti-money laundering laws or
regulations.
          (u) Purchaser has not discussed the Offering with any other party or
potential investors (other than the Company, Placement Agent, any other
Purchaser and Purchaser’s authorized representatives), except as expressly
permitted under the terms of this Agreement.
          (v) Knowledge as to Conditions. Purchaser does not know of any reason
why any regulatory approvals and, to the extent necessary, any other approvals,
authorizations, filings, registrations, and notices required or otherwise a
condition to the consummation by it of the transactions contemplated by this
Agreement will not be obtained.
     The Company and each of the Purchasers acknowledge and agree that no party
to this Agreement has made or makes any representations or warranties with
respect to the transactions contemplated hereby other than those specifically
set forth in this Article 3 and the Transaction Documents.
ARTICLE 4:
OTHER AGREEMENTS OF THE PARTIES
     4.1 Transfer Restrictions.
     (a) Compliance with Laws. Notwithstanding any other provision of this
Article 4, each Purchaser covenants that the Securities may be disposed of only
pursuant to an effective registration statement under, and in compliance with
the requirements of, the Securities Act, or pursuant to an available exemption
from, or in a transaction not subject to, the registration requirements of the
Securities Act, and in compliance with any applicable state, federal or foreign
securities laws. In connection with any transfer of the Securities other than
(i) pursuant to an effective registration statement, (ii) to the Company or
(iii) pursuant to Rule 144 (provided that the transferor provides the Company
with reasonable assurances (in the form of seller and broker representation
letters) that such securities may be sold pursuant to such rule), the Company
may require the transferor thereof to provide to the Company and the Transfer
Agent, at the transferor’s expense, an opinion of counsel selected by the
transferor and reasonably acceptable to the Company and the Transfer Agent, the
form and substance of which opinion shall be reasonably satisfactory to the
Company and the Transfer Agent, to the effect that such transfer does not
require registration of such transferred Securities under the Securities Act. As
a condition of transfer (other than pursuant to clauses (i), (ii) or (iii) of
the preceding sentence), any such transferee shall agree in writing to be bound
by the terms of this Agreement and shall have the rights of a Purchaser under
this Agreement and the Registration Rights Agreement with respect to such
transferred Securities.
     (b) Legends. Certificates evidencing the Securities shall bear any legend
as required by the “blue sky” laws of any state and a restrictive legend in
substantially the following form (and,

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with respect to Securities held in book-entry form, the Transfer Agent will
record such a legend on the share register), until such time as they are not
required under Section 4.1(c) or applicable law:

      THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE “SECURITIES ACT”), OR APPLICABLE STATE SECURITIES LAWS.
THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN
THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER
THE SECURITIES ACT OR (B) AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN
ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS OR BLUE SKY LAWS AS EVIDENCED
BY A LEGAL OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY AND ITS
TRANSFER AGENT OR (II) UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT (PROVIDED
THAT THE TRANSFEROR PROVIDES THE COMPANY WITH REASONABLE ASSURANCES (IN THE FORM
OF SELLER AND BROKER REPRESENTATION LETTERS) THAT THE SECURITIES MAY BE SOLD
PURSUANT TO SUCH RULE). NO REPRESENTATION IS MADE BY THE ISSUER AS TO THE
AVAILABILITY OF THE EXEMPTION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT FOR
RESALES OF THESE SECURITIES.

     (c) Removal of Legends. The restrictive legend set forth in Section 4.1(b)
above shall be removed and the Company shall issue a certificate without such
restrictive legend or any other restrictive legend to the holder of the
applicable Securities upon which it is stamped or issue to such holder by
electronic delivery at the applicable balance account at DTC, if (i) such
Securities are sold or transferred pursuant to Rule 144 (if the transferor is
not an Affiliate of the Company), or (ii) such Securities are eligible for sale
under Rule 144, without the requirement for the Company to be in compliance with
the current public information required under Rule 144(c)(1) (or Rule 144(i)(2),
if applicable) as to such securities and without volume or manner-of-sale
restrictions. Following the earlier of (i) the Effective Date (as defined in the
Registration Rights Agreement) or (ii) Rule 144 becoming available for the
resale of Securities, without the requirement for the Company to be in
compliance with the current public information required under 144(c)(1) (or
Rule 144(i)(2), if applicable) as to the Securities and without volume or
manner-of-sale restrictions, the Company shall instruct the Transfer Agent to
remove the legend from the Securities and shall cause its counsel to issue any
legend removal opinion required by the Transfer Agent. Any fees (with respect to
the Transfer Agent, Company counsel or otherwise) associated with the issuance
of such opinion or the removal of such legend shall be borne by the Company. If
a legend is no longer required pursuant to the foregoing, the Company will no
later than three (3) Trading Days following the delivery by a Purchaser to the
Company or the Transfer Agent (with notice to the Company) of a legended
certificate or instrument representing such Securities (endorsed or with stock
powers attached, signatures guaranteed, and otherwise in form necessary to
affect the reissuance and/or transfer) and a representation letter to the extent
required by Section 4.1(a), (such third Trading

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Day, the “Legend Removal Date”) deliver or cause to be delivered to such
Purchaser a certificate or instrument (as the case may be) representing such
Securities that is free from all restrictive legends. The Company may not make
any notation on its records or give instructions to the Transfer Agent that
enlarge the restrictions on transfer set forth in this Section 4.1(c).
Certificates for Securities free from all restrictive legends may be transmitted
by the Transfer Agent to the Purchasers by crediting the account of the
Purchaser’s prime broker with DTC as directed by such Purchaser.
     (d) Acknowledgement. Each Purchaser hereunder acknowledges its primary
responsibilities under the Securities Act and accordingly will not sell or
otherwise transfer the Securities or any interest therein without complying with
the requirements of the Securities Act            and the rules and regulations
promulgated thereunder. Except as otherwise provided below, while the
above-referenced registration statement remains effective, each Purchaser
hereunder may sell the Securities in accordance with the plan of distribution
contained in the registration statement and if it does so it will comply
therewith and with the related prospectus delivery requirements unless an
exemption therefrom is available or unless the Securities are sold pursuant to
Rule 144. Each Purchaser, severally and not jointly with the other Purchasers,
agrees that if it is notified by the Company in writing at any time that the
registration statement registering the resale of the Securities is not effective
or that the prospectus included in such registration statement no longer
complies with the requirements of Section 10 of the Securities Act, such
Purchaser will refrain from selling such Securities until such time as such
Purchaser is notified by the Company that such registration statement is
effective or such prospectus is compliant with Section 10 of the Exchange Act,
unless such Purchaser is able to, and does, sell such Securities pursuant to an
available exemption from the registration requirements of Section 5 of the
Securities Act.
     4.2 Acknowledgment of Dilution. The Company acknowledges that the issuance
of the Securities may result in dilution of the outstanding shares of Common
Stock. The Company further acknowledges that its obligations under the
Transaction Documents, including without limitation its obligation to issue the
Securities pursuant to the Transaction Documents, are unconditional and absolute
and not subject to any right of set off, counterclaim, delay or reduction,
regardless of the effect of any such dilution or any claim the Company may have
against any Purchaser and regardless of the dilutive effect that such issuance
may have on the ownership of the other stockholders of the Company.
     4.3 Furnishing of Information. In order to enable the Purchasers to sell
the Securities under Rule 144 of the Securities Act, for a period of one year
from the Closing, the Company shall maintain the registration of the Common
Stock under Section 12(b) or 12(g) of the Exchange Act and to timely file (or
obtain extensions in respect thereof and file within the applicable grace
period) all reports required to be filed by the Company after the date hereof
pursuant to the Exchange Act. During such one year period, if the Company is not
required to file reports pursuant to such laws, it will prepare and furnish to
the Purchasers and make publicly available the information described in
Rule 144(c)(2), if the provision of such information will allow resales of the
Securities pursuant to Rule 144.
     4.4 Form D and Blue Sky. The Company agrees to timely file a Form D with
respect to the Preferred Shares as required under Regulation D. The Company, on
or before the Closing Date, shall take such action as the Company shall
reasonably determine is necessary in order to obtain an exemption for or to
qualify the Preferred Shares for sale to the Purchasers at the Closing pursuant
to

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this Agreement under applicable securities or “Blue Sky” laws of the states of
the United States (or to obtain an exemption from such qualification). The
Company shall make all filings and reports relating to the offer and sale of the
Preferred Shares required under applicable securities or “Blue Sky” laws of the
states of the United States following the Closing Date.
     4.5 No Integration. The Company shall not, and shall use its commercially
reasonable efforts to ensure that no Affiliate of the Company shall, sell, offer
for sale or solicit offers to buy or otherwise negotiate in respect of any
security (as defined in Section 2 of the Securities Act) that will be integrated
with the offer or sale of the Securities in a manner that would require the
registration under the Securities Act of the sale of the Securities to the
Purchasers.
     4.6 Securities Laws Disclosure; Publicity. On or before 7:30 p.m., New York
City time, on the Closing Date, the Company shall issue one or more press
releases (collectively, the “Press Release”) disclosing the material terms of
the transactions contemplated hereby, including, without limitation, the
issuance of the Preferred Shares and the acquisition of the Failed Bank. On or
before 5:30 p.m., New York City time, on the fourth Trading Day immediately
following the Closing Date, the Company will file a Current Report on Form 8-K
with the Commission describing the terms of the Transaction Documents and the
P&A Agreement (and including as exhibits to such Current Report on Form 8-K the
material Transaction Documents (including, without limitation, this Agreement,
the Registration Rights Agreement and the Certificate of Designations) and the
P&A Agreement (unless the FDIC objects)). Notwithstanding the foregoing, the
Company shall not publicly disclose the name of any Purchaser or any Affiliate
or investment adviser of any Purchaser, or include the name of any Purchaser or
any Affiliate or investment adviser of any Purchaser in any press release or
filing with the Commission (other than the Registration Statement) or Trading
Market, without the prior written consent of such Purchaser, except (i) as
required by federal securities law in connection with (A) any registration
statement contemplated by the Registration Rights Agreement and (B) the filing
of final Transaction Documents with the Commission, (ii) to the extent such
disclosure is required by law, at the request of the Staff of the Commission or
Trading Market regulations, in which case the Company shall provide the
Purchasers with prior written notice of such disclosure permitted under this
subclause (ii). Notwithstanding the foregoing, the Company may disclose the name
of any Purchaser or any Affiliate or investment adviser of any Purchaser to the
FDIC in connection with its bid for the Failed Bank. From and after the issuance
of the Press Release, no Purchaser shall be in possession of any material,
non-public information received from the Company, any Subsidiary or any of their
respective officers, directors or employees, that is not disclosed in the Press
Release. Each Purchaser, severally and not jointly with the other Purchasers,
covenants that until such time as the transactions contemplated by this
Agreement are publicly disclosed by the Company as described in this
Section 4.6, such Purchaser will maintain the confidentiality of all disclosures
made to it in connection with this transaction (including the existence and
terms of this transaction).
     4.7 Non-Public Information. Except with the express written consent of such
Purchaser and unless prior thereto such Purchaser shall have executed a written
agreement regarding the confidentiality and use of such information, the Company
shall not, and shall cause each Subsidiary and each of their respective
officers, directors, employees and agents, not to, and each Purchaser shall not
directly solicit the Company, any of its Subsidiaries or any of their respective
officers, directors, employees or agents to provide any Purchaser with any
material, non-public information regarding the Company or any of its
Subsidiaries from and after the filing of the Press Release.

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     4.8 Indemnification.
          (a) Indemnification of Purchasers. In addition to the indemnity
provided in the Registration Rights Agreement, the Company will indemnify and
hold each Purchaser and its directors, officers, stockholders, members,
partners, employees and agents (and any other Persons with a functionally
equivalent role of a Person holding such titles notwithstanding a lack of such
title or any other title), each Person who controls such Purchaser (within the
meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act),
and the directors, officers, stockholders, agents, members, partners or
employees (and any other Persons with a functionally equivalent role of a Person
holding such titles notwithstanding a lack of such title or any other title) of
such controlling person (each, a “Purchaser Party”) harmless from any and all
losses, liabilities, obligations, claims, contingencies, damages, costs and
expenses, including all judgments, amounts paid in settlements, court costs and
reasonable attorneys’ fees and costs of investigation that any such Purchaser
Party may suffer or incur as a result of (i) any breach of any of the
representations, warranties, covenants or agreements made by the Company in this
Agreement or in the other Transaction Documents or (ii) any action instituted
against a Purchaser Party in any capacity, or any of them or their respective
affiliates, by any stockholder of the Company who is not an affiliate of such
Purchaser Party, with respect to any of the transactions contemplated by this
Agreement. The Company will not be liable to any Purchaser Party under this
Agreement to the extent, but only to the extent that a loss, claim, damage or
liability is attributable to any Purchaser Party’s breach of any of the
representations, warranties, covenants or agreements made by such Purchaser
Party in this Agreement or in the other Transaction Documents or attributable to
the gross negligence or willful misconduct on the part of such Purchaser Party.
          (b) Conduct of Indemnification Proceedings. Promptly after receipt by
any Person (the "Indemnified Person”) of notice of any demand, claim or
circumstances which would or might give rise to a claim or the commencement of
any action, proceeding or investigation in respect of which indemnity may be
sought pursuant to Section 4.8(a), such Indemnified Person shall promptly notify
the Company in writing and the Company shall assume the defense thereof,
including the employment of counsel reasonably satisfactory to such Indemnified
Person, and shall assume the payment of all fees and expenses; provided, that
the failure of any Indemnified Person so to notify the Company shall not relieve
the Company of its obligations hereunder except to the extent that the Company
is actually and materially and adversely prejudiced by such failure to notify.
In any such proceeding, any Indemnified Person 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 Person unless: (i) the Company and the Indemnified
Person shall have mutually agreed to the retention of such counsel; (ii) the
Company shall have failed promptly to assume the defense of such proceeding and
to employ counsel reasonably satisfactory to such Indemnified Person in such
proceeding; or (iii) in the reasonable judgment of counsel to such Indemnified
Person, representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between them;
provided, that the Indemnifying Party shall not be liable for the fees and
expenses of more than one separate firm of attorneys at any time for all
Indemnified Parties. The Company shall not be liable for any settlement of any
proceeding effected without its written consent, which consent shall not be
unreasonably withheld, delayed or conditioned. Without the prior written consent
of the Indemnified Person, which consent shall not be unreasonably withheld,
delayed or conditioned, the Company shall not effect any settlement of any
pending or threatened proceeding in respect of which any Indemnified Person is
or could have been a party and

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indemnity could have been sought hereunder by such Indemnified Party, unless
such settlement includes an unconditional release of such Indemnified Person
from all liability arising out of such proceeding.
     4.9 Listing of Common Stock. The Company will use its reasonable best
efforts to list the Underlying Shares for quotation on the NYSE and maintain the
listing of the Common Stock on the NYSE.
     4.10 Use of Proceeds. The Company intends to use the net proceeds from the
sale of the Preferred Shares hereunder for the purpose of acquiring certain
assets and liabilities of the Failed Bank from the FDIC and related transaction
fees and expenses and general corporate purposes.
     4.11 Stockholders Meeting. The Company shall call a special meeting of its
stockholders, to be held as promptly as practicable following the Closing, but
in no event later than 75 days after the Closing, to vote on proposals (the
“Stockholder Proposals”) to (i) approve the conversion of the Preferred Shares
into Common Stock for purposes of Rule 312.03 of the NYSE Listed Company Manual,
and (ii) if necessary, amend the Certificate of Incorporation to increase the
number of authorized shares of Common Stock to at least such number as shall be
sufficient to permit the full conversion of the Preferred Shares (such approval
of the Stockholder Proposals, "Stockholder Approvals”). The Board of Directors
of the Company shall recommend to the Company’s stockholders that such
stockholders vote in favor of the Stockholder Proposals. In connection with such
meeting, the Company shall promptly prepare and file (but in no event more than
15 Business Days after the Closing Date) with the Commission a preliminary proxy
statement, shall use its reasonable best efforts to respond to any comments of
the Commission or its staff and to cause a definitive proxy statement related to
such stockholders’ meeting to be mailed to the Company’s stockholders not more
than 10 Business Days after clearance thereof by the Commission, and shall use
its reasonable best efforts to solicit proxies for such Stockholder Approvals.
If at any time prior to such stockholders’ meeting there shall occur any event
that is required to be set forth in an amendment or supplement to the proxy
statement, the Company shall as promptly as practicable prepare and mail to its
stockholders such an amendment or supplement. In the event that Stockholder
Approvals are not obtained at such special stockholders meeting, the Company
shall include a proposal to approve (and the Board of Directors shall recommend
approval of) such proposal at a meeting of its stockholders to be held no less
than once in each subsequent six-month period beginning on the date of such
special stockholders meeting until such approval is obtained.
     4.12 Limitation on Beneficial Ownership. No Purchaser (and its Affiliates
or any other Persons with which it is acting in concert) will be entitled to
purchase a number of Preferred Shares that would result in such Purchaser
becoming, directly or indirectly, the beneficial owner (as determined under
Rule 13d-3 under the Exchange Act) of more than 9.9% of the number of shares of
Common Stock issued and outstanding.
ARTICLE 5:
CONDITIONS PRECEDENT TO CLOSING
     5.1 Conditions Precedent to the Obligations of the Purchasers to Purchase
Preferred Shares. The obligation of each Purchaser to acquire Preferred Shares
at the Closing is subject to the fulfillment, on or prior to the Closing Date,
of each of the following conditions, any of which may be waived by such
Purchaser (as to itself only):

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          (a) Representations and Warranties. The representations and warranties
of the Company contained herein shall be true and correct in all material
respects (except for those representations and warranties that are qualified by
materiality, which shall be true and correct in all respects) as of the date
hereof and as of the Closing Date, as though made on and as of such date, except
for such representations and warranties that speak as of a specific date.
          (b) Performance. The Company shall have performed, satisfied and
complied in all material respects with all covenants, agreements and conditions
required by the Transaction Documents to be performed, satisfied or complied
with by it at or prior to the Closing.
          (c) No Injunction. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent jurisdiction that
prohibits the consummation of any of the transactions contemplated by the
Transaction Documents.
          (d) Consents. Other than the Required Approvals contemplated in
Section 3.1(e)(i), (iii), (v) and (vi) above, the Company shall have obtained in
a timely fashion any and all consents, permits, approvals, registrations and
waivers necessary for consummation of the purchase and sale of the Preferred
Shares, all of which shall be and remain so long as necessary in full force and
effect.
          (e) Company Deliverables. The Company shall have delivered the Company
Deliverables in accordance with Section 2.2(a).
          (f) Compliance Certificate. The Company shall have delivered to each
Purchaser a certificate, dated as of the Closing Date and signed by its Chief
Executive Officer or its Chief Financial Officer, dated as of the Closing Date,
certifying to the fulfillment of the conditions specified in Sections 5.1(a) and
(b) in the form attached hereto as Exhibit F.
          (g) Certificate of Designations. The Company shall have filed the
Certificate of Designations with the Secretary of State.
          (h) Termination. This Agreement shall not have been terminated as to
such Purchaser in accordance with Sections 6.16 or 6.17 herein.
          (i) Acquisition. (i) The FDIC shall have accepted the bid from the
Bank for the Failed Bank, (ii) the Bank shall have executed the P&A Agreement
with the FDIC with respect to the Failed Bank and (iii) the closing under the
P&A Agreement shall be imminent.
          (j) Minimum Gross Proceeds. The Company shall simultaneously issue and
deliver at the Closing to the Purchasers hereunder in the aggregate at least
sufficient Preferred Shares against payment of aggregate Subscription Amounts of
at least $175.0 million.
     5.2 Conditions Precedent to the Obligations of the Company to sell
Preferred Shares. The Company’s obligation to sell and issue the Preferred
Shares at the Closing is subject to the fulfillment, on or prior to the Closing
Date, of the following conditions, any of which may be waived by the Company:

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          (a) Representations and Warranties. The representations and warranties
made by each Purchaser in Section 3.2 hereof shall be true and correct in all
material respects (except for those representations and warranties that are
qualified by materiality, which shall be true and correct in all respects) as of
the date hereof and as of the Closing Date as though made on and as of such
date, except for representations and warranties that speak as of a specific
date.
          (b) Performance. Such Purchaser shall have performed, satisfied and
complied in all material respects with all covenants, agreements and conditions
required by the Transaction Documents to be performed, satisfied or complied
with by such Purchaser at or prior to the Closing Date.
          (c) No Injunction. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent jurisdiction that
prohibits the consummation of any of the transactions contemplated by the
Transaction Documents.
          (d) Consents. Other than the Required Approvals contemplated in
Section 3.1(e)(i), (iii), (v) and (vi) above, the Company shall have obtained in
a timely fashion any and all consents, permits, approvals, registrations and
waivers necessary for consummation of the purchase and sale of the Preferred
Shares, all of which shall be and remain so long as necessary in full force and
effect.
          (e) Purchasers Deliverables. Such Purchaser shall have delivered its
Purchaser Deliverables in accordance with Section 2.2(b).
          (f) Termination. This Agreement shall not have been terminated as to
such Purchaser in accordance with Sections 6.16 or 6.17 herein.
ARTICLE 6:
MISCELLANEOUS
     6.1 Fees and Expenses. The parties hereto shall be responsible for the
payment of all expenses incurred by them in connection with the preparation and
negotiation of the Transaction Documents and the consummation of the
transactions contemplated hereby. The Company shall pay all amounts owed to the
Placement Agent relating to or arising out of the transactions contemplated
hereby. The Company shall pay all Transfer Agent fees, stamp taxes and other
taxes and duties levied in connection with the sale and issuance of the
Securities to the Purchasers.
     6.2 Entire Agreement. The Transaction Documents, together with the Exhibits
and Schedules thereto, contain the entire understanding of the parties with
respect to the subject matter hereof and supersede all prior agreements,
understandings, discussions and representations, oral or written, with respect
to such matters, which the parties acknowledge have been merged into such
documents, exhibits and schedules. At or after the Closing, and without further
consideration, the Company and the Purchasers will execute and deliver to the
other such further documents as may be reasonably requested in order to give
practical effect to the intention of the parties under the Transaction
Documents.

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     6.3 Notices. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earliest of (a) the date of transmission, if
such notice or communication is delivered via facsimile (provided the sender
receives a machine-generated confirmation of successful transmission) at the
facsimile number specified in this Section prior to 5:00 p.m., New York City
time, on a Trading Day, (b) the next Trading Day after the date of transmission,
if such notice or communication is delivered via facsimile at the facsimile
number specified in this Section on a day that is not a Trading Day or later
than 5:00 p.m., New York City time, on any Trading Day, (c) the Trading Day
following the date of mailing, if sent by U.S. nationally recognized overnight
courier service with next day delivery specified, or (d) upon actual receipt by
the party to whom such notice is required to be given. The address for such
notices and communications shall be as follows:

  If to the Company:     Oriental Financial Group Inc.
997 San Roberto Street
San Juan, Puerto Rico 00926
Attention: General Counsel
Telephone: (787) 993-4206
Fax: (787) 771-6896     With a copy to:    Skadden, Arps, Slate, Meagher & Flom
LLP
300 S. Grand Ave, 34th Floor
Los Angeles, CA 90017
Attention: Gregg Noel
Telephone: (213) 687-5000
Fax: (213) 687-5600     If to a Purchaser:     To the address set forth under
such Purchaser’s name on the signature page hereof;

     or such other address as may be designated in writing hereafter, in the
same manner, by such Person.
     6.4 Amendments; Waivers; No Additional Consideration. No amendment or
waiver of any provision of this Agreement will be effective with respect to any
party unless made in writing and signed by an officer or a duly authorized
representative of such party. No consideration shall be offered or paid to any
Purchaser to amend or consent to a waiver or modification of any provision of
any Transaction Document unless the same consideration is also offered to all
Purchasers who then hold Preferred Shares.
     6.5 Construction. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof. The language used in this Agreement will be deemed
to be the language chosen by the parties to express their mutual intent, and no
rules of strict construction will be applied against any party. This Agreement
shall be construed as if drafted jointly by the parties, and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any provisions of this Agreement or any of the Transaction
Documents.

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     6.6 Successors and Assigns. The provisions of this Agreement shall inure to
the benefit of and be binding upon the parties and their successors and
permitted assigns. This Agreement, or any rights or obligations hereunder, may
not be assigned by the Company without the prior written consent of the
Purchasers. Any Purchaser may assign its rights hereunder in whole or in part to
any Person to whom such Purchaser assigns or transfers any Securities in
compliance with the Transaction Documents and applicable law, provided such
transferee shall agree in writing to be bound, with respect to the transferred
Securities, by the terms and conditions of this Agreement that apply to the
“Purchasers”.
     6.7 No Third-Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person, other than, solely with respect to the provisions of
Section 4.8, the Indemnified Persons.
     6.8 Governing Law. This Agreement will be governed by and construed in
accordance with the laws of the State of New York applicable to contracts made
and to be performed entirely within such State. Each party agrees that all
Proceedings concerning the interpretations, enforcement and defense of the
transactions contemplated by this Agreement and any other Transaction Documents
(whether brought against a party hereto or its respective Affiliates, employees
or agents) may be commenced on a non-exclusive basis in the New York Courts.
Each party hereto hereby irrevocably submits to the non-exclusive jurisdiction
of the New York Courts for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or discussed
herein (including with respect to the enforcement of any of the Transaction
Documents), and hereby irrevocably waives, and agrees not to assert in any
Proceeding, any claim that it is not personally subject to the jurisdiction of
any such New York Court, or that such Proceeding has been commenced in an
improper or inconvenient forum. Each party hereto hereby irrevocably waives
personal service of process and consents to process being served in any such
Proceeding by mailing a copy thereof via registered or certified mail or
overnight delivery (with evidence of delivery) to such party at the address in
effect for notices to it under this Agreement and agrees that such service shall
constitute good and sufficient service of process and notice thereof. Nothing
contained herein shall be deemed to limit in any way any right to serve process
in any manner permitted by law. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY
JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
     6.9 Survival. Subject to applicable statute of limitations, the
representations, warranties, agreements and covenants contained herein shall
survive the Closing and the delivery of the Preferred Shares; provided, that the
representations and warranties of the Company shall survive the Closing and the
delivery of Preferred Shares for a period of one year.
     6.10 Execution. This Agreement may be executed in two or more counterparts,
all of which when taken together shall be considered one and the same agreement
and shall become

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effective when counterparts have been signed by each party and delivered to the
other party, it being understood that the parties need not sign the same
counterpart. In the event that any signature is delivered by facsimile
transmission, or by e-mail delivery of a “.pdf” format data file, such signature
shall create a valid and binding obligation of the party executing (or on whose
behalf such signature is executed) with the same force and effect as if such
facsimile signature page were an original thereof.
     6.11 Severability. If any provision of this Agreement is held to be invalid
or unenforceable in any respect, the validity and enforceability of the
remaining terms and provisions of this Agreement shall not in any way be
affected or impaired thereby and the parties will attempt to agree upon a valid
and enforceable provision that is a reasonable substitute therefor, and upon so
agreeing, shall incorporate such substitute provision in this Agreement.
     6.12 Replacement of Preferred Shares. If any certificate or instrument
evidencing any Preferred Shares is mutilated, lost, stolen or destroyed, the
Company shall issue or cause to be issued in exchange and substitution for and
upon cancellation thereof, or in lieu of and substitution therefor, a new
certificate or instrument, but only upon receipt of evidence reasonably
satisfactory to the Company and the Transfer Agent of such loss, theft or
destruction and the execution by the holder thereof of a customary lost
certificate affidavit of that fact and an agreement to indemnify and hold
harmless the Company and the Transfer Agent for any losses in connection
therewith or, if required by the Transfer Agent, a bond in such form and amount
as is required by the Transfer Agent. The applicants for a new certificate or
instrument under such circumstances shall also pay any reasonable third-party
costs associated with the issuance of such replacement Preferred Shares. If a
replacement certificate or instrument evidencing any Preferred Shares is
requested due to a mutilation thereof, the Company may require delivery of such
mutilated certificate or instrument as a condition precedent to any issuance of
a replacement.
     6.13 Remedies. In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, each of the
Purchasers and the Company may be entitled to specific performance under the
Transaction Documents. The parties agree that monetary damages may not be
adequate compensation for any loss incurred by reason of any breach of
obligations described in the foregoing sentence and hereby agree to waive in any
action for specific performance of any such obligation (other than in connection
with any action for a temporary restraining order) the defense that a remedy at
law would be adequate.
     6.14 Payment Set Aside. To the extent that the Company makes a payment or
payments to any Purchaser pursuant to any Transaction Document or a Purchaser
enforces or exercises its rights thereunder, and such payment or payments or the
proceeds of such enforcement or exercise or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside, recovered
from, disgorged by or are required to be refunded, repaid or otherwise restored
to the Company, a trustee, receiver or any other person under any law
(including, without limitation, any bankruptcy law, state or federal law, common
law or equitable cause of action), then to the extent of any such restoration
the obligation or part thereof originally intended to be satisfied shall be
revived

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and continued in full force and effect as if such payment had not been made or
such enforcement or setoff had not occurred.
     6.15 Independent Nature of Purchasers’ Obligations and Rights. The
obligations of each Purchaser under any Transaction Document are several and not
joint with the obligations of any other Purchaser, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser under any Transaction Document. The decision of each Purchaser to
purchase Preferred Shares pursuant to the Transaction Documents has been made by
such Purchaser independently of any other Purchaser and independently of any
information, materials, statements or opinions as to the business, affairs,
operations, assets, properties, liabilities, results of operations, condition
(financial or otherwise) or prospects of the Company or any Subsidiary which may
have been made or given by any other Purchaser or by any agent or employee of
any other Purchaser, and no Purchaser and any of its agents or employees shall
have any liability to any other Purchaser (or any other Person) relating to or
arising from any such information, materials, statement or opinions. Nothing
contained herein or in any Transaction Document, and no action taken by any
Purchaser pursuant thereto, shall be deemed to constitute the Purchasers as a
partnership, an association, a joint venture or any other kind of entity, or
create a presumption that the Purchasers are in any way acting in concert or as
a group with respect to such obligations or the transactions contemplated by the
Transaction Documents. Each Purchaser acknowledges that no other Purchaser has
acted as agent for such Purchaser in connection with making its investment
hereunder and that no Purchaser will be acting as agent of such Purchaser in
connection with monitoring its investment in the Securities or enforcing its
rights under the Transaction Documents. Each Purchaser shall be entitled to
independently protect and enforce its rights, including without limitation the
rights arising out of this Agreement or out of the other Transaction Documents,
and it shall not be necessary for any other Purchaser to be joined as an
additional party in any proceeding for such purpose.
     6.16 Effectiveness. Sections 6.1 through 6.8, Section 6.10, Section 6.11
and this Section 6.16 shall be effective upon the execution of this Agreement by
the parties hereto. All other provisions of this Agreement shall become
automatically effective, without further action of the parties, upon the later
of the date (such date, the “Effectiveness Date”) (i) that is two business days
prior to the date (the “Scheduled Date”) on which the FDIC is scheduled to be
appointed receiver for the Failed Bank and will enter into the P&A Agreement
with the Bank relating to the Bank’s purchase of certain assets and assumption
of deposits (and certain other specified liabilities) of the Failed Bank and
(ii) that the Company notifies the Purchasers of the Scheduled Date. The Company
will provide notification to each Purchaser of (i) the Scheduled Date upon the
notification to the Company by the FDIC that the Bank is the winning bidder for
the Failed Bank and (ii) any changes to the Scheduled Date by the FDIC following
the initial determination of the Scheduled Date by the FDIC. If (i) the FDIC
notifies the Company that the Bank will not be permitted to enter a bid for the
Failed Bank, (ii) the FDIC has notified the Company that the scheduled due date
for bids with respect to the Failed Bank has been modified, changed or set to a
date later than June 1, 2010, or such other date as the parties mutually agree,
or that the FDIC intends not to schedule or re-schedule a bid date for the
Failed Bank on or before June 1, 2010, or such other date as the parties
mutually agree, (iii) the Bank fails to submit a bid for the Failed Bank by the
deadline for such submission established by the FDIC, (iv) the FDIC has notified
the Company that the Bank is not the winning bidder for the Failed Bank, (v) no
bid by the Bank for the Failed Bank has been

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accepted by the FDIC by June 1, 2010 or (vi) if the Bank has been selected as
the winning bidder for the Failed Bank, the P&A Closing has not occurred by
June 30, 2010, then, in each case, this Agreement shall terminate, other than
Sections 6.1 through 6.8, Section 6.10, Section 6.11 and this Section 6.16,
which shall survive such termination. The Company shall promptly notify
Purchaser upon receipt of any notification described in the two preceding
sentences from the FDIC. Prior to such termination, neither party may revoke its
acceptance of this Agreement.
     6.17 Termination, Rescission.
          (a) In the event that, following the Effectiveness Date, the Purchase
and Assumption Agreement with the FDIC relating to the purchase by Oriental Bank
and Trust, a wholly owned Subsidiary of the Company (the “Bank”), of certain
assets, and the assumption by the Bank of deposits (and certain other specified
liabilities), of Eurobank, San Juan, Puerto Rico (“Failed Bank”) (the “P&A
Agreement”), is not entered into on or before June 1, 2010, or is entered into
prior to such date but the consummation of the transfer of the assets and
liabilities of the Failed Bank to the Bank pursuant to the P&A Agreement (such
transfer, the “P&A Closing”) does not occur by June 30, 2010, then either the
Company, upon written notice to the Purchasers, or any Purchaser, solely with
respect to itself and not with respect to any other Purchaser, upon written
notice to the Company, may terminate this Agreement.
          (b) Promptly following the termination of this Agreement pursuant to
Section 6.16 or Section 6.17(a), the Company shall provide written notice to the
Escrow Agent notifying the Escrow Agent that this Agreement has been terminated.
Pursuant to the terms of the Escrow Agreement, the Escrow Agent shall
(A) distribute to each Purchaser that is not a Section 2.1(c)(iii) Purchaser
such Purchaser’s Subscription Amount and (B) advise the Transfer Agent that the
share issuance instructions with respect to such Purchaser shall be null and
void.
          (c) In the event that following the Closing, the P&A Agreement is not
entered into on or before June 1, 2010 or the P&A Agreement is terminated prior
to the P&A Closing, or the P&A Closing does not occur by June 30, 2010, then the
Company shall promptly notify Purchaser of such event and either (i) the
Company, upon written notice to the Purchasers, may redeem the Securities
purchased hereunder or (ii) any Purchaser, solely with respect to itself and not
with respect to any other Purchaser, upon written notice to the Company, require
the Company to repurchase the Securities purchased hereunder as specified on
such Purchaser’s signature page hereto. Promptly following either such notice,
(i) the Company and Purchaser shall provide written notice to the Transfer Agent
notifying the Transfer Agent that such Securities have been redeemed or
repurchased, as the case may be (unless Purchaser is a Certificate Purchaser, in
which case Purchaser shall return to the Company for cancellation the
certificates for its Preferred Shares concurrently with the Company returning
Purchaser’s Subscription Amount pursuant to the following clause (ii)) and (ii)
the Company shall promptly return to Purchaser by wire transfer of immediately
available funds to a bank account designated by Purchaser, its Subscription
Amount.
          (d) Notwithstanding anything to the contrary contained in (and without
limiting any similar provisions of) the Transaction Documents, whenever any
Purchaser exercises a right, election, demand or option under a Transaction
Document and the Company does not timely perform its related obligations within
the periods therein provided, then such Purchaser may rescind or withdraw, in
its sole discretion from time to time upon written notice to the Company, any
relevant notice, demand or election in whole or in part without prejudice to its
future actions and rights.

37

--------------------------------------------------------------------------------

 

     IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.

