Document:

Exhibit 10.2

 

EXECUTION COPY

FIRST AMENDMENT TO CREDIT AGREEMENT AND WAIVER

THIS FIRST AMENDMENT TO CREDIT AGREEMENT AND WAIVER (this “Amendment”), dated as of February 16, 2007, is by and among BELDEN CDT INC., a Delaware corporation (the “Borrower”), those Material Domestic Subsidiaries of the Borrower party hereto (each a “Guarantor” and collectively, the “Guarantors”), and WACHOVIA BANK, NATIONAL ASSOCIATION, as administrative agent on behalf of the Lenders (as hereinafter defined) under the Credit Agreement (as hereinafter
defined) (in such capacity, the “Administrative Agent”).  Capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed thereto in the Credit Agreement.

 

W I T N E S S E T H

 

WHEREAS, the Borrower, the Guarantors, certain banks and financial institutions from time to time party thereto (the “Lenders”) and the Administrative Agent are parties to that certain Credit Agreement dated as of January 24, 2006 (as amended, modified, extended, restated, replaced, or supplemented from time to time, the “Credit Agreement”); 

 

WHEREAS, the Credit Parties have requested that the Revolving Committed Amount be increased by $60,000,000 to $225,000,000 (such increased amount, the “Incremental Revolver”);

 

WHEREAS, certain of the Lenders have agreed to provide the additional Commitments necessary for the Incremental Revolver; 

 

WHEREAS, events of default exist pursuant to the Senior Note Purchase Documents (the “Senior Notes Event of Default”) and therefore one or more Events of Default exists under the Credit Agreement (collectively, the “Acknowledged Event of Default”); 

 

WHEREAS, the Credit Parties have requested the Lenders waive the Acknowledged Event of Default and agree to amend certain additional provisions of the Credit Agreement; and

 

WHEREAS, the Required Lenders are willing to make such amendments to the Credit Agreement, subject to the terms and conditions set forth herein.

 

NOW, THEREFORE, in consideration of the agreements hereinafter set forth, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows:

 

 

ARTICLE I

AMENDMENTS TO CREDIT AGREEMENT

 

1.1        Amendments to Section 1.1.  

 

(a)          The following definitions are hereby added to Section 1.1 of the Credit Agreement in appropriate alphabetical order:

 

“Designated Real Estate” shall mean real property owned by the Borrower and/or one or more of its Subsidiaries that is no longer used in the manufacturing process of the Borrower or its Subsidiaries.

 

“Existing Subordinated Debt Securities” shall mean the 4.0% Convertible Subordinated Debentures due July 15, 2023, in an original principal amount of $110,000,000 (of which original principal amount, $110,000,000 is outstanding as of the First Amendment Effective Date), issued by the Borrower (which, at the time of such issuance was known as Cable Design Technologies Corporation, a Delaware corporation), pursuant to the Existing Subordinated Note Indenture which are outstanding on the First Amendment Effective Date, as such debentures may be supplemented, amended or otherwise modified from time to time to the extent permitted hereunder.  

 

“Existing Subordinated Note Indenture” shall mean that certain Indenture, dated as of July 8, 2003 by and among the Borrower (which, at the time of entering into such Indenture was known as Cable Design Technologies Corporation, a Delaware corporation), and US Bank National Association, as trustee, as supplemented, amended or otherwise modified from time to time to the extent permitted hereunder.

 

“First Amendment Effective Date” shall mean February 16, 2007.

 

“New Subordinated Debt Securities” shall have the meaning set forth in Section 6.11, as such debentures may be supplemented, amended or otherwise modified from time to time to the extent permitted hereunder.  

 

“New Subordinated Note Indenture” shall mean the Indenture with respect to the New Subordinated Debt Securities, as the same may be supplemented, amended or otherwise modified from time to time to the extent permitted hereunder.

 

(b)   The definitions of “Permitted Investments”, “Restricted Payment”, “Scheduled Funded Debt Payments”, “Subordinated Debt Securities” and “Subordinated Note Indenture” are hereby amended as follows:

 

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(i)     Clause (k) of the definition of “Permitted Investments” is hereby amended and restated in its entirety to read as follows:

 

(k) Investments (in addition to those Investments in Subsidiaries existing as of the First Amendment Effective Date and disclosed to the Administrative Agent on Schedule 1.1(b) and Guaranty Obligations permitted by Section 6.1(h)) (i) by Subsidiaries which are not Credit Parties in Subsidiaries which are not Credit Parties; and (ii) by Credit Parties in Subsidiaries which are not Credit Parties in an aggregate amount at any time outstanding not to exceed $600,000,000; provided, that no Default or Event of Default shall exist either before or immediately after the making thereof; 

 

(ii)    Clause (e) of the definition of “Restricted Payment” is hereby amended and restated in its entirety to read as follows:

 

(e) any payment or prepayment of principal of, premium, if any, or interest on, redemption, purchase, retirement, defeasance, sinking fund or similar payment with respect to, the Senior Notes, any Subordinated Debt or any other publicly held or privately placed Indebtedness incurred in accordance with Section 6.1(p).

 

(iii)   The definition of “Scheduled Funded Debt Payments” is hereby amended by the addition of the following sentence at the end thereof:

 

Further, notwithstanding the foregoing, the payment(s) permitted by Section 6.10(h) shall not be included in the determination of Scheduled Funded Debt Payments.

 

(iv)   The definition of “Subordinated Debt Securities” is hereby amended and restated in its entirety to read as follows:

 

“Subordinated Debt Securities” shall mean, collectively, (a) the Existing Subordinated Debt Securities and (b) the New Subordinated Debt Securities.  

 

 (v)        The definition of “Subordinated Note Indenture” is hereby amended and restated in its entirety to read as follows:

 

“Subordinated Note Indenture” shall mean, collectively, (a) the Existing Subordinated Note Indenture and (b) the New Subordinated Note Indenture.

 

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1.2        Amendment to Section 2.1(a).     Section 2.1(a) is hereby amended by increasing the Revolving Committed Amount from $165,000,000 to $225,000,000, such increase to be implemented pursuant to Article II hereof.

 

1.3        Amendment to 2.5.     Section 2.5 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

 

	
             
  	
            Section 2.5
 	
            Incremental Facility.
 

 

Subject to the terms and conditions set forth herein, the Borrower shall have the right, at any time from time to time during the Commitment Period and after the First Amendment Effective Date, to incur additional Indebtedness under this Credit Agreement in the form of term loans (each, an “Incremental Term Loan”) and/or increases to the Revolving Committed Amount (each, an “Incremental Revolver”; each Incremental Term Loan and Incremental Revolver, an “Incremental Facility”) by an aggregate amount of up to $125,000,000.  The following terms and conditions shall apply to each Incremental Facility:  (a) the loans made under any such Incremental Facility
(each an “Additional Loan”) shall constitute Credit Party Obligations and will be secured and guaranteed with the other Credit Party Obligations on a pari passu basis, (b) any such Additional Loans (1) made pursuant to an Incremental Revolver shall have the same terms (including interest rate, maturity date, voting rights and rights to receive the proceeds of prepayments) as the existing Revolving Loans and shall be considered Revolving Loans hereunder and (2) made pursuant to an Incremental Term Loan shall have terms (including interest rate, maturity date, voting rights, rights to receive the proceeds of prepayments and amortization) to be agreed upon by the Administrative Agent and the Borrower at the time of such Incremental Term Loan, (c) each Incremental Facility shall be in a minimum principal amount of $25,000,000 and integral multiples of $2,500,000 in excess thereof, (d) the proceeds of any Additional
Loan will be used for the purposes set forth in Section 3.11, (e) the Borrower shall execute such promissory notes as are necessary to reflect the Additional Loans under any such Incremental Facility, (f) before any Additional Loans are made, the conditions to Extensions of Credit in Section 4.2 shall have been satisfied, (g) no Default or Event of Default shall then exist or would exist after giving effect to any such Incremental Facility, (h) the Administrative Agent shall have received from the Borrower a satisfactory legal opinion of counsel to the Borrower and such other documentation as it deems reasonably necessary to effectuate each such Incremental Facility and (i) the Administrative Agent shall have received from the Borrower updated financial projections and an officer’s certificate, in each case in form and substance satisfactory to the Administrative Agent, demonstrating that, (A) after giving effect to any such Incremental Facility on a pro forma basis, the Credit
Parties will be in compliance with the financial covenants set forth in Section 5.9 and (B) if the full amount of the Revolving Committed Amount (after giving effect to such Incremental Facility) were drawn by the Borrower, the Credit Parties would be in compliance with all financial covenants under the Subordinated Note Documents and the documents for all other publicly held or privately placed Indebtedness incurred in accordance with Section 6.1(p).  Each Incremental Facility shall be obtained from existing Lenders or from other 

 

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banks, financial institutions or investment funds reasonably acceptable to the Administrative Agent and the Borrower; provided that such other banks, financial institutions and investment funds shall enter into such joinder or other agreements to give effect thereto as the Administrative Agent and the Borrower may reasonably request.  The Administrative Agent is authorized to enter into, on behalf of the Lenders, any amendment to this Credit Agreement or any other Credit Document as may be necessary to incorporate the terms of any Incremental Facility therein.

 

1.4          Amendment to Section 2.8.     Section 2.8(b)(iii) of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

 

Immediately upon receipt by any Credit Party or any Subsidiary of a Credit Party of Net Cash Proceeds from any Debt Issuance, the Borrower shall prepay the Loans (to the extent there are Loans outstanding) without a corresponding reduction in the Revolving Committed Amount in an aggregate amount equal to one hundred percent (100%) of the Net Cash Proceeds of such Debt Issuance (such prepayment to be applied as set forth in clause (v) below).  Notwithstanding the foregoing, the Borrower shall not be required to prepay the Loans with the proceeds of a Debt Issuance approved by the Administrative Agent in writing that is consummated for the purpose of raising funds to finance Permitted Acquisitions or certain capital expenditures or to refinance certain existing Indebtedness (to the extent permitted hereunder), to the extent that the proceeds are actually used for such
Permitted Acquisition, capital expenditures or refinancing.

 

1.5          Amendment to Section 5.9.     Section 5.9 of the Credit Agreement is hereby amended by adding the following clause (c) at the end thereof:

 

 (c)         Minimum Liquidity.  If the Borrower obligates itself to redeem, repurchase, retire or prepay the Subordinated Debt Securities, or to make cash payments to the holders of the Subordinated Debt Securities upon conversion thereof, or to make cash payments to holders in connection with the exchange of Existing Subordinated Debt Securities for New Subordinated Debt Securities as permitted by Section 6.11, then the Borrower shall maintain Minimum Liquidity of $150,000,000 for so long as such obligation continues; provided, that the foregoing amount shall be reduced by the amount of each payment made by the Borrower to satisfy such obligations.  

 

1.6          Amendment to 6.1(d).     Section 6.1(d) of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

 

(d)          Intercompany Indebtedness (i) among the Credit Parties, (ii) among Subsidiaries of the Borrower that are not Credit Parties, (iii) owing from a Credit Party to a Subsidiary of the Borrower that is not a Credit Party or (iv) owing from a Subsidiary of the Borrower that is not a Credit Party to a Credit Party in an aggregate principal amount outstanding at any time not to exceed (in addition to such intercompany 

 

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Indebtedness existing as of the First Amendment Effective Date) $600,000,000; provided that, upon the request of the Administrative Agent at any time, any such Indebtedness in the preceding clause (iii) shall be (1) fully subordinated to the Credit Party Obligations hereunder on terms reasonably satisfactory to the Administrative Agent and (2) evidenced by “floating balance” promissory notes not requiring notations having terms reasonably satisfactory to the Administrative Agent, the sole originally executed counterparts of which shall be pledged and delivered to the Administrative Agent, for the benefit of the Secured Parties, as security for the Credit Party Obligations;

 

1.7          Amendment to 6.4(a).     Section 6.4(a) of the Credit Agreement is hereby amended by (a) replacing clause (xi) thereof with clause (xi) below, (b) adding a new clause (xii) and a new clause (xiii) thereto, to read respectively as clause (xii) and clause (xiii) below, (c) amending and restating the provisos at the end of such Section to read as shown below, and (d) making the appropriate accompanying punctuation and grammatical changes thereto:

 

(xi)         sale and leaseback transactions with respect to real estate having a net book value not to exceed $45,000,000 in the aggregate during the term of this Agreement;  

 

(xii)        sales of Designated Real Estate for fair market value in an aggregate amount not to exceed $50,000,000 during the term of this Agreement; and

 

(xiii)      other sales, leases, transfers or other dispositions of property or assets not to exceed $10,000,000 in the aggregate during the term of this Agreement; 

 

provided that (A) with respect to clauses (ii), (iii), (vi), (xi), (xii) and (xiii) above, at least 75% of any consideration received therefor by the Credit Parties or any such Subsidiary shall be in the form of cash or Cash Equivalents, (B) after giving effect to any sale, lease or transfer of property or assets pursuant to clauses (xi), (xii) and (xiii)  above, the Credit Parties shall be in compliance on a Pro Forma Basis with the financial covenants set forth in Section 5.9 hereof, recalculated for the most recently ended quarter for which information is available, (C) with respect to clause (iv) above, no Event of Default shall exist or shall result therefrom and (D) with respect to clauses (v) and (vi) above, no Default or Event of Default shall exist or shall result therefrom; provided, further, that with respect to sales of assets permitted hereunder only, the Administrative Agent shall be entitled, without the consent of the Required Lenders, to release its Liens relating to the particular assets sold; or

 

1.8          Amendment to Section 6.9.     Clause (iii) of Section 6.9 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

 

 (iii)       the Senior Note Purchase Documents and the documents for all other publicly held or privately placed Indebtedness incurred in accordance with Section 6.1(p), 

 

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            1.9
 	
            Amendments to Section 6.10.  
 

 

(a)          Clause (c) of Section 6.10 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

 

 (c)         to pay regularly scheduled principal and interest payments in respect of the Senior Notes, the Subordinated Debt Securities, other Subordinated Debt and other publicly held or privately placed Indebtedness incurred in accordance with Section 6.1(p), 

 

(b)          Clause (f) of Section 6.10 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

 

(f)           provided that (i) no Default or Event of Default has occurred and is continuing or would result therefrom and (ii) after giving effect thereto on a Pro Forma Basis there is at least $75,000,000 in Minimum Liquidity, to pay dividends (other than those paid in accordance with the Borrower’s historical dividend policy which are permitted as provided in (e) above) and repurchase Capital Stock in an aggregate amount not to exceed (A) $150,000,000 during any fiscal year and (B) $200,000,000 in the aggregate during the term of this Agreement and

 

(c)          Section 6.10 of the Credit Agreement is hereby amended by (i) adding a new clause (h) thereto, to read as clause (h) below and (ii) making the appropriate accompanying punctuation and grammatical changes thereto:

 

(h)          to redeem, repurchase, retire or prepay the Subordinated Debt Securities, or make cash payments to the holders of the Subordinated Debt Securities upon conversion thereof, or make cash payments to holders in connection with the exchange of Existing Subordinated Debt Securities for New Subordinated Debt Securities in accordance with Section 6.11; provided that (i) no Default or Event of Default has occurred and is continuing or would result therefrom, (ii) after giving effect thereto on a Pro Forma Basis, the Credit Parties are in compliance with each of the financial covenants set forth in Section 5.9; and (iii) the aggregate amount of all such
redemptions, repurchases, retirements, prepayments or cash payments shall not exceed $110,000,000, plus cash payments in respect of fractional shares and cash payments to holders in connection with the exchange of Existing Subordinated Debt Securities for New Subordinated Debt Securities (but in any event not to exceed $115,000,000 in the aggregate) during the term of this Agreement.  

 

1.10       Amendment to 6.11.     Section 6.11 of the Credit Agreement is hereby amended by adding the following sentence to the end thereof:

 

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Notwithstanding any other provision of this Section 6.11 to the contrary, the Credit Parties may issue new subordinated debt securities (“New Subordinated Debt Securities”) in exchange for Existing Subordinated Debt Securities with terms substantially identical to those in the Existing Subordinated Debt Securities, but with terms that permit the making of payments in cash (pursuant to the implementation of a net share settlement program) to the holders thereof upon conversion of such New Subordinated Debt Securities and/or provide for an increase in the conversion rate in the event of certain changes in control of the Borrower; provided, that such terms shall be reasonably satisfactory to the Administrative Agent

 

1.11       Amendment to Section 6.12.       Clause (c)(vii) of Section 6.12 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

 

 (vii)      pursuant to the Senior Note Purchase Documents and the documents for all other publicly held or privately placed Indebtedness incurred in accordance with Section 6.1(p), 

 

1.12     Amendment to 6.14.     Section 6.14 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

 

Section 6.14     Operating Leases.

 

Each of the Credit Parties will not, nor will it permit any of its Subsidiaries to, enter into, assume or permit to exist any obligations for the payment of rent under Operating Leases which in the aggregate for all such Persons would exceed $30,000,000  in any fiscal year of the Borrower.

 

1.13       Replacement Schedules.     Schedules 1.1(b) and 3.12 of the Credit Agreement are hereby replaced in its entirety with the Schedules with the appropriate numbers attached hereto as Exhibit B.

 

ARTICLE II

INCREASE IN COMMITMENTS

 

The Borrower has requested an increase of the Revolving Committed Amount by $60,000,000 from $165,000,000 (as in effect prior to this Amendment) to $225,000,000 (after giving effect to this Amendment).  The Borrower has secured additional Commitments from certain of the Lenders to provide the Incremental Revolver, and the Administrative Agent has delivered to each such Lender a revised Lender Commitment Letter setting forth its revised Commitment (after giving effect to this Amendment).  For the avoidance of doubt, the Incremental Revolver shall not operate to reduce the availability of additional increases to the Revolving Committed Amount pursuant to Section 2.5 of the Credit Agreement (as amended by this Amendment).

 

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ARTICLE III

WAIVER

 

Notwithstanding the provisions of the Credit Agreement to the contrary, the Required Lenders hereby waive, on a one-time basis, the Acknowledged Event of Default.

 

ARTICLE IV

CONDITIONS TO EFFECTIVENESS

 

4.1         Closing Conditions.     This Amendment shall become effective as of the day and year set forth above (the “First Amendment Effective Date”) upon satisfaction of the following conditions (in form and substance reasonably acceptable to the Administrative Agent):

 

 (a)         Executed Amendment.     The Administrative Agent shall have received a copy of this Amendment duly executed by each of the Credit Parties and the Administrative Agent, on behalf of the Required Lenders.

 

 (b)         Executed Consents.     The Administrative Agent shall have received executed consents, in substantially the form of Exhibit A attached hereto, from the Required Lenders authorizing the Administrative Agent to enter into this Amendment on their behalf.  The delivery by the Administrative Agent of its signature page to this Amendment shall constitute conclusive evidence that the consents from the Required Lenders have been obtained.

 

 (c)          Lender Commitment Letters; New Lender Joinder.     The Administrative Agent shall have received sufficient additional Commitments from the Lenders and/or new banks, financial institutions or investment funds to provide the Incremental Revolver, and the Administrative Agent shall have delivered to each Lender, bank, financial institution and investment fund providing an additional Commitment a revised Lender Commitment Letter, setting forth such Lender’s revised Commitment (after giving effect to this Amendment).  If any new bank, financial institution or investments fund provides a portion of the Incremental Revolver, the Administrative Agent shall have received such documentation as the Administrative Agent shall reasonably require joining such entity

as a
new lender party to the Credit Agreement.  

 

 (d)          Consent and Approvals.      All consents and approvals of the boards of directors, shareholders, governmental authorities and other applicable material third parties necessary in connection with this Amendment shall have been obtained.

 

 (e)         Corporate and Capital Structure, etc.     The Administrative Agent shall be satisfied with the corporate and capital structure and management of the Borrower and its Subsidiaries after giving effect to this Amendment, with all legal, tax, accounting, business and other matters relating to this Amendment or to the Borrower and its Subsidiaries after giving effect to this Amendment, and with the aggregate amount of fees and expenses payable in connection with the consummation of this Amendment and the aggregate outstanding amount of Indebtedness of the 

 

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Borrower and its Subsidiaries, and any liens in connection therewith or otherwise, after giving effect to this Amendment.  

 

(f)         Material Adverse Change.     Since December 31, 2005, no material adverse change shall have occurred in the business, operations, property, assets or financial condition of the Borrower and its subsidiaries taken as a whole which could reasonably be expected to have a Material Adverse Effect.  

 

(g)        No Litigation.     There shall not exist any pending litigation or investigation affecting or relating to any Credit Party or any of its Subsidiaries that in the reasonable judgment of the Administrative Agent and Lenders could be expected to have a Material Adverse Effect, that has not been settled, dismissed, vacated, discharged or terminated prior to the First Amendment Effective Date.

 

(h)        Financial Projections.     The Administrative Agent shall have received from the Borrower updated financial projections, in form and substance reasonably satisfactory to the Administrative Agent.

 

(i)         Officer’s Certificate.     The Administrative Agent shall have received a certificate from the Borrower reasonably satisfactory thereto that (i) each of the Borrower and the Guarantors is solvent, (ii) the Borrower is in compliance with all financial covenants set forth in Section 5.9 of the Credit Agreement on a pro forma basis after giving effect to this Amendment and (iii) demonstrates that if the full committed amount of the Revolving Committed Amount (after giving effect to the $60,000,000 increase on the First Amendment Effective Date) were drawn by the Borrower, the Borrower would be in compliance with all financial covenants under the Subordinated Note Documents.

 

(j)         Legal Opinion.     The Administrative Agent shall have received an opinion or opinions of counsel for the Credit Parties, dated the First Amendment Effective Date and addressed to the Administrative Agent and the Lenders, in form and substance reasonably acceptable to the Administrative Agent (which shall include, without limitation, opinions with respect to the valid existence of each Credit Party and opinions as to the non-contravention of the Credit Parties’ organizational documents and the Subordinated Note Documents).

 

(k)        Payment of Fees.  The Administrative Agent shall have received, for itself and the Lenders, all fees owing pursuant to the engagement letter between the Administrative Agent, the Arranger and the Borrower dated January 8, 2007.

 

(l)           Other Fees and Expenses.     The Borrower shall have paid in full all reasonable out-of-pocket fees and expenses of the Administrative Agent in connection with the preparation, execution and delivery of this Amendment, including without limitation, the reasonable fees and expenses of Moore & Van Allen PLLC. 

 

(m)         Prepayment of Senior Notes.     The Administrative Agent shall have received evidence satisfactory to the Administrative Agent that the Senior Notes have been prepaid in full 

 

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(including all principal, interest, fees, premiums and other amounts due under the Senior Notes) and the obligations of the Credit Parties and their Subsidiaries under the Senior Note Purchase Documents have been terminated.  

 

(n)          Miscellaneous.     All other documents and legal matters in connection with the transactions contemplated by this Amendment shall be reasonably satisfactory in form and substance to the Administrative Agent and its counsel.

 

ARTICLE V

MISCELLANEOUS

 

5.1        Amended Terms.     On and after the First Amendment Effective Date, all references to the Credit Agreement in each of the Credit Documents shall hereafter mean the Credit Agreement as amended by this Amendment.  Except as specifically amended hereby or otherwise agreed, the Credit Agreement is hereby ratified and confirmed and shall remain in full force and effect according to its terms.

 

5.2        Representations and Warranties of Credit Parties.      Each of the Credit Parties represents and warrants as follows:

 

 (a)         It has taken all necessary action to authorize the execution, delivery and performance of this Amendment.

 

 (b)        This Amendment has been duly executed and delivered by such Person and constitutes such Person’s legal, valid and binding obligations, enforceable in accordance with its terms, except as such enforceability may be subject to (i) bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer, moratorium or similar laws affecting creditors’ rights generally and (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding at law or in equity).

 

 (c)         No consent, approval, authorization or order of, or filing, registration or qualification with, any court or governmental authority or third party is required in connection with the execution, delivery or performance by such Person of this Amendment.

 

 (d)        After giving effect to this Amendment and the prepayment in full of the Senior Notes, the representations and warranties set forth in Article III of the Credit Agreement are true and correct in all material respects as of the date hereof (except for those which expressly relate to an earlier date).

 

 (e)          After giving effect to this Amendment, no event has occurred and is continuing which constitutes a Default or an Event of Default.

 

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 (f)          The Security Documents continue to create a valid security interest in, and Lien upon, the Collateral, in favor of the Administrative Agent, for the benefit of the Lenders, which security interests and Liens are perfected in accordance with the terms of the Security Documents and prior to all Liens other than Permitted Liens.

 

 (g)          Except as specifically provided in this Amendment, the Credit Party Obligations are not reduced or modified by this Amendment and are not subject to any offsets, defenses or counterclaims.

 

5.3         Reaffirmation of Credit Party Obligations.     Each Credit Party hereby ratifies the Credit Agreement and acknowledges and reaffirms (a) that it is bound by all terms of the Credit Agreement applicable to it and (b) that it is responsible for the observance and full performance of its respective Credit Party Obligations.

 

5.4        Credit Document.      This Amendment shall constitute a Credit Document under the terms of the Credit Agreement.

 

5.5        Further Assurances.       The Credit Parties agree to promptly take such action, upon the request of the Administrative Agent, as is necessary to carry out the intent of this Amendment.

 

5.6        Entirety.     This Amendment and the other Credit Documents embody the entire agreement among the parties hereto and supersede all prior agreements and understandings, oral or written, if any, relating to the subject matter hereof.

 

5.7          Counterparts; Telecopy.     This Amendment may be executed in any number of counterparts, each of which when so executed and delivered shall be an original, but all of which shall constitute one and the same instrument.  Delivery of an executed counterpart to this Amendment by telecopy or other electronic means shall be effective as an original and shall constitute a representation that an original will be delivered.  

 

5.8        GOVERNING LAW.     THIS AMENDMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (INCLUDING SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW).

 

5.9        Successors and Assigns.     This Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.

 

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5.10     Consent to Jurisdiction; Service of Process; Waiver of Jury Trial.     The jurisdiction, services of process and waiver of jury trial provisions set forth in Sections 9.14 and 9.17 of the Credit Agreement are hereby incorporated by reference, mutatis mutandis.

 

5.11     Acknowledgment of Repayment of Senior Notes.     The parties hereto acknowledge that in connection with this Amendment and in accordance with the conditions to effectiveness set forth in Section 4.1(m), the Borrower intends to repay (or make irrevocable arrangements for the repayment of) the Senior Notes, which repayment is permitted by the terms of Section 6.10 of the Credit Agreement.  

 

[remainder of page intentionally left blank]

 

 

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BELDEN CDT INC.

AMENDMENT TO CREDIT AGREEMENT

 

                IN WITNESS WHEREOF the Credit Parties and the Administrative Agent (on behalf of the Required Lenders) have caused this Amendment to be duly executed on the date first above written.

 

	
            BORROWER:
 	
            BELDEN CDT INC.,
 a Delaware corporation
 
	
             
 	
             
 	
             
 
	
             
 	
            By:
 	
            /s/ Stephen H. Johnson
 
	
             
 	
            Name:
 	
            Stephen H. Johnson
 
	
             
 	
            Title:
 	
            Treasurer
 

 

 

	
            GUARANTORS:
 	
            BELDEN WIRE & CABLE COMPANY,
 a Delaware corporation
 
	
             
 	
             
 	
             
 
	
             
 	
            By:
 	
            /s/ Stephen H. Johnson
 
	
             
 	
            Name:
 	
            Stephen H. Johnson
 
	
             
 	
            Title:
 	
            Treasurer
 

 

 

	
             
 	
            BELDEN CDT NETWORKING, INC.,
 a Washington corporation
 
	
             
 	
             
 	
             
 
	
             
 	
            By:
 	
            /s/ Stephen H. Johnson
 
	
             
 	
            Name:
 	
            Stephen H. Johnson
 
	
             
 	
            Title:
 	
            Treasurer
 

 

 

	
             
 	
            NORDX/CDT CORP.,
 a Delaware corporation
 
	
             
 	
             
 	
             
 
	
             
 	
            By:
 	
            /s/ Stephen H. Johnson
 
	
             
 	
            Name:
 	
            Stephen H. Johnson
 
	
             
 	
            Title:
 	
            Treasurer
 

 

 

	
             
 	
            THERMAX/CDT, INC.,
 a Delaware corporation
 
	
             
 	
             
 	
             
 
	
             
 	
            By:
 	
            /s/ Stephen H. Johnson
 
	
             
 	
            Name:
 	
            Stephen H. Johnson
 
	
             
 	
            Title:
 	
            Treasurer
 

 

 

 

 

 

	
             
 	
            BELDEN HOLDINGS, INC.,
 a Delaware corporation
 
	
             
 	
             
 	
             
 
	
             
 	
            By:
 	
            /s/ Stephen H. Johnson
 
	
             
 	
            Name:
 	
            Stephen H. Johnson
 
	
             
 	
            Title:
 	
            Treasurer
 

 

 

	
             
 	
            BELDEN TECHNOLOGIES, INC.,
 a Delaware corporation
 
	
             
 	
             
 	
             
 
	
             
 	
            By:
 	
            /s/ Stephen H. Johnson
 
	
             
 	
            Name:
 	
            Stephen H. Johnson
 
	
             
 	
            Title:
 	
            Treasurer
 

 

 

	
             
 	
            BELDEN INC.,
 a Delaware corporation
 
	
             
 	
             
 	
             
 
	
             
 	
            By:
 	
            /s/ Stephen H. Johnson
 
	
             
 	
            Name:
 	
            Stephen H. Johnson
 
	
             
 	
            Title:
 	
            Treasurer
 

 

 

	
             
 	
            CDT INTERNATIONAL HOLDINGS INC.,
 a Delaware corporation
 
	
             
 	
             
 	
             
 
	
             
 	
            By:
 	
            /s/ Stephen H. Johnson
 
	
             
 	
            Name:
 	
            Stephen H. Johnson
 
	
             
 	
            Title:
 	
            Treasurer
 

 

 

 

 

BELDEN CDT INC.

AMENDMENT TO CREDIT AGREEMENT

 

 

	
            ADMINISTRATIVE AGENT:
 	
            WACHOVIA BANK, NATIONAL ASSOCIATION,
 as a Lender and as Administrative Agent on behalf of the Required Lenders
 
	
             
 	
             
 	
             
 
	
             
 	
            By:
 	
            /s/ David K. Hall
 
	
             
 	
            Name:
 	
            David K. Hall
 
	
             
 	
            Title:
 	
            Director – Agency Management
 

 

 

 

EXHIBIT A

 

FORM OF

LENDER CONSENT

 

See Attached.

 

LENDER CONSENT

 

This Lender Consent is given pursuant to the Credit Agreement, dated as of January 24, 2006 (as previously amended and modified, the “Credit Agreement”; and as further amended by the Amendment (as hereinafter defined), the “Amended Credit Agreement”), by and among BELDEN CDT INC., a Delaware corporation (the “Borrower”), those Material Domestic Subsidiaries of the Borrower party thereto (each a “Guarantor” and collectively, the “Guarantors”), the lenders and other financial institutions from time to time party
thereto (the “Lenders”) and WACHOVIA BANK, NATIONAL ASSOCIATION, as administrative agent on behalf of the Lenders (in such capacity, the “Administrative Agent”).  Capitalized terms used herein shall have the meanings ascribed thereto in the Credit Agreement unless otherwise defined herein. 

 

The undersigned hereby approves the First Amendment to Credit Agreement and Waiver (the “Amendment”), dated as of February 16, 2007, by and among the Borrower, the Guarantors party thereto and the Administrative Agent and hereby authorizes the Administrative Agent to execute and deliver the Amendment on its behalf and, by its execution below, the undersigned agrees to be bound by the terms and conditions of the Amendment and the Amended Credit Agreement.  

 

Delivery of this Lender Consent by telecopy shall be effective as an original.

 

A duly authorized officer of the undersigned has executed this Lender Consent as of the ___ day of February, 2007.

 

______________________________,

as a Lender

 

By: ______________________________

Name: ____________________________

Title: ___________________________

 

 

EXHIBIT B

 

REPLACEMENT 

SCHEDULES

 

See Attached.

 

 

	
            Belden CDT Inc.
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 
	
            Schedule 1.1(b)
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 
	
            Investments
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 
	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 
	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 
	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 
	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 
	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 
	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 
	
             
 	
            Investor
 	
             
 	
             
 	
             
 	
            Investee
 	
             
 	
             
 	
             
 	
            Ownership Interest 
 	
             
 	
            Debt 
 	
             
 
	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 
	
             
 	
            Belden CDT Inc.
 	
             
 	
             
 	
            Belden Inc.
 	
             
 	
             
 	
             
 	
            100%
 	
             
 	
             
 	
             
 
	
             
 	
             
 	
             
 	
             
 	
             
 	
            Belden Wire & Cable Company
 	
             
 	
            100%
 	
             
 	
            USD 75,000,000.00 
 	
             
 
	
             
 	
             
 	
             
 	
             
 	
             
 	
            Belden Technologies, Inc.
 	
             
 	
             
 	
            100%
 	
             
 	
            USD 12,671,999.57 
 	
             
 
	
             
 	
             
 	
             
 	
             
 	
             
 	
            Boselan (UK)
 	
             
 	
             
 	
            100%
 	
             
 	
             
 	
             
 
	
             
 	
             
 	
             
 	
             
 	
             
 	
            Belden CDT Networking, Inc.
 	
             
 	
            100%
 	
             
 	
             
 	
             
 
	
             
 	
             
 	
             
 	
             
 	
             
 	
            Red Hawk/CDT, Inc.
 	
             
 	
             
 	
            100%
 	
             
 	
             
 	
             
 
	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 
	
             
 	
            Belden Inc.
 	
             
 	
             
 	
             
 	
            Belden Wire & Cable Company
 	
             
 	
            100%
 	
             
 	
             
 	
             
 
	
             
 	
             
 	
             
 	
             
 	
             
 	
            Belden Insurance Company
 	
             
 	
            100%
 	
             
 	
             
 	
             
 
	
             
 	
             
 	
             
 	
             
 	
             
 	
            Belden Communications Holding, Inc.
 	
             
 	
            100%
 	
             
 	
             
 	
             
 
	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 
	
             
 	
            Belden Wire & Cable Company
 	
             
 	
            Belden CDT International Inc.
 	
             
 	
            100%
 	
             
 	
             
 	
             
 
	
             
 	
             
 	
             
 	
             
 	
             
 	
            Belden Holdings, Inc.
 	
             
 	
             
 	
            100%
 	
             
 	
             
 	
             
 
	
             
 	
             
 	
             
 	
             
 	
             
 	
            Belden Electronics S.a.r.l.
 	
             
 	
             
 	
            100%
 	
             
 	
             
 	
             
 
	
             
 	
             
 	
             
 	
             
 	
             
 	
            Belden UK Limited
 	
             
 	
             
 	
            100%
 	
             
 	
             
 	
             
 
	
             
 	
             
 	
             
 	
             
 	
             
 	
            Belden CDT (Canada) Inc.
 	
             
 	
            100%
 	
             
 	
             
 	
             
 
	
             
 	
             
 	
             
 	
             
 	
             
 	
            Belden Technologies, Inc.
 	
             
 	
             
 	
            100%
 	
             
 	
             
 	
             
 
	
             
 	
             
 	
             
 	
             
 	
             
 	
            Belden (UK) Finco Limited Partnership
 	
             
 	
            99% (other 1% Belden Communications Holding, Inc.)
 	
             
 
	
             
 	
             
 	
             
 	
             
 	
             
 	
            Belden Electronics S.A. de C.V.
 	
             
 	
            100%
 	
             
 	
             
 	
             
 
	
             
 	
             
 	
             
 	
             
 	
             
 	
            Belden Brasil Commercial Ltda.
 	
             
 	
            50% ( other 50% Belden CDT International Inc.)
 	
             
 
	
             
 	
             
 	
             
 	
             
 	
             
 	
            Belden Electronics Argentina S.A.
 	
             
 	
            50% ( other 50% Belden CDT International Inc.)
 	
             
 
	
             
 	
             
 	
             
 	
             
 	
             
 	
            Belden Foreign Sales Corporation
 	
             
 	
            100%
 	
             
 	
             
 	
             
 
	
             
 	
             
 	
             
 	
             
 	
             
 	
            Belden (Bermuda) Finance Ltd
 	
             
 	
            100%
 	
             
 	
             
 	
             
 
	
             
 	
             
 	
             
 	
             
 	
             
 	
            Belden Superannuation Pty Ltd.
 	
             
 	
            100%
 	
             
 	
             
 	
             
 
	
             
 	
             
 	
             
 	
             
 	
             
 	
            Belden Australia Pty Ltd.
 	
             
 	
             
 	
            100%
 	
             
 	
            AUD 27,288,400.62 
 	
             
 
	
             
 	
             
 	
             
 	
             
 	
             
 	
            Belden Australia Pty Ltd.
 	
             
 	
             
 	
            100%
 	
             
 	
            AUD 3,337,896.99 
 	
             
 
	
             
 	
             
 	
             
 	
             
 	
             
 	
            Belden Wire & Cable Trading (Shanghai) Co. Ltd.
 	
            100%
 	
             
 	
             
 	
             
 
	
             
 	
             
 	
             
 	
             
 	
             
 	
            Belden de Sonora S.A. de C.V.
 	
             
 	
            98% (other 2% Belden CDT International, Inc.)
 	
             
 
	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 
	
             
 	
            Belden Communications Holding, Inc.
 	
             
 	
            Belden (UK) Finco Limited Partnership
 	
             
 	
            1%
 	
             
 	
             
 	
             
 
	
             
 	
             
 	
             
 	
             
 	
             
 	
            Belden (Canada) Finco Limited Partnership
 	
            1%
 	
             
 	
             
 	
             
 

 

 

 

 

	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 
	
             
 	
            Belden Holdings, Inc.
 	
             
 	
             
 	
            Belden International Holdings B.V.
 	
             
 	
            100%
 	
             
 	
            EUR 11,197,292.90 
 	
             
 
	
             
 	
             
 	
             
 	
             
 	
             
 	
            Belden International Holdings B.V.
 	
             
 	
            100%
 	
             
 	
            EUR 15,338,756.44 
 	
             
 
	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 
	
             
 	
            Belden Technologies, Inc.
 	
             
 	
             
 	
            Belden (Canada) Finco Limited Partnership
 	
            99% (other 1% Belden Communications Holding, Inc.)
 	
             
 
	
             
 	
             
 	
             
 	
             
 	
             
 	
            Belden Wire & Cable B.V.
 	
             
 	
             
 	
             
 	
             
 	
            EUR 11,391,427.84 
 	
             
 
	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 
	
             
 	
            Belden CDT Networking, Inc.
 	
             
 	
            CDT International Holdings Inc.
 	
             
 	
            100%
 	
             
 	
             
 	
             
 
	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 
	
             
 	
            CDT International Holdings Inc.
 	
             
 	
            A.W. Industries Inc.
 	
             
 	
             
 	
            100%
 	
             
 	
             
 	
             
 
	
             
 	
             
 	
             
 	
             
 	
             
 	
            Nordx/CDT Inc.
 	
             
 	
             
 	
            100%
 	
             
 	
             
 	
             
 
	
             
 	
             
 	
             
 	
             
 	
             
 	
            Noslo Ltd
 	
             
 	
             
 	
             
 	
            100%
 	
             
 	
             
 	
             
 
	
             
 	
             
 	
             
 	
             
 	
             
 	
            CDT Asia Pacific
 	
             
 	
             
 	
            100%
 	
             
 	
             
 	
             
 
	
             
 	
             
 	
             
 	
             
 	
             
 	
            Nordx/CDT Do Brazil Ltda.
 	
             
 	
            100%
 	
             
 	
             
 	
             
 
	
             
 	
             
 	
             
 	
             
 	
             
 	
            Nordx/CDT Asia Limited
 	
             
 	
             
 	
            100%
 	
             
 	
             
 	
             
 
	
             
 	
             
 	
             
 	
             
 	
             
 	
            Nordx/CDT Corp.
 	
             
 	
             
 	
            100%
 	
             
 	
             
 	
             
 
	
             
 	
             
 	
             
 	
             
 	
             
 	
            CDTCO Ltd
 	
             
 	
             
 	
             
 	
            100%
 	
             
 	
             
 	
             
 
	
             
 	
             
 	
             
 	
             
 	
             
 	
            Nordx/CDT Australia Pty Ltd
 	
             
 	
            100%
 	
             
 	
             
 	
             
 
	
             
 	
             
 	
             
 	
             
 	
             
 	
            Nordx/CDT-IP Corp.
 	
             
 	
             
 	
            100%
 	
             
 	
             
 	
             
 
	
             
 	
             
 	
             
 	
             
 	
             
 	
            Tennecast/CDT, Inc.
 	
             
 	
             
 	
            100%
 	
             
 	
             
 	
             
 
	
             
 	
             
 	
             
 	
             
 	
             
 	
            X-Mark/CDT, Inc.
 	
             
 	
             
 	
            100%
 	
             
 	
             
 	
             
 
	
             
 	
             
 	
             
 	
             
 	
             
 	
            Thermax/CDT, Inc.
 	
             
 	
             
 	
            100%
 	
             
 	
             
 	
             
 
	
             
 	
             
 	
             
 	
             
 	
             
 	
            Dearborn/CDT Corp
 	
             
 	
             
 	
            100%
 	
             
 	
             
 	
             
 
	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 
	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 
	
             
 	
            Guarantees
 	
             
 	
             
 	
            Guarantor 
 	
             
 	
            Beneficiary 
 	
             
 	
            Purpose 
 	
             
 	
            Amount 
 	
             
 
	
             
 	
            Belden CDT Inc.
 	
             
 	
             
 	
            Wachovia Bank
 	
            Bank of Montreal
 	
            Overdraft Line 
 	
             
 	
            CAD 500,000
 	
             
 
	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 
	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 	
             
 

 

 

 

Schedule 3.12 – Subsidiaries

 

	
            Legal Name
 	
            Jurisdiction of Incorporation
 	
            Number of Authorized Shares
 	
            Number of Issued Shares
 	
            Percentage Ownership
 	
            Owner
 
	
            Belden Inc.
 	
            Delaware
 	
            10,000
 	
            100
 	
            100
 	
            Belden CDT Inc.
 
	
            Belden Wire & Cable Company
 	
            Delaware
 	
            10,000
 	
            9,000
 	
            100
 	
            Belden Inc.
 
	
            Belden Communications Holding, Inc.
 	
            Delaware
 	
            10,000
 	
            100
 	
            100
 	
            Belden Inc.
 
	
            Belden Insurance Company
 	
            Vermont
 	
            200,000
 	
            100,000
 	
            100
 	
            Belden Inc.
 
	
            Belden Holdings, Inc.
 	
            Delaware
 	
            10,000
 	
            100
 	
            100
 	
            Belden Wire & Cable Company
 
	
            Belden Technologies, Inc.
 	
            Delaware
 	
            10,000
 	
            10,000
 	
            100
 	
            Belden Wire & Cable Company
 
	
            Belden CDT International, Inc. (formerly Belden International, Inc.)
 	
            Delaware
 	
            10,000
 	
            100
 	
            100
 	
            Belden Wire & Cable Company
 
	
            Belden Electronics S.a.r.l.
 	
            France
 	
            500
 	
            500
 	
            100
 	
            Belden Wire & Cable Company (99%)

Belden CDT International Inc. (1%)
 
	
            Belden UK Limited
 	
            United Kingdom
 	
            1,000
 	
            2
 	
            100
 	
            Belden Wire & Cable Company
 
	
            Belden CDT (Canada) Inc. (formerly Belden (Canada) Inc.)
 	
            Canada
 	
            Unlimited
 	
            8,000,100
 	
            100
 	
            Belden Wire & Cable Company
 
	
            Belden Electronics S.A. de C.V.
 	
            Mexico
 	
            50
 	
            50
 	
            100
 	
            Belden Wire & Cable Company
 

 

 

 

 

	
            Belden Brasil Commercial Ltda.
 	
            Brazil
 	
            10,000
 	
            200
 	
            100
 	
            Belden Wire & Cable Company (50%)

Belden CDT International, Inc. (50%)
 
	
            Belden Electronics Argentina S.A.
 	
            Argentina
 	
            12,000
 	
            12,000
 	
            100
 	
            Belden Wire & Cable Company (50%)

Belden CDT International, Inc. (50%)
 
	
            Belden Foreign Sales Corporations
 	
            Barbados
 	
            10
 	
            10
 	
            100
 	
            Belden Wire & Cable Company
 
	
            Belden Superannuation Pty Ltd
 	
            Australia
 	
            2
 	
            2
 	
            100
 	
            Belden Wire & Cable Company
 
	
            Belden Australia Pty Ltd.
 	
            Australia
 	
            2,700,002
 	
            2,700,002
 	
            100
 	
            Belden Wire & Cable Company
 
	
            Belden Wire & Cable Trading (Shanghai) Co. Ltd.
 	
            China
 	
             
 	
             
 	
            100
 	
            Belden Wire & Cable Company
 
	
            Belden (UK) Finco Limited Partnership
 	
            United Kingdom
 	
            n/a
 	
            n/a
 	
            100
 	
            Belden Wire & Cable Company (99%)

Belden Communications Holding, Inc. (1%)
 
	
            Belden (Canada) Finco Limited Partnership
 	
            Canada
 	
            n/a
 	
            n/a
 	
            100
 	
            Belden Technologies, Inc. (99%)

Belden Communications Holding Inc. (1%)
 
	
            Belden International Holdings B.V.
 	
            Netherlands
 	
            50,000,000
 	
            10,000
 	
            100
 	
            Belden Holdings, Inc.
 
	
            Belden Europe B.V.
 	
            Netherlands
 	
            50,000
 	
            10,000
 	
            100
 	
            Belden International Holdings B.V.
 
	
            Belden Wire & Cable B.V.
 	
            Netherlands
 	
            200
 	
            180
 	
            100
 	
            Belden Europe B.V.
 
	
            Belden CDT European Shared Services
 	
            Netherlands
 	
            90,000
 	
            18,000
 	
            100
 	
            Belden Europe B.V.
 
	
            Belden Dunakabel Kft
 	
            Hungary
 	
            1,300,000,000
 	
            1,300,000,000
 	
            100
 	
            Belden Europe B.V.
 
	
            Belden Electronics GmbH
 	
            Germany
 	
            50,000
 	
            50,000
 	
            100
 	
            Belden Europe B.V.
 
	
            Belden Deutschland GmbH
 	
            Germany
 	
            50,000
 	
            50,000
 	
            100
 	
            Belden Europe B.V.
 
	
            Belden Europe B.V. & Belden Wire & Cable B.V. Finance Gbr
 	
            Germany
 	
            n/a
 	
            n/a
 	
            100
 	
            Belden Europe B.V. (99%)

Belden Wire & Cable B.V. (1%)
 

 

 

 

 

	
            Belden-EIW GmbH & Co KG
 	
            Germany
 	
            n/a
 	
            n/a
 	
            100
 	
            Belden Deutschland GmbH (99.9%)

Belden Electronics GmbH (0.1%)
 
	
            Red Hawk/CDT, Inc.
 	
            Delaware
 	
            1,000
 	
            100
 	
            100
 	
            Belden CDT Inc.
 
	
            Boselan
 	
            United Kingdom
 	
             
 	
             
 	
             
 	
            Belden CDT Inc.
 
	
            Belden CDT Networking Inc.
 	
            Washington
 	
             
 	
             
 	
             
 	
            Belden CDT Inc.
 
	
            CDT International Holdings Inc.
 	
            Delaware
 	
            1,000
 	
            100
 	
            100
 	
            Belden CDT Networking, Inc.
 
	
            Nordx/CDT Corp.
 	
            Delaware
 	
            1,000
 	
            100
 	
            100
 	
            CDT International Holdings Inc.
 
	
            Thermax/CDT, Inc.
 	
            Delaware
 	
            1,000
 	
            100
 	
            100
 	
            CDT International Holdings Inc.
 
	
            Dearborn/CDT Corp.
 	
            Delaware
 	
            1,000
 	
            100
 	
            100
 	
            CDT International Holdings Inc.
 
	
            A.W. Industries
 	
            Florida
 	
             
 	
            13,500
 	
            100
 	
            CDT International Holdings Inc.
 
	
            Nordx/CDT Inc.
 	
            Canada
 	
            1,000
 	
            100
 	
            100
 	
            CDT International Holdings Inc.
 
	
            Noslo Ltd.
 	
            United Kingdom
 	
            100
 	
            100
 	
            100
 	
            CDT International Holdings Inc.
 
	
            CDT Asia Pacific PTE LTD
 	
            Singapore
 	
             
 	
             
 	
            100
 	
            CDT International Holdings Inc.
 
	
            Belden Asia (Hong Kong) Limited
 	
            Hong Kong
 	
             
 	
            100,000
 	
            100
 	
            CDT International Holdings Inc.
 
	
            Nordx/CDT Australia Pty Ltd.
 	
            Australia
 	
            n/a
 	
            n/a
 	
            100
 	
            CDT International Holdings Inc.
 
	
            Nordx/CDT Do Brazil Ltda.
 	
            Brazil
 	
            n/a
 	
            n/a
 	
            100
 	
            CDT International Holdings Inc.
 
	
            CDTCO Ltd.
 	
            Bermuda
 	
            12,000
 	
             
 	
            100
 	
            CDT International Holdings Inc.
 
	
            Nordx/CDT – IP Corp.
 	
            Delaware
 	
            1,000
 	
            100
 	
            100
 	
            CDT International Holdings Inc.
 
	
            Tennecast CDT, Inc.
 	
            Ohio
 	
            1,000
 	
            100
 	
            100
 	
            CDT International Holdings Inc.
 
	
            X-Mark/CDT, Inc.
 	
            Pennsylvania
 	
            100,000
 	
            99,900
 	
            100
 	
            CDT International Holdings Inc.
 
	
            Wire Group International Ltd.
 	
            United Kingdom
 	
            100,000
 	
            99,900
 	
            100
 	
            Noslo Ltd.
 
	
            Raydex/CDT Ltd.
 	
            United Kingdom
 	
            1,000
 	
            100
 	
            100
 	
            Noslo Ltd.
 
	
            Nordx Ltd.
 	
            United Kingdom
 	
            1,000
 	
             
 	
            100
 	
            Noslo Ltd.
 
	
            Anglo American Cables Ltd.
 	
            United Kingdom
 	
             
 	
            100
 	
            100
 	
            Noslo Ltd.
 
	
            CDT (CZ) SRO
 	
            Czech Republic
 	
             
 	
            200,000
 	
            100
 	
            Noslo Ltd.
 
	
            CDT/Nordic Holding AB
 	
            Sweden
 	
             
 	
            101,000
 	
            100
 	
            Noslo Ltd.
 
	
            ITC/CDT Industria Tecnica Cavi S.R.L.
 	
            Italy
 	
             
 	
             
 	
            100
 	
            Noslo Ltd.
 
	
            Cekan/CDT A/S
 	
            Denmark
 	
             
 	
            One common stock or (full) share at a value of 500,00DKK
 	
            100
 	
            Noslo Ltd.
 

 

 

 

	
            Cable Design Technologies (Deutschland) GmbH
 	
            Germany
 	
             
 	
            DEM 25,000 ; DEM 24,500 ; DEM 500
 	
            100
 	
            Noslo Ltd.
 
	
            Belden CDT Orebro AB
 	
            Sweden
 	
             
 	
            24,000
 	
            100
 	
            CDT/Nordic Holding AB
 
	
            Kabelovna Decin Poldmodly AS
 	
            Czech Republic

 
 	
            377,000
 	
            136,000
 	
            100
 	
            CDT/Nordic Holding AB
 
	
            CDT Kabeltechnik Berlin GmbH
 	
            Germany

 
 	
             
 	
             
 	
            100
 	
            Kabelovna Decin Poldmodly AS
 
	
            HEW-Kabel Heinz Eilentropp Verwaltungs GmbH
 	
            Germany
 	
             
 	
            German equivalent of Limited Partnership
 	
            100
 	
            Cale Design Technologies (Deutschland) GmbH
 
	
            HEW GmbH & Co KG
 	
            Germany
 	
             
 	
            German equivalent of Limited Partnership 
 	
            100
 	
            HEW-Kabel Heinz Eilentropp Verwaltungs GmbH
 
	
            HEW-Kabel/CDT/Skandinaviska AB
 	
            Sweden
 	
             
 	
            9,000 shares at nom 100SEK
 	
            100
 	
            HEW GmbH & Co KG
 
	
            Belden de Sonora S.A. de C.V.
 	
            Mexico
 	
            50
 	
            50
 	
            100
 	
            Belden Wire & Cable Company (98%)

Belden CDT International, Inc. (2%)
 
	
            Belden India Private Limited
 	
            India
 	
             
 	
             
 	
             
 	
             
 

 

 

No options, warrants, rights of conversion or purchase and similar rights outstanding with respect to any of the entities listed above.EX-10.01 INVESTMENT AGREEMENT

 

Exhibit 10.01

EXECUTION COPY

 

INVESTMENT AGREEMENT

 

Between

The Bank of Nova Scotia

and

First BanCorp

Dated as of February 15, 2007

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 	 	 	 	Page
	 
	 	 	 	 	 	 
	ARTICLE I

	 
	 	 	 	 	 	 
	DEFINITIONS

	 
	 	 	 	 	 	 
	SECTION 1.01.

	 	Certain Defined Terms
	 	 	1	 
	SECTION 1.02.

	 	Definitions
	 	 	8	 
	SECTION 1.03.

	 	Interpretation and Rules of Construction
	 	 	9	 
	 
	 	 	 	 	 	 
	ARTICLE II

	 
	 	 	 	 	 	 
	PURCHASE AND SALE

	 
	 	 	 	 	 	 
	SECTION 2.01.

	 	Purchase and Sale of the Shares
	 	 	10	 
	SECTION 2.02.

	 	Purchase Price
	 	 	10	 
	SECTION 2.03.

	 	Closing
	 	 	10	 
	SECTION 2.04.

	 	Closing Deliveries by the Company
	 	 	10	 
	SECTION 2.05.

	 	Closing Deliveries by the Investor
	 	 	10	 
	SECTION 2.06.

	 	Transfer Taxes
	 	 	11	 
	SECTION 2.07.

	 	Adjustments to Purchase Price
	 	 	11	 
	 
	 	 	 	 	 	 
	ARTICLE III

	 
	 	 	 	 	 	 
	REPRESENTATIONS AND WARRANTIES OF THE COMPANY

	 
	 	 	 	 	 	 
	SECTION 3.01.

	 	Organization, Authority and Qualification of the Company
	 	 	11	 
	SECTION 3.02.

	 	Subsidiaries
	 	 	12	 
	SECTION 3.03.

	 	Capitalization
	 	 	12	 
	SECTION 3.04.

	 	Corporate Books and Records
	 	 	13	 
	SECTION 3.05.

	 	No Conflict
	 	 	13	 
	SECTION 3.06.

	 	Governmental Consents and Approvals
	 	 	14	 
	SECTION 3.07.

	 	SEC Filings and the Sarbanes-Oxley Act
	 	 	14	 
	SECTION 3.08.

	 	Financial Information; Books and Records
	 	 	15	 
	SECTION 3.09.

	 	Absence of Undisclosed Liabilities
	 	 	15	 
	SECTION 3.10.

	 	Conduct in the Ordinary Course; Absence of Certain Changes,
Events and Conditions
	 	 	16	 
	SECTION 3.11.

	 	Litigation
	 	 	16	 
	SECTION 3.12.

	 	Compliance with Laws
	 	 	16	 
	SECTION 3.13.

	 	Environmental and Other Permits and Licenses; Related Matters
	 	 	17	 
	SECTION 3.14.

	 	Material Contracts
	 	 	17	 
	SECTION 3.15.

	 	Intellectual Property
	 	 	17	 
	SECTION 3.16.

	 	Real Property; Assets
	 	 	18	 
	SECTION 3.17.

	 	Employee Benefit Matters
	 	 	19	 

i

 

	 	 	 	 	 	 	 
	 	 	 	 	Page
	 
	SECTION 3.18.

	 	Labor Matters
	 	 	21	 
	SECTION 3.19.

	 	Taxes
	 	 	22	 
	SECTION 3.20.

	 	Insurance
	 	 	23	 
	SECTION 3.21.

	 	Certain Business Practices
	 	 	24	 
	SECTION 3.22.

	 	Regulatory Reports; Allowance for Losses
	 	 	24	 
	SECTION 3.23.

	 	Related Party Transactions
	 	 	24	 
	SECTION 3.24.

	 	Loans
	 	 	25	 
	SECTION 3.25.

	 	Risk Management Instruments
	 	 	25	 
	SECTION 3.26.

	 	Community Reinvestment Act, Customer Information Security and
Anti-Money Laundering
	 	 	26	 
	SECTION 3.27.

	 	Credit Card Accounts
	 	 	26	 
	SECTION 3.28.

	 	Agreements with Governmental Authorities
	 	 	26	 
	SECTION 3.29.

	 	Regulatory Capital
	 	 	27	 
	SECTION 3.30.

	 	Private Offering
	 	 	27	 
	SECTION 3.31.

	 	Vote Required
	 	 	27	 
	SECTION 3.32.

	 	Takeover Statute
	 	 	27	 
	SECTION 3.33.

	 	Brokers
	 	 	27	 
	 
	 	 	 	 	 	 
	ARTICLE IV

	 
	 	 	 	 	 	 
	REPRESENTATIONS AND WARRANTIES
OF THE INVESTOR

	 
	 	 	 	 	 	 
	SECTION 4.01.

	 	Organization and Authority of the Investor
	 	 	27	 
	SECTION 4.02.

	 	No Conflict
	 	 	28	 
	SECTION 4.03.

	 	Governmental Consents and Approvals
	 	 	28	 
	SECTION 4.04.

	 	Investment Purpose
	 	 	28	 
	SECTION 4.05.

	 	Status of Shares; Limitations on Transfer and Other Restrictions
	 	 	28	 
	SECTION 4.06.

	 	Sophistication and Financial Condition of the Investor
	 	 	29	 
	SECTION 4.07.

	 	Available Funds
	 	 	29	 
	SECTION 4.08.

	 	Litigation
	 	 	29	 
	SECTION 4.09.

	 	Brokers
	 	 	29	 
	 
	 	 	 	 	 	 
	ARTICLE V

	 
	 	 	 	 	 	 
	ADDITIONAL AGREEMENTS

	 
	 	 	 	 	 	 
	SECTION 5.01.

	 	Conduct of Business Prior to the Closing
	 	 	29	 
	SECTION 5.02.

	 	Taxes
	 	 	30	 
	SECTION 5.03.

	 	Access to Information
	 	 	31	 
	SECTION 5.04.

	 	Confidentiality
	 	 	31	 
	SECTION 5.05.

	 	Regulatory and Other Authorizations; Notices and Consents
	 	 	32	 
	SECTION 5.06.

	 	Notice of Developments
	 	 	32	 
	SECTION 5.07.

	 	No Solicitation or Negotiation
	 	 	32	 
	SECTION 5.08.

	 	Authorization for Listing
	 	 	34	 
	SECTION 5.09.

	 	Security Interest
	 	 	34	 
	SECTION 5.10.

	 	Further Action
	 	 	34	 

ii

 

	 	 	 	 	 	 	 
	 	 	 	 	Page
	 
	 
	 	 	 	 	 	 
	ARTICLE VI

	 
	 	 	 	 	 	 
	CONDITIONS TO CLOSING

	 
	 	 	 	 	 	 
	SECTION 6.01.

	 	Conditions to Obligations of the Company
	 	 	35	 
	SECTION 6.02.

	 	Conditions to Obligations of the Investor
	 	 	35	 
	 
	 	 	 	 	 	 
	ARTICLE VII

	 
	 	 	 	 	 	 
	INDEMNIFICATION

	 
	 	 	 	 	 	 
	SECTION 7.01.

	 	Survival of Representations and Warranties
	 	 	37	 
	SECTION 7.02.

	 	Indemnification by the Company
	 	 	37	 
	SECTION 7.03.

	 	Indemnification by the Investor
	 	 	38	 
	SECTION 7.04.

	 	Limits on Indemnification
	 	 	39	 
	SECTION 7.05.

	 	Notice of Loss; Third Party Claims
	 	 	39	 
	SECTION 7.06.

	 	Tax Treatment
	 	 	40	 
	 
	 	 	 	 	 	 
	ARTICLE VIII

	 
	 	 	 	 	 	 
	TERMINATION

	 
	 	 	 	 	 	 
	SECTION 8.01.

	 	Termination
	 	 	41	 
	SECTION 8.02.

	 	Effect of Termination
	 	 	42	 
	 
	 	 	 	 	 	 
	ARTICLE IX

	 
	 	 	 	 	 	 
	GENERAL PROVISIONS

	 
	 	 	 	 	 	 
	SECTION 9.01.

	 	Expenses
	 	 	42	 
	SECTION 9.02.

	 	Notices
	 	 	42	 
	SECTION 9.03.

	 	Public Announcements
	 	 	43	 
	SECTION 9.04.

	 	Severability
	 	 	44	 
	SECTION 9.05.

	 	Entire Agreement
	 	 	44	 
	SECTION 9.06.

	 	Assignment
	 	 	44	 
	SECTION 9.07.

	 	Amendment
	 	 	44	 
	SECTION 9.08.

	 	Waiver
	 	 	44	 
	SECTION 9.09.

	 	No Third Party Beneficiaries
	 	 	45	 
	SECTION 9.10.

	 	Governing Law
	 	 	45	 
	SECTION 9.11.

	 	Waiver of Jury Trial
	 	 	45	 
	SECTION 9.12.

	 	Currency
	 	 	45	 
	SECTION 9.13.

	 	Counterparts
	 	 	45	 

iii

 

          INVESTMENT AGREEMENT, dated as of February 15, 2007 (this “Agreement”), between
The Bank of Nova Scotia, a chartered bank under the Bank Act (Canada) (the “Investor”), and
First BanCorp, a Puerto Rico-chartered financial holding company (the “Company”).

          WHEREAS, the Company desires to issue and sell to the Investor, and the Investor desires to
purchase from the Company, pursuant to the terms and conditions set forth in this Agreement, that
number of shares (the “Shares”) of the common stock, par value $1.00 per share (“Common
Stock”), of the Company such that immediately after giving effect to the issuance as
contemplated by this Agreement the Investor will own 10% of the outstanding Common Stock; and

          WHEREAS, concurrently with the closing of the sale and purchase of the Shares contemplated by
this Agreement, the Company will enter into a stockholder agreement with the Investor,
substantially in the form attached hereto as Exhibit A (the “Stockholder Agreement”).

          NOW, THEREFORE, in consideration of the premises and the mutual agreements and covenants
hereinafter set forth, and intending to be legally bound, the Company and the Investor hereby agree
as follows:

ARTICLE I

DEFINITIONS

          SECTION 1.01. Certain Defined Terms. For purposes of this Agreement:

          “Action” means any claim, action, suit, arbitration, inquiry, proceeding or
investigation.

          “Adverse Reputational Effect” means any circumstance, change in or effect on the
Company, any Subsidiary or any of their businesses that, individually or in the aggregate with all
other circumstances, changes in or effects on the Company, any Subsidiary or any of their
businesses, is or is reasonably likely to be materially adverse to the relationship or standing of
the Company, any Subsidiary, the Investor or any of its Affiliates with any Governmental Authority,
other than those matters set forth under the caption “Exceptions to Adverse Reputational Effect” in
Section 1.01 of the Disclosure Schedule.

          “Affiliate” means, with respect to any specified Person, any other Person that
directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under
common control with, such specified Person.

          “Agency” means FirstBank Insurance Agency, Inc., a Puerto Rico-chartered insurance
agency.

          “Agreement” or “this Agreement” means this Investment Agreement between the
parties hereto (including the Exhibits and Schedules hereto and the Disclosure Schedule) and all
amendments hereto made in accordance with the provisions of Section 9.07.

 

 

          “Bank” means FirstBank Puerto Rico, a Puerto Rico-chartered commercial bank.

          “Bank Act” means the Puerto Rico Bank Act, as amended.

          “BHC Act” means the U.S. Bank Holding Company Act of 1956.

          “Business Day” means any day that is not a Saturday, a Sunday or other day on which
banks are required or authorized by Law to be closed in any of The City of New York, NY, San Juan,
Puerto Rico or Toronto, Canada.

          “CERCLA” means the U.S. Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended through the Closing.

          “Claims” means any and all administrative, regulatory or judicial actions, suits,
petitions, appeals, notices of noncompliance or violation, investigations, proceedings, consent
orders or consent agreements.

          “Code” means, collectively, the U.S. Code and the P.R. Code.

          “Company Representative” means (a) any of the following employees of the Company: the
Chief Executive Officer, the Chief Financial Officer, the Chief Operating Officer, the Chief
Accounting Officer, the Chief Lending Officer, the Chief Risk Officer, the Treasurer or the General
Counsel; or (b) Luis Cabrera.

          “control” (including the terms “controlled by” and “under common control
with”) means, the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the ownership of voting
securities, as trustee or executor, by contract or otherwise, including, without limitation, the
ownership, directly or indirectly, of securities having the power to elect a majority of the board
of directors or similar body governing the affairs of such Person.

          “Disclosure Schedule” means the Disclosure Schedule attached hereto, dated as of the
date hereof, delivered by the Company to the Investor in connection with this Agreement.

          “Encumbrance” means any Lien, violation, charge, lease, license, encumbrance, servient
easement, adverse claim, reversion, reverter, preferential arrangement, restrictive covenant,
condition or restriction of any kind, including any restriction on the use, voting, transfer,
receipt of income or other exercise of any attributes of ownership.

          “Environment” means surface waters, groundwaters, soil, subsurface strata and ambient
air.

          “Environmental Claims” means any Claims relating in any way to any Environmental Law
or any Environmental Permit, including (a) any and all Claims by Governmental Authorities for enforcement, cleanup, removal, response, remedial or other
actions or damages pursuant to any applicable Environmental Law and (b) any and all Claims by any
Person seeking damages, contribution, indemnification, cost recovery, compensation or

2

 

injunctive relief resulting from Hazardous Materials or arising from alleged injury or threat of injury to
health, safety or the Environment.

          “Environmental Laws” means all Laws, now or hereafter in effect and as amended,
relating to the Environment, health, safety, natural resources or Hazardous Materials, including
CERCLA; the Resource Conservation and Recovery Act, 42 U.S.C. §§ 6901 et seq.; the
Hazardous Materials Transportation Act, 49 U.S.C. §§ 6901 et seq.; the Clean Water
Act, 33 U.S.C. §§ 1251 et seq.; the Toxic Substances Control Act, 15 U.S.C. §§ 2601
et seq.; the Clean Air Act, 42 U.S.C. §§ 7401 et seq.; the Safe
Drinking Water Act, 42 U.S.C. §§ 300f et seq.; the Atomic Energy Act, 42 U.S.C. §§
2011 et seq.; the Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. §§
136 et seq.; and the Federal Food, Drug and Cosmetic Act, 21 U.S.C. §§ 301
et seq.

          “Environmental Permits” means all permits, approvals, identification numbers, licenses
and other authorizations required under or issued pursuant to any applicable Environmental Law.

          “Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended.

          “FDIA” means the U.S. Federal Deposit Insurance Act, as amended.

          “FDIC” means the Federal Deposit Insurance Corporation of the United States.

          “Federal Reserve Board” means the Board of Governors of the Federal Reserve System of
the United States.

          “FSB” means FirstBank Florida, a Federal savings bank organized under the Laws of the
United States.

          “GAAP” means United States generally accepted accounting principles in effect from
time to time applied consistently throughout the periods involved.

          “Governmental Authority” means any federal, national, supranational, state,
provincial, municipal, local, territorial or similar government, governmental, regulatory or
administrative authority, agency or commission or any court, tribunal, or judicial or arbitral
body.

          “Governmental Order” means any order, writ, judgment, injunction, decree, stipulation,
determination or award entered by or with any Governmental Authority.

          “Hazardous Materials” means (a) petroleum and petroleum products, radioactive
materials, asbestos-containing materials, urea formaldehyde foam insulation, transformers or other
equipment that contain polychlorinated biphenyls and radon gas, (b) any other chemicals, materials
or substances defined as or included in the definition of “hazardous substances”, “hazardous
wastes”, “hazardous materials”, “extremely hazardous wastes”, “restricted hazardous wastes”, “toxic substances”, “toxic pollutants”, “contaminants” or “pollutants”, or words of
similar import, under any applicable Environmental Law, and (c) any other chemical, material or
substance that is regulated by any Environmental Law.

3

 

          “HOLA” means the U.S. Home Owners’ Loan Act of 1933.

          “Indebtedness” means, with respect to any Person, (a) all indebtedness of such Person,
whether or not contingent, for borrowed money, (b) all obligations of such Person for the deferred
purchase price of property or services, (c) all obligations of such Person evidenced by notes,
bonds, debentures or other similar instruments, (d) all indebtedness created or arising under any
conditional sale or other title retention agreement with respect to property acquired by such
Person (even though the rights and remedies of the seller or lender under such agreement in the
event of default are limited to repossession or sale of such property), (e) all obligations of such
Person as lessee under leases that have been or should be, in accordance with GAAP, recorded as
capital leases, (f) all obligations, contingent or otherwise, of such Person under acceptance,
letter of credit or similar facilities, (g) all obligations of such Person to purchase, redeem,
retire, defease or otherwise acquire for value any capital stock of such Person or any warrants,
rights or options to acquire such capital stock, valued, in the case of redeemable preferred stock,
at the greater of its voluntary or involuntary liquidation preference plus accrued and unpaid
dividends, (h) all Indebtedness of others referred to in clauses (a) through (g) above guaranteed
directly or indirectly in any manner by such Person, and (i) all Indebtedness referred to in
clauses (a) through (g) above secured by (or for which the holder of such Indebtedness has an
existing right, contingent or otherwise, to be secured by) any Lien on property (including accounts
and contract rights) owned by such Person, even though such Person has not assumed or become liable
for the payment of such Indebtedness.

          “Indemnified Litigation” means In re First BanCorp Securities Litigation — Civ. No.
05-2148 (GAG) in the United States District Court for the District of Puerto Rico, In re First
BanCorp Derivative Litigation — Civ. No. 06-1064 (GAG) in the United States District Court for the
District of Puerto Rico, the Action pending before the SEC with respect to the restatement of the
Company’s 2002, 2003 and 2004 financial statements and all other Claims to the extent now or
hereafter arising out of or relating to all or a portion of the facts underlying the foregoing
Actions.

          “Indemnified Party” means an Investor Indemnified Party or a Company Indemnified
Party, as the case may be.

          “Indemnifying Party” means the Company pursuant to Section 7.02 or the Investor
pursuant to Section 7.03, as the case may be.

          “Intellectual Property” means (a) patents, patent applications and statutory invention
registrations, (b) trademarks, service marks, domain names, trade dress, logos, trade names,
corporate names and other identifiers of source or goodwill, including registrations and
applications for registration thereof and including the goodwill of the business symbolized thereby
or associated therewith, (c) mask works and copyrights, including copyrights in computer software,
and registrations and applications for registration thereof, and (iv) confidential and proprietary
information, including trade secrets, know-how and invention rights.

          “IRS” means the Internal Revenue Service of the United States.

4

 

          “Law” means any federal, national, supranational, state, provincial, local or similar
statute, law, ordinance, regulation, rule, code, order, or rule of law (including common law) and
any judicial or administrative interpretation thereof, including any judicial or administrative
order, consent decree or judgment.

          “Leased Real Property” means the real property leased by the Company or any Subsidiary
as tenant, together with, to the extent leased by the Company or any Subsidiary, all buildings and
other structures, facilities or improvements currently or hereafter located thereon, all fixtures,
systems, equipment and items of personal property of the Company or any Subsidiary attached or
appurtenant thereto and all easements, licenses, rights and appurtenances relating to the
foregoing.

          “Liabilities” means any and all debts, liabilities and obligations, whether accrued or
fixed, absolute or contingent, matured or unmatured or determined or determinable, including those
arising under any Law (including any Environmental Law), Claim or Governmental Order and those
arising under any contract, agreement, arrangement, commitment or undertaking.

          “Lien” means any security interest, pledge, hypothecation, mortgage, lien (including
environmental and tax liens).

          “Material Adverse Effect” means any circumstance, change in or effect on the Company
or the Subsidiaries that, individually or in the aggregate with all other circumstances, changes in
or effects on the Company or any Subsidiary, is or is reasonably likely to be materially adverse to
the business, assets, results of operations or the condition (financial or otherwise) of the
Company and the Subsidiaries taken as a whole; provided, however, that none of the
following, either alone or in combination, shall be considered in determining whether a Material
Adverse Effect has occurred or is reasonably likely to occur: (i) events, circumstances, changes
or effects that generally affect the banking industry in Puerto Rico (including legal and
regulatory changes), except to the extent that the Company or any Subsidiary is disproportionately
affected thereby, (ii) general economic conditions or events, circumstances, changes or effects
affecting the economy of Puerto Rico generally, or the securities markets generally, except to the
extent that the Company or any Subsidiary is disproportionately affected thereby, or (iii) changes
arising from the announcement of the execution of this Agreement.

          “Material Contract” means a contract or other binding arrangement with respect to
which the Company or any Subsidiary is bound and (a) the cancellation of which would likely have a
material adverse effect on, or that otherwise is material to, the Company and the Subsidiaries
taken as a whole (including each contract that is required by Item 6.01(10) of SEC Regulation S-K
to be an Exhibit to a Report of the Company on Form 10-K); (b) under which any past or present
officer, director, employee or consultant of the Company or any Subsidiary is provided payment of
more than $500,000 in any twelve month period (in any circumstance); (c) which provides for the
grant of options to any past or present officer, director, employee or any consultant of the
Company or any Subsidiary, other than agreements relating to options granted under a Stock Option
Plan; (d) has been entered into by the Company or any Subsidiary in its ordinary course of business
(but excluding any written contract providing for the advancement of credit, whether by way of
loan, guarantee or otherwise) and is likely to involve consideration or Liability of more than
$2,000,000 in the aggregate; (e) has been entered into by

5

 

the Company or any Subsidiary other than in the ordinary course of business and is likely to involve
consideration or Liability of more than $500,000 in the aggregate; or (f) that provides or purports
to provide for exclusivity to any Person, limits the payment of dividends (in any circumstance),
imposes financial covenants or limits the conduct of business, in each case on or over the Company,
any Significant Subsidiary or the Investor.

          “OIC” means the Office of the Insurance Commissioner of Puerto Rico.

          “OCFI” means the Office of the Commissioner of Financial Institutions of the
Commonwealth of Puerto Rico.

          “OSFI” means the Office of the Superintendent of Financial Institutions (Canada).

          “Owned Real Property” means the real property in which the Company or any Subsidiary
has fee title (or equivalent) interest, together with all buildings and other structures,
facilities or improvements currently or hereafter located thereon, all fixtures, systems, equipment
and items of personal property of the Company or any Subsidiary attached or appurtenant thereto and
all easements, licenses, rights and appurtenances relating to the foregoing.

          “Permitted Encumbrances” means such of the following as to which no enforcement,
collection, execution, levy or foreclosure proceeding shall have been commenced and as to which
neither the Company nor any Subsidiary is otherwise subject to civil or criminal liability due to
its existence: (a) liens for Taxes not yet due and payable, which have been incurred in the
ordinary course of business and for which adequate reserves are shown or reflected in the
Management 2006 Financial Statements or that relate to periods ended after December 31, 2006; (b)
Encumbrances imposed by Law, such as materialmen’s, mechanics’, carriers’, workmen’s and
repairmen’s liens and other similar liens arising in the ordinary course of business securing
obligations that (i) are not overdue for a period of more than 30 days and (ii) are not in excess
of $50,000 in the case of a single property or $500,000 in the aggregate at any time; (c) pledges
or deposits to secure obligations under workers’ compensation Laws or similar legislation or to
secure public or statutory obligations; (d) liens or other security interests securing bona fide
obligations incurred by the Company or the Subsidiaries, provided that such obligations are shown
or reflected in the Management 2006 Financial Statements or incurred in the ordinary course of
business consistent with past practice since December 31, 2006 and (e) minor survey exceptions,
reciprocal easement agreements and other customary encumbrances on title to real property that (i)
were not incurred in connection with any Indebtedness, (ii) do not render title to the property
encumbered thereby unmarketable, and (iii) do not, individually or in the aggregate, materially and
adversely affect the value of or the use of such property for its current and anticipated purposes.

          “Person” means any individual, partnership, firm, corporation, limited liability
company, association, trust, unincorporated organization or other entity, as well as any syndicate
or group that would be deemed to be a person under Section 13(d)(3) of the Exchange Act.

          “P.R. Code” means the Puerto Rico Internal Revenue Code of 1964, as amended.

6

 

          “Purchase Price Bank Account” means a bank account in the United States to be
designated by the Company in a written notice to the Investor at least five Business Days before
the Closing.

          “Real Property” means the Leased Real Property and the Owned Real Property.

          “Regulatory Reports” means the annual or quarterly reports, and accompanying
schedules, of the Company and any Subsidiary filed with the Federal Reserve Board, the OCFI, the
FDIC, the Office of Thrift Supervision or the State of Florida since December 31, 2003.

          “Release” means disposing, discharging, injecting, spilling, leaking, leaching,
dumping, emitting, escaping, emptying, seeping, placing and the like into or upon any land or water
or air or otherwise entering into the Environment.

          “Remedial Action” means all action to (a) clean up, remove, treat or handle in any
other way Hazardous Materials in the Environment; (b) prevent the Release of Hazardous Materials so
that they do not migrate, endanger or threaten to endanger public health or the Environment; or (c)
perform remedial investigations, feasibility studies, corrective actions, closures and
post-remedial or post-closure studies, investigations, operations, maintenance and monitoring.

          “SEC” means the U.S. Securities and Exchange Commission.

          “Significant Subsidiary” means (i) the Bank, the Agency or any other Subsidiary set
forth in Section 3.02(a) of the Disclosure Schedule and (ii) any other Subsidiary that is a
significant subsidiary of the Company under Rule 1-02(w) of SEC Regulation S-X.

          “Stock Option Plans” means the FirstBank 1987 Stock Option Plan and the FirstBank 1997
Stock Option Plan.

          “Subsidiary” or “Subsidiaries” means any and all corporations, partnerships,
limited liability companies, joint ventures, associations and other entities controlled by the
Company, directly or indirectly, as a result of ownership of equity, membership or similar
interests in such Person or any other related rights.

          “Tax Returns” means any return, declaration, report, election, claim for refund or
information return or other statement or form relating to Taxes, filed or required to be filed with
any government or taxing authority, including any schedule or attachment thereto or any amendment
thereof.

          “Taxes” means any and all taxes, fees, levies, duties, tariffs, imposts, and other
charges of any kind (together with any and all interest, penalties, additions to tax and additional
amounts imposed with respect thereto) imposed by any government or taxing authority, including
taxes or other charges on or with respect to income, franchises, windfall or other profits, gross
receipts, property, intangible property, excise, sales, use, capital stock, accumulation of
earnings, payroll, employment, social security, workers’ compensation, unemployment compensation,
or net worth; taxes or other charges in the nature of excise, withholding, ad valorem, stamp,
transfer, value added, or gains taxes; license, registration and

7

 

documentation fees; and customs’ duties, tariffs, and similar charges. It also includes any
withholding taxes which the Corporation or any Affiliate of the Corporation is required by any
governmental or taxing authority to withhold on behalf of any Person, and to remit to a government,
municipal or taxing authority.

          “Treasury” means the Puerto Rico Treasury Department.

          “U.S. Code” means the U.S. Internal Revenue Code of 1986, as amended.

          SECTION 1.02. Definitions. The following terms have the meanings set forth in the
Sections set forth below:

	 	 	 
	Definition	 	Location
	 
	 	 
	“2005 10-K”
	 	3.07
	“Acquisition Notice”
	 	5.07(b)
	“Acquisition Transaction”
	 	5.07(b)
	“Aggregate Purchase Price”
	 	2.02
	“Closing”
	 	2.03
	“Common Stock”
	 	Recitals
	“Community Reinvestment Act”
	 	3.26(a)
	“Company”
	 	Preamble
	“Company Indemnified Party”
	 	7.03
	“Company Regulatory Agreement”
	 	3.28
	“Counteroffer Period”
	 	5.07(c)
	“Credit Agreement”
	 	5.09
	“Derivatives Contract”
	 	3.25
	“Doral”
	 	5.09
	“ERISA”
	 	3.17(a)
	“Financial Statements”
	 	3.08(a)
	“Governmental Approvals”
	 	3.06
	“internal controls”
	 	3.07(c)
	“Investor”
	 	Preamble
	“Investor Indemnified Party”
	 	7.02
	“Investor Offer”
	 	5.07(c)
	“Loss”
	 	7.02
	“Management 2006 Financial Statements”
	 	3.08(a)
	“Material Contracts”
	 	3.14(a)
	“Multiemployer Plan”
	 	3.17(b)
	“Multiple Employer Plan”
	 	3.17(b)
	“No Solicit Period”
	 	5.07(a)
	“Patriot Act”
	 	3.26(b)
	“Plans”
	 	3.17(a)
	“Preferred Stock”
	 	3.03
	“Purchase Price”
	 	2.02
	“Registered IP”
	 	3.15
	“SEC Reports”
	 	3.07(a)

8

 

	 	 	 
	Definition	 	Location
	 
	 	 
	“Securities Act”
	 	3.07(a)
	“Shares”
	 	Recitals
	“Stockholder Agreement”
	 	Recitals
	“Superior Proposal”
	 	5.07(d)
	“Termination Date”
	 	5.05(b)
	“Third Party Claim”
	 	7.05(b)
	“Third Party Offer”
	 	5.07(c)

          SECTION 1.03. Interpretation and Rules of Construction. In this Agreement, except to
the extent otherwise provided or that the context otherwise requires:

     (a) when a reference is made in this Agreement to an Article, Section, Exhibit or
Schedule, such reference is to an Article or Section of, or an Exhibit or Schedule to, this
Agreement unless otherwise indicated;

     (b) the table of contents and headings for this Agreement are for reference purposes
only and do not affect in any way the meaning or interpretation of this Agreement;

     (c) whenever the words “include”, “includes” or “including” are used in this Agreement,
they are deemed to be followed by the words “without limitation”;

     (d) the words “hereof”, “herein” and “hereunder” and words of similar import, when used
in this Agreement, refer to this Agreement as a whole and not to any particular provision of
this Agreement;

     (e) all terms defined in this Agreement have the defined meanings when used in any
certificate or other document made or delivered pursuant hereto, unless otherwise defined
therein;

     (f) the definitions of terms contained in this Agreement are applicable to the singular
as well as the plural forms of such terms;

     (g) any Law defined or referred to herein or in any agreement or instrument that is
referred to herein means such Law or statute as from time to time amended, modified or
supplemented, including by succession of comparable successor Laws;

     (h) references to a Person are also to its successors and permitted assigns;

     (i) the use of “or” is not intended to be exclusive unless expressly indicated
otherwise; and

     (j) all references to the word “state” include the Commonwealth of Puerto Rico and all
territories of the United States.

9

 

ARTICLE II

PURCHASE AND SALE

          SECTION 2.01. Purchase and Sale of the Shares. Upon the terms and subject to the
conditions of this Agreement, at the Closing, the Company shall issue to the Investor (or an
Affiliate thereof designated by the Investor), and the Investor (or such Affiliate) shall purchase,
accept and acquire from the Company, the Shares.

          SECTION 2.02. Purchase Price. The purchase price per share for the Shares shall be
$10.25 (the “Purchase Price”). The “Aggregate Purchase Price” shall be equal to
the product of (a) the number of Shares to be purchased pursuant to this Agreement and (b) the
Purchase Price.

          SECTION 2.03. Closing. Subject to the terms and conditions of this Agreement, the
issuance, sale and purchase of the Shares contemplated by this Agreement shall take place at a
closing (the “Closing”) to be held at the offices of Shearman & Sterling LLP, 599 Lexington
Avenue, New York, New York at 10:00 A.M. New York time on the third Business Day following the
satisfaction or waiver of the conditions to the obligations of the parties set forth in Article VI
(other than those that by their terms are to be satisfied or waived at the Closing) or at such
other place or at such other time or on such other date as the Company and the Investor may
mutually agree upon in writing.

          SECTION 2.04. Closing Deliveries by the Company. At the Closing, the Company shall
deliver or cause to be delivered to the Investor:

     (a) stock certificates evidencing the Shares registered in the name of the Investor or
its designated Affiliate, which stock certificates may be legended as provided in the
Stockholder Agreement;

     (b) the Company’s executed counterpart to the Stockholder Agreement;

     (c) a receipt for the Aggregate Purchase Price; and

     (d) a true and complete copy, certified by the Secretary or an Assistant Secretary of
the Company, of the resolutions duly and validly adopted by the Board of Directors of the
Company evidencing its authorization of the execution and delivery of this Agreement and the
Stockholder Agreement and the consummation of the transactions contemplated hereby and
thereby.

          SECTION 2.05. Closing Deliveries by the Investor. At the Closing, the Investor shall
deliver to the Company:

     (a) the Aggregate Purchase Price by wire transfer in immediately available funds to the
Purchase Price Bank Account; and

     (b) the Investor’s executed counterpart to the Stockholder Agreement.

10

 

          SECTION 2.06. Transfer Taxes. Any issuance or withholding taxes, fees or duties
under applicable Law incurred in connection with the issuance of the Shares under this Agreement
shall be borne and paid by the Company and it shall promptly reimburse the Investor for any such
taxes, fees or duties which the Investor pays or is otherwise liable for.

          SECTION 2.07. Adjustments to Purchase Price. The Purchase Price shall be adjusted to
reflect appropriately the effect of any stock split, reverse stock split, stock dividend (including
any dividend or distribution of securities convertible into Common Stock), extraordinary cash
dividends, reorganization, recapitalization, reclassification, combination, exchange of shares or
other like change with respect to Common Stock occurring on or after the date hereof and prior to
the Closing.

ARTICLE III

REPRESENTATIONS AND WARRANTIES

OF THE COMPANY

          As an inducement to the Investor to enter into this Agreement, the Company hereby represents
and warrants to the Investor as follows:

          SECTION 3.01. Organization, Authority and Qualification of the Company. (a) The
Company is a corporation duly organized and validly existing, and, if it had filed audited
financial statements for 2004, 2005 and 2006, it would be in good standing under the Laws of the
jurisdiction of its incorporation and has all necessary power and authority to enter into this
Agreement and the Stockholder Agreement, to carry out its obligations hereunder and thereunder and
to consummate the transactions contemplated hereby and thereby. The Company is duly licensed or
qualified to do business and is in good standing in each jurisdiction in which the properties owned
or leased by it or the operation of its business makes such licensing or qualification necessary,
except jurisdictions in which the failure to be licensed or qualified would not, individually or in
the aggregate, have a material adverse effect on the Company and the Subsidiaries taken as a whole.
The execution and delivery of this Agreement and the Stockholder Agreement by the Company, the
performance by the Company of its obligations hereunder and thereunder and the consummation by the
Company of the transactions contemplated hereby and thereby have been duly authorized by all
requisite corporate action on the part of the Company. This Agreement has been, and upon its
execution and delivery at the Closing, the Stockholder Agreement will have been, duly executed and delivered by the Company,
and (assuming due authorization, execution and delivery by the Investor) this Agreement
constitutes, and upon its execution the Stockholder Agreement will constitute, legal, valid and
binding obligations of the Company, enforceable against the Company in accordance with their
respective terms, subject to the effect of any applicable bankruptcy, insolvency (including all
Laws relating to fraudulent transfers), reorganization, moratorium or similar Laws affecting
creditors’ rights generally and subject to the effect of general principles of equity (regardless
of whether considered in a proceeding at law or in equity) or any applicable conservatorship or
receivership provisions of the FDIA (“FDIA Limitations”).

          (b) The Company has not taken any action that in any material respect conflicts with,
constitutes a default under or results in a violation of any provision of its Articles of

11

 

Incorporation or Bylaws (or similar organizational documents). True and complete copies of the
Articles of Incorporation and Bylaws of the Company, each as in effect on the date hereof, have
been delivered by the Company to the Investor.

          SECTION 3.02. Subsidiaries. (a) Section 3.02(a) of the Disclosure Schedule sets
forth a true and complete list of all Subsidiaries, listing for each Subsidiary its name, type of
entity, the jurisdiction of its incorporation or organization and the percentage of each class or
series of its equity securities owned by the Company or a Subsidiary.

          (b) The Bank is a commercial bank duly organized and validly existing under the Laws of Puerto
Rico, and duly licensed by the OCFI. FSB is a federal savings bank duly organized and validly
existing under the Laws of the United States and is a qualified thrift lender pursuant to Section
10(m) of the HOLA and a member in good standing of the Federal Home Loan Bank of New York. The
deposits of the Bank and of FSB are insured by the FDIC to the fullest extent permitted in the
FDIA, and all premiums and assessments required to be paid in connection therewith have been paid
when due. The Agency is a Puerto Rico-chartered insurance agency, duly organized and validly
existing under the Laws of Puerto Rico. The Agency is qualified and licensed by the OIC as an
insurance agent pursuant to Article 9.160 of the Puerto Rico Insurance Code.

          (c) Each other Subsidiary that is a corporation: (i) is a corporation duly organized and
validly existing and in good standing (except to the extent it is not in good standing because of
the failure to file audited financial statements for one or more of 2004, 2005 and 2006) under the
Laws of its jurisdiction of incorporation, (ii) has all necessary power and authority to own,
operate or lease the properties and assets owned, operated or leased by such Subsidiary and to
carry on its business as it has been and is currently conducted by such Subsidiary and (iii) is
duly licensed or qualified to do business and is in good standing in each jurisdiction in which the
properties owned or leased by it or the operation of its business makes such licensing or
qualification necessary or desirable other than jurisdictions in which the failure of the
Subsidiary to be licensed or qualified would not, individually or in aggregate, have a material
adverse effect on such Subsidiary. Each other Subsidiary that is not a corporation: (i) is duly
organized, validly existing and in good standing under the Laws of its jurisdiction of
organization, (ii) has all necessary power and authority to own, operate or lease the properties
and assets owned, operated or leased by such Subsidiary and to carry on its business as it has been and is
currently conducted by such Subsidiary and (iii) is duly licensed or qualified to do business and
is in good standing in each jurisdiction in which the properties owned or leased by it or the
operation of its business makes such licensing or qualification necessary or desirable.

          SECTION 3.03. Capitalization. (a) The authorized capital stock of the Company
consists of 250,000,000 shares of Common Stock and 50,000,000 shares of preferred stock,
par value $1.00 per share (the “Preferred Stock”). As of the date hereof, (i) 83,254,056
shares of Common Stock are issued and outstanding, all of which are validly issued, fully paid,
nonassessable and free of preemptive rights, (ii) 22,004,000 shares of Preferred Stock are issued
and outstanding, all of which are validly issued, fully paid and nonassessable, of which 3,600,000
shares of Series A Preferred Stock are issued and outstanding, 3,000,000 shares of Series B
Preferred Stock are issued and outstanding, 4,140,000 shares of Series C Preferred Stock are issued
and outstanding, 3,680,000 shares of Series D Preferred Stock are issued and

12

 

outstanding, 7,584,000 shares of Series E Preferred Stock are issued and outstanding, and (iii) 4,378,400 shares of Common
Stock are reserved for issuance pursuant to employee stock options granted pursuant to the Stock
Option Plans. None of the issued and outstanding shares of Common Stock was issued in violation of
any preemptive rights. Except for the Stock Option Plans, there are no options, warrants,
convertible securities or other rights, agreements, arrangements or commitments of any character
relating to the Shares or obligating the Company to issue or sell any shares of Common Stock, or
any other interest in, the Company. There are no outstanding contractual obligations of the
Company to repurchase, redeem or otherwise acquire any shares of Common Stock. The Shares, when
issued, paid for and delivered in accordance with the terms of this Agreement, will be fully paid
and nonassessable and the Investor will own the Shares free and clear of all Encumbrances. Other
than the Stockholder Agreement, there are no voting trusts, stockholder agreements, proxies or
other agreements or understandings in effect with respect to the voting or transfer of any of the
Shares.

          (b) All the outstanding shares owned by the Company or any Subsidiary of capital stock of each
Subsidiary that is a corporation are validly issued, fully paid, nonassessable and, except with
respect to wholly owned Subsidiaries, free of preemptive rights and are owned by the Company,
whether directly or indirectly, free and clear of all Encumbrances. There are no options,
warrants, convertible securities or other rights, agreements, arrangements or commitments of any
character relating to the capital stock of any Significant Subsidiary or obligating the Company or
any Subsidiary to issue or sell any shares of capital stock of, or any other interest in, any
Significant Subsidiary. There are no voting trusts, stockholder agreements, proxies or other
agreements or understandings in effect with respect to the voting or transfer of any shares of
capital stock of or any other interests in any Significant Subsidiary.

          SECTION 3.04. Corporate Books and Records. The minute books of the Company contain
accurate records of all meetings and accurately reflect all other actions taken by the
stockholders, Board of Directors and all committees of the Board of Directors of the Company and
the Subsidiaries, except that minutes for the meetings listed in Section 3.04 of the Disclosure
Schedule have not yet been finalized and are not contained in the minute books. Complete and accurate copies of all such minute books
have been made available by the Company to the Investor.

          SECTION 3.05. No Conflict. Assuming that all consents, approvals, authorizations and
other actions described in Section 3.06 have been obtained, all filings and notifications described
in Section 3.06 have been made and any applicable waiting period has expired or been terminated,
the execution, delivery and performance of this Agreement and the Stockholder Agreement by the
Company do not and will not (a) violate, conflict with or result in the breach of any provision of
the Articles of Incorporation or ByLaws (or similar organizational documents) of the Company or any
Subsidiary, or (b) conflict with or violate (or cause an event which could have a Material Adverse
Effect as a result of) any Law or Governmental Order applicable to the Company, any Subsidiary or
any of their respective assets, properties or businesses, or (c) conflict with, result in any
breach of, constitute a default (or event which with the giving of notice or lapse of time, or
both, would become a default) under, require any consent under, or give to others any rights of
termination, amendment, acceleration, suspension, revocation or cancellation of, or result in the
creation of any Encumbrance on any of the Shares pursuant to, any note, bond, mortgage or
indenture, contract, agreement, lease, sublease, license,

13

 

permit, franchise or other instrument or arrangement to which the Company or any Subsidiary is a party or by which any of the Shares or any
of such assets or properties is bound or affected.

          SECTION 3.06. Governmental Consents and Approvals. The execution, delivery and
performance of this Agreement and the Stockholder Agreement by the Company do not and will not
require any consent, approval, authorization or other order of, action by, filing with or
notification to, any Governmental Authority, except for filings, applications, notices (by any of
the Investor, the Company or any of the Subsidiaries) to, approvals of, or the termination or
expiration of any waiting periods under or associated with, the Federal Reserve Board under the BHC
Act, the FDIC, OCFI and any other applicable Governmental Authority (collectively, the
“Governmental Approvals”). No Company Representative, after having made due inquiry, is
aware or knows of any fact or circumstance that would reasonably be expected to result in the
denial to the Company or a Subsidiary of any Governmental Approval or result in any such
Governmental Approval containing any condition or requirement that could reasonably be expected to
have, individually or in the aggregate, a material adverse effect on the Company and the
Subsidiaries taken as a whole or that, without any duty of inquiry in respect of the Investor or
the Subsidiaries on the part of a Company Representative, could reasonably be expected to have a
material adverse effect on the Investor and its subsidiaries.

          SECTION 3.07. SEC Filings and the Sarbanes-Oxley Act. (a) Except as set forth in
Section 3.07(a) of the Disclosure Schedule, the Company has filed all forms, reports and documents
required to be filed by it with the SEC since December 31, 2003, including (i) its Annual Reports
on Form 10-K, (ii) its Quarterly Reports on Form 10-Q, (iii) all proxy statements relating to the
Company’s meetings of stockholders (whether annual or special) and (iv) all other forms, reports
and other registration statements required to be filed by the Company with the SEC (the forms, reports and other documents
referred to in clauses (i), (ii), (iii) and (iv) above (other than those listed in Section 3.07(a)
of the Disclosure Schedule) being, collectively, the “SEC Reports”). Except as described
in the Company’s Amended Annual Report on Form 10-K/A for the year ended December 31, 2004 or its
Annual Report on Form 10-K for the year ended December 31, 2005 (the “2005 10-K”), the SEC
Reports (i) were prepared in accordance with either the requirements of the U.S. Securities Act of
1933, as amended (the “Securities Act”), or the Exchange Act, as the case may be, and the
rules and regulations promulgated thereunder, and (ii) did not, at the time they were filed (if an
amendment, being the date the amendment was filed), contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary in order to make the
statements made therein, in the light of the circumstances under which they were made, not
misleading. No Subsidiary is required to file any form, report or other document with the SEC.

          (b) The Company has established and maintains disclosure controls and procedures (as defined
in Rule 13a-15 under the Exchange Act). Such disclosure controls and procedures are designed to
ensure that material information relating to the Company, including its consolidated Subsidiaries,
is made known to the Company’s principal executive officer and its principal financial officer by
others within those entities, particularly during the periods in which the periodic reports
required under the Exchange Act are being prepared. Such disclosure controls and procedures as in
effect at the date of this Agreement are effective in timely alerting the Company’s principal
executive officer and principal financial officer to material information required to be included
in the Company’s periodic reports required under the Exchange Act,

14

 

except to the extent of failures of the Company’s disclosure controls and procedures to be effective that are described in the SEC
Reports.

          (c) The Company and the Subsidiaries have established and maintained a system of internal
control over financial reporting (as defined in Rule 13a-15 under the Exchange Act) (“internal
controls”). Such internal controls as in effect at the date of this Agreement are sufficient to
provide reasonable assurance regarding the reliability of the Company’s financial reporting and the
preparation of Company financial statements for external purposes in accordance with GAAP, except
to the extent of material weaknesses described in the SEC Reports. The Company has disclosed,
based on its most recent evaluation of internal controls prior to the date hereof, to the Company’s
auditors and audit committee (i) any significant deficiencies and material weaknesses in the design
or operation of internal controls which are reasonably likely to adversely affect the Company’s
ability to record, process, summarize and report financial information and (ii) any fraud, whether
or not material, that involves management or other employees who have a significant role in
internal controls. The Company has disclosed in the SEC Reports any such disclosure made by
management to the Company’s auditors and its audit committee and the Company has provided the
Investor a written summary of the information regarding the matters set forth in clauses (i) and
(ii) hereof, if any, that would have been disclosed in the Company’s Form 10-K for the fiscal year
2006 had such Form been filed prior to the date hereof.

          SECTION 3.08. Financial Information; Books and Records. (a) Each of the
consolidated financial statements (including, in each case, any notes thereto) contained in the
2005 10-K (collectively, the “Financial Statements”) and the unaudited consolidated balance sheet of the Company as of December 31, 2006, and the related
consolidated statements of income, copies of which are attached hereto as Exhibit I (collectively,
the “Management 2006 Financial Statements”), (i) was prepared in accordance with the books
of account and other financial records of the Company and the Subsidiaries, (ii) presents fairly
the consolidated financial condition and results of operations of the Company and the Subsidiaries
as of the dates thereof or for the periods covered thereby in accordance with GAAP, (iii) was
prepared in accordance with GAAP applied on a basis consistent with the past practices of the
Company and the Subsidiaries, and (iv) includes all adjustments (consisting, except as otherwise
described in the notes to the Financial Statements, only of normal recurring accruals) that are
necessary for a fair presentation of the consolidated financial condition of the Company and the
Subsidiaries and the results of the operations of the Company and the Subsidiaries as of the dates
thereof or for the periods covered thereby.

          (b) The books of account and other financial records of the Company and the Subsidiaries: (i)
reflect all items of income and expense and all assets and Liabilities required to be reflected
therein in accordance with GAAP applied on a basis consistent with the past practices of the
Company and the Subsidiaries, respectively, (ii) are in all material respects complete and correct,
and do not contain or reflect any material inaccuracies or discrepancies and (iii) have been
maintained in accordance with good business and accounting practices.

          SECTION 3.09. Absence of Undisclosed Liabilities. There are no Liabilities of the
Company or any Subsidiary, other than Liabilities (a) reflected or reserved against in the
Management 2006 Financial Statements, (b) arising under any contract which is being

15

 

performed by the Company or any Subsidiary in accordance with its terms, or
(c) incurred since December 31, 2006 in the ordinary course of business, consistent with past
practice, of the Company and the Subsidiaries and which, with respect to this clause (c), do not
and could not reasonably be expected to have a Material Adverse Effect. Reserves are reflected in
the Management 2006 Financial Statements against all Liabilities of the Company and the
Subsidiaries in amounts that have been established on a basis consistent with the past practices of
the Company and the Subsidiaries and in accordance with GAAP.

          SECTION 3.10. Conduct in the Ordinary Course; Absence of Certain Changes, Events and
Conditions. Since December 31, 2006, (a) the Company and the Subsidiaries have conducted their
businesses only in the ordinary course and in a manner consistent with past practice, and (b) there
has not been any Material Adverse Effect.

          SECTION 3.11. Litigation. Except as set forth in Section 3.11 of the Disclosure
Schedule (which, with respect to each Action set forth therein, sets forth the parties, nature of
the proceeding, date and method commenced, amount of charges or other relief sought and, if
applicable, paid or granted), there are no Actions by or against the Company or any Subsidiary (or
by or against any Affiliate thereof and relating to the Company or any Subsidiary) pending before
any Governmental Authority (and no Company Representative, after having made due inquiry, is aware
or knows of any facts or circumstances that could reasonably be expected to give rise to any such
Action), other than Actions (a) commenced by customers of the Company arising in response to the
enforcement of asserted rights by the Company or any Subsidiary and seeking only money damages of
not greater than $1,000,000 and which, in the aggregate, do not exceed $50,000,000 (it being
understood for the purposes of this clause (a) that any Actions arising from the same or any
similar facts, circumstances, practices or omissions shall be treated as a single Action) and (b)
arising in the ordinary course of business (other than Actions described in clause (a) above)
seeking only money damages of not greater than $500,000 and which, in the aggregate, do not exceed
$20,000,000 (it being understood for the purposes of this clause (b) that any Actions arising from
the same or any similar facts, circumstances, practices or omissions shall be treated as a single
Action). None of the matters set forth in Section 3.11 of the Disclosure Schedule has or could
reasonably be expected to materially affect the Company or any Subsidiary or could affect the
legality, validity or enforceability of this Agreement, the Stockholder Agreement or the
consummation of the transactions contemplated hereby or thereby. Except as set forth in Section
3.11 of the Disclosure Schedule, none of the Company, the Subsidiaries or any of their respective
assets or properties is subject to any Governmental Order (and no Company Representative, after
having made due inquiry, is aware or knows of any Governmental Orders threatened to be imposed by
any Governmental Authority) which has had or could reasonably be expected to have, individually or
in the aggregate, a material adverse effect on the Company and the Subsidiaries taken as a whole or
could affect the legality, validity or enforceability of this Agreement, the Stockholder Agreement
or the consummation of the transactions contemplated hereby or thereby.

          SECTION 3.12. Compliance with Laws. (a) Except as set forth in Section 3.12(a) of
the Disclosure Schedule, the Company and the Subsidiaries have each conducted and continue to
conduct their respective businesses in all material respects in accordance with all Laws and
Governmental Orders applicable to the Company or any

16

 

Subsidiary, and neither the Company nor any
Subsidiary is in violation in a material respect of any such Law or Governmental Order.

          (b) Section 3.12(b) of the Disclosure Schedule sets forth a brief description of each
Governmental Order applicable to the Company or any Subsidiary, and no such Governmental Order
could reasonably be expected to have in the future, individually or in the aggregate, a material
adverse effect on the Company and the Subsidiaries taken as a whole or could affect the legality,
validity or enforceability of this Agreement, the Stockholder Agreement or the consummation of the
transactions contemplated hereby or thereby.

          SECTION 3.13. Environmental and Other Permits and Licenses; Related Matters. (a)
Except as would not have, individually or in the aggregate, a material adverse effect on the
Company and the Subsidiaries taken as a whole:

     (i) The Company and each Subsidiary are in compliance with all applicable Environmental
Laws and all Environmental Permits.

     (ii) There has been no Release of any Hazardous Material on any of the Real Property
or, during the period of the Company’s or any Subsidiary’s ownership, lease, use or
occupancy thereof, on any property formerly owned, leased, used or occupied by the Company
or any Subsidiary.

     (iii) There are no Environmental Claims pending or threatened against the Company, any
Subsidiary or the Real Property, and no Company Representative, after having made due
inquiry, is aware or knows of any circumstances that can reasonably be expected to form the
basis of any such Environmental Claim.

     (iv) Neither the Company nor any Subsidiary has any actual or alleged liability,
whether fixed or contingent, under any Environmental Law.

          (b) Neither the execution of this Agreement or the Stockholder Agreement nor the consummation
of the transactions contemplated hereby or thereby will require any Remedial Action or notice to or
consent of Governmental Authorities or third parties pursuant to any applicable Environmental Law
or Environmental Permit.

          SECTION 3.14. Material Contracts. (a) Each Material Contract is valid and binding on
the parties thereto and is in full force and effect, (b) neither the Company nor any Subsidiary is
(and no Company Representative, after having made due inquiry, is aware or knows of any other party
that is) in breach in any material respect of, or default in a material respect under, any Material
Contract, and (c) no party to any Material Contract will have the right to terminate any or all of
the
provisions of any such Material Contract as a result of the transactions contemplated by this
Agreement or the Stockholder Agreement.

          SECTION 3.15. Intellectual Property. (a) Except as would not reasonably be expected
to have, individually or in the aggregate, a material adverse effect on the Company and the
Subsidiaries taken as a whole:

17

 

     (i) The Company and the Subsidiaries have used their reasonable best efforts to protect
the proprietary nature of the trade secrets and confidential information that they own or
use;

     (ii) The Company or the Subsidiaries own all right, title and interest in and to, or
has the valid right to use, free and clear of all Encumbrances (other than Permitted
Encumbrances and encumbrances arising pursuant to license agreements), the Intellectual
Property necessary for or used in the conduct of their business;

     (iii) The conduct of the Company and the Subsidiaries, and the conduct of the business
of the Company and the Subsidiaries as currently conducted, do not conflict with, infringe
upon, misappropriate, violate or interfere with the Intellectual Property rights of any
third party;

     (iv) No Company Representative, after having made due inquiry, is aware or knows that
any third party is infringing upon any Intellectual Property owned by the Company or any
Subsidiary; and

     (v) The Company and the Subsidiaries have taken commercially reasonable measures to
maintain and protect all the (i) registered trade names, trademarks and service marks and
applications therefor, (ii) registered copyrights and applications therefor, (iii) issued
patents and patent applications, and (iv) domain names, in each case, that are owned by the
Company or any Subsidiary and are material to the conduct of the business of the Company and
the Subsidiaries taken together (collectively, the “Registered IP”).

          (b) The execution and delivery by the Company of this Agreement and the Stockholder Agreements
do not, and the performance of its obligations hereunder and thereunder will not, adversely affect
the validity of, or the Company’s or the Subsidiaries’ rights in, any Registered IP, or any other
Intellectual Property (other than those which could not reasonably be expected to have,
individually or in the aggregate, a material adverse effect on the Company and the Subsidiaries
taken as a whole).

          SECTION 3.16. Real Property; Assets. (a) Except as set forth in Section 3.16(a) of
the Disclosure Schedule, there is no material violation of any Law (including any building,
planning or zoning law) relating to any of the Real Property, either the Company or a Subsidiary,
as the case may be, is in peaceful and undisturbed possession of each parcel of Real Property, and
there are no contractual or legal restrictions that preclude or restrict in a material way the
ability to use the Real Property for the
purposes for which it is currently being used. There are no material latent defects or
material adverse physical conditions affecting the Real Property or any of the facilities,
buildings, structures, erections, improvements, fixtures, fixed assets and personalty of a
permanent nature annexed, affixed or attached to, located on or forming part of the Real Property
that are reasonably likely to have, individually or in the aggregate, a material adverse effect on
the Company and the Subsidiaries taken as a whole.

          (b) Except as would not have, individually or in the aggregate, a material adverse effect on
the Company and the Subsidiaries taken as a whole:

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     (i) All improvements on the Real Property constructed by or on behalf of the
Company or any Subsidiary were constructed in compliance with all applicable Laws
(including any building, planning or zoning Laws) affecting such Real Property, and
no Company Representative, after having made due inquiry, is aware or knows of any
improvements on the Real Property constructed by or on behalf of any other Person
that were not constructed in compliance with all applicable Laws (including any
building, planning or zoning Laws) affecting such Real Property.

     (ii) No improvements on the Real Property and none of the current uses and
conditions thereof violate any Encumbrance, applicable deed restrictions or other
applicable covenants, restrictions, agreements, existing site plan approvals, zoning
or subdivision regulations or urban redevelopment plans as modified by any duly
issued variances, and no permits, licenses or certificates pertaining to the
ownership or operation of all improvements on the Real Property, other than those
which are transferable with the Real Property, are required by any Governmental
Authority having jurisdiction over the Real Property.

     (iii) All improvements on any Real Property are wholly within the lot limits of
such Real Property and do not encroach on any adjoining premises or Encumbrance
benefiting such Real Property, and there are no encroachments on any Real Property
or any easement or property right or benefit appurtenant thereto by any improvements
located on any adjoining premises.

     (iv) Each of the Company and the Subsidiaries has good and valid title to, or,
in the case of leased properties and assets, valid leasehold or subleasehold
interests in, all of its properties and assets, tangible and intangible, real,
personal and mixed, used or held for use in its business, free and clear of any
Encumbrances, except for Permitted Encumbrances, and such properties and assets are
sufficient for the conduct of the business of the Company and the Subsidiaries as
currently conducted.

          SECTION 3.17. Employee Benefit Matters. (a) Plans and Material Documents.
Section 3.17(a) of the Disclosure Schedule lists (i) all employee benefit plans (as defined in
Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended (“ERISA”)) and all bonus, stock option, stock
purchase, restricted stock, incentive, deferred compensation, retiree medical or life insurance,
supplemental retirement, severance or other benefit plans, programs or arrangements, including any
non-qualified deferred compensation plan, and all employment, termination, severance or other
contracts or agreements, whether legally enforceable or not, to which the Company or any Subsidiary
is a party, with respect to which the Company or any Subsidiary has any obligation or which are
maintained, contributed to or sponsored by the Company or any Subsidiary for the benefit of any
current or former employee, officer or director of the Company or any Subsidiary, (ii) each
employee benefit plan for which the Company or any Subsidiary could incur liability under Section
4069 of ERISA in the event such plan has been or were to be terminated, (iii) any plan in respect
of which the Company or any Subsidiary could incur liability under Section 4212(c) of ERISA, and
(iv) any contracts,

19

 

arrangements or understandings between the Company or any of its Affiliates and
any employee of the Company or of any Subsidiary, including any contracts, arrangements or
understandings relating to the sale of the Company (collectively, the “Plans”). Except as
set forth in Section 3.17(a) of the Disclosure Schedule, there are no other employee benefit plans,
programs, arrangements or agreements, whether formal or informal, whether in writing or not, to
which the Company or any Subsidiary is a party, with respect to which the Company or any Subsidiary
has any obligation or which are maintained, contributed to or sponsored by the Company or any
Subsidiary for the benefit of any current or former employee, officer or director of the Company or
any Subsidiary. Neither the Company nor any Subsidiary has any express or implied commitment,
whether legally enforceable or not, (I) to create, incur liability with respect to, or cause to
exist, any other employee benefit plan, program or arrangement, (II) to enter into any contract or
agreement to provide compensation or benefits to any individual, or (III) to modify, change or
terminate any Plan, other than with respect to a modification, change or termination required by
ERISA or the Code.

          (b) Absence of Certain Types of Plans. None of the Plans is a multiemployer plan
(within the meaning of Section 3(37) or 4001(a)(3) of ERISA) (a “Multiemployer Plan”) or a
single employer pension plan (within the meaning of Section 4001(a)(15) of ERISA) for which the
Company or any Subsidiary could incur liability under Section 4063 or 4064 of ERISA (a
“Multiple Employer Plan”). None of the Plans provides for the payment of separation,
severance, termination or similar benefits to any Person or obligates the Company or any Subsidiary
to pay separation, severance, termination or similar benefits solely as a result of any transaction
contemplated by this Agreement or as a result of a “change in control”, within the meaning of such
term under Section 280G of the U.S. Code. None of the Plans provides for or promises retiree
medical, disability or life insurance benefits to any current or former employee, officer or
director of the Company or any Subsidiary. Each of the Plans is subject only to the Laws of the
United States or a political subdivision thereof.

          (c) Compliance with Applicable Law. Each Plan is now and always has been operated in
accordance with the requirements of all applicable Law, including ERISA and the Code, and all
Persons who participate in the operation of such Plans and all Plan “fiduciaries” (within the
meaning of Section 3(21) of ERISA) have always acted in compliance in all material respects with
the provisions of all applicable Law, including ERISA and the Code. The Company (and each
Subsidiary) has performed in all material respects all obligations required to be performed by it
under, is not in any material respect in default under or in violation of, and no Company
Representative, after having made due inquiry, is aware or knows of any default or
violation by any party to, any Plan. No Action is pending, and no Company Representative,
after having made due inquiry, is aware or knows of any threatened Action, with respect to any Plan
(other than claims for benefits in the ordinary course) and no fact or event exists that could give
rise to any such Action.

          (d) Qualification of Certain Plans. Each Plan that is intended to be qualified under
Section 401(a) of the U.S. Code or Section 401(k) of the U.S. Code, and Section 1165 of the P.R.
Code, has received favorable determination letters from the IRS and Treasury, as applicable, that
it is so qualified, and each trust established in connection with any Plan that is intended to be
exempt from federal and Puerto Rico income taxation under Section 501(a) of the U.S. Code and
Section 1101 of the P.R. Code has received determination letters from the IRS

20

 

and Treasury, as
applicable, that it is so exempt, and no fact or event has occurred since the date of such
determination letter from the IRS to adversely affect the qualified status of any such Plan or the
exempt status of any such trust. Each trust maintained or contributed to by the Company or any
Subsidiary that is intended to be qualified as a voluntary employees’ beneficiary association and
that is intended to be exempt from federal income taxation under Section 501(c)(9) of the U.S. Code
and Puerto Rico income taxation under Section 1101(12) of the P.R. Code has received favorable
determination letters from the IRS and Treasury, as applicable, that it is so qualified and so
exempt, and no fact or event has occurred since the date of such determinations by the IRS or
Treasury, as applicable, to adversely affect such qualified or exempt status.

          (e) Absence of Certain Liabilities and Events. There has been no non-exempt
prohibited transaction (within the meaning of Section 406 of ERISA or Section 4975 of the U.S. Code
or Section 1409(c) of the P.R. Code) with respect to any Plan. Neither the Company nor any
Subsidiary has incurred any liability for any penalty or tax arising under Section 4971, 4972,
4980, 4980B or 6652 of the U.S. Code or Section 1404 of the P.R. Code or any liability under
Section 502 of ERISA, and no Company Representative, after having made due inquiry, is aware or
knows of any fact or event that exists that could give rise to any such liability. Neither the
Company nor any Subsidiary has incurred any liability under, arising out of or by operation of
Title IV of ERISA (other than liability for premiums to the Pension Benefit Guaranty Corporation
arising in the ordinary course), including any liability in connection with (i) the termination or
reorganization of any employee benefit plan subject to Title IV of ERISA or (ii) the withdrawal
from any Multiemployer Plan or Multiple Employer Plan, and no Company Representative, after having
made due inquiry, is aware or knows of any fact or event that exists that could give rise to any
such liability. No complete or partial termination has occurred within the five years preceding
the date hereof with respect to any Plan. No reportable event (within the meaning of Section 4043
of ERISA) has occurred or is expected to occur with respect to any Plan subject to Title IV of
ERISA. No Plan had an accumulated funding deficiency (within the meaning of Section 302 of ERISA
or Section 412 of the U.S. Code or Section 1165 of the P.R. Code), whether or not waived, as of the
most recently ended plan year of such Plan. None of the assets of the Company or any Subsidiary is
the subject of any lien arising under Section 302(f) of ERISA or Section 412(n) of the U.S. Code or
Section 1165 of the P.R. Code; neither the Company nor any Subsidiary has been required to post any
security under Section 307 of ERISA or Section 401(a)(29) of the U.S. Code or Section 1165 of the
P.R. Code; and no fact or event exists which could give rise to any such lien or requirement to
post any such security.

          (f) Plan Contributions and Funding. All contributions, premiums or payments required
to be made by the Company or any Subsidiary with respect to any Plan have been made on or before
their due dates. All such contributions have been fully deducted for income tax purposes and no
such deduction has been challenged or disallowed by any Governmental Authority, and no Company
Representative, after having made due inquiry, is aware or knows of any fact or event that exists
that presents a reasonable likelihood of giving rise to any such challenge or disallowance. As of
the Closing, no Plan that is subject to Title IV of ERISA will have an “unfunded benefit liability”
(within the meaning of Section 4001(a)(18) of ERISA).

          SECTION 3.18. Labor Matters. (a) Neither the Company nor any Subsidiary is a party
to any collective bargaining agreement or other labor union contract applicable to persons

21

 

employed by the Company or any Subsidiary, and currently there are no organizational campaigns, petitions or
other unionization activities seeking recognition of a collective bargaining unit which could
affect the Company or any Subsidiary; and (b) the Company and each Subsidiary are currently in
compliance in all material respects with all applicable Laws relating to the employment of labor,
including those related to wages, hours, collective bargaining and, except as set forth in Section
3.19(a) of the Disclosure Schedule, the payment and withholding of Taxes and other sums as required
by the appropriate Governmental Authority and has withheld and paid to the appropriate Governmental
Authority or is holding for payment not yet due to such Governmental Authority all amounts required
to be withheld from employees of the Company or any Subsidiary (other than minor inadvertent
failures properly to withhold) and is not liable for any material arrears of wages, Taxes,
penalties or other sums for failure to comply with any of the foregoing.

          SECTION 3.19. Taxes. (a) Except as set forth in Section 3.19(a) of the Disclosure
Schedule: (i) all Tax Returns required to be filed by or with respect to the Company and the
Subsidiaries have been timely filed and the Company and the Subsidiaries are not currently the
beneficiary of any extension of time within which to file any Tax Return; (ii) all Taxes required
to be shown on such Tax Returns or otherwise due in respect of the Company or any Subsidiary have
been timely paid; (iii) all such Tax Returns are true, correct and complete in all material
respects and any restatements/adjustments of financial information of the Company and the
Subsidiaries will have no material affect on the Tax liability of the Company and the Subsidiaries
with respect to the 2005 taxable year and any prior taxable year; (iv) neither the Company nor any
Subsidiary has granted any waiver of any statute of limitations with respect to, or any extension
of a period for the assessment of, any Tax; (v) the Company and the Subsidiaries have each properly
and timely withheld, collected and deposited all Taxes that are required to be withheld, collected
and deposited in connection with any amounts owing to any employee, independent contractor,
creditor, stockholder or other third party (other than minor inadvertent failures properly to
withhold) and each Form W-2 (or other similar form) provided to any employee or officer of the
Company and the Subsidiaries is true, correct and complete; (vi) the Company and the Subsidiaries
have paid all Taxes imposed, including those imposed on Real Property; (vii) there are no Tax
liens on any assets of the Company or any Subsidiary (other than Permitted Encumbrances) and no
deficiency for any amount of Tax has been assessed against the Company or any Subsidiary that has
not been satisfied by payment, settled or withdrawn; and (viii) the (A)
reserves for Tax Liability on the most recently audited Financial Statements are adequate in
accordance with GAAP and (B) such reserves as adjusted for the passage of time through the Closing
are adequate in accordance with GAAP.

          (b) Except as set forth in Section 3.19(b) of the Disclosure Schedule: (i) No audits, other
administrative proceedings or court proceedings are currently pending or have been threatened in
writing with regard to any Taxes or Tax Return of the Company or any Subsidiary; and (ii) no claim
has been made by a government or taxing authority in a jurisdiction where the Company or any
Subsidiary does not file Tax Returns that it is or may be subject to taxation by that jurisdiction.

          (c) (i) Except as set forth in Section 3.19(c) of the Disclosure Schedule or in the ordinary
course of business consistent with past practice, neither the Company nor any Subsidiary will be
required to include any item of income in, or exclude any item of deduction

22

 

from, taxable income
for any taxable period (or portion thereof) ending after the Closing as a result of any: (A)
adjustment by reason of a change in method of Tax accounting for a taxable period ending on or
prior to the Closing, (B) agreement entered into with a government or taxing authority on or prior
to the Closing, (C) transaction among members of an affiliated taxpayer group, (D) installment sale
or open transaction disposition made on or prior to the Closing, or (E) prepaid amount received on
or prior to the Closing; and (ii) neither the Company nor any Subsidiary has or will have any
liability for the Taxes of any Person other than the Company and the Subsidiaries as a result of
being or having been a member of an affiliated, consolidated, combined or unitary group, as a
transferee or successor, by contract, or otherwise.

          (d) (i) Section 3.19(d) of the Disclosure Schedule lists all material income and non-income
Tax Returns filed with respect to each of the Company and the Subsidiaries for taxable periods
ended on or after December 31, 2002, indicates the most recent of each type of such Tax Returns for
each relevant jurisdiction for which an audit has been completed or the statute of limitations has
lapsed, and indicates all such Tax Returns that currently are the subject of audit; (ii) the
Company has made available to the Investor correct and complete copies of all income and similar
Tax Returns, examination reports, and statements of deficiencies assessed against or agreed to by
the Company or any Subsidiary since December 31, 2002; and (iii) the Company has delivered to the
Investor a true and complete copy of any Tax sharing or allocation agreement or arrangement
involving the Company or any Subsidiary and a true and complete description of any such unwritten
or informal agreement or arrangement. No event has resulted or will result in the extension of the
Codes’ statutes of limitation.

          (e) The Company has provided to the Investor copies of all private letter rulings, closing
agreements and all other documents related to any private negotiation of the Company or an
Affiliate, with the IRS or Treasury. All the facts represented to the IRS and Treasury in
negotiating any of the foregoing were true and correct, and have not changed thereafter, in a
manner that would affect the validity and effectiveness of the private letter ruling, closing
agreement or results of the negotiation

          (f) The Company and the Subsidiaries have followed in all material respects the statutory
guidance provided for the allocation of items of income, deductions, losses and credits provided by
Section 482 of the U.S. Code and Section 1047 of the P.R Code, or similar legal
provisions in any jurisdiction in which the Corporation or the Subsidiaries are or were
conducting business

          (g) The Company has provided to the Investor all Tax documents related to Tax credits acquired
by it or any Subsidiary from unrelated Persons pursuant to any Laws granting such credits and their
transfer. Neither the Company nor any Subsidiary is subject to recapture of Tax by reason of its
acquisition of such credits.

          (h) Neither the Company nor any Subsidiary has participated in any transaction identified by
the IRS as a “listed transaction” or similarly identified by another government or taxing authority
or other applicable Tax Law.

          SECTION 3.20. Insurance. All material assets, properties and risks of the Company
and each Subsidiary are, and for the past five years have been, covered by valid and,

23

 

except for
insurance policies that have expired under their terms in the ordinary course, currently effective
insurance policies or binders of insurance (including general liability insurance, property
insurance and workers’ compensation insurance) issued in favor of the Company or a Subsidiary, as
the case may be, in each case with responsible insurance companies, in such types and amounts and
covering such risks as are consistent with customary practices and standards of companies engaged
in businesses and operations similar to those of the Company or such Subsidiary, as the case may
be.

          SECTION 3.21. Certain Business Practices. No Company Representative, after having
made due inquiry, is aware or knows that the Company or any of the Subsidiaries or any of their
respective directors, officers, agents, representatives or employees (in their capacity as
directors, officers, agents, representatives or employees) has: (a) used any funds for unlawful
contributions, gifts, entertainment or other unlawful expenses relating to political activity in
respect of the business of the Company or any of the Subsidiaries; (b) directly or indirectly, paid
or delivered any fee, commission or other sum of money or item of property, however characterized,
to any finder, agent, or other party acting on behalf of or under the auspices of a governmental
official or Governmental Authority, in the United States or Commonwealth of Puerto Rico or any
other country, which is in any manner illegal under any Law of the United States or Commonwealth of
Puerto Rico or any other country having jurisdiction; or (c) made any payment to any customer or
supplier of the Company or any Subsidiary or any officer, director, partner, employee or agent of
any such customer or supplier for an unlawful reciprocal practice, or made any other unlawful
payment or given any other unlawful consideration to any such customer or supplier or any such
officer, director, partner, employee or agent, in respect of the business of the Company or any of
the Subsidiaries.

          SECTION 3.22. Regulatory Reports; Allowance for Losses. (a) The Regulatory Reports
have been, or will be, prepared in all material respects in accordance with applicable regulatory
accounting principles and practices, including, but not limited to, all applicable rules,
regulations and pronouncements of applicable
Governmental Authorities, throughout the periods covered by such statements, and fairly
present, or will fairly present in all respects, the financial position, results of operations and
changes in shareholders’ equity of the Company as of and for the periods ended on the dates
thereof, in accordance with applicable regulatory accounting principles, including, but not limited
to, all applicable rules, regulations and pronouncements of applicable Governmental Authorities,
applied on a consistent basis.

          (b) The allowance for loan losses reflected, and to be reflected, in the Regulatory Reports
each has been, and will be, established in compliance with the requirements of all applicable
regulatory criteria, and the allowance for loan losses shown, and to be shown, on the balance
sheets contained in the Financial Statements have been, and will be, established in compliance with
the applicable requirements of GAAP.

          SECTION 3.23. Related Party Transactions. Except as set forth in Section 3.23 of the
Disclosure Schedule, the Company is not a party to any transaction (including any loan or other
credit accommodation, but excluding deposits in the ordinary course of business) with any Affiliate
of the Company (except a Subsidiary) or any officer or director of the Company, and no Company
Representative, after having made due inquiry, is aware or knows of any such transaction with any
Affiliate or family member of any such officer or director. All transactions

24

 

listed in Section
3.23 of the Disclosure Schedule (a) were made in the ordinary course of business, (b) were made on
substantially the same terms, including interest rates and collateral, as those prevailing at the
time for comparable transactions with other Persons, and (c) did not involve more than the normal
risk of collectibility or present other unusual risks or unfavorable features. Except as set forth
in Section 3.23 of the Disclosure Schedule, no loan or credit accommodation to any Affiliate of the
Company (except a Subsidiary) or any officer or director of the Company is presently in default or,
during the three-year period prior to the date of this Agreement, has been written off as
uncollectible or otherwise, and no Company Representative, after having made due inquiry, is aware
or knows of any loan or credit accommodation to any Affiliate or family member of any such officer
or director that is presently in default or, during the three-year period prior to the date of this
Agreement, has been written off as uncollectible or otherwise. Neither the Company nor the Bank
has been notified that principal and interest with respect to any such loan or other credit
accommodation will not be paid when due or that the loan grade classification accorded such loan or
credit accommodation by the Bank is inappropriate.

          SECTION 3.24. Loans. Each loan reflected as an asset in the Financial Statements (a)
was originated, underwritten, approved, documented and periodically approved in all material
respects in accordance with prudent lending standards generally accepted in the banking business
and no Company Representative, after having made due inquiry, is aware or knows that any such
approval deviated in any material respect from the Company’s policies and procedures currently in
effect, and (b) no Company Representative, after due inquiry and after the Company or the
Subsidiary, as applicable, followed its normal verification procedures, is aware or knows that such
loan is not the legal, valid and binding obligation of the obligor named therein, enforceable
against that obligor in accordance with its terms, subject to the effect of any applicable
bankruptcy, insolvency (including all Laws relating to fraudulent transfers), reorganization,
moratorium or similar Laws affecting creditors’ rights generally and subject to the effect of
general principles of equity (regardless of whether considered in a proceeding at law or in equity)
or any FDIA Limitations. The extensions of credit made by the Bank do not exceed the individual
borrower lending limits set in the Bank Act. Each extension of credit made by the Bank to an
“insider” (as such term is defined in the Federal Reserve Board’s Regulation O) of the Bank or the
Company complies with the Federal Reserve Board’s Regulation O, as made applicable to the Bank by
12 C.F.R. § 563.43 and with the Bank Act.

          SECTION 3.25. Risk Management Instruments. Neither the Company nor any of the
Subsidiaries is a party to or has agreed to enter into an exchange traded or over-the-counter
equity, interest rate, foreign exchange or other swap, forward, future, option, cap, floor or
collar or any other contract that is not included on the balance sheet and is a derivatives
contract (including various combinations thereof) (each, a “Derivatives Contract”) or owns
securities that (a) are referred to generically as “structured notes,” “high risk mortgage
derivatives,” “capped floating rate notes” or “capped floating rate mortgage derivatives” or (b)
are likely to have changes in value as a result of interest or exchange rate changes that
significantly exceed normal changes in value attributable to interest or exchange rate changes,
except for those Derivatives Contracts and other instruments legally purchased or entered into in
the ordinary course of business, consistent with safe and sound banking principles and regulatory
guidance. All of such Derivatives Contracts or other instruments, are legal, valid and binding
obligations of the Company or any of the Subsidiaries that are parties to them enforceable against
the Company or

25

 

the Subsidiaries in accordance with their terms (except as enforcement may be
limited by the effect of any applicable bankruptcy, insolvency (including all Laws relating to
fraudulent transfers), reorganization, moratorium or similar Laws affecting creditors’ rights
generally and subject to the effect of general principles of equity (regardless of whether
considered in a proceeding at law or in equity)), and are in full force and effect. Except as set
forth in Section 3.25 of the Disclosure Schedules, the Company and the Subsidiaries have duly
performed in all material respects all of their obligations thereunder to the extent that such
obligations to perform have accrued, and no Company Representative, after having made due inquiry,
is aware or knows of any breaches, violations or defaults or allegations or assertions of such by
any party thereunder which would have or could reasonably be expected to have, individually or in
the aggregate, a material adverse effect on the Company and the Subsidiaries taken as a whole.

          SECTION 3.26. Community Reinvestment Act, Customer Information Security and Anti-Money
Laundering. (a) Neither the Company nor any Subsidiary is, and no Company Representative,
after having made due inquiry, is aware or knows of any facts or circumstances that exist which
would cause the Company or any Subsidiary to be, (i) not in satisfactory compliance in any material
respect with the Community Reinvestment Act of 1977, as amended (the “Community Reinvestment
Act”), and the regulations promulgated thereunder, or to be assigned a rating for Community
Reinvestment Act purposes by federal or state bank regulators of lower than “satisfactory,” or (ii)
not to be in satisfactory compliance in any respect with the applicable privacy of customer
information requirements contained in any federal and state
privacy Laws and regulations, including, without limitation, in Title V of the
Gramm-Leach-Bliley Act of 1999 and regulations promulgated thereunder, as well as the provisions of
the information security program adopted by the Bank pursuant to 12 C.F.R. Part 364.

          (b) Except as set forth in Section 3.26(b) of the Disclosure Schedule, neither the Company nor
any Subsidiary is, and no Company Representative, after having made due inquiry, is aware or knows
of any facts or circumstances that exist which would cause the Company or any Subsidiary to be,
operating in violation in any respect of the federal Bank Secrecy Act, as amended, and its
implementing regulations (31 C.F.R. Part 103), the USA PATRIOT Act of 2001, Public Law 107-56 (the
“Patriot Act”), and the regulations promulgated thereunder, any order issued with respect
to anti-money laundering by the U.S. Department of the Treasury’s Office of Foreign Assets Control,
or any other applicable anti-money laundering statute, rule or regulation. The board of directors
of the Bank has adopted and implemented an anti-money laundering program that contains adequate and
appropriate customer identification certification procedures that has not been deemed ineffective
in any material respects by any Governmental Authority and that meets the requirements in all
material respects of Section 352 of the Patriot Act and the regulations thereunder.

          SECTION 3.27. Credit Card Accounts. Except as set forth in Section 3.27 of the
Disclosure Schedule, neither the Company nor any Subsidiary originates, maintains or administers
credit card accounts.

          SECTION 3.28. Agreements with Governmental Authorities. Except as set forth in
Section 3.28 of the Disclosure Schedule, neither the Company nor any Subsidiary is subject to any
presently pending cease-and-desist or other order or enforcement action issued by or is a

26

 

party to any written agreement, consent agreement or memorandum of understanding with, or is a party to any
commitment letter or similar undertaking to, or is subject to any order or directive by, or has
been ordered to pay any civil money penalty by, or has been since December 31, 2003, a recipient of
any supervisory letter from, or since December 31, 2003, has adopted any policies, procedures or
board resolutions at the request or suggestion of, any Governmental Authority that currently
restricts in any material respect the conduct of its business or that in any manner relates to its
capital adequacy, its ability to pay dividends, its credit or risk management policies, its
management or its business (each item in this sentence, whether or not set forth in the Disclosure
Schedule, a “Company Regulatory Agreement”), nor has the Company or any Subsidiary been
advised since December 31, 2003 by any Governmental Authority that it is considering issuing,
initiating, ordering, or requesting any such Company Regulatory Agreement.

          SECTION 3.29. Regulatory Capital. The Company and the Bank meet or exceed all
applicable regulatory capital requirements, and the Bank is deemed “well capitalized” under such
regulatory requirements.

          SECTION 3.30. Private Offering. None of the Company, any of the Subsidiaries, or anyone acting on their behalf, has offered or
sold or will offer or sell any securities, or has taken or will take any other action, which would
reasonably be expected to subject the offer, issuance or sale of the Shares, as contemplated
hereby, to a requirement that it be registered under the Securities Act.

          SECTION 3.31. Vote Required. No vote of any holders of any class or series of
capital stock of or other equity interests in the Company is necessary to approve the issuance of
the Shares.

          SECTION 3.32. Takeover Statute. The execution, delivery and performance of this
Agreement and the Stockholder Agreement will not cause the Investor to be subject to any applicable
“fair price,” “moratorium,” “control share acquisition” or other similar antitakeover statute or
regulation enacted under state or federal Laws.

          SECTION 3.33. Brokers. Except for UBS Investment Bank, no broker, finder or
investment banker is entitled to any brokerage, finder’s or other fee or commission in connection
with the transactions contemplated by this Agreement or the Stockholder Agreement based upon
arrangements made by or on behalf of the Company. The Company is solely responsible for the fees
and expenses of UBS Investment Bank.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

OF THE INVESTOR

          As an inducement to the Company to enter into this Agreement, the Investor hereby represents
and warrants to the Company as follows:

          SECTION 4.01. Organization and Authority of the Investor. The Investor is a
corporation duly organized, validly existing and in good standing under the Laws of the
jurisdiction of its incorporation and has all necessary corporate power and authority to enter into

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this Agreement and the Stockholder Agreement, to carry out its obligations hereunder and thereunder
and to consummate the transactions contemplated hereby and thereby. The execution and delivery by
the Investor of this Agreement and the Stockholder Agreement, the performance by the Investor of
its obligations hereunder and thereunder and the consummation by the Investor of the transactions
contemplated hereby and thereby have been duly authorized by all requisite corporate action on the
part of the Investor. This Agreement has been, and upon its execution and delivery at the Closing
the Stockholder Agreement will have been, duly executed and delivered by the Investor, and
(assuming due authorization, execution and delivery by the Company) this Agreement constitutes, and
upon its execution and delivery the Stockholder Agreement will constitute, legal, valid and binding
obligations of the Investor, enforceable against the Investor in accordance with their respective
terms, subject to the effect of
any applicable bankruptcy, insolvency (including all Laws relating to fraudulent transfers),
reorganization, moratorium or similar Laws affecting creditors’ rights generally and subject to the
effect of general principles of equity (regardless of whether considered in a proceeding at law or
in equity) or any applicable FDIA Limitations.

          SECTION 4.02. No Conflict. Assuming the making and obtaining of all filings,
notifications, consents, approvals, authorizations and other actions referred to in Section 4.03,
the execution, delivery and performance by the Investor of this Agreement and the Stockholder
Agreement do not and will not (a) violate, conflict with or result in the breach of any provision
of the Charter or Bylaws of the Investor, (b) conflict with or violate any Law or Governmental
Order applicable to the Investor, or (c) conflict with, or result in any breach of, constitute a
default (or event which with the giving of notice or lapse of time, or both, would become a
default) under, require any consent under, or give to others any rights of termination, amendment,
acceleration, suspension, revocation or cancellation of, any note, bond, mortgage or indenture,
contract, agreement, lease, sublease, license, permit, franchise or other instrument or arrangement
to which the Investor is a party, which would adversely affect the ability of the Investor to carry
out its obligations under, and to consummate the transactions contemplated by, this Agreement or
the Stockholder Agreement or could result in a Claim against, or Liability by, the Company or a
Subsidiary.

          SECTION 4.03. Governmental Consents and Approvals. The execution, delivery and
performance by the Investor of this Agreement and the Stockholder Agreement do not and will not
require any consent, approval, authorization or other order of, action by, filing with, or
notification to any Governmental Authority, except the Governmental Approvals.

          SECTION 4.04. Investment Purpose. The Investor is acquiring the Shares solely for
the purpose of investment and not with a view to, or for offer or sale in connection with, any
distribution thereof.

          SECTION 4.05. Status of Shares; Limitations on Transfer and Other Restrictions. The
Investor acknowledges and understands that (i) the Shares have not been and will not be registered
under the Securities Act or under any state securities Laws (other than in accordance with the
Stockholder Agreement) and are being offered and sold in reliance upon federal and state exemptions
for transactions not involving any public offering, (ii) such exemption depends in part upon, and
such Shares are being sold in reliance on, the representations and warranties set forth in this
Article IV, (iii) the Investor may have to bear the economic risk of its investment in

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the Shares for an indefinite period of time because the Shares must be held indefinitely unless subsequently
registered under the Securities Act and applicable state securities Laws or unless an exemption
from such registration is available, (iv) the Shares will be subject to certain restrictions on
transfer and voting, as set forth in the Stockholder Agreement, and (v) a restrictive legend in the
form set forth in the Stockholder Agreement shall be placed on all certificates evidencing the
Shares.

          SECTION 4.06. Sophistication and Financial Condition of the Investor. The Investor
is an “accredited investor” as defined in Rule 501 of Regulation D promulgated under the Securities
Act, a sophisticated investor and, by virtue of its business or financial experience, is capable of
evaluating the merits and risks of the investment in the Shares. The Investor has been provided an
opportunity to ask questions of and receive answers from representatives of the Company concerning
the terms and conditions of this Agreement and the purchase of the Shares contemplated hereby.

          SECTION 4.07. Available Funds. The Investor has, or will have on or prior to the
Closing, sufficient funds in its possession to permit it to acquire and pay for the Shares to be
purchased by it and to perform its obligations under this Agreement.

          SECTION 4.08. Litigation. No Action by or against the Investor is pending or, to the
knowledge of the Investor after due inquiry, threatened, which could affect the legality, validity
or enforceability of this Agreement or the Stockholder Agreement or the consummation of the
transactions contemplated hereby or thereby.

          SECTION 4.09. Brokers. No broker, finder or investment banker is entitled to any
brokerage, finder’s or other fee or commission in connection with the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of the Investor.

ARTICLE V

ADDITIONAL AGREEMENTS

          SECTION 5.01. Conduct of Business Prior to the Closing. The Company covenants and agrees
that, except as set forth in Section 5.01 of the Disclosure Schedule, between the date hereof and
the time of the Closing, neither the Company nor any Subsidiary shall conduct its business other
than in the ordinary course and consistent with the Company’s and such Subsidiary’s prior practice.
Without limiting the generality of the foregoing, the Company covenants and agrees that between
the date hereof and the time of the Closing, without the prior written consent of the Investor,
neither the Company nor any Subsidiary will:

     (a) adopt or propose any change in its Articles of Incorporation or Bylaws;

     (b) merge or consolidate with any other Person or acquire a material amount of assets
from any other Person;

     (c) sell, lease, license or otherwise dispose of any material assets or property except
(i) pursuant to existing contracts or commitments or (ii) in the ordinary course consistent
with past practice;

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     (d) issue or sell any shares of Common Stock or any securities convertible into or
exchangeable for shares of Common Stock, other than pursuant to the Stock Option Plans or
pursuant to employee stock options that are outstanding at the date hereof or that are
granted after the date hereof in the ordinary course of business consistent with past
practice;

     (e) knowingly take or agree or commit to take any action that would make any
representation or warranty of the Company hereunder inaccurate at, or as of any time prior
to, the Closing;

     (f) knowingly omit or agree to omit to take any action necessary to prevent any such
representation or warranty from being inaccurate at any such time; or

     (g) agree or commit to do any of the foregoing.

          SECTION 5.02. Taxes. (a) From the date of this Agreement and through the Closing,
the Company shall not, and shall not permit the Subsidiaries to, without the prior written consent
of the Investor (such consent not to be unreasonably withheld or delayed): (i) make any change (or
file any such change) in any method of Tax accounting for a material amount of Taxes, or (ii) make,
change or rescind any material Tax election, (iii) settle or compromise any material Tax liability,
(iv) waive or extend the statute of limitations in respect of Taxes, in each case except as
required by Law or where such action was taken in the ordinary course of business consistent with
past practice, or (v) acquire any Tax credits.

          (b) From the date of this Agreement and through the Closing, the Company shall, and shall
cause the Subsidiaries to: (i) prepare and file all Tax Returns (“Post-Signing Returns”)
required to be filed by their respective due dates, (ii) timely pay all Taxes shown to be due and
payable on such Post-Signing Returns, (iii) timely pay all Taxes that are not self-imposed, and
(iv) promptly notify the Investor of any notice of any suit, claim, action, investigation, audit or
proceeding in respect of any Tax matters (or any significant developments with respect to ongoing
suits, claims, actions, investigations, audits or proceedings in respect of such Tax matters).

          (c) At the request of the Investor, the Company and the Subsidiaries shall provide the
Investor with access to and the right to copy such documents (including Tax Returns of the Company
or any Subsidiary), and shall provide such other information, as are reasonably necessary to allow
the Investor to determine and report the Tax consequences of ownership of the Shares and to prepare
any applicable Tax Returns or other required filings of the Investor or its Affiliates.

          (d) At the request of the Investor, the Company or any Subsidiary shall make, change or revoke
a Tax election or take other similar actions to the extent that such election or
action relates to or otherwise affects the Investor and would not adversely affect the
Company, any Subsidiary or any other stockholders of the Company, as determined by the Investor and
the Company acting in good faith.

          (e) From the date of this Agreement, except as required by Law, the Company and the
Subsidiaries will not, without the prior consent of the Investor, amend any Tax Returns

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for the 2004 taxable year or any prior taxable year to reflect changes related to the
restatement of the Company’s financial statements described in the Company’s Amended Annual Report
on Form 10-K/A for the year ended December 31, 2004. From the date of this Agreement, except as
required by Law, the Company and the Subsidiaries will not, without the prior consent of the
Investor, amend any Tax Returns for the 2005 taxable year to reflect changes related to the
restatement of the Company’s financial statements described in the Company’s Amended Annual Report
on Form 10-K/A for the year ended December 31, 2004 unless the amendment would not have a material
affect on the Tax liability of the Company and the Subsidiaries.

          SECTION 5.03. Access to Information. From the date of this Agreement and through the
Closing, upon reasonable notice, the Company shall cause its officers, directors, employees,
agents, representatives, accountants and counsel, and shall cause the Subsidiaries and each of the
Subsidiaries’ officers, directors, employees, agents, representatives, accountants and counsel to:
(a) afford the officers, employees, agents, accountants, counsel, financing sources and
representatives of the Investor reasonable access, during normal business hours, to the offices,
properties, other facilities, books and records of the Company and each Subsidiary and to those
officers, directors, employees, agents, accountants and counsel of the Company and of each
Subsidiary who have any knowledge relating to the Company, any Subsidiary or their respective
businesses and (b) furnish to the officers, employees, agents, accountants, counsel, and
representatives of the Investor such additional financial and operating data and other information
regarding the assets, properties, liabilities and goodwill of the Company, the Subsidiaries and
their respective businesses (or legible copies thereof) as the Investor may from time to time
reasonably request; provided, however, that neither the Company nor any of the
Subsidiaries will be required to give anyone acting for or on behalf of the Investor any of the
information specifically identified on Annex I to the Stockholder Agreement.

          SECTION 5.04. Confidentiality. This Section 5.04 supersedes the confidentiality
agreement, dated March 16, 2006, between the Company and the Investor, which is hereby terminated
and of no further force or effect. From the date hereof until the Closing, the Investor agrees to,
and shall cause its agents, representatives, Affiliates, employees, officers and directors to: (a)
treat and hold as confidential (and not disclose or provide access to any Person to or use for any
purpose other than with regard to its decision to purchase the Shares) all information relating to
trade secrets, processes, patent applications, product development, price, customer and supplier
lists, pricing and marketing plans, policies and strategies, details of client and consultant
contracts, operations methods, product development techniques, business acquisition plans, new
personnel acquisition plans, information regarding particular customers and all other confidential
or proprietary information with respect to the Company, each Subsidiary and their respective
businesses, (b) in the event that the Investor or any such agent, representative, Affiliate,
employee, officer or director becomes legally compelled to disclose any such information, provide
the Company with prompt written notice of such requirement so that the Company or any Subsidiary
may seek a protective order or other remedy or waive compliance with this Section 5.04, and (c) in
the event that such protective order or other remedy is not obtained, or the Company waives
compliance with this Section 5.04, furnish only that portion of such confidential information which is
legally required to be provided and exercise its commercially reasonable efforts to obtain
assurances that confidential treatment will be accorded such information; provided,
however, that this sentence shall not apply to any information that, at the

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time of disclosure, is available publicly and was not disclosed in breach of this Agreement by the
Investor, its agents, representatives, Affiliates, employees, officers or directors.

          SECTION 5.05. Regulatory and Other Authorizations; Notices and Consents. (a) Each
of the Investor and the Company shall use its reasonable best efforts to obtain (or to enable the
other of them or the Subsidiaries to obtain) all the Government Approvals and all other
authorizations, consents, orders and approvals of all Governmental Authorities that may be or
become necessary for the performance by the Company or the Investor of its obligations pursuant to
this Agreement and the Stockholder Agreement and will cooperate fully with the other party in
promptly seeking to obtain all such authorizations, consents, orders and approvals. Each party
hereto agrees to make promptly all appropriate filings and to supply as promptly as practicable to
the appropriate Governmental Authorities any additional information and documentary material that
may be requested in connection with obtaining the Government Approvals and all such other
authorizations, consents, orders and approvals of all Governmental Authorities that may be or
become necessary with respect to the transactions contemplated by this Agreement and the
Stockholder Agreement. In addition, each party hereto shall, with respect to the transactions
contemplated hereby and to the extent permitted by Law or by the applicable Governmental Authority:
(a) promptly notify the other of, and if in writing, furnish the other with copies of (or, in the
case of oral communications, advise the other of), any communications from or with any Governmental
Authority (other than OSFI), (b) permit the other to review and discuss in advance, and consider in
good faith the views of the other in connection with, any proposed written or any oral
communication with any such Governmental Authority (other than OSFI), (c) participate in any
meeting or communication with any such Governmental Authority (other than OSFI), (d) furnish the
other with copies of all filings and communications between it and any such Governmental Authority
(other than OSFI). Notwithstanding any of the foregoing, neither the Investor nor the Company
shall be required to propose, negotiate, commit to or effect, by consent decree, hold separate
orders, or otherwise, the sale, divestiture, closure or disposition of any of its assets,
properties or businesses in order to obtain any Governmental Approvals or to avoid the entry of, or
to effect the dissolution of, any injunction, temporary restraining order or other order in any
suit or proceeding.

          SECTION 5.06. Notice of Developments. Prior to the Closing, (a) the Company shall
promptly notify the Investor in writing of all events, circumstances, facts and occurrences arising
subsequent to the date of this Agreement which could result in any breach of a representation or
warranty or covenant of the Company in this Agreement or which could have the effect of making any
representation or warranty of the Company in this Agreement untrue or incorrect in a material
respect and (b) the Investor shall promptly notify the Company in writing of all events,
circumstances, facts and occurrences arising subsequent to the date of this Agreement which could
result in any breach of a representation or warranty or covenant of the Investor in this Agreement
or which could have the effect of making any representation or warranty of the Investor in this Agreement untrue
or incorrect in a material respect.

          SECTION 5.07. No Solicitation or Negotiation. (a) The Company agrees that, during
the period commencing on the date hereof and ending upon the Closing or the earlier termination of
this Agreement (the “No Solicit Period”), neither it nor any Subsidiary nor any of the
directors, officers or employees of it or any Subsidiary will, and that it will cause its and the
Subsidiaries’ agents, advisors and other representatives (including, without limitation, any

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investment banker, attorney or accountant retained by it or any Subsidiary), not to, directly or
indirectly, (i) solicit, initiate or encourage (including by way of furnishing nonpublic
information), or take any other action to facilitate, any inquiries or the making of any proposal
or offer (including, without limitation, any proposal or offer to its stockholders) that
constitutes, or may reasonably be expected to lead to, any Acquisition Transaction (as defined
below), or (ii) enter into or maintain or continue discussions or negotiations with any person or
entity in furtherance of such inquiries or to obtain a proposal or offer for an Acquisition
Transaction, or (iii) agree to, approve, endorse or recommend any Acquisition Transaction or enter
into any letter of intent or contract, agreement or commitment contemplating or otherwise relating
to any Acquisition Transaction, or (iv) authorize or permit any of the officers, directors or
employees of the Company or any of the Subsidiaries, or any investment banker, financial advisor,
attorney, accountant or other representative retained by the Company or any of the Subsidiaries, to
take any such action. During the No Solicit Period, the Company shall notify the Investor as
promptly as practicable (and in any event within one (1) day after any Company Representative is
aware or knows thereof), orally and in writing (the “Acquisition Notice”), if any proposal
or offer, or any inquiry or contact with any Person with respect thereto, regarding an Acquisition
Transaction is made, specifying the material terms and conditions thereof and the identity of the
Person making such proposal or offer or inquiry or contact (including material amendments or
proposed material amendments). The Company immediately shall cease and cause to be terminated all
existing discussions or negotiations with any parties conducted heretofore with respect to an
Acquisition Transaction. The Company shall not release any Person from, or waive any provision of,
any confidentiality or standstill agreement to which it is a party.

          (b) An “Acquisition Transaction” means any of the following (other than the
transactions contemplated by this Agreement) in one transaction or a series of related
transactions: (i) any merger, consolidation, share exchange, business combination,
recapitalization, liquidation, dissolution or other similar transaction involving the Company or
any Significant Subsidiary; (ii) any sale, lease, exchange, transfer or other disposition to a
Person of assets or businesses that constitute or represent 10% or more of the total revenue,
operating income or assets of the Company and the Subsidiaries, taken as a whole; (iii) any sale,
issuance, exchange, transfer or other disposition by the Company or any Subsidiary to a Person of
5% or more of the outstanding Common Stock (including, both in the determination of the number of
shares of Common Stock that are being issued and the number of shares of Common Stock that are
outstanding, Common Stock issuable on exercise, conversion or exchange of options, warrants or
exercisable, convertible or exchangeable securities); or (iv) any tender offer or exchange offer
for Common Stock or securities that are, or may become, convertible into or exchangeable or
exercisable for Common Stock.

          (c) If the Company has received and determines to pursue an unsolicited, written, bona fide
proposal or offer from any Person to effect an Acquisition Transaction, provided such
Acquisition Transaction is a merger, consolidation, share exchange or other business combination or
a tender offer or exchange offer for more than 50% of the outstanding Common Stock (a “Third
Party Offer”), the Company shall notify the Investor in writing as promptly as practicable
after having made such determination (which notice shall specify the material terms and conditions
thereof and the identity of the party making such proposal or offer or inquiry or contact
(including material amendments or proposed material amendments)) (the “Determination
Notice”). The Investor shall then have five Business Days (the “Counteroffer Period”)
following

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the date that such Determination Notice is received by the Investor to notify the Company
in writing if it wishes to make an offer for an Acquisition Transaction, which notice shall include
the form and amount of consideration and the structure of the Acquisition Transaction proposed by
the Investor (the “Investor Offer”). After the expiration of the Counteroffer Period, if
(i) the Company has not received an Investor Offer or (ii) the Board has determined, in its good
faith judgment (after consultation with a financial advisor of internationally recognized
reputation), that such Third Party Offer constitutes a Superior Proposal (as defined below), then,
notwithstanding anything to the contrary in Sections 5.01 and 5.07(a), the Board may furnish
information to, and enter into discussions with, the Person who has made such Third Party Offer and
the Company shall be free thereafter (without liability to the Investor) to enter into a definitive
agreement regarding the Third Party Offer with such Person.

          (d) A “Superior Proposal” means a Third Party Offer that the Board determines, in its
good faith judgment (after consultation with a financial advisor of internationally recognized
reputation), to be (i) more favorable to the stockholders of the Company from a financial point of
view than the Investor Offer and (ii) reasonably capable of being completed, taking into account
all financial, legal, regulatory and other aspects of such Third Party Offer; provided,
however, that any such offer shall not be deemed to be a “Superior Proposal” if any
financing required to consummate the transaction contemplated by such offer is not highly likely to
be obtained.

          SECTION 5.08. Authorization for Listing. The Company shall cause the Shares to be
authorized for listing on the New York Stock Exchange upon notice of issuance prior to Closing.

          SECTION 5.09. Security Interest. The Company shall use its reasonable best efforts,
including, if necessary, taking legal action to enforce its rights under that certain Credit
Agreement, effective as of May 25, 2006 (the “Credit Agreement”), between Doral Financial
Corporation (“Doral”) and the Bank, to cause Doral to keep all proceeds relating to the
Collateral (as such term is defined in the Master Pledge and Security Agreement, effective as of
May 25, 2006, between Doral and the Bank) in a separate, identified account until such time as
Doral makes a payment to the Company equal to the amount of such proceeds pursuant to the Credit
Agreement.

          SECTION 5.10. Further Action. Each of the parties hereto shall use all reasonable efforts to take, or cause to be taken,
all reasonably appropriate action, do or cause to be done all things reasonably necessary, proper
or advisable under applicable Law, and execute and deliver such documents and other papers as may
be reasonably required to carry out the provisions of this Agreement and the Stockholder Agreement
to which it is a party and to consummate and make effective the transactions contemplated hereby
and thereby, including that the Company shall use reasonable efforts to cause the conditions set
forth in Section 6.02 to be satisfied and that the Investor shall use reasonable efforts to cause
the conditions set forth in Sections 6.01(a), 6.01(b) and 6.01(c) to be satisfied;
provided, however, that neither party shall be required to take any action to the
extent that any provision of this Agreement, including the last sentence of Section 5.05, states
that the party is not required to take such action.

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ARTICLE VI

CONDITIONS TO CLOSING

          SECTION 6.01. Conditions to Obligations of the Company. The obligations of the
Company to consummate the transactions contemplated by this Agreement shall be subject to the
fulfillment or written waiver, at or prior to the Closing, of each of the following conditions:

     (a) Representations, Warranties and Covenants. (i) The representations and
warranties of the Investor contained in this Agreement shall have been true and correct in
all material respects when made and shall be true and correct in all material respects as of
the Closing, except to the extent such representations and warranties are as of another
date, in which case, such representations and warranties shall be true and correct as of
that date, (ii) the covenants and agreements contained in this Agreement to be complied with
by the Investor on or before the Closing shall have been complied with in all material
respects, and (iii) the Investor will have delivered to the Company a certificate of a duly
authorized officer certifying to the matters set forth in this Section 6.01(a).

     (b) Government Approvals. The Government Approvals and all other
authorizations, consents, orders and approvals of all Governmental Authorities that are
necessary for the performance by the Company of its obligations pursuant to this Agreement
and the Stockholder Agreement shall have been obtained on terms reasonably acceptable to the
parties hereto; and

     (c) No Proceeding or Litigation. No Action shall have been commenced by or
before any Governmental Authority against either the Company or the Investor seeking to
restrain or materially and adversely alter the transactions contemplated by this Agreement
which, in the reasonable, good faith determination of the Company, is likely to render it
impossible or unlawful to consummate such transactions; provided, however,
that this Section 6.01(c) shall not apply if the Company has directly or indirectly
solicited or encouraged any such Action.

     (d) Authorization for Listing. The Shares will have been authorized for
listing on the New York Stock Exchange upon notice of issuance.

          SECTION 6.02. Conditions to Obligations of the Investor. The obligations of the
Investor to consummate the transactions contemplated by this Agreement shall be subject to the
fulfillment or written waiver, at or prior to the Closing, of each of the following conditions:

     (a) Representations, Warranties and Covenants. (i) The representations and
warranties of the Company contained in this Agreement (x) that are not qualified by
“materiality”, “material adverse effect” or “Material Adverse Effect” shall have been true
and correct in all material respects when made and shall be true and correct in all material
respects as of the Closing with the same force and effect as if made as of the Closing and
(y) that are qualified by “materiality”, “material adverse effect” or “Material Adverse
Effect” shall have been true and correct when made and shall be true and correct as of the
Closing with the same force and effect as if made as of the Closing, except in each

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instance to the extent such representations and warranties are as of another date, in which case,
such representations and warranties shall be true and correct as of that date, and except in
the case of clause (y) above for such failure of such representations and warranties to be
true and correct that would not (A) have, individually or in the aggregate, a Material
Adverse Effect, (B) prevent the Company from consummating the transactions contemplated by
this Agreement or the Stockholder Agreement or (C) materially impair the Company’s ability
to perform its obligations under this Agreement or the Stockholder Agreement and (ii) the
covenants and agreements contained in this Agreement to be complied with by the Company on
or before the Closing shall have been complied with in all material respects, and (iii) the
Company will have delivered to the Investor a certificate of a duly authorized officer
certifying to the matters set forth in this Section 6.02(a);

     (b) Government Approvals. The Government Approvals and all other
authorizations, consents, orders and approvals of all Governmental Authorities that are
necessary for the performance by the Investor of its obligations pursuant to this Agreement
and the Stockholder Agreement shall have been obtained on terms reasonably acceptable to the
parties hereto;

     (c) No Proceeding or Litigation. No Action shall have been commenced or
threatened by or before any Governmental Authority against either the Company or the
Investor seeking to restrain or materially and adversely alter the transactions contemplated
by this Agreement which, in the reasonable, good faith determination of the Investor, is
likely to render it impossible or unlawful to consummate such transactions or which could
have a Material Adverse Effect;

     (d) Legal Opinion. The Investor shall have received from Clifford Chance US
LLP (which, to the extent it involves matters of Puerto Rican Law, may be given in reliance
in an opinion of Martinez, Odell & Calabria) a written legal opinion, addressed to the
Investor and dated as of the date of the Closing, which shall be in such form and to
such effect as is customary in connection with the private placement of securities by
public companies;

     (e) Certain Doral Matters. Doral shall not have commenced, and shall not have
had commenced against it, on or prior to March 19, 2007, a case under title 11 of the United
States Code; and

     (f) No Material Adverse Effect. There shall not exist, and no event or events
shall have occurred, or be reasonably likely to occur, which, individually or in the
aggregate, have had, or would be likely to have, a Material Adverse Effect or an Adverse
Reputational Effect.

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ARTICLE VII

INDEMNIFICATION

          SECTION 7.01. Survival of Representations and Warranties. (a) The representations
and warranties of the Company contained in this Agreement and the Stockholder Agreement shall
survive the Closing until the later of (i) the second anniversary of the Closing and (ii) the date
on which the Company has filed all reports and other documents required to be filed in order to be
in compliance with, and current under, the reporting requirements of the Exchange Act;
provided, however, that (i) the representations and warranties made pursuant to
Sections 3.01(a), 3.03 and 3.33 shall survive indefinitely, and (ii) the representations and
warranties in Section 3.19 shall survive until 120 days after the expiration of the relevant
statute of limitations for the Tax liabilities in question. Neither the period of survival nor the
liability of the Company with respect to the Company’s representations and warranties shall be
reduced by any investigation made at any time by or on behalf of the Investor. If written notice
of a claim has been given prior to the expiration of the applicable representations and warranties
by the Investor to the Company, then the relevant representations and warranties shall survive as
to such claim, until such claim has been finally resolved.

          (b) The representations and warranties of the Investor contained in this Agreement and the
Stockholder Agreement shall survive the Closing until the second anniversary of the Closing;
provided, however, that the representations and warranties made pursuant to
Sections 4.04, 4.05, 4.06 and 4.09 shall survive indefinitely. Neither the period of survival nor
the liability of the Investor with respect to the Investor’s representations and warranties shall
be reduced by any investigation made at any time by or on behalf of the Company. If written notice
of a claim has been given prior to the expiration of the applicable representations and warranties
by the Company to the Investor, then the relevant representations and warranties shall survive as
to such claim, until such claim has been finally resolved.

          SECTION 7.02. Indemnification by the Company. The Investor and its Affiliates,
officers, directors, employees, agents, successors and assigns (each a “Investor Indemnified
Party”) shall be indemnified and held harmless by the Company for and against any and all
Liabilities, Taxes, losses, diminution in value, damages, claims, costs and expenses, interest,
awards, judgments and penalties (including reasonable attorneys’ and consultants’ fees and expenses) actually
suffered or incurred by them (including any Action brought or otherwise initiated by any of them) (hereinafter
a “Loss”) arising out of or resulting from:

     (a) the breach of any representation or warranty made by the Company contained in this
Agreement or the Stockholder Agreement (it being understood that such representations and
warranties shall be interpreted without giving any effect to any limitations or
qualifications as to “materiality” (including the word “material”), “material adverse
effect” or “Material Adverse Effect” set forth therein);

     (b) the breach of any covenant or agreement by the Company contained in this Agreement
or the Stockholder Agreement (other than any such breach that takes place, and is disclosed
in reasonable detail in a separate written instrument delivered by the Company to the
Investor, prior to the Closing, which written instrument specifically

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includes an acknowledgement by the Company that (i) the closing condition set forth in Section
6.02(a)(ii) has not been and cannot be satisfied, and that the Investor is not required to
consummate the Closing, as a result of such breach (ii) the Investor shall have the right to
terminate this Agreement pursuant to Section 8.01(g) without any cost or liability to the
Investor, and (iii) the Company waives and releases any right to commence any Action against
the Investor if the Investor determines not to consummate the Closing and/or terminates the
Agreement as a result thereof);

     (c) any and all Taxes (or the non-payment thereof) of the Company or any Subsidiary for
all taxable periods (or portions thereof) ending on or before the date of the Closing; or

     (d) any and all Losses suffered or incurred by the Investor, the Company or any
Subsidiary arising out of or resulting from the Indemnified Litigation; provided,
however, that the Investor Indemnified Parties shall only be indemnified and held
harmless by the Company for and against Losses resulting from amounts paid, agreed to be
paid or obligated to be paid by the Company arising out of or related to the Indemnified
Litigation to the extent that such amounts exceed $90 million in the aggregate (and any
Investor’s Loss relating to any amount paid by the Company will be the Investor’s
proportionate share of such amount, based on the percentage that the number of Shares owned
by the Investor is of all of the outstanding Shares, grossed up as provided in the following
paragraph).

The parties acknowledge and agree that the items set forth in Section 3.19 of the Disclosure
Schedule are set forth solely for purposes of responding to the representations and warranties in
Article III of this Agreement and shall have no effect on the right of an Investor Indemnified
Party to be indemnified and held harmless for any Loss pursuant to Section 7.02(c) hereof.

In determining the amount of any Losses suffered by the Investor for which it is entitled to
indemnification hereunder, such Losses shall be grossed up to reflect the fact that as a
shareholder of the Company the Investor will be indirectly paying a portion of such Losses to
itself pursuant to the indemnity provisions hereunder so that after grossing-up such Losses, the
amount paid to the Investor pursuant to the indemnity provisions hereunder net of the amount
which the Investor is indirectly paying to itself will be equal to the Losses suffered by the
Investor. To the extent that the Company’s undertakings set forth in this Section 7.02 may be
unenforceable, the Company shall contribute the maximum amount that it is permitted to contribute
under applicable Law to the payment and satisfaction of all Losses incurred by the Investor
Indemnified Parties.

          SECTION 7.03. Indemnification by the Investor. The Company and its Affiliates,
officers, directors, employees, agents, successors and assigns (each a “Company Indemnified
Party”) shall be indemnified and held harmless by the Investor for and against any and all
Losses, arising out of or resulting from:

     (a) the breach of any representation or warranty made by the Investor contained in this
Agreement or the Stockholder Agreement; or

38

 

     (b) the breach of any covenant or agreement by the Investor contained in this Agreement
or the Stockholder Agreement (other than any such breach that takes place, and is disclosed
in reasonable detail in a separate written instrument delivered by the Investor to the
Company, prior to the Closing, which written instrument specifically includes an
acknowledgement by the Investor that (i) the closing condition set forth in Section
6.01(a)(ii) has not been and cannot be satisfied, and that the Company is not required to
consummate the Closing, as a result of such breach (ii) the Company shall have the right to
terminate this Agreement pursuant to Section 8.01(g) without any cost or liability to the
Company, and (iii) the Investor waives and releases any right to commence any Action against
the Company if the Company determines not to consummate the Closing and/or terminates the
Agreement as a result thereof).

To the extent that the Investor’s undertakings set forth in this Section 7.03 may be unenforceable,
the Investor shall contribute the maximum amount that it is permitted to contribute under
applicable Law to the payment and satisfaction of all Losses incurred by the Company Indemnified
Parties.

          SECTION 7.04. Limits on Indemnification. Notwithstanding anything to the contrary
contained in this Agreement, except with respect to any claims relating to a breach or breaches of
the representations and warranties contained in Sections 3.01(a), 3.03, 3.19, 3.33, 4.04, 4.05,
4.06 or 4.09 hereof: (a) an Indemnifying Party shall not be liable for any claim for
indemnification pursuant to Section 7.02(a) or 7.03(a), unless and until the aggregate amount of
indemnifiable Losses which have or may be recovered from the Indemnifying Party pursuant to Section
7.02(a) or 7.03(a) equals or exceeds 2% of the Aggregate Purchase Price (the “Deductible”),
whereupon the Indemnifying Party shall be entitled to indemnification for the amount of the excess
and (b) the maximum amount of indemnifiable Losses which may be recovered from an Indemnified Party
arising out of or resulting from the causes set forth in Section 7.02(a) or 7.03(a), as the case
may be, shall be an amount equal to 75% of the Aggregate Purchase Price (the “Cap”).
Neither the Deductible nor the Cap shall apply to any claims to the extent relating to a breach or
breaches of the representations and warranties contained in Sections 3.01(a), 3.03, 3.33, 4.04,
4.05, 4.06 or 4.09 hereof and the Deductible, but not the Cap, shall apply to any claims to the extent relating
to a breach of the representations and warranties contained in Section 3.19 hereof. For purposes
of calculating whether the Deductible or the Cap has been, or will be, exceeded, the Company and
the Investor acknowledge and agree to exclude from any such calculation any and all Losses paid,
payable or indemnifiable to any Investor Indemnified Party as a result of the gross up of Losses
contemplated by the last paragraph of Section 7.02 hereof.

          SECTION 7.05. Notice of Loss; Third Party Claims. (a) An Indemnified Party seeking
indemnification under this Agreement shall give the Indemnifying Party notice of the matter for
which it is seeking indemnification under this Agreement, stating the amount of the Loss, if known,
and method of computation thereof, and containing a reference to the provisions of this Agreement
in respect of which such right of indemnification is claimed or arises.

          (b) If an Indemnified Party shall receive notice of any Action, audit, demand or assessment
(each, a “Third Party Claim”) against it which may give rise to a claim for Loss under this
Article VII, within 30 days of the receipt of such notice, the Indemnified Party shall

39

 

give the Indemnifying Party notice of such Third Party Claim; provided, however, that the
failure to provide such notice shall not release the Indemnifying Party from any of its obligations
under this Article VII except to the extent that the Indemnifying Party is materially prejudiced by
such failure and shall not relieve the Indemnifying Party from any other obligation or Liability
that it may have to any Indemnified Party otherwise than under this Article VII. If the
Indemnifying Party acknowledges in writing its obligation to indemnify the Indemnified Party
hereunder against any Losses that may result from such Third Party Claim, then the Indemnifying
Party shall be entitled to assume and control the defense of such Third Party Claim at its expense
and through counsel of its choice if it gives notice of its intention to do so to the Indemnified
Party within twenty days of the receipt of notice from the Indemnified Party of such Third Party
Claim; provided, however, that if there exists or is reasonably likely to exist a
conflict of interest that would make it inappropriate in the judgment of the Indemnified Party in
its sole and absolute discretion for the same counsel to represent both the Indemnified Party and
the Indemnifying Party, then the Indemnified Party shall be entitled to retain its own counsel in
each jurisdiction for which the Indemnified Party determines counsel is required, at the expense of
the Indemnifying Party (except that no Indemnifying Party will be required to pay the costs of more
than one counsel for all the Indemnified Parties with regard to a Third Party Claim). In the event
that the Indemnifying Party exercises the right to undertake any such defense against any such
Third Party Claim as provided above, the Indemnified Party shall cooperate with the Indemnifying
Party in such defense and make available to the Indemnifying Party, at the Indemnifying Party’s
expense, all witnesses, pertinent records, materials and information in the Indemnified Party’s
possession or under the Indemnified Party’s control relating thereto as is reasonably required by
the Indemnifying Party. Similarly, in the event the Indemnified Party is, directly or indirectly,
conducting the defense against any such Third Party Claim, the Indemnifying Party shall cooperate
with the Indemnified Party in such defense and make available to the Indemnified Party, at the
Indemnifying Party’s expense, all such witnesses, records, materials and information in the
Indemnifying Party’s possession or under the Indemnifying Party’s control relating thereto as is
reasonably required by the Indemnified Party. No such Third Party Claim may be settled by the
Indemnifying Party without the prior written consent of the Indemnified Party unless the settlement involves
only the payment of money, with no admission of wrongdoing by the Indemnified Party, and includes a full release of the
Indemnified Party.

          SECTION 7.06. Tax Treatment. The parties shall treat any indemnification payments
made under this Agreement as an adjustment to the Aggregate Purchase Price for Tax purposes, unless
otherwise required by applicable Law, and all such payments shall be paid free and clear of any Tax
deduction or withholding; provided that if any such deduction or withholding is required, the
amount of any such payment shall be increased by such additional amount as is necessary to ensure
that the net amount received is equal to the amount which would have been received had the payment
in question not been subject to any deductions or withholdings.

40

 

ARTICLE VIII

TERMINATION

          SECTION 8.01. Termination. This Agreement may be terminated at any time prior to the
Closing:

     (a) by the Investor if, between the date hereof and the Closing: (i) a Material
Adverse Effect or an Adverse Reputational Effect has occurred, (ii) the Company or any
Subsidiary makes a general assignment for the benefit of creditors, or any proceeding shall
be instituted by or against the Company or any Subsidiary that is responsible for more than
5% of the consolidated revenues, earnings or assets of the Company and the Subsidiaries
seeking to adjudicate any of them as bankrupt or insolvent, or seeking any of their
liquidation, winding up or reorganization, or seeking any arrangement, adjustment,
protection, relief or composition of any of their debts under any Law relating to
bankruptcy, insolvency or reorganization, or (iii) a Person acquires more than 50% of the
outstanding Common Stock;

     (b) by the Investor, if (i) the Company shall have breached any representation,
warranty, covenant or agreement set forth in this Agreement, (ii) such breach or
misrepresentation is not cured within 20 days after the Company receives written notice
thereof from the Investor (or such shorter period between the date of such notice and the
Closing) and (iii) such breach or misrepresentation would cause the condition set forth in
Section 6.02(a) not to be satisfied;

     (c) by the Company, if (i) the Investor shall have breached any representation,
warranty, covenant or agreement set forth in this Agreement, (ii) such breach or
misrepresentation is not cured within 20 days after the Investor receives written notice
thereof from the Company (or such shorter period between the date of such notice and the
Closing) and (iii) such breach or misrepresentation would cause the condition set forth in
Section 6.01(a) not to be satisfied;

     (d) by either the Company or the Investor if the Closing shall not have occurred by
July 31, 2007 (the “Termination Date”); provided, however, that the
right to terminate this Agreement under this Section 8.01(d) shall not be available to any
party whose failure to fulfill any obligation under this Agreement shall have been the
principal cause of, or shall have resulted in, the failure of the Closing to occur on or
prior to such date;

     (e) by either the Investor or the Company in the event that any Governmental Authority
shall have issued an order, decree or ruling or taken any other action restraining,
enjoining or otherwise prohibiting the transactions contemplated by this Agreement and such
order, decree, ruling or other action shall have become final and nonappealable;

     (f) by the mutual written consent of the Company and the Investor; or

     (g) by the Investor or the Company pursuant to Section 7.02(b) or 7.03(b), as
applicable.

41

 

          SECTION 8.02. Effect of Termination. In the event of termination of this Agreement
as provided in Section 8.01, this Agreement shall forthwith become void and there shall be no
liability on the part of either party hereto except (a) as set forth in Sections 5.04 and 9.01 and
(b) that nothing herein shall relieve either party from liability for any breach of this Agreement
that occurred before such termination.

ARTICLE IX

GENERAL PROVISIONS

          SECTION 9.01. Expenses. Except as otherwise specified in this Agreement, all costs
and expenses, including fees and disbursements of counsel, financial advisors and accountants,
incurred in connection with this Agreement and the transactions contemplated by this Agreement
shall be paid by the party incurring such costs and expenses, whether or not the Closing shall have
occurred; provided, however, that if the Company enters into a definitive agreement
with a Person regarding a Third Party Offer and the Investor terminates this Agreement pursuant to
Section 8.01(a)(iii), the Company shall reimburse all costs and expenses up to $2 million in the
aggregate, including fees and disbursements of counsel, financial advisors and accountants,
incurred by the Investor in connection with this Agreement and the transactions contemplated by
this Agreement.

          SECTION 9.02. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given or made (and shall be deemed to
have been duly given or made upon receipt) by delivery in person, by an internationally recognized
overnight courier service, by facsimile or electronic mail, or by registered or certified mail
(postage prepaid, return receipt requested) to the respective parties hereto at the following addresses (or at such
other address for a party as shall be specified in a notice given in accordance with this Section
9.02):

          (a) if to the Company:

First BanCorp.

1519 Ponce De León Ave

San Juan, Puerto Rico 00908

Facsimile: (787) 753-8402

Email: lawrence.odell@firstbankpr.com

Attention: General Counsel

with a copy to:

Clifford Chance US LLP

31 West 52nd Street

New York, New York 10019

Facsimile: (212) 878-8375

Email: david.bernstein@cliffordchance.com

Attention: David Bernstein

42

 

          (b) if to the Investor:

The Bank of Nova Scotia

44 King Street West, 6th Fl.

Toronto, Canada M5H 1H1

Facsimile: (416) 866-5903

Email: andres.cruells@scotiabank.com

Attention: Andres Cruells

with a copy to:

The Bank of Nova Scotia

44 King Street West, 6th Fl.

Toronto, Canada M5H 1H1

Facsimile: (416) 866-5903

Email: tim.hayward@scotiabank.com

Attention: Tim Hayward

and to:

The Bank of Nova Scotia

44 King Street West, 6th Fl.

Toronto, Canada M5H 1H1

Facsimile: (416) 866-5090

Email: deborah.alexander@scotiabank.com

Attention: Deborah Alexander

and to:

Shearman & Sterling LLP

599 Lexington Avenue

New York, New York 10022

Facsimile: (212) 848-7179

Email: spetepiece@shearman.com

Attention: Scott Petepiece

and to:

McCarthy Tétrault LLP

Suite 4700

Toronto Dominion Bank Tower

Toronto, Canada M5K 1E6

Facsimile: (416) 868-0673

Email: iarellan@mccarthy.ca

Attention: Ian W. Arellano

          SECTION 9.03. Public Announcements. Neither party hereto shall make, or cause to be
made, any press release or public announcement in respect of this Agreement or the

43

 

transactions
contemplated hereby or which refer to the other party hereto or otherwise communicate with any news
media regarding any of the foregoing without, to the extent practicable, the prior written consent
of the other party (such consent not to be unreasonably withheld or delayed), and the parties
hereto shall cooperate as to the timing and contents of any such press release, public announcement
or communication. However, nothing in this Section will prevent any party from issuing any press
release or making any filing when required by Law or by the rules of any securities exchange on
which securities of the party or an Affiliate are listed.

          SECTION 9.04. Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any Law or public policy, all other terms and
provisions of this Agreement shall nevertheless remain in full force and effect for so long as the
economic or legal substance of the transactions contemplated hereby is not affected in any manner
materially adverse to either party hereto. Upon a determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good
faith to modify this Agreement so as to effect the original intent of the parties as closely as
possible in an enforceable manner in order that the transactions contemplated hereby are
consummated as originally contemplated to the greatest extent possible.

          SECTION 9.05. Entire Agreement. This Agreement and the Stockholder Agreement
constitute the entire agreement of the parties hereto with respect to the subject matter hereof and
thereof and supersede all prior agreements and undertakings, both written and oral, between the Company and the
Investor with respect to the subject matter hereof and thereof.

          SECTION 9.06. Assignment. This Agreement may not be assigned by operation of law or
otherwise without the express written consent of the Company and the Investor (which consent may be
granted or withheld in the sole discretion of the Company or the Investor) and any such assignment
or attempted assignment without such consent shall be void; provided, however, that
the Investor may assign this Agreement or any of its rights and obligations hereunder to one or
more Affiliates of the Investor without the consent of the Company and this Agreement may be
assigned by operation of law to any successor by merger of either the Investor or the Company.

          SECTION 9.07. Amendment. This Agreement may not be amended or modified except (a) by
an instrument in writing signed by, or on behalf of, the Company and the Investor or (b) by a
waiver in accordance with Section 9.08.

          SECTION 9.08. Waiver. Either party to this Agreement may (a) extend the time for the
performance of any of the obligations or other acts of the other party, (b) waive any inaccuracies
in the representations and warranties of the other party contained herein or in any document
delivered by the other party pursuant hereto, or (c) waive compliance with any of the agreements of
the other party or conditions to such party’s obligations contained herein. Any such extension or
waiver shall be valid only if set forth in an instrument in writing signed by the party that is
giving the waiver. Any waiver of any term or condition shall not be construed as a waiver of any
subsequent breach or a subsequent waiver of the same term or condition, or a waiver of any other
term or condition of this Agreement. The failure of either party hereto to assert any of its
rights hereunder shall not constitute a waiver of any of such rights. All rights

44

 

and remedies existing under this Agreement are cumulative to, and not exclusive of, any rights or remedies
otherwise available.

          SECTION 9.09. No Third Party Beneficiaries. Except for the provisions of Article VII
relating to indemnified parties, this Agreement shall be binding upon and inure solely to the
benefit of the parties hereto and their respective successors and permitted assigns and nothing
herein, express or implied, is intended to or shall confer upon any other Person, including any
union or any employee or former employee of the Company, any legal or equitable right, benefit or
remedy of any nature whatsoever, including any rights of employment for any specified period, under
or by reason of this Agreement.

          SECTION 9.10. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the Laws of the State of New York applicable to contracts executed in and to be
performed in that State, without regard to any principles of conflicts of Laws that would apply the Laws of any
other jurisdiction. All Actions arising out of or relating to this Agreement shall be heard and
determined exclusively in any New York federal court sitting in the Borough of Manhattan of The
City of New York, provided, however, that if such federal court does not have
jurisdiction over such Action, such Action shall be heard and determined exclusively in any New
York state court sitting in the Borough of Manhattan of The City of New York. Consistent with the
preceding sentence, each of the parties hereto hereby (a) submits to the exclusive jurisdiction of
any federal or state court sitting in the Borough of Manhattan of The City of New York for the
purpose of any Action arising out of or relating to this Agreement brought by any party hereto and
(b) irrevocably waives, and agrees not to assert by way of motion, defense, or otherwise, in any
such Action, any claim that it is not subject personally to the jurisdiction of the above-named
courts, that its property is exempt or immune from attachment or execution, that the Action is
brought in an inconvenient forum, that the venue of the Action is improper, or that this Agreement
or the transactions contemplated by this Agreement may not be enforced in or by any of the
above-named courts.

          SECTION 9.11. Waiver of Jury Trial. Each of the parties hereto hereby waives to the
fullest extent permitted by applicable Law any right it may have to a trial by jury with respect to
any litigation directly or indirectly arising out of, under or in connection with this Agreement or
the transactions contemplated by this Agreement. Each of the parties hereto hereby (a) certifies
that no representative, agent or attorney of the other party has represented, expressly or
otherwise, that such other party would not, in the event of litigation, seek to enforce the
foregoing waiver and (b) acknowledges that it has been induced to enter into this Agreement and the
transactions contemplated by this Agreement, as applicable, by, among other things, the mutual
waivers and certifications in this Section 9.11.

          SECTION 9.12. Currency. Unless otherwise specified in this Agreement, all references
to currency, monetary values and dollars set forth herein shall mean United States (U.S.) dollars
and all payments hereunder shall be made in United States dollars.

          SECTION 9.13. Counterparts. This Agreement may be executed and delivered (including
by facsimile transmission or portable document format (“.pdf”)) in one or more counterparts, and by
the different parties hereto in separate counterparts, each of which when

45

 

executed shall be deemed
to be an original, but all of which taken together shall constitute one and the same agreement.

[Remainder of this page intentionally left blank]

46

 

          IN WITNESS WHEREOF, the Company and the Investor have caused this Agreement to be executed as
of the date first written above by their respective officers thereunto duly authorized.

	 	 	 	 	 
	 	FIRST BANCORP

 	 
	 	By:  	/s/
Luis Beauchamp	 
	 	 	Name:  	Luis Beauchamp
	 	 	Title:  	President & CEO
	 
	 	THE BANK OF NOVA SCOTIA

 	 
	 	By:  	/s/ T. P. Hayward
 	 
	 	 	Name:  	T. P. Hayward 	 
	 	 	Title:  	EVP & CAO, Int’l Banking 	 
	 

Investment Agreement Signature Page

 

EXHIBIT A

Confidential

 

STOCKHOLDER AGREEMENT

 

Between

[The Bank of Nova Scotia]

and

First BanCorp

Dated as of                     , 2007

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	
ARTICLE I
	 
	 	 	 	 	 	 
	CERTAIN DEFINITIONS
	 
	 	 	 	 	 	 
	Section 1.01.
	 	Certain Definitions	 	 	1	 
	
ARTICLE II
	 
	 	 	 	 	 	 
	RESTRICTIONS ON TRANSFERABILITY
	 
	 	 	 	 	 	 
	Section 2.01.
	 	General	 	 	5	 
	Section 2.02.
	 	Restrictive Legend	 	 	5	 
	
ARTICLE III
	 
	 	 	 	 	 	 
	CORPORATE GOVERNANCE
	 
	 	 	 	 	 	 
	Section 3.01.
	 	Observer to the Board	 	 	5	 
	
ARTICLE IV
	 
	 	 	 	 	 	 
	REGISTRATION RIGHTS
	 
	 	 	 	 	 	 
	Section 4.01.
	 	Demand Registration	 	 	6	 
	Section 4.02.
	 	Piggyback Registration	 	 	6	 
	Section 4.03.
	 	Shelf Registration Statement	 	 	7	 
	Section 4.04.
	 	Blackout Periods	 	 	7	 
	Section 4.05.
	 	Registration Procedures	 	 	8	 
	Section 4.06.
	 	Expenses	 	 	10	 
	Section 4.07.
	 	Rule 144 and Rule 144A Information	 	 	11	 
	Section 4.08.
	 	Indemnification and Contribution	 	 	12	 
	Section 4.09.
	 	Certain Additional Limitations on Registration Rights	 	 	14	 
	Section 4.10.
	 	Limitations on Registration of Other Securities; Representation	 	 	14	 
	Section 4.11.
	 	No Inconsistent Agreements	 	 	14	 
	Section 4.12.
	 	Selection of Managing Underwriters	 	 	14	 
	
 ARTICLE V
	 
	 	 	 	 	 	 
	ADDITIONAL AGREEMENTS
	 
	 	 	 	 	 	 
	Section 5.01.
	 	Right of First Look	 	 	15	 
	Section 5.02.
	 	Right of Last Look	 	 	15	 
	Section 5.03.
	 	Investor Right of First Offer	 	 	16	 
	Section 5.04.
	 	Rights to Purchase New Securities	 	 	17	 
	Section 5.05.
	 	Furnishing of Information	 	 	17	 
	Section 5.06.
	 	Company Right of First Offer	 	 	18	 
	
ARTICLE VI
	 
	 	 	 	 	 	 
	MISCELLANEOUS
	 
	 	 	 	 	 	 
	Section 6.01.
	 	Termination	 	 	19	 
	Section 6.02.
	 	Notices	 	 	19	 
	Section 6.03.
	 	Amendments and Waivers	 	 	21	 
	Section 6.04.
	 	Binding Effect	 	 	21	 
	Section 6.05.
	 	Expenses	 	 	21	 
	Section 6.06.
	 	Governing Law	 	 	21	 
	Section 6.07.
	 	Waiver of Jury Trial	 	 	21	 
	Section 6.08.
	 	Specific Performance	 	 	22	 

i

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	 	 	Page
	Section 6.09.
Section 6.10.
Section 6.11.
Section 6.12.
Section 6.13.
Section 6.14.
Section 6.15.
Section 6.16.
Section 6.17.

	 	Counterparts

Entire Agreement

Headings

Severability

Public Announcements

Cumulative Remedies

Interpretation

No Third Party Beneficiaries

Construction
	 	22

22

22

22

22

22

23

23

23

ii

 

STOCKHOLDER AGREEMENT

     This Stockholder Agreement (this “Agreement”) is made effective as of                     , 2007,
between First BanCorp, a Puerto Rico-chartered financial holding company (the “Company”),
and [The Bank of Nova Scotia, a chartered bank under the Bank Act (Canada)] (the
“Investor”).

     WHEREAS, the Company and the Investor have entered into the Investment Agreement, dated as of
[                    ], 2007 (the “Investment Agreement”);

     WHEREAS, upon consummation of the transaction contemplated by the Investment Agreement, the
Investor will beneficially own that number of shares of common stock, par value $1.00 per share
(“Common Stock”), of the Company such that immediately after giving effect to the issuance
as contemplated by the Investment Agreement the Investor will own 10% of the issued and outstanding
Common Stock;

     WHEREAS, the parties hereto wish to enter into this Agreement to set forth their agreement as
to the matters set forth herein; and

     WHEREAS, the execution and delivery of this Agreement is a condition to the closing of the
transactions contemplated by the Investment Agreement.

     NOW, THEREFORE, in consideration of the premises and the mutual agreements and covenants
hereinafter set forth, and for good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the Company and the Investor hereby agree as follows:

ARTICLE I

CERTAIN DEFINITIONS

     Section 1.01. Certain Definitions. As used in this Agreement, the following terms
shall have the following respective meanings:

     “Affiliate” means, with respect to any specified Person, any Person that directly, or
indirectly through one or more intermediaries, Controls, is Controlled by, or is under common
Control with, such specified Person.

     “beneficial owner” or “beneficially own” has the meaning given such term in
Rule 13d-3 under the Exchange Act.

     “Board” means the board of directors of the Company.

     “Business Day” means any day that is not a Saturday, a Sunday or other day on which
banks are required or authorized by Law to be closed in any of The City of New York, NY, San Juan,
Puerto Rico or Toronto, Canada.

     “Cash Equivalents” means (a) marketable direct obligations issued or unconditionally
guaranteed by the United States government or issued by any agency thereof and backed by the full
faith and credit of the United States, in each case maturing within one year from the date of
acquisition thereof, (b) marketable direct obligations issued by any state of the United States or
any political subdivision of any such state or any public instrumentality thereof maturing within one year from the date of
acquisition thereof and, at the time of acquisition, having from either Standard & Poor’s Ratings
Services or Moody’s

 

 

Investors Service, Inc. the highest rating available from that rating agency or
(c) commercial paper maturing not more than one year from the date of issuance thereof and, at the
time of acquisition, having from either Standard & Poor’s Corporation or Moody’s Investors Service,
Inc. the highest rating available from that rating agency.

     “Closing” has the meaning given to such term in the Investment Agreement.

     “Control” (including the terms “Controlled by” and “under common Control
with”) means, the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the ownership of voting
securities, as trustee or executor, by contract or otherwise, including, without limitation, the
ownership, directly or indirectly, of securities having the power to elect a majority of the board
of directors or similar body governing the affairs of such Person.

     “Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.

     “Holder” shall mean the Investor, and any transferee of the Investor or any Holder to
whom Registrable Securities are transferred, and, in each case, who continues to be entitled to the
rights of a Holder hereunder.

     “Investor Stock” means the shares of Common Stock acquired by the Investor pursuant to
the Investment Agreement.

     “Law” means any federal, national, supranational, state, provincial, municipal, local
or similar statute, law, ordinance, regulation, rule, code, order, or rule of law (including common
law) and any judicial or administrative interpretation thereof, including any judicial or
administrative order, consent decree or judgment.

     “Marketable Securities” means securities that are (a)(i) securities of or other
interests in any Person that are traded on a United States national securities exchange or (ii)
debt securities in which at least three nationally recognized securities firms are making or have
agreed to make a market, and (b) not subject to restrictions on transfer as a result of any
applicable contractual provisions or the provisions of the Securities Act or, if subject to such
restrictions under the Securities Act, are also subject to registration rights reasonably
acceptable to the Person receiving such Marketable Securities.

     “New Securities” means any Common Stock, whether now authorized or not, and rights,
options or warrants to purchase such Common Stock, and securities of any type whatsoever that are,
or may become, convertible into or exchangeable or exercisable for Common Stock that are issued
after the date of this Agreement; provided that the term “New Securities” does not include
(a) securities of the Company issued to employees, officers or directors of the Company or any
Subsidiary, or which have been reserved for issuance, pursuant to any employee stock option, stock
purchase, stock bonus plan, or other similar stock agreement or arrangement approved by the Board,
(b) securities of the Company issued pro rata to all holders of Common Stock in connection with any
stock split, stock dividend or recapitalization of the Company, (c) securities of the Company
issued upon the conversion, exchange or exercise of convertible, exchangeable or exercisable
securities of the Company that are issued and outstanding as of the date of this Agreement, (d)
securities of the Company issued upon the conversion, exchange or exercise of convertible,
exchangeable or exercisable securities of the Company that are issued in accordance with this
Agreement, or (e) any right, option or warrant to acquire any security
convertible into or exchangeable or exercisable for the securities excluded from the
definition of New

2

 

Securities pursuant to subclause (a) above if issued pursuant to any employee
stock option, stock purchase, stock bonus plan or other similar stock agreement or arrangement
approved by the Board.

     “Person” means any individual, partnership, firm, corporation, association, trust,
unincorporated organization or other entity, as well as any syndicate or group that would be deemed
to be a person under Section 13(d)(3) of the Exchange Act.

     “Price Determination Date” means (a) in connection with any issuance of New Securities
by the Company pursuant to Section 5.03 hereof, (i) the date on which the Company receives an
Investor Notice of Election or (ii) the date on which the Company and a Third Party enter into a
definitive agreement in accordance with Section 5.03(d) and (b) in connection with any sale of
Investor Stock by the Investor or its Affiliate, as the case may be, pursuant to Section 5.06
hereof, (i) the date on which the Investor or its Affiliate, as the case may be, receives a Company
Notice of Election or (ii) the date on which the Investor or its Affiliate, as the case may be, and
a Third Party enter into a definitive agreement in accordance with Section 5.06(d).

     The terms “register,” “registered” and “registration” refer to a
registration effected by preparing and filing a registration statement in compliance with the
Securities Act, and the declaration or ordering of the effectiveness of such registration statement
by the SEC.

     “Registrable Securities” means (a) the shares of Common Stock issued pursuant to the
Investment Agreement and held by a Holder, (b) any securities issuable or issued or distributed in
respect of any of the Common Stock identified in clause (a) by way of stock dividend or stock split
or in connection with a combination of shares, recapitalization, reorganization, merger,
consolidation or otherwise, (c) any New Securities issued pursuant to this Agreement and held by a
Holder and (d) any shares of Common Stock or New Securities acquired by a Holder from the Company
after the date of the Investment Agreement. For purposes of this Agreement, Registrable Securities
shall cease to be Registrable Securities (i) when a Registration Statement covering such
Registrable Securities has been declared effective under the Securities Act by the SEC and such
Registrable Securities have been disposed of pursuant to such effective Registration Statement,
(ii) with respect to a Holder, when all the Registrable Securities held by such Holder become
eligible to be sold under Rule 144(k), or (iii) with respect to a Holder, when the entire amount of
the Registrable Securities proposed to be sold by such Holder can, in the opinion of counsel
satisfactory to the Company and such Holder, each in their reasonable judgment, be distributed to
the public in brokers transactions pursuant to Rule 144 within a three month period or any such
Registrable Securities have been sold in a sale made pursuant to Rule 144.

     “Registration Statement” shall mean the Demand Registration Statement, the Piggyback
Registration Statement and/or the Shelf Registration Statement, as the case may be.

     “Rule 144” means Rule 144 (or any successor provisions) under the Securities Act.

     “SEC” means the U.S. Securities and Exchange Commission.

     “Securities Act” means the U.S. Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.

     “Significant Subsidiary” means (i) any Subsidiary set forth in Section 3.02(a) of the
Disclosure Schedule to the Investment Agreement and (ii) any other Subsidiary that is a significant
subsidiary of the Company under Rule 1-02(w) of SEC Regulation S-X.

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     “Subsidiary” or “Subsidiaries” means any and all corporations, partnerships,
limited liability companies, joint ventures, associations and other entities controlled by the
Company, directly or indirectly, as a result of ownership of equity, membership or similar
interests in such Person or any other related rights.

     “Third Party” means, with respect to the Investor, any other Person (other than the
Company or an Affiliate of the Investor) and, with respect to the Company, any other Person (other
than the Investor).

     “VWAP” means the volume weighted average of the trading prices of Common Stock, as
such price is reported on the NYSE Composite Transaction Tape (as reported by Bloomberg Financial
Markets or such other source as the parties shall agree in writing), for the 20 trading days ending
on (and including) the date that is two trading days prior to the Price Determination Date.

     Each of the following terms is defined in the Section set forth opposite such term:

	 	 	 
	Term	 	Section
	Acquisition Transaction
	 	5.01(b)
	Agreement
	 	Preamble
	Blackout Period
	 	4.04
	Common Stock
	 	Recitals
	Company
	 	Preamble
	Company Offer
	 	5.06(a)
	Company Offer Notice
	 	5.06(a)
	Company Offer Period
	 	5.06(b)(i)
	Company Offer Price
	 	5.06(a)
	Company Offered Shares
	 	5.06(a)
	Company Notice of Election
	 	5.06(b)(i)
	Counteroffer Period
	 	5.02(a)
	Demand Registration
	 	4.01(a)
	Demand Registration Statement
	 	4.01(a)
	Determination Notice
	 	5.02(a)
	Indemnified Party
	 	4.08(d)
	Indemnifying Party
	 	4.08(d)
	Investment Agreement
	 	Recitals
	Investor
	 	Preamble
	Investor Offer
	 	5.03(a)
	Investor Offer Notice
	 	5.03(a)
	Investor Offer Period
	 	5.03(b)(i)
	Investor Offer Price
	 	5.03(a)
	Investor Offered Shares
	 	5.03(a)
	Investor Notice of Election
	 	5.03(b)(i)
	Investor Proposal
	 	5.02(a)
	Look Period
	 	5.01(a)
	Maximum Number of Securities
	 	4.02(c)
	Notice of Issuance
	 	5.04(b)
	Observer
	 	3.01(a)
	Participating Demand Holders
	 	4.01(a)
	Participating Piggyback Holders
	 	4.02(b)
	Piggyback Registration
	 	4.02(a)
	Piggyback Registration Statement
	 	4.02(a)
	Shelf Registration
	 	4.01(b)

4

 

	 	 	 
	Term	 	Section
	Shelf Registration Statement
	 	4.01(b)
	Superior Proposal
	 	5.02(b)
	Third Party New Securities
	 	5.04(a)
	Third Party Offer
	 	5.02(a)

ARTICLE II

RESTRICTIONS ON TRANSFERABILITY

     Section 2.01. General. The Investor understands and agrees that the Investor Stock has not
been registered under the Securities Act and are restricted securities except pursuant to an
effective registration statement under the Securities Act or pursuant to an applicable exemption
from the registration and prospectus delivery requirements of the Securities Act.

     Section 2.02. Restrictive Legend. (a) Each certificate representing the shares of
Investor Stock shall be stamped or otherwise imprinted with a legend in substantially the following
form (in addition to any legends required by agreement or by applicable state securities Laws):

THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN
CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. SUCH SHARES GENERALLY MAY NOT BE SOLD OR
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR OF AN APPLICABLE EXEMPTION FROM THE
REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SAID ACT.

          (b) The Company shall, at the request of a holder of shares of Common Stock, remove from each
certificate evidencing shares of Common Stock the legend described in Section 2.02(a) if such
requesting holder provides, at its expense, an opinion of counsel satisfactory to the Company that
the securities evidenced thereby may be publicly sold without registration under the Securities
Act.

ARTICLE III

CORPORATE GOVERNANCE

     Section 3.01. Observer to the Board. