exv10w3






Exhibit 10.3




SUBSCRIPTION AGREEMENT




First BanCorp

1519 Ponce de Leon Avenue

San Juan, Puerto Rico 00908



Ladies and Gentlemen:



The undersigned confirms its agreement with you as follows:





	1.	 	This Subscription Agreement (the “Agreement”) is between First BanCorp, a Puerto Rico
chartered financial holding company (the “Company”) and the investor named on the signature
page (the “Investor”) and will be effective when it is accepted by the Company.






	2.	 	The Company is proposing to issue and sell to certain investors (the “Offering”) shares of
the Company’s common stock, par value $0.10 per share (the “Common Stock”), at a purchase
price of U.S.$3.50 per share (the “Purchase Price”). These shares are being offered only to
(a) accredited investors, as that term is defined in Rule 501 of Regulation D under the
Securities Act of 1933, as amended (the “Securities Act”) of the type described in clause (1),
(2), (3) (4) or (7) of Rule 501 and (b) persons who are not U.S. persons, as that term is
defined in Regulation S under the Securities Act. The Offering is not being registered under
the Securities Act.






	3.	 	The Company and the Investor agree that, upon the terms and subject to the conditions set
forth in this Agreement, the Investor will purchase from the Company, and the Company will
issue and sell to the Investor, the number of shares of Common Stock set forth on the
signature page for the aggregate purchase price set forth on that signature page, on the terms
set forth in the Terms and Conditions for Purchase of Shares attached to this Agreement as
Annex A (the “Terms and Conditions”). The Terms and Conditions are incorporated into, and are
a part of, this Subscription Agreement.






	4.	 	By executing this Subscription Agreement, the Investor is making the representations and
warranties set forth in the Terms and Conditions.




Number of shares of Common Stock to be purchased equals 100% of the aggregate purchase price
divided by U.S.$3.50, rounded down to the nearest whole share.



Please confirm that this Agreement correctly sets forth the agreement between us by signing in the
space provided below for that purpose.




[Signature Pages Follow]






 









 








	 	 	 	 	 

	 	 	INVESTOR:
	 
	 	 	 	 
	 

	 	Name:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Title:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 	 	Date Signed: ___________________, 2011






TO BE COMPLETED BY INVESTOR




	 

	Type of Entity:  



	Jurisdiction of Organization:  



	Taxpayer Identification No.:  



	Address:  



	Contact Name:  



	Telephone:  (           )                               Email Address:  




	Number of Shares , or

	Percentage of Common Stock to be Outstanding, Being Acquired:  



	Name in which Securities Should Be Registered:  



	Total Purchase Price: $  



	Number of Shares Already Owned by Investor or Affiliates:  



	 

	The following must be checked to be eligible to purchase shares:








			
	           ___	 	I am an accredited investor and professional investor, and the
representations I make include the representations in Section 2.2(g) of the Terms
and Conditions.




AGREED AND ACCEPTED:




FIRST BANCORP,

a Puerto Rico chartered financial holding company




	 	 	 	 	 

	By:
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Name:
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Title:
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Date:

	 	____________________, 2011
	 	 







 









 








INSTRUCTION SHEET FOR INVESTOR




(To be read in conjunction with the entire Agreement)


Complete the following items in the Agreement:





	1.	 	Provide the information regarding the Investor requested on the signature page to the
Agreement. The Agreement must be executed by an individual authorized to bind the Investor.






	2.	 	If the investor is purchasing shares for more than one investor account, it may either (i)
complete a separate Agreement for each such account, in which case a separate wire transfer
(or other acceptable form of payment) must be made by or on behalf of each account for the
shares the Investor will purchase for that account and a separate book entry issuance will be
made by the Transfer Agent with regard to each account, or (ii) complete a single Agreement
for all the accounts, in which case only one wire transfer (or other acceptable form of
payment) need be made for the shares to be purchased for all the accounts, and all the shares
will be delivered to a single account specified by the Investor, but the information called on
for the signature page to the Agreement must be completed for each account.






	3.	 	Return the signed Agreement to:
	 
	 	 	James Furey

Sandler O’Neill & Partners, L.P. Syndicate Desk

919 Third Avenue, 6th Floor

New York, New York 10022

JFurey@sandleroneill.com

(212) 466-7800






	4.	 	You will be notified at least 48 hours before the Closing of the account to which payment for
shares should be wired. Please note that all payments must be made in U.S. dollars.




An executed Agreement or a facsimile transmission of it must be received by Sandler O’Neill &
Partners, L.P. by 8:00 a.m. New York time on a date of which you will be informed. The Company
reserves the right to reject any subscription before it is accepted by the Company.





 









 








ANNEX A




TERMS AND CONDITIONS




CONSTITUTING A PART OF



SUBSCRIPTION AGREEMENT



BETWEEN



FIRST BANCORP



AND THE INVESTOR NAMED IN THE SUBSCRIPTION AGREEMENT








 









 








Table of Contents




	 	 	 	 	 
	 	 	Page	 
	ARTICLE 1

THE CLOSING TRANSACTIONS

	 
	 	 	 	 
	1.1 Closing
	 	 	1	 
	1.2 Actions on the Closing Date
	 	 	1	 
	 
	 	 	 	 
	ARTICLE 2

REPRESENTATIONS AND WARRANTIES

	 
	 	 	 	 
	2.1 Representations and Warranties of the Company
	 	 	2	 
	2.2 Representations and Warranties of the Investor
	 	 	19	 
	 
	 	 	 	 
	ARTICLE 3

ACTIONS PRIOR TO THE TRANSACTION

	 
	 	 	 	 
	3.1 Stockholder Approval
	 	 	21	 
	3.2 HSR Act Filings
	 	 	22	 
	3.3 Listing of Shares
	 	 	22	 
	3.4 Change of Bank Control Act and Bank Holding Company Act
	 	 	22	 
	3.5 Notice of Adverse Occurrences
	 	 	23	 
	3.6 Reasonable Best Efforts
	 	 	23	 
	3.7 Confidentiality
	 	 	24	 
	3.8 Conduct of the Business
	 	 	24	 
	3.9 Most Favored Terms
	 	 	25	 
	 
	 	 	 	 
	ARTICLE 4

CONDITIONS PRECEDENT TO TRANSACTION

	 
	 	 	 	 
	4.1 Conditions to the Company’s Obligations
	 	 	26	 
	4.2 Conditions to the Investor’s Obligations
	 	 	27	 
	4.3 Waiver of Conditions to Investor’s Obligations
	 	 	30	 
	4.4 Limited Effect of Failure of Condition
	 	 	30	 
	 
	 	 	 	 
	ARTICLE 5

ADDITIONAL AGREEMENTS

	 
	 	 	 	 
	5.1 Company Obligation Regarding Adequate Public Information
	 	 	30	 
	5.2 Efforts to Maintain Listing
	 	 	30	 
	5.3 Additional Regulatory Matters
	 	 	31	 
	 
	 	 	 	 
	ARTICLE 6

SALE RESTRICTIONS

	 
	 	 	 	 
	6.1 Restrictions on Sales of Acquired Common Stock
	 	 	31	 
	 
	 	 	 	 
	ARTICLE 7

SECURITIES ACT REGISTRATION

	 
	 	 	 	 
	7.1 Obligation to Register Acquired Common Stock
	 	 	32	 
	7.2 Obligations of the Investor Regarding Registration
	 	 	36	 
	7.3 Indemnification Regarding Disclosures
	 	 	36	 






 









 






	 	 	 	 	 
	 	 	Page	 
	7.4 Assignment of Registration Rights
	 	 	37	 
	7.5 Suspension of Sales
	 	 	37	 
	 
	 	 	 	 
	ARTICLE 8

TERMINATION

	 
	 	 	 	 
	8.1 Right to Terminate
	 	 	37	 
	8.2 Manner of Terminating Agreement
	 	 	38	 
	8.3 Effect of Termination
	 	 	39	 
	 
	 	 	 	 
	ARTICLE 9

INDEMNIFICATION

	 
	 	 	 	 
	9.1 Indemnification Against Loss Due to Inaccuracies in Company’s Representations and Warranties
or Company Failure 

  to Fulfill Obligations
	 	 	39	 
	9.2 Indemnification Against Loss Due to Inaccuracies in Investor’s Representations and Warranties
or Investor Failure to

  Fulfill Obligations
	 	 	39	 
	9.3 Limit on Liability for Breach of Warranty
	 	 	39	 
	9.4 Indemnification Sole Remedy
	 	 	40	 
	 
	 	 	 	 
	ARTICLE 10

ABSENCE OF BROKERS

	 
	 	 	 	 
	10.1 Representations and Warranties Regarding Brokers and Others
	 	 	40	 
	10.2 Expenses
	 	 	40	 
	 
	 	 	 	 
	ARTICLE 11

GENERAL

	 
	 	 	 	 
	11.1 Announcement of Transaction
	 	 	41	 
	11.2 Entire Agreement
	 	 	41	 
	11.3 Benefit of Agreement
	 	 	41	 
	11.4 Captions
	 	 	41	 
	11.5 Assignments
	 	 	41	 
	11.6 Notices and Other Communications
	 	 	42	 
	11.7 Governing Law
	 	 	42	 
	11.8 Consent to Jurisdiction
	 	 	43	 
	11.9 Remedies; Specific Performance
	 	 	43	 
	11.10 Non-Recourse
	 	 	43	 
	11.11 Waiver of Jury Trial
	 	 	43	 
	11.12 Amendments
	 	 	44	 
	11.13 Interpretation
	 	 	44	 
	11.14 Mutual Drafting
	 	 	44	 
	11.15 Severability
	 	 	44	 
	11.16 Counterparts
	 	 	44	 






 









 





DEFINED TERMS USED IN TERMS AND CONDITIONS




	 	 	 	 	 
	 	 	Page	 
	Acquired Common Stock
	 	 	1	 
	Agency
	 	 	15	 
	Aggregate Purchase Price
	 	 	2	 
	Bank Holding Company Act
	 	 	2	 
	Bank Regulatory Agency
	 	 	14	 
	Business Day
	 	 	1	 
	CBCA
	 	 	23	 
	Closing Date
	 	 	1	 
	Code
	 	 	11	 
	Company
	 	 	1	 
	Company 10-K
	 	 	7	 
	Company Benefit Plans
	 	 	13	 
	Company Financial Statements
	 	 	8	 
	Company Material Adverse Effect
	 	 	3	 
	Company Reports
	 	 	7	 
	Company Significant Agreement
	 	 	17	 
	Company Subsidiaries
	 	 	6	 
	Company Subsidiary
	 	 	6	 
	Environmental Law
	 	 	12	 
	ERISA
	 	 	13	 
	Exchange Act
	 	 	7	 
	FDIC
	 	 	6	 
	FDIC Consent Order
	 	 	9	 
	Federal Reserve
	 	 	6	 
	Federal Reserve Agreement
	 	 	10	 
	FirstBank
	 	 	3	 
	GAAP
	 	 	3	 
	Governmental Entity
	 	 	5	 
	HSR Act
	 	 	6	 
	Indemnitee
	 	 	36	 
	Information
	 	 	24	 
	Insurer
	 	 	15	 
	Intellectual Property
	 	 	18	 
	Intellectual Property Rights
	 	 	18	 
	Interim Financials
	 	 	8	 
	Investment Company Act
	 	 	2	 
	Investor Agreements
	 	 	4	 
	Investor Presentation
	 	 	19	 
	Investors
	 	 	1	 
	Investor’s Subscription Agreement
	 	 	1	 
	IT Assets
	 	 	18	 
	Loan
	 	 	16	 
	Loan Investor
	 	 	15	 
	Majority Investors
	 	 	25	 
	March 10-Q
	 	 	7	 
	Material Adverse Change
	 	 	9	 
	Materially Burdensome Regulatory Condition
	 	 	23	 
	NYSE
	 	 	4	 
	OCFI
	 	 	6	 
	OCFI Order
	 	 	9	 






 









 






	 	 	 	 	 
	 	 	Page	 
	OFAC
	 	 	15	 
	Other Investors
	 	 	4	 
	Per Share Price
	 	 	1	 
	Previously Disclosed
	 	 	3	 
	Principal Investment Agreements
	 	 	1	 
	Principal Investors
	 	 	1	 
	Registrable Securities
	 	 	33	 
	Ruling
	 	 	29	 
	SEC
	 	 	3	 
	Securities Act
	 	 	2	 
	Series G Preferred Stock
	 	 	5	 
	Shelf Registration Statement
	 	 	32	 
	Subscription Agreements
	 	 	1	 
	Tax Return
	 	 	12	 
	Taxes
	 	 	11	 
	THL Investors
	 	 	1	 
	Transfer Agent
	 	 	2	 
	Unlawful Gains
	 	 	16	 
	Unrelated Potential Investor
	 	 	21	 






- 8 -









 





TERMS AND CONDITIONS




     The following are the terms and conditions on which the Investor (as defined on the first page
of the Subscription Agreement of which these Terms and Conditions are a part (the “Investor’s
Subscription Agreement”)) agrees to purchase for $3.50 per share (the “Per Share Price”), the
shares of Common Stock (as defined on the first page of the Investor’s Subscription Agreement)
shown on the signature page of the Investor’s Subscription Agreement as “Number of Shares, or
Percentage of Common Stock to be Outstanding, Being Acquired” (the shares being purchased by the
Investor being the “Acquired Common Stock”), par value $0.10 per share, of First BanCorp (the
“Company”), a Puerto Rico chartered financial holding company (except that, unless the Investor has
stated on the signature page of the Investor’s Subscription Agreement or has otherwise acknowledged
in writing that it expects to acquire more than 9.9% of the shares of Common Stock that will be
outstanding after the Closing (defined below) and after conversion of the Series G Preferred Stock
(defined below) into Common Stock, if the number of shares shown on the signature page of the
Investor’s Subscription Agreement would constitute more than 9.9% of the shares of Common Stock
that will be outstanding after the Closing and after conversion of the Series G Preferred Stock
into Common Stock, the number of shares of Common Stock the Investor will purchase will be the
number that will constitute 9.9% of the shares of Common Stock that will be outstanding after the
Closing and after conversion of the Series G Preferred Stock into Common Stock). The purchases of
Common Stock by investors who sign other subscription agreements (together with the Investor’s
Subscription Agreement, the “Subscription Agreements”) are part of an equity financing by the
Company that includes sales of Common Stock for $3.50 per share to additional investors pursuant to
an Investment Agreement dated as of May 26, 2011 between the Company and investors advised by
Thomas H. Lee Partners L.P. (the “THL Investors”), and Investment Agreements with other major
investors, as they may be amended from time to time, (the “Principal Investment Agreements) (the
THL Investors and any other investors who execute Principal Investment Agreements together being
the “Principal Investors,” and the Principal Investors together with the investors who sign
Subscription Agreements being the “Investors”).



ARTICLE 1

THE CLOSING TRANSACTIONS




     1.1 Closing.
Subject to the satisfaction or waiver of the conditions set forth in the Investor’s
Subscription Agreement (including these Terms and Conditions), the closing of the sale of Acquired
Common Stock described in the preamble to these Terms and Conditions will take place at the offices
of K&L Gates, LLP, 599 Lexington Avenue, New York, NY 10019, or by electronic exchange of documents
and signature pages, on the day (the “Closing Date”) that is the second Business Day after the day
on which all the conditions in Article 4 (other than conditions that by their terms cannot be
fulfilled until the Closing Date, but subject to the satisfaction or waiver of such conditions) are
satisfied, or at such other place and time as is agreed upon by the parties. As used in the
Investor’s Subscription Agreement, the term “Business Day” means a day that is not a Saturday, a
Sunday or a day on which banks in New York City or in San Juan, Puerto Rico generally are required
or permitted not to be open for banking business.



     1.2 Actions on the Closing Date.



 









 





          (a) Unless the Investor is an investment company registered under the Investment Company Act
of 1940, as amended (the “Investment Company Act”) that is not permitted to pay for securities
until it has possession of the securities, not later than 11:00 a.m., New York City time, on the
Closing Date, the Investor will transmit to the account of the Company specified as provided in the
Instructions to the Investor’s Subscription Agreement, immediately available funds equal to the
full amount of the purchase price for the Acquired Common Stock to be purchased by the Investor in
accordance with the Investor’s Subscription Agreement (the “Aggregate Purchase Price””). Upon
receipt by the Company of confirmation that such funds have been received, the Company will
instruct The Bank of New York Mellon Shareholder Services (or its successor), as transfer agent
(the “Transfer Agent”), to issue the Acquired Common Stock to the Investor through book entry
transfer to an account at The Depositary Trust Company or another account specified by the
Investor.




          (b) If the Investor is an investment company registered under the Investment Company Act that
is not permitted to pay for securities until it has possession of the securities, at the earliest
time the Company instructs the Transfer Agent to issue Common Stock to any Investor, the Company
will instruct The Transfer Agent to issue the Acquired Common Stock to the Investor through book
entry transfer to an account at The Depositary Trust Company or another account specified by the
Investor. As soon as the Investor receives confirmation that the Acquired Common Stock has been
issued for its account, the Investor will transmit to the account of the Company specified as
provided in the Instructions to the Investor’s Subscription Agreement, immediately available funds
equal to the full amount of the purchase price for the Acquired Common Stock being purchased by the
Investor in accordance with the Investor’s Subscription Agreement.




          (c) The Company may notify the depositary that holds the Acquired Common Stock to note on its
records that the Acquired Common Stock (a) has been issued without registration under the
Securities Act of 1933, as amended (the “Securities Act”), and may not be sold or transferred other
than in a transaction that is registered under the Securities Act or is exempt from the
registration requirements of the Securities Act (which notation will be withdrawn at the request of
the Investor at any time after (i) a registration statement registering resales of the Acquired
Common Stock under the Securities Act has become effective, (ii) with regard to particular shares,
when those shares are sold or transferred in a transaction that under SEC Rule 144 causes the
shares no longer to be restricted shares, or (iii) under Rule 144, the shares can be sold without
limitation as to volume or manner of sale and without a requirement that the Company be in
compliance with the current public information requirement of Rule 144(c)(1) (or Rule 144(i)(2), if
applicable). On the Closing Date, the Company will also deliver or cause to be delivered to each
Investor a receipt for the Aggregate Purchase Price paid by that Investor.




ARTICLE 2

REPRESENTATIONS AND WARRANTIES




     2.1 Representations and Warranties of the Company.
The Company represents and warrants to the Investor as follows:



          (a) Organization and Power. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the Commonwealth of Puerto Rico. The
Company is duly registered as a financial holding company under the U.S. Bank Holding Company
Act of 1956, as amended (the “Bank Holding Company Act”). Each of the Company and each Company
Subsidiary, including each Company Subsidiary that is a




- 2 -









 




Significant Subsidiary (as that term is
defined in Rule 1.02 of Securities and Exchange Commission (“SEC”) Regulation S-X), including
FirstBank Puerto Rico (“FirstBank”), has all the corporate power and authority that is required to
enable it to conduct its business as it is being conducted at the date of the Investor’s
Subscription Agreement. The Company and each Company Subsidiary is duly qualified to do business
and is in good standing in every jurisdiction in which qualification is required, except
jurisdictions in which failure to qualify would not have a Company Material Adverse Effect. The
Company has furnished to the Investor or has filed via “Edgar” with the SEC true, correct and
complete copies of the Company’s Articles of Incorporation and By-Laws, as amended through the date
of the Investor’s Subscription Agreement. For purposes of the Investor’s Subscription Agreement,
“Previously Disclosed” means (i) information publicly disclosed by the Company in the Company
Reports filed by it with or furnished to the SEC and publicly available via the Edgar system prior
to the date of the Investor’s Subscription Agreement (excluding any risk factor disclosures
contained in such documents and any disclosure of risks included in any forward-looking statements
disclaimer or other statements that are similarly non-specific or are predictive or forward-looking
in nature), or (ii) documents made available to Investors prior to the date of the Investor’s
Subscription Agreement either physically or in an electronic data room to which Investors or their
representatives were offered access and the information contained in those documents.




          (b) “Company Material Adverse Effect.” As used in the Investor’s Subscription
Agreement, the term “Company Material Adverse Effect” means any circumstance, change, effect, event
or fact the effect of which, individually or in the aggregate, (i) is, or would reasonably be
expected to be, materially adverse to the business, assets, liabilities, results of operations or
financial condition of the Company and its consolidated Company Subsidiaries taken as a whole or
(ii) prevents or materially delays or materially impairs the ability of the Company to perform its
obligations under the Investor’s Subscription Agreement and to consummate the transactions
contemplated thereby; provided, however, that the term Company Material Adverse
Effect will not include any circumstance, change, effect, event or fact arising from (A) changes
after the date of the Investor’s Subscription Agreement in general business, economic or market
conditions in the United States or the Commonwealth of Puerto Rico (including changes generally in
prevailing interest rates, credit availability and liquidity, currency exchange rates and price
levels or trading volumes in the United States or foreign securities or credit markets), or any
outbreak or escalation of hostilities, declared or undeclared acts of war or terrorism, in each
case generally affecting the industries in which the Company and the Company Subsidiaries operate,
(B) changes or proposed changes after the date of the Investor’s Subscription Agreement in United
States generally accepted accounting principles (“GAAP”) or regulatory accounting requirements
applicable to the Company and the Company Subsidiaries (C) changes or proposed changes after date
of the Investor’s Subscription Agreement in securities or other laws or regulations of general
applicability, (D) changes in the market price or trading volume of the Common Stock or any other
equity, equity-related or debt securities of the Company or the Company Subsidiaries (but not the
underlying reason or reasons for any such change), (E) the effects of actions or failures to act by
the Company or the Company Subsidiaries that are required by Investor Agreements, or (F) failure by
the Company or any of the Company Subsidiaries to meet internal projections or forecasts with
regard to results of operations or financial condition (but not the underlying reason or reasons
that the projections or forecasts are not met); provided, however, that in the case
of clauses (A), (B) and (C), any
circumstance, change, effect, event or fact shall nevertheless be considered in determining
whether a Company Material Adverse Effect has occurred to the extent that such circumstance,
change, effect, event or fact, individually or in the aggregate, has, or would reasonably be
expected to have, a disproportionate, adverse impact on the business, assets, results of operations
or financial condition of the Company and its




- 3 -









 




consolidated Company Subsidiaries taken as a whole
relative to other participants in the United States or in the Commonwealth of Puerto Rico in the
industries in which the Company and the Company Subsidiaries operate.




          (c) Authorization. The Company has all corporate power and authority that is
necessary to enable it to enter into the Investor’s Subscription Agreement and the other Investor
Agreements and to carry out the transactions contemplated by the Investor’s Subscription Agreement
and the other Investor Agreements (defined below). All corporate actions necessary to authorize
the Company to enter into the Investor’s Subscription Agreement and the other Investor Agreements
and to carry out the transactions contemplated by them have been taken, except that, if the rules
of the New York Stock Exchange (“NYSE”) require stockholder approval of the issuance of Common
Stock to the Investor and other investors, that approval has not yet been given. When the
Investor’s Subscription Agreement is accepted by the Company, assuming due execution by the
Investor, it will be a valid and binding agreement of the Company, enforceable against the Company
in accordance with its terms. The purchase of the Acquired Common Stock contemplated by the
Investor’s Subscription Agreement will not constitute a Business Combination subject to Section B
of Article Tenth of the Company’s Articles of Incorporation and will not be subject to any
statutory or other provisions regarding business combinations with interested stockholders or other
anti-takeover provisions. The Company has not adopted a shareholder rights plan or other plan
intended to have adverse effects on persons who acquire beneficial ownership of more than specified
portions of the outstanding stock of the Company or who obtain control of the Company.




          (d) NYSE Required Stockholder Approval. If the rules of the NYSE require stockholder
approval of the issuance of Common Stock to the Investors as contemplated by the Investor’s
Subscription Agreement, such stockholder approval will require the affirmative vote of a majority
of the votes cast, provided that the total votes cast represent over 50% of all the outstanding
Common Stock.




          (e) Other Investors and Aggregate Sale Price. The Company has entered into, or
intends to enter into, agreements (the Subscription Agreements and the Principal Investment
Agreements collectively being the “Investor Agreements”) with investors other than the Investor
(together with the Principal Investors, the “Other Investors”) relating to purchases of Common
Stock at the Per Share Price. The Company is seeking to enter into Investor Agreements (including
the Investor’s Subscription Agreement) relating to sales of Common Stock with a total aggregate
sale price of at least $500 million and not more than (i) $550 million, minus (ii) the purchase
price of the shares that would be issuable on exercise of rights expected to be issued in the
Rights Offering, which Rights Offering will not exceed $35 million in the aggregate. Copies of the
Principal Investment Agreements into which the Company has entered have been, or will be, filed
with, or furnished to, the SEC in Reports on Form 8-K within the time required by the applicable
SEC rules. The Subscription Agreements with Other Investors are substantially identical in all
material respects with the Investor’s Subscription Agreement, except as to the number of shares to
be purchased and the Aggregate Purchase Price (but they are the same with regard to the Per Share
Purchase Price). The Company has no other agreements or understandings (including, without
limitation, side letters) with Other Investors, except that the Company may have side letters that
have been or will be filed with the SEC or made available
to the Investor with one or more Other Investors each of which will be purchasing what will be
after the Closing and the issuance of Common Stock on conversion of the Company’s fixed rate
cumulative mandatorily convertible preferred stock, Series G (“Series G Preferred Stock”), at least
3% of the Company’s outstanding Common Stock.




- 4 -









 








          (f) No Conflict. Neither the execution, delivery and performance by the Company of
the Investor’s Subscription Agreement or of any or all of the Investor Agreements with the Other
Investors, nor the consummation of the transactions contemplated by the Investor’s Subscription
Agreement or by any or all of the Investor Agreements with the Other Investors, will violate,
conflict with, result in a breach of, or constitute a default (or an event which, with notice or
lapse of time or both, would constitute a default) under, (i) the Articles of Incorporation or the
By-Laws of the Company, (ii) any agreement or instrument or obligation to which the Company or any
of the Company Subsidiaries is a party or by which any of them is bound or to which the Company or
any of the Company Subsidiaries or any of their assets or properties may be subject, or (iii) any
law, order, rule or regulation of any governmental or regulatory authorities, agencies, courts,
commissions or other entities, whether federal, state, local or foreign and including such
authorities of the Commonwealth of Puerto Rico, the United States, the United States Virgin
Islands, the British Virgin Islands or any other nation, province, municipality or other political
subdivision thereof, or any or applicable self-regulatory organizations (each, a “Governmental
Entity”) having jurisdiction over the Company or any of the Company Subsidiaries, except
violations, breaches or defaults that would not reasonably be expected to have a Company Material
Adverse Effect.




          (g) Issuance of Acquired Common Stock. When the Company issues the shares of Acquired
Common Stock under the Investor’s Subscription Agreement, such shares will be duly authorized,
validly issued and non-assessable outstanding shares of Common Stock. The sale of Common Stock as
contemplated by the Investor’s Subscription Agreement and the Investor Agreements with the Other
Investors will not give any other person preemptive rights or other rights to acquire shares of the
Company of any class or series. When shares of Acquired Common Stock are sold to the Investor on
the Closing Date as contemplated by the Investor’s Subscription Agreement, the Investor will own
such shares free and clear of any liens, encumbrances or claims of any other persons, other than
liens imposed because of acts of the Investor and restrictions on transfer imposed by applicable
securities or banking laws.




          (h) Capitalization. The only authorized stock of the Company is 2,000,000,000 shares
of Common Stock and 50,000,000 shares of preferred stock. At the date of the Investor’s
Subscription Agreement, the only outstanding stock is not more than 21,350,000 shares of Common
Stock, 2,522,000 shares of Series A through E preferred stock (with a liquidation preference of $25
per share) and 424,174 shares of Series G preferred stock (with a liquidation preference of $1,000
per share). In the event the Company enters into Investor Agreements (including the Investor’s
Subscription Agreement) with total aggregate sale proceeds of between $500 million and $515 million
($550 million minus the expected $35 million purchase price of the shares that would be issuable on
exercise of rights expected to be issued in the Rights Offering), such Investor Agreements will
require the Company to issue no less than 142,857,142 shares of Common Stock and no more than
147,142,858 shares of Common Stock. The only options, warrants, exchangeable securities or other
agreements which require, or which, upon the passage of time, the payment of money or the
occurrence of any other event, may require the Company to issue any stock of any class or series
are (i) options, warrants and employee equity grants that may entitle the holders to purchase a
total of up to 132,000 shares of Common Stock (subject to adjustment as a result of various
occurrences, including the transactions contemplated by the Investor’s Subscription Agreement and
the other
Investor Agreements), (ii) the conversion provisions of the Series G Preferred Stock, which,
among other things, give the holders the right to convert the Series G Preferred Stock into a total
of approximately 29,246,000 shares of Common Stock (which as a result of the sales of Common Stock
contemplated by the Investor’s Subscription Agreement and the other Investor Agreements, will
become between 32,916,087 shares and 32,931,770 shares) plus any shares




- 5 -









 




that may be issued in lieu
of cash dividends, (iii) a warrant entitling the United States Department of the Treasury to
purchase 389,483 shares of Common Stock (subject to adjustment as a result of various occurrences,
including the transactions contemplated by the Investor’s Subscription Agreement and the other
Investor Agreements, which will increase the number of shares issuable on exercise of that warrant
to 1,210,513 shares) and (iv) the rights of Investors under Investor Agreements. In addition, the
Company has 251,185 shares of Common Stock reserved for issuance under Company Benefit Plans or for
other purposes and the Company expects to issue to the holders of its Common Stock as of a day
prior to the Closing Date rights that will entitle them to purchase Common Stock at the Per Share
Price for a total of up to $35 million. The Company has Previously Disclosed true, correct and
complete copies of all instruments and agreements that govern the terms and conditions of those
securities, including all certificates of designation, warrant agreements and other agreements, as
amended through the date of the Investor’s Subscription Agreement.




          (i) Consents and Approvals. Neither the execution and delivery of the Investor’s
Subscription Agreement by the Company, nor the completion by the Company of the transactions that
are the subject of the Investor’s Subscription Agreement, requires the consent of, approval by, or
a filing or notification by the Company with, any Governmental Entity, other than (i) filings with
the SEC reporting the signing of Investor Agreements or the consummation of the transactions
contemplated thereby; (ii) approval of, or non-objection by, the Board of Governors of the Federal
Reserve System (the “Federal Reserve ”) of any notice filed by the Investor pursuant to the Change
in Bank Control Act of 1978, as amended; (iii) any filings or notifications that may be required to
be made with or given to the Federal Deposit Insurance Company (the “FDIC”), the Office of the
Commissioner of Financial Institutions of the Commonwealth of Puerto Rico (the “OCFI”) and other
banking or insurance regulatory agencies; (iv) filing with NYSE in order to list the shares of
Acquired Common Stock as contemplated by Section 4.2(f) and (v) securities or blue sky laws
of the various states. Assuming the Investor’s representations and warranties in Section
2.2(h) are correct, the transactions that are contemplated by the Investor’s Subscription
Agreement qualify for an exemption from the reporting or waiting period requirements of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the “HSR Act”) under Section 7A(c) of the HSR
Act.




          (j) FirstBank. The Company owns all the outstanding shares of FirstBank. FirstBank
is a commercial bank duly organized and validly existing under the laws of the Commonwealth of
Puerto Rico and is duly licensed by the OCFI. The deposits of FirstBank are insured by the FDIC to
the fullest extent permitted in the Federal Deposit Insurance Act and the rules and regulations of
the FDIC thereunder, and all premiums and assessments required to be paid in connection therewith
have been paid when due.




          (k) Subsidiaries. The Company has Previously Disclosed a true, correct and complete
list of all of its subsidiaries (as the term “subsidiary” is defined for purposes of the Bank
Holding Company Act) as of the date of the Investor’s Subscription Agreement (individually, a
“Company Subsidiary” and, collectively, the “Company Subsidiaries”). Each Company Subsidiary
(including FirstBank) has been duly organized and is validly existing and, to the extent the
concept is applicable, in good standing under the laws of the jurisdiction in which it was
formed. All the Company’s shares of stock or other equity interests in each of the Company
Subsidiaries, whether directly or indirectly owned, have been duly authorized and validly issued
and, with regard to stock of corporations or other equity interests in limited liability entities,
are fully paid and non-assessable and are not subject to any preemptive rights and are free and
clear of any lien, adverse right or claim, charge, option, pledge, covenant, title defect, security
interest or other encumbrance of any kind, with no personal liability attaching to the




- 6 -









 




ownership
thereof, except liens, adverse rights or claims, charges, options, pledges, covenants, title
defects, security interests or encumbrances on the Company’s equity interests in Company
Subsidiaries other than FirstBank that do not affect the Company’s control over those Company
Subsidiaries and, in the aggregate, would not reasonably be expected to be materially adverse to
the Company and the Company Subsidiaries taken as a whole. Neither the Company nor any of the
Company Subsidiaries has issued any options, warrants, scrips, pre-emptive rights, rights to
subscribe, gross-up rights, calls, commitments or convertible or exchangeable securities, or is a
party to any other agreements, which require, or upon the passage of time, the payment of money or
the occurrence of any other event may require, the Company or any Company Subsidiary to issue or
transfer any shares of or other equity interests in a Company Subsidiary, and there are no
registration rights or covenants or transfer or voting restrictions with respect to any shares of
or other equity interests in any of the Company Subsidiaries.




          (l) Company Reports. Since January 1, 2008, the Company and the Company Subsidiaries
have filed all reports, proxy statements and other documents required to have been filed with the
SEC (the “Company Reports”), including under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), and have paid all material fees and assessments due and payable in connection
therewith. When they were filed, the Company Reports complied in all material respects with the
applicable rules, regulations and forms promulgated by the SEC, and none of the Company Reports,
when filed, contained an untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statements made in it, in light of the circumstances under which
they were made, not misleading. Without limiting the generality of what is said in the preceding
sentence, the Company’s Annual Report on Form 10-K for the year ended December 31, 2010 (the
“Company 10-K”) and its Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2011
(the “March 10-Q”) which were filed with the SEC, including any documents incorporated by reference
in them, each complied in all material respects with the requirements of the form on which it was
filed and, when it was filed, did not contain an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements made in it, in light of the
circumstances under which they were made, not misleading. As of the date of the Investor’s
Subscription Agreement, there are no outstanding comments from the SEC with respect to any Company
Report other than oral inquiries regarding the accounting for and presentation in the consolidated
financial statements and disclosures made in those consolidated financial statements regarding the
February 2011 sale of loans from FirstBank to a joint venture majority owned by PRLP Ventures LLC.
No executive officer of the Company has failed in any respect to make the certifications required
of him or her under Section 302 or 906 of the Sarbanes-Oxley Act of 2002.




          (m) Controls and Procedures. The records, systems, controls, data and information of
the Company and the Company Subsidiaries are recorded, stored, maintained and operated under means
(including any electronic, mechanical or photographic process, whether computerized or not) that
are under the exclusive ownership and direct control of the Company, the Company Subsidiaries or
their accountants (including all means of access
thereto and therefrom), except for any nonexclusive ownership and nondirect control that would
not reasonably be expected to have a material adverse effect on the system of internal accounting
controls described below. The Company (i) has implemented and maintains disclosure controls and
procedures (as defined in Rule 13a-15(e) under the Exchange Act) to ensure that material
information relating to the Company, including its consolidated Company Subsidiaries, is made known
to the chief executive officer and the chief financial officer of the Company by others within
those entities, and (ii) has disclosed, based on its most recent evaluation prior to the date of
the Investor’s Subscription Agreement, to the Company’s outside




- 7 -









 




auditors and the audit committee of
the Board of Directors (A) any significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting (as defined in Rule 13a-15(f) under the
Exchange Act) that are reasonably likely to adversely affect the Company’s ability to record,
process, summarize and report financial information, and (B) any fraud, whether or not material,
that involves management or other employees who have a significant role in the Company’s internal
controls over financial reporting. As of the date of the Investor’s Subscription Agreement, no
officer of the Company has knowledge of any reason that its outside auditors and its chief
executive officer and chief financial officer will not be able to give the certifications and
attestations required pursuant to the rules and regulations adopted pursuant to Section 404 of the
Sarbanes-Oxley Act of 2002, without qualification, when next due. Since December 31, 2008, (A)
neither the Company nor any of the Company Subsidiaries nor, to the knowledge of the Company, any
director, officer, employee, auditor, accountant or representative of the Company or any of the
Company Subsidiaries, has received or otherwise had or obtained knowledge of any material
complaint, allegation, assertion or claim, whether written or oral, regarding the accounting or
auditing practices, procedures, methodologies or methods of the Company or any of the Company
Subsidiaries or their respective internal accounting controls, including any material complaint,
allegation, assertion or claim that the Company or any of the Company Subsidiaries has engaged in
questionable accounting or auditing practices, and (B) no attorney representing the Company or any
of the Company Subsidiaries, whether or not employed by the Company or any of the Company
Subsidiaries, has reported under Part 205 of the SEC Rules (17 CFR §205.1, et.seq.) evidence of a
material violation of securities laws, breach of fiduciary duty or similar violation by the Company
or any of its officers, directors, employees or agents to the Board of Directors or any committee
thereof or to any director or officer of the Company. The management of the Company has, at least
since January 1, 2006, performed the evaluation of the effectiveness, as of the end of each fiscal
year, of the Company’s internal control over financial reporting required by SEC Rule 13a-15(c).
The evaluation as of December 31, 2010 did not disclose any material weaknesses.




          (n) Financial Statements. Each of the consolidated balance sheets of the Company and
the Company Subsidiaries and the related consolidated statements of income, stockholders’ equity
and cash flows, together with the notes thereto, included in the Company 10-K, and the unaudited
consolidated balance sheets of the Company and the Company Subsidiaries as of March 31, 2011 and
the related consolidated statements of income, stockholders’ equity and cash flows for the period
ending March 31, 2011, together with the notes thereto, included in the March 10-Q, (the “Interim
Financials” and, collectively, the “Company Financial Statements”), (i) have been prepared from,
and are in accordance with, the books and records of the Company and the Company Subsidiaries, (ii)
complied as to form, as of their respective filing dates, in all material respects with applicable
accounting requirements and with the published rules and regulations of the SEC with respect
thereto, (iii) have been prepared in accordance with GAAP applied on a consistent basis and (iv)
present fairly in conformity with GAAP in all material respects the consolidated financial position
of the Company and the Company Subsidiaries at the dates and the consolidated results of
operations, changes in
stockholders’ equity and cash flows of the Company and the Company Subsidiaries for the
periods stated therein (subject to the absence of notes and year-end audit adjustments in the case
of the Interim Financials).




          (o) Absence of Undisclosed Liabilities. Neither the Company nor any of the Company
Subsidiaries has any liabilities, contingent or otherwise, that would be required to be reflected
on, or disclosed in notes to, consolidated financial statements of the Company and the Company
Subsidiaries prepared in accordance with GAAP, other than (i) liabilities reflected on the
consolidated balance sheet of the Company and the Company Subsidiaries at March 31,




- 8 -









 




2011 included
in the March 10-Q, (ii) liabilities disclosed in the notes to the financial statements in the
Company 10-K or the March 10-Q, (iii) liabilities that, because they were not material, were not
required by GAAP to have been reflected on the consolidated balance sheet of the Company and the
Company Subsidiaries at March 31, 2011 or disclosed in the notes to the financial statements
included in the Company 10-K or the March 10-Q, (iv) contingent obligations and contingent
liabilities disclosed in the management’s discussion and analysis of financial condition and
results of operations included in the Company 10-K or the March 10-Q, (v) contingent liabilities
not required by GAAP to be reflected in, or described in notes to, the Company’s financial
statements and not required by applicable SEC rules to be described in the management’s discussion
and analysis of financial condition and results of operations included in the Company 10-K or the
March 10-Q or (vi) liabilities arising in the ordinary course of the conduct by the Company and the
Company Subsidiaries of their respective businesses since March 31, 2011.




          (p) Absence of Certain Changes. Since December 31, 2010, (i) the Company and the
Company Subsidiaries, including FirstBank, have conducted their businesses in the ordinary course
and in the same manner in which they were being conducted during the period immediately prior to
December 31, 2010, (ii) there has not been a Material Adverse Change in the financial condition,
results of operations, business or prospects of the Company and the Company Subsidiaries taken as a
whole and (iii) nothing has occurred that has had or is likely to have a Company Material Adverse
Effect. A “Material Adverse Change” (x) in the financial condition of the Company and the Company
Subsidiaries will occur between two dates if between those dates there is a material reduction of
the Company’s and the Company Subsidiaries’ consolidated working capital, net worth or tangible net
worth, a material increase in their consolidated current liabilities (other than due to the conduct
of business in the ordinary course) or a material increase in their consolidated total liabilities
(other than due to the conduct of business in the ordinary course), and (y) in the results of
operations of the Company and the Company Subsidiaries during a period will occur if that period
consists of one or more full fiscal quarters and during that period there is a material reduction
in its and its subsidiaries’ consolidated total revenues, net income before income taxes, net
income, or earnings before interest, taxes, depreciation and amortization compared both with the
same period of the preceding fiscal year and with the immediately preceding period of the same
number of fiscal quarters. However, a change due wholly or primarily to any of the conditions or
occurrences referred to in clauses (A) through (F) of Section 2.1(b) is not
a Material Adverse Change (which clauses shall be read to incorporate the proviso applicable to
clauses (A) through (C) in Section 2.1(b)).




          (q) Compliance with FDIC Order, OCFI Order and Federal Reserve Agreement. The capital
of the Company and of FirstBank, supplemented by proceeds totaling at least $500 million of the
sales of Common Stock under this and other Investor Agreements and the conversion of the Series G
Preferred Stock into Common Stock, will be sufficient to meet any applicable minimum capital
requirement imposed by statute, regulation or
Governmental Entity, including any requirements as to the capitalization of FirstBank
contained in or arising out of the consent order dated June 3, 2010 issued by the FDIC (the “FDIC
Consent Order”) and the simultaneous order issued by the OCFI requiring compliance with the FDIC
Consent Order (the “OCFI Order”) or as to the capitalization of the Company contained in or arising
out of the agreement dated June 4, 2010 between the Company and the Federal Reserve Bank of New
York (the “Federal Reserve Agreement”) and any capital plan approved in connection therewith and in
effect.




- 9 -









 








          (r) Compliance with Laws. Each of the Company, FirstBank, and each of the other
Company Subsidiaries has at all times complied, and currently is complying, with, and the condition
and use of its assets and properties has not violated or infringed and does not currently violate
or infringe in any material respects, any applicable United States domestic, federal, state or
local, any applicable Commonwealth of Puerto Rico, or any applicable foreign, laws, regulations,
rules, judgments, injunctions and decrees, including, to the extent they are applicable to the
Company or Company Subsidiaries, the Troubled Asset Relief Program, the Emergency Economic
Stabilization Act of 2008, the Sarbanes-Oxley Act of 2002, the Equal Credit Opportunity Act, the
Fair Housing Act, the Community Reinvestment Act, the Home Mortgage Disclosure Act, the Uniting and
Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism
(USA PATRIOT) Act of 2001, all other applicable fair lending laws or other laws relating to
discrimination and the Bank Secrecy Act, except to the extent of failures to comply, violations or
infringements that would not reasonably be expected to result in actions against the Company or
Company Subsidiaries that would, in the aggregate, interfere in a material respect with the
businesses of the Company and the Company Subsidiaries or result in monetary penalties against the
Company or Company Subsidiaries that would be material to the Company and the Company Subsidiaries
taken as a whole. Insofar as any officer of the Company is aware, none of the Company or any of
the Company Subsidiaries is under investigation with respect to, or has been threatened to be
charged with or given notice of any material violation of, any such laws, regulations, rules,
judgments, injunctions or decrees. FirstBank is the only Company Subsidiary that is subject to the
Community Reinvestment Act. FirstBank has a Community Reinvestment Act rating of “satisfactory” or
better.




          (s) Licenses and Permits. The Company and the Company Subsidiaries have all material
licenses and permits from Governmental Entities that are required at the date of the Investor’s
Subscription Agreement to enable them to conduct their businesses as they currently are being
conducted. To the knowledge of the Company, no suspension or cancellation of any such licenses or
permits is pending or threatened.




          (t) Litigation. Neither the Company nor any of the Company Subsidiaries is a party to
(i) any legal proceeding that the Company would be required to disclose under Item 103 of SEC
Regulation S-K in a filing at the date of the Investor’s Subscription Agreement or the Closing Date
to which that Item applies, other than legal proceedings disclosed in the Company 10-K or the March
10-Q, or in a report on Form 8-K filed with the SEC since December 31, 2010, or (ii) any suit or
governmental proceeding that seeks to prevent the Company from completing the transactions that are
the subject of the Investor’s Subscription Agreement or any of the other Investor Agreements, nor,
to the best of the knowledge of any officer of the Company, has any suit or governmental proceeding
which seeks to prevent the Company from completing the transactions that are the subject of the
Investor’s Subscription Agreement or any of the other Investor Agreements been threatened.




          (u) Tax Matters. Each of the Company and the Company Subsidiaries has timely filed
when due (taking account of timely filed extensions) all Tax Returns which it has been required to
file and has timely paid or has timely withheld and remitted all Taxes shown on any Tax Return.
All such Tax Returns are true, correct and complete in all material respects and accurately reflect
in all material respects all Taxes required to have been paid, except to the extent of items that
may be disputed by applicable taxing authorities but for which there is substantial authority to
support the position taken by the Company or the Company Subsidiary and which have been adequately
reserved against in accordance with GAAP on the consolidated balance sheet at December 31, 2010
included in the Company 10-K. No Tax lien




- 10 -









 




has been filed by any taxing authority against the
Company or any of the Company Subsidiaries or any of their assets, other than properties acquired
through foreclosure or similar processes and held for sale. Except as Previously Disclosed, no
Federal, Commonwealth, United States Virgin Islands, foreign, state or local audits or other
administrative proceedings or court proceedings in any jurisdiction with regard to Taxes are
currently pending or threatened with regard to the Company or any of its the Company Subsidiaries.
Neither the Company nor any of the Company Subsidiaries (i) is a party to any agreement providing
for the allocation or sharing of Taxes, (ii) has participated in or cooperated with an
international boycott as that term is used in Section 999 of the Internal Revenue Code of 1986, as
amended (the “Code”), or (iii) is liable as a transferee, a successor or otherwise for any Tax
incurred by any other person. There is no material intercompany income or gain which may in the
future become taxable to the Company, whether on disposition of particular assets or Company
Subsidiaries or otherwise. Except as Previously Disclosed, no Tax Return of the Company or any of
the Company Subsidiaries is the subject of an audit by any taxing authority (including any state or
local taxing authority) in the Commonwealth of Puerto Rico, the United States, the United States
Virgin Islands or any other nation. All deficiencies asserted or assessments made as a result of
any Tax audits that are not being contested in good faith by appropriate proceedings and for which
appropriate reserves have been established have been paid in full. At least since January 1, 2006,
no claim has been made by an authority in a jurisdiction where the Company or any of the Company
Subsidiaries does not file a Tax Return that the Company or any of the Company Subsidiaries is or
may be subject to taxation by that jurisdiction. Except as Previously Disclosed, neither the
Company nor any Company Subsidiary (i) has waived any statute of limitations with respect to Taxes
or agreed to any extension of time with respect to a Tax assessment or deficiency, in each case,
that is still in effect, or has pending a request for any such extension or waiver or (ii) has or
has ever had a permanent establishment in any country other than the country of its organization,
or is or has ever been subject to Tax in a jurisdiction outside the country of its organization.
The Company is not a “controlled foreign corporation” within the meaning of Section 957 of the
Code, nor will it become a “controlled foreign corporation” as a result of the transactions
contemplated by the Investor’s Subscription Agreement. Neither the Company nor any of the Company
Subsidiaries is (i) a passive foreign investment company within the meaning of Section 1297 of the
Code or (ii) a shareholder, directly or indirectly, in such a passive foreign investment company.
There are no current limitations on the utilization by the Company or any of the Company
Subsidiaries of its respective net operating loss carryforwards under any applicable Tax law,
including Section 382 of the Code (or any similar provision of state, local or non-U.S. law). The
transactions described herein occurring on the Closing Date and any other transactions contemplated
by the Investor’s Subscription Agreement and the other Investor Agreements will not result in a
limitation on the utilization of the Company’s or FirstBank’s net operating loss carryforwards
under any applicable provision of Puerto Rico income Tax law. The net operating loss carryforward
of FirstBank as of December 31, 2010 as a result of losses that have been or will be reflected on
FirstBank’s Puerto Rico income tax returns (at least some of which are or will be subject to audit)
will be at least $550,000,000. For the purposes of the Investor’s Subscription Agreement,
the term “Taxes” means (1) all Commonwealth of Puerto Rico, U.S. Virgin Islands, British
Virgin Islands, U.S. federal, state, local, foreign or other taxes of any kind (together with any
and all interest, penalties, additions to tax and additional amounts imposed with respect thereto)
imposed by any Governmental Entity, including taxes on or with respect to income, franchise,
windfall or other profits, gross receipts, property, sales, use, capital stock, payroll,
employment, unemployment, social security, workers’ compensation or net worth, and taxes in the
nature of excise, withholding, ad valorem or value added, (2) liability for the payment of any
amounts of the type described in clause (1) as a result of being or having been a member of an
affiliated, consolidated, combined or unitary group, and (3) liability for the payment of any
amounts as a




- 11 -









 




result of being party to any tax sharing agreement or as a result of any express or
implied obligation to indemnify any other person with respect to the payment of amounts of the type
described in clause (1) or (2). For the purposes of the Investor’s Subscription Agreement, the
term “Tax Return” means any and all returns and reports (including elections, declarations,
disclosures, schedules, estimates and information returns and any amendments thereto) supplied or
required to be supplied to any Governmental Entity in connection with Taxes.




          (v) Environmental Matters. Except as would not reasonably be expected, in aggregate,
to have a Company Material Adverse Effect, (i) the Company and the Company Subsidiaries have all
environmental permits which are necessary to enable them to conduct their businesses as they are
being conducted on the date of the Investor’s Subscription Agreement without violating any
Environmental Laws, (ii) neither the Company nor any of the Company Subsidiaries has received any
notice of material noncompliance or material liability under any Environmental Law, (iii) neither
the Company nor any of the Company Subsidiaries has performed any acts, including, but not limited
to, releasing, storing or disposing of hazardous materials, there is no condition on any property
owned or leased by the Company or a Company Subsidiary, and there was no condition on any property
formerly owned or leased by the Company or a Company Subsidiary while the Company or a Company
Subsidiary owned or leased that property, that could result in liability by the Company or a
Company Subsidiary under any Environmental Law and (iv) neither the Company nor any of the Company
Subsidiaries is subject to any order of any Governmental Entity requiring the Company or any of the
Company Subsidiaries to take, or refrain from taking, any actions in order to comply with any
Environmental Law and no action or proceeding seeking such an order is pending or, insofar as any
officer of the Company or any of the Company Subsidiaries is aware, threatened against the Company
or any of the Company Subsidiaries. As used in the Investor’s Subscription Agreement, the term
“Environmental Law” means any United States, Puerto Rico or other national, state or local law,
rule, regulation, guideline or other legally enforceable requirement of a Governmental Entity
relating to protection of the environment or to environmental conditions which affect human health
or safety.




          (w) Labor Matters. No employees of the Company or Company Subsidiaries are
represented by any labor union nor are there any collective bargaining agreements otherwise in
effect. There is no pending demand by any union or employee group to be recognized or certified as
the bargaining representative for any of the Company’s or the Company Subsidiaries’ employees, and
there are no proceedings seeking recognition or certification of that type pending before the
National Labor Relations Board or any other Governmental Entity in the United States, Puerto Rico
or elsewhere.




          (x) Company Benefit Plans.





      (i) The Company has Previously Disclosed all benefit plans, agreements, commitments,
practices or arrangements of any type maintained or sponsored by the Company or any Company
Subsidiary for its current and former employees, directors and consultants and the
compensation paid to all its directors, to its Chief Executive Officer, its Chief Financial
Officer, and its three most highly compensated officers other than its Chief Executive
Officer and its Chief Financial Officer who were serving as officers at December 31, 2010.
“Company Benefit Plans” means all benefit and compensation plans, agreements, commitments,
practices or arrangements of any type maintained or sponsored by the Company or any Company
Subsidiary for its current and former employees, directors and individual consultants.



- 12 -









 






     (ii) Except as would not reasonably be expected to result in a liability that would be
material to the Company and the Company Subsidiaries taken as a whole, (i) each Company
Benefit Plan that is required to be registered with, or approved by, a Governmental Entity
in the Commonwealth of Puerto Rico, the United States or any other jurisdiction has been so
registered with or approved by that Governmental Entity and (ii) each Company Benefit Plan
has been maintained in all material respects in accordance with its terms and any applicable
provisions of law (including, if applicable, the U.S. Employee Retirement Income Security
Act of 1974, as amended (“ERISA”), the Code, the Internal Revenue Code of New Puerto Rico,
the Troubled Asset Relief Program and the Emergency Economic Stabilization Act of 2008.




     (iii) No Company Benefit Plan is (x) a pension plan (of the type described in Section
3(2) of ERISA) subject to statutory minimum funding requirements under Title IV of ERISA,
Section 412 of the Code, or similar law; (y) a “multiemployer plan” (of the type described
in Section 3(37) of ERISA), (z) a “employee welfare plan” (of the type described in Section
3(1) of ERISA) providing benefits, including death or medical benefits, beyond termination
of service or retirement other than coverage mandated by the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended, or similar law, and at the sole expense of the
participant or the participant’s beneficiary. Neither the Company nor any Company
Subsidiary would reasonably be expected to have any liability with respect to any plan
described in (x), (y) or (z) of this subsection or other wise as a result of any trade or
business that is or during the past six years has been treated as a single employer with the
Company or any Company Subsidiary under Section 414(b), (c), (m) or (o) of the Code or
Section 4001(b) of ERISA.




     (iv) Neither the execution of the Investor Agreements nor the consummation of the
transactions contemplated by the Investor Agreements will give rise to a change in control
under, or result in the breach or violation of, or the acceleration of any right under, or
result in any additional rights, or the triggering of any anti-dilution adjustment under an
equity plan sponsored by the Company or any of the Company Subsidiaries or an employment
agreement or other contract or agreement to which the Company or any of the Company
Subsidiaries is a party.




     (v) Neither the Company nor any of the Company Subsidiaries has a contract, plan or
commitment, whether legally binding or not, to create any additional Company Benefit Plan or
to modify any existing Company Benefit Plan in a manner that would increase materially the
expense of maintaining such Company Benefit Plan above the level of the expense incurred
therefore for the most recent fiscal year.



         (y) Investment Company or Investment Adviser. Neither the Company nor any of the
Company Subsidiaries is required to be registered as an investment company under the Investment
Company Act of 1940, as amended, or to be registered under the Investment Advisers Act of 1940, as
amended.



         (z) Compliance with Banking Laws and Regulations. Neither the Company nor any of the
Company Subsidiaries (including FirstBank) (i) is subject to (or has been advised that a
Governmental Entity that regulates banking activities in any location in which the Company or any
Company Subsidiary conducts banking activities (including the FDIC, the OCFI and the Federal
Reserve) (each a “Bank Regulatory Agency”) is considering issuing, initiating or ordering) any
cease-and-desist or similar order, or any enforcement action commenced, by any Bank Regulatory
Agency or (ii) is a party to any written agreement, consent agreement or



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memorandum of
understanding with, or any commitment letter or written undertaking to, any Bank Regulatory Agency,
and no resolution of the Board of Directors of the Company or any of the Company Subsidiaries
(including FirstBank) is in effect that was adopted at the request of a Bank Regulatory Agency that
restricts in any material respect the conduct of its business or that relates in a material manner
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, other than the FDIC Consent Order, the OCFI Order, the
Federal Reserve Agreement and a confidential agreement dated September 28, 2010 with a Bank
Regulatory Agency. The Company and each of the Company Subsidiaries is in compliance in all
material respects with all agreements, commitments and undertakings it has made to a Governmental
Entity that are currently in effect (including the FDIC Consent Order, the OCFI Order and the
Federal Reserve Agreement) and neither the Company nor any of the Company Subsidiaries has received
any notice from any Bank Regulatory Agency indicating that either the Company or any of the Company
Subsidiaries is not in compliance in all material respects with any such agreement, commitment or
undertaking. Since January 1, 2008, the Company and its subsidiaries have filed all material
reports, registrations and statements, together with any required amendments thereto, that they
were required to file with the Bank Regulatory Agencies, including, without limitation, all
financial statements and financial information required to be filed by them under the Federal
Deposit Insurance Act and the Bank Holding Company Act. As of their respective dates, such reports
complied in all material respects with all the rules and regulations promulgated by the applicable
Bank Regulatory Agencies.




          (aa) Compliance with Mortgage Laws and Sale of Mortgage Loans. The Company and the
Company Subsidiaries have complied in all material respects with (i) all requirements of applicable
laws and governmental regulations with respect to the origination, purchase, sale, insuring or
servicing of or filing of claims in connection with mortgage loans, including all laws and
governmental regulations with respect to documentation in connection with the origination,
processing, underwriting (including credit approval), purchase and servicing of mortgage loans,
real estate settlement procedures, consumer protection, truth in lending, fair housing, transfers
of servicing, collection practices, equal credit opportunity and adjustable rate mortgages, (ii)
with regard to mortgage loans any of them has sold to any Agency, any agreements with, or
applicable rules, regulations, guidelines or other requirements of, any Agency to which the
mortgage loans were sold, in each case, except failures to comply that would not reasonably be
expected, in aggregate, to have a Company Material Adverse Effect, (iii) the responsibilities and
obligations relating to mortgage loans set forth in any agreement between the Company or any of the
Company Subsidiaries and any such Agency, Loan Investor or Insurer, and (iv) the terms and
provisions of any mortgage or other collateral documents and other loan documents with respect to
each mortgage loan, in the case of this
clause (iv) only, except as would not cause a Company Material Adverse Effect.
 Neither the Company nor any of the Company Subsidiaries has received a written claim from
any Agency, Loan Investor or Insurer to the effect that the Company or any of the Company
Subsidiaries has failed to comply in any material respect with applicable underwriting standards or
guidelines with respect to mortgage loans sold by the Company or any of the Company Subsidiaries to
an Agency or Loan Investor or with respect to any sale of mortgage servicing rights, or a written
notice from any Agency, Loan Investor or Insurer restricting the activities (including commitment
authority) of the Company or any of the Company Subsidiaries or terminating or giving notice of
intent to terminate its relationship with the Company or any of the Company Subsidiaries because of
poor performance, poor loan quality or concern with respect to the Company’s or any of the Company
Subsidiaries’ compliance with laws. For purposes of this Section 2.1(aa):




- 14 -









 









     (i) “Agency” shall mean the Federal Housing Administration, the Federal Home Loan
Mortgage Corporation, the Federal National Mortgage Association, the Government National
Mortgage Association, or any other federal or state agency with authority to (i) determine
any investment, origination, lending or servicing requirements with regard to mortgage loans
originated, purchased or serviced by the Company or any of the Company Subsidiaries or (ii)
originate, purchase, or service mortgage loans, or otherwise promote mortgage lending,
including, without limitation, state and local housing finance authorities;




     (ii) “Loan Investor ” shall mean any person (including an Agency) having a beneficial
interest in any mortgage loan originated, purchased or serviced by the Company or any of the
Company Subsidiaries or a security backed by or representing an interest in any such
mortgage loan; and




     (iii) “Insurer ” shall mean a person who insures or guarantees for the benefit of the
mortgagee all or any portion of the risk of loss upon borrower default on any of the
mortgage loans originated, purchased or serviced by the Company or any of the Company
Subsidiaries, including the Federal Housing Administration, the United States Department of
Veterans’ Affairs, the Rural Housing Service of the U.S. Department of Agriculture and any
private mortgage insurer, and providers of hazard, title or other insurance with respect to
such mortgage loans or the related collateral.



          (bb) Risk Management. The Company and the Company Subsidiaries have in place risk
management policies and procedures sufficient in scope and operation to provide reasonable
protection against risks of the type and in amounts reasonably expected to be incurred by entities
that are similar to the Company and the Company Subsidiaries in size and in the lines of business
in which they are engaged. All material derivative instruments entered into by the Company or the
Company Subsidiaries for their own accounts were entered into (i) in the ordinary course of
business only for the purposes of mitigating identified risks, (ii) in accordance with prudent
practices and in all material respects with all applicable laws, rules, regulations and regulatory
policies, and (iii) with counterparties that, at the time, the Company or the applicable Company
Subsidiary believed to be financially responsible. Each such material derivative instrument
constitutes a valid and legally binding obligation of the Company or one or more of the Company
Subsidiaries, enforceable in accordance with its terms and, to the knowledge of the Company,
neither the Company nor any of the Company Subsidiaries, nor any other party thereto, is in
material breach of or has materially defaulted under any such agreement or arrangement.




          (cc) Patriot Act, Office of Foreign Asset Controls; Anti-Money Laundering. The
operations of the Company and the Company Subsidiaries are being conducted in compliance in all
material respects with applicable financial recordkeeping, reporting and other requirements of the
Currency and Foreign Transactions Reporting Act of 1970, as amended, the United and Strengthening
America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001,
any applicable order or regulation issued by the Office of Foreign Assets Control of the U.S.
Department of the Treasury (“OFAC”), or any other applicable anti-money laundering or
anti-terrorist-financing statutes, rules or regulations of any jurisdictions, and no action or
proceeding by or before any Governmental Entity alleging violations of anti-money laundering
statutes or anti-terrorist financing statutes by the Company or any of the Company Subsidiaries is
pending or, to the knowledge of the Company, threatened, except, in each case, as would not
reasonably be expected, in aggregate, to have a Company Material Adverse Effect. None of the
Company or any of the Company Subsidiaries




- 15 -









 




has, since December 31, 2008, nor to the knowledge of
the Company has any other person on behalf of the Company or any of the Company Subsidiaries that
qualifies as a “financial institution” under U.S. anti-money laundering laws, knowingly acted, by
itself or in conjunction with another, in any act in connection with the concealment of any
currency, securities or other proprietary interest that is the result of a felony as defined in
U.S. anti-money laundering laws (“Unlawful Gains”), nor knowingly accepted, transported, stored,
dealt in or brokered any sale, purchase or any transaction of any other nature for Unlawful Gains.
Each of the Company and, to the extent it qualifies as a “financial institution” under U.S.
anti-money laundering laws, any of the Company Subsidiaries has implemented in all material
respects such anti-money laundering mechanisms and kept and filed all material reports and other
necessary material documents as required by, and otherwise complied in all material respects with,
U.S. anti-money laundering laws and rules and regulations thereunder. None of the Company or any
of the Company Subsidiaries, nor any of their respective directors, officers, agents, employees or
any other persons acting on their behalf, will knowingly directly or indirectly lend, contribute or
otherwise make available any proceeds of the sale of the Acquired Common Stock to the Investor to
any subsidiary, joint venture partner or other person or entity for the purpose of financing the
activities of any person currently subject to U.S. sanctions administered by OFAC.




          (dd) Foreign Corrupt Practices Act. None of the Company or any of the Company
Subsidiaries, nor any of their respective directors, officers, agents, employees or any other
persons acting on their behalf (i) has violated the Foreign Corrupt Practices Act, 15 U.S.C. §
78dd-1 et seq., as amended, or any other similar applicable foreign, federal, or state legal
requirement, including making or providing, or causing to be made or provided, directly or
indirectly, any payment or thing of value to a foreign official, foreign political party, candidate
for office or any other person knowing that the person shall pay or offer to pay the foreign
official, party or candidate, for the purpose of influencing a decision, inducing an official to
violate their lawful duty, securing any improper advantage, or inducing a foreign official to use
his or her influence to affect a governmental decision, (ii) has paid, accepted or received any
unlawful contributions, payments, expenditures or gifts, or (iii) has violated or operated in
noncompliance with any export restrictions, anti-terrorism law or regulation, anti-boycott
regulations or embargo regulations.




          (ee) Insurance. The Company and each of the Company Subsidiaries is presently
insured, and during each of the past three calendar years (or during such lesser period of time as
the Company has owned such subsidiary) has been insured, for reasonable amounts with financially
sound and reputable insurance companies against such risks as
companies engaged in a similar business would, in accordance with good business practice,
customarily be insured.




          (ff) Core Deposits and Certificates of Deposits. As of the date hereof, FirstBank has
at least $3,475,000,000 in core deposits (including money market, demand, checking, savings and
transactional accounts and excluding secured governmental deposits and certificates of deposits)
and at least $1,825,000,000 in certificates of deposits, excluding governmental and brokered
deposits.




          (gg) Loans to Affiliates; Loans to Directors and Officers. Neither the Company nor
any of the Company Subsidiaries is a party to any loan, loan agreement, note or borrowing
arrangement (including leases, credit enhancements, commitments, guarantees and interest-bearing
liabilities) (each, a “Loan”) with any director or executive officer of the Company or any of the
Company Subsidiaries or shareholder of the Company that beneficially owns five percent or more of
the voting common stock of the Company. All Loans with any executive officer of the




- 16 -









 




Company or any
of the Company Subsidiaries or shareholder of the Company are made in compliance with the
applicable requirements of the Federal Reserve Board’s Regulation O.




          (hh) Compliance with Securities Laws. Neither the Company nor any person acting on
its behalf has taken any action (including, offering any securities of the Company under
circumstances which would require the integration of such offering with the offering of any of the
securities to be issued pursuant to the Investor’s Subscription Agreement or any other Investor
Agreement for purposes of the Securities Act and the rules and regulations of the SEC promulgated
thereunder) which might subject the offering, issuance or sale of any of the securities to be
issued pursuant to the Investor’s Subscription Agreement or any other Investor Agreement to the
registration requirements of the Securities Act or that would cause the sale of Common Stock under
this and the other Investor Agreements not to be eligible for the exemption from the registration
requirements of the Securities Act contained in Section 4(2) of that Act.




          (ii) Commitments and Contracts. Each agreement to which the Company or any Company
Subsidiary is a party which is a “material contract” within the meaning of Item 601(b)(10) of
Regulation S-K (each, a “Company Significant Agreement”) is valid and binding on the Company and
the Company Subsidiaries, as applicable, and, insofar as any officer of the Company is aware, is
valid and binding on the other party or parties to it, and is in full force and effect. The
Company and each of the Company Subsidiaries, as applicable, are in all material respects in
compliance with and have in all material respects performed all obligations required to be
performed by them to date under each Company Significant Agreement. Neither the Company nor any of
the Company Subsidiaries knows of, or has received notice of, any material violation or default (or
any condition which with the passage of time or the giving of notice would cause such a violation
of or a default) by the Company or any Company Subsidiary under any Company Significant Agreement.
To the knowledge of the Company, as of the date of the Investor’s Subscription Agreement, there are
no material transactions or series of related transactions, agreements, arrangements or
understandings, nor are there any currently proposed material transactions, or series of related
transactions between the Company or any Company Subsidiaries, on the one hand, and the Company, any
current or former director or executive officer of the Company or any Company Subsidiaries or any
person who beneficially owns 5% or more of the Common Shares (or any of such person’s immediate
family members or affiliates) (other than Company Subsidiaries), on the other hand.




          (jj) Properties and Leases. The Company and the Company Subsidiaries have good and
marketable title to all real properties and good title to all other properties and assets owned by
them (other than any assets the Company or any of the Company Subsidiaries has repossessed), in
each case, free from Liens that would affect the value thereof or interfere with the use made or to
be made thereof by them in any material respect. The Company and the Company Subsidiaries own or
lease all properties that are necessary to their operations as now conducted. All leases of real
property and all other leases material to the Company or any of the Company Subsidiaries pursuant
to which the Company or any such Company Subsidiary, as lessee, leases real or personal property
are valid and effective in accordance with their respective terms, and there is not, under any such
lease, any existing default by the Company or such Company Subsidiary or any event which, with
notice or lapse of time or both, would constitute such a default except for such as would not
reasonably be expected to have a Company Material Adverse Effect.




          (kk) Intellectual Property Rights.




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     (i) The Company and the Company Subsidiaries own or possess adequate rights or licenses
to use all material intellectual property rights (“Intellectual Property Rights”) necessary
to conduct their business as conducted on the date of the Investor’s Subscription Agreement
and as presently contemplated to be conducted in the future. To the knowledge of the
Company, no product or service of the Company or the Company Subsidiaries infringes the
Intellectual Property Rights of others. The Company and the Company Subsidiaries have not
received notice of any claim being made or brought, or, to the knowledge of the Company,
being threatened, against the Company or any of the Company Subsidiaries (i) regarding their
Intellectual Property Rights that are necessary to conduct their business as conducted on
the date of the Investor’s Subscription Agreement and as presently contemplated to be
conducted in the future, or (ii) that the products or services of the Company or the Company
Subsidiaries infringe the Intellectual Property Rights of others. The computers, computer
software, firmware, middleware, servers, workstations, routers, hubs, switches, data
communications lines, and all other information technology equipment, and all associated
documentation used in the business of the Company and the Company Subsidiaries (the “IT
Assets”) operate and perform in all material respects in accordance with their documentation
and functional specifications and otherwise as required in connection with the business. To
the Company’s knowledge, no person has gained unauthorized access to the IT Assets. The
Company and the Company Subsidiaries have implemented reasonable backup and disaster
recovery technology consistent with industry practices. The Company and the Company
Subsidiaries take reasonable measures, directly or indirectly, to ensure the
confidentiality, privacy and security of customer, employee and other confidential
information. The Company and the Company Subsidiaries have complied with all internet domain
name registration and other requirements of internet domain registrars concerning internet
domain names that are used in the business. Without limiting the foregoing, the Company and
the Company Subsidiaries (A) own or have the valid right to use all the names that are
material to the conduct of their businesses or the maintenance of their customer goodwill,
including the name “FirstBank”, in all applicable jurisdictions, free and clear of all Liens
and (B) have not granted to any third party, by license or otherwise, any right or interest
in or to use any such name other than in connection with relationships between those third
parties and the Company or Company Subsidiaries. No third party has asserted any rights in
any geographic area in which it competes with the Company or a Company Subsidiary
to any name that is material to the business of the Company or a Company Subsidiary
with which the third party competes.




     (ii) For the purposes of the Investor’s Subscription Agreement, “Intellectual Property”
shall mean trademarks, service marks, brand names, certification marks, trade dress, domain
names and other indications of origin, the goodwill associated with the foregoing and
registrations in any jurisdiction of, and applications in any jurisdiction to register, the
foregoing, including any extension, modification or renewal of any such registration or
application; inventions, discoveries and ideas, whether patentable or not, in any
jurisdiction; patents, applications for patents (including divisions, continuations,
continuations in part and renewal applications), and any renewals, extensions or reissues
thereof, in any jurisdiction; nonpublic information, know-how, trade secrets and
confidential information and rights in any jurisdiction to limit the use or disclosure
thereof by any person; writings and other works, whether copyrightable or not, in any
jurisdiction; and registrations or applications for registration of copyrights in any
jurisdiction, and any renewals or extensions thereof; and any similar intellectual property
or proprietary rights.



- 18 -









 





          (ll) Disclosure. If the Investor did not, in the course of its investigation regarding
whether to purchase the Acquired Common Stock, receive from the Company or its representatives any
information about the Company other than the Investor Presentation dated May 2011 (the “Investor
Presentation”) and did not access information posted on the internet that was made available to
prospective purchasers of Common Stock who requested access to that information, when the Investor
Presentation and the form of Subscription Agreement are included in a filing with the SEC as
required by Section 11.1, no information the Investor has received from the Company or its
representatives in connection with the offer that resulted in the execution of this Investor
Agreement will constitute material non-public information about the Company. The Company
understands that the Investor or its subsidiaries may rely on the representation in the preceding
sentence in effecting transactions in securities of the Company.




     2.2 Representations and Warranties of the Investor.
The Investor, by executing the Investor’s Subscription Agreement, represents and warrants to
the Company as follows:



          (a) Organization and Power. The Investor is duly organized, validly existing and in
good standing under the laws of the jurisdiction in which it was formed and the Investor is duly
qualified to do business in all jurisdictions where failure to be qualified could reasonably be
expected to affect adversely the Investor’s ability to carry out the transactions that are the
subject of the Investor’s Subscription Agreement.




          (b) Authorization. The Investor has all power and authority that is necessary to
enable it to enter into the Investor’s Subscription Agreement and carry out the transactions
contemplated by the Investor’s Subscription Agreement, including these Terms and Conditions. All
actions necessary to authorize the Investor to enter into the Investor’s Subscription Agreement and
carry out the transactions contemplated by it have been taken. The Investor’s Subscription
Agreement has been duly executed by the Investor and, assuming due execution by the Company, it is
a valid and binding agreement of the Investor, enforceable against the Investor in accordance with
its terms.




          (c) No Conflict. Neither the execution and delivery of the Investor’s Subscription
Agreement by the Investor nor the consummation of the transactions contemplated
by the Investor’s Subscription Agreement, including these Terms and Conditions, will violate,
result in a breach of, or constitute a default (or an event which, with notice or lapse of time or
both, would constitute a default) under, (i) the certificate of incorporation and bylaws or other
organizational documents of the Investor, (ii) any agreement or instrument to which the Investor or
any of its subsidiaries is a party or by which any of them is bound, or (iii) any law, or any
order, rule or regulation of any Governmental Entity having jurisdiction over the Investor or any
of its subsidiaries, except violations, breaches or defaults that would not reasonably be expected
to affect adversely the Investor’s ability to carry out the transactions that are the subject of
the Investor’s Subscription Agreement when and as contemplated by the Investor’s Subscription
Agreement.




          (d) Consents and Approvals. Neither the execution and delivery of the Investor’s
Subscription Agreement by the Investor, nor the completion by the Investor of the transactions that
are the subject of the Investor’s Subscription Agreement, including these Terms and Conditions,
requires the consent of, approval by, or a filing or notification by the Investor with, any
Governmental Entity, other than, if applicable, filings under the Exchange Act reporting the
purchase of Common Stock by the Investor and filings, notifications, clearances or approvals that
may be required to be made or given with or to, or obtained from, the Federal Reserve Board, the
FDIC, the OCFI or any other Governmental Entity, including any banking or




- 19 -









 




insurance regulatory
agency as a result of its jurisdiction over the Company or any of the Company Subsidiaries
(including FirstBank) or persons who control the Company. At the date of the Investor’s
Subscription Agreement, the Investor does not know of any reason that any Governmental Entity would
not give any required consent to, or approval of, the Investor’s acquiring the Acquired Common
Stock as contemplated by the Investor’s Subscription Agreement, including these Terms and
Conditions. The transactions that are contemplated by the Investor’s Subscription Agreement
qualify for an exemption from the reporting or waiting period requirements of the HSR Act under
Section 7A(c) of the HSR Act.




          (e) Ownership. The Investor does not own any interest in any depository institution
such that the Investor’s acquisition of the Acquired Common Stock would cause that depository
institution and First Bank to be “commonly controlled insured depository institutions” (as that
term is defined for purposes of Section 5(e) of the Federal Deposit Insurance Act). Except as
shown on the signature page to the Investor’s Subscription Agreement, neither the Investor nor any
affiliate of the Investor (other than an affiliate as to which the Investor does not control
decisions regarding the purchase, sale or voting of securities) owns any Common Stock of the
Company.




          (f) Financial Capacity. The Investor has, or has legally binding commitments from
equity investors, lenders or both to provide, and on the Closing Date the Investor will have, all
the funds the Investor will require to enable the Investor to pay the Aggregate Purchase Price for
the Acquired Common Stock it will be purchasing as indicated on the signature page of the
Investor’s Subscription Agreement when and as contemplated by the Investor’s Subscription
Agreement, including these Terms and Conditions.




          (g) Accredited Investor. The Investor either (i) is an accredited investor, as that
term is defined in SEC Rule 501 under the Securities Act, of the type described in clause (1), (2),
(3), (4) or (7) of that Rule, and has such knowledge and experience in financial and business
matters and in investments similar to the purchase of the Acquired Common Stock that it is capable
of evaluating the merits and risks of its investment in the Acquired Common Stock and of making an
informed investment decision regarding the purchase of the Acquired Common Stock, or (ii) is not a
U.S. person, as that term is defined in SEC Regulation S under
the Securities Act, and is acquiring the Acquired Common Stock outside the United States. The
Investor is aware that the Acquired Common Stock is being offered in a transaction not involving a
public offering in the United States, that the offer and sale of the Acquired Common Stock has not
been registered under the Securities Act, and that the Investor may only sell or transfer Acquired
Common Stock under the limited circumstances set forth in Article 6. The Investor will be
acquiring the Acquired Common Stock for investment, and not with a view to distributing it, except
that the Investor may sell Acquired Common Stock under the limited circumstances set forth in
Article 6.




          (h) Investment Purpose. The Investor will be acquiring the Acquired Common Stock for
investment (as that term is defined in the rules under the HSR Act) and, assuming the Company’s
representations and warranties in Section 2.1(h) are correct, the acquisition of the Acquired
Common Stock by the Investor as contemplated by the Investor’s Subscription Agreement will not
result in the Investor’s owning 25% or more of the outstanding Common Stock. The Investor is not
acting in concert with any other party to an Investor Agreement with regard to the purchase of
Common Stock and the Investor has no agreements or understandings with any other persons (other
than its agreements with the Company in the Investor’s Subscription Agreement) regarding actions as
a stockholder of the Company after the Closing Date.




- 20 -









 








          (i) Investor’s Decision. The Investor’s decision to enter into the Investor’s
Subscription Agreement and to purchase the Acquired Common Stock was based on the Investor’s or its
adviser’s independent analysis of the merits and risks of an investment in the Acquired Common
Stock, taking into account the Investor’s own financial circumstances. The Investor did not rely
in making that decision upon any analysis prepared by, or investment advice received from, the
Company or any financial advisor, placement agent or other person acting on behalf of the Company.
The Investor is, however, relying on the representations and warranties of the Company in the
Investor’s Subscription Agreement, including these Terms and Conditions, in making its decision to
purchase Acquired Common Stock.




          (j) No Affiliation. Except to the extent that the Investor and Other Investors may be
advised by the same investment adviser, or as stated on the signature page of the Investor’s
Subscription Agreement, to the best of the Investor’s actual knowledge, the Investor (i) is not
affiliated with any other Investors which have been identified by the Company to the Investor, (ii)
made its decision to purchase the Acquired Common Stock independently from any person that does not
have the same investment adviser as the Investor and is known by the Investor to be a potential
purchaser of Common Stock (an “Unrelated Potential Investor”), (iii) except as stated on the
signature page of the Investor’s Subscription Agreement, is not advised or managed by a person that
advises or manages any other Investors, (iv) does not have a formal or informal understanding or
agreement with any Unrelated Potential Investor to make a coordinated purchase of Common Stock
(except that under these Terms and Conditions the closing of the Investor’s purchase of the
Acquired Common Stock will be simultaneous with the closing of purchases by Other Investors and the
Investor’s obligation to purchase the Acquired Common Stock is conditioned on a minimum total
amount being received from Investors for purchases of Common Stock), (v) does not have a formal or
informal understanding or agreement with any Unrelated Potential Investor to act in concert for the
purpose of exercising a controlling influence over the Company or any of its subsidiaries,
including any understanding or agreement regarding the voting or sale of Common Stock, (vi) does
not regularly participate as a member of a group consisting of substantially the same Unrelated
Potential Investors in the purchase, in substantially the same proportions in
which they are expected to purchase Common Stock under Investor Agreements, in banking
ventures in the United States or Puerto Rico.




ARTICLE 3

ACTIONS PRIOR TO THE TRANSACTION




     3.1 Stockholder Approval.
Unless the NYSE informs the Company that the NYSE rules (including Rule 312.03 of the listed
company rules) do not require (whether because the NYSE requirement has been satisfied by prior
stockholder approvals, or because of an exception, a waiver or otherwise) approval by the Company’s
stockholders of the transactions that are the subject of the Investor Agreements (including the
Investor’s Subscription Agreement), within 20 days after the date of the Investor’s Subscription
Agreement, the Company will file with the SEC a preliminary proxy statement relating to a
stockholders meeting at which the Company’s stockholders will be asked to approve the transactions
that are the subject of the Investor Agreements. The Company will include in the proxy statement
the recommendation of its Board of Directors that the Company’s stockholders vote to approve the
transactions that are the subject of the Investor Agreements, unless, and solely to the extent, the
Board determines, after consultation with counsel, that in the exercise of its fiduciary duties it
should withdraw or modify that recommendation. A withdrawal or modification of the recommendation
of the Board shall not affect the obligations of the Company to hold the meeting of the Company’s
stockholders contemplated by this Agreement. The Company will, to



- 21 -









 







the extent it is not unreasonable
for it to do so, resolve and comply with all comments of the staff of the SEC promptly, and cause
the proxy statement to be filed in definitive form and distributed to the Company’s stockholders as
promptly as practicable and in any event within five Business Days, after the Company is informed
by the staff of the SEC that they have no further comments with regard to the proxy statement,
either by mail or by notice of internet access. The Company will cause the stockholders meeting to
which the proxy statement relates and at which the Company’s stockholders will be asked to approve
the transactions that are the subject of the Investor Agreements to be held as promptly as
practicable and no more than 40 days after the Company distributes the proxy statement to its
stockholders.



     3.2 HSR Act Filings.



          (a) The purchase of the Acquired Common Stock by the Investor as contemplated by the
Investor’s Subscription Agreement (either alone or together with the purchases of Common Stock by
Other Investors under Investor Agreements) qualifies for an exemption from the reporting or waiting
period requirements of the HSR Act under Section 7A(c) of the HSR Act. If it is necessary for the
Investor and the Company to make filings with one or both of the Federal Trade Commission and the
Department of Justice in order to satisfy the requirements of that exemption or for an exemption
from any other applicable antitrust laws with regard to the transactions that are the subject of
the Investor’s Subscription Agreement, the Investor and the Company will each make those filings as
promptly as practicable and each of them will take all reasonable steps within its control
(including providing information to the Federal Trade Commission and the Department of Justice) to
ensure the transaction qualifies for the exemption under the HSR Act and any other applicable
antitrust laws. Each of the Investor and the Company will each provide information and cooperate
in all other respects to assist the other of them in ensuring that the transaction qualifies for
the exemption under the HSR Act and any other applicable antitrust laws.




          (b) If it is determined by any Governmental Agency that a filing with regard to the
transactions that are the subject of the Investor’s Subscription Agreement is required under the
HSR Act (notwithstanding the belief of the Company and the Investor that those transactions are
exempt from the reporting and waiting period requirements of the HSR Act) or any other antitrust
or competition laws of any jurisdiction, each of the Investor and the Company will provide
information and cooperate in all other respects to assist the other of them in making the filing
required under the HSR Act or other antitrust or competition law. The Company will pay the filing
fee that is required with regard to any filing required under the HSR Act or any other antitrust or
competition law.




     3.3 Listing of Shares.
Promptly after the date of the Investor’s Subscription Agreement, the Company will file an
application with the NYSE to list the shares of Common Stock that it will be issuing under the
Investor’s Subscription Agreement and the other Investor Agreements and the Company will use its
best commercially reasonable efforts to cause those shares to be authorized for listing upon notice
of issuance.



     3.4 Change of Bank Control Act and Bank Holding Company Act. 
If the Investor is required to file a written notice with the Federal Reserve Board under the
Change in Bank Control Act of 1978, as amended (the “CBCA”) with respect to the Investor’s proposed
purchase of Acquired Common Stock, it will file that notice within 20 Business Days after the date
of the Investor’s Subscription Agreement and will use its best commercially reasonable efforts,
including providing all information reasonably requested by the Federal Reserve Board and entering
into customary passivity commitments, to obtain as promptly as practicable a



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written confirmation
from the Federal Reserve Board to the effect that the Investor’s purchase of the Acquired Common
Stock and the consummation of the transactions that are the subject of the Investor’s Subscription
Agreement will not result in the Investor or any of its affiliates being in control of the Company
or of FirstBank for purposes of the Bank Holding Company Act or the Federal Reserve Board’s
Regulation Y, or otherwise being subject to regulation as a bank holding company under that Act.
The Company will cooperate with the Investor in all reasonable respects with regard to the
Investor’s efforts to obtain such confirmation from the Federal Reserve Board. If the Federal
Reserve Board requires revisions to the structure of the transactions that are the subject of the
Investor’s Subscription Agreement before it will give such confirmation, the Company and the
Investor will cooperate to make the necessary revisions, provided that neither the Company nor the
Investor will be required to revise the structure of those transactions in a way that will require
an amendment of any other Investor Agreement or that will impose a “Materially Burdensome
Regulatory Condition ”, defined as any condition, restriction or limitation (other than passivity
commitments or other conditions, restrictions or limitations that are customary for similarly
situated investments, but including, for the avoidance of doubt, any modification, alteration,
deletion or other change to the terms and conditions of the Investor Agreements that differs from
those agreed by and among the parties), arising pursuant to any notice to, registration,
declaration or filing with, exemption or review by, or authorization, order, consent or approval
of, any Governmental Entity, that when used in reference to the Investor’s or the Company’s
obligations under the Investor’s Subscription Agreement (including these Terms and Conditions) or a
condition to an Investor’s or the Company’s obligations under the Investor’s Subscription Agreement
(including these Terms and Conditions) is, in the good faith reasonable judgment of such Investor
or the Company, as the case may be, materially burdensome on, or would materially reduce the
economic benefits of the transactions contemplated by the Investor’s Subscription Agreement to,
such Investor or the Company.



     3.5 Notice of Adverse Occurrences.
The Company shall promptly provide the Investor with written notice of the occurrence of any
circumstance, change, effect, event, fact or development occurring between the date hereof and the
Closing Date and relating to the Company or any of the Company’s Subsidiaries of which the Company
has knowledge and which (a) causes any representation and warranty in Section 2.1 to cease
to be correct, (b) could give rise to a Material Adverse Change in the financial condition, results
of operations, business or prospects of the Company and the Company’s Subsidiaries taken as a
whole, or (c) has, or in the Company’s reasonable judgment could give rise to, a Company Material
Adverse Effect.



     3.6 Reasonable Best Efforts.



          (a) Subject to the terms and conditions of the Investor’s Subscription Agreement, the Company
and the Investor will use their respective reasonable best efforts to take, or cause to be taken,
all appropriate actions, to do, or cause to be done, and assist and cooperate with the other
parties in doing, all things necessary, proper or advisable to consummate, in the most expeditious
manner practicable, the transactions contemplated by the Investor’s Subscription Agreement
(including these Terms and Conditions), including causing the satisfaction and fulfillment of all
the conditions set forth in Article 4. Without limiting the foregoing, the Company shall
use its reasonable best efforts, in order to cause the condition set forth in Section
4.2(h) to be fulfilled at the Closing, to cause the conversion of the Series G Preferred Stock
to take place at the Closing or as promptly as practicable after the Closing, and if the conversion
will not occur until after the Closing, to obtain from all the holders of the Series G Preferred
Stock written assurances at or before the Closing that on the Closing Date, effective immediately
after (but subject to) the completion of the sales of Common Stock




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contemplated by the Investor’s
Subscription Agreement and the other Investor Agreements, the Company will have the right to cause
all the shares of Series G Preferred Stock to be converted into Common Stock.




          (b) Notwithstanding anything in Section 3.6(a) or elsewhere in the Investor’s Subscription
Agreement, if any Governmental Entity requires disclosure of the identities of limited partners,
shareholders or members (other than the managing member) of the Investor or any of its affiliates
or investment advisors, or other confidential proprietary information of the Investor or any of its
affiliates or investment advisers, and the Investor is not able with reasonable effort to persuade
the Governmental Entity to accept only the information that the Investor typically provides to
Governmental Entities under policies of the Investor and its affiliates (including policies
regarding confidential treatment of the information that is provided) that the Investor and its
affiliates consistently apply, the Investor may refuse to provide that information, but if it does
so and the Company reasonably determines that there is a significant possibility that the
Investor’s failure to provide that information will prevent, or materially delay, the Governmental
Entity’s giving a required consent or approval, the Company will have the option to terminate the
Investor’s Subscription Agreement.




     3.7 Confidentiality.



          (a) Each party to the Investor’s Subscription Agreement shall hold, and shall cause its
respective subsidiaries and their directors, officers, employees, agents, consultants and advisors
to hold, in strict confidence, unless disclosure to a Governmental Entity is necessary or
appropriate in connection with any necessary regulatory approval or unless compelled to disclose by
judicial or administrative process or, in the written opinion of its counsel, by other requirement
of law or the applicable requirements of any Governmental Entity,
all nonpublic records, books, contracts, instruments, computer data and other data and
information (collectively “Information”) concerning the other party hereto furnished to it by such
other party or its representatives pursuant to the Investor’s Subscription Agreement (including
these Terms and Conditions) (except to the extent that such information can be shown to have been
(1) previously known by such party on a nonconfidential basis, (2) in the public domain through no
fault of such party or (3) later lawfully acquired from other sources by the party to which it was
furnished), and neither party hereto shall release or disclose such Information to any other
person, except its auditors, attorneys, financial advisors, other consultants and advisors and, to
the extent permitted above, to bank regulatory authorities




          (b) If, through the exercise of its rights under the Investor’s Subscription Agreement, the
Investor obtains material non-public information about the Company, the Investor will comply with
all applicable provisions of law relating to trading on the basis of material non-public
information, including SEC Rule 10b5-1. The Company will not provide the Investor with information
that the Company believes to constitute material non-public information about the Company, other
than at the request, or with the consent, of the Investor.




     3.8 Conduct of the Business. Prior to the earlier of the Closing Date and the termination of the Investor’s Subscription
Agreement pursuant to Article 8, the Company shall, and shall cause each of the Company
Subsidiaries to, (a) use commercially reasonable efforts to carry on its business in the ordinary
course of business and use reasonable best efforts to maintain and preserve its and its
subsidiaries’ business (including its organization, assets, properties, goodwill and insurance
coverage) and preserve business relationships with customers, strategic partners, suppliers,
distributors and others having business dealings with it; provided, that nothing in this
Section 3.8 shall limit or require any actions that the Board of



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Directors may, in good
faith, determine to be inconsistent with, or reasonably likely to be necessary to enable the
Company and the Company Subsidiaries to be able to comply with, their duties or the Company’s
obligations under applicable law or imposed by any Governmental Entity. Without limiting the
foregoing, during the period from the date of the Investor’s Subscription Agreement until the
Closing Date, except to the extent approved by Investors who have agreed to purchase a majority of
all the Common Stock to which the Investor Agreements relate (“Majority Investors”), the Company
shall and shall cause the Company Subsidiaries to, not take any of the following actions: (i) grant
or provide any severance or termination payments or benefits to any director, officer or employee
of the Company or any of its subsidiaries, other than as required by any Company Benefit Plans;
(ii) increase the compensation, bonus or pension, welfare, severance or other benefits of, pay any
bonus to, or make any new equity awards to any director, officer or employee of the Company or any
of its subsidiaries, other than (x) as required by any Company Benefit Plans or (y) increases in
employee salaries, or bonus awards, made in the ordinary course consistent with past practice, that
do not in aggregate exceed 5% of current aggregate employee salaries; (iii) establish, adopt, amend
or terminate any Company Benefit Plan or amend the terms of any outstanding equity-based awards,
except that the Company expects to inform employees that it intends to adopt new equity incentive
plans or amend existing equity incentive plans, in each case, after the Closing Date, so that the
Company will be able to make equity based awards to employees with regard to up to 4% of the shares
of Common Stock that will be outstanding after the Closing and the conversion of the Series G
Preferred Stock into Common Stock; (iv) take any action to accelerate the vesting or payment, or
fund or in any other way secure the payment, of compensation or benefits under any Company Benefit
Plan, to the extent not already provided in any such Company Benefit Plan; (v) change any actuarial
or other assumptions used to calculate funding obligations with respect to any Company Benefit Plan
or to change the manner in which contributions to such plans are made or the basis on which such
contributions are determined, except as may be required by GAAP; (vi) forgive any loans to
directors, officers or employees of the Company or any of its subsidiaries. (vii) amend its
articles of incorporation or bylaws, except to the extent, if any, required to implement provisions
of Investor Agreements; (viii) except as contemplated or permitted by the Investor’s Subscription
Agreement or required by Company Benefit Plans, issue, deliver, sell, pledge or otherwise encumber
or subject to any lien, security interest or other encumbrance any shares of its capital stock, any
other voting securities or any securities convertible into, or any rights, warrants or options to
acquire, any such shares, voting securities or convertible securities, of the Company or any of the
Company Subsidiaries; (ix) amend, modify or waive any material term of any outstanding security of
the Company or any of the Company Subsidiaries; (x) make or change any Tax election or adopt or
change any material Tax practice or policy (unless required by applicable law) or change its fiscal
year or accounting methods, policies or practices (except as required by changes in GAAP); (xi)
except as expressly contemplated in the applicable organizational documents, adjust, split, combine
or reclassify any of the Company’s capital stock or issue or authorize the issuance of any other
securities in respect of, in lieu of or in substitution for, shares of its capital stock; (xii)
purchase, redeem or otherwise acquire any shares of capital stock of the Company or any other
securities thereof or any rights, warrants or options to acquire any such shares or securities
(other than pursuant to any Company Benefit Plan or in connection with the Company’s possible
issuance of up to 8,000,000 shares of Common Stock in exchange for shares of the Company’s Series A
through E preferred stock); or (xiii) authorize any of, or commit or agree to take any of, the
foregoing actions.




     3.9 Most Favored Terms
If the Acquired Common Stock will be after the Closing and the issuance of Common Stock on
conversion of the Series G Preferred Stock into Common Stock 5% or more of the Company’s
outstanding Common Stock, the Company will



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not enter into any Subscription Agreement, or amend
(directly or by entering into a side letter) any Subscription Agreement with any Other Investor
that will not be acquiring a greater number of shares of Common Stock than the number being
acquired under Investor Agreements by the Investor and its affiliates that is in any material
respect more favorable to the Other Investor that is a party to that Subscription Agreement than
the Investor’s Subscription Agreement is to the Investor, unless the Company modifies the
Investor’s Subscription Agreement so that it provides the Investor with the same rights and
benefits that are provided to the Other Investor under the Investor Agreement to which it is a
party (or the Company offers to modify the Investor’s Subscription Agreement in that manner but the
Investor refuses to agree to such modification). Under no circumstances will the Company reduce
the price per share of Common Stock that any Other Investor will be paying below the Per Share
Price under the Investor’s Subscription Agreement unless the Company reduces the Per Share Price
being paid by the Investor to the lowest price per share of Common Stock being paid by any
Investor.





ARTICLE 4

CONDITONS PRECEDENT TO TRANSACTION




     4.1 Conditions to the Company’s Obligations.
The obligations of the Company to complete the transactions that are the subject of the
Investor’s Subscription Agreement are subject to satisfaction of the following conditions (any or
all of which may be waived by the Company):



          (a) (i) The representations and warranties of the Investor contained in Section 2.2(a)
and Section 2.2(b) will be true and correct in all material respects as of the Closing Date
with the same effect as though made on such date (except that any representation and warranty that
relates to a specified date or a specified time period need only to have been
true and correct with regard to the specified date or time period) and (ii) all other
representations and warranties of the Investor contained in the Investor’s Subscription Agreement,
including these Terms and Conditions, will be true and correct as of the Closing Date (without
giving effect to any “material” or “materiality” qualifications contained in such representations
and warranties) with the same effect as though made on such date (except that any representation
and warranty that relates to a specified date or a specified time period need only to have been
true and correct with regard to the specified date or time period), except, in the case of this
clause (ii) only, to the extent the failure of any such representations or warranties to be
true and correct would not, individually or in the aggregate, prevent or materially delay the
ability of the Investor to perform its obligations under the Investor’s Subscription Agreement and
to consummate the transactions contemplated thereby.




          (b) The Investor will have fulfilled in all material respects all its obligations under the
Investor’s Subscription Agreement required to have been fulfilled on or before the Closing Date.




          (c) No provision of any applicable law or regulation shall exist and no order, decree,
injunction or judgment will have been entered by any Governmental Entity and be in force that
invalidates the Investor’s Subscription Agreement or restrains the Company from completing the
transactions that are the subject of the Investor’s Subscription Agreement or some or all of the
other Investor Agreements and no actions or proceedings relating to the transactions that are the
subject of Investor Agreements will be pending against the Company or any of the Company
Subsidiaries that, if decided against the Company or any of the Company Subsidiaries, would
materially affect the operations of the Company and the Company Subsidiaries taken as a whole or
would reasonably be expected to require the




- 26 -









 




Company or any of the Company Subsidiaries to pay
damages in an amount that would have a Company Material Adverse Effect.




          (d) The Company’s stockholders will have given the approval of the issuances of Common Stock
contemplated by the Investor Agreements that are required by NYSE listed company Rule 312.03, or
the NYSE will have informed the Company that it is not required to obtain that stockholder approval
(whether because the NYSE requirement has been satisfied by prior stockholder approvals, or because
of an exception, a waiver or otherwise).




          (e) All approvals of the Federal Reserve Board, the FDIC, the OCFI and all other Governmental
Entities, including those with authority to regulate banking or insurance, that are required to be
obtained before the sales of Common Stock contemplated by the Investor Agreements can be completed
will have been obtained.




          (f) The shares of Common Stock that will be issued under Investor Agreements will have been
authorized for listing on the NYSE.




          (g) All the shares of Series G Preferred Stock will have been converted into the number of
shares of Common Stock determined in accordance with the Certificate of Designations relating to
the Series G Preferred Stock as in effect on the date of the Investor’s Subscription Agreement, or
all the holders of Series G Stock will have given written assurances that on the Closing Date,
effective immediately after (but subject to) the completion of the sales of Common Stock
contemplated by the Investor’s Subscription Agreement and the other Investor Agreements, the
Company will have the right to cause all the shares of Series G Preferred Stock to be converted
into Common Stock.




     4.2 Conditions to the Investor’s Obligations.
The obligations of the Investor to complete the transactions that are the subject of the
Investor’s Subscription Agreement are subject to satisfaction of the following conditions (any or
all of which may be waived by the Investor, and which will be deemed waived by the Investor under
the circumstances described in Section 4.3):



          (a) (i) The representations and warranties of the Company contained in Section 2.1(h)
will be true and correct in all respects as of the Closing Date with the same effect as though made
on such date (except for such inaccuracies as are de minimis relative to Section 2.1(h)
taken as a whole); (ii) the representations and warranties of the Company contained in Section
2.1(a) (with respect to the Company and its Significant Subsidiaries) and Section
2.1(c) will be true and correct in all material respects as of the Closing Date with the same
effect as though made on such date (except that any representation and warranty that relates to a
specified date or a specified time period need only to have been true and correct with regard to
the specified date or time period); and (iii) all other representations and warranties of the
Company contained in the Investor’s Subscription Agreement, including these Terms and Conditions,
will be true and correct as of the Closing Date (without giving effect to any “material” or
“materiality” qualifications contained in such representations and warranties) with the same effect
as though made on such date (except that any representation and warranty that relates to a
specified date or a specified time period need only to have been true and correct with regard to
the specified date or time period), except, in the case of this clause (iii) only, to the
extent the failure of any such representations or warranties to be true and correct would not,
individually or in the aggregate, have, or reasonably be expected to have, a Company Material
Adverse Effect.




- 27 -









 








          (b) The Company will have fulfilled in all material respects all its obligations under the
Investor’s Subscription Agreement, including these Terms and Conditions, required to have been
fulfilled on or before the Closing Date.




          (c) No provision of any applicable law or regulation shall exist and no order, decree,
injunction or judgment will have been entered by any Governmental Entity and be in force that
invalidates the Investor’s Subscription Agreement or restrains the Investor from completing the
transactions that are the subject of the Investor’s Subscription Agreement and no actions or
proceedings will be pending against the Investor or the Company or any of the Company Subsidiaries
that, if decided against the Investor or the Company or any of the Company Subsidiaries, could
require the Investor to pay damages that would be material to the Investor, would impose a
Materially Burdensome Regulatory Condition or could reasonably be expected to have a Company
Material Adverse Effect.




          (d) Between the date of the Investor’s Subscription Agreement and the Closing Date, there will
not have been a Material Adverse Change in the financial condition, results of operations, business
or prospects of the Company and the Company Subsidiaries taken as a whole and nothing will have
occurred that has had or is likely to have a Company Material Adverse Effect.




          (e) The Company’s stockholders will have given the approval of the issuance of Common Stock
contemplated by the Investor Agreements that are required by NYSE listed company Rule 312.03, or
the NYSE will have informed the Company that it is not required to obtain that stockholder approval
(whether because the NYSE requirement has been satisfied by prior stockholder approvals, or because
of an exception, a waiver or otherwise).




          (f) The shares of Common Stock that will be issued under Investor Agreements will have been
authorized for listing on the NYSE.




          (g) The Company will receive gross proceeds on or before the Closing Date from sales of Common
Stock under Investor Agreements (including the Investor’s Subscription Agreement) totaling at
least $500 million




          (h) All the outstanding shares of Series G Preferred Stock will have been converted into an
aggregate of not more than the number of shares of Common Stock calculated as provided in the
Certificate of Designations relating to the Series G Preferred Stock as in effect on the date of
this Agreement, or all the holders of Series G Stock will have given written assurances that on the
Closing Date, effective immediately after (but subject to) the completion of the sales of Common
Stock contemplated by the Investor’s Subscription Agreement and the other Investor Agreements, the
Company will have the right to cause all the shares of Series G Preferred Stock to be converted
into Common Stock and the Company shall have delivered notice to the holders of the Series G
Preferred Stock of such conversion and done all things necessary to cause such conversion to occur
immediately after (but subject to) the completion of the sales of Common stock contemplated by the
Investor’s Subscription Agreement and the other Investor Agreements.




          (i) The Acquired Common Stock will not constitute more than 9.9% of the shares of Common Stock
that will be outstanding after the Closing and after conversion of the Series G Preferred Stock
into Common Stock.




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          (j) All approvals of the Federal Reserve Board, the FDIC, the OCFI and all other Governmental
Entities, including those with authority to regulate banking or insurance, that are required to be
obtained before the sales of Common Stock contemplated by the Investor Agreements can be completed
will have been obtained and no such approval shall impose or contain any Materially Burdensome
Regulatory Condition.




          (k) The Company shall not have received any notification from any of the FDIC, the Federal
Reserve Board and the OCFI to the effect that the capital of the Company or of FirstBank is
insufficient to meet any applicable minimum capital requirement imposed by statute, regulation or
Governmental Entity, including any requirements as to the capitalization of FirstBank contained in
or arising out of the FDIC Consent Order and the OCFI Order or as to the capitalization of the
Company contained in or arising out of the Federal Reserve Agreement, and any capital plan approved
in connection therewith and in effect. and the Company or FirstBank, as the case may be, or to the
effect that the Company will not be permitted to make acquisitions and to engage in all aspects of
its business and its currently proposed businesses without material restrictions, including the
imposition of a Materially Burdensome Regulatory Condition.




          (l) The private letter ruling dated May 6, 2011, received by FirstBank from the Puerto Rico
Department of the Treasury, a true and correct copy of which has been provided to the Investor (the
“Ruling”), to the effect that the issuance of Common Stock to the Investor and the Other Investors
as contemplated by the Investor Agreements will not reduce or limit the extent to which FirstBank
can apply losses incurred in 2010 or prior years to reduce income taxes FirstBank would be required
to pay to the Commonwealth of Puerto Rico in 2011 or any subsequent year or years shall continue to
be in full force and effect and not amended or modified in any respect.




          (m) The consummation of the transactions contemplated by the Investor Agreements and the
conversion of the Series G Preferred Stock will not cause the Company or any Company Subsidiary to
be required by GAAP to establish a new cost basis for its assets through the application of push
down accounting or otherwise.




          (n) In the event FirstBank’s Puerto Rico income tax returns have been filed prior to the
Closing Date, the net operating loss carryforward of FirstBank as of December 31, 2010 as a result
of losses that are reflected on such income tax returns (at least some of which are or will be
subject to audit) will be at least $550,000,000.




          (o) As of the Closing Date, FirstBank shall have at least $3,475,000,000 in core deposits
(including, money market, demand, checking, savings and transactional accounts and excluding
secured governmental deposits and certificates of deposits) and at least $1,825,000,000 
in certificates of deposits, excluding governmental and brokered deposits.




          (p) On the Closing Date, taking into account the transactions contemplated by the Investor
Agreements and assuming the full conversion of the Series G Preferred Stock, the Company’s Tier 1
leverage ratio shall be no lower than 10.75%.




          (q) The Company shall not be in default under repurchase agreements (so-called repos) or
agreements for borrowed money under which the Company has payment obligations totaling more than
$25 million.




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     4.3 Waiver of Conditions to Investor’s Obligations.
If investors that have signed Investor Agreements obligating them to purchase in total 75% of
all the shares of Common Stock that investors have agreed to purchase under all the Investor
Agreements that are in effect on the Closing Date (including the Investor’s Subscription Agreement)
waive any condition with regard to all the Investor Agreements (including the condition in the
Principal Investor Agreements that is substantially the same as the condition in the Subscription
Agreements), other than a condition in paragraph (b), (c) (other than the condition in paragraph
(c) relating to actions or proceedings against the Company or any of the Company Subsidiaries that,
if decided against the Company or any of the Company Subsidiaries, would impose a Materially
Burdensome Regulatory Condition or could reasonably be expected to have a Company Material Adverse
Effect), (e), (f), (g), (h) or (i) in Section 4.2 of the Investor’s Subscription Agreement,
the Investor will be deemed to have waived that condition even if the Investor does not itself
waive it. A condition in Section 4.2(b), (c) (other than the condition in paragraph (c) relating
to actions or proceedings against the Company or any of the Company Subsidiaries that, if decided
against the Company or any of the Company Subsidiaries, would impose a Materially Burdensome
Regulatory Condition or could reasonably be expected to have a Company Material Adverse Effect),
(e), (f), (g), (h) or (i) may be waived as to the Investor only by the Investor.



     4.4 Limited Effect of Failure of Condition. The failure of the condition in Section 4.2(b), (c) or (i) with regard to an Investor will
affect only the obligations of that Investor, and will not affect the obligations of any other
Investor.



ARTICLE 5

ADDITIONAL AGREEEMENTS




     5.1 Company Obligation Regarding Adequate Public Information.
Until such time as the Investor no longer owns any Registrable Securities, the Company will:



          (a) File in a timely manner all reports it is required to file under Section 13 of the
Exchange Act, except that failure to file a report on Form 8-K will not be a breach of the
Investor’s Subscription Agreement.




          (b) Do all things, in addition to filing required reports under Section 13 of the Exchange
Act, that are necessary so that adequate public information, as defined in Rule 144(c) under the
Securities Act, is available at all times.




          (c) Upon request, furnish to the Investor a written statement as to the Company’s
compliance with the reporting conditions of Rule 144 under the Securities Act, and a copy of the
most recent annual or quarterly report of the Company (which may be a Report on Form 10-K or 10-Q);
and such other reports and documents as the Investor may reasonably request in order to meet the
requirements of any rule that would allow the Investor to sell Registrable Securities without
registration under the Securities Act.




     5.2 Efforts to Maintain Listing.
From the Closing Date until such time as the Investor no longer owns any Registrable
Securities, the Company will use its reasonable best efforts to cause the Common Stock to be listed
on either the New York Stock Exchange or the Nasdaq Global Market (or a successor to one of those
exchanges).



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     5.3 Additional Regulatory Matters




     (i) The Company shall not, without the consent of the Investor, take any action
(including, but not limited to, any redemption, repurchase or recapitalization of Common
Stock, of securities or rights, options, or warrants to purchase Common Stock, or securities
of any type whatsoever that are, or may become, convertible into or exchangeable into or
exercisable for Common Stock) that, based on the advice of counsel, could cause the Acquired
Common Stock together with any Common Stock that is being sold to affiliates of the Investor
under Other Investor Agreements to constitute in total more than 9.9% of the Common Stock
that will be outstanding immediately after the Closing and the issuance of Common Stock on
conversion of the Series G Preferred Stock into Common Stock (unless the Investor and its
affiliates are subscribing to purchase more than that percentage of the Common Stock that
will be outstanding) or otherwise cause the Investor and its affiliates to be deemed to
become, or to “control”, a “bank holding company” with respect to the Company and its
affiliates within the meaning of the Bank Holding Company Act, or that will require a filing
that would not otherwise be required under the Change in Bank Control Act, including the
rules and regulations promulgated under either of those Acts (or any successor provisions).




     (ii) Neither the Company nor the Investor shall take or permit to be taken any action
that would cause any subsidiary of the Company to become a “commonly controlled insured
depository institution” (as that term is defined for purposes of 12 U.S.C. §1815(e), as may
be amended or supplemented from time to time, or any successor provision) with respect to
any institution that is not a direct or indirect subsidiary of the Company.




     (iii) The Company shall not take, or permit to be taken, any action that would
reasonably be expected to cause the Investor to be subject to or bound by the FDIC’s Policy
Statement on Qualifications for Failed Bank Acquisitions, as it may be amended or
supplemented from time to time, except with the prior written consent of the Investor.




     (iv) In the event that any party to the Investor’s Subscription Agreement breaches its
obligations under this Section 5.3 or believes that it is reasonably likely to
breach such obligations, it shall immediately notify the other parties and shall cooperate
in good faith with such other parties to modify ownership or other arrangements or take any
other action, in each case, as is necessary to cure or avoid such breach.




     (v) The Company shall, and shall cause FirstBank to, take all necessary and appropriate
actions within their commercially reasonable control to ensure the continuing application of
the Ruling.



ARTICLE 6

SALE RESTRICTIONS




     6.1 Restrictions on Sales of Acquired Common Stock.
The Investor will not sell or otherwise transfer any of the Acquired Common Stock, except as
follows:



          (a) The Investor may at any time transfer Acquired Common Stock to an entity that is an
affiliate of the Investor, as the term “affiliate” is defined in the Securities Act, or to a
general or limited partner of the Investor, but only if prior to the transfer, the affiliate or the




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general or limited partner delivers to the Company a written agreement to be bound by this
Section 6.1 to the same extent as the Investor.




          (b) The Investor may sell Acquired Common Stock in transactions that are registered under the
Securities Act.




          (c) The Investor may sell Acquired Common Stock in transactions that are not subject to the
registration requirements of the Securities Act by reason of Rule 144 under the Securities Act.




          (d) If Rule 144A under the Securities Act makes it possible for sales of Acquired Common Stock
to be exempt under that Rule from the registration requirements of the Securities Act, the Investor
may sell Acquired Common Stock to one or more purchasers, each of which is a qualified
institutional buyer, as that term is defined in Rule 144A, in transactions that satisfy all the
conditions in Rule 144A(d), but only if prior to each sale, the purchaser delivers to the Company
an agreement to be bound by this Section 6.1 to the same extent as the Investor.




          (e) The Investor may sell Acquired Common Stock in transactions that constitute “offshore
transactions,” as that term is defined in Rule 902 under the Securities Act.




          (f) The Investor may sell or transfer Acquired Common Stock as part of a merger of the
Investor with another entity or in connection with a sale of all or substantially all of the
Investor’s assets to the person to whom the Investor transfers the Acquired Common Stock, but only
if prior to the merger or sale, the entity that will survive the merger or the purchaser of all or
substantially all of the Investor’s assets delivers to the Company an agreement to be bound by this
Section 6.1 to the same extent as the Investor.




          (g) The Investor may sell Acquired Common Stock in a transaction that is exempt from the
registration requirements of the Securities Act for a reason other than one described in a previous
paragraph of this Section, but only if prior to each such sale, the purchaser delivers to the
Company a written agreement to be bound by this Section 6.1 to the same extent as the
Investor.




ARTICLE 7

SECURITIES ACT REGISTRATION




     7.1 Obligation to Register Acquired Common Stock.



          (a) As promptly as practicable, and in any event not later than 90 days after the Closing
Date, the Company will file with the SEC a shelf registration statement (the “Shelf Registration
Statement”) under SEC Rule 415 relating to sales of Registrable Securities by the Investor and
other holders of Registrable Securities. If the Shelf Registration Statement can be filed as an
automatic shelf registration statement, the Company will file it as an automatic shelf registration
statement. If the Shelf Registration Statement cannot be filed as an automatic shelf registration
statement, the Company will file it on Form S-3, or if the Shelf Registration Statement cannot be
filed on Form S-3, the Company will file it on Form S-1 or such other form as is applicable. The
Company may, instead of filing a separate registration statement relating to the Registrable
Securities, register the Registrable Securities by filing a prospectus supplement to an existing
automatic shelf registration statement or by otherwise designating an existing shelf registration
statement to cover the Registrable Securities. The Company will use




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its reasonable best efforts to
cause the Shelf Registration Statement to become effective as promptly as practicable (or, if it is
an automatic shelf registration statement, to cause it to be effective when it is filed) and to
keep the Shelf Registration Statement continuously effective and available for resales of
Registrable Securities until such time as the Investor no longer owns any Registrable Securities
(including by refiling the Shelf Registration Statement, or filing a new Shelf Registration
Statement, if the initial Shelf Registration Statement expires).




          (b) The term “Registrable Securities” means shares of Common Stock that are issued under
Investor Agreements (including the Investor’s Subscription Agreement), except that shares of Common
Stock will cease to be Registrable Securities when (i) they are sold pursuant to an effective
registration statement under the Securities Act, (ii) they may be sold pursuant to Rule 144 without
limitation on volume or manner of sale, (iii) they cease to be outstanding or (iv) they have been
sold in a private transaction in which the transferor’s rights under this Section 7.1 are
not assigned to the Investor.




          (c) If the Investor notifies the Company that it, individually or together with Other
Investors, intends to distribute Registrable Securities by means of an underwritten offering, and
that the aggregate public offering price of the shares that will be the subject of the underwritten
offering is estimated to be at least $25,000,000, the Company will take all reasonable steps to
facilitate that distribution, including the actions described in Section 7.1(e). However,
the Company will not be required to file or supplement a registration statement (i) with respect to
any Registrable Securities that cannot be sold under a registration statement as a result of the
transfer restrictions set forth in Article 6; (ii) with respect to securities that are not
Registrable Securities; or (iii) if after receiving a request for registration of an underwritten
distribution of Registrable Securities from the Investor, the Company notifies the Investor and any
other holders of Registrable Securities who joined in the request that in the good faith
judgment of the Company’s Board of Directors, it would be materially detrimental to the
Company or its stockholders for a registration to be effected at the particular time, in which
event the Company may defer filing a registration statement, a post-effective amendment or a
prospectus supplement relating to the underwritten distribution of Registrable Securities for up to
90 days after receipt of the request for registration; provided, that the Company may not
exercise the right to defer filing a registration statement, a post-effective amendment or a
prospectus supplement relating to an underwritten distribution more than twice in any 12-month
period or for an aggregate of more than 180 days in any 12-month period.




          (d) The Company will bear all expenses of preparing and filing the Shelf Registration
Statement and all other expenses of fulfilling its obligations under this Article 7.
However, the Company will not pay any commissions, underwriting discounts or other expenses related
to the Investor’s sale of Common Stock, and the Investor will be responsible for paying all those
expenses.




          (e) Whenever the Company is required to effect the registration of any Registrable Securities,
or facilitate the distribution of Registrable Securities in an underwritten offering, the Company
will, as expeditiously as reasonably practicable:





      (i) Prepare and file with the SEC a registration statement, or a post-effective
amendment or prospectus supplement with regard to an already effective registration
statement, relating to the offering and sale of the Registrable Securities and keep that
registration statement effective or that prospectus supplement current until the Registrable
Securities to which it relates no longer are Registrable Securities or the underwritten
distribution has been completed or abandoned.



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     (ii) Prepare and file with the SEC such amendments and supplements to the applicable
registration statement and the prospectus or prospectus supplement relating to the
underwritten distribution of Registrable Securities as may be necessary to comply with the
Securities Act with respect to the distribution of the Registrable Securities to which the
registration statement or the prospectus supplement relates.




     (iii) Furnish to each holder of the Registrable Securities to which the registration
statement or prospectus supplement relates and to the underwriters of any underwritten
offering of those Registrable Securities at least one copy of the registration statement
(including exhibits) and each amendment to it, and as many copies of the prospectus included
in that registration statement and any amendments or supplements to it, as each holder or
underwriter may reasonably request, and any other documents that they may reasonably request
in order to facilitate the disposition of Registrable Securities they own or are
distributing.




     (iv) Use its reasonable best efforts to register and qualify the Registrable Securities
that are the subject of the registration statement or prospectus supplement under the
securities or Blue Sky laws of such, if any, jurisdictions as may reasonably be requested by
any holder or managing underwriter, and to keep that registration or qualification in effect
for as long as required by applicable law, and take any other reasonable action that may be
necessary or appropriate to enable the holders to dispose of the Registrable Securities that
are the subject of the registration or qualification, provided that the Company will not be
required to qualify to do business or to file a general consent to service of process in any
jurisdiction.




     (v) At any time when holders of Registrable Securities are required to deliver
prospectuses in connection with sales of Registrable Securities, notify each holder of
Registrable Securities of the happening of any event as a result of which the applicable
prospectus includes an untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein not misleading in
light of the circumstances then existing.



          (f) The Company will give written notice to the Investor (to the extent doing so would not
give the Investor material non-public information about the Company):





     (i) When any registration statement filed pursuant to this Section 7.1 or any
amendment to such a registration statement is filed with the SEC and when any such
registration statement or any post-effective amendment to such a registration statement
becomes effective;




     (ii) Of any request by the SEC for an amendment or supplement to any registration
statement filed pursuant to this Section 7.1 that relates to Registrable Securities
owned by the Investor or the prospectus included in any such registration statement;




     (iii) Of the issuance by the SEC of a stop order suspending the effectiveness of any
registration statement filed pursuant to this Section 7.1 that relates to
Registrable Securities owned by the Investor or the initiation by the SEC of a proceeding
for that purpose;



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     (iv) Of the receipt by the Company or its legal counsel of any notification with
respect to the suspension of the qualification of the Common Stock for sale in any
jurisdiction in which Registrable Securities owned by Investors are registered or qualified
or the initiation of any proceeding for that purpose;




     (v) Of the happening of any event that requires the Company to make changes in any
effective registration statement that relates to Registrable Securities owned by the
Investor or the prospectus included in any such registration statement or a supplement to it
in order to make the statements therein not misleading (which notice will be accompanied by
an instruction to suspend the use of the prospectus or prospectus supplement until the
requisite changes have been made); and




     (vi) If at any time the representations and warranties of the Company contained in any
underwriting agreement relating to an underwritten distribution that includes Registrable
Securities owned by the Investor cease to be true and correct in all material respects.



          (g) The Company will use its reasonable best efforts to prevent the issuance, or obtain the
withdrawal, as promptly as practicable, of any order suspending the effectiveness of any
registration statement relating to Registrable Securities owned by the Investor.




          (h) If anything occurs that causes a registration statement, a prospectus or a prospectus
supplement relating to a sale of Registrable Securities to contain an untrue statement of a
material fact or omit to state any material fact necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading, the Company will promptly prepare
a post-effective amendment to the registration statement or a supplement
to the prospectus or prospectus supplement so that the registration statement, prospectus or
prospectus supplement no longer will contain an untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading . If the Company notifies the Investor to suspend the
use of a prospectus or prospectus supplement until required changes have been made, the Investor
will (and will cause any underwriter of a distribution of Registrable Securities owned by the
Investor to) suspend use of that prospectus or prospectus supplement and use its reasonable best
efforts to obtain the return of any copies of the prospectus or prospectus supplement that the
Investor (or the underwriters) have given to prospective purchasers of Registrable Securities.




          (i) The Company will use reasonable best efforts to procure the cooperation of the Company’s
transfer agent in settling any transfer of Registrable Securities in a transaction that is
registered under the Securities Act as contemplated by this Section 7.1.




          (j) If the Investor and other holders of Registrable Securities notify the Company that they
intend to distribute Registrable Securities by means of an underwritten offering, and that the
aggregate public offering price of the underwritten offering is estimated to be at least
$25,000,000, the Company will enter into an underwriting agreement in customary form, and take all
other actions that are reasonably requested by the managing underwriter, if any, to facilitate the
underwritten disposition of the Registrable Securities, including (i) making members of management
and executives of the Company available to participate in a “road show” and similar events, (ii)
making representations and warranties to the selling stockholders and the underwriters that are
customarily made by issuers in connection with underwritten public offerings by selling
stockholders, (iii) using its reasonable best efforts to obtain and




- 35 -









 




furnish to the underwriters
opinions of counsel to the Company regarding the matters customarily covered in opinions given in
connection with underwritten public offerings by selling stockholders, (iv) using its reasonable
best efforts to obtain and furnish to the underwriters “comfort letters” from the firm of
independent registered public accountants that audits the Company’s financial statements (and, if
necessary, any other independent registered public accountants that audited any financial
statements included in the registration statement) and (v) delivering to the underwriters any other
documents or certificates that the managing underwriter reasonably requests.




     7.2 Obligations of the Investor Regarding Registration.



          (a) The Investor will not use any free writing prospectus (as defined in Rule 405 under the
Securities Act) in connection with a sale of Registrable Securities without the prior written
consent of the Company.




          (b) The Investor will, and will cause any underwriters of an underwritten offering of
Registrable Securities owned by the Investor to, furnish to the Company all information regarding
itself, the Registrable Securities that the Investor and any other selling stockholders hold, and
the intended method of disposition of those Registrable Securities as the Company may reasonably
request for inclusion in a registration statement, prospectus or prospectus supplement required by
this Article 7. The Company will not describe the Investor as an “underwriter” in any
registration statement, prospectus or prospectus supplement without the prior written consent of
the Investor, provided that if the staff of the SEC requests that the Investor be described as an
“underwriter,” and the Investor does not consent to being described as an underwriter, the Investor
will not be eligible to include Registrable Securities it owns in the applicable registration
statement.




     7.3 Indemnification Regarding Disclosures.



          (a) The Company agrees to indemnify the Investor and the Investor’s officers, directors,
employees, agents, representatives and affiliates, and each person, if any, that controls the
Investor within the meaning of the Securities Act (each, an “Indemnitee”), against any and all
losses, liabilities and expenses (including reasonable fees and expenses of attorneys and other
professionals) arising out of or based upon any untrue statement or alleged untrue statement of
material fact contained in any registration statement, prospectus or prospectus supplement that
includes Registrable Securities owned by the Investor, or any amendments or supplements to any of
them or any documents incorporated by reference in any of them or contained in any free writing
prospectus prepared by the Company or authorized by it in writing for use by the Investor; or any
omission or alleged omission to state in any such document a material fact required to be stated
therein or necessary to make the statements therein, in light of the circumstances under which they
were made, not misleading; provided, that the Company will not be liable to any Indemnitee to the
extent that any loss, liability or expense results from (i) a claim relating to information
provided by the Investor or an underwriter of an offering that includes Registrable Securities
owned by the Investor for use in connection with the applicable registration statement, prospectus
or prospectus supplement, or (ii) an offer or sale effected “by means of” (as defined in Rule 159A
under the Securities Act) a “free writing prospectus” that was not prepared or authorized in
writing by the Company.




          (b) If the indemnification provided for in Section 7.3(a) is not available to an
Indemnitee with respect to any loss, liability or expenses referred to in that Section or is not
sufficient to hold the Indemnitee harmless as contemplated in that Section, then the Company,




- 36 -









 




in
lieu of indemnifying that Indemnitee, will contribute to the amount paid or payable by that
Indemnitee in such proportion as is appropriate to reflect the relative fault of the Indemnitee, on
the one hand, and the Company, on the other hand, in connection with the statements or omissions
which resulted in the loss, liability or expenses as well as any other relevant equitable
considerations. The relative fault of the Company, on the one hand, and of the Indemnitee, on the
other hand, will be determined by reference to, among other factors, whether the untrue statement
of a material fact or omission to state a material fact relates to information supplied by the
Company or by the Indemnitee and the parties’ relative intent, knowledge, access to information and
opportunity to correct or prevent the statement or omission. The Company and the Investor agree
that it would not be just and equitable if contribution under this Section 7.3 were
determined by pro rata allocation or by any other method of allocation that does not take account
of those equitable considerations. No Indemnitee that is guilty of fraudulent misrepresentation
(as that term is used with regard to Section 11(f) of the Securities Act) will be entitled to
contribution from the Company if the Company was not guilty of fraudulent misrepresentation.




     7.4 Assignment of Registration Rights.
The rights of the Investor to registration of Registrable Securities under this Article
7 may be assigned by the Investor to any transferee of Registrable Securities if (i) the
Investor transfers to that transferee Registrable Securities with a market value at the time of
transfer of at least $5,000,000 (or such lesser amount of Registrable Securities as is all the
Registrable Securities that the Investor owns), (ii) the transfer is permitted under the terms of
the Investor’s Subscription Agreement (including these Terms and Conditions)and (iii) the Investor
or the transferee has furnished to the Company written notice of the name and address of the
transferee and the number of Registrable Securities that were, or are being, transferred to the
transferee.



     7.5 Suspension of Sales.
If the Company proposes to sell securities in an underwritten public offering or an offering
under SEC Rule 144A with an expected public offering price of at least $25,000,000, and a managing
underwriter or lead initial purchaser of that offering tells the Company that failure to suspend
significant sales of Registrable Securities could adversely affect the amount of securities the
Company can sell or the price for which the Company can sell the securities, if the Investor owns
more than 5% of the Common Stock that is outstanding at that time, the Investor will, at the
request of the Company, suspend sales of Registrable Securities for a period not exceeding 90 days
and, if the managing underwriter or lead initial investor requests that the Investor do so, enter
into an agreement not to sell any Registrable Securities during that suspension period. The
Investor will not be required to suspend sales in accordance with this Section more than twice in
any twelve month period.



ARTICLE 8

TERMINATION




     8.1 Right to Terminate.
The Investor’s Subscription Agreement may be terminated at any time prior to the earlier of
the payment by the Investor of the Aggregate Purchase Price for the Acquired Common Stock, or the
issuance of the Acquired Common Stock to the Investor, as described in Section 1.2:



          (a) By mutual consent of the Investor and the Company.




          (b) By either the Investor or the Company by July 31, 2011 if, by such date, the Company has
not entered into Investor Agreements (including the Investor’s Subscription Agreement) relating to
sales of Common Stock for at least $500 million (but the right to




- 37 -









 




terminate the Investor’s
Subscription Agreement pursuant to this Section 8.1(b) will end when the Company has
entered into Investor Agreements (including the Investor’s Subscription Agreement) relating to
sales of Common Stock for at least $500 million).




          (c) By either the Investor or the Company if the Closing Date shall not have occurred by
December 31, 2011; provided, however, that a party shall not be entitled to
terminate the Investor’s Subscription Agreement pursuant to this Section 8.1(c) if such
party has breached any of its representations, warranties or obligations under the Investor’s
Subscription Agreement (including each such party’s obligations under Section 3.6 or
3.7, as applicable) and such breach was a material reason for the failure of a condition
set forth in Section 4.1 or 4.2, as applicable, to be fulfilled.




          (d) By either the Investor or the Company if either of them is informed by a Governmental
Agency that an approval or other action by that Governmental Agency that is required to enable the
sale of Common Stock contemplated by the Investor’s Subscription Agreement to take place will not
be given or taken by that Governmental Agency.




          (e) By the Investor if any applicable law or regulation shall be in force or any final and
non-appealable order, decree, injunction or judgment shall have been entered by any Governmental
Entity that invalidates the Investor’s Subscription Agreement or prevents or restrains the Investor
from completing the transactions that are the subject of the Investor’s Subscription Agreement.




          (f) By the Company if any applicable law or regulation shall be in force or any final and
non-appealable order, decree, injunction or judgment shall have been entered by
any Governmental Entity that invalidates the Investor’s Subscription Agreement or any of the
other Investor Agreements.




          (g) By either the Investor or the Company if a stockholders meeting is held as contemplated by
Section 3.1, and at that meeting, the Company’s stockholders vote on, but do not approve,
the proposal to approve the transactions that are the subject of the Investor Agreements.




          (h) By the Company, at any time prior to the Closing, if (i) the Investor is in breach of its
representations, warranties or covenants made by it in the Investor’s Subscription Agreement; (ii)
such breach is not cured or capable of being cured by the earlier of the day prior to the
Termination Date and thirty days following written notice of such breach from the Company and (iii)
such breach, if uncured, would render any condition set forth in Section 4.1 incapable of
being satisfied.




          (i) By the Investor, at any time prior to the Closing, if (i) the Company is in breach of its
representations, warranties or covenants made by it ion the Investor’s Subscription Agreement; (ii)
such breach is not cured or capable of being cured by the earlier of the day prior to the
Termination Date and thirty days following written notice of such breach from the Investor and
(iii) such breach, if uncured, would render any condition set forth in Section 4.2
incapable of being satisfied.




     8.2 Manner of Terminating Agreement.
If at any time the Investor or the Company has the right under Section 8.1 to
terminate the Investor’s Subscription Agreement, it can terminate the Investor’s Subscription
Agreement by a notice to the other of them that it is



- 38 -









 




terminating the Investor’s Subscription
Agreement at a time specified in the notice (which may be the time the notice is given).




     8.3 Effect of Termination.
If the Investor’s Subscription Agreement is terminated pursuant to this Article 8,
after the Investor’s Subscription Agreement is terminated, neither the Investor nor the Company
will have any further rights or obligations under the Investor’s Subscription Agreement. Nothing
contained in this Article 8 will relieve any party of liability for any breach of the
Investor’s Subscription Agreement that occurs before it is terminated.



ARTICLE 9

INDEMNIFICATION




     9.1 Indemnification Against Loss Due to Inaccuracies in Company’s Representations and
Warranties or Company Failure to Fulfill Obligations.
Subject to the limits in Section 9.3, the Company indemnifies the Investor against,
and agrees to hold the Investor harmless from, all losses, liabilities and expenses (including, but
not limited to, reasonable fees and expenses of counsel and expenses of investigation) incurred by
the Investor directly or indirectly because (i) any matter that is the subject of a representation
and warranty contained in Section 2.1 is not as represented and warranted (without giving
effect to any “material”, “materiality”, “material adverse change” or “material adverse effect”
qualification contained in any such representation and warranty), or (ii) the Company fails to
fulfill in any respect any of its obligations under the Investor’s Subscription Agreement, or under
any document delivered in accordance with the Investor’s Subscription Agreement, which is required
to be fulfilled after the Closing Date.



     9.2 Indemnification Against Loss Due to Inaccuracies in Investor’s Representations and
Warranties or Investor Failure to Fulfill Obligations.
Subject to the limits in Section 9.3, the
Investor indemnifies the Company against, and agrees to hold the Company harmless from, all
losses, liabilities and expenses (including, but not limited to, reasonable fees and expenses of
counsel and expenses of investigation) incurred by the Company directly or indirectly because (i)
any matter that is the subject of a representation and warranty contained in Section 2.2 is
not as represented and warranted (without giving effect to any “material”, “materiality”, “material
adverse change” or “material adverse effect” qualification contained in any such representation and
warranty), or (ii) the Investor fails to fulfill in any respect any of its obligations under the
Investor’s Subscription Agreement, or under any document delivered in accordance with the
Investor’s Subscription Agreement, which is required to be fulfilled after the Closing Date.



     9.3 Limit on Liability for Breach of Warranty. 



          (a) Except with respect to breaches of the representations and warranties contained in
Sections 2.1(a) (Organization and Power), 2.1(c) (Authorization) or 2.1(g)
(Issuance of Acquired Common Stock) or in Section 2.1(u) (Tax Matters) (but only with
respect to the representations and warranties in that Section with respect to the amount and
ability to the apply net operating loss carryforward of FirstBank as of December 31, 2010, which
shall be the only portion of Section 2.1(u) that is not subject to the limitations in this
Section 9.3), and in instances of knowing fraud, the Company will not be liable to the
Investor under Section 9.1, or any other provision of the Investor’s Subscription
Agreement, as a result of a breach of the Company’s representations and warranties in Section
2.1, to the extent the losses, liabilities and expenses for which the Investor would, except
for this Section 9.3(a), be entitled to indemnification under Section 9.1 are in
total less than 2% or, except in the case of Section 2.1(u) (which shall not be limited to 15%),
more than 15% of the Aggregate Purchase Price the Investor has agreed pursuant to the Investor’s
Subscription Agreement to pay for the Acquired




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Common Stock, and the Company will have no
obligation to reimburse the Investor for the amount that is less than 2% or more than 15% of the
Aggregate Purchase Price the Investor has agreed in the Investor’s Subscription Agreement to pay
for the Acquired Common Stock. In determining the amount of losses, no breach of a representation
and warranty that results in a loss to the Investor of less than $50,000 will be included.




          (b) Except in instances of knowing fraud, the Investor will not be liable under Section
9.2, or any other provision of the Investor’s Subscription Agreement, as a result of a breach
of the Investor’s representations and warranties in Section 2.2, to the extent the losses,
liabilities and expenses for which the Company would, except for this Section 9.3(b), be
entitled to indemnification from the Investor under Section 9.2 are in total less than 2%
or more than 15% of the Aggregate Purchase Price the Investor has agreed under the Investor’s
Subscription Agreement to pay for the Acquired Common Stock, and the Investor will have no
obligation to reimburse the Company for the amount that is less than 2% or more than 15% of the
total purchase price the Investor has agreed under the Investor’s Subscription Agreement to pay for
the Acquired Common Stock. In determining the amount of losses, no breach of a representation and
warranty that results in a loss to the Company of less than $50,000 will be included.




     9.4 Indemnification Sole Remedy.
Except in instances of knowing fraud, the indemnification in Sections 9.1 and
9.2, as the case may be, will be the sole remedy of the Investor or the Company, as
applicable, as a result of a breach of a representation and warranty contained in Section
2.1 or 2.2, as applicable. Except as to claims with respect to breaches of the
representations and warranties in Section 2.1(u) (Tax Matters), any claim for
indemnification must be made in a written notification to the party from which indemnification is
sought, must describe in reasonable detail the claim and the facts on which such claim is based
and, with
respect to claims for indemnification arising under Section 9.1(i) or Section
9.2(i), must be given not later than the day that is two years after the Closing Date. Neither
the Company nor the Investor will have any liability for any breach of a representation and
warranty contained in Section 2.1 or 2.2 unless a claim is made in accordance with
this Section 9.4.



ARTICLE 10

ABSENCE OF BROKERS




     10.1 Representations and Warranties Regarding Brokers and Others.
The Company and the Investor each represent and warrant to the other of them that nobody acted
as a broker, a finder or in any similar capacity in connection with the transactions that are the
subject of the Investor’s Subscription Agreement, except that Sandler O’Neill & Partners, L.P.
acted as financial adviser to the Company and there may be a finder with regard to sales of Common
Stock to some Other Investors, who will be entitled to a fee from the Company equal to 1% of the
purchase price paid by those Other Investors. The Company will pay all the fees and other charges
of Sandler O’Neill & Partners, L.P. The Company indemnifies the Investor and agrees to hold it
harmless from, and the Investor indemnifies the Company, against and agrees to hold the Company
harmless from, all losses, liabilities and expenses (including, but not limited to, reasonable fees
and expenses of counsel and costs of investigation) incurred because of any claim by anyone for
compensation as a broker, a finder or in any similar capacity by reason of services allegedly
rendered to the indemnifying party or its subsidiaries in connection with the transactions which
are the subject of the Investor’s Subscription Agreement.



     10.2 Expenses.
Except as specifically provided in the Investor’s Subscription Agreement, each of the Investor
and the Company will pay its own expenses in connection with



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the transactions that are the subject
of the Investor’s Subscription Agreement, including legal fees and disbursements.



ARTICLE 11

GENERAL




     11.1 Announcement of Transaction.
The Company will, not later than one Business Day after Investors and Other Investors have
signed Investor Agreements (including the Investor’s Subscription Agreement) relating to purchases
of Common Stock for a total of at least $500 million, (i) issue a press release, or make a filing
with the SEC, that describes the signing of such Investor Agreements in sufficient detail so that
the fact that Investor Agreements have been signed and knowledge of the terms of the Investor
Agreements will not constitute material non-public information, and (ii) include the Investor
Presentation in a Report filed with the SEC. The Company will also timely make all filings with
the SEC that are required under the Exchange Act with respect to the execution of the Investor
Agreements and the issuance of Common Stock under the Investor Agreements. The Company will not,
without the consent of the Investor, mention the names of the Investor or of its affiliates or
advisers in any public disclosures regarding the transactions that are the subject of the Investor
Agreements, except that nothing in this Section or elsewhere in the Investor’s Subscription
Agreement will prevent the Company from disclosing the name of the Investor or its affiliates or
investment adviser to the extent it is required to do so by law, by rules of the SEC or the NYSE,
or by any form the Company is required to file with a Governmental Entity, or to the extent the
Company is asked for that information by any Governmental Entity (including, but not limited to,
the staff of the SEC, the FDIC, the Federal Reserve or the OCFI); provided,
however, that the Company will, to the extent reasonably practicable, provide the Investor
with a reasonable opportunity to review and comment on any such disclosures and filings in advance.



     11.2 Entire Agreement.
The Investor’s Subscription Agreement (including these Terms and Conditions) and the previous
confidentiality agreement, if any, between the Company and the Investor contain the entire
agreement between the Company and the Investor relating to the transactions that are the subject of
the Investor’s Subscription Agreement, and supersede all prior negotiations, understandings and
agreements between the Company and the Investor, and there are no representations, warranties,
understandings or agreements concerning the transactions that are the subject of the Investor’s
Subscription Agreement other than those expressly set forth in the Investor’s Subscription
Agreement and the previous confidentiality agreement, if any, between the Company and the
Investor.



     11.3 Benefit of Agreement.
The Investor’s Subscription Agreement is for the benefit of, and will bind, the parties to it,
their respective successors and any permitted assigns. The Investor’s Subscription Agreement is
not intended to be for the benefit of, or to give any rights to, anybody other than the parties,
their respective successors and any permitted assigns. Without limiting the generality of the
foregoing, no investor other than the Investor will have any claim against the Company or the
Investor under or by reason of the Investor’s Subscription Agreement.



     11.4 Captions.
The captions of the Articles and Sections of the Investor’s Subscription Agreement and of
these Terms and Conditions are for convenience only, and do not affect the meaning or
interpretation of the Investor’s Subscription Agreement.



     11.5 Assignments.
Neither the Investor’s Subscription Agreement nor any right of any party under it may be
assigned, except that (i) the Investor may assign its rights to acquire the



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Acquired Common Stock
to an affiliate (including any entity that has the same principal adviser as the Investor),
provided, however, that, in such event, the Investor and such affiliate will be
jointly and severally liable for any failure of the affiliate to fulfill any of the Investor’s
obligations under the Investor’s Subscription Agreement and (ii) if the Investor transfers
Registrable Securities to another person under circumstances and in a manner that entitles the
transferee to registration rights as provided in Section 7.4, the Company will be deemed to
have entered into an agreement with the transferee giving the transferee all the rights with regard
to the transferred Registrable Securities that the Investor had immediately before the transfer.




     11.6 Notices and Other Communications.
Any notice or other communication under the Investor’s Subscription Agreement must be in
writing and will be deemed given when it is delivered in person or sent by facsimile or electronic
mail (with proof of receipt at the facsimile number or email address to which it is required to be
sent), on the Business Day after the day on which it is delivered to a major overnight delivery
service marked for next business day delivery, or on the third Business Day after the day on which
it is mailed by first class registered or certified mail, return receipt requested, from within
the United States or Puerto Rico, addressed, if to the Investor, to the address shown on the
signature page of the Investor’s Subscription Agreement, and if to the Company:


First BanCorp

1519 Ponce de Leon Avenue

San Juan, Puerto Rico 00908

Attention: General Counsel

Facsimile No.: 787-753-8402

Email Address: lawrence.odell@firstbankpr.com



with a copy to (which copy alone shall not constitute notice):



K&L Gates LLP

599 Lexington Avenue

New York, NY 10022

Attention: David W. Bernstein

Facsimile No.: 212-536-3901

Email Address: david.bernstein@klgates.com



Any notice or communication given under or with regard to the Investor’s Subscription Agreement
will be deemed given on (a) if received on a Business Day on or before 5:00 p.m. local time of the
recipient, the date of receipt, or (b) if received on a day other than a Business Day or on a
Business Day after 5:00 p.m. local time of the recipient, the first Business Day following the date
of receipt.




     11.7 Governing Law.
The Investor’s Subscription Agreement and all disputes arising out of or relating to it and
the subject matter thereof or the actions of the parties thereto in the negotiation, execution,
administration, performance or nonperformance, enforcement, interpretation, termination and
construction hereof and all matters based upon, arising out of or related to any of the foregoing
(whether based on contract, tort or otherwise), including all matters of construction, validity and
performance, shall be governed by and construed in accordance with the internal laws, both
procedural and substantive, of the State of New York,



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without regard to conflicts of laws
principles (whether of the State of New York or any other jurisdiction) that would apply the laws
of any jurisdiction other than the State of New York.




     11.8 Consent to Jurisdiction.
The Company and the Investor each agrees that any action or proceeding relating to the
Investor’s Subscription Agreement or the transactions that are the subject thereof shall be brought
in any state or Federal court sitting in the Borough of Manhattan in the State of New York, and in
no other court, and each of them (i) consents to the personal jurisdiction of each of those courts
in any such action or proceeding, (ii) agrees not to seek to transfer any such action or proceeding
to any other court, whether because of inconvenience of the forum or for any other reason (but
nothing in this Section 11.8 will prevent a party from removing any action or proceeding
from a state court sitting in the Borough of Manhattan to a Federal court sitting in that Borough)
and (iii) agrees that process in any such action or proceeding may be served by registered mail or
in any other manner permitted by the rules of the court in which the action or proceeding is
brought.



     11.9 Remedies; Specific Performance.
The parties acknowledge that money damages may not be an adequate remedy if the Company or the
Investor fails to perform in any material respect any of its obligations under the Investor’s
Subscription Agreement, and accordingly they agree that in addition to any other remedy to which a
party may be entitled at law or in equity, each party will be entitled to seek to obtain an order
compelling specific performance of the other party’s obligations under the Investor’s Subscription
Agreement, without any requirement that the party seeking specific performance post a bond, and the
parties agree that if any proceeding is brought in equity to compel performance of any provision of
the Investor’s Subscription Agreement, no party will raise the defense that there is an adequate
remedy at law. No remedy will be exclusive of any other remedy to which a party may be entitled,
and the remedies available to a party will be cumulative.



     11.10 Non-Recourse.
All claims or causes of action (whether in contract or in tort, in law or in equity) that may
be based upon, arise out of or relate to the Investor’s Subscription Agreement, or the negotiation,
execution or performance of the Investor’s Subscription Agreement (including any representation or
warranty made in or in connection with the Investor’s Subscription Agreement or as an inducement to
enter into the Investor’s Subscription Agreement), may be made only against the entities that are
expressly identified as parties hereto. No person who is not a named party to the Investor’s
Subscription Agreement, including without limitation any past, present or future director, officer,
employee, incorporator, member, partner, equityholder, Affiliate, agent, attorney or representative
of any named party to the Investor’s Subscription Agreement, shall have any liability (whether in
contract or in tort, in law or in equity, or based upon any theory that seeks to impose liability
of an entity party against its owners or affiliates) for any obligations or liabilities arising
under, in connection with or related to the Investor’s Subscription Agreement or for any claim
based on, in respect of, or by reason of the Investor’s Subscription Agreement or its negotiation
or execution; and each party hereto waives and releases all such liabilities, claims and
obligations against any such person who is not a named party to the Investor’s Subscription
Agreement.



     11.11 Waiver of Jury Trial.
EACH OF THE PARTIES TO THE INVESTOR’S SUBSCRIPTION AGREEMENT IRREVOCABLY WAIVES ALL RIGHTS TO
TRIAL BY JURY IN ANY ACTION OR PROCEEDING RELATING TO THE INVESTOR’S SUBSCRIPTION AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED BY THE INVESTOR’S SUBSCRIPTION AGREEMENT, INCLUDING ANY ACTION OR
PROCEEDING BROUGHT BY WAY OF COUNTERCLAIM. EACH OF THE PARTIES ACKNOWLEDGES THAT IT IS AWARE THAT
THIS WAIVER OF RIGHTS TO JURY TRIAL WAS A FACTOR IN EACH OTHER



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PARTY’S DECISION TO AGREE TO THE
TERMS OF THE INVESTOR’S SUBSCRIPTION AGREEMENT AND THAT NOBODY PROMISED THAT THIS WAIVER OF THE
RIGHT TO JURY TRIAL WOULD NOT BE ENFORCED.



     11.12 Amendments.
The Investor’s Subscription Agreement may be amended by, but only by, a document in writing
signed by both the Company and the Investor.



     11.13 Interpretation.
The table of contents and headings contained in the Investor’s Subscription Agreement,
including these Terms and Conditions, are for reference purposes only and shall not affect in any
way the meaning or interpretation of the Investor’s Subscription Agreement or these Terms and
Conditions. Except to the extent otherwise provided or when the context otherwise requires,
references to Sections, Articles or Exhibits contained in these Terms and Conditions refer to
Sections, Articles or Exhibits of these Terms and Conditions. Whenever the words “include”,
“includes”, or “including” are used in the Investor’s Subscription Agreement, including these Terms
and Conditions, they are deemed to be followed by the words “without limitation”. The words
“hereof”, “herein”, and “hereunder”, and words of similar import, when used in the Investor’s
Subscription Agreement, including these Terms and Conditions, refer to the Investor’s Subscription
Agreement as a whole and not to any particular provision of the Investor’s Subscription Agreement.
All terms defined in the Investor’s Subscription Agreement have the defined meanings when used in
any certificate or other document made or delivered pursuant hereto, unless otherwise defined
therein. The definitions contained in the Investor’s Subscription Agreement are applicable to the
singular as well as the plural forms of such terms. References to a person are also to its
successors and permitted assigns. The use of “or” is not intended to be exclusive unless expressly
indicated otherwise. A reference that a statement is made “to the knowledge of the Company”
means that no officer of the Company has actual knowledge of facts that are inconsistent with that
statement.



     11.14 Mutual Drafting.
The parties hereto are sophisticated and have been represented by lawyers who have carefully
reviewed the provisions hereof. As a consequence, the parties do not intend that the presumptions
of any laws or rules relating to the interpretation of contracts against the drafter of any
particular clause should be applied to the Investor’s Subscription Agreement and therefore waive
their effects.



     11.15 Severability.
If any provision of the Investor’s Subscription Agreement, including these Terms and
Conditions, or the application of any such provision to any person or circumstance shall be held
invalid, illegal or unenforceable in any respect by a court of competent jurisdiction, such
invalidity, illegality or unenforceability shall not affect any other provision hereof.



     11.16 Counterparts.
The Investor’s Subscription Agreement may be executed in two or more counterparts, some of
which may be signed by fewer than all the parties or may contain facsimile copies of pages signed
by some of the parties. Each of those counterparts will be deemed to be an original copy of the
Investor’s Subscription Agreement, but all of them together will constitute one and the same
agreement.




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