            ORIENTAL FINANCIAL GROUP INC.
      By:   /s/ José Rafael Fernández         Name:   José Rafael Fernández     
  Title:   President, Chief Executive Officer and
Vice Chairman of the Board   

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
[SIGNATURE PAGES FOR PURCHASERS FOLLOW]

--------------------------------------------------------------------------------

 

            PURCHASER: Bay Pond Partners, L.P.
      By:   Wellington Management Company, LLP,
as investment adviser         By:   /s/ Robert J. Toner         Name:   Robert
J. Toner        Title:   Vice President and Counsel     

     
 
  Aggregate Purchase Price (Subscription Amount): $16,640,000.00
 
   
 
  Number of Preferred Shares to be Acquired: 16,640
 
   
 
  Tax ID No.: 04-3217743
 
   
 
  Address for Notice:
 
  c/o Wellington Management Company, LLP
 
            75 State Street, Boston, MA 02109

         
 
  Telephone No.:   617.790.7770
 
       
 
  Facsimile No.:   617.289.5699
 
       
 
  E-mail Address:   seclaw@wellington.com
 
       
 
  Attention:   Legal and Compliance
 
            o Purchaser is prohibited by the terms of its organizational or
constituent documents to enter into an escrow agreement and has provided the
Company with documented evidence of such prohibition. Purchaser meets the
requirements of a Section 2.1(c)(iii) Purchaser.

Delivery Instructions:
(if different than above)
c/o See settlement spreadsheet
Street:
 
City/State/Zip:
 
Attention:
 
Telephone No.:
 
[Signature Page to Stock Purchase Agreement]

 

--------------------------------------------------------------------------------

 

            PURCHASER: Bay Pond Investors (Bermuda), L.P.
      By:   Wellington Management Company, LLP,
as investment adviser         By:   /s/ Robert J. Toner         Name:   Robert
J. Toner        Title:   Vice President and Counsel   

     
 
  Aggregate Purchase Price (Subscription Amount): $7,903,000.00
 
   
 
  Number of Preferred Shares to be Acquired: 7,903
 
   
 
  Tax ID No.: 98-0218500
 
   
 
  Address for Notice:
 
  c/o Wellington Management Company, LLP
 
             75 State Street, Boston, MA 02109

         
 
  Telephone No.:   617.790.7770  
 
  Facsimile No.:   617.289.5699  
 
  E-mail Address:   seclaw@wellington.com  
 
  Attention:   Legal and Compliance               o Purchaser is prohibited by
the terms of its organizational or constituent documents to enter into an escrow
agreement and has provided the Company with documented evidence of such
prohibition. Purchaser meets the requirements of a Section 2.1(c)(iii)
Purchaser.

Delivery Instructions:
(if different than above)
c/o See settlement spreadsheet
Street:
 
City/State/Zip:
 
Attention:
 
Telephone No.:
 
[Signature Page to Stock Purchase Agreement]

 

--------------------------------------------------------------------------------

 

            PURCHASER: Ithan Creek Master Investment Partnership
(Cayman) II, L.P.
      By:   Wellington Management Company, LLP,
as investment adviser         By:   /s/ Robert J. Toner         Name:   Robert
J. Toner        Title:   Vice President and Counsel   

     
 
  Aggregate Purchase Price (Subscription Amount): $991,000.00
 
   
 
  Number of Preferred Shares to be Acquired: 991
 
   
 
  Tax ID No.: 98-0643603
 
   
 
  Address for Notice:
 
  c/o Wellington Management Company, LLP
 
             75 State Street, Boston, MA 02109

         
 
  Telephone No.:   617.790.7770
 
       
 
  Facsimile No.:   617.289.5699
 
       
 
  E-mail Address:   seclaw@wellington.com
 
       
 
  Attention:   Legal and Compliance
 
            o Purchaser is prohibited by the terms of its organizational or
constituent documents to enter into an escrow agreement and has provided the
Company with documented evidence of such prohibition. Purchaser meets the
requirements of a Section 2.1(c)(iii) Purchaser.

Delivery Instructions:
(if different than above)
c/o See settlement spreadsheet
Street:
 
City/State/Zip:
 
Attention:
 
Telephone No.:
 
[Signature Page to Stock Purchase Agreement]

 

--------------------------------------------------------------------------------

 

            PURCHASER: Ithan Creek Master Investors (Cayman) L.P.
      By:   Wellington Management Company, LLP,
as investment adviser         By:   /s/ Robert J. Toner         Name:   Robert
J. Toner        Title:   Vice President and Counsel   

     
 
  Aggregate Purchase Price (Subscription Amount): $9,670,000.00
 
   
 
  Number of Preferred Shares to be Acquired: 9,670
 
   
 
  Tax ID No.: 98-0580385
 
   
 
  Address for Notice:
 
  c/o Wellington Management Company, LLP
 
             75 State Street, Boston, MA 02109

         
 
  Telephone No.:   617.790.7770
 
       
 
  Facsimile No.:   617.289.5699
 
       
 
  E-mail Address:   seclaw@wellington.com
 
       
 
  Attention:   Legal and Compliance
 
            o Purchaser is prohibited by the terms of its organizational or
constituent documents to enter into an escrow agreement and has provided the
Company with documented evidence of such prohibition. Purchaser meets the
requirements of a Section 2.1(c)(iii) Purchaser.

Delivery Instructions:
(if different than above)
c/o See settlement spreadsheet
Street:
 
City/State/Zip:
 
Attention:
 
Telephone No.:
 
[Signature Page to Stock Purchase Agreement]

 

--------------------------------------------------------------------------------

 

            PURCHASER: Wolf Creek Investors (Bermuda) L.P.
      By:   Wellington Management Company, LLP,
as investment adviser             By:   /s/ Robert J. Toner         Name:  
Robert J. Toner        Title:   Vice President and Counsel   

     
 
  Aggregate Purchase Price (Subscription Amount): $2,680,000.00
 
   
 
  Number of Preferred Shares to be Acquired: 2,680
 
   
 
  Tax ID No.: 98-0346053
 
   
 
  Address for Notice:
 
  c/o Wellington Management Company, LLP
 
 
75 State Street, Boston, MA 02109

         
 
  Telephone No.:   617.790.7770
 
       
 
  Facsimile No.:   617.289.5699
 
       
 
  E-mail Address:   seclaw@wellington.com
 
       
 
  Attention:   Legal and Compliance

     
 
  o Purchaser is prohibited by the terms of its organizational or constituent
documents to enter into an escrow agreement and has provided the Company with
documented evidence of such prohibition. Purchaser meets the requirements of a
Section 2.1(c)(iii) Purchaser.

Delivery Instructions:
(if different than above)
c/o See settlement spreadsheet
Street:
 
City/State/Zip:
 
Attention:
 
Telephone No.:
 
[Signature Page to Stock Purchase Agreement]

 

--------------------------------------------------------------------------------

 

            PURCHASER: Wolf Creek Partners, L.P.
      By:   Wellington Management Company, LLP,
as investment adviser             By:   /s/ Robert J. Toner         Name:  
Robert J. Toner        Title:   Vice President and Counsel   

     
 
  Aggregate Purchase Price (Subscription Amount): $1,116,000.00
 
   
 
  Number of Preferred Shares to be Acquired: 1,116
 
   
 
  Tax ID No.: 04-3539573
 
   
 
  Address for Notice:
 
  c/o Wellington Management Company, LLP
 
 
75 State Street, Boston, MA 02109

         
 
  Telephone No.:   617.790.7770
 
       
 
  Facsimile No.:   617.289.5699
 
       
 
  E-mail Address:   seclaw@wellington.com
 
       
 
  Attention:   Legal and Compliance

     
 
  o Purchaser is prohibited by the terms of its organizational or constituent
documents to enter into an escrow agreement and has provided the Company with
documented evidence of such prohibition. Purchaser meets the requirements of a
Section 2.1(c)(iii) Purchaser.

Delivery Instructions:
(if different than above)
c/o See settlement spreadsheet
Street:
 
City/State/Zip:
 
Attention:
 
Telephone No.:
 
[Signature Page to Stock Purchase Agreement]

 

--------------------------------------------------------------------------------

 

            PURCHASER: Burnham Financial Industries Fund
      By:   /s/ Michael E. Barna         Name:   Michael E. Barna       
Title:   EVP/CFO   

     
 
  Aggregate Purchase Price (Subscription Amount): $2,500,000.00
 
   
 
  Number of Preferred Shares to be Acquired: 2,500
 
   
 
  Tax ID No.: 57-1199020
 
   
 
  Address for Notice:
 
  Mendon Capital Advisors
 
  150 Allens Creek Rd
 
  Rochester, NY 14618

         
 
  Telephone No.:   1.585.770.1770
 
       
 
  Facsimile No.:   1.585.770.1779
 
       
 
  E-mail Address:   asullivan@mendoncapital.com
 
       
 
  Attention:   Amy Sullivan

     
 
  o Purchaser is prohibited by the terms of its organizational or constituent
documents to enter into an escrow agreement and has provided the Company with
documented evidence of such prohibition. Purchaser meets the requirements of a
Section 2.1(c)(iii) Purchaser.

Delivery Instructions:
(if different than above)
c/o Brown Brothers Harriman
Street: 140 Broadway

 

--------------------------------------------------------------------------------

 

            PURCHASER: Burnham Financial Services Fund
      By:   /s/ Michael E. Barna         Name:   Michael E. Barna       
Title:   EVP/CFO   

     
 
  Aggregate Purchase Price (Subscription Amount): $500,000.00
 
   
 
  Number of Preferred Shares to be Acquired: 500
 
   
 
  Tax ID No.: 134052634
 
   
 
  Address for Notice:
 
  Mendon Capital Advisors Corp
 
  150 Allens Creek Road
 
  Rochester, NY 14618

         
 
  Telephone No.:   585.770.1770
 
       
 
  Facsimile No.:   585.770.1779
 
       
 
  E-mail Address:   asullivan@mendoncapital.com
 
       
 
  Attention:   Amy Sullivan

     
 
  o Purchaser is prohibited by the terms of its organizational or constituent
documents to enter into an escrow agreement and has provided the Company with
documented evidence of such prohibition. Purchaser meets the requirements of a
Section 2.1(c)(iii) Purchaser.

Delivery Instructions:
(if different than above)
c/o Brown Brothers Harriman
Street: 140 Broadway
City/State/Zip: New York, NY 10005

 

--------------------------------------------------------------------------------

 

            PURCHASER: Moors and Mendon Master Fund LP
      By:   /s/ Anton V. Schutz         Name:   Anton V. Schutz        Title:  
Director, Moors and Mendon Capital LTD, GP to the Moors and Mendon Master Fund
LP   

     
 
  Aggregate Purchase Price (Subscription Amount): $1,500,000.00
 
   
 
  Number of Preferred Shares to be Acquired: 1,500
 
   
 
  Tax ID No.: 98-0401323
 
   
 
  Address for Notice:
 
  Mendon Capital Advisors
 
  150 Allens Creek Road
 
  Rochester, NY 14618

         
 
  Telephone No.:   585.770.1770
 
  Facsimile No.:   585.770.1779
 
  E-mail Address:   asullivan@mendoncapital.com
 
  Attention:   Amy Sullivan

                  Wire instructions for return of escrowed funds:
 
   
 
       
 
   
 
       
 
   
 
       

     
 
  o Purchaser is prohibited by the terms of its organizational or constituent
documents to enter into an escrow agreement and has provided the Company with
documented evidence of such prohibition. Purchaser meets the requirements of a
Section 2.1(c)(iii) Purchaser.
 
   
 
  o Purchaser has entered into a Custodian Agreement.

Delivery Instructions:
(if different than above)
c/o Jake Tisinger/Jefferies and Co.
Street: 520 Madison Avenue, 12th Floor

 

--------------------------------------------------------------------------------

 

            PURCHASER: Northaven Offshore, Ltd.
      By:   /s/ Paul Burke         Name:   Paul Burke        Title:   Director 
 

     
 
  Aggregate Purchase Price (Subscription Amount): $375,000
 
   
 
  Number of Preferred Shares to be Acquired: 375 shares
 
   
 
  Tax ID No.: None
 
   
 
  Address for Notice:
 
  c/o Northaven Management, Inc.
 
  375 Park Avenue, Suite 2709
 
  New York, NY 10152

         
 
  Telephone No.:   212.798.0304
 
  Facsimile No.:   212.798.0310
 
  E-mail Address:   paul.burke@northavenmgt.com
 
  Attention:   Paul Burke

                  Wire instructions for return of escrowed funds:
 
   
 
       
 
  See Attached
 
       
 
   
 
       

     
 
  o Purchaser is prohibited by the terms of its organizational or constituent
documents to enter into an escrow agreement and has provided the Company with
documented evidence of such prohibition. Purchaser meets the requirements of a
Section 2.1(c)(iii) Purchaser.
 
   
 
  o Purchaser has entered into a Custodian Agreement.

Delivery Instructions:
(if different than above)
c/o
 
Street:
 
City/State/Zip:
 
Attention:
 
Telephone No.:
 
[Signature Page to Securities Purchase Agreement]

 

--------------------------------------------------------------------------------

 

Northaven Offshore, Ltd.
Wire Instructions
Please wire to:
UBS AG
ABA #026-007-993
For Credit to:
UBS Securities LLC — HFS
Account # 101WA797414000
For Further Credit to:
Northaven Offshore, Ltd.
Account # 483-80145

 

--------------------------------------------------------------------------------

 

            PURCHASER: Northaven Partners II, L.P.
      By:   /s/ Paul Burke         Name:   Paul Burke        Title:   Member of
the GP        Aggregate Purchase Price (Subscription Amount): $200,000

Number of Preferred Shares to be Acquired: 200 shares

Tax ID No.: 13-3880614

Address for Notice:
375 Park Avenue, Suite 2709
New York, NY 10152
   

                 
 
  Telephone No.:   212.798.0304        
 
  Facsimile No.:   212.798.0310        
 
  E-mail Address:   paul.burke@northavenmgt.com        
 
  Attention:   Paul Burke        
 
                    Wire instructions for return of escrowed funds:
 
                                  See Attached              
 
                             
 
                    o Purchaser is prohibited by the terms of its organizational
or constituent documents to enter into an escrow agreement and has provided the
Company with documented evidence of such prohibition. Purchaser meets the
requirements of a Section 2.1(c)(iii) Purchaser.
 
                    o Purchaser has entered into a Custodian Agreement.

Delivery Instructions:
(if different than above)
c/o
 
Street:
 
City/State/Zip:
 
Attention:
 
Telephone No.:
 
[Signature Page to Securities Purchase Agreement]

 

--------------------------------------------------------------------------------

 

Northaven Partners II, L.P.
Wire Instructions
Please wire to:
UBS AG
ABA #026-007-993
For Credit to:
UBS Securities LLC — HFS
Account # 101WA797414000
For Further Credit to:
Northaven Partners II, L.P.
Account # 483-90655

 

--------------------------------------------------------------------------------

 

            PURCHASER: Northaven Partners, L.P.
      By:   /s/ Paul Burke         Name:   Paul Burke        Title:   Member of
the GP        Aggregate Purchase Price (Subscription Amount): $2,425,000

Number of Preferred Shares to be Acquired: 2,425

Tax ID No.: 13-3818682

Address for Notice:
375 Park Avenue, Suite 2709
New York, NY 10152    

                 
 
  Telephone No.:   212.798.0304        
 
  Facsimile No.:   212.798.0310        
 
  E-mail Address:   paul.burke@northavenmgt.com        
 
  Attention:   Paul Burke        
 
                    Wire instructions for return of escrowed funds:
 
                                  See Attached              
 
                             
 
                    o Purchaser is prohibited by the terms of its organizational
or constituent documents to enter into an escrow agreement and has provided the
Company with documented evidence of such prohibition. Purchaser meets the
requirements of a Section 2.1(c)(iii) Purchaser.
 
                    o Purchaser has entered into a Custodian Agreement.

Delivery Instructions:
(if different than above)
c/o
 
Street:
 
City/State/Zip:
 
Attention:
 
Telephone No.:
 
[Signature Page to Securities Purchase Agreement]

 

--------------------------------------------------------------------------------

 

            PURCHASER: Fidelity Northstar Fund
      By:   /s/ Paul Murphy         Name:   Paul Murphy        Title:  
Assistant Treasurer        Aggregate Purchase Price (Subscription Amount):
$1,500,000.00

Number of Preferred Shares to be Acquired: 1,500

Tax ID No.: ______________

Address for Notice:
82 Devonshire Street V13H
Boston, MA 02109    

                 
 
  Telephone No.:   617.563.5144        
 
  Facsimile No.:   617.392.1605        
 
  E-mail Address:   andrew.boyd@fmr.com        
 
  Attention:   Andrew Boyd        
 
                    Wire instructions for return of escrowed funds:
 
                             
 
                             
 
                             
 
                    þ Purchaser is prohibited by the terms of its organizational
or constituent documents to enter into an escrow agreement and has provided the
Company with documented evidence of such prohibition. Purchaser meets the
requirements of a Section 2.1(c)(iii) Purchaser.
 
                    o Purchaser has entered into a Custodian Agreement.

Delivery Instructions:
(if different than above)
c/o See attached
Street:
 
City/State/Zip:
 
Attention:
 
Telephone No.:
 
[Signature Page to Securities Purchase Agreement]

 

--------------------------------------------------------------------------------

 

            PURCHASER: Fidelity Puritan Trust: Fidelity Low-Priced
Stock Fund
      By:   /s/ Paul Murphy         Name:   Paul Murphy        Title:  
Assistant Treasurer        Aggregate Purchase Price (Subscription Amount):
$16,885,000.00

Number of Preferred Shares to be Acquired: 16,885

Tax ID No.: 04-3070917

Address for Notice:
82 Devonshire Street V13H
Boston, MA 02109    

                 
 
  Telephone No.:   617.563.5144        
 
  Facsimile No.:   617.392.1605        
 
  E-mail Address:   andrew.boyd@fmr.com        
 
  Attention:   Andrew Boyd        
 
                    Wire instructions for return of escrowed funds:
 
                             
 
                             
 
                             
 
                    þ Purchaser is prohibited by the terms of its organizational
or constituent documents to enter into an escrow agreement and has provided the
Company with documented evidence of such prohibition. Purchaser meets the
requirements of a Section 2.1(c)(iii) Purchaser.
 
                    o Purchaser has entered into a Custodian Agreement.

Delivery Instructions:
(if different than above)
c/o See attached
Street:
 
City/State/Zip:
 
Attention:
 
Telephone No.:
 
[Signature Page to Securities Purchase Agreement]

 

--------------------------------------------------------------------------------

 

            PURCHASER: Fidelity Select Portfolios: Banking
Portfolio
      By:   /s/ Paul Murphy         Name:   Paul Murphy        Title:  
Assistant Treasurer        Aggregate Purchase Price (Subscription Amount):
$297,000.00

Number of Preferred Shares to be Acquired: 297

Tax ID No.: 04-2959666

Address for Notice:
82 Devonshire Street V13H
Boston, MA 02109    

         
 
  Telephone No.:   617.563.5144
 
  Facsimile No.:   617.392.1605
 
  E-mail Address:   andrew.boyd@fmr.com
 
  Attention:   Andrew Boyd

                      Wire instructions for return of escrowed funds:
 
               
 
           
 
               
 
           
 
               
 
           
 
                    þ Purchaser is prohibited by the terms of its organizational
or constituent documents to enter into an escrow agreement and has provided the
Company with documented evidence of such prohibition. Purchaser meets the
requirements of a Section 2.1(c)(iii) Purchaser.
 
                    o Purchaser has entered into a Custodian Agreement.

Delivery Instructions:
(if different than above)
c/o See attached
Street:
 
City/State/Zip:
 
Attention:
 
Telephone No.:
 
[Signature Page to Securities Purchase Agreement]

 

--------------------------------------------------------------------------------

 

            PURCHASER: Fidelity Commonwealth Trust: Fidelity
Mid-Cap Stock Fund
      By:   /s/ Paul Murphy         Name:   Paul Murphy        Title:  
Assistant Treasurer        Aggregate Purchase Price (Subscription Amount):
$4,597,000.00

Number of Preferred Shares to be Acquired: 4,597

Tax ID No.: 04-3216044

Address for Notice:
82 Devonshire Street V13H
Boston, MA 02109    

         
 
  Telephone No.:   617.563.5144
 
  Facsimile No.:   617.392.1605
 
  E-mail Address:   andrew.boyd@fmr.com
 
  Attention:   Andrew Boyd

                      Wire instructions for return of escrowed funds:
 
               
 
           
 
               
 
           
 
               
 
           
 
                    þ Purchaser is prohibited by the terms of its organizational
or constituent documents to enter into an escrow agreement and has provided the
Company with documented evidence of such prohibition. Purchaser meets the
requirements of a Section 2.1(c)(iii) Purchaser.
 
                    o Purchaser has entered into a Custodian Agreement.

Delivery Instructions:
(if different than above)
c/o See attached
Street:
 
City/State/Zip:
 
Attention:
 
Telephone No.:
 
[Signature Page to Securities Purchase Agreement]

 

--------------------------------------------------------------------------------

 

            PURCHASER: Fidelity Destiny Portfolios: Fidelity
Advisor Capital Development Fund
      By:   /s/ Paul Murphy         Name:   Paul Murphy        Title:  
Assistant Treasurer        Aggregate Purchase Price (Subscription Amount):
$1,721,000.00

Number of Preferred Shares to be Acquired: 1,721

Tax ID No.: 04-6538289

Address for Notice:
82 Devonshire Street V13H
Boston, MA 02109    

         
 
  Telephone No.:   617.563.5144
 
  Facsimile No.:   617.392.1605
 
  E-mail Address:   andrew.boyd@fmr.com
 
  Attention:   Andrew Boyd

                      Wire instructions for return of escrowed funds:
 
               
 
           
 
               
 
           
 
               
 
           
 
                    þ Purchaser is prohibited by the terms of its organizational
or constituent documents to enter into an escrow agreement and has provided the
Company with documented evidence of such prohibition. Purchaser meets the
requirements of a Section 2.1(c)(iii) Purchaser.
 
                    o Purchaser has entered into a Custodian Agreement.

Delivery Instructions:
(if different than above)
c/o See attached
Street: _______________________________________________
City/State/Zip: _________________________________________
Attention: _____________________________________________
Telephone No.: _________________________________________
[Signature Page to Securities Purchase Agreement]

 

--------------------------------------------------------------------------------

 

            PURCHASER: Integrated Core Strategies (US) LLC*
         * By: Integrated Holding Group LP, its Managing Member               
By: Millennium Management LLC, its General Partner             By:   /s/ Larry
Statsky         Name:   Larry Statsky        Title:   Chief Administrative
Officer        Aggregate Purchase Price (Subscription Amount): $10,000,000 (Ten
Million)

Number of Preferred Shares to be Acquired: 10,000 (Ten Thousand)

Tax ID No.: 20-2196675    

              Address for Notice:     c/o Millennium Management LLC     666
Fifth Avenue, 8th Floor     New York, NY 10103
 
  Telephone No.:   212.841.4100
 
  Facsimile No.:   212.841.4141
 
  E-mail Address:   General.Counsel@mlp.com
 
  Attention:   General Counsel

     
 
  Wire instructions for return of escrowed funds:
 
  Bank Name: CHASE MANHATTAN BANK, N.A.
 
  City/State: NEW YORK, N.Y.
 
  Bank ABA # 021-000-021
 
  Bnf Account #: 066-024390
 
  Bnf Name: MERRILL LYNCH PROFESSIONAL CLEARING CORP.
 
  Sub-Account #: 359-42315-D5
 
  Sub A/c Name: Millennium Partners
 
   
 
  o Purchaser is prohibited by the terms of its organizational or constituent
documents to enter into an escrow agreement and has provided the Company with
documented evidence of such prohibition. Purchaser meets the requirements of a
Section 2.1(c)(iii) Purchaser.
 
   
 
  o Purchaser has entered into a Custodian Agreement.

Delivery Instructions:
(if different than above)
c/o
 
Street:
 
City/State/Zip:
 
Attention:
 
Telephone No.:
 
[Signature Page to Securities Purchase Agreement]

 

--------------------------------------------------------------------------------

 

            PURCHASER: Marshall Wace North America LP, in its
capacity as Discretionary Investment Adviser
      By:   /s/ S. Goodman         Name:   S. Goodman        Title:   Partner,
Marshall Wace LLC for and on behalf of Marshall Wace North America LP       
Aggregate Purchase Price (Subscription Amount): $5,000,000

Number of Preferred Shares to be Acquired: 5,000

Tax ID No.: 47-0943020

Address for Notice:
Harborside, 3 River Road
Greenwich, CT 06807-2717    

         
 
  Telephone No.:   203.625.3200
 
  Facsimile No.:   203.625.3299
 
  E-mail Address:   m.sargent@mwam.com
 
  Attention:   Michael Sargent

                      Wire instructions for return of escrowed funds:
 
               
 
                To Follow
 
           
 
               
 
           
 
                    o Purchaser is prohibited by the terms of its organizational
or constituent documents to enter into an escrow agreement and has provided the
Company with documented evidence of such prohibition. Purchaser meets the
requirements of a Section 2.1(c)(iii) Purchaser.
 
                    o Purchaser has entered into a Custodian Agreement.

Delivery Instructions:
(if different than above)
c/o
 
Street:
 
City/State/Zip:
 
Attention:
 
Telephone No.:
 
[Signature Page to Securities Purchase Agreement]

 

--------------------------------------------------------------------------------

 

            PURCHASER: Front Point Financial Horizons Fund, L.P.
      By:   Front Point Financial Horizons Fund GP, LLC         By:   /s/ T.A.
McKinney         Name:   T.A. McKinney        Title:   Authorized Signatory     
  Aggregate Purchase Price (Subscription Amount): $2,086,000

Number of Preferred Shares to be Acquired: 2,086

Tax ID No.: 68-0618363

Address for Notice:
Front Point Financial Horizons Fund GP, LLC
Two Greenwich Plaza, 4th Floor
Greenwich, CT 06830    

             
 
  Telephone No.:   203.622.5200  
 
  Facsimile No.:   203.622.5230  
 
  E-mail Address:   ops@fppartners.com
 
  Attention:   Operations Department

     
 
  Wire instructions for return of escrowed funds:
 
  ABA: 021000021
 
  Bank: JP Morgan Chase, New York
 
  A/C #: 9301011483
 
  Entity Name: Goldman Sachs & Co., New York
 
  a/c #: 002396224
 
   
 
  o Purchaser is prohibited by the terms of its organizational or constituent
documents to enter into an escrow agreement and has provided the Company with
documented evidence of such prohibition. Purchaser meets the requirements of a
Section 2.1(c)(iii) Purchaser.
 
   
 
  o Purchaser has entered into a Custodian Agreement.

Delivery Instructions:
(if different than above)
c/o
 
Street:
 
City/State/Zip:
 
Attention:
 
Telephone No.:
 
[Signature Page to Securities Purchase Agreement]

--------------------------------------------------------------------------------

 

            PURCHASER: Front Point Financial Services Fund, L.P.
      By:   Front Point Financial Services Fund GP, LLC             By:   /s/
T.A. McKinney         Name:   T.A. McKinney        Title:   Authorized
Signatory        Aggregate Purchase Price (Subscription Amount): $7,914,000

Number of Preferred Shares to be Acquired: 7,914

Tax ID No.: 98-0503297

Address for Notice:
Front Point Financial Services Fund GP, LLC
Two Greenwich Plaza, 4th Floor
Greenwich, CT 06830    

         
 
  Telephone No.:   203.622.5200
 
  Facsimile No.:   203.622.5230
 
  E-mail Address:   ops@fppartners.com
 
  Attention:   Operations Department

     
 
  Wire instructions for return of escrowed funds:
 
  ABA: 021000021
 
  Bank: JP Morgan Chase, New York
 
  A/C #: 9301011483
 
  Entity Name: Goldman Sachs & Co., New York
 
  a/c #: 00236630
 
   
 
  o Purchaser is prohibited by the terms of its organizational or constituent
documents to enter into an escrow agreement and has provided the Company with
documented evidence of such prohibition. Purchaser meets the requirements of a
Section 2.1(c)(iii) Purchaser.
 
   
 
  o Purchaser has entered into a Custodian Agreement.

Delivery Instructions:
(if different than above)
c/o
 
Street:
 
City/State/Zip:
 
Attention:
 
Telephone No.:
 
[Signature Page to Securities Purchase Agreement]

--------------------------------------------------------------------------------

 

            PURCHASER: Zweig-DiMenna Partners, L.P.
      By:   /s/ Kevin Cannon         Name:   Kevin Cannon        Title:   CEO of
Managing General Partner        Aggregate Purchase Price (Subscription Amount):
$7,158,000

Number of Preferred Shares to be Acquired: 7,158 shares

Tax ID No.: 13-3185100

Address for Notice:
900 Third Ave., 31st Floor
New York, N.Y. 10022    

             
 
  Telephone No.:   212.451.1100  
 
  Facsimile No.:   212.451.1408  
 
  E-mail Address:   ops@Zweig-DiMenna.com
 
  Attention:   Jeannine Lanese

     
 
  Wire instructions for return of escrowed funds:
 
  Citibank / NYC
 
  ABA: 021-000089
 
  Morgan Stanley A/C #: 388-90774
 
  F/F/C: Zweig-DiMenna Partners, LP
 
  A/C #: 038-00056
 
   
 
  o Purchaser is prohibited by the terms of its organizational or constituent
documents to enter into an escrow agreement and has provided the Company with
documented evidence of such prohibition. Purchaser meets the requirements of a
Section 2.1(c)(iii) Purchaser.
 
   
 
  o Purchaser has entered into a Custodian Agreement.

Delivery Instructions:
(if different than above)
c/o
 
Street:
 
City/State/Zip:
 
Attention:
 
Telephone No.:
 
[Signature Page to Securities Purchase Agreement]

--------------------------------------------------------------------------------

 

            PURCHASER: Zweig-DiMenna International, Ltd.
      By:   /s/ Kevin Cannon         Name:   Kevin Cannon        Title:   CEO of
Investment Manager        Aggregate Purchase Price (Subscription Amount):
$11,758,000

Number of Preferred Shares to be Acquired: 11,758 shares

Tax ID No.: N/A

Address for Notice:
900 Third Ave., 31st Floor
New York, N.Y. 10022    

             
 
  Telephone No.:   212.451.1100  
 
  Facsimile No.:   212.451.1408  
 
  E-mail Address:   ops@Zweig-DiMenna.com
 
  Attention:   Jeannine Lanese

     
 
  Wire instructions for return of escrowed funds:
 
  Citibank / NYC
 
  ABA: 021-000089
 
  Morgan Stanley a/c #: 388-90774
 
  F/F/C: Zweig-DiMenna International Ltd.
 
  a/c #: 038-00856
 
   
 
  o Purchaser is prohibited by the terms of its organizational or constituent
documents to enter into an escrow agreement and has provided the Company with
documented evidence of such prohibition. Purchaser meets the requirements of a
Section 2.1(c)(iii) Purchaser.
 
   
 
  o Purchaser has entered into a Custodian Agreement.

Delivery Instructions:
(if different than above)
c/o
 
Street:
 
City/State/Zip:
 
Attention:
 
Telephone No.:
 
[Signature Page to Securities Purchase Agreement]

--------------------------------------------------------------------------------

 

            PURCHASER: Zweig-DiMenna Investors, L.P.
      By:   /s/ Kevin Cannon         Name:   Kevin Cannon        Title:   CEO of
Managing General Partner        Aggregate Purchase Price (Subscription Amount):
$267,000

Number of Preferred Shares to be Acquired: 267 shares

Tax ID No.: 13-3997890

Address for Notice:

900 Third Ave., 31st Floor
New York, N.Y. 10022    

             
 
  Telephone No.:   212.451.1100  
 
  Facsimile No.:   212.451.1408  
 
  E-mail Address:   ops@Zweig-DiMenna.com
 
  Attention:   Jeannine Lanese

     
 
  Wire instructions for return of escrowed funds:
 
  Citibank / NYC
 
  ABA: 021-000089
 
  Morgan Stanley a/c #: 388-90774
 
  F/F/C: Zweig-DiMenna Investors, LP
 
  a/c #: 038-5601
 
   
 
  o Purchaser is prohibited by the terms of its organizational or constituent
documents to enter into an escrow agreement and has provided the Company with
documented evidence of such prohibition. Purchaser meets the requirements of a
Section 2.1(c)(iii) Purchaser.
 
   
 
  o Purchaser has entered into a Custodian Agreement.

Delivery Instructions:
(if different than above)
c/o
 
Street:
 
City/State/Zip:
 
Attention:
 
Telephone No.:
 
[Signature Page to Securities Purchase Agreement]

--------------------------------------------------------------------------------

 

            PURCHASER: Zweig-DiMenna Market Neutral, LP
      By:   /s/ Kevin Cannon         Name:   Kevin Cannon        Title:   CEO of
Managing General Partner        Aggregate Purchase Price (Subscription Amount):
$817,000

Number of Preferred Shares to be Acquired: 817 shares

Tax ID No.: 13-4197164

Address for Notice:
900 Third Ave., 31st Floor
New York, N.Y. 10022    

             
 
  Telephone No.:   212.451.1100  
 
  Facsimile No.:   212.451.1408  
 
  E-mail Address:   ops@Zweig-DiMenna.com
 
  Attention:   Jeannine Lanese

     
 
  Wire instructions for return of escrowed funds:
 
  Citibank / NYC
 
  ABA: 021-000089
 
  Morgan Stanley A/C #: 388-90774
 
  F/F/C: Zweig-DiMenna Market Neutral L.P.
 
  a/c #: 038-56071
 
   
 
  o Purchaser is prohibited by the terms of its organizational or constituent
documents to enter into an escrow agreement and has provided the Company with
documented evidence of such prohibition. Purchaser meets the requirements of a
Section 2.1(c)(iii) Purchaser.
 
   
 
  o Purchaser has entered into a Custodian Agreement.

Delivery Instructions:
(if different than above)
c/o
 
Street:
 
City/State/Zip:
 
Attention:
 
Telephone No.:
 
[Signature Page to Securities Purchase Agreement]

--------------------------------------------------------------------------------

 

            PURCHASER: Samlyn Onshore Fund, L.P.
      By:   /s/ Aaron Foxbruner         Name:   Aaron Foxbruner        Title:  
Authorized Signatory        Aggregate Purchase Price (Subscription Amount):
$6,120,000

Number of Preferred Shares to be Acquired: 6,120

Tax ID No.: 20-8210651

Address for Notice:
500 Park Ave., 2nd Floor
New York, NY 10022    

             
 
  Telephone No.:   212.848.0500  
 
  Facsimile No.:   212.848.0501  
 
  E-mail Address:   afoxbruner@samlyncapital.com
 
  Attention:   Aaron Foxbruner

     
 
  Wire instructions for return of escrowed funds:
 
  Citibank, N.A.      Subaccount #: 038C79392
 
  ABA: 021000089  Sub acct: Samlyn Onshore Fund, LP
 
  Acct: 38890774
 
  Name: Morgan Stanly & Co.
 
   
 
  o Purchaser is prohibited by the terms of its organizational or constituent
documents to enter into an escrow agreement and has provided the Company with
documented evidence of such prohibition. Purchaser meets the requirements of a
Section 2.1(c)(iii) Purchaser.
 
   
 
  o Purchaser has entered into a Custodian Agreement.

Delivery Instructions:
(if different than above)
c/o N/A
Street:
 
City/State/Zip:
 
Attention: Book Entry
Telephone No.:
 
[Signature Page to Securities Purchase Agreement]

--------------------------------------------------------------------------------

 

            PURCHASER: Samlyn Offshore Master Fund, Ltd.
      By:   /s/ Aaron Foxbruner         Name:   Aaron Foxbruner        Title:  
Authorized Signatory   

     
 
  Aggregate Purchase Price (Subscription Amount): $8,880,000
 
   
 
  Number of Preferred Shares to be Acquired: 8,880
 
   
 
  Tax ID No.: 98-0603351
 
   
 
  Address for Notice:
 
  c/o Samlyn Capital, LLC
 
   500 Park Ave., 2nd Floor
 
  New York, NY 10022
 
   
 
  Telephone No.:       212.848.0500
 
  Facsimile No.:         212.848.0501
 
  E-mail Address:      afoxbruner@samlyncapital.com
 
  Attention:                Aaron Foxbruner
 
   
 
  Wire instructions for return of escrowed funds:
 
  Citibank, N.A.                                 Subaccount #: 038C79384
 
  ABA: 021000089                             Subacct name: Samlyn
 
  Acct: 38890774                               Offshore Master Fund, Ltd.
 
  Name: Morgan Stanly & Co.
 
   
 
  o Purchaser is prohibited by the terms of its organizational or constituent
documents to enter into an escrow agreement and has provided the Company with
documented evidence of such prohibition. Purchaser meets the requirements of a
Section 2.1(c)(iii) Purchaser.
 
   
 
  o Purchaser has entered into a Custodian Agreement.

Delivery Instructions:
(if different than above)
c/o N/A
Street:
 
City/State/Zip:
 
Attention: Book Entry
 
Telephone No.:
 
[Signature Page to Securities Purchase Agreement]

 

--------------------------------------------------------------------------------

 

            PURCHASER: Endeavour Financial Restoration Fund, L.P.
      By:   /s/ Mitchell J. Kate         Name:   Mitchell J. Kate       
Title:   General Partner   

     
 
  Aggregate Purchase Price (Subscription Amount): $8,500,000
 
   
 
  Number of Preferred Shares to be Acquired: 8,500
 
   
 
  Tax ID No.: 30-0597740
 
   
 
  Address for Notice:
 
  Endeavour Capital
 
   289 Greenwich Ave., 2nd Floor
 
  Greenwich, CT 06830
 
   
 
  Telephone No.:     203.618.0101
 
  Facsimile No.:       203.618.0106
 
  E-mail Address:   gh@endcap.com
 
  Attention:             Glenn Hofsess
 
   
 
  Wire instructions for return of escrowed funds:

         
 
  See Attached    
 
 
 
   
 
       
 
 
 
   
 
       
 
 
 
   

     
 
  o Purchaser is prohibited by the terms of its organizational or constituent
documents to enter into an escrow agreement and has provided the Company with
documented evidence of such prohibition. Purchaser meets the requirements of a
Section 2.1(c)(iii) Purchaser.
 
   
 
  o Purchaser has entered into a Custodian Agreement.

Delivery Instructions:
(if different than above)
c/o BNP Paribas Prime Brokerage
Street: 787 7th Avenue, 8th Floor
City/State/Zip: New York, NY 10019
Attention: John O’Neill
Telephone No.: 212.471.6827
[Signature Page to Securities Purchase Agreement]

 

--------------------------------------------------------------------------------

 

BNP PARIBAS
Prime Brokerage
WIRE INSTRUCTIONS

         
•
  Beneficiary Bank:   BNP Paribas, NA
 
      787 7th Avenue, 7th Floor
 
      New York, NY 10019
 
       
•
  ABA Number:   026 007 689
 
       
•
  Beneficiary:   BNP Paribas Prime Brokerage, Inc.
 
      787 7th Avenue, 8th Floor
 
      New York, NY 10019
 
       
•
  Account Number:   61661700177
 
       
•
  For Further Credit:   Endeavour Financial Restoration Fund LP  
•
  Account Number   118-03321

 

--------------------------------------------------------------------------------

 

     
 
  PURCHASER: Financial Stocks Capital Partners V L.P.  
 
  By: Finstocks Capital Management V, LLC, its: General Partner

            By:   /s/ John M. Stein         Name:   John M. Stein       
Title:   President     

     
 
  Aggregate Purchase Price (Subscription Amount): $11,000,000
 
   
 
  Number of Preferred Shares to be Acquired: 11,000
 
   
 
  Tax ID No.: 26-0270069
 
   
 
  Address for Notice:
 
   441 Vine Street, Suite 1300
 
  Cincinnati, OH 45202
 
   
 
  Telephone No.:      513.746.2200
 
  Facsimile No.:         513.746.2201
 
  E-mail Address:      jstein@fsig.com; sstein@fsig.com
 
  Attention:                John M. Stein
 
   
 
  Wire instructions for return of escrowed funds:

         
 
 
 
   
 
       
 
 
 
   
 
       
 
 
 
   

     
 
  o Purchaser is prohibited by the terms of its organizational or constituent
documents to enter into an escrow agreement and has provided the Company with
documented evidence of such prohibition. Purchaser meets the requirements of a
Section 2.1(c)(iii) Purchaser.
 
   
 
  o Purchaser has entered into a Custodian Agreement.

Delivery Instructions:
(if different than above)
c/o Fifth Third Bank, Attn.: Ms. Arica Ratliff
Street: 5001 Kingsley Drive, Mail Drop 1MOB2J
City/State/Zip: Cincinnati, OH 45227
Attention: Acct. # 010034293486
Telephone No.: 513.358.5972
[Signature Page to Securities Purchase Agreement]

 

--------------------------------------------------------------------------------

 

     
 
  PURCHASER: PM Manager Fund, SPC, on behalf of and for the account of
Segregated Portfolio 23  
 
  By: Elbrook Holdings LLC, its: Subadviser

            By:   /s/ John M. Stein         Name:   John M. Stein       
Title:   President   

     
 
  Aggregate Purchase Price (Subscription Amount): $4,000,000
 
   
 
  Number of Preferred Shares to be Acquired: 4,000
 
   
 
  Tax ID No.: _______________
 
   
 
  Address for Notice:
 
  c/o Elbrook Holdings, LLC
 
   441 Vine Street, Suite 1300
 
  Cincinnati, OH 45202
 
   
 
  Telephone No.:      513.746.2200
 
  Facsimile No.:         513.746.2201
 
  E-mail Address:      jstein@fsig.com
 
  Attention:                John M. Stein  
 
  Wire instructions for return of escrowed funds:

         
 
 
 
   
 
 
 
   
 
 
 
   

     
 
  o Purchaser is prohibited by the terms of its organizational or constituent
documents to enter into an escrow agreement and has provided the Company with
documented evidence of such prohibition. Purchaser meets the requirements of a
Section 2.1(c)(iii) Purchaser.
 
   
 
  o Purchaser has entered into a Custodian Agreement.

Delivery Instructions:
(if different than above)
c/o Morgan Stanley / ISG Operations
Street: 901 South Bond Street, 6th Floor
City/State/Zip: Baltimore, MD 21231
Attention: Deborah Mullin
Telephone No.: 410.534.1480
[Signature Page to Securities Purchase Agreement]

 

--------------------------------------------------------------------------------

 

            PURCHASER: American Funds Insurance Series - Global Small
Capitalization Fund
      By:   /s/ Michael J. Downer         Name:   Michael J. Downer       
Title:   Senior Vice President and Secretary   

     
 
  Aggregate Purchase Price (Subscription Amount): $4,470,000
 
   
 
  Number of Preferred Shares to be Acquired: 4,470 shares
 
   
 
  Tax ID No.: 95-4672504
 
   
 
  Address for Notice:
 
  c/o Capital Research and Management Company
 
   333 South Hope Street, 55th Floor
 
  Los Angeles, CA 90071
 
   
 
  Telephone No.:      213.486.9200
 
  Facsimile No.:         213.615.0431
 
  E-mail Address:      wrb@capgroup.com
 
  Attention:                Walt R. Burkley
 
   
 
  Wire instructions for return of escrowed funds:
 
  State Street Bank and Trust Company
 
  P.O. Box 1713
 
  Boston, MA 02105
 
  Attn.: Robert Mendez
 
   
 
  o Purchaser is prohibited by the terms of its organizational or constituent
documents to enter into an escrow agreement and has provided the Company with
documented evidence of such prohibition. Purchaser meets the requirements of a
Section 2.1(c)(iii) Purchaser.
 
   
 
  þ Purchaser has entered into a Custodian Agreement.

Delivery Instructions:
(if different than above)
c/o
 
Street:
 
City/State/Zip:
 
Attention:
 
Telephone No.:
 
[Signature Page to Securities Purchase Agreement]

 

--------------------------------------------------------------------------------

 

            PURCHASER: SmallCap World Fund, Inc.
      By:   /s/ Michael J. Downer         Name:   Michael J. Downer       
Title:   Senior Vice President and Secretary   

     
 
  Aggregate Purchase Price (Subscription Amount): $25,530,000
 
   
 
  Number of Preferred Shares to be Acquired: 25,530 shares
 
   
 
  Tax ID No.: 95-4523845
 
   
 
  Address for Notice:
 
  c/o Capital Research and Management Company
 
   333 South Hope Street, 55th Floor
 
  Los Angeles, CA 90071
 
   
 
  Telephone No.:      213.486.9200
 
  Facsimile No.:         213.615.0431
 
  E-mail Address:      wrb@capgroup.com
 
  Attention:                Walt R. Burkley
 
   
 
  Wire instructions for return of escrowed funds:
 
  State Street Bank and Trust Company
 
  P.O. Box 1713
 
  Boston, MA 02105
 
  Attn.: Robert Mendez
 
   
 
  o Purchaser is prohibited by the terms of its organizational or constituent
documents to enter into an escrow agreement and has provided the Company with
documented evidence of such prohibition. Purchaser meets the requirements of a
Section 2.1(c)(iii) Purchaser.
 
   
 
  þ Purchaser has entered into a Custodian Agreement.

Delivery Instructions:
(if different than above)
c/o
 
Street:
 
City/State/Zip:
 
Attention:
 
Telephone No.:
 
[Signature Page to Securities Purchase Agreement]

 

--------------------------------------------------------------------------------

 

            PURCHASER: JAM Partners, L.P.
      By:   /s/ Sy Jacobs         Name:   Sy Jacobs        Title:   Managing
Partner of General Partner   

     
 
  Aggregate Purchase Price (Subscription Amount): $8,000,000
 
   
 
  Number of Preferred Shares to be Acquired: 8,000
 
   
 
  Tax ID No.: 13-3810784
 
   
 
  Address for Notice:
 
  One Fifth Avenue
 
  New York, NY 10003

         
 
  Telephone No.:   212.271.5526
 
  Facsimile No.:   212.271.5525
 
  E-mail Address:   sy@JamPartners.com
 
  Attention:   Sy Jacobs

         
 
  Wire instructions for return of escrowed funds:    
 
       
 
 
 
   
 
  See attached    
 
 
 
   
 
       
 
 
 
   
 
            o Purchaser is prohibited by the terms of its organizational or
constituent documents to enter into an escrow agreement and has provided the
Company with documented evidence of such prohibition. Purchaser meets the
requirements of a Section 2.1(c)(iii) Purchaser.
 
            þ Purchaser has entered into a Custodian Agreement.

Delivery Instructions:
(if different than above)
c/o N/A
Street:
 
City/State/Zip:
 
Attention:
 
Telephone No.:
 
[Signature Page to Securities Purchase Agreement]

 

--------------------------------------------------------------------------------

 

Updated 6/2009
BNP Paribas Prime Brokerage Wire Instructions

     
Beneficiary Bank:
  BNP Paribas, NA
 
  787 Seventh Avenue, 7th Floor
 
  New York, NY 10019
 
   
ABA Number:
  026 007 689
 
   
Beneficiary:
  BNP Paribas Prime Brokerage Inc.
 
  787 7th Avenue, 8th Floor
 
  New York, NY 10019
 
   
Account Number:
  61661700177
 
   
For Further Credit:
  JAM Partners, L.P.
 
   
Sub AIC Number:
  118-11032-25

 

--------------------------------------------------------------------------------

 

            PURCHASER: JAM Special Opportunities Fund II, L.P.
      By:   /s/ Sy Jacobs         Name:   Sy Jacobs        Title:   Managing
Partner of General Partner   

     
 
  Aggregate Purchase Price (Subscription Amount): $3,150,000
 
   
 
  Number of Preferred Shares to be Acquired: 3,150
 
   
 
  Tax ID No.: 26-3154903
 
   
 
  Address for Notice:
 
  One Fifth Avenue
 
  New York, NY 10003

         
 
  Telephone No.:   212.271.5526
 
  Facsimile No.:   212.271.5525
 
  E-mail Address:   sy@JamPartners.com
 
  Attention:   Sy Jacobs

         
 
  Wire instructions for return of escrowed funds:    
 
       
 
 
 
   
 
  See attached    
 
 
 
   
 
       
 
 
 
   
 
            o Purchaser is prohibited by the terms of its organizational or
constituent documents to enter into an escrow agreement and has provided the
Company with documented evidence of such prohibition. Purchaser meets the
requirements of a Section 2.1(c)(iii) Purchaser.
 
            þ Purchaser has entered into a Custodian Agreement.

Delivery Instructions:
(if different than above)
c/o                     N/A
Street:
 
City/State/Zip:
 
Attention:
 
Telephone No.:
 
[Signature Page to Securities Purchase Agreement]

 

--------------------------------------------------------------------------------

 

Updated 6/2009
BNP Paribas Prime Brokerage Wire Instructions

     
Beneficiary Bank:
  BNP Paribas, NA
 
  787 Seventh Avenue, 7th Floor
 
  New York, NY 10019
ABA Number:
  026 007 689
 
   
Beneficiary:
  BNP Paribas Prime Brokerage Inc.
 
  787 7th Avenue, 8th Floor
 
  New York, NY 10019
 
   
Account Number:
  61661700177
 
   
For Further Credit:
  JAM Special Opportunities Fund II, L.P.
 
   
Sub AIC Number:
  118-03129-26

 

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            PURCHASER: JAM Recovery Fund, L.P.
      By:   /s/ Sy Jacobs         Name:   Sy Jacobs        Title:   Managing
Member of General Partner   

     
 
  Aggregate Purchase Price (Subscription Amount): $3,850,000
 
   
 
  Number of Preferred Shares to be Acquired: 3,850
 
   
 
  Tax ID No.: 27-1375266
 
   
 
  Address for Notice:
 
  One Fifth Avenue
 
  New York, NY 10003

         
 
  Telephone No.:   212.271.5526
 
  Facsimile No.:   212.271.5525
 
  E-mail Address:   sy@JamPartners.com
 
  Attention:   Sy Jacobs

         
 
  Wire instructions for return of escrowed funds:    
 
       
 
 
 
   
 
  See attached    
 
 
 
   
 
       
 
 
 
   
 
            o Purchaser is prohibited by the terms of its organizational or
constituent documents to enter into an escrow agreement and has provided the
Company with documented evidence of such prohibition. Purchaser meets the
requirements of a Section 2.1(c)(iii) Purchaser.
 
            þ Purchaser has entered into a Custodian Agreement.

Delivery Instructions:
(if different than above)
c/o N/A
Street:
 
City/State/Zip:
 
Attention:
 
Telephone No.:
 
[Signature Page to Securities Purchase Agreement]

 

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BNP PARIBAS
Prime Brokerage
WIRE INSTRUCTIONS
EFFECTIVE 06/22/2009

         
•
  Beneficiary Bank:   BNP Paribas, NA
 
       787 7th Avenue, 7th Floor
 
      New York, NY 10019
 
       
•
  ABA Number:    026 007 689
 
       
•
  Beneficiary:   BNP Paribas Prime Brokerage, Inc.
 
       787 7th Avenue, 8th Floor
 
      New York, NY 10019
 
       
•
  Account Number:    61661700177
 
       
•
  For Further Credit:   Client Account Name JAM RECOVERY FUND, LP
 
       
 
  FFC/AC#:   Client Account # 118-03313-14

 

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                                                                      Common
Shares upon                     Common Stock         Acct Id   LEGAL NM  
Preferred Shares     conversion     Price     Registration Name   US Delivery
Instructions   Currently held     Tax Id  
 
                                  Goldman, Sachs & Co.                
 
                                  200 West Street 3rd Floor                
 
                              Ithan Creek Master   New York, NY 10282          
     
3P28
  Ithan Creek Master Investment Partnership (Cayman) II L.P.                    
      Investment Partnership   Attn: Jon Scalzo                
 
      991       66,000     $ 991,000.00     (Cayman) II L.P.   Ph: 212-934-3941
    45,300       98-0643603  
 
                                                   
 
                                  Morgan Stanley                
 
                                  Custody/Trasnsfer                
 
                                  901 South Bond Street                
 
                                  Baltimore, MD 21231                
 
                                  Attn: Alicia Alvez / Deborah Mullin          
     
 
                                  Phone: 410-534-1582                
1939
  Bay Pond Partners, L.P.     16,640       1,108,225     $ 16,640,000.00     Bay
Pond Partners, L.P.   FFC: 038-03056     700,134       04-3217743  
 
                                                   
 
                                  Morgan Stanley                
 
                                  Custody/Trasnsfer                
 
                                  901 South Bond Street                
 
                                  Baltimore, MD 21231                
 
                                  Attn: Alicia Alvez / Deborah Mullin          
     
 
                              Bay Pond Investors   Phone: 410-534-1582          
     
3287
  Bay Pond Investors (Bermuda) L.P.     7,903       526,340     $ 7,903,000.00  
  (Bermuda) L.P.   FFC: 038-03056     313,400       98-0218500  
 
                                                   
 
                                  Goldman, Sachs & Co.                
 
                                  200 West Street 3rd Floor                
 
                                  New York, NY 10282                
 
                              Ithan Creek Master   Attn: Jon Scalzo            
   
38D3
  Ithan Creek Master Investors (Cayman) L.P.     9,670       644,022     $
9,670,000.00     Investors (Cayman) L.P.   Ph: 212-934-3941     440,400      
98-0580385  
 
                                                   
 
                                  Goldman, Sachs & Co.                
 
                                  200 West Street 3rd Floor                
 
                                  New York, NY 10282                
 
                                  Attn: Jon Scalzo                
6153
  Wolf Creek Partners, L.P.     1,116       74,325     $ 1,116,000.00     Wolf
Creek Partners, L.P.   Ph: 212-934-3941     115,226       04-3539573  
 
                                                   
 
                                  Goldman, Sachs & Co.                
 
                                  200 West Street 3rd Floor                
 
                                  New York, NY 10282                
 
                              Wolf Creek Investors   Attn: Jon Scalzo          
     
6331
  Wolf Creek Investors (Bermuda) L.P.     2,680       178,488     $ 2,680,000.00
    (Bermuda) L.P.   Ph: 212-934-3941     119,200       98-0346053  
 
                                                   
 
 
Total
    39,000       2,597,400     $ 39,000,000.00               1,733,660          

 

--------------------------------------------------------------------------------

 

EXHIBITS

     
A:
  Form of Certificate of Designations  
B:
  Form of Registration Rights Agreement  
C-1:
  Accredited Investor Questionnaire  
C-2:
  Stock Certificate Questionnaire  
D:
  Form of Opinion of Company Puerto Rican Counsel  
E:
  Form of Opinion of Company U.S. Counsel  
F:
  Form of Secretary’s Certificate  
G:
  Form of Officer’s Certificate  
H:
  Subsidiaries of the Company  
I:
  Form of Escrow Agreement

 

--------------------------------------------------------------------------------

 

EXHIBIT A
Form of Certificate of Designations
CERTIFICATE OF DESIGNATIONS
OF
MANDATORILY CONVERTIBLE NON-CUMULATIVE NON-VOTING PERPETUAL
PREFERRED STOCK, SERIES C
OF
ORIENTAL FINANCIAL GROUP INC.
Pursuant to Section 5.01 of the
General Corporation Law
of the Commonwealth of Puerto Rico
     Pursuant to Article 5.01 of the General Corporation Law of the Commonwealth
of Puerto Rico, the undersigned, Carlos O. Souffront, as Secretary of the Board
of Directors of Oriental Financial Group Inc., a financial holding company and
corporation organized in the Commonwealth of Puerto Rico (the “Corporation”),
HEREBY CERTIFIES that, pursuant to the authority conferred upon the Board of
Directors (the “Board of Directors”) by the Corporation’s Certificate of
Incorporation, as amended, and resolutions duly adopted by the Board of
Directors on April 21, 2010, creating a committee thereof known as the
“Preferred Stock Pricing Committee,” the Preferred Stock Pricing Committee on
April 23, 2010, duly adopted the following resolutions creating a series of
200,000 shares of Preferred Stock designated as the “Mandatorily Convertible
Non-Cumulative Non-Voting Perpetual Preferred Stock, Series C, ” and that such
resolutions have not been modified or rescinded and remain in full force and
effect:
     RESOLVED, that pursuant to the authority expressly granted to and vested in
the Board of Directors of the Corporation and delegated to the Preferred Stock
Pricing Committee in accordance with the provisions of the Corporation’s
Certificate of Incorporation, as amended, a series of Series C Preferred Stock
of the Corporation be and it hereby is created;
     FURTHER RESOLVED, that the Preferred Stock Pricing Committee designated by
the Board of Directors has determined that the preferences and relative,
participating, optional or other special rights of the shares of such series of
Series C Preferred Stock, and the qualifications, limitations or restrictions
thereof, as stated and expressed herein, are under the circumstances prevailing
on the date hereof fair and equitable to all the existing stockholders of the
Corporation; and
     FURTHER RESOLVED, that the designation and amount of such series and the
voting powers, preferences and relative, participating, optional or other
special rights of the shares of such series of Series C Preferred Stock, and the
qualifications, limitations or restrictions thereof are as follows:

 

--------------------------------------------------------------------------------

 

RIGHTS AND PREFERENCES
          Section 1. Designation. There is hereby created out of the authorized
and unissued shares of preferred stock of the Corporation a series of preferred
stock designated as the “Mandatorily Convertible Non-Cumulative Non-Voting
Perpetual Preferred Stock, Series C” (the “Series C Preferred Stock”). The
number of shares constituting such series initially shall be 200,000. The par
value of the Series C Preferred Stock shall be $1.00 per share, and the
liquidation preference shall be $1,000 per share.
          Section 2. Ranking. The Series C Preferred Stock will, with respect to
dividend rights and rights on liquidation, winding up and dissolution, rank
(i) on a parity with the Corporation’s 7.125% Non-Cumulative Monthly Income
Preferred Stock, Series A, 7.0% Non-Cumulative Monthly Income Preferred Stock,
Series B and with each other class or series of equity securities of the
Corporation the terms of which do not expressly provide that such class or
series will rank senior or junior to the Series C Preferred Stock as to dividend
rights and rights on liquidation, winding-up and dissolution of the Corporation
(collectively referred to as “Parity Securities”), and (ii) senior to the
Corporation’s common stock, par value $1.00 per share (the “Common Stock”), and
each other class or series of capital stock of the Corporation outstanding or
established after the Effective Date by the Corporation the terms of which do
not expressly provide that it ranks on a parity with or senior to the Series C
Preferred Stock as to dividend rights and rights on liquidation, winding-up and
dissolution of the Corporation (collectively referred to as “Junior
Securities”). The Corporation has the power to authorize and/or issue additional
shares or classes or series of Junior Securities or Parity Securities without
the consent of the Holders.
          Section 3. Definitions. The following initially capitalized terms
shall have the following meanings, whether used in the singular or the plural:
          (a) “Affiliate” of any specified Person means any other Person
directly or indirectly controlling or controlled by or under common control with
such specified Person. For the purposes of this definition, “control” when used
with respect to any specified Person means the power to direct the management
and policies of such Person, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise; and the terms
“controlling” and “controlled” have meanings correlative to the foregoing.
          (b) “Applicable Conversion Price” means the Conversion Price in effect
at any given time.
          (c) “BHC Act” means the Bank Holding Company Act of 1956, as amended.
          (d) “Business Day” means any day that is not Saturday or Sunday and
that, in New York City, is not a day on which banking institutions generally are
authorized or obligated by law or executive order to be closed.
          (e) “Certificate of Designations” means this Certificate of
Designations of the Corporation.
          (f) “Certificate of Incorporation” means the Certificate of
Incorporation of the Corporation, as amended.

2

--------------------------------------------------------------------------------

 

          (g) “Closing Price” of the Common Stock (or other relevant capital
stock or equity interest) on any date of determination means the closing sale
price or, if no closing sale price is reported, the last reported sale price of
the shares of the Common Stock (or other relevant capital stock or equity
interest) on the New York Stock Exchange on such date. If the Common Stock (or
other relevant capital stock or equity interest) is not traded on the New York
Stock Exchange on any date of determination, the Closing Price of the Common
Stock (or other relevant capital stock or equity interest) on such date of
determination means the closing sale price as reported in the composite
transactions for the principal U.S. national or regional securities exchange on
which the Common Stock (or other relevant capital stock or equity interest) is
so listed or quoted, or, if no closing sale price is reported, the last reported
sale price on the principal U.S. national or regional securities exchange on
which the Common Stock (or other relevant capital stock or equity interest) is
so listed or quoted, or if the Common Stock (or other relevant capital stock or
equity interest) is not so listed or quoted on a U.S. national or regional
securities exchange, the last quoted bid price for the Common Stock (or other
relevant capital stock or equity interest) in the over-the-counter market as
reported by Pink OTC Markets Inc. or similar organization, or, if that bid price
is not available, the market price of the Common Stock (or other relevant
capital stock or equity interest) on that date as determined by a nationally
recognized independent investment banking firm retained by the Corporation for
this purpose.
          For purposes of this Certificate of Designations, all references
herein to the “Closing Price” and “last reported sale price” of the Common Stock
(or other relevant capital stock or equity interest) on the New York Stock
Exchange shall be such closing sale price and last reported sale price as
reflected on the website of the New York Stock Exchange (http://www.nyse.com)
and as reported by Bloomberg Professional Service; provided that in the event
that there is a discrepancy between the closing sale price or last reported sale
price as reflected on the website of the New York Stock Exchange and as reported
by Bloomberg Professional Service, the closing sale price and last reported sale
price on the website of the New York Stock Exchange shall govern.
          (h) “Common Stock” has the meaning set forth in Section 2.
          (i) “Corporation” means Oriental Financial Group Inc., a financial
holding company and corporation organized in the Commonwealth of Puerto Rico.
          (j) “Conversion Price” means for each share of Series C Preferred
Stock, $15.015 provided that the foregoing shall be subject to adjustment or
limitation as set forth herein.
          (k) “Current Market Price” means, on any date, the average of the
daily Closing Price per share of the Common Stock or other securities on each of
the five consecutive Trading Days preceding the earlier of the day before the
date in question and the day before the Ex-Date with respect to the issuance or
distribution giving rise to an adjustment to the Conversion Price pursuant to
Section 10.
          (l) “Effective Date” means the date on which shares of the Series C
Preferred Stock are first issued.
          (m) “Exchange Property” has the meaning set forth in Section 11(a).

3

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          (n) “Ex-Date”, when used with respect to any issuance or distribution,
means the first date on which the Common Stock or other securities trade without
the right to receive the issuance or distribution giving rise to an adjustment
to the Conversion Price pursuant to Section 10.
          (o) “Holder” means the Person in whose name the shares of the Series C
Preferred Stock are registered, which may be treated by the Corporation as the
absolute owner of the shares of Series C Preferred Stock for the purpose of
making payment and settling the related conversions and for all other purposes.
          (p) “Junior Securities” has the meaning set forth in Section 2.
          (q) “Liquidation Preference” means, as to the Series C Preferred
Stock, $1,000 per share (as adjusted for any split, subdivision, combination,
consolidation, recapitalization or similar event with respect to the Series C
Preferred Stock).
          (r) “Mandatory Conversion Date” means, with respect to the shares of
Series C Preferred Stock of any Holder, the fifth Business Day after which the
Corporation has received the Stockholder Approvals (or if a Reorganization Event
has theretofore been consummated, the date of consummation of such
Reorganization Event), provided, however, that if a Mandatory Conversion Date
would otherwise occur on or after an Ex-Date for an issuance or distribution
that results in an adjustment of the Conversion Price pursuant to Section 10 and
on or before the Record Date for such issuance or distribution, such Mandatory
Conversion Date shall instead occur on the first calendar day after the Record
Date for such issuance or distribution.
          (s) “Notice of Mandatory Conversion” has the meaning set forth in
Section 9(a).
          (t) “Parity Securities” has the meaning set forth in Section 2.
          (u) “Person” means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint-stock
company, limited liability company or trust.
          (v) “Record Date” has the meaning set forth in Section 4(d).
          (w) “Reorganization Event” has the meaning set forth in Section 11(a).
          (x) “Section 4(c) Dividend Payment Date” has the meaning set forth in
Section 4(c).
          (y) “Section 4(c) Dividend Period” has the meaning set forth in
Section 4(c).
          (z) “Special Dividend” has the meaning set forth in Section 4(c).
          (aa) “Special Dividend Rate” means, with respect to any Section 4(c)
Dividend Period, 14% per annum.
          (bb) “Securities Purchase Agreement” means the Securities Purchase
Agreement, effective as provided in Section 6.16 therein, as may be amended from
time to time, between the Corporation and a Holder.
          (cc) “Series C Preferred Stock” has the meaning set forth in
Section 1.

4

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          (dd) “Stockholder Approvals” means the stockholder approvals necessary
to (i) approve the conversion of the Series C Preferred Stock into Common Stock
for purposes of Rule 312.03 of the NYSE Listed Company Manual, and (ii) if
necessary, amend the Certificate of Incorporation to increase the number of
authorized shares of Common Stock to at least such number as shall be sufficient
to permit the full conversion of the Series C Preferred Stock into Common Stock.
          (ee) “Trading Day” means a day on which the shares of Common Stock:
     (i) are not suspended from trading on any national or regional securities
exchange or association or over-the-counter market at the close of business; and
     (ii) have traded at least once on the national or regional securities
exchange or association or over-the-counter market that is the primary market
for the trading of the Common Stock.
          (ff) “Violation” means a violation of the stockholder approval
requirements of Rule 312.03 of the NYSE Listed Company Manual.
          (gg) “Voting Stock” has the meaning set forth in BHC Act and any rules
or regulations promulgated thereunder.
          Section 4. Dividends. (a) From and after the Effective Date, the
Holders shall be entitled to receive, when, as and if declared by the Board of
Directors or a duly authorized committee of the Board of Directors, out of funds
legally available therefor, non-cumulative dividends of the type and in the
amounts determined as set forth in Section 4(b) and Section 4(c), and no more.
          (b) Subject to Section 4(a), if the Board of Directors or a duly
authorized committee of the Board of Directors declares and pays a cash dividend
in respect of Common Stock, then the Board of Directors or such duly authorized
committee of the Board of Directors shall declare and pay to the Holders of the
Series C Preferred Stock, on the same dates on which such cash dividend is
declared or paid, as applicable, on the Common Stock, a cash dividend in an
amount per share of Series C Preferred Stock equal to the product of (i) the per
share dividend declared and paid in respect of each share of Common Stock and
(ii) the number of shares of Common Stock into which such share of Series C
Preferred Stock is then convertible, assuming receipt of the Stockholder
Approvals.
          (c) In the event Stockholder Approvals have not been obtained and the
Series C Preferred Stock has not been converted into Common Stock in full by
September 15, 2010, in addition to dividends payable under Section 4(b),
dividends shall be payable semi-annually in arrears, when, as and if declared by
the Board of Directors or a duly authorized committee of the Board of Directors,
on April 15 and September 15 of each year, or, if any such day is not a Business
Day, the next Business Day, commencing April 15, 2011 (each, a “Section 4(c)
Dividend Payment Date”) for each outstanding share of Series C Preferred Stock,
payable in cash at an annual rate on the Liquidation Preference equal to the
Special Dividend Rate (such dividend, the “Special Dividend”). Dividends payable
pursuant to this Section 4(c), including for the first Section 4(c) Dividend
Period and any Section 4(c) Dividend Period that is shorter than a semi-annually
Section 4(c) Dividend Period, will be computed on the basis of a 360-day year of
twelve 30-day months. No interest or sum of money in lieu of interest will be
paid on any

5

--------------------------------------------------------------------------------

 

dividend payment on a share of Series C Preferred Stock paid later than the
scheduled Section 4(c) Dividend Payment Date. The period from September 15, 2010
to but excluding April 15, 2011 and each period from and including a Section
4(c) Dividend Payment Date to but excluding the following Section 4(c) Dividend
Payment Date is herein referred to as a “Section 4(c) Dividend Period.” To the
extent declared and payable, such dividends will accumulate during each dividend
period from and including the immediately preceding dividend payment date (in
the case of the initial dividend period, if applicable, September 15, 2010) to
but excluding the immediately succeeding dividend payment date.
          (d) Each dividend will be payable to Holders of record as they appear
in the records of the Corporation at the close of business on the same record
date, which (i) with respect to dividends payable pursuant to Section 4(b),
shall be the same day as the record date for the payment of the corresponding
dividends to the holders of shares of Common Stock and (ii) with respect to
dividends payable pursuant to Section 4(c), shall be on the first Business Day
of the month in which the relevant Section 4(c) Dividend Payment Date occurs
(each, a “Record Date”).
          (e) Special Dividends are non-cumulative. If the Board of Directors
does not declare a Special Dividend on the Series C Preferred Stock in respect
of any Section 4(c) Dividend Period, the Holders will have no right to receive
any Special Dividend for such Section 4(c) Dividend Period, and the Corporation
will have no obligation to pay a Special Dividend for such Section 4(c) Dividend
Period, whether or not Special Dividends are declared and paid for any future
Section 4(c) Dividend Period.
          (f) If full dividends payable pursuant to Section 4(b) or Section 4(c)
on all outstanding shares of the Series C Preferred Stock for the current
dividend period have not been declared and paid, or declared and a sum
sufficient for the payment of those dividends been set aside, the Corporation
may not: (i) declare and pay or set aside for payment or declare and make or set
aside for payment any distribution of assets on any Junior Securities (other
than a dividend payable solely in Junior Securities); (ii) repurchase, redeem,
or otherwise acquire for consideration, directly or indirectly, any Junior
Securities (other than as a result of a reclassification of Junior Securities
for or into other Junior Securities, or the exchange or conversion of one Junior
Security for or into another Junior Security, and other than through the use of
the proceeds of a substantially contemporaneous sale of other Junior
Securities), nor shall any monies be paid to or made available for a sinking
fund for the redemption of any Junior Securities by the Corporation; or
(iii) repurchase, redeem, or otherwise acquire for consideration any Parity
Securities otherwise than pursuant to pro rata offers to purchase all, or a pro
rata portion, of the Series C Preferred Stock and such Parity Securities except
by conversion into or exchange for Junior Securities. The foregoing limitations
do not apply to purchases or acquisitions of Junior Securities pursuant to any
employee or director incentive or benefit plan or arrangement (including any of
the Corporation’s employment, severance, or consulting agreements) of the
Corporation or of any of its subsidiaries adopted before or after the Effective
Date.
          (g) If full dividends payable pursuant to Section 4(b) or Section 4(c)
on all outstanding shares of the Series C Preferred Stock have not been declared
and paid, or declared and a sum sufficient for the payment of those dividends
been set aside, the Corporation may not declare, pay, or set aside for payment
dividends on any Parity Securities for any period;

6

--------------------------------------------------------------------------------

 

provided, however, that to the extent that the Corporation declares dividends on
the Series C Preferred Stock and on any Parity Securities but does not make full
payment of such declared dividends, the Corporation will allocate the dividend
payments on a pro rata basis among the Holders and the holders of any Parity
Securities. For purposes of calculating the pro rata allocation of partial
dividend payments, the Corporation will allocate dividend payments based on the
ratio between the then-current dividend payments due on the shares of Series C
Preferred Stock and the aggregate of the current and accrued dividends due on
any Parity Securities, which shall not include any accumulation for any prior
dividend periods if such Parity Securities does not have a cumulative dividend.
          (h) If the Mandatory Conversion Date with respect to any share of
Series C Preferred Stock is prior to any Record Date, the Holder of such share
of Series C Preferred Stock will not have the right to receive any dividends on
the Series C Preferred Stock with respect to such Record Date. If the Mandatory
Conversion Date with respect to any share of Series C Preferred Stock is after
the Record Date for any declared dividend and prior to the payment date for that
dividend, the Holder thereof shall receive that dividend on the relevant payment
date if such Holder was the Holder of record on the Record Date for that
dividend.
          Section 5. Liquidation. (a) In the event the Corporation voluntarily
or involuntarily liquidates, dissolves or winds up, the Holders at the time
shall be entitled to receive liquidating distributions in an amount equal to the
greater of (i) the Liquidation Preference per share of Series C Preferred Stock,
plus an amount equal to any accrued but unpaid dividends, whether or not
declared, thereon to and including the date of such liquidation and (ii) 110% of
the payment or distribution to which such Holders would be entitled if the
Series C Preferred Stock were converted into Common Stock immediately before
such liquidation, dissolution or winding-up, out of assets legally available for
distribution to the Corporation’s stockholders, before any distribution of
assets is made to the holders of the Common Stock or any other Junior
Securities. After payment of the full amount of such liquidation distribution,
the Holders shall not be entitled to any further participation in any
distribution of assets by the Corporation.
          (b) In the event the assets of the Corporation available for
distribution to stockholders upon any liquidation, dissolution or winding-up of
the affairs of the Corporation, whether voluntary or involuntary, shall be
insufficient to pay in full the amounts payable with respect to all outstanding
shares of the Series C Preferred Stock and the corresponding amounts payable on
any Parity Securities, Holders and the holders of such Parity Securities shall
share ratably in any distribution of assets of the Corporation in proportion to
the full respective liquidating distributions to which they would otherwise be
respectively entitled.
          (c) The Corporation’s consolidation or merger with or into any other
entity, the consolidation or merger of any other entity with or into the
Corporation, or the sale of all or substantially all of the Corporation’s
property or business will not constitute its liquidation, dissolution or winding
up.
          Section 6. Maturity. The Series C Preferred Stock shall be perpetual
unless converted or redeemed in accordance with this Certificate of
Designations.

7

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          Section 7. Redemptions by the Corporation.
          (a) Optional Redemption. Except as provided in Section 7(f) below, the
Series C Preferred Stock may not be redeemed by the Corporation prior to
June 30, 2015. After June 30, 2015, the Corporation, at its option, may redeem
in whole or in part at any time the shares of Series C Preferred Stock at the
time outstanding, upon notice given as provided in Section 7(c) below, at a
redemption price per share payable in cash equal to the greater of (i) 125.0% of
the sum of (A) the Liquidation Preference, plus (B) all declared and unpaid
dividends up to, but excluding, the date fixed for redemption and (ii) 110% of
(A) the number of shares of Common Stock into which a share of Series C
Preferred Stock would be convertible on the Trading Day immediately prior to the
date fixed for redemption (assuming receipt of Stockholder Approvals) multiplied
by (B) the Closing Price of Common Stock on such Trading Day; provided that in
no event shall such redemption price exceed the amount determined in accordance
with clause (i) above when replacing 125.0% with 150.0%. The redemption price
for any shares of Series C Preferred Stock shall be payable on the redemption
date to the Holder of such shares against surrender of the certificate(s)
evidencing such shares to the Corporation or its agent. Any declared but unpaid
dividends payable on a redemption date that occurs subsequent to a Record Date
shall not be paid to the Holder entitled to receive the redemption price on the
redemption date, but rather shall be paid to the holder of record of the
redeemed shares on such Record Date.
          (b) No Sinking Fund. The Series C Preferred Stock will not be subject
to any mandatory redemption, sinking fund or other similar provisions. Holders
of Series C Preferred Stock will have no right to require redemption of any
shares of Series C Preferred Stock.
          (c) Notice of Redemption. Notice of every redemption of shares of
Series C Preferred Stock shall be given by first class mail, postage prepaid,
addressed to the Holders of the shares to be redeemed at their respective last
addresses appearing on the books of the Corporation. Such mailing shall be at
least 30 days and not more than 60 days before the date fixed for redemption;
provided, that failure to give such notice by mail, or any defect in such notice
or in the mailing thereof, to any Holder of shares of Series C Preferred Stock
designated for redemption shall not affect the validity of the proceedings for
the redemption of any other shares of Series C Preferred Stock to be so redeemed
except as to the Holder to whom the Corporation has failed to give such notice
or except as to the Holder to whom notice was defective. Notwithstanding the
foregoing, if the Series C Preferred Stock or any depositary shares representing
interests in the Series C Preferred Stock are issued in book-entry form through
The Depository Trust Company or any other similar facility, notice of redemption
may be given to the Holders of Series C Preferred Stock at such time and in any
manner permitted by such facility. Each such notice given to a Holder shall
state: (1) the redemption date; (2) the number of shares of Series C Preferred
Stock to be redeemed and, if less than all the shares held by such Holder are to
be redeemed, the number of such shares to be redeemed from such Holder; (3) the
redemption price (or manner of determination of the redemption price); and
(4) the place or places where certificates for such shares are to be surrendered
for payment of the redemption price.
          (d) Partial Redemption. In case of any redemption of only part of the
shares of Series C Preferred Stock at the time outstanding, the shares to be
redeemed shall be selected on a pro rata basis or such other method as the
depositary shall require that approximates a pro rata basis. If fewer than all
the shares represented by any certificate are redeemed, a new certificate shall
be issued representing the unredeemed shares without charge to the Holder
thereof.

8

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          (e) Effectiveness of Redemption. If notice of redemption has been duly
given as provided in Section 7(c) and if on or before the redemption date
specified in the notice all funds necessary for the redemption have been set
aside by the Corporation, separate and apart from its other funds, in trust for
the pro rata benefit of the Holders of the shares called for redemption, so as
to be and continue to be available therefor, then, notwithstanding that any
certificate for any share so called for redemption has not been surrendered for
cancellation, on and after the redemption date unless the Corporation defaults
in the payment of the redemption price, in which case such rights shall continue
until the redemption price is paid, dividends shall cease to accrue on all
shares so called for redemption, all shares so called for redemption shall no
longer be deemed outstanding and all rights with respect to such shares shall
forthwith on such redemption date cease and terminate, except only the right of
the Holders thereof to receive the amount payable on such redemption, without
interest. Any funds unclaimed at the end of two years from the redemption date
shall, to the extent permitted by law, be released to the Corporation, after
which time the Holders of the shares so called for redemption shall look only to
the Corporation for payment of the redemption price of such shares. Shares of
outstanding Series C Preferred Stock that are redeemed, purchased or otherwise
acquired by the Corporation, or converted into another series of the
Corporation’s preferred stock, shall be cancelled and shall revert to authorized
but unissued shares of the Corporation’s preferred stock undesignated as to
series.
          (f) Redemption Upon the Failure to Acquire Failed Bank. If the Company
fails to consummate the transactions contemplated under that certain Purchase
and Assumption Agreement, dated as of April 30, 2010 (the “P&A Agreement”), by
and among the Company and the Federal Deposit Insurance Corporation by June 30,
2010 or, if the P&A Agreement shall be terminated for any reason whatsoever, the
Company may redeem all outstanding shares of Series C Preferred Stock at a
redemption price per share payable in cash equal to the Liquidation Preference.
          Section 8. Mandatory Conversion. Effective as of the close of business
on the Mandatory Conversion Date with respect to the shares of Series C
Preferred Stock of a Holder, all such Holder’s shares of Series C Preferred
Stock shall automatically convert into shares of Common Stock as set forth
below. The number of shares of Common Stock into which a share of Series C
Preferred Stock shall be convertible shall be determined by dividing (i) the
Liquidation Preference, plus all accrued and unpaid dividends, whether or not
declared, with respect to any Section 4(c) Dividend Period completed prior to
the Mandatory Conversion Date (but not with respect to the Section 4(c) Dividend
Period in which the Mandatory Conversion Date occurs), by (ii) the Applicable
Conversion Price (subject to the conversion procedures of Section 9 hereof);
provided that, notwithstanding anything to the contrary contained in this
Certificate of Designations, the number of Common Shares to be issued to any
Holder pursuant to this Certificate of Designations shall be issued to the
extent (but only to the extent) that issuance of such Common Shares would not
(i) cause or result in such Holder and its Affiliates, collectively, being
deemed to own, control or have the power to vote securities which (assuming, for
this purpose only, full conversion and/or exercise of such securities) would
represent 10.0% or more of the Voting Stock of the Corporation outstanding at
such time, (ii) otherwise cause such Holder or any of its Affiliates to violate
any banking law or regulation or (iii) require such Holder or any of its
Affiliates to obtain the prior approval or non-objection of any bank regulator
(collectively, the “Ownership Limit”); provided, further, however, that any
Common Shares that would otherwise be issued to the Holder upon conversion of
shares of Series C Preferred Stock held by

9

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such Holder, but cannot be issued to such Holder at the time of conversion as a
result of the Ownership Limit, shall thereafter be issued to such Holder on the
first date on which such issuance would not cause or result in a violation of
the Ownership Limit. Upon conversion, Holders shall receive cash in lieu of
fractional shares in accordance with Section 13 hereof.
          Section 9. Conversion Procedures.
          (a) Upon receipt by the Corporation of Stockholder Approvals, within
two (2) Business Days thereafter, the Corporation shall provide notice of
mandatory conversion to each Holder (such notice a “Notice of Mandatory
Conversion”). In addition to any information required by applicable law or
regulation, the Notice of Mandatory Conversion with respect to such Holder shall
state, as appropriate:
     (i) the Mandatory Conversion Date;
     (ii) the number of shares of Common Stock to be issued upon conversion of
each share of Series C Preferred Stock held of record by such Holder and subject
to such mandatory conversion; and
     (iii) if certificates are to be issued, the place or places where
certificates for shares of Series C Preferred Stock held of record by such
Holder are to be surrendered for issuance of certificates representing shares of
Common Stock.
          (b) Effective immediately prior to the close of business on the
Mandatory Conversion Date with respect to any shares of Series C Preferred Stock
dividends shall no longer be declared on any such shares of Series C Preferred
Stock and such shares of Series C Preferred Stock shall cease to be outstanding,
in each case, subject to the right of the Holder to receive (i) shares of Common
Stock issuable upon such mandatory conversion, (ii) any declared and unpaid
dividends on such share to the extent provided in Section 4(h) and (iii) any
other payments to which such Holder is otherwise entitled pursuant to Section 8,
Section 11 or Section 13 hereof, as applicable.
          (c) No allowance or adjustment, except pursuant to Section 10, shall
be made in respect of dividends payable to holders of the Common Stock of record
as of any date prior to the close of business on the Mandatory Conversion Date
with respect to any share of Series C Preferred Stock. Prior to the close of
business on the Mandatory Conversion Date with respect to any share of Series C
Preferred Stock, shares of Common Stock issuable upon conversion thereof, or
other securities issuable upon conversion of, such share of Series C Preferred
Stock shall not be deemed outstanding for any purpose, and the Holder thereof
shall have no rights with respect to the Common Stock or other securities
issuable upon conversion (including voting rights, rights to respond to tender
offers for the Common Stock or other securities issuable upon conversion and
rights to receive any dividends or other distributions on the Common Stock or
other securities issuable upon conversion) by virtue of holding such share of
Series C Preferred Stock.
          (d) Shares of Series C Preferred Stock duly converted in accordance
with this Certificate of Designations, or otherwise reacquired by the
Corporation, will resume the status of authorized and unissued shares of the
Corporation’s preferred stock, undesignated as to series and available for
future issuance. The Corporation may from time-to-time take such appropriate
action as may be necessary to reduce the authorized number of shares of Series C
Preferred

10

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Stock; provided, that the Corporation shall not take any such action if such
action would reduce the authorized number of shares of Series C Preferred Stock
below the number of shares of Series C Preferred Stock then outstanding.
          (e) The Person or Persons entitled to receive the Common Stock and/or
cash, securities or other property issuable upon conversion of Series C
Preferred Stock shall be treated for all purposes as the record holder(s) of
such shares of Common Stock and/or securities as of the close of business on the
Mandatory Conversion Date with respect thereto. In the event that a Holder shall
not by written notice designate the name in which shares of Common Stock and/or
cash, securities or other property (including payments of cash in lieu of
fractional shares) to be issued or paid upon conversion of shares of Series C
Preferred Stock should be registered or paid or the manner in which such shares
should be delivered, the Corporation shall be entitled to register and deliver
such shares, and make such payment, in the name of the Holder and in the manner
shown on the records of the Corporation.
          (f) On the Mandatory Conversion Date with respect to any share of
Series C Preferred Stock, certificates representing shares of Common Stock shall
be issued and delivered to the Holder thereof or such Holder’s designee (or, at
the Corporation’s option such shares shall be registered in book-entry form)
upon presentation and surrender of the certificate evidencing the Series C
Preferred Stock to the Corporation and, if required, the furnishing of
appropriate endorsements and transfer documents and the payment of all transfer
and similar taxes.
          Section 10. Anti-Dilution Adjustments.
          (a) The Conversion Price shall be subject to the following
adjustments:
     (i) Stock Dividends and Distributions. If the Corporation pays dividends or
other distributions on the Common Stock in shares of Common Stock, then the
Conversion Price in effect immediately prior to the Ex-Date for such dividend or
distribution will be multiplied by the following fraction:

              OS0          
 
OS1    

Where,

     
OS0 =
  the number of shares of Common Stock outstanding immediately prior to Ex-Date
for such dividend or distribution.  
OS1 =
  the sum of the number of shares of Common Stock outstanding immediately prior
to the Ex-Date for such dividend or distribution plus the total number of shares
of Common Stock constituting such dividend or distribution.

For the purposes of this clause (i), the number of shares of Common Stock at the
time outstanding shall not include shares acquired by the Corporation. If any
dividend or distribution described in this clause (i) is declared but not so
paid or made, the Conversion Price shall be readjusted, effective as of the date
the Board of Directors publicly announces

11

--------------------------------------------------------------------------------

 

its decision not to make such dividend or distribution, to such Conversion Price
that would be in effect if such dividend or distribution had not been declared.
     (ii) Subdivisions, Splits and Combination of the Common Stock. If the
Corporation subdivides, splits or combines the shares of Common Stock, then the
Conversion Price in effect immediately prior to the effective date of such share
subdivision, split or combination will be multiplied by the following fraction:

              OS0                  
 
OS1    

Where,

     
OS0 =
  the number of shares of Common Stock outstanding immediately prior to the
effective date of such share subdivision, split or combination.
 
   
OS1 =
  the number of shares of Common Stock outstanding immediately after the opening
of business on the effective date of such share subdivision, split or
combination.

For the purposes of this clause (ii), the number of shares of Common Stock at
the time outstanding shall not include shares acquired by the Corporation. If
any subdivision, split or combination described in this clause (ii) is announced
but the outstanding shares of Common Stock are not subdivided, split or
combined, the Conversion Price shall be readjusted, effective as of the date the
Board of Directors publicly announces its decision not to subdivide, split or
combine the outstanding shares of Common Stock, to such Conversion Price that
would be in effect if such subdivision, split or combination had not been
announced.
     (iii) Issuance of Stock Purchase Rights. If the Corporation issues to all
holders of the shares of Common Stock rights or warrants (other than rights or
warrants issued pursuant to a stockholders’ rights plan, a dividend reinvestment
plan or share purchase plan or other similar plans) entitling them, for a period
of up to 45 days from the date of issuance of such rights or warrants, to
subscribe for or purchase the shares of Common Stock at less than the Current
Market Price on the date fixed for the determination of stockholders entitled to
receive such rights or warrants, then the Conversion Price in effect immediately
prior to the Ex-Date for such distribution will be multiplied by the following
fraction:

              OS0 + Y                
 
OS0 + X    

Where,

12

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  OS0  =  the number of shares of Common Stock outstanding immediately prior to
the Ex-Date for such distribution.     X  =  the total number of shares of
Common Stock issuable pursuant to such rights or warrants.     Y  =  the number
of shares of Common Stock equal to the aggregate price payable to exercise such
rights or warrants divided by the Current Market Price on the date fixed for the
determination of stockholders entitled to receive such rights or warrants.

For the purposes of this clause (iii), the number of shares of Common Stock at
the time outstanding shall not include shares acquired by the Corporation. The
Corporation shall not issue any such rights or warrants in respect of shares of
the Common Stock acquired by the Corporation. In the event that such rights or
warrants described in this clause (iii) are not so issued, the Conversion Price
shall be readjusted, effective as of the date the Board of Directors publicly
announces its decision not to issue such rights or warrants, to the Conversion
Price that would then be in effect if such issuance had not been declared. To
the extent that such rights or warrants are not exercised prior to their
expiration or shares of Common Stock are otherwise not delivered pursuant to
such rights or warrants upon the exercise of such rights or warrants, the
Conversion Price shall be readjusted to such Conversion Price (but giving effect
to any other adjustments that may have been made with respect to the Conversion
Price pursuant to the terms of this Certificate of Designations) that would then
be in effect had the adjustment made upon the issuance of such rights or
warrants been made on the basis of the delivery of only the number of shares of
Common Stock actually delivered. In determining the aggregate offering price
payable for such shares of Common Stock, there shall be taken into account any
consideration received for such rights or warrants and the value of such
consideration (if other than cash, to be determined in a reasonable manner by
the Board of Directors).
     (iv) Debt or Asset Distributions. If the Corporation distributes to all
holders of shares of Common Stock evidences of indebtedness, shares of capital
stock, securities, cash or other assets (excluding any dividend or distribution
referred to in clause (i) above, any rights or warrants referred to in clause
(iii) above, any dividend or distribution paid exclusively in cash, any
consideration payable in connection with a tender or exchange offer made by the
Corporation or any of its applicable subsidiaries, and any dividend of shares of
capital stock of any class or series, or similar equity interests, of or
relating to a subsidiary or other business unit in the case of certain spin-off
transactions as described below), then the Conversion Price in effect
immediately prior to the Ex-Date for such distribution will be multiplied by the
following fraction:

              SP0 — FMV                   
 
SP0     

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Where,

  SP0  =  the Current Market Price per share of Common Stock on such date.    
FMV  =  the fair market value of the portion of the distribution applicable to
one share of Common Stock on such date as determined in good faith by the Board
of Directors.

In a “spin-off”, where the Corporation makes a distribution to all holders of
shares of Common Stock consisting of capital stock of any class or series, or
similar equity interests of, or relating to, a subsidiary or other business
unit, the Conversion Price will be adjusted on the fifteenth Trading Day after
the effective date of the distribution by multiplying such Conversion Price in
effect immediately prior to such fifteenth Trading Day by the following
fraction:

              MP0                   
 
MP0 + MPs     

Where,

  MP0  =  the average of the Closing Prices of the Common Stock over the first
ten Trading Days commencing on and including the fifth Trading Day following the
effective date of such distribution.     MPs  =  the average of the Closing
Prices of the capital stock or equity interests representing the portion of the
distribution applicable to one share of Common Stock over the first ten Trading
Days commencing on and including the fifth Trading Day following the effective
date of such distribution, or, if not traded on a national or regional
securities exchange or over-the-counter market, the fair market value of the
capital stock or equity interests representing the portion of the distribution
applicable to one share of Common Stock on such date as determined in good faith
by the Board of Directors.

In the event that such distribution described in this clause (iv) is not so paid
or made, the Conversion Price shall be readjusted, effective as of the date the
Board of Directors publicly announces its decision not to pay or make such
dividend or distribution, to the Conversion Price that would then be in effect
if such dividend or distribution had not been declared.
     (v) Cash Distributions. If the Corporation makes a distribution consisting
exclusively of cash to all holders of the Common Stock, excluding, (a) any cash
dividend on the Common Stock to the extent a corresponding cash dividend is paid
on the Series C Preferred Stock pursuant to Section 4 (b), (b) any cash that is
distributed in a

14

--------------------------------------------------------------------------------

 

Reorganization Event or as part of a “spin-off” referred to in clause
(iv) above, (c) any dividend or distribution in connection with the
Corporation’s liquidation, dissolution or winding up, and (d) any consideration
payable in connection with a tender or exchange offer made by the Corporation or
any of its subsidiaries, then in each event, the Conversion Price in effect
immediately prior to the Ex-Date for such distribution will be multiplied by the
following fraction:

              SP0 – DIV                   
 
SP0     

Where,

  SP0  =  the Closing Price per share of Common Stock on the Trading Day
immediately preceding the Ex-Date.     DIV  =  the amount per share of Common
Stock of the cash distribution, as determined pursuant to the introduction to
this clause (v).

In the event that any distribution described in this clause (v) is not so made,
the Conversion Price shall be readjusted, effective as of the date the Board of
Directors publicly announces its decision not to pay such distribution, to the
Conversion Price which would then be in effect if such distribution had not been
declared.
     (vi) Self Tender Offers and Exchange Offers. If the Corporation or any of
its subsidiaries successfully completes a tender or exchange offer for the
Common Stock where the cash and the value of any other consideration included in
the payment per share of the Common Stock exceeds the Closing Price per share of
the Common Stock on the Trading Day immediately succeeding the expiration of the
tender or exchange offer, then the Conversion Price in effect at the close of
business on such immediately succeeding Trading Day will be multiplied by the
following fraction:

              OS0 × SP0                   
 
AC + (SP0 × OS1)     

Where,

  SP0  =  the Closing Price per share of Common Stock on the Trading Day
immediately succeeding the expiration of the tender or exchange offer.     OS0
 =  the number of shares of Common Stock outstanding immediately prior to the
expiration of the tender or exchange offer, including any shares validly
tendered and not withdrawn.

15

--------------------------------------------------------------------------------

 

  OS1  =  the number of shares of Common Stock outstanding immediately after the
expiration of the tender or exchange offer, giving effect to consummation of the
acquisition of all shares validly tendered or exchanged (and not withdrawn) in
connection with such tender or exchange.     AC  =  the aggregate cash and fair
market value of the other consideration payable in the tender or exchange offer,
as determined in good faith by the Board of Directors.

In the event that the Corporation, or one of its subsidiaries, is obligated to
purchase shares of Common Stock pursuant to any such tender offer or exchange
offer, but the Corporation, or such subsidiary, is permanently prevented by
applicable law from effecting any such purchases, or all such purchases are
rescinded, then the Conversion Price shall be readjusted to be such Conversion
Price that would then be in effect if such tender offer or exchange offer had
not been made.
     (vi) Rights Plans. To the extent that the Corporation has a rights plan in
effect with respect to the Common Stock on the Mandatory Conversion Date, upon
conversion of any             shares of the Series C Preferred Stock, Holders
will receive, in addition to the shares of Common Stock, the rights under the
rights plan, unless, prior to the Mandatory Conversion Date, the rights have
separated from the shares of Common Stock, in which case the Conversion Price
will be adjusted at the time of separation as if the Corporation had made a
distribution to all holders of the Common Stock as described in clause
(iv) above, subject to readjustment in the event of the expiration, termination
or redemption of such rights.
          (b) Subject to the limitations set forth in the provisos to the first
paragraph of Section 10(a), the Corporation may make such decreases in the
Conversion Price, in addition to any other decreases required by this
Section 10, if the Board of Directors deems it advisable to avoid or diminish
any income tax to holders of the Common Stock resulting from any dividend or
distribution of shares of Common Stock (or issuance of rights or warrants to
acquire shares of Common Stock) or from any event treated as such for income tax
purposes or for any other reason.
          (c) (i) All adjustments to the Conversion Price shall be calculated to
the nearest 1/10 of a cent. No adjustment in the Conversion Price shall be
required if such adjustment would be less than $0.01; provided, that any
adjustments which by reason of this subparagraph are not required to be made
shall be carried forward and taken into account in any subsequent adjustment;
provided further that on the Mandatory Conversion Date adjustments to the
Conversion Price will be made with respect to any such adjustment carried
forward and which has not been taken into account before such date.
     (ii) No adjustment to the Conversion Price shall be made if Holders may
participate in the transaction that would otherwise give rise to an adjustment,
as a result of holding the Series C Preferred Stock (including without
limitation pursuant to Section 4 hereof), without having to convert the Series C
Preferred Stock, as if they held the full number of shares of Common Stock into
which a share of the Series C Preferred Stock may then be converted.
     (iii) The Applicable Conversion Price shall not be adjusted:

16

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     (A) upon the issuance of any shares of Common Stock pursuant to any present
or future plan providing for the reinvestment of dividends or interest payable
on the Corporation’s securities and the investment of additional optional
amounts in shares of Common Stock under any such plan;
     (B) upon the issuance of any shares of Common Stock or rights or warrants
to purchase those shares pursuant to any present or future employee, director or
consultant benefit plan or program of or assumed by the Corporation or any of
its subsidiaries;
     (C) upon the issuance of any shares of Common Stock pursuant to any option,
warrant, right or exercisable, exchangeable or convertible security outstanding
as of the date shares of the Series C Preferred Stock were first issued and not
substantially amended thereafter;
     (D) for a change in the par value or no par value of Common Stock; or
     (E) for accrued but unpaid dividends on the Series C Preferred Stock.
          (d) Whenever the Conversion Price is to be adjusted in accordance with
Section 10(a) or Section 10(b), the Corporation shall: (i) compute the
Conversion Price in accordance with Section 10(a) or Section 10(b), taking into
account the $0.01 threshold set forth in Section 10(c) hereof; (ii) as soon as
practicable following the occurrence of an event that requires an adjustment to
the Conversion Price pursuant to Section 10(a) or Section 10(b), taking into
account the $0.01 threshold set forth in Section 10(c) hereof (or if the
Corporation is not aware of such occurrence, as soon as practicable after
becoming so aware), provide, or cause to be provided, a written notice to the
Holders of the occurrence of such event; and (iii) as soon as practicable
following the determination of the revised Conversion Price in accordance with
Section 10(a) or Section 10(b) hereof, provide, or cause to be provided, a
written notice to the Holders setting forth in reasonable detail the method by
which the adjustment to the Conversion Price was determined and setting forth
the revised Conversion Price.
          Section 11. Reorganization Events. (a) In the event that for so long
as any shares of Series C Preferred Stock remains outstanding there occurs:
     (i) any consolidation, merger or other similar business combination of the
Corporation with or into another Person, in each case pursuant to which the
Common Stock will be converted into cash, securities or other property of the
Corporation or another Person;
     (ii) any sale, transfer, lease or conveyance to another Person of all or
substantially all of the property and assets of the Corporation, in each case
pursuant to which the Common Stock will be converted into cash, securities or
other property of the Corporation or another Person;
     (iii) any reclassification of the Common Stock into securities including
securities other than the Common Stock; or
     (iv) any statutory exchange of the outstanding shares of Common Stock for
securities of another Person (other than in connection with a merger or
acquisition);
(any such event specified in this Section 11(a), a “Reorganization Event”); then
each share of such Holder’s Series C Preferred Stock outstanding immediately
prior to such Reorganization Event shall remain outstanding but shall
automatically convert, effective as of the close of

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business on the Mandatory Conversion Date with respect to the shares of Series C
Preferred Stock of such Holder, into the type and amount of securities, cash and
other property receivable in such Reorganization Event by the holder (excluding
the counterparty to the Reorganization Event or an Affiliate of such
counterparty) of the number of shares of Common Stock obtained by dividing (x)
the Liquidation Preference, plus all accrued but unpaid dividends, whether or
not declared, up to, but excluding such date, by (y) the Applicable Conversion
Price as of such date (such securities, cash and other property, the “Exchange
Property”). In the event that a Reorganization Event referenced in Section 11(a)
involves common stock as all or part of the consideration being offered in a
fixed exchange ratio transaction, the fair market value per share of such common
stock shall be determined by reference to the average of the closing prices of
such common stock for the ten Trading Day period ending immediately prior to the
consummation of such Reorganization Event.
          (b) In the event that holders of the shares of Common Stock have the
opportunity to elect the form of consideration to be received in such
transaction, the consideration that the Holders are entitled to receive shall be
deemed to be the types and amounts of consideration received by the majority of
the holders of the shares of Common Stock that affirmatively make an election.
          (c) The above provisions of this Section 11 shall similarly apply to
successive Reorganization Events and the provisions of Section 10 shall apply to
any shares of capital stock of the Corporation (or any successor) received by
the holders of the Common Stock in any such Reorganization Event.
          (d) The Corporation (or any successor) shall, within seven days of the
consummation of any Reorganization Event, provide written notice to the Holders
of such consummation of such event and of the kind and amount of the cash,
securities or other property that constitutes the Exchange Property. Failure to
deliver such notice shall not affect the operation of this Section 11.
          (e) The Corporation shall not enter into any agreement for a
transaction constituting a Reorganization Event unless such agreement provides
for or does not interfere with or prevent (as applicable) conversion of the
Series C Preferred Stock into the Exchange Property in a manner that is
consistent with and gives effect to this Section 11.
          Section 12. Voting Rights. (a) Holders will not have any voting
rights, including the right to elect any directors, except (i) voting rights, if
any, required by law, and (ii) voting rights, if any, described in this
Section 12.
          (b) So long as any shares of Series C Preferred Stock are outstanding,
the vote or consent of the Holders of a majority of the shares of Series C
Preferred Stock at the time outstanding, voting as a single class, given in
person or by proxy, either in writing without a meeting or by vote at any
meeting called for the purpose, will be necessary for effecting or validating
any of the following actions, whether or not such approval is required by Puerto
Rico law:
     (i) any amendment, alteration or repeal (including by means of a merger,
consolidation or otherwise) of any provision of the Certificate of Incorporation
(including this Certificate

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of Designations) or the Corporation’s bylaws that would significantly and
adversely affect the rights or preference of the Series C Preferred Stock;
     (ii) any amendment or alteration (including by means of a merger,
consolidation or otherwise) of the Corporation’s Certificate of Incorporation to
authorize, or create, or increase the authorized amount of, any shares of, or
any securities convertible into shares of, any class or series of the
Corporation’s capital stock ranking senior to the Series C Preferred Stock in
the payment of dividends or in the distribution of assets on any liquidation,
dissolution or winding up of the Corporation; or
     (iii) the consummation of a binding share exchange or reclassification
involving the Series C Preferred Stock or a merger or consolidation of the
Corporation with another entity, except that the Holders will have no right to
vote under this provision or under Puerto Rico law if in each case (x) the
Series C Preferred Stock remains outstanding or, in the case of any such merger
or consolidation with respect to which the Corporation is not the surviving or
resulting entity, is converted into or exchanged for preference securities of
the surviving or resulting entity or its ultimate parent, that is an entity
organized and existing under the laws of the United States of America, any state
thereof, the District of Columbia or the Commonwealth of Puerto Rico, and
(y) such Series C Preferred Stock remaining outstanding or such preference
securities, as the case may be, have such rights, preferences, privileges and
voting powers, taken as a whole, as are not materially less favorable to the
Holders thereof than the rights, preferences, privileges and voting powers of
the Series C Preferred Stock, taken as a whole.
provided, however, that any increase in the amount of the authorized preferred
stock of the Corporation or any securities convertible into the preferred stock
of the Corporation or the creation and issuance, or an increase in the
authorized or issued amount, of any series of preferred stock of the Corporation
or any securities convertible into preferred stock of the Corporation ranking
equally with and/or junior to the Series C Preferred Stock with respect to the
payment of dividends (whether such dividends are cumulative or non-cumulative)
and/or the distribution of assets upon the Corporation’s liquidation,
dissolution or winding up will not, in and of itself, be deemed to significantly
and adversely affect the rights or preference of the Series C Preferred Stock
and, notwithstanding any provision of Puerto Rico law, Holders will have no
right to vote solely by reason of such an increase, creation or issuance. For
the avoidance of doubt, stockholder approval to amend the Corporation’s
Certificate of Incorporation to increase the authorized preferred stock of the
Corporation in the amount currently contemplated in the Corporation’s definitive
proxy statement will not be deemed to adversely affect the rights of the
Series C Preferred Stock, and Holders will have no right to vote solely by
reason of such increase.
          (c) Notwithstanding the foregoing, Holders shall not have any voting
rights if, at or prior to the effective time of the act with respect to which
such vote would otherwise be required, all outstanding shares of Series C
Preferred Stock shall have been converted into shares of Common Stock.
          Section 13. Fractional Shares.
          (a) No fractional shares of Common Stock will be issued as a result of
any conversion of shares of Series C Preferred Stock.

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          (b) In lieu of any fractional share of Common Stock otherwise issuable
in respect of any mandatory conversion pursuant to Section 8 hereof, the
Corporation shall pay an amount in cash (computed to the nearest cent) equal to
the same fraction of the Closing Price of the Common Stock determined as of the
second Trading Day immediately preceding the Mandatory Conversion Date.
          (c) If more than one share of the Series C Preferred Stock is
surrendered for conversion at one time by or for the same Holder, the number of
full shares of Common Stock issuable upon conversion thereof shall be computed
on the basis of the aggregate number of shares of the Series C Preferred Stock
so surrendered.
          Section 14. Reservation of Common Stock.
          (a) Following the receipt of the Stockholder Approvals, the
Corporation shall at all times reserve and keep available out of its authorized
and unissued Common Stock or shares acquired by the Corporation, solely for
issuance upon the conversion of shares of Series C Preferred Stock as provided
in this Certificate of Designations free from any preemptive or other similar
rights, such number of shares of Common Stock as shall from time to time be
issuable upon the conversion of all the shares of Series C Preferred Stock then
outstanding. For purposes of this Section 14(a), the number of shares of Common
Stock that shall be deliverable upon the conversion of all outstanding shares of
Series C Preferred Stock shall be computed as if at the time of computation all
such outstanding shares were held by a single Holder.
          (b) Notwithstanding the foregoing, the Corporation shall be entitled
to deliver upon conversion of shares of Series C Preferred Stock, as herein
provided, shares of Common Stock acquired by the Corporation (in lieu of the
issuance of authorized and unissued shares of Common Stock), so long as any such
acquired shares are free and clear of all liens, charges, security interests or
encumbrances.
          (c) All shares of Common Stock delivered upon conversion of the
Series C Preferred Stock shall be duly authorized, validly issued, fully paid
and non-assessable, free and clear of all liens, claims, security interests and
other encumbrances.
          (d) Prior to the delivery of any securities that the Corporation shall
be obligated to deliver upon conversion of the Series C Preferred Stock, the
Corporation shall use its reasonable best efforts to comply with all federal and
state laws and regulations thereunder requiring the registration of such
securities with, or any approval of or consent to the delivery thereof by, any
governmental authority.
          (e) The Corporation hereby covenants and agrees that, if at any time
the Common Stock shall be listed on the New York Stock Exchange or any other
national securities exchange or automated quotation system, the Corporation
will, if permitted by the rules of such exchange or automated quotation system,
list and keep listed, so long as the Common Stock shall be so listed on such
exchange or automated quotation system, all the Common Stock issuable upon
conversion of the Series C Preferred Stock.
          Section 15. Replacement Certificates.
          (a) The Corporation shall replace any mutilated certificate at the
Holder’s expense upon surrender of that certificate to the Corporation. The
Corporation shall replace certificates

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that become destroyed, stolen or lost at the Holder’s expense upon delivery to
the Corporation of satisfactory evidence that the certificate has been
destroyed, stolen or lost, together with any indemnity that may be required by
the Corporation.
          (b) The Corporation shall not be required to issue any certificates
representing the Series C Preferred Stock on or after the Mandatory Conversion
Date. In place of the delivery of a replacement certificate following the
Mandatory Conversion Date, the Corporation, upon delivery of the evidence and
indemnity described in clause (a) above, shall deliver the shares of Common
Stock pursuant to the terms of the Series C Preferred Stock formerly evidenced
by the certificate.
          Section 16. Miscellaneous.
          (a) All notices referred to herein shall be in writing, and, unless
otherwise specified herein, all notices hereunder shall be deemed to have been
given upon the earlier of receipt thereof or three Business Days after the
mailing thereof if sent by registered or certified mail (unless first-class mail
shall be specifically permitted for such notice under the terms of this
Certificate of Designations) with postage prepaid, addressed: (i) if to the
Corporation, to its office at 997 San Roberto Street, San Juan, Puerto Rico,
00926, Attention: General Counsel, or (ii) if to any Holder, to such Holder at
the address of such Holder as listed in the stock record books of the
Corporation, or (iii) to such other address as the Corporation or any such
Holder, as the case may be, shall have designated by notice similarly given.
          (b) The Corporation shall pay any and all stock transfer and
documentary stamp taxes that may be payable in respect of any issuance or
delivery of shares of Series C Preferred Stock or shares of Common Stock or
other securities issued on account of Series C Preferred Stock pursuant hereto
or certificates representing such shares or securities. The Corporation shall
not, however, be required to pay any such tax that may be payable in respect of
any transfer involved in the issuance or delivery of shares of Series C
Preferred Stock or Common Stock or other securities in a name other than that in
which the shares of Series C Preferred Stock with respect to which such shares
or other securities are issued or delivered were registered, or in respect of
any payment to any Person other than a payment to the registered holder thereof,
and shall not be required to make any such issuance, delivery or payment unless
and until the Person otherwise entitled to such issuance, delivery or payment
has paid to the Corporation the amount of any such tax or has established, to
the satisfaction of the Corporation, that such tax has been paid or is not
payable.
          (c) All payments on the shares of Series C Preferred Stock shall be
subject to withholding and backup withholding of tax to the extent required by
applicable law, subject to applicable exemptions, and amounts withheld, if any,
shall be treated as received by the holders thereof.
          (d) No share of Series C Preferred Stock shall have any rights of
preemption whatsoever under this Certificate of Designations as to any
securities of the Corporation, or any warrants, rights or options issued or
granted with respect thereto, regardless of how such securities, or such
warrants, rights or options, may be designated issued or granted.
          (e) The shares of Series C Preferred Stock shall not have any voting
powers, preferences or relative, participating, optional or other special
rights, or qualifications,

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limitations or restrictions thereof, other than as set forth herein or in the
Certificate of Incorporation or as provided by applicable law.
          (f) The Corporation covenants (1) not to treat the Series C Preferred
Stock as preferred stock for purposes of Section 305 of the Internal Revenue
Code of 1986, as amended, except as otherwise required by applicable law.
          RESOLVED, that all actions taken by the officers and directors of the
Corporation or any of them in connection with the foregoing resolutions through
the date hereof be, and they hereby are, ratified and approved.
          IN WITNESS WHEREOF, Oriental Financial Group Inc. has caused this
Certificate of Designations to be signed by Carlos O. Souffront its Secretary of
the Board of Directors this 29th day of April, 2010.

            ORIENTAL FINANCIAL GROUP INC.
      By:           Name:   Carlos O. Souffront        Title:   Secretary of the
Board of Directors     

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EXHIBIT B
Form of Registration Rights Agreement
REGISTRATION RIGHTS AGREEMENT
     This Registration Rights Agreement (this “Agreement”) is made and entered
into as of April 23, 2010, by and among Oriental Financial Group Inc., a
financial holding company and corporation organized in the Commonwealth of
Puerto Rico (the “Company”), and the several purchasers signatory hereto (each a
“Purchaser” and collectively, the “Purchasers”).
     This Agreement is made pursuant to the Securities Purchase Agreement, dated
as of the date hereof between the Company and each Purchaser (the “Purchase
Agreement”).
     NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this
Agreement, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the Company and each of the
Purchasers agree as follows:
     1. Definitions. Capitalized terms used and not otherwise defined herein
that are defined in the Purchase Agreement shall have the meanings given such
terms in the Purchase Agreement. As used in this Agreement, the following terms
shall have the following meanings:
          “Advice” shall have the meaning set forth in Section 6(d).
          “Affiliate” means, with respect to any person, any other person which
directly or indirectly controls, is controlled by, or is under common control
with, such person.
          “Agreement” shall have the meaning set forth in the Preamble.
          “Business Day” means a day, other than a Saturday or Sunday, on which
banks in New York City are open for the general transaction of business.
          “Closing” has the meaning set forth in the Purchase Agreement.
          “Closing Date” has the meaning set forth in the Purchase Agreement.
          “Commission” means the Securities and Exchange Commission.
          “Common Stock” means the common stock of the Company, $1.00 par value
per share, and any securities into which such shares of common stock may
hereinafter be reclassified.
          “Company” shall have the meaning set forth in the Preamble.
          “Effective Date” means the date that the Registration Statement filed
pursuant to Section 2(a) is first declared effective by the Commission.

 

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          “Effectiveness Deadline” means, with respect to the Initial
Registration Statement or the New Registration Statement, the earlier of (i) the
120th calendar day following the Closing Date (or the 155th calendar day
following the Closing Date in the event that such registration statement is
subject to review by the Commission) and (ii) the 5th Trading Day after the date
the Company is notified (orally or in writing, whichever is earlier) by the
Commission that such Registration Statement will not be “reviewed” or will not
be subject to further review; provided, that if the Effectiveness Deadline falls
on a Saturday, Sunday or other day that the Commission is closed for business,
the Effectiveness Deadline shall be extended to the next Business Day on which
the Commission is open for business.
     “Effectiveness Period” shall have the meaning set forth in Section 2(b).
     “Event” shall have the meaning set forth in Section 2(c).
     “Event Date” shall have the meaning set forth in Section 2(c).
          “Exchange Act” means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
     “Filing Deadline” means, with respect to the Initial Registration Statement
required to be filed pursuant to Section 2(a), the 90th calendar day following
the Closing Date, provided, that if the Filing Deadline falls on a Saturday,
Sunday or other day that the Commission is closed for business, the Filing
Deadline shall be extended to the next business day on which the Commission is
open for business.
     “Holder” or “Holders” means the holder or holders, as the case may be, from
time to time of Registrable Securities.
          “Indemnified Party” shall have the meaning set forth in Section 5(c).
          “Indemnifying Party” shall have the meaning set forth in Section 5(c).
          “Initial Registration Statement” means the initial Registration
Statement filed pursuant to Section 2(a) of this Agreement.
          “Liquidated Damages” shall have the meaning set forth in Section 2(c).
          “Losses” shall have the meaning set forth in Section 5(a).
          “New Registration Statement” shall have the meaning set forth in
Section 2(a).
          “Person” means an individual or corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof)
or other entity of any kind.
     “Principal Market” means the Trading Market on which the Common Stock is
primarily listed on and quoted for trading, which, as of the Closing Date, shall
be the New York Stock Exchange.

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     “Proceeding” means an action, claim, suit, investigation or proceeding
(including, without limitation, an investigation or partial proceeding, such as
a deposition), whether commenced or threatened.
     “Prospectus” means the prospectus included in a Registration Statement
(including, without limitation, a prospectus that includes any information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated under the Securities Act), as
amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Registrable Securities covered by a
Registration Statement, and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material incorporated
by reference or deemed to be incorporated by reference in such Prospectus.
     “Purchase Agreement” shall have the meaning set forth in the Recitals.
     “Purchaser” or “Purchasers” shall have the meaning set forth in the
Preamble.
     “Registrable Securities” means all of the Preferred Shares and the
Underlying Shares and any securities issued or issuable upon any stock split,
dividend or other distribution, recapitalization or similar event with respect
to the Preferred Shares and the Underlying Shares, provided, that the Holder has
completed and delivered to the Company a Selling Stockholder Questionnaire; and
provided, further, that Preferred Shares or Underlying Shares shall cease to be
Registrable Securities upon the earliest to occur of the following: (A) a sale
pursuant to a Registration Statement or Rule 144 under the Securities Act (in
which case, only such security sold shall cease to be a Registrable Security);
(B) becoming eligible for sale without the requirement for the Company to be in
compliance with the current public information required under Rule 144(c)(1) (or
Rule 144(i)(2), if applicable) and without volume or manner of sale restrictions
by Holders who are not Affiliates of the Company; (C) if such Preferred Shares
or Underlying Shares have ceased to be outstanding; or (D) if such Preferred
Shares or Underlying Shares have been sold in a private transaction in which the
Holder’s rights under this Agreement have not been assigned to the transferee.
     “Registration Statements” means any one or more registration statements of
the Company filed under the Securities Act that covers the resale of any of the
Registrable Securities pursuant to the provisions of this Agreement (including
without limitation the Initial Registration Statement, the New Registration
Statement and any Remainder Registration Statements), amendments and supplements
to such Registration Statements, including post-effective amendments, all
exhibits and all material incorporated by reference or deemed to be incorporated
by reference in such Registration Statements.
     “Remainder Registration Statement” shall have the meaning set forth in
Section 2(a).
     “Rule 144” means Rule 144 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.

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     “Rule 415” means Rule 415 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.
     “Rule 424” means Rule 424 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.
          “SEC Guidance” means (i) any publicly-available written or oral
guidance, comments, requirements or requests of the Commission staff and
(ii) the Securities Act.
          “Securities Act” means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
          “Selling Stockholder Questionnaire” means a questionnaire in the form
attached as Annex B hereto, or such other form of questionnaire as may
reasonably be adopted by the Company from time to time.
          “Trading Day” means (i) a day on which the Common Stock is listed or
quoted and traded on its Principal Market (other than the OTC Bulletin Board),
or (ii) if the Common Stock is not listed on a Trading Market (other than the
OTC Bulletin Board), a day on which the Common Stock is traded in the
over-the-counter market, as reported by the OTC Bulletin Board, or (iii) if the
Common Stock is not quoted on any Trading Market, a day on which the Common
Stock is quoted in the over-the-counter market as reported in the “pink sheets”
by Pink Sheets LLC (or any similar organization or agency succeeding to its
functions of reporting prices); provided, that in the event that the Common
Stock is not listed or quoted as set forth in (i), (ii) and (iii) hereof, then
Trading Day shall mean a Business Day.
          “Trading Market” means whichever of the New York Stock Exchange, the
NYSE Amex, the NASDAQ Global Select Market, the NASDAQ Global Market, the NASDAQ
Capital Market or OTC Bulletin Board on which the Common Stock is listed or
quoted for trading on the date in question.
     2. Registration.
          (a) On or prior to the Filing Deadline, the Company shall prepare and
file with the Commission a Registration Statement covering the resale of all of
the Registrable Securities not already covered by an existing and effective
Registration Statement for an offering to be made on a continuous basis pursuant
to Rule 415 or, if Rule 415 is not available for offers and sales of the
Registrable Securities, by such other means of distribution of Registrable
Securities as the Company may reasonably determine (the “Initial Registration
Statement”). The Initial Registration Statement shall be on Form S-3 (except if
the Company is then ineligible to register for resale of the Registrable
Securities on Form S-3, in which case such registration shall be on such other
form available to the Company to register for resale of the Registrable
Securities as a secondary offering) subject to the provisions of Section 2(f)
and shall contain (except if otherwise required pursuant to written comments
received from the Commission upon a review of such Registration Statement) the
“Plan of Distribution” section substantially in the form attached hereto as
Annex A. Notwithstanding the registration obligations set forth in this
Section 2, in the event the Commission informs the Company that all of the
Registrable Securities cannot, as a result of the application of Rule 415, be
registered for resale as a

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secondary offering on a single registration statement, the Company agrees to
promptly (i) inform each of the Holders thereof and use its commercially
reasonable efforts to file amendments to the Initial Registration Statement as
required by the Commission and/or (ii) withdraw the Initial Registration
Statement and file a new registration statement (a “New Registration
Statement”), in either case covering the maximum number of Registrable
Securities permitted to be registered by the Commission, on Form S-3 or such
other form available to the Company to register for resale the Registrable
Securities as a secondary offering; provided, that prior to filing such
amendment or New Registration Statement, the Company shall be obligated to use
its commercially reasonable efforts to advocate with the Commission for the
registration of all of the Registrable Securities in accordance with the SEC
Guidance, including without limitation, Compliance and Disclosure Interpretation
612.09. Notwithstanding any other provision of this Agreement and subject to the
payment of Liquidated Damages in Section 2(c), if any SEC Guidance sets forth a
limitation of the number of Registrable Securities or other shares of Common
Stock permitted to be registered on a particular Registration Statement as a
secondary offering (and notwithstanding that the Company used diligent efforts
to advocate with the Commission for the registration of all or a greater number
of Registrable Securities), the number of Registrable Securities or other shares
of Common Stock to be registered on such Registration Statement will be reduced
on a pro rata basis. In the event the Company amends the Initial Registration
Statement or files a New Registration Statement, as the case may be, under
clauses (i) or (ii) above, the Company will use its commercially reasonable
efforts to file with the Commission, as promptly as allowed by Commission or SEC
Guidance provided to the Company or to registrants of securities in general, one
or more registration statements on Form S-3 or such other form available to the
Company to register for resale those Registrable Securities that were not
registered for resale on the Initial Registration Statement, as amended, or the
New Registration Statement (the “Remainder Registration Statements”). No Holder
shall be named as an “underwriter” in any Registration Statement without such
Holder’s prior written consent.
          (b) The Company shall use its commercially reasonable efforts to cause
each Registration Statement to be declared effective by the Commission as soon
as practicable and, with respect to the Initial Registration Statement or the
New Registration Statement, as applicable, no later than the Effectiveness
Deadline, and shall use its commercially reasonable efforts to keep each
Registration Statement continuously effective under the Securities Act until the
earlier of (i) such time as all of the Registrable Securities covered by such
Registration Statement have been publicly sold by the Holders or (ii) the date
that all Registrable Securities covered by such Registration Statement may be
sold by non-affiliates without volume or manner of sale restrictions under
Rule 144, without the requirement for the Company to be in compliance with the
current public information requirements under Rule 144(c)(1) (or Rule 144(i)(2),
if applicable), as determined by counsel to the Company pursuant to a written
opinion letter to such effect, addressed and reasonably acceptable to the
Company’s transfer agent and the effected Holders (the “Effectiveness Period”).
The Company shall request effectiveness of a Registration Statement as of 5:00
p.m. New York City time on a Trading Day. The Company shall promptly notify the
Holders via facsimile or electronic mail of a “.pdf” format data file of the
effectiveness of a Registration Statement within one (1) Business Day of the
Effective Date. The Company shall, by 9:30 a.m. New York City time on the first
Trading Day after the Effective Date, file a final Prospectus with the
Commission, as required by Rule 424(b).

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          (c) If: (i) the Initial Registration Statement is not filed with the
Commission on or prior to the Filing Deadline, (ii) the Initial Registration
Statement or the New Registration Statement, as applicable, is not declared
effective by the Commission (or otherwise does not become effective) for any
reason on or prior to the Effectiveness Deadline, other than as a result of any
open issues arising out of any routine Commission review of Exchange Act filings
in effect as of the date hereof, or (iii) after its Effective Date, (A) such
Registration Statement ceases for any reason (including without limitation by
reason of a stop order, or the Company’s failure to update the Registration
Statement), to remain continuously effective as to all Registrable Securities
for which it is required to be effective or (B) the Holders are not permitted to
utilize the Prospectus therein to resell such Registrable Securities, in the
case of (A) and (B) (other than during an Allowable Grace Period (as defined in
Section 2(e) of this Agreement)), (iv) a Grace Period (as defined in Section
2(e) of this Agreement) exceeds the length of an Allowable Grace Period, or (v)
after the date six months following the Closing Date, and only in the event a
Registration Statement is not effective or available to sell all Registrable
Securities, the Company fails to file with the SEC any required reports under
Section 13 or 15(d) of the 1934 Act such that it is not in compliance with
Rule 144(c)(1) (or Rule 144(i)(2), if applicable), as a result of which the
Holders who are not affiliates are unable to sell Registrable Securities without
restriction under Rule 144 (or any successor thereto) (any such failure or
breach in clauses (i) through (v) above being referred to as an “Event,” and,
for purposes of clauses (i), (ii), (iii) or (v), the date on which such Event
occurs, or for purposes of clause (iv) the date on which such Allowable Grace
Period is exceeded, being referred to as an “Event Date”), then in addition to
any other rights the Holders may have hereunder or under applicable law, on each
such Event Date and on each monthly anniversary of each such Event Date (if the
applicable Event shall not have been cured by such date) until the applicable
Event is cured, the Company shall pay to each Holder an amount in cash, as
liquidated damages and not as a penalty (“Liquidated Damages”), equal to 0.5% of
the aggregate purchase price paid by such Holder pursuant to the Purchase
Agreement for any Registrable Securities held by such Holder on the Event Date.
The parties agree that notwithstanding anything to the contrary herein or in the
Purchase Agreement, no Liquidated Damages shall be payable (i) if as of the
relevant Event Date, the Registrable Securities may be sold by non-affiliates
without volume or manner of sale restrictions under Rule 144 and the Company is
in compliance with the current public information requirements under
Rule 144(c)(1) (or Rule 144(i)(2), if applicable), as determined by counsel to
the Company pursuant to a written opinion letter to such effect, addressed and
reasonably acceptable to the Company’s transfer agent and (ii) with respect to
any period after the expiration of the Effectiveness Period (it being understood
that this sentence shall not relieve the Company of any Liquidated Damages
accruing prior to the Effectiveness Period). If the Company fails to pay any
Liquidated Damages pursuant to this Section 2(c) in full within five (5)
Business Days after the date payable, the Company will pay interest thereon at a
rate of 1.0% per month (or such lesser maximum amount that is permitted to be
paid by applicable law) to the Holder, accruing daily from the date such
Liquidated Damages are due until such amounts, plus all such interest thereon,
are paid in full. The Liquidated Damages pursuant to the terms hereof shall
apply on a daily pro-rata basis for any portion of a month prior to the cure of
an Event, except in the case of the first Event Date. The Effectiveness Deadline
for a Registration Statement shall be extended without default or Liquidated
Damages hereunder in the event that the Company’s failure to obtain the
effectiveness of the Registration Statement on a timely basis results from the
failure of a Purchaser to timely provide the Company with information requested
by the Company and

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necessary to complete the Registration Statement in accordance with the
requirements of the Securities Act (in which case the Effectiveness Deadline
would be extended with respect to Registrable Securities held by such
Purchaser).
          (d) Each Holder agrees to furnish to the Company a completed Selling
Stockholder Questionnaire not more than ten (10) Trading Days following the date
of this Agreement. At least five (5) Trading Days prior to the first anticipated
filing date of a Registration Statement for any registration under this
Agreement, the Company will notify each Holder of the information the Company
requires from that Holder other than the information contained in the Selling
Stockholder Questionnaire, if any, which shall be completed and delivered to the
Company promptly upon request and, in any event, within two (2) Trading Days
prior to the applicable anticipated filing date. Each Holder further agrees that
it shall not be entitled to be named as a selling securityholder in the
Registration Statement or use the Prospectus for offers and resales of
Registrable Securities at any time, unless such Holder has returned to the
Company a completed and signed Selling Stockholder Questionnaire and a response
to any requests for further information as described in the previous sentence.
If a Holder of Registrable Securities returns a Selling Stockholder
Questionnaire or a request for further information, in either case, after its
respective deadline, the Company shall use its commercially reasonable efforts
at the expense of the Holder who failed to return the Selling Stockholder
Questionnaire or to respond for further information to take such actions as are
required to name such Holder as a selling security holder in the Registration
Statement or any pre-effective or post-effective amendment thereto and to
include (to the extent not theretofore included) in the Registration Statement
the Registrable Securities identified in such late Selling Stockholder
Questionnaire or request for further information. Each Holder acknowledges and
agrees that the information in the Selling Stockholder Questionnaire or request
for further information as described in this Section 2(d) will be used by the
Company in the preparation of the Registration Statement and hereby consents to
the inclusion of such information in the Registration Statement.
          (e) Notwithstanding anything to the contrary herein, at any time after
the Registration Statement has been declared effective by the Commission, the
Company may delay the disclosure of material non-public information concerning
the Company if the disclosure of such information at the time is not, in the
good faith judgment of the Company, in the best interests of the Company (a
“Grace Period”); provided, the Company shall promptly (i) notify the Holders in
writing of the existence of material non-public information giving rise to a
Grace Period (provided that the Company shall not disclose the content of such
material non-public information to the Holders) or the need to file a
post-effective amendment, as applicable, and the date on which such Grace Period
will begin, (ii) use reasonable best efforts to terminate a Grace Period as
promptly as practicable and (iii) notify the Holders in writing of the date on
which the Grace Period ends; provided, further, that no single Grace Period
shall exceed thirty (30) consecutive days, and during any three hundred
sixty-five (365) day period, the aggregate of all Grace Periods shall not exceed
an aggregate of sixty (60) days (each Grace Period complying with this provision
being an “Allowable Grace Period”). For purposes of determining the length of a
Grace Period, the Grace Period shall be deemed to begin on and include the date
the Holders receive the notice referred to in clause (i) above and shall end on
and include the later of the date the Holders receive the notice referred to in
clause (iii) above and the date referred to in such notice; provided, that no
Grace Period shall be longer than an Allowable Grace Period.

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Notwithstanding anything to the contrary, the Company shall cause the Transfer
Agent to deliver unlegended Common Stock to a transferee of a Holder in
accordance with the terms of the Purchase Agreement in connection with any sale
of Registrable Securities with respect to which a Holder has entered into a
contract for sale prior to the Holder’s receipt of the notice of a Grace Period
and for which the Holder has not yet settled.
          (f) In the event that Form S-3 is not available for the registration
of the resale of Registrable Securities hereunder, the Company shall
(i) register the resale of the Registrable Securities on another appropriate
form and (ii) undertake to register the Registrable Securities on Form S-3
promptly after such form is available, provided that the Company shall maintain
the effectiveness of the Registration Statement then in effect until such time
as a Registration Statement on Form S-3 covering the Registrable Securities has
been declared effective by the Commission.
     3. Registration Procedures
     In connection with the Company’s registration obligations hereunder:
          (a) the Company shall not less than three (3) Trading Days prior to
the filing of a Registration Statement and not less than one (1) Trading Day
prior to the filing of any related Prospectus or any amendment or supplement
thereto (except for Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q
and Current Reports on Form 8-K and any similar or successor reports), the
Company shall, furnish to the Holder copies of such Registration Statement,
Prospectus or amendment or supplement thereto, as proposed to be filed, which
documents will be subject to the review of such Holder (it being acknowledged
and agreed that if a Holder does not object to or comment on the aforementioned
documents within such three (3) Trading Day or one (1) Trading Day period, as
the case may be, then the Holder shall be deemed to have consented to and
approved the use of such documents). The Company shall not file any Registration
Statement or amendment or supplement thereto in a form to which a Holder
reasonably objects in good faith, provided that, the Company is notified of such
objection in writing within the three (3) Trading Day or one (1) Trading Day
period described above, as applicable.
          (b) (i) the Company shall prepare and file with the Commission such
amendments (including post-effective amendments) and supplements, to each
Registration Statement and the Prospectus used in connection therewith as may be
necessary to keep such Registration Statement continuously effective as to the
applicable Registrable Securities for its Effectiveness Period (except during an
Allowable Grace Period); (ii) the Company shall cause the related Prospectus to
be amended or supplemented by any required Prospectus supplement (subject to the
terms of this Agreement), and, as so supplemented or amended, to be filed
pursuant to Rule 424 (except during an Allowable Grace Period); (iii) the
Company shall respond as promptly as reasonably practicable to any comments
received from the Commission with respect to each Registration Statement or any
amendment thereto and, as promptly as reasonably possible, provide the Holders
true and complete copies of all correspondence from and to the Commission
relating to such Registration Statement that pertains to the Holders as “Selling
Stockholders” but not any comments that would result in the disclosure to the
Holders of material and non-public information concerning the Company; and
(iv) the Company shall

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comply with the provisions of the Securities Act and the Exchange Act with
respect to the disposition of all Registrable Securities covered by a
Registration Statement until such time as all of such Registrable Securities
shall have been disposed of (subject to the terms of this Agreement) in
accordance with the intended methods of disposition by the Holders thereof as
set forth in such Registration Statement as so amended or in such Prospectus as
so supplemented; provided, that each Purchaser shall be responsible for the
delivery of the Prospectus to the Persons to whom such Purchaser sells any of
the Registrable Securities (including in accordance with Rule 172 under the
Securities Act), and each Purchaser agrees to dispose of Registrable Securities
in compliance with the plan of distribution described in the Registration
Statement and otherwise in compliance with applicable federal and state
securities laws. In the case of amendments and supplements to a Registration
Statement which are required to be filed pursuant to this Agreement (including
pursuant to this Section 3(b)) by reason of the Company filing a report on Form
10-K, Form 10-Q or Form 8-K or any analogous report under the Exchange Act, the
Company shall have incorporated such report by reference into such Registration
Statement, if applicable, or shall file such amendments or supplements with the
Commission on the same day on which the Exchange Act report which created the
requirement for the Company to amend or supplement such Registration Statement
was filed.
          (c) the Company shall notify the Holders (which notice shall, pursuant
to clauses (iii) through (v) hereof, be accompanied by an instruction to suspend
the use of the Prospectus until the requisite changes have been made) as
promptly as reasonably practicable (and, in the case of (i)(A) below, not less
than two Trading Days prior to such filing, in the case of (iii) and (iv) below,
not more than one Trading Day after such issuance or receipt, and in the case of
(v) below, not more than one Trading Day after the occurrence or existence of
such development) and (if requested by any such Person) confirm such notice in
writing no later than one Trading Day following the day (i)(A) when a Prospectus
or any Prospectus supplement or post-effective amendment to a Registration
Statement is proposed to be filed; (B) when the Commission notifies the Company
whether there will be a “review” of such Registration Statement and whenever the
Commission comments in writing on any Registration Statement (in which case the
Company shall provide to each of the Holders true and complete copies of all
comments that pertain to the Holders as a “Selling Stockholder” or to the “Plan
of Distribution” and all written responses thereto, but not information that the
Company believes would constitute material and non-public information); and
(C) with respect to each Registration Statement or any post-effective amendment,
when the same has become effective; (ii) of any request by the Commission or any
other Federal or state governmental authority for amendments or supplements to a
Registration Statement or Prospectus or for additional information that pertains
to the Holders as “Selling Stockholders” or the “Plan of Distribution”; (iii) of
the issuance by the Commission or any other federal or state governmental
authority of any stop order suspending the effectiveness of a Registration
Statement covering any or all of the Registrable Securities or the initiation of
any Proceedings for that purpose; (iv) of the receipt by the Company of any
notification with respect to the suspension of the qualification or exemption
from qualification of any of the Registrable Securities for sale in any
jurisdiction, or the initiation or threatening of any Proceeding for such
purpose; and (v) of the occurrence of any event or passage of time that makes
the financial statements included in a Registration Statement ineligible for
inclusion therein or any statement made in such Registration Statement or
Prospectus or any document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or that requires any revisions to such
Registration Statement, Prospectus or other documents so that,

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in the case of such Registration Statement or the Prospectus, as the case may
be, it will not contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein (in the case of any Prospectus, form of prospectus or
supplement thereto, in light of the circumstances under which they were made),
not misleading.
          (d) the Company shall use commercially reasonable efforts to avoid the
issuance of, or, if issued, obtain the withdrawal of (i) any order suspending
the effectiveness of a Registration Statement, or (ii) any suspension of the
qualification (or exemption from qualification) of any of the Registrable
Securities for sale in any jurisdiction, as soon as practicable.
          (e) the Company shall, if requested by a Holder, furnish to such
Holder, without charge, at least one conformed copy of each Registration
Statement and each amendment thereto and all exhibits to the extent requested by
such Person (including those previously furnished or incorporated by reference)
promptly after the filing of such documents with the Commission; provided, that
the Company shall have no obligation to provide any document pursuant to this
clause that is available on the Commission’s EDGAR system.
          (f) the Company shall, prior to any resale of Registrable Securities
by a Holder, use its commercially reasonable efforts to register or qualify or
cooperate with the selling Holders in connection with the registration or
qualification (or exemption from the registration or qualification) of such
Registrable Securities for the resale by the Holder under the securities or Blue
Sky laws of such jurisdictions within the United States as any Holder reasonably
requests in writing, to keep each registration or qualification (or exemption
therefrom) effective during the Effectiveness Period and to do any and all other
acts or things reasonably necessary to enable the disposition in such
jurisdictions of the Registrable Securities covered by each Registration
Statement; provided, that the Company shall not be required to qualify generally
to do business in any jurisdiction where it is not then so qualified, subject
the Company to any material tax in any such jurisdiction where it is not then so
subject or file a general consent to service of process in any such
jurisdiction.
          (g) the Company shall, cooperate with the Holders to facilitate the
timely preparation and delivery of certificates representing Registrable
Securities to be delivered to a transferee pursuant to the Registration
Statement, which certificates shall be free, to the extent permitted by the
Purchase Agreement and under law, of all restrictive legends, and to enable such
Registrable Securities to be in such denominations and registered in such names
as any such Holders may reasonably request. Certificates for Registrable
Securities free from all restrictive legends may be transmitted by the transfer
agent to a Holder by crediting the account of such Holder’s prime broker with
DTC as directed by such Holder.
          (h) the Company shall following the occurrence of any event
contemplated by Section 3(c)(iii)-(v), as promptly as reasonably practicable
(taking into account the Company’s good faith assessment of any adverse
consequences to the Company and its stockholders of the premature disclosure of
such event), prepare and file a supplement or amendment, including a
post-effective amendment, to the affected Registration Statements or a
supplement to the related Prospectus or any document incorporated or deemed to
be incorporated therein by reference, and

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file any other required document so that, as thereafter delivered, no
Registration Statement nor any Prospectus will 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 (in the case of any Prospectus, form of
prospectus or supplement thereto, in light of the circumstances under which they
were made), not misleading.
          (i) the Company may require each selling Holder to furnish to the
Company a certified statement as to (i) the number of shares of Common Stock
beneficially owned by such Holder and any Affiliate thereof, (ii) any Financial
Industry Regulatory Authority (“FINRA”) affiliations, (iii) any natural persons
who have the power to vote or dispose of the Common Stock and (iv) any other
information as may be requested by the Commission, FINRA or any state securities
commission. During any periods that the Company is unable to meet its
obligations hereunder with respect to the registration of Registrable Securities
because any Holder fails to furnish such information within three Trading Days
of the Company’s request, any Liquidated Damages that are accruing at such time
as to such Holder only shall be tolled and any Event that may otherwise occur
solely because of such delay shall be suspended as to such Holder only, until
such information is delivered to the Company.
          (j) the Company shall cooperate with any registered broker through
which a Holder proposes to resell its Registrable Securities in effecting a
filing with FINRA pursuant to FINRA Rule 5110 as requested by any such Holder
and the Company shall pay the filing fee required for the first such filing
within two (2) Business Days of the request therefore.
          (k) the Company shall use its commercially reasonable efforts to
maintain eligibility for use of Form S-3 (or any successor form thereto) for the
registration of the resale of Registrable Securities.
          (l) if requested by a Holder, the Company shall (i) promptly
incorporate in a Prospectus supplement or post-effective amendment to the
Registration Statement such information as the Company reasonably agrees should
be included therein and (ii) make all required filings of such Prospectus
supplement or such post-effective amendment as soon as reasonably practicable
after the Company has received notification of the matters to be incorporated in
such Prospectus supplement or post-effective amendment.
          (m) the Company shall otherwise use commercially reasonable efforts to
comply with all applicable rules and regulations of the Commission under the
Securities Act and the Exchange Act, including Rule 172, notify the Holders
promptly if the Company no longer satisfies the conditions of Rule 172 and take
such other actions as may be reasonably necessary to facilitate the registration
of the Registrable Securities hereunder; and make available to its security
holders, as soon as reasonably practicable, but not later than the Availability
Date (as defined below), an earnings statement covering a period of at least
twelve (12) months, beginning after the effective date of each Registration
Statement, which earning statement shall satisfy the provisions of Section 11(a)
of the Securities Act, including Rule 158 promulgated thereunder (for the
purpose of this Section 3, “Availability Date” means the 45th day following the
end of the fourth fiscal quarter that includes the effective date of such
Registration Statement, except that, if such fourth fiscal quarter is the last
quarter of the Company’s fiscal year,

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“Availability Date” means the 90th day after the end of such fourth fiscal
quarter), in each case subject to extensions permissible under applicable law.
     4. Registration Expenses. All fees and expenses incident to the Company’s
performance of or compliance with its obligations under this Agreement
(excluding any underwriting discounts and selling commissions and all legal fees
and expenses of legal counsel for any Holder) shall be borne by the Company
whether or not any Registrable Securities are sold pursuant to a Registration
Statement. The fees and expenses referred to in the foregoing sentence shall
include, without limitation, (i) all registration and filing fees (including,
without limitation, fees and expenses (A) with respect to filings required to be
made with any Trading Market on which the Common Stock is then listed for
trading, (B) with respect to compliance with applicable state securities or Blue
Sky laws (including, without limitation, fees and disbursements of counsel for
the Company in connection with Blue Sky qualifications or exemptions of the
Registrable Securities and determination of the eligibility of the Registrable
Securities for investment under the laws of such jurisdictions as requested by
the Holders) and (C) if not previously paid by the Company in connection with an
Issuer Filing, with respect to any filing that may be required to be made by any
broker through which a Holder intends to make sales of Registrable Securities
with FINRA pursuant to FINRA Rule 5110, so long as the broker is receiving no
more than a customary brokerage commission in connection with such sale,
(ii) printing expenses (including, without limitation, expenses of printing
certificates for Registrable Securities and of printing prospectuses if the
printing of prospectuses is reasonably requested by the Holders of a majority of
the Registrable Securities included in the Registration Statement),
(iii) messenger, telephone and delivery expenses of the Company, (iv) fees and
disbursements of counsel for the Company, (v) Securities Act liability
insurance, if the Company so desires such insurance, and (vi) fees and expenses
of all other Persons retained by the Company in connection with the consummation
of the transactions contemplated by this Agreement. In addition, the Company
shall be responsible for all of its internal expenses incurred in connection
with the consummation of the transactions contemplated by this Agreement
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), the expense of any annual
audit and the fees and expenses incurred in connection with the listing of the
Registrable Securities on any securities exchange as required hereunder. In no
event shall the Company be responsible for any underwriting, broker or similar
fees or commissions of any Holder or, except to the extent provided for in the
Transaction Documents, any legal fees or other costs of the Holders.
     5. Indemnification.
          (a) Indemnification by the Company. The Company shall, notwithstanding
any termination of this Agreement, indemnify, defend and hold harmless each
Holder, the officers, directors, agents, general partners, managing members,
managers, Affiliates and employees of each of them, each Person who controls any
such Holder (within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act) and the officers, directors, general partners,
managing members, managers, agents and employees of each such controlling
Person, to the fullest extent permitted by applicable law, from and against any
and all losses, claims, damages, liabilities, costs (including, without
limitation, reasonable costs of preparation and investigation and reasonable
attorneys’ fees) and expenses (collectively, “Losses”), as

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incurred, that arise out of or are based upon any untrue or alleged untrue
statement of a material fact contained in any Registration Statement, any
Prospectus or any form of prospectus or in any amendment or supplement thereto
or in any preliminary prospectus, or arising out of or relating to any omission
or alleged omission to state a material fact required to be stated therein or
necessary to make the statements therein (in the case of any Prospectus or form
of prospectus or supplement thereto, in light of the circumstances under which
they were made) not misleading, except to the extent, but only to the extent,
that (A) such untrue statements, alleged untrue statements, omissions or alleged
omissions are based solely upon information regarding such Holder furnished in
writing to the Company by such Holder expressly for use therein, or to the
extent that such information relates to such Holder or such Holder’s proposed
method of distribution of Registrable Securities and was reviewed and approved
by such Holder expressly for use in the Registration Statement, such Prospectus
or such form of Prospectus or in any amendment or supplement thereto (it being
understood that each Holder has approved Annex A hereto for this purpose), or
(B) in the case of an occurrence of an event of the type specified in Section
3(c)(iii)-(v), related to the use by a Holder of an outdated or defective
Prospectus after the Company has notified such Holder in writing that the
Prospectus is outdated or defective and prior to the receipt by such Holder of
the Advice contemplated and defined in Section 6(d) below, but only if and to
the extent that following the receipt of the Advice the misstatement or omission
giving rise to such Loss would have been corrected. The Company shall notify the
Holders promptly of the institution, threat or assertion of any Proceeding
arising from or in connection with the transactions contemplated by this
Agreement of which the Company is aware. Such indemnity shall remain in full
force and effect regardless of any investigation made by or on behalf of an
Indemnified Party (as defined in Section 5(c)) and shall survive the transfer of
the Registrable Securities by the Holders.
          (b) Indemnification by Holders. Each Holder shall, severally and not
jointly, indemnify and hold harmless the Company, its directors, officers,
agents and employees, each Person who controls the Company (within the meaning
of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the
directors, officers, agents or employees of such controlling Persons, to the
fullest extent permitted by applicable law, from and against all Losses, as
incurred, arising out of or are based upon any untrue or alleged untrue
statement of a material fact contained in any Registration Statement, any
Prospectus, or any form of prospectus, or in any amendment or supplement thereto
or in any preliminary prospectus, or arising out of or relating to any omission
or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein (in the case of any Prospectus, or any
form of prospectus or supplement thereto, in light of the circumstances under
which they were made) not misleading (i) to the extent, but only to the extent,
that such untrue statements or omissions are based solely upon information
regarding such Holder furnished in writing to the Company by such Holder
expressly for use therein or (ii) to the extent, but only to the extent, that
such information relates to such Holder or such Holder’s proposed method of
distribution of Registrable Securities and was reviewed and approved by such
Holder expressly for use in a Registration Statement (it being understood that
the Holder has approved Annex A hereto for this purpose), such Prospectus or
such form of Prospectus or in any amendment or supplement thereto or (iii) in
the case of an occurrence of an event of the type specified in
Section 3(c)(iii)-(v), to the extent, but only to the extent, related to the use
by such Holder of an outdated or defective Prospectus after the Company has
notified such Holder in writing that the Prospectus is outdated or defective and
prior to the receipt by such Holder of the Advice contemplated in

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Section 6(d), but only if and to the extent that following the receipt of the
Advice the misstatement or omission giving rise to such Loss would have been
corrected. In no event shall the liability of any selling Holder hereunder be
greater in amount than the dollar amount of the net proceeds received by such
Holder upon the sale of the Registrable Securities giving rise to such
indemnification obligation.
          (c) Conduct of Indemnification Proceedings. If any Proceeding shall be
brought or asserted against any Person entitled to indemnity hereunder (an
“Indemnified Party”), such Indemnified Party shall promptly notify the Person
from whom indemnity is sought (the “Indemnifying Party”) in writing, and the
Indemnifying Party shall have the right to assume the defense thereof, including
the employment of counsel reasonably satisfactory to the Indemnified Party and
the payment of all reasonable fees and expenses incurred in connection with
defense thereof; provided, that the failure of any Indemnified Party to give
such notice shall not relieve the Indemnifying Party of its obligations or
liabilities pursuant to this Agreement, except (and only) to the extent that it
shall be finally determined by a court of competent jurisdiction (which
determination is not subject to appeal or further review) that such failure
shall have materially and adversely prejudiced the Indemnifying Party.
     An Indemnified Party shall have the right to employ separate counsel in any
such Proceeding and to participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such Indemnified Party or
Parties unless: (1) the Indemnifying Party has agreed in writing to pay such
fees and expenses; (2) the Indemnifying Party shall have failed promptly to
assume the defense of such Proceeding and to employ counsel reasonably
satisfactory to such Indemnified Party in any such Proceeding; or (3) the named
parties to any such Proceeding (including any impleaded parties) include both
such Indemnified Party and the Indemnifying Party, and such Indemnified Party
shall have been advised by counsel that a conflict of interest exists if the
same counsel were to represent such Indemnified Party and the Indemnifying
Party; provided, that the Indemnifying Party shall not be liable for the fees
and expenses of more than one separate firm of attorneys at any time for all
Indemnified Parties. The Indemnifying Party shall not be liable for any
settlement of any such Proceeding effected without its written consent, which
consent shall not be unreasonably withheld, delayed or conditioned. No
Indemnifying Party shall, without the prior written consent of the Indemnified
Party, effect any settlement of any pending Proceeding in respect of which any
Indemnified Party is a 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.
     Subject to the terms of this Agreement, all fees and expenses of the
Indemnified Party (including reasonable fees and expenses to the extent incurred
in connection with investigating or preparing to defend such Proceeding in a
manner not inconsistent with this Section 5(c)) shall be paid to the Indemnified
Party, as incurred, within twenty Trading Days of written notice thereof to the
Indemnifying Party; provided, that the Indemnified Party shall promptly
reimburse the Indemnifying Party for that portion of such fees and expenses
applicable to such actions for which such Indemnified Party is finally
judicially determined to not be entitled to indemnification hereunder). The
failure to deliver written notice to the Indemnifying Party within a reasonable
time of the commencement of any such action shall not relieve such Indemnifying
Party of any liability to the Indemnified Party under this Section 5, except to
the

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extent that the Indemnifying Party is materially and adversely prejudiced in its
ability to defend such action.
          (d) Contribution. If a claim for indemnification under Section 5(a) or
5(b) is unavailable to an Indemnified Party or insufficient to hold an
Indemnified Party harmless for any Losses, then each Indemnifying Party, in lieu
of indemnifying such Indemnified Party, shall contribute to the amount paid or
payable by such Indemnified Party as a result of such Losses, in such proportion
as is appropriate to reflect the relative fault of the Indemnifying Party and
Indemnified Party in connection with the actions, statements or omissions that
resulted in such Losses as well as any other relevant equitable considerations.
The relative fault of such Indemnifying Party and Indemnified Party shall be
determined by reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or omission
or alleged omission of a material fact, has been taken or made by, or relates to
information supplied by, such Indemnifying Party or Indemnified Party, and the
parties’ relative intent, knowledge, access to information and opportunity to
correct or prevent such action, statement or omission. The amount paid or
payable by a party as a result of any Losses shall be deemed to include, subject
to the limitations set forth in this Agreement, any reasonable attorneys’ or
other reasonable fees or expenses incurred by such party in connection with any
Proceeding to the extent such party would have been indemnified for such fees or
expenses if the indemnification provided for in this Section 5(d) was available
to such party in accordance with its terms.
     The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 5(d) were determined by pro rata
allocation or by any other method of allocation that does not take into account
the equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 5(d), no Holder shall be required
to contribute, in the aggregate, any amount in excess of the amount by which the
net proceeds actually received by such Holder from the sale of the Registrable
Securities subject to the Proceeding exceeds the amount of any damages that such
Holder 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 indemnity and contribution agreements contained in this Section 5 are
in addition to any liability that the Indemnifying Parties may have to the
Indemnified Parties and are not in diminution or limitation of the
indemnification provisions under the Purchase Agreement.
     6. Miscellaneous.
          (a) Remedies. In the event of a breach by the Company or by a Holder
of any of their obligations under this Agreement, each Holder or the Company, as
the case may be, in addition to being entitled to exercise all rights granted by
law and under this Agreement, including recovery of damages, will be entitled to
specific performance of its rights under this Agreement. The Company and each
Holder agree that monetary damages would not provide adequate compensation for
any losses incurred by reason of a breach by it of any of the provisions of this
Agreement and hereby further agrees that, in the event of any action for

15

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specific performance in respect of such breach, it shall waive the defense that
a remedy at law would be adequate.
          (b) No Piggyback on Registrations; Prohibition on Filing Other
Registration Statements. Neither the Company nor any of its security holders may
include securities of the Company in a Registration Statement hereunder and the
Company shall not prior to the Effective Date enter into any agreement providing
any such right to any of its security holders. The Company shall not, from the
date hereof until the date that is 30 days after the Effective Date of the
Initial Registration Statement, prepare and file with the Commission a
registration statement relating to an offering for its own account under the
Securities Act of any of its equity securities, other than (i) a registration
statement on Form S-8, (ii) in connection with an acquisition, on Form S-4 or
(iii) a registration statement to register for resale securities issued by the
Company pursuant to acquisitions or strategic transactions approved by a
majority of the disinterested directors of the Company, provided that any such
issuance shall only be to a Person which is, itself or through its subsidiaries,
an operating company in a business synergistic with the business of the Company
and in which the Company receives benefits in addition to the investment of
funds, but shall not include a transaction in which the Company is issuing
securities primarily for the purpose of raising capital or to an entity whose
primary business is investing in securities. For the avoidance of doubt, the
Company shall not be prohibited from preparing and filing with the Commission a
registration statement relating to an offering of Common Stock by existing
stockholders of the Company under the Securities Act pursuant to the terms of
registration rights held by such stockholder or from filing amendments to
registration statements filed prior to the date of this Agreement.
          (c) Compliance. Each Holder covenants and agrees that it will comply
with the prospectus delivery requirements of the Securities Act as applicable to
it (unless an exemption therefrom is available) in connection with sales of
Registrable Securities pursuant to the Registration Statement and shall sell the
Registrable Securities only in accordance with a method of distribution
described in the Registration Statement
          (d) Discontinued Disposition. By its acquisition of Registrable
Securities, each Holder agrees that, upon receipt of a notice from the Company
of the occurrence of any event of the kind described in Section 3(c)(iii)-(v),
such Holder will forthwith discontinue disposition of such Registrable
Securities under a Registration Statement until it is advised in writing (the
“Advice”) by the Company that the use of the applicable Prospectus (as it may
have been supplemented or amended) may be resumed. The Company may provide
appropriate stop orders to enforce the provisions of this paragraph.
          (e) No Inconsistent Agreements. Neither the Company nor any of its
Subsidiaries has entered, as of the date hereof, nor shall the Company or any of
its Subsidiaries, on or after the date hereof, enter into any agreement with
respect to its securities, that would have the effect of impairing the rights
granted to the Holders in this Agreement or otherwise conflicts with the
provisions hereof.
          (f) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, or waived unless the same shall be in writing and signed by the
Company and Holders holding at least two-

16

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thirds of the then outstanding Registrable Securities, provided that any party
may give a waiver as to itself. Notwithstanding the foregoing, a waiver or
consent to depart from the provisions hereof with respect to a matter that
relates exclusively to the rights of Holders and that does not directly or
indirectly affect the rights of other Holders may be given by Holders of all of
the Registrable Securities to which such waiver or consent relates; provided,
that the provisions of this sentence may not be amended, modified, or
supplemented except in accordance with the provisions of the immediately
preceding sentence. Notwithstanding the foregoing, if any such amendment,
modification or waiver would adversely affect in any material respect any Holder
or group of Holders who have comparable rights under this Agreement
disproportionately to the other Holders having such comparable rights, such
amendment, modification, or waiver shall also require the written consent of the
Holder(s) so adversely affected.
          (g) Notices. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be delivered as set forth
in the Purchase Agreement; provided that the Company may deliver to each Holder
the documents required to be delivered to such Holder under Section 3(a) of this
Agreement by e-mail to the e-mail addresses provided by such Holder to the
Company solely for such specific purpose.
          (h) Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors and permitted assigns of each of the
parties and shall inure to the benefit of each Holder. Nothing in this
Agreement, express or implied, is intended to confer upon any party other than
the parties hereto or their respective successors and assigns any rights,
remedies, obligations, or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement. The Company may not assign its
rights (except by merger or in connection with another entity acquiring all or
substantially all of the Company’s assets) or obligations hereunder without the
prior written consent of all the Holders of the then outstanding Registrable
Securities. Each Holder may assign its respective rights hereunder in the manner
and to the Persons as permitted under the Purchase Agreement.
          (i) Execution and Counterparts. This Agreement may be executed in two
or more counterparts, each of which when so executed shall be deemed to be an
original and, all of which taken together shall constitute one and the same
Agreement and shall become effective when counterparts have been signed by each
party and delivered to the other party, it being understood that both parties
need not sign the same counterpart. In the event that any signature is delivered
by facsimile transmission or by e-mail delivery of a “.pdf” format data file,
such signature shall create a valid and binding obligation of the party
executing (or on whose behalf such signature is executed) with the same force
and effect as if such facsimile or “.pdf” signature were the original thereof.
          (j) Governing Law. All questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be determined
in accordance with the provisions of the Purchase Agreement.
          (k) Cumulative Remedies. Except as provided in Section 2(c) with
respect to Liquidated Damages, the remedies provided herein are cumulative and
not exclusive of any other remedies provided by law.

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          (l) Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their good faith reasonable efforts to find and employ an
alternative means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It is hereby
stipulated and declared to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants and restrictions without
including any of such that may be hereafter declared invalid, illegal, void or
unenforceable.
          (m) Headings. The headings in this Agreement are for convenience only
and shall not limit or otherwise affect the meaning hereof.
          (n) Independent Nature of Purchasers’ Obligations and Rights. The
obligations of each Purchaser under this Agreement are several and not joint
with the obligations of any other Purchaser hereunder, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser hereunder. The decision of each Purchaser to purchase the Preferred
Shares pursuant to the Transaction Documents has been made independently of any
other Purchaser. Nothing contained herein or in any other agreement or document
delivered at any closing, and no action taken by any Purchaser pursuant hereto
or thereto, shall be deemed to constitute the Purchasers as a partnership, an
association, a joint venture or any other kind of entity, or create a
presumption that the Purchasers are in any way acting in concert with respect to
such obligations or the transactions contemplated by this Agreement. Each
Purchaser acknowledges that no other Purchaser has acted as agent for such
Purchaser in connection with making its investment hereunder and that no
Purchaser will be acting as agent of such Purchaser in connection with
monitoring its investment in the Preferred Shares or enforcing its rights under
the Transaction Documents. Each Purchaser shall be entitled to protect and
enforce its rights, including, without limitation, the rights arising out of
this Agreement, and it shall not be necessary for any other Purchaser to be
joined as an additional party in any Proceeding for such purpose. The Company
acknowledges that each of the Purchasers has been provided with the same
Registration Rights Agreement for the purpose of closing a transaction with
multiple Purchasers and not because it was required or requested to do so by any
Purchaser.

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     IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.

            ORIENTAL FINANCIAL GROUP INC.
      By:           Name:           Title:        

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK,
SIGNATURE PAGES OF HOLDERS TO FOLLOW]

 

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          IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.

            NAME OF INVESTING ENTITY

          AUTHORIZED SIGNATORY       By:           Name:           Title:      
    ADDRESS FOR NOTICE  

                  c/o:      

                  Street:      

                  City/State/Zip:      

                  Attention:      

                  Tel:      

                  Fax:      

                  Email:      

 

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Annex A
PLAN OF DISTRIBUTION
     We are registering the Securities issued to the selling stockholder to
permit the resale of these Securities by the holders of the Securities from time
to time after the date of this prospectus. We will not receive any of the
proceeds from the sale by the selling stockholders of the Securities. We will
bear all fees and expenses incident to our obligation to register the
Securities.
     The selling stockholders may sell all or a portion of the Securities
beneficially owned by them and offered hereby from time to time directly or
through one or more underwriters, broker-dealers or agents. If the Securities
are sold through underwriters or broker-dealers, the selling stockholders will
be responsible for underwriting discounts or commissions or agent’s commissions.
The Securities may be sold on any national securities exchange or quotation
service on which the securities may be listed or quoted at the time of sale, in
the over-the-counter market or in transactions otherwise than on these exchanges
or systems or in the over-the-counter market and in one or more transactions at
fixed prices, at prevailing market prices at the time of the sale, at varying
prices determined at the time of sale, or at negotiated prices. These sales may
be effected in transactions, which may involve crosses or block transactions.
The selling stockholders may use any one or more of the following methods when
selling Securities:

  •   ordinary brokerage transactions and transactions in which the
broker-dealer solicits purchasers;     •   block trades in which the
broker-dealer will attempt to sell the shares as agent but may position and
resell a portion of the block as principal to facilitate the transaction;     •
  purchases by a broker-dealer as principal and resale by the broker-dealer for
its account;     •   an exchange distribution in accordance with the rules of
the applicable exchange;     •   privately negotiated transactions;     •  
settlement of short sales entered into after the effective date of the
registration statement of which this prospectus is a part;     •  
broker-dealers may agree with the selling stockholders to sell a specified
number of such securities at a stipulated price per share;     •   through the
writing or settlement of options or other hedging transactions, whether such
options are listed on an options exchange or otherwise;     •   a combination of
any such methods of sale; and     •   any other method permitted pursuant to
applicable law.

     The selling stockholders also may resell all or a portion of the Securities
in open market transactions in reliance upon Rule 144 under the Securities Act,
as permitted by that rule, or Section 4(1) under the Securities Act, if
available, rather than under this prospectus, provided that they meet the
criteria and conform to the requirements of those provisions.

 

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     Broker-dealers engaged by the selling stockholders may arrange for other
broker-dealers to participate in sales. If the selling stockholders effect such
transactions by selling Securities to or through underwriters, broker-dealers or
agents, such underwriters, broker-dealers or agents may receive commissions in
the form of discounts, concessions or commissions from the selling stockholders
or commissions from purchasers of the Securities for whom they may act as agent
or to whom they may sell as principal. Such commissions will be in amounts to be
negotiated, but, except as set forth in a supplement to this prospectus, in the
case of an agency transaction will not be in excess of a customary brokerage
commission in compliance with NASD Rule 2440; and in the case of a principal
transaction a markup or markdown in compliance with NASD IM-2440.
     In connection with sales of the Securities or otherwise, the selling
stockholders may enter into hedging transactions with broker-dealers or other
financial institutions, which may in turn engage in short sales of the
Securities in the course of hedging in positions they assume. The selling
stockholders may also sell Securities short and if such short sale shall take
place after the date that this Registration Statement is declared effective by
the Commission, the selling stockholders may deliver Securities covered by this
prospectus to close out short positions and to return borrowed shares in
connection with such short sales. The selling stockholders may also loan or
pledge Securities to broker-dealers that in turn may sell such shares, to the
extent permitted by applicable law. The selling stockholders may also enter into
option or other transactions with broker-dealers or other financial institutions
or the creation of one or more derivative securities which require the delivery
to such broker-dealer or other financial institution of shares offered by this
prospectus, which shares such broker-dealer or other financial institution may
resell pursuant to this prospectus (as supplemented or amended to reflect such
transaction). Notwithstanding the foregoing, the selling stockholders have been
advised that they may not use shares registered on this registration statement
to cover short sales of our Securities made prior to the date the registration
statement, of which this prospectus forms a part, has been declared effective by
the SEC.
     The selling stockholders may, from time to time, pledge or grant a security
interest in some or all of the Securities owned by them and, if they default in
the performance of their secured obligations, the pledgees or secured parties
may offer and sell the Securities from time to time pursuant to this prospectus
or any amendment to this prospectus under Rule 424(b)(3) or other applicable
provision of the Securities Act of 1933, as amended, amending, if necessary, the
list of selling stockholders to include the pledgee, transferee or other
successors in interest as selling stockholders under this prospectus. The
selling stockholders also may transfer and donate the Securities in other
circumstances in which case the transferees, donees, pledgees or other
successors in interest will be the selling beneficial owners for purposes of
this prospectus.
     The selling stockholders and any broker-dealer or agents participating in
the distribution of the Securities may be deemed to be “underwriters” within the
meaning of Section 2(11) of the Securities Act in connection with such sales. In
such event, any commissions paid, or any discounts or concessions allowed to,
any such broker-dealer or agent and any profit on the resale of the shares
purchased by them may be deemed to be underwriting commissions or discounts
under the Securities Act. Selling Stockholders who are “underwriters” within the
meaning of Section 2(11) of the Securities Act will be subject to the applicable
prospectus delivery requirements of the Securities Act and may be subject to
certain statutory liabilities of, including but not limited to, Sections 11, 12
and 17 of the Securities Act and Rule 10b-5 under the Securities Exchange Act of
1934, as amended, or the Exchange Act.

 

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     Each selling stockholder has informed the Company that it is not a
registered broker-dealer and does not have any written or oral agreement or
understanding, directly or indirectly, with any person to distribute the
Securities. Upon the Company being notified in writing by a selling stockholder
that any material arrangement has been entered into with a broker-dealer for the
sale of Securities through a block trade, special offering, exchange
distribution or secondary distribution or a purchase by a broker or dealer, a
supplement to this prospectus will be filed, if required, pursuant to Rule
424(b) under the Securities Act, disclosing (i) the name of each such selling
stockholder and of the participating broker-dealer(s), (ii) the number of shares
involved, (iii) the price at which such the Securities were sold, (iv) the
commissions paid or discounts or concessions allowed to such broker-dealer(s),
where applicable, (v) that such broker-dealer(s) did not conduct any
investigation to verify the information set out or incorporated by reference in
this prospectus, and (vi) other facts material to the transaction. In no event
shall any broker-dealer receive fees, commissions and markups, which, in the
aggregate, would exceed eight percent (8%).
     Under the securities laws of some states, the Common Stock may be sold in
such states only through registered or licensed brokers or dealers. In addition,
in some states the Common Stock may not be sold unless such shares have been
registered or qualified for sale in such state or an exemption from registration
or qualification is available and is complied with.
     There can be no assurance that any selling stockholder will sell any or all
of the Securities registered pursuant to the shelf registration statement, of
which this prospectus forms a part.
     Each selling stockholder and any other person participating in such
distribution will be subject to applicable provisions of the Securities Exchange
Act of 1934, as amended, and the rules and regulations thereunder, including,
without limitation, to the extent applicable, Regulation M of the Exchange Act,
which may limit the timing of purchases and sales of any of the Securities by
the selling stockholder and any other participating person. To the extent
applicable, Regulation M may also restrict the ability of any person engaged in
the distribution of the Securities to engage in market-making activities with
respect to the Securities. All of the foregoing may affect the marketability of
the Securities and the ability of any person or entity to engage in
market-making activities with respect to the Securities.
     We will pay all expenses of the registration of the Securities pursuant to
the registration rights agreement, including, without limitation, Securities and
Exchange Commission filing fees and expenses of compliance with state securities
or “blue sky” laws; provided, that each selling stockholder will pay all
underwriting discounts and selling commissions, if any and any related legal
expenses incurred by it. We will indemnify the selling stockholders against
certain liabilities, including some liabilities under the Securities Act, in
accordance with the registration rights agreement, or the selling stockholders
will be entitled to contribution. We may be indemnified by the selling
stockholders against civil liabilities, including liabilities under the
Securities Act, that may arise from any written information furnished to us by
the selling stockholders specifically for use in this prospectus, in accordance
with the related registration rights agreements, or we may be entitled to
contribution.

 

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Annex B
ORIENTAL FINANCIAL GROUP INC.
SELLING STOCKHOLDER NOTICE AND QUESTIONNAIRE
     The undersigned holder of securities of Oriental Financial Group Inc., a
financial holding company and corporation organized in the Commonwealth of
Puerto Rico (the “Company”), issued pursuant to a certain Securities Purchase
Agreement by and among the Company and the Purchasers named therein, dated as of
April 23, 2010, understands that the Company intends to file with the Securities
and Exchange Commission a registration statement on Form S-3 (the “Resale
Registration Statement”) for the registration and the resale under Rule 415 of
the Securities Act of 1933, as amended (the “Securities Act”), of the
Registrable Securities in accordance with the terms of a certain Registration
Rights Agreement by and among the Company and the Purchasers named therein,
dated as of April 23, 2010 (the “Agreement”). All capitalized terms not
otherwise defined herein shall have the meanings ascribed thereto in the
Agreement.
     In order to sell or otherwise dispose of any Registrable Securities
pursuant to the Resale Registration Statement, a holder of Registrable
Securities generally will be required to be named as a selling stockholder in
the related prospectus or a supplement thereto (as so supplemented, the
“Prospectus”), deliver the Prospectus to purchasers of Registrable Securities
(including pursuant to Rule 172 under the Securities Act) and be bound by the
provisions of the Agreement (including certain indemnification provisions, as
described below). Holders must complete and deliver this Notice and
Questionnaire in order to be named as selling stockholders in the Prospectus.
Holders of Registrable Securities who do not complete, execute and return this
Notice and Questionnaire within ten (10) Trading Days following the date of the
Agreement (1) will not be named as selling stockholders in the Resale
Registration Statement or the Prospectus and (2) may not use the Prospectus for
resales of Registrable Securities.
     Certain legal consequences arise from being named as a selling stockholder
in the Resale Registration Statement and the Prospectus. Holders of Registrable
Securities are advised to consult their own securities law counsel regarding the
consequences of being named or not named as a selling stockholder in the Resale
Registration Statement and the Prospectus.
NOTICE
     The undersigned holder (the “Selling Stockholder”) of Registrable
Securities hereby gives notice to the Company of its intention to sell or
otherwise dispose of Registrable Securities owned by it and listed below in Item
(3), unless otherwise specified in Item (3), pursuant to the Resale Registration
Statement. The undersigned, by signing and returning this Notice and
Questionnaire, understands and agrees that it will be bound by the terms and
conditions of this Notice and Questionnaire and the Agreement.
     The undersigned hereby provides the following information to the Company
and represents and warrants that such information is accurate and complete:

 

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QUESTIONNAIRE

1.   Name.

         
 
  (a)   Full Legal Name of Selling Stockholder:
 
       
 
       
 
       
 
       
 
  (b)   Full Legal Name of Registered Holder (if not the same as (a) above)
through which Registrable Securities Listed in Item 3 below are held:
 
       
 
       
 
       
 
       
 
  (c)   Full Legal Name of Natural Control Person (which means a natural person
who directly or indirectly alone or with others has power to vote or dispose of
the securities covered by the questionnaire):
 
       
 
       
 
       

2.   Address for Notices to Selling Stockholder:

 
 
 
Telephone:
 
Fax:
 
Contact Person:
 
E-mail address of Contact Person:
 
3. Beneficial Ownership of Registrable Securities Issuable Pursuant to the
Purchase Agreement:

         
 
  (a)   Type and Number of Registrable Securities beneficially owned and issued
pursuant to the Agreement:
 
       
 
       
 
       
 
       
 
       
 
       
 
       
 
       
 
  (b)   Number of Securities to be registered pursuant to this Notice for
resale:
 
       
 
       
 
       
 
       
 
       
 
       
 
       
 
       
 
       

 

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4. Broker-Dealer Status:

         
 
  (a)   Are you a broker-dealer?
 
       
 
      Yes o           No o
 
       
 
  (b)   If “yes” to Section 4(a), did you receive your Registrable Securities as
compensation for investment banking services to the Company?
 
       
 
      Yes o           No o

Note:   If no, the Commission’s staff has indicated that you should be
identified as an underwriter in the Registration Statement.

         
 
  (c)   Are you an affiliate of a broker-dealer?
 
       
 
      Yes o          No o
 
       
 
  Note:   If yes, provide a narrative explanation below:
 
       
 
       
 
       
 
       
 
       
 
       
 
  (c)   If you are an affiliate of a broker-dealer, do you certify that you
bought the Registrable Securities in the ordinary course of business, and at the
time of the purchase of the Registrable Securities to be resold, you had no
agreements or understandings, directly or indirectly, with any person to
distribute the Registrable Securities?
 
       
 
      Yes o      No o
 
       
 
  Note:   If no, the Commission’s staff has indicated that you should be
identified as an underwriter in the Registration Statement.

5.   Beneficial Ownership of Other Securities of the Company Owned by the
Selling Stockholder.

     
 
  Except as set forth below in this Item 5, the undersigned is not the
beneficial or registered owner of any securities of the Company other than the
Registrable Securities listed above in Item 3.
 
   
 
  Type and amount of other securities beneficially owned:
 
       
 
   
 
   
 
   
 
               —
 
   
 
   
 
   
 
               —

 

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6. Relationships with the Company:

     
 
  Except as set forth below, neither the undersigned nor any of its affiliates,
officers, directors or principal equity holders (owners of 5% of more of the
equity securities of the undersigned) has held any position or office or has had
any other material relationship with the Company (or its predecessors or
affiliates) during the past three years.
 
   
 
  State any exceptions here:
 
   
 
   
 
   
 
   
 
   

7.   Plan of Distribution:

     
 
  The undersigned has reviewed the form of Plan of Distribution attached as
Annex A to the Registration Rights Agreement, and hereby confirms that, except
as set forth below, the information contained therein regarding the undersigned
and its plan of distribution is correct and complete.
 
   
 
  State any exceptions here:
 
   
 
   
 
   
 
   
 
   

***********
By signing below, the undersigned consents to the disclosure of the information
contained herein in its answers to Items (1) through (7) above and the inclusion
of such information in the Resale Registration Statement and the Prospectus. The
undersigned understands that such information will be relied upon by the Company
in connection with the preparation or amendment of any such Registration
Statement and the Prospectus.
By signing below, the undersigned acknowledges that it understands its
obligation to comply, and agrees that it will comply, with the provisions of the
Exchange Act and the rules and regulations thereunder, particularly Regulation M
in connection with any offering of Registrable Securities pursuant to the Resale
Registration Statement. The undersigned also acknowledges that it understands
that the answers to this Questionnaire are furnished for use in connection with
Registration Statements filed pursuant to the Registration Rights Agreement and
any amendments or supplements thereto filed with the Commission pursuant to the
Securities Act.

 

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I confirm that, to the best of my knowledge and belief, the foregoing statements
(including without limitation the answers to this Questionnaire) are correct.
IN WITNESS WHEREOF the undersigned, by authority duly given, has caused this
Questionnaire to be executed and delivered either in person or by its duly
authorized agent.

                Dated:      Beneficial Owner:                   By:            
  Name:               Title:            

 

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EXHIBIT C-1
ACCREDITED INVESTOR QUESTIONNAIRE
(ALL INFORMATION WILL BE TREATED CONFIDENTIALLY)

      To:   Oriental Financial Group Inc.

This Investor Questionnaire (“Questionnaire”) must be completed by each
potential investor in connection with the offer and sale of shares of
mandatorily convertible non-cumulative non-voting perpetual preferred stock,
$1,000 liquidation preference per share (the “Preferred Shares”), of Oriental
Financial Group Inc., a financial holding company and corporation organized in
the Commonwealth of Puerto Rico (the “Corporation”). The Preferred Shares are
being offered and sold by the Corporation without registration under the
Securities Act of 1933, as amended (the “Securities Act”), and the securities
laws of certain states, in reliance on the exemptions contained in Section 4(2)
of the Securities Act and on Regulation D promulgated thereunder and in reliance
on similar exemptions under applicable state laws. The Corporation must
determine that a potential investor meets certain suitability requirements
before offering or selling Preferred Shares to such investor. The purpose of
this Questionnaire is to assure the Corporation that each investor will meet the
applicable suitability requirements. The information supplied by you will be
used in determining whether you meet such criteria, and reliance upon the
private offering exemptions from registration is based in part on the
information herein supplied.
This Questionnaire does not constitute an offer to sell or a solicitation of an
offer to buy any security. Your answers will be kept strictly confidential.
However, by signing this Questionnaire, you will be authorizing the Corporation
to provide a completed copy of this Questionnaire to such parties as the
Corporation deems appropriate in order to ensure that the offer and sale of the
Preferred Shares will not result in a violation of the Securities Act or the
securities laws of any state and that you otherwise satisfy the suitability
standards applicable to purchasers of the Preferred Shares. All potential
investors must answer all applicable questions and complete, date and sign this
Questionnaire. Please print or type your responses and attach additional sheets
of paper if necessary to complete your answers to any item.

PART A.   BACKGROUND INFORMATION

Name of Beneficial Owner of the Preferred Shares:
 
Business Address:
 
(Number and Street)

           
(City)
  (State)   (Zip Code)

Telephone Number: (        )
 

 

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If a corporation, partnership, limited liability company, trust or other entity:

Type of entity:
 
Were you formed for the purpose of investing in the securities being offered?
     Yes o                 No o          
If an individual:
Residence Address:
 
(Number and Street)

           
(City)
  (State)   (Zip Code)

Telephone Number: (        )
 

                     
Age:
 
 
  Citizenship:  
 
  Where registered to vote:  
 

Set forth in the space provided below the state(s), if any, in the United States
in which you maintained your residence during the past two years and the dates
during which you resided in each state:
Are you a director or executive officer of the Corporation?
     Yes o                No o          
Social Security or Taxpayer Identification No.
 

PART B.   ACCREDITED INVESTOR QUESTIONNAIRE

     In order for the Company to offer and sell the Preferred Shares in
conformance with state and federal securities laws, the following information
must be obtained regarding your investor status. Please initial each category
applicable to you as a Purchaser of Preferred Shares.

         (1)   A bank as defined in Section 3(a)(2) of the Securities Act, or
any savings and loan association or other institution as defined in Section
3(a)(5)(A) of the Securities Act whether acting in its individual or fiduciary
capacity;            (2)   A broker or dealer registered pursuant to Section 15
of the Securities Exchange Act of 1934;            (3)   An insurance company as
defined in Section 2(13) of the Securities Act;

 

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        (4)   An investment company registered under the Investment Company Act
of 1940 or a business development company as defined in Section 2(a)(48) of that
act;           (5)   A Small Business Investment Company licensed by the U.S.
Small Business Administration under Section 301(c) or (d) of the Small Business
Investment Act of 1958;           (6)   A plan established and maintained by a
state, its political subdivisions, or any agency or instrumentality of a state
or its political subdivisions, for the benefit of its employees, if such plan
has total assets in excess of $5,000,000;           (7)   An employee benefit
plan within the meaning of the Employee Retirement Income Security Act of 1974,
if the investment decision is made by a plan fiduciary, as defined in
Section 3(21) of such act, which is either a bank, savings and loan association,
insurance company, or registered investment adviser, or if the employee benefit
plan has total assets in excess of $5,000,000 or, if a self-directed plan, with
investment decisions made solely by persons that are accredited investors;    
      (8)   A private business development company as defined in
Section 202(a)(22) of the Investment Advisers Act of 1940;           (9)   An
organization described in Section 501(c)(3) of the Internal Revenue Code, a
corporation, Massachusetts or similar business trust, or partnership, not formed
for the specific purpose of acquiring the Preferred Shares, with total assets in
excess of $5,000,000;           (10)   A trust, with total assets in excess of
$5,000,000, not formed for the specific purpose of acquiring the Preferred
Shares, whose purchase is directed by a sophisticated person who has such
knowledge and experience in financial and business matters that such person is
capable of evaluating the merits and risks of investing in the Company;    
      (11)   A natural person whose individual net worth, or joint net worth
with that person’s spouse, at the time of his purchase exceeds $1,000,000;    
      (12)   A natural person who had an individual income in excess of $200,000
in each of the two most recent years, or joint income with that person’s spouse
in excess of $300,000, in each of those years, and has a reasonable expectation
of reaching the same income level in the current year;           (13)   An
executive officer or director of the Corporation;

 

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       (14)   An entity in which all of the equity owners qualify under any of
the above subparagraphs. If the undersigned belongs to this investor category
only, list the equity owners of the undersigned, and the investor category which
each such equity owner satisfies.

                          A.   FOR EXECUTION BY AN INDIVIDUAL:        
 
                       
 
   
 
      By  
 
        
 
  Date                    
 
          Print Name:  
 
   

                      B.   FOR EXECUTION BY AN ENTITY:        
 
                   
 
        Entity Name:        
 
             
 
   
 
                   
 
 
 
      By  
 
   
 
  Date                
 
          Print Name:        
 
             
 
   
 
          Title:        
 
             
 
   

                      C.   ADDITIONAL SIGNATURES (if required by partnership,
corporation or trust document):
 
                   
 
        Entity Name:        
 
             
 
   
 
                   
 
 
 
      By  
 
   
 
  Date                
 
          Print Name:        
 
             
 
   
 
          Title:        
 
             
 
   

             
 
                   
 
        Entity Name:        
 
             
 
   
 
                   
 
 
 
      By  
 
   
 
  Date                
 
          Print Name:        
 
             
 
   
 
          Title:        
 
             
 
   

 

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EXHIBIT C-2
Stock Certificate Questionnaire
Pursuant to Section 2.2(b) of the Agreement, please provide us with the
following information:

             
 
           
1.
  The exact name that the Preferred Shares are to be registered in (this is the
name that will appear on the stock certificate(s) and warrant(s)). You may use a
nominee name if appropriate:        
 
           
 
           
2.
  The relationship between the Purchaser of the Preferred Shares and the
Registered Holder listed in response to Item 1 above:        
 
           
 
           
3.
  The mailing address, telephone and telecopy number of the Registered Holder
listed in response to Item 1 above:        
 
           
 
           
4.
  The Tax Identification Number (or, if an individual, the Social Security
Number) of the Registered Holder listed in response to Item 1 above:        
 
           
 
           

 

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EXHIBIT D
Form of Opinion of Company Puerto Rican Counsel*

1.   The Company is duly registered as a bank holding company under the Bank
Holding Company Act of 1956, as amended, and a financial holding company under
the Gramm-Leach-Bliley Act of 1999, as amended, and has been duly incorporated
and is validly existing as a corporation in good standing under the laws of the
Commonwealth of Puerto Rico.

2.   The Company has the corporate power and authority to execute and deliver
and to perform its obligations under the Transaction Documents, including,
without limitation, to issue the Preferred Shares and, upon obtaining the
Stockholder Approvals, the Underlying Shares.

3.   Each of the Transaction Documents has been duly authorized, executed and
delivered by the Company and, assuming due authorization, execution and delivery
by the Purchasers (to the extent they are a party), each of the Transaction
Documents constitutes a valid and binding agreement of the Company, enforceable
against the Company in accordance with its terms.

4.   The execution and delivery by the Company of each of the Transaction
Documents and the performance by the Company of its obligations under such
agreements, including its issuance and sale of the Preferred Shares and, upon
obtaining the Stockholder Approvals, the Underlying Shares, do not and will not:
(a) result in any violation of the Certificate of Incorporation or Bylaws of the
Company, (b) require any consent, approval, license or exemption by, order or
authorization of, or filing, recording or registration by the Company with any
Puerto Rican governmental authority, except for the filing of the Certificate of
Designations with the Puerto Rico Department of State, (c) violate any court
order, judgment or decree, if any, or (d) result in a breach of, or constitute a
default under, any Material Contract.

5.   The Preferred Shares being delivered to the Purchasers pursuant to the
Securities Purchase Agreement have been duly and validly authorized and, when
issued, delivered and paid for as contemplated in the Securities Purchase
Agreement, will be duly and validly issued, fully paid and non-assessable, and
free of any preemptive right or similar rights contained in the Company’s
Certificate of Incorporation or Bylaws. The Underlying Shares, when issued in
accordance with the Certificate of Designations, will be duly and validly
issued, fully paid and non-assessable, and free of any preemptive right or
similar rights contained in the Company’s Certificate of Incorporation or
Bylaws.

 

*   The opinion letter of Company Counsel will be subject to customary
limitations and carveouts.

 

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EXHIBIT E
Form of Opinion of Company U.S. Counsel*

1.   Each of the Transaction Documents has been duly executed and delivered to
the extent such execution and delivery are governed by the laws of the State of
New York by the Company, and assuming due authorization, execution and delivery
by the Purchasers, each of the Transaction Documents constitutes a valid and
binding agreement of the Company, enforceable against the Company in accordance
with its terms.

2.   The execution and delivery by the Company of each of the Transaction
Documents and the consummation by the Company of the transaction contemplated
thereby, including the issuance and sale of the Preferred Shares and the
Underlying Shares, will not (i) constitute a violation of, or breach or default
under, the terms of any Applicable Contract or (ii) violate or conflict with, or
result in any contravention of, any Applicable Law or Applicable Orders. We do
not express any opinion, however, as to whether the execution, delivery or
performance by the Company of the Transaction Documents will constitute a
violation of, or default under, any covenant, restriction or provision with
respect to financial ratios or tests or any aspect of the financial condition or
results of operations of the Company or any of its subsidiaries.

3.   No Governmental Approval, which has not been obtained or taken and is not
in full force and effect, is required to authorize, or is required for, the
execution or delivery of the Transaction Documents by the Company or the
consummation by the Company of the transactions contemplated thereby.

4.   Assuming (i) the accuracy of the representations and warranties of the
Company set forth in Section 3.1 of the Securities Purchase Agreement and of you
in Section 3.2 of the Securities Purchase Agreement, and (ii) the accuracy of
the representations and warranties made in the Accredited Investor
Questionnaire, the offer, sale and delivery of the Preferred Shares to you in
the manner contemplated by the Securities Purchase Agreement, do not require
registration under the Securities Act, and the Underlying Shares issuable to the
holders of the Preferred Shares in accordance with the Certificate of
Designations may be delivered to such holders without registration under the
Securities Act provided that no commission or other remuneration is paid or
given directly or indirectly for soliciting such conversion.

 

*   The opinion letter of Company Counsel will be subject to customary
limitations and carveouts.

 

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EXHIBIT F
Form of Secretary’s Certificate
The undersigned hereby certifies that he is the duly elected, qualified and
acting Secretary of Oriental Financial Group Inc., a financial holding company
and corporation organized in the Commonwealth of Puerto Rico (the “Company”),
and that as such he is authorized to execute and deliver this certificate in the
name and on behalf of the Company and in connection with the Securities Purchase
Agreement, dated as of April 23, 2010, by and among the Company and the
investors party thereto (the “Securities Purchase Agreement”), and further
certifies in his official capacity, in the name and on behalf of the Company,
the items set forth below. Capitalized terms used but not otherwise defined
herein shall have the meaning set forth in the Securities Purchase Agreement.

1.   Attached hereto as Exhibit A is a true, correct and complete copy of the
resolutions duly adopted by the Board of Directors of the Company at a meeting
held on [_______], 2010. Such resolutions have not in any way been amended,
modified, revoked or rescinded, have been in full force and effect since their
adoption to and including the date hereof and are now in full force and effect.

2.   The Company’s Certificate of Incorporation, as amended, were filed as an
Exhibit to the Form S-3 on April 2, 1999; its Bylaws were filed as an exhibit to
the 8-K filed with the SEC on June 23, 2008. Such Certificate of Incorporation,
as amended, and Bylaws, constitute true, correct and complete copies of the
Certificate of Incorporation, as amended, and Bylaws as in effect on the date
hereof.

3.   Each person listed below has been duly elected or appointed to the
position(s) indicated opposite his name and is duly authorized to sign the
Securities Purchase Agreement and each of the Transaction Documents on behalf of
the Company, and the signature appearing opposite such person’s name below is
such person’s genuine signature.

          Name   Position   Signature
 
       
 
       
 
       
 
       

 

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IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of this ___ day
of [____], 2010.
                                                            
[_____________]
Secretary
I, [_____________], [Chief Financial Officer], hereby certify that
[_____________] is the duly elected, qualified and acting Secretary of the
Company and that the signature set forth above is his true signature.
                                                            
[______________]
[Chief Financial Officer]

 

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EXHIBIT A
Resolutions
ORIENTAL FINANCIAL GROUP INC.
Authorization of Preferred Stock Private Placement and
Creation of Preferred Stock Pricing Committee
     WHEREAS, Oriental Financial Group Inc. (hereinafter referred to as the
“Corporation”) wants to authorize the issuance and private sale of up to
$200,000,000 in aggregate initial offering price of one or more series of the
Corporation’s preferred stock, $1.00 par value per share (hereinafter referred
to as the “Preferred Stock”).
     NOW, THEREFORE, BE IT RESOLVED, that the Corporation is hereby authorized
to issue and sell the Preferred Stock in one or more private transactions exempt
from registration under applicable laws; provided, however, that the Preferred
Stock shall have an aggregate initial offering price not exceeding the sum of
Two Hundred Million United States Dollars (US$200,000,000) or, if applicable,
the equivalent thereof in any other currency or currencies.
Authorized Officers; Registration Exemptions
     FURTHER RESOLVED, that José Rafael Fernández, President, Chief Executive
Officer and Vice Chairman of the Board, Julio Micheo, Senior Executive Vice
President, Treasurer and Chief Investment Officer, and Norberto González,
Executive Vice President and Chief Financial Officer (hereinafter collectively
referred to as the “Authorized Officers”), each acting singly be, and hereby
are, authorized, empowered and directed, in the name and on behalf of the
Corporation, to take any and all actions which they may deem necessary or
desirable in order to effect the registration exemptions of the Preferred Stock
for offering and sale under the United States federal securities laws, and the
Blue Sky or securities laws of the Commonwealth of Puerto Rico and any of the
States of the United States of America and, in connection therewith, to execute,
acknowledge, verify, deliver, file or cause to be established, in any case on
behalf of the Corporation, any applications, reports, consents to service of
process, appointments of attorneys to receive service of process, and other
papers, documents and instruments as may be required under such laws and to take
any and all further action as they deem necessary or advisable in order to
maintain any such registration exemption for as long as they deem necessary or
advisable or as may be required by law.
Transfer Agent
     FURTHER RESOLVED, that American Stock Transfer and Trust Company, be and
hereby is appointed as Transfer Agent and Registrar of the Preferred Stock and
said Transfer Agent and Registrar shall be vested with all powers and duties
with respect to the Preferred Stock as are presently vested or charged in its
capacities as Transfer Agent and Registrar with respect to the currently
outstanding shares of common stock and serial preferred stock of the
Corporation.

 

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Net Proceeds
     FURTHER RESOLVED, that the net proceeds from the sale of the Preferred
Stock be used for the purpose of acquiring certain assets and liabilities of a
failed bank from the Federal Deposit Insurance Corporation and related
transaction fees and expenses.
Indemnification
     FURTHER RESOLVED, that to the extent permitted by applicable law and not
prohibited by the Corporation’s Certificate of Incorporation, as amended, the
Corporation (i) shall indemnify and hold harmless each and every past and
present director and officer of the Corporation, and each attorney-in-fact of
such director or officer, against any and all losses, claims, damages or
liabilities to which such person may become subject under the Securities Act of
1933, as amended (hereinafter referred to as the “Securities Act”), the
Securities Exchange Act of 1934, as amended, any insurance, Blue Sky or
securities laws of the Commonwealth of Puerto Rico or of any State of the United
States of America or any comparable or similar laws of any other jurisdiction,
or otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise in connection with the offering and sale of the
Preferred Stock as contemplated herein or in connection with any filing under
such laws, or any amendments thereto; and (ii) shall reimburse each such person
for any legal or other expenses reasonably incurred by him or her in connection
with investigating or defending any such action or claim.
Form and Execution of Preferred Stock
     FURTHER RESOLVED, that the Authorized Officers be, and each of them acting
singly hereby is, authorized, empowered and directed, in the name and on behalf
of the Corporation, to execute, seal (or cause the Treasurer or Secretary, or
any Assistant Treasurer or Assistant Secretary, of the Corporation to seal) with
the seal of the Corporation (or facsimile thereof), and deliver, or cause to be
delivered, any certificates representing the shares of Preferred Stock as
authorized herein in such form as may be approved by any of the Authorized
Officers, which approval shall be conclusively evidenced by the execution by any
such Authorized Officer of an Officer’s Certificate with such form or forms of
Preferred Stock set forth therein or annexed thereto; and that the signatures of
any of the foregoing officers on the shares of Preferred Stock may be manual or
facsimile.
Restrictive Legends
     FURTHER RESOLVED, that any such certificates representing the shares of
Preferred Stock as authorized herein shall contain any and all required legends
evidencing that the Preferred Stock has not been registered under the Securities
Act and the Blue Sky or securities laws of the Commonwealth of Puerto Rico or of
any State of the United States of America, or any comparable or similar laws of
any other jurisdiction, and setting forth or referring to the restrictions on
transferability and sale of the Preferred Stock.

 

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General Enabling
     FURTHER RESOLVED, that the Authorized Officers be, and each of them acting
singly hereby is, authorized, empowered and directed, in the name and on behalf
of the Corporation to take, or cause to be taken, any and all action which each
such officer may deem necessary or desirable in order to carry out the purpose
and intent of the foregoing resolutions or in order to perform, or cause to be
performed, the obligations of the Corporation under any agreement referred to
herein, and, in connection therewith, to make, execute and deliver, or cause to
be made, executed and delivered, all agreements, undertakings, documents,
certificates, orders, requests or instruments in the name and on behalf of the
Corporation as each such officer may deem necessary or desirable and any such
action which they may have taken is hereby authorized and ratified.
Preferred Stock Pricing Committee
     FURTHER RESOLVED, that the Preferred Stock Pricing Committee be and hereby
is authorized and empowered, in the name and on behalf of the Corporation, to
determine the number of shares to be offered and sold hereunder, the offering
price or prices thereof, the fees to be paid to any placement agent or agents,
and the designations, preferences, rights, qualifications, limitations,
restrictions and other terms of the Preferred Stock in accordance herewith.
     FURTHER RESOLVED, that for the sale of the Preferred Stock, the Preferred
Stock Pricing Committee be and hereby is authorized, empowered and directed, in
the name and on behalf of the Corporation, to approve and cause to be executed
one or more private placement agreements, registration rights agreements, and
any other agreement or agreements that the Preferred Stock Pricing Committee may
deem necessary or appropriate in connection with the arrangements for the sale
and purchase of the Preferred Stock, and that the Authorized Officers be, and
each of them acting singly hereby is, authorized to execute and deliver in the
name and on behalf of the Corporation any such agreement or agreements in
substantially the form approved by the Preferred Stock Pricing Committee with
such changes therein, additions thereto, and deletions therefrom as the
Authorized Officer executing the same may approve, as conclusively evidenced by
the execution and delivery thereof.
     FURTHER RESOLVED, that José Rafael Fernández, Vice Chairman of the Board,
be and hereby is appointed as the sole member of the Preferred Stock Pricing
Committee, and shall be authorized to exercise such corporate power and
authority with respect to the issuance of the Preferred Stock as was delegated
to the Preferred Stock Pricing Committee in the foregoing resolutions.
     FURTHER RESOLVED, that José J. Gil Lamadrid, Chairman of the Board, be and
hereby is appointed as the alternate member of the Preferred Stock Pricing
Committee, who may act in place of Mr. Fernández but only if Mr. Fernández is
absent or otherwise not able to discharge the powers delegated to the Preferred
Stock Pricing Committee with respect to the issuance of the Preferred Stock.

 

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     IN WITNESS WHEREOF, the members of the Board of Directors of the
Corporation hereby approve, execute and deliver this Resolution by unanimous
consent in lieu of meeting as of April 21, 2010.

      SIGNATURE   TITLE
 
   
/s/ José J. Gil de Lamadrid
 
José J. Gil de Lamadrid
  Chairman 
 
   
/s/ José Rafael Fernández
 
José Rafael Fernández
  President, Chief Executive Officer and Vice Chairman
 
   
/s/ Juan Carlos Aguayo
 
Juan Carlos Aguayo
  Director 
 
   
/s/ Pablo I. Altieri
 
Pablo I. Altieri
  Director 
 
   
/s/ Maricarmen Aponte
 
Maricarmen Aponte
  Director 
 
   
/s/ Francisco Arriví
 
Francisco Arriví
  Director 
 
   
/s/ Nelson García
 
Nelson García
  Director 
 
   
/s/ Julian S. Inclán
 
Julian S. Inclán
  Director 
 
   
/s/ Rafael Machargo-Chardón
 
Rafael Machargo-Chardón
  Director 

 

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      SIGNATURE   TITLE
 
   
/s/ Pedro Morazzani
 
Pedro Morazzani
  Director 
 
   
/s/ Josen Rossi
 
Josen Rossi
  Director 

 

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EXHIBIT B
Certificate of Incorporation
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
ORIENTAL FINANCIAL GROUP INC
     FIRST: The name of the corporation (hereinafter called the Corporation) is
“Oriental Financial Group Inc.”
     SECOND: The principal office of the Corporation in the Commonwealth of
Puerto Rico is located at Hato Rey Tower, 268 Muñoz Rivera Avenue, Suite 501,
Hato Rey, Puerto Rico in the Municipality of San Juan, Puerto Rico. The name of
the resident agent of the Corporation is CT Corporation System and its address
is 361 San Francisco Street, 4th Floor, San Juan, Puerto Rico 00901.
     THIRD: The purpose of the Corporation is to engage, for profit, in any
lawful act or activity for which a corporation may be organized under the
General Corporation Law of the Commonwealth of Puerto Rico.
     FOURTH: The authorized capital of the Corporation shall be FORTY FIVE
MILLION DOLLARS ($45,000,000) represented by FORTY MILLION (40,000,000) shares
of common stock, $1.00 par value per share, and FIVE MILLION (5,000,000) shares
of preferred stock, $1.00 par value per share. The shares may be issued by the
Corporation from time to time as authorized by the Board of Directors without
the further approval of shareholders, except to the extent that such approval is
required by governing law, rule or regulation.
     The Board of Directors is expressly authorized to provide, when it deems
necessary, for the issuance of shares of preferred stock in one or more series,
with such voting powers, full or limited, but not to exceed one vote per share,
or without voting powers; and with such designations, preferences, rights,
qualifications, limitations or restrictions thereof, as shall be expressed in
the resolution or resolutions of the Board of Directors, authorizing such
issuance, including (but without limiting the generality of the foregoing) the
following:
     (a) the designation of such series, the number of shares to constitute such
series and the stated value thereof if different from the par value thereof;
     (b) the dividend rate of such series, the conditions and dates upon which
the dividends shall be payable, the preference or relation which such dividends
shall bear to the dividends payable on any other class or classes of capital
stock of the Corporation, and whether such dividends shall be cumulative or
non-cumulative;

 

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     (c) whether the shares of such series shall be subject to redemption by
Corporation, and if made subject to such redemption, the terms and conditions of
such redemption;
     (d) the terms and amount of any sinking fund provided for the purchase or
redemption of the shares of such series;
     (e) whether the shares of such series shall be convertible and if provision
be made for conversion, the terms of such conversion;
     (f) the extent, if any, to which the holders of such shares shall be
entitled to vote; provided, however, that in no event, shall any holder of any
series of preferred stock be entitled to more than one vote for each such share;
     (g) the restrictions and conditions, if any, upon the issue or re-issue of
any additional preferred stock ranking on a parity with or prior to such shares
as to dividends or upon dissolution;
     (h) the rights of the holders of such shares upon dissolution of, or upon
distribution of assets of the Corporation, which rights may be different in the
case of a voluntary dissolution; and
     (i) any other powers, preferences and relative, participating, optional and
other special rights, and any qualifications, limitations and restrictions
thereof.
     The powers, preferences and relative, participating, optional and other
special rights, of each series of preferred stock, and the qualifications,
limitations or restrictions thereof, if any, may differ from those of any and
all other series at any time outstanding. All shares of any one series of
preferred stock shall be identical in all respects with all other shares of such
series, except that shares of any one series issued at different times may
differ as to the dates from which dividends thereon shall accrue and/or be
cumulative.
     FIFTH: No holder of the capital stock of the Corporation shall be entitled
as such, as a matter of right, to subscribe for or purchase any part of any new
or additional issue of stock of any class whatsoever of the Corporation, or of
securities convertible into stock of any class whatsoever, whether now or
hereafter authorized, or whether issued for cash or other consideration or by
way of a dividend.
     SIXTH: The name, place of residence and postal address of the sole
incorporator are as follows:

 

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          Name Place of Residence and Postal Address
Pedro Maldonado
  Carretera 971
 
  Kilómetro 12.2
 
  Barrio Sonadora
 
  Naguabo, Puerto Rico
 
       
 
  P.O. Box 364225
 
  San Juan, Puerto Rico 00936-4225

     SEVENTH: The Corporation is to have perpetual existence.
     EIGHTH: For the management of the business and for the conduct of the
affairs of the Corporation, and in further creation, definition, limitation and
regulation of the powers of the Corporation and of its directors and
stockholders, it is further provided:
     1. Directors and Number of Directors. The business and affairs of the
Corporation shall be managed by or under the direction of a Board of Directors.
The number of directors of the Corporation shall be fixed by, or in the manner
provided in, the by-laws. The directors of the Corporation need not be
stockholders.
     2. Classification and Term. The Board of Directors, other than those who
may be elected by the holders of any class or series of stock having preference
over the Common Stock as to dividends or upon liquidation, shall be divided into
three classes as nearly equal in number as possible, with one class to be
elected annually. The term of office of the initial directors shall be as
follows: the term of directors of the first class shall expire at the first
annual meeting of stockholders after the effective date of this Certificate of
Incorporation; the term of office of the directors of the second class shall
expire at the second annual meeting of stockholders after the effective date of
this Certificate of Incorporation; and the term of office of the third class
shall expire at the third annual meeting of stockholders after the effective
date of this Certificate of Incorporation; and, as to directors of each class,
when their respective successors are elected and qualified. At each annual
meeting of stockholders, directors elected to succeed those whose terms are
expiring shall be elected for a term of office to expire at the third succeeding
annual meeting of stockholders and when their respective successors are elected
and qualified.
     3. Cumulative Voting. At each annual meeting of stockholders in which more
than one director is being elected, every stockholder entitled to vote at such
election shall have the right to vote, in person or by proxy, the number of
shares owned by the stockholder for as many persons as there are directors to be
elected and for whose election the stockholder has a right to vote, or to
cumulate the votes by giving one candidate as many votes as the number of such
directors to be elected multiplied by the number of his shares shall equal, or
by distributing such votes on the same principle among any number of candidates.

 

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     4. Vacancies. Except as otherwise fixed pursuant to the provisions of
Article FOURTH hereof relating to the rights of the holders of any class or
series of stock having a preference over the Common Stock as to dividends or
upon liquidation to elect directors, any vacancy occurring in the Board of
Directors, including any vacancy created by reason of an increase in the number
of directors, may be filled by a majority vote of the directors then in office,
whether or not a quorum is present, or by a sole remaining director, and any
director so chosen shall hold office for the remainder of the term to which the
director has been selected and until such director’s successor shall have been
elected and qualified. When the number of directors is changed, the Board of
Directors shall determine the class or classes to which the increased or
decreased number of directors shall be apportioned; provided that no decrease in
the number of directors shall shorten the term of any incumbent director.
     5. Removal. Subject to the rights of any class or series of stock having
preference over the Common Stock as to dividends or upon liquidation to elect
directors, any director (including persons elected by directors to fill
vacancies in the Board of Directors) may be removed from office only with cause
by an affirmative vote of not less than a majority of the votes eligible to be
cast by stockholders at a duly constituted meeting of stockholders called
expressly for such purpose.
     6. By-Laws. The Board of Directors is expressly authorized and empowered to
make, alter and repeal the by-laws of the Corporation, subject to the power of
the stockholders to alter or repeal the by-laws made by the Board of Directors.
Such action by the Board of Directors shall require the affirmative vote of a
majority of the directors then in office at any regular or special meeting of
the Board of Directors. Such action by the stockholders shall require the
affirmative vote of the holders of a majority of the shares of the Corporation
entitled to vote generally in an election of directors, voting together as a
single class, as well as such additional vote of the preferred stock as may be
required by the provisions of any series thereof.
     NINTH: The personal liability of the directors and officers of the
Corporation for monetary damages shall be eliminated to the fullest extent
permitted by the General Corporation Law of the Commonwealth of Puerto Rico as
it exists on the effective date of this Certificate of Incorporation or as such
law may be thereafter in effect. No amendment, modification or repeal of this
Article NINTH shall adversely affect the rights provided hereby with respect to
any claim, issue or matter in any proceeding that is based in any respect on any
alleged action or failure to act prior to such amendment, modification or
repeal.
     TENTH: The affirmative vote of the holders of not less than seventy-five
percent (75%) of the total number of outstanding shares of the Corporation shall
be required to amend this Article TENTH to the extent that such amendment is not
approved by eighty percent (80%) of the Corporation’s Board of Directors then in
office; to approve any Business Combination for which stockholder approval is
required by applicable law to the extent that such Business Combination is not
approved by eighty percent (80%) of the Corporation’s Board of Directors then in
office; or to approve the voluntary dissolution of the Corporation to the extent
that such dissolution is not approved by eighty percent (80%) of the
Corporation’s Board of Directors then in office, notwithstanding that applicable
law would otherwise permit any of the above with the approval of fewer shares or
without the approval of any shares.

 

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     For purposes of this Article TENTH, the term “Business Combination” shall
mean:
     (a) a merger, reorganization, or consolidation in which the Corporation is
a constituent corporation; or
     (b) the sale, lease, or hypothecation of substantially all the assets of
the Corporation.

 

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EXHIBIT C
Bylaws
BY-LAWS OF
ORIENTAL FINANCIAL GROUP INC.
ARTICLE I.
STOCKHOLDERS
     SECTION 1. Place of Meetings. All annual and special meetings of
stockholders shall be held at the principal office of the Corporation or at such
other place as the Board of Directors may determine.
     SECTION 2. Annual Meeting. A meeting of the stockholders of the Corporation
for the election of directors and for the transaction of any other business of
the Corporation shall be held annually after the end of the Corporation’s fiscal
year at such date and time as the Board of Directors may determine in accordance
with applicable laws and regulations.
     SECTION 3. Special Meeting. Special meetings of stockholders, for any
purpose(s), may be called at any time by the Chairman, the Vice Chairman, the
President or by the Board of Directors, and shall be called by the Chairman or
the Vice Chairman of the Board, the President or the Secretary upon the written
request of the holders of not less than twenty percent (20%) of the paid-in
capital of the Corporation entitled to vote at the meeting. The written request
specified above shall state the purpose(s) of the meeting and shall be delivered
at the principal office of the Corporation addressed to the Chairman or the Vice
Chairman of the Board, the President or the Secretary.
     SECTION 4. Conduct of Meetings. The Board of Directors shall designate,
when present, the Chairman of the Board or, if he or she is not present, the
Vice Chairman of the Board, to preside at any and all stockholders’ meetings.
     SECTION 5. Notice of Meetings. Notice of all meetings of stockholders shall
be mailed to each stockholder of the Corporation at least ten (10) days, but not
more than sixty (60) days, prior to the date for each such meeting.
     SECTION 6. Fixing of Record Date. For the purpose of determining
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, or stockholders entitled to receive payment of any
dividend, or in order to make a determination of stockholders for any other
proper purpose, the Board of Directors shall fix in advance a date as the record
date for any such determination of stockholders. Such date in any case shall be
not more than sixty (60) days nor less than ten (10) days prior to the date on
which the particular action, requiring such determination of stockholders, is to
be taken. When a determination of

 

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stockholders entitled to vote at any meeting of stockholders has been made as
provided in this Section 6, such determination shall apply to any adjournment
thereof.
     SECTION 7. Voting Lists. At least ten (10) days before each meeting of the
stockholders, the officer or agent having charge of the stock transfer books for
shares of the Corporation shall make a complete list of the stockholders
entitled to vote at such meeting, or any adjournment thereof, arranged in
alphabetical order, with the address of and the number of shares held by each.
This list of stockholders shall be kept on file at the principal office of the
Corporation and shall be subject to inspection by any stockholder at any time
during normal business hours for a period of ten (10) days prior to such
meeting. Such list shall also be produced and kept open at the time and place of
the meeting and shall be subject to the inspection of any stockholder during the
entire time of the meeting. The original stock transfer book shall constitute
prima facie evidence of the stockholders entitled to examine such list or
transfer books or to vote at any meeting of stockholders.
     SECTION 8. Quorum; Manner of Acting. A majority of the outstanding shares
of the Corporation entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of stockholders. If less than a majority of the
outstanding shares is represented at a meeting, a majority of the shares so
represented may adjourn the meeting from time to time without further notice;
provided that the date of the adjourned meeting shall not be more than thirty
(30) days after the date for which the first meeting was called. At such
adjourned meeting at which a quorum shall be present or represented, any
business may be transacted which might have been at the meeting as originally
notified. The stockholders present at a duly organized meeting may continue to
transact business until adjournment, notwithstanding the withdrawal of enough
stockholders to leave less than a quorum.
     Except as otherwise provided in the Corporation’s Certificate of
Incorporation or under applicable law, in all matters other than the election of
directors, the affirmative vote of the majority of shares present in person or
represented by proxy at the meeting and entitled to vote on the subject matter
shall be the act of the stockholders. Directors shall be elected by a plurality
of the votes of the shares present in person or represented by proxy at the
meeting and entitled to vote on the election of directors (which number shall
take into account the cumulation as votes as provided in the Corporation s
Certificate of Incorporation and Article I, Section 11 of these By-laws). If, at
any meeting of the stockholders, due to a vacancy or vacancies or otherwise,
directors of more than one class of the Board of Directors are to be elected,
each class of directors to be elected at the meeting shall be elected in a
separate election by a plurality vote.
     SECTION 9. Proxies. At all meetings of stockholders, a stockholder may vote
by proxy executed in writing by the stockholder or by his or her duly authorized
attorney in fact. Proxies solicited on behalf of the management shall be voted
as directed by the stockholder or, in the absence of such direction, as
determined by a majority of the Board of Directors. Proxies must be filed with
the Secretary of the Corporation.
     SECTION 10. Voting of Shares by Certain Holders. Shares standing in the
name of another corporation may be voted by any officer, agent or proxy as the
by-laws of such corporation may prescribe, or, in the absence of such provision,
as the board of directors of such

 

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corporation may determine. Shares held by an administrator, executor, guardian
or conservator may be voted by him or her, either in person or by proxy, without
a transfer of such shares into his or her name. Shares standing in the name of a
trustee may be voted by him or her, either in person or by proxy, but no trustee
shall be entitled to vote shares held by him or her without a transfer of such
shares into his or her name. Shares standing in the name of a receiver may be
voted by such receiver, and shares held by or under the control of a receiver
may be voted by such receiver without the transfer thereof into his or her name
if authority to do so is contained in an appropriate order of the court or other
public authority by which such receiver was appointed.
          A stockholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledgee, and
thereafter the pledgee shall be entitled to vote the shares so transferred.
     SECTION 11. Cumulative Voting. At each annual meeting of stockholders in
which more than one director is being elected, every stockholder entitled to
vote at such election shall have the right to vote, in person or by proxy, the
number of shares owned by the stockholder for as many persons as there are
directors to be elected and for whose election the stockholder has a right to
vote, or to cumulate the votes by giving one candidate as many votes as the
number of such directors to be elected multiplied by the number of his or her
shares shall equal, or by distributing such votes on the same principle among
any number of candidates.
     SECTION 12. Inspector of Election. In advance of any meeting of
stockholders, the Chairman of the Board of Directors may appoint any person(s)
other than nominees for office as inspectors of election to act at such meeting
or any adjournment thereof. Any such appointment shall not be altered at the
meeting. If the inspector(s) of election is (are) not so appointed, the Chairman
of the Board or, if he or she is not present at the meeting, the Vice Chairman
of the Board, may, and at the request of not fewer than ten percent (10%) of the
votes represented at the meeting shall, make such appointment at the meeting. In
case any person(s) appointed as inspector(s) fail(s) to appear or fail(s) or
refuse(s) to act, the vacancy may be filled by appointment by the Chairman of
the Board in advance of the meeting or at the meeting, or, if he or she is not
present at the meeting, by the Vice Chairman of the Board.
          The duties of such inspectors shall include: determining the number of
shares of stock and the voting power of each share, the shares of stock
represented at the meeting, the existence of a quorum, the authenticity,
validity and effect of proxies; receiving votes, ballots or consents; hearing
and determining all challenges and questions in any way arising in connection
with the right to vote; counting and tabulating all votes or consents;
determining the result; and such acts as may be proper to conduct the election
or vote with fairness to all stockholders.
     SECTION 13. Nominations for Directors. The Corporate Governance and
Nominating Committee (the “Nominating Committee”) of the Board of Directors
shall recommend to the Board of Directors the selection of management nominees
for election as directors. Except in the case of a nominee substituted as a
result of the death or other incapacity of a management nominee, the Board of
Directors, upon the recommendation of the Nominating Committee, shall deliver
written nominations to the Secretary of the Corporation at least twenty
(20) days prior to the date of the annual meeting. No nominations for directors,
except those made by the Board of

 

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Directors upon the recommendation of the Nominating Committee, shall be voted
upon at the annual meeting unless other nominations by stockholders are made in
writing, together with the nominee’s qualifications for service and evidence of
his or her willingness to serve on the Board of Directors, and delivered to the
Secretary of the Corporation at least one hundred and twenty (120) days prior to
the anniversary date of the mailing of proxy materials by the Corporation in
connection with the immediately preceding annual meeting. Ballots bearing the
names of all the persons nominated by the Board of Directors and by stockholders
shall be provided for use at the annual meeting. However, if the Board of
Directors or the Nominating Committee shall fail or refuse to act at least
twenty (20) days prior to the annual meeting, nominations for directors may be
made at the annual meeting by any stockholder entitled to vote and shall be
voted upon.
     SECTION 14. Proposals. At an annual meeting of the stockholders, only such
business shall be conducted as shall have been properly brought before the
meeting. To be properly brought before an annual meeting, business must be
(a) specified in the notice of meeting (or any supplement thereto) given by or
at the direction of the Board of Directors, or (b) otherwise properly brought
before the meeting by a stockholder. For business to be properly brought before
an annual meeting by a stockholder, the stockholder must have given timely
notice thereof in writing to the Secretary of the Corporation. To be timely a
stockholder’s notice must be delivered to or mailed and received at the
principal executive offices of the Corporation not later than one hundred twenty
days (120) prior to the anniversary date of the mailing of proxy materials by
the Corporation in connection with the immediately preceding annual meeting of
stockholders of the Corporation. A stockholder’s notice to the Secretary shall
set forth as to each matter the stockholder proposes to bring before the annual
meeting (i) a brief description of the business desired to be brought before the
annual meeting, (ii) the name and address, as they appear on the Corporation’s
books, of the stockholder proposing such business, (iii) the class and number of
shares of the Corporation which are beneficially owned by the stockholder, and
(iv) any material interest of the stockholder in such business. The chairman of
an annual meeting shall, if the facts warrant, determine and declare to the
meeting that business was not properly brought before the meeting in accordance
with the provisions of this Article I, Section 14, and if he or she should so
determine, he or she shall so declare to the meeting and any such business not
properly brought before the meeting shall not be transacted. This provision is
not a limitation on any other applicable laws and regulations.
ARTICLE II.
BOARD OF DIRECTORS
     SECTION 1. General Powers. The business and affairs of the Corporation
shall be under the direction of the Board of Directors which shall annually
elect a Chairman and a Vice Chairman from among its members and shall designate,
when present, the Chairman or, if he or she is not present, the Vice Chairman to
preside at its meetings. The Chairman of the Board shall have such other duties
as set forth in these By-laws or as may from time to time be assigned by the
Board of Directors. The Vice Chairman of the Board shall assist the Chairman of
the Board in the performance of his or her duties and shall have such other
duties as set forth in these By-laws or as may from time to time be assigned by
the Board of Directors or the Chairman of the Board.

 

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     SECTION 2. Classification and Term. The Board of Directors shall be divided
into three classes as nearly equal in number as possible. The term of office of
the initial directors shall be as follows: the term of directors of the first
class shall expire at the first annual meeting of stockholders after the
effective date of the Corporation’s Certificate of Incorporation; the term of
office of the directors of the second class shall expire at the second annual
meeting of stockholders after the effective date of the Corporation’s
Certificate of Incorporation; and the term of office of the third class shall
expire at the third annual meeting of stockholders after the effective date of
the Corporation’s Certificate of Incorporation; and as to directors of each
class, when their respective successors are elected and qualified. At each
annual meeting of stockholders, directors elected to succeed those whose terms
are expiring shall be elected for a term of office to expire at the third
succeeding annual meeting of stockholders and when their respective successors
are elected and qualified. No director shall be elected, re-elected or nominated
for election or re-election, as the case may be, after attaining the age of
seventy-one (71). Also, the term of a director shall end upon attaining the age
of seventy-one (71). In such case, the Board of Directors shall elect a
replacement to serve the remainder of his or her term as director.
     SECTION 3. Number of Directors. The Board of Directors shall consist of
such number of directors as established from time to time by a vote of a
majority of the Board of Directors, provided that no decrease in the number of
directors shall have the effect of shortening the term of any incumbent
director.
     SECTION 4. Meetings. All meetings of the Board of Directors may be held in
or outside Puerto Rico.
     SECTION 5. Special Meetings. Special meetings of the Board of Directors may
be called by or at the request of the Chairman or the Vice Chairman of the
Board, the President, or one-third of the members of the Board. Such meetings
shall be held at such place as the person(s) calling the meeting shall
designate.
     SECTION 6. Notice. Written notice of any special meeting shall be given to
each director at least two (2) days previous thereto if delivered personally or
by fax or electronic mail, or at least five (5) days previous thereto if
delivered by postal mail at the address at which the director is most likely to
be reached. Such notice shall be deemed to be delivered when deposited in the
U.S. postal mail so addressed, with postage thereon prepaid if mailed or when
delivered if sent by fax or electronic mail. Any director may waive notice of
any meeting by a writing filed with the Secretary. The attendance of a director
at a meeting shall constitute a waiver of notice of such meeting, except where a
director attends a meeting for the express purpose of objecting to the
transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
meeting of the Board of Directors need be specified in the notice or waiver of
notice of such meeting.
     SECTION 7. Quorum. A majority of the directors shall constitute a quorum
for the transaction of business at any meeting of the Board of Directors, but if
less than such majority is present at a meeting, a majority of the directors
present may adjourn the meeting from time to

 

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time. Notice of any adjourned meeting shall be given in the same manner as
prescribed by Section 6 of this Article II.
     SECTION 8. Manner of Acting. The act of the majority of the directors
present at a meeting at which a quorum is present shall be the act of the Board
of Directors, unless a greater number is prescribed by applicable laws or
regulations or by these By-laws.
     SECTION 9. Resignation. Any director may resign at any time by sending a
written notice of such resignation to the principal office of the Corporation
addressed to the Chairman or the Vice Chairman of the Board. Unless otherwise
specified therein, such resignation shall take effect upon receipt thereof by
the Chairman or the Vice Chairman of the Board.
     SECTION 10. Vacancies. All vacancies in the Board of Directors shall be
filled in the manner provided in the Corporation’s Certificate of Incorporation.
     SECTION 11. Removal of Directors. Directors may be removed in the manner
provided in the Corporation’s Certificate of Incorporation.
     SECTION 12. Action by Directors Without a Meeting. Any action required or
which may be taken at a meeting of the directors, or of a committee thereof, may
be taken without a meeting if a consent in writing, setting forth the action so
taken or to be taken, shall be signed by all of the directors, or all of the
members of the committee, as the case may be, and such consents are filed with
the minutes of proceedings of the Board of Directors or committee, as the case
may be. Such consent shall have the same effect as a unanimous vote.
     SECTION 13. Action by Directors by Communications Equipment. Any action
required or which may be taken at a meeting of directors, or of a committee
thereof, may be taken by means of a conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other at the same time.
     SECTION 14. Compensation. The Board of Directors may fix, from time to
time, a reasonable fee to be paid to each director for his or her services in
attending meetings of the Board of Directors or of any authorized committee. The
Board of Directors may also provide that such compensation as it deems
reasonable shall be paid to any or all of its members for services rendered to
the Corporation other than attendance at meetings of the Board of Directors or
its committees.
ARTICLE III.
EXECUTIVE AND OTHER COMMITTEES
     SECTION 1. Appointment. The Board of Directors, by resolution adopted by a
majority of the full Board, may, from time to time appoint, any number of
committees, composed of one (1) or more directors as the Board may determine.

 

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     SECTION 2. Authority. These committees shall and may exercise those powers
that the Board of Directors may so delegate and shall have the name or names
that from time to time the Board of Directors may determine by resolution.
     SECTION 3. Minutes, Reports. Minutes shall be kept of all meetings of the
committees. The minutes of each meeting, together with such reports in writing
as may be required to fully explain any business or transactions, shall be
submitted for information purposes to the Board of Directors at the next regular
meeting of the Board of Directors. The Board of Directors shall record such
action in the minutes of such meeting.
     SECTION 4. Appointment, Term of Office. Members of the committees shall be
appointed by the Board for such term as the Board may determine, and all members
of the committees shall serve at the pleasure of the Board.
     SECTION 5. Quorum. A majority of the members of any committee shall
constitute a quorum. A majority of the votes cast shall decide every question or
matter submitted to a committee.
ARTICLE IV.
OFFICERS
     SECTION 1. Positions. The officers of the Corporation shall be a President,
one or more Vice Presidents, a Secretary, an Assistant Secretary, and a
Treasurer, each of whom shall be elected by the Board of Directors. The Board of
Directors may designate one or more Vice Presidents as Executive Vice President
or Senior Vice President. The Board of Directors may also elect or authorize the
appointment of such other officers as the business of the Corporation may
require. The officers shall have such authority and perform such duties as the
Board of Directors may from time to time authorize or determine. In the absence
of action by the Board of Directors, the officers shall have such powers and
duties as generally pertain to their respective offices.
     SECTION 2. Election and Term of Office. The officers of the Corporation
shall be elected annually at the first meeting of the Board of Directors held
after the annual meeting of the stockholders.
          If the election of officers is not held at such meeting, such election
shall be held as soon thereafter as possible. Each officer shall hold office
until a successor has been duly elected and qualified or until the officer’s
death, resignation or removal in the manner hereinafter provided. Election or
appointment of an officer, employee or agent shall not of itself create
contractual rights. The Board of Directors may authorize the Corporation to
enter into an employment contract with any officer in accordance with
regulations of the Board, but no such contract shall impair the right of the
Board of Directors to remove any officer at any time in accordance with
Section 3 of this Article IV.

 

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     SECTION 3. Removal. Any officer may be removed by the Board of Directors
whenever, in its judgment, the best interests of the Corporation will be served
thereby, but such removal, other than for cause, shall be without prejudice to
the contractual rights, if any, of the person so removed.
     SECTION 4. Vacancies. A vacancy in any office because of death,
resignation, removal, disqualification or otherwise, may be filled by the Board
of Directors for the unexpired portion of the term.
     SECTION 5. Remuneration. The remuneration of the officers shall be fixed
from time to time by the Board of Directors.
ARTICLE V.
CONTRACTS, LOANS, CHECKS AND DEPOSITS
     SECTION 1. Contracts. To the extent permitted by applicable laws and
regulations, and except as otherwise prescribed by these By-laws with respect to
certificates for shares, the Board of Directors may authorize any officer,
employee or agent of the Corporation to enter into any contract or execute and
deliver any instrument in the name and on behalf of the Corporation. Such
authority may be general or confined to specific instances.
     SECTION 2. Loans. No loans shall be contracted on behalf of the Corporation
and no evidence of indebtedness shall be issued unless authorized by the Board
of Directors. Such authority may be general or confined to specific instances.
     SECTION 3. Checks, Drafts. All checks, drafts or other orders for the
payment of money, notes and other evidences of indebtedness issued in the name
of the Corporation shall be signed by one or more officers, employees or agents
of the Corporation in such manner as shall from time to time be determined by
the Board of Directors.
     SECTION 4. Deposits. All funds of the Corporation not otherwise employed
shall be deposited from time to time to the credit of the Corporation in any one
of its authorized depositories as the Board of Directors select.
ARTICLE VI.
STOCK AND STOCK CERTIFICATES
     SECTION 1. Transfer. Shares of stock shall be transferable on the books of
the Corporation, and a transfer book shall be kept in which all transfer of
stock shall be recorded. Every person becoming a stockholder by such transfer
shall, in proportion to his or her shares, succeed to all rights and liabilities
of the prior holder of such shares.
     SECTION 2. Stock Certificates. Certificates of stock shall bear the
signature of the Chairman or the Vice Chairman of the Board, the President or
any Vice President (which may be

 

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engraved, printed or impressed), and shall be signed manually or by facsimile
process by the Secretary or an Assistant Secretary, or any other officer
appointed by the Board of Directors for that purpose, to be known as an
Authorized Officer, and the seal of the Corporation shall be engraved thereon.
     SECTION 3. Owner of Record, Attachment, Pledge. Shares of stock are
transferable by all means recognized by law, if there is no attachment levied
against them under competent authority, but as long as the transfer is not
signed and recorded in the transfer books the Corporation shall be entitled to
consider as owner thereof the party who appears as such in said books.
     SECTION 4. Lost or Destroyed Stock Certificates. In the event any
certificate of stock shall be lost or destroyed the Board may order a new
certificate to be issued in its place upon receiving such proof of loss and such
bond of indemnity therefore as may be satisfactory to the Board of Directors.
New certificates may be issued without requiring any bond when in the judgment
of the Board it is proper to do so.
     SECTION 5. Transfer Agent. The Board of Directors may designate any person,
whether or not an officer of the Corporation, as stock transfer agent or
registrar of the Corporation with respect to Stock Certificates or other
securities issued by the Corporation.
ARTICLE VII.
INDEMNIFICATION, ETC., OF DIRECTORS,
OFFICERS, EMPLOYEES AND AGENTS
     SECTION 1. Indemnification.
          (a) The Corporation shall indemnify, to the fullest extent authorized
by the General Corporation Law of the Commonwealth of Puerto Rico, any person
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of the
Corporation) by reason of the fact that he or she is or was a director, officer,
employee, or agent of the Corporation, or is or was serving at the written
request of the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys’ fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him or her in connection with
such action, suit or proceeding if he or she acted in good faith and in a matter
he or she reasonably believed to be in or not opposed to the best interests of
the Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his or her conduct was unlawful, provided that the
Corporation shall not be liable for any amounts which may be due to any person
in connection with a settlement of any action, suit or proceeding effected
without its prior written consent or any action, suit or proceeding initiated by
any person seeking indemnification hereunder without its prior written consent.
The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the person did not act

 

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in good faith and in a manner which he or she reasonably believed to be in or
not opposed to the best interests of the Corporation and, with respect to any
criminal action or proceeding, had reasonable cause to believe that his or her
conduct was unlawful.
          (b) The Corporation shall indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the Corporation to procure a judgment in
its favor by reason of the fact that he or she is or was a director, officer,
employee, or agent of the Corporation, or is or was serving at the written
request of the Corporation as a director, officer, employee, or agent of another
corporation, partnership, joint venture, trust or other enterprise against
expenses (including attorneys’ fees) actually and reasonably incurred by him or
her in connection with the defense or settlement of such action or suit if he or
she acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Corporation, except that no indemnification
shall be made in respect of any claim, issue or matter as to which such person
shall have been adjudged to be liable for negligence or misconduct in the
performance of his or her duty to the Corporation unless and only to the extent
that the court in which such action or suit was brought shall determine upon
application that, despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expense which such court shall deem proper.
          (c) To the extent that a director, officer, employee, or agent of the
Corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in Section 1(a) or Section 1(b) of this
Article VII, or in defense of any claim, issue or matter therein, he or she
shall be indemnified against expenses (including attorneys’ fees) actually and
reasonably incurred by him or her in connection therewith.
          (d) Any indemnification under Section 1(a) or Section 1(b) of this
Article VII (unless ordered by a court) shall be made by the Corporation only as
authorized in the specific case upon a determination that indemnification of the
director, officer, employee or agent is proper in the circumstances because he
or she has met the applicable standard of conduct set forth therein. Such
determination shall be made (a) by the Board of Directors by a majority vote of
a quorum consisting of directors who were not parties to such action, suit or
proceeding, or (b) if such a quorum is not obtainable, or, even if obtainable a
quorum of disinterested directors so directs, by independent legal counsel in a
written opinion, or (c) by the stockholders.
          (e) The Corporation shall not be liable for any amounts which may be
due to any person in connection with a settlement of any action, suit or
proceeding initiated by any person seeking indemnification under this
Article VII without its prior written consent.
     SECTION 2. Advancement of Expenses. Reasonable expenses (including
attorneys’ fees) incurred in defending a civil or criminal action, suit or
proceeding described in Section 1 of this Article VII may be paid by the
Corporation in advance of the final disposition of such action, suit or
proceeding as authorized by the Board of Directors in the specific case upon
receipt of an undertaking by or on behalf of the director or officer to repay
such amount unless it shall ultimately be determined that he or she is entitled
to be indemnified by the Corporation as authorized in this Article VII.

 

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     SECTION 3. Other Rights and Remedies. The indemnification and advancement
of expenses provided by, or granted pursuant to, this Article VII shall not be
deemed exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any statute, by-law, agreement,
vote of stockholders or disinterested directors or otherwise, both as to actions
in their official capacity and as to actions in another capacity while holding
such office, and shall continue as to a person who has ceased to be a director,
officer, employee, or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
     SECTION 4. Insurance. By action of its Board of Directors, notwithstanding
any interest of the directors in the action, the Corporation may purchase and
maintain insurance, in such amounts as the Board of Directors deems appropriate,
on behalf of any person who is or was a director, officer, employee or agent of
the Corporation, or is or was serving at the written request of the Corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against any liability asserted against
him or her and incurred by him or her in any such capacity, or arising out of
his or her status as such, whether or not the Corporation would have the power
or would be required to indemnify him or her against such liability under the
provisions of this Article VII or of the General Corporation Law of the
Commonwealth of Puerto Rico, or of the laws of any other State or political
dependency of the United States or foreign country as may be applicable.
     SECTION 5. Modification. The duties of the Corporation to indemnify and to
advance expenses to a director, officer, employee or agent provided in this
Article VII shall be in the nature of a contract between the Corporation and
each such person, and no amendment or repeal of any provision of this
Article VII shall alter, to the detriment of such person, the right of such
person to the advance of expenses or indemnification related to a claim based on
an act or failure to act which took place prior to such amendment or repeal.
ARTICLE VIII.
CORPORATE SEAL
     The corporate seal of the Corporation shall be in such form and bear such
inscription as may be adopted by resolution of the Board of Directors, or by
usage of the officers on behalf of the Corporation.
ARTICLE IX.
MISCELLANEOUS PROVISIONS
     SECTION 1. Fiscal Year. The fiscal year of the Corporation shall be from
January 1 to December 31 of each year.

 

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     SECTION 2. Dividends. The Board of Directors may from time to time declare,
and the Corporation may pay dividends in cash or in shares of the capital stock
of the Corporation, in the manner and upon the terms and conditions provided by
applicable laws and regulations.
     SECTION 3. Conflict with New Laws. The provisions of these By-laws in
conflict with any and all new statutes shall become revoked without affecting
the validity of the remaining provisions hereof.
     SECTION 4. Books and Records. The Corporation shall keep correct and
complete books and records of account and shall keep minutes and proceedings of
its stockholders and Board of Directors (including committees thereof). Any
books, records and minutes may be in written form or any other form capable of
being converted to written form within a reasonable time.

 

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EXHIBIT G
Form of Officer’s Certificate
The undersigned, the [Chief Financial Officer] [Chief Executive Officer] of
Oriental Financial Group Inc., a financial holding company and corporation
organized in the Commonwealth of Puerto Rico (the “Company”), pursuant to
Section 5.1(g) of the Securities Purchase Agreement, dated as of April 23, 2010
by and among the Company and the investors signatory thereto (the “Securities
Purchase Agreement”), hereby represents, warrants and certifies as follows
(capitalized terms used but not otherwise defined herein shall have the meaning
set forth in the Securities Purchase Agreement):

  1.   The representations and warranties of the Company contained in the
Securities Purchase Agreement are true and correct as of the date when made and
as of the Closing Date, as though made on and as of such date, except for such
representations and warranties that speak as of a specific date.

  2.   The Company has performed, satisfied and complied in all material
respects with all covenants, agreements and conditions required by the
Transaction Documents to be performed, satisfied or complied with by it at or
prior to the Closing.

          IN WITNESS WHEREOF, the undersigned has executed this certificate this
___ day of [_______], 2010.

                             [__________]        [Chief Financial Officer]
[Chief Executive Officer]   

 

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EXHIBIT H
Subsidiaries
Oriental Bank and Trust
Oriental International Bank Inc.
Oriental Mortgage Corporation
Oriental Financial Services Corp.
Oriental Insurance, Inc.
Caribbean Pension Consultants, Inc.
Oriental Financial (PR) Statutory Trust II

 

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EXHIBIT I
Form of Escrow Agreement
ESCROW AGREEMENT
by and among
ORIENTAL FINANCIAL GROUP INC.
and
AMERICAN STOCK TRANSFER & TRUST COMPANY, LLC
Dated as of
April 23, 2010

 

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ESCROW AGREEMENT
     This ESCROW AGREEMENT, dated as of this 23rd day of April 2010 (this
“Agreement”), is by and between Oriental Financial Group Inc., a financial
holding company and corporation organized in the Commonwealth of Puerto Rico
(the “Company”), and American Stock Transfer & Trust Company, LLC, a New York
banking association organized under the laws of the State of New York, as escrow
agent (the “Agent”).
W I T N E S S E T H:
     WHEREAS, the Company is conducting a private placement (the “Private
Placement”) of its mandatorily convertible non-cumulative non-voting perpetual
preferred stock, Series C, $1,000 liquidation preference per share (the
“Preferred Shares”), to certain investors (individually and not including any
Excluded Purchasers (as defined below), an “Investor,” and collectively and not
including any Excluded Purchasers, the “Investors”) pursuant to Section 4(2) of
the Securities Act of 1933, as amended (the “1933 Act”) and Rule 506 of
Regulation D, as promulgated by the United States Securities and Exchange
Commission (the “Commission”) under the 1933 Act;
     WHEREAS, the Company proposes to engage the Agent for the purpose of
receiving, depositing and holding in a segregated interest-bearing account all
funds (the “Proceeds”) received from the Investors in connection with the sale
of the Preferred Shares by the Company until such time as such funds are to be
released to the Company or returned to the Investors in accordance with the
terms of this Agreement; and
     WHEREAS, the Agent has agreed to serve as the escrow agent in connection
with the proposed purchase and sale of the Preferred Shares.
     NOW, THEREFORE, in consideration of the mutual promises herein contained
and intending to be legally bound, the parties hereby agree as follows:
     Appointment of Agent.
     1. The Company hereby appoints the Agent as the escrow agent in accordance
with the terms and conditions set forth herein, and the Agent hereby accepts
such appointment.
     Establishment of Escrow Account; Deposits.
          (a) The Agent shall promptly cause to be opened a fully segregated
interest-bearing escrow account, which escrow account shall be entitled Oriental
Financial Group Inc. Escrow Account (the “Escrow Account”), for the purpose of
holding in trust all Proceeds from Investors in the Private Placement. The
Proceeds will be segregated, and account balances kept, on an individual
Investor basis. In accordance with, and subject to the terms and conditions of
the Securities Purchase Agreement entered into by and between the Company and
each Investor (the “Securities Purchase Agreement”), each Investor shall remit
the amount to be deposited by such Investor to the Escrow Account, as provided
in the applicable signature page of such

 

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Investor to the Securities Purchase Agreement (each, a “Signature Page” and
collectively, the “Signature Pages”), in the form of wire transfers to the
Agent. All such wire transfers forwarded to the Agent shall be accompanied by a
copy of such Investor’s Signature Page, which will contain written information
identifying such Investor, the Investor’s full legal name, social security or
tax identification number, and current street address and will also include wire
transfer instructions pursuant to which the Agent may return escrowed funds, if
applicable. All Signature Pages shall be mailed by the Company directly to the
Agent, or transmitted by facsimile at (718) 765-8758, Attention: Alan Finn. Wire
transfers to the Escrow Account shall be made in federal funds transferred as
follows:
JP Morgan Chase
2. New York, NY
3. Account Name: American Stock Transfer & Trust Company, LLC
4. For further credit to Oriental Financial Group Inc. Escrow Account
ABA: 021000021
A/C: 323-890121
     5. All Proceeds received by the Agent are subject to clearance time, and
the funds represented thereby cannot be drawn until such time as the same
constitutes good and collected funds. The Agent will provide an executed
receipt, in substantially the form attached hereto as Exhibit A, upon the
request of any Investor. If requested by an Investor, the Agent will deliver
such receipt on the same day the Proceeds are received by the Agent from such
Investor.
          (a) All Proceeds received by the Agent pursuant to the terms of this
Agreement shall be invested by the Agent in the Evergreen Institutional Treasury
Money Market Fund # 397, unless otherwise directed in writing by the Company;
provided, however, that the Proceeds attributable to any Investor shall not be
invested other than in money market mutual funds investing in treasuries or
government-backed securities unless the Company presents to the Agent such
Investor’s consent in writing to such alternative investment.
     Procedure for Disbursement from the Escrow Account.
          (b) The Proceeds held in the Escrow Account, plus all earnings,
interest and income thereon (the “Escrow Earnings”), shall be subject to, and
distributed in accordance with, the provisions below. Until such time as the
Proceeds and Escrow Earnings are distributed to the Company in accordance with
Section 3.3 below, the Company shall not be entitled to, nor shall the Company
have any rights, interest or claims to, any of the Proceeds or Escrow Earnings
held in the Escrow Account.
          (c) The Company may accept the Proceeds attributable to the Investors
in a closing (with respect to such Investor, the “Closing”) in accordance with
Section 3.3 and the Securities Purchase Agreement. The time of the Closing shall
be 10:00 a.m., Eastern Time (or such later time agreed to by the Company and
such Investor), on the date determined in accordance with Section 2.1(c)(i) of
the Securities Purchase Agreement (the “Closing Date”).

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          (d) On the Closing Date, the Company shall provide written
instructions to the Agent, with, upon the request of an Investor, a copy to such
Investor: (i) confirming that the conditions to the Closing set forth in the
Securities Purchase Agreement have been satisfied or waived; and (ii)
instructing the Agent to remit to the Company in immediately available funds the
Proceeds related to the Closing (as determined in accordance with the Securities
Purchase Agreement), after the payment of fees and expenses due and payable to
certain third parties as designated and approved by the Company, including the
Agent’s compensation as set forth in Exhibit B hereto. Upon receipt of such
written instruction from the Company, the Agent shall remit to the Company in
immediately available funds such Proceeds and Escrow Earnings related to the
Closing, after the payment of the fees and expenses due and payable to the third
parties referenced in the preceding sentence; such written instructions from the
Company shall include wire instructions for, and the amount of the fees and
expenses payable to, such third parties. The Agent will make the deliveries on
the Closing Date. The Agent will notify the Company and Keefe, Bruyette & Woods,
Inc., the Company’s placement agent (the “Placement Agent”), in writing, of any
problems with such delivery.
          (e) Upon the receipt by the Company of the written demand of any
Investor, pursuant to Section 6.17(a) of the Securities Purchase Agreement, that
the Company return all or any portion of such Investor’s Proceeds and the Escrow
Earnings thereon, the Company shall, if required pursuant to Section 6.17(b) of
the Securities Purchase Agreement, instruct in writing (with, upon the written
request of an Investor, a copy to such Investor) the Agent to return by wire
transfer to such Investor such Proceeds and Escrow Earnings. The instructions
provided by the Company to the Agent pursuant to the preceding sentence shall
state the amount of Escrow Earnings to be received by the Investor, as
calculated by the Company. The Agent shall notify the Company and the Placement
Agent in writing of the distribution of such funds to such Investor. Provided
that the information has been provided to the Agent pursuant to Section 3.9
hereto, the Agent shall return to such Investor the Proceeds and the Escrow
Earnings thereon as set forth in the Company’s instructions no later than the
second business day after receipt of such instructions. No Investor shall demand
the return of any Proceeds unless entitled to a return of such Proceeds pursuant
to the terms of the Securities Purchase Agreement.
          (f) As soon as practicable after the date upon which the Company gives
notice to the Agent that the Securities Purchase Agreement has been terminated
(the “Termination Date”), the Agent shall return by wire transfer to each
Investor the amount of the Proceeds that were received by the Agent from such
Investor, plus all Escrow Earnings thereon. The Agent shall notify the Company
and the Placement Agent in writing of the distribution of such funds to the
Investors. Provided that the information has been provided to the Agent pursuant
to Section 3.9 hereto, the Agent shall return the Proceeds to the Investor no
later than the second business day after the Termination Date.
          (g) Any payments by the Agent to the Investors, or to persons (other
than the Company) pursuant to the terms of this Agreement shall be made by wire
transfer in accordance with the wire instructions in the Signature Pages.
          (h) Any payments by the Agent to the Company pursuant to the terms of
this Agreement shall be made by wire transfer in accordance with wire
instructions delivered by the Company to the Agent.

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          (i) All amounts referred to herein are expressed in United States
dollars and all payments by the Agent shall be made in United States dollars.
          (j) Any payments of income from the Escrow Account shall be subject to
withholding regulations then in force with respect to United States taxes. The
Company or the Placement Agent will provide the Agent with appropriate W-9 forms
for the Investors or W-8 forms for nonresident alien certifications. It is
understood that the Agent shall be responsible for income reporting only with
respect to income earned on investment of funds that are a part of the Escrow
Account balance and is not responsible for any other reporting.
     Exculpation and Indemnification of Agent.
          (k) The Agent does not have any interest in the Proceeds deposited
hereunder, but is serving as escrow holder only and having only possession of
the Proceeds, plus all Escrow Earnings thereon, in its capacity as such. The
Agent shall have no duties or responsibilities other than those expressly set
forth herein. The Agent shall have no duty to enforce any obligation of any
person to make any payment or delivery, or to direct or cause any payment or
delivery to be made, or to enforce any obligation of any person to perform any
other act. The Agent shall be under no liability to the Company or any other
party by reason of any failure on the part of any party hereto or any maker,
guarantor, endorser or other signatory of any document or any other person to
perform such person’s obligations under any such document.
          (l) The Agent shall not be liable to the Company or to any other party
for any action taken or omitted by it, or any action suffered by it to be taken
or omitted, in good faith and in the exercise of its own best judgment except
where it has been grossly negligent or has engaged in bad faith or willful
misconduct. The Agent shall be entitled to rely conclusively and shall be
protected in acting upon any order, notice, demand, certificate, opinion or
advice of counsel (including counsel chosen by the Agent), statement,
instrument, report or other paper or document (not only as to its due execution
and the validity and effectiveness of its provisions, but also as to the truth
and acceptability of any information therein contained), which is reasonably
believed by the Agent to be genuine and to be signed or presented by the proper
person or persons. The Agent shall not be bound by any notice or demand, or any
waiver, modification, termination or rescission of this Agreement or any of the
terms thereof, unless evidenced by a writing delivered to the Agent signed by
the proper party or parties and, if the duties or rights of the Agent are
affected, unless it shall give its prior written consent thereto. If the Agent
is unsure as to any course of action to be taken hereunder, it may request
instructions from the Company; the Agent shall not be liable to any person and
shall be held harmless and indemnified by the Company in relying on such
instructions; in the event the Agent receives conflicting instructions, or no
instructions after a request therefor, the Agent shall be fully protected in
refraining from acting until such conflict is resolved or instructions provided
to the satisfaction of the Agent.
          (m) The Agent shall not be responsible for the sufficiency or accuracy
of the form of, or the execution, validity, value or genuineness of, any
document or property received, held or delivered by it hereunder, or of any
signature or endorsement thereon, or for any lack of endorsement thereon, or for
any description therein; nor shall the Agent be responsible or liable to the
Company or to anyone else in any respect on account of the identity, authority
or rights of

4

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the persons executing or delivering or purporting to execute or deliver any
document or property pursuant to this Agreement. Provided that the Agent
complies with Section 2.2 hereof, the Agent shall have no responsibility with
respect to the use or application of any Proceeds or other property paid or
delivered by the Agent pursuant to the provisions hereof.
          (n) In the event of any dispute with respect to the Proceeds held in
escrow by the Agent, the Agent shall be entitled to refuse to act until such
conflicting or adverse claims or demands shall have been determined by a final
order, judgment or decree of a court of competent jurisdiction, which order,
judgment or decree is not subject to appeal, or settled by agreement between the
conflicting parties as evidenced in a writing satisfactory to the Agent.
          (o) The Agent shall be entitled to consult with legal counsel at the
expense of the Company in the event that a question or dispute arises with
regard to the construction of any of the provisions hereof, and shall incur no
liability and shall be fully protected in acting in accordance with the advice
or opinion of such counsel. The Agent shall not be required to take any action
which, in the Agent’s sole and absolute judgment, could involve it in expense or
liability in excess of its fees and reimbursable expenses hereunder unless
furnished with security and indemnity that it deems, in its sole and absolute
discretion, to be satisfactory.
          (p) The Agent shall, if applicable, withhold from any payment of
monies held by it hereunder such amount as the Agent estimates to be sufficient
to provide for the payment of any applicable taxes not yet paid, and may use the
sum withheld for that purpose. The Agent shall be indemnified and held harmless
against any liability for taxes, and for any penalties or interest in respect of
taxes, on such investment income or payments in the manner provided in
Section 4.7.
          (q) The Company shall indemnify and hold the Agent harmless from and
against Expenses (as defined in Section 4.8), including reasonable counsel fees
and disbursements, of any kind and nature whatsoever suffered by the Agent in
connection with any action, suit or other proceeding involving any claim, or in
connection with any claim or demand, which in any way, directly or indirectly,
arises out of or relates to this Agreement, the services of the Agent hereunder
or the monies or other property held by it hereunder; provided, however, that
such indemnification shall not extend to acts of gross negligence, willful
misconduct or bad faith by the Agent. Promptly after the receipt by the Agent of
notice of any demand or claim or the commencement of any action, suit or
proceeding, the Agent shall, if a claim in respect thereof is to be made against
the Company, notify the Company thereof in writing, but the failure by the Agent
to give such notice shall not relieve the Company from any liability which the
Company may have to the Agent hereunder. The terms of this Section 4.7 shall
survive the termination of this Agreement and the resignation or removal of the
Agent.
          (r) For the purposes hereof, the term “Expenses” shall include any and
all amounts assessed, paid or payable to satisfy any claim, action, suit, cost,
loss, demand or liability, or in settlement of any claim, demand, action, suit
or proceeding settled with the express written consent of the Agent, and all
costs and expenses, including, but not limited to, reasonable counsel fees and
disbursements, paid or incurred in investigating or defending against any such
claim, demand, action, suit or proceeding.

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          (s) The Agent shall not incur any liability for not performing any act
or fulfilling any duty, obligation or responsibility hereunder by reason of any
occurrence beyond the control of Agent (including but not limited to any act or
provision of any present or future law or regulation or governmental authority,
any act of God or war, or the unavailability of the Federal Reserve Bank wire or
telex or other wire or communication facility).
     Termination of Agreement and Resignation or Removal of Agent.
          (t) This Agreement shall terminate on the release of all Proceeds,
including the Escrow Earnings, held in escrow hereunder, provided that the
rights of the Agent and the obligations of the other parties hereto under
Sections 3.9, 4 and 6 shall survive the termination hereof.
          (u) The Agent may resign at any time by giving the Company at least
30 days’ notice thereof, and upon the effectiveness of such resignation the
Agent shall be discharged from its duties as Agent hereunder. The Company may
remove the Agent at any time by giving the Agent at least 30 days’ notice
thereof, and upon the effectiveness of such removal the Agent shall be
discharged from its duties as Agent hereunder. As soon as practicable after its
resignation or removal, the Agent shall turn over to a successor escrow agent
appointed by the Company all monies and property held hereunder (less such
amount as the Agent is entitled to retain pursuant to Section 6) upon
presentation of the document appointing the new escrow agent and its acceptance
thereof. If no new Agent is so appointed within the 30-day period following such
notice of resignation or removal, the Agent may deposit the aforesaid monies and
property with any court it deems appropriate. Section 3.9 shall survive the
resignation or removal of the Agent.
     Compensation of Agent.
     6. For services rendered, the Agent shall receive the compensation set
forth in Exhibit B hereto. The Agent shall also be entitled to reimbursement
from the Company for all reasonable Expenses paid or incurred by it in the
administration of its duties hereunder, including, but not limited to, all
reasonable counsel and advisors’ fees and disbursements and all reasonable taxes
or other governmental charges. Such compensation and reimbursement to the Agent
by the Company shall be paid only from funds properly drawn by the Company
pursuant to Section 3.3, or by funds otherwise available to the Company.
     Notices.
     7. All notices, requests, demands and other communications provided for
herein shall be in writing, shall be delivered by overnight courier providing a
receipt of delivery or by facsimile, certified or registered mail, shall be
deemed given when received and shall be addressed to the parties hereto at their
respective addresses listed below or to such other persons or addresses as the
relevant party shall designate as to itself from time to time in writing
delivered in like manner.

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     If to the Company:
Oriental Financial Group Inc.
997 San Roberto Street
San Juan, Puerto Rico 00926
Telephone: (787) 993-4206
Facsimile: (787) 771-6896
Attention: General Counsel
     with copies (for informational purposes only) to:
Skadden, Arps, Slate, Meagher & Flom LLP
300 South Grand Avenue, Suite 3400
Los Angeles, California 90071
Telephone: (213) 687-5000
Facsimile: (213) 687-5600
Attention: Gregg A. Noel, Esq.
     If to the Agent:
American Stock Transfer & Trust Company, LLC
6201 15th Avenue
New York, New York 11219
Telephone: (718) 765-8758
Facsimile: afinn@amstock.com
Attention: Alan G. Finn
     Further Assurances.
     8. From time to time on and after the date hereof, the Company shall
deliver or cause to be delivered to the Agent such further documents and
instruments and shall do and cause to be done such further acts as the Agent
shall reasonably request (it being understood that the Agent shall have no
obligation to make any such request) to carry out more effectively the
provisions and purposes of this Agreement, to evidence compliance herewith or to
assure itself that it is protected in acting hereunder.
     Governing Law and Consent to Service of Process.
     9. This Agreement shall be interpreted, construed, enforced and
administered in accordance with the laws of the State of New York. Each of the
Company and the Agent hereby irrevocably consents to the jurisdiction of the
courts of the State of New York and of any federal court located in such State
in connection with any action, suit or other proceeding arising out of or
relating to this Agreement or any action taken or omitted hereunder, and waives
personal service of any summons, complaint or other process and agrees that the
service thereof may be made by certified or registered mail directed to each of
the parties at its address for purposes of notices hereunder, and such service
shall be deemed completed ten (10) calendar days after the same is so mailed.

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     Miscellaneous.
          (a) This Agreement shall be construed without regard to any
presumption or other rule requiring construction against the party causing such
instrument to be drafted. The terms “hereby,” “hereof,” “hereto,” “hereunder”
and any similar terms, as used in this Agreement, refer to the Agreement in its
entirety and not only to the particular portion of this Agreement where the term
is used. The word “person” shall mean any natural person, partnership, company,
government and any other form of business or legal entity. All words or terms
used in this Agreement, regardless of the number or gender in which they are
used, shall be deemed to include any other number and any other gender as the
context may require. This Agreement shall not be admissible in evidence to
construe the provisions of any prior agreement. The rule of ejusdem generis
shall not be applicable herein to limit a general statement, which is followed
by or referable to an enumeration of specific matters, to matters similar to the
matters specifically mentioned.
          (b) This Agreement and the rights and obligations hereunder of the
Company may be assigned by the Company only to a successor to the Company’s
entire business. This Agreement and the rights and obligations hereunder of the
Agent may be assigned by the Agent only to a successor to its entire business.
This Agreement shall be binding upon and inure to the benefit of each party’s
respective successors and permitted assigns. This Agreement is intended to be
for the sole benefit of the parties hereto, and no other person shall acquire or
have any rights under or by virtue of this Agreement; provided, however, that
the Investors shall be third party beneficiaries of the parties’ obligations
hereunder. This Agreement may not be changed orally or modified, amended or
supplemented without an express written agreement executed by the Agent or the
Company, and, to the extent such change, modification, amendment or supplement
would adversely affect any Investor’s Proceeds or any Escrow Earnings thereon,
the consent of such Investor, which consent will not be unreasonably withheld.
          (c) The headings in this Agreement are for purposes of reference only
and shall not limit or otherwise affect any of the terms hereof.
          (d) “Excluded Purchasers” means any Section 2.1(c)(iii) Purchasers (as
defined in the Securities Purchase Agreement) and any Purchasers (as defined in
the Securities Purchase Agreement) that have entered into Custodian Agreements
(as defined in the Securities Purchase Agreement).
     Execution in Counterparts.
     10. This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original as against any party whose signature
appears thereon, and all of which shall together constitute one and the same
instrument. This Agreement shall become binding when one or more counterparts
hereof, individually or taken together, shall bear the signature of all of the
parties reflected hereon as the signatures.
     11.

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     IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
on the day and year first above written.

            ORIENTAL FINANCIAL GROUP INC.
      By:           Name:           Title:        

            AMERICAN STOCK TRANSFER & TRUST COMPANY, LLC
      By:           Name:           Title:        

[Escrow Agreement]

 

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Exhibit A
RECEIPT
     American Stock Transfer & Trust Company, LLC, as Escrow Agent (the
“Agent”), for Oriental Financial Group Inc. (the “Company”), hereby acknowledges
receipt by wire transfer of U.S. $__________________, in immediately available
funds, from _________________, representing the escrow deposit to be held in
escrow by the Agent, pursuant to the Escrow Agreement (the “Escrow Agreement”),
dated April 23, 2010, by and between the Company and the Agent. All capitalized
terms used herein and not otherwise defined shall have the same respective
meanings as set forth in the Escrow Agreement.
_________ __, 2010

            American Stock Transfer & Trust Company, LLC, as the
Agent
      By:           Name:           Title:      

A-1

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Exhibit B
American Stock Transfer & Trust Company, LLC
ESCROW AGENT SERVICES
FEE PROPOSAL
ORIENTAL FINANCIAL GROUP INC.
Acceptance fee: $2,500.00
Annual administration fee: $7,500.00

B-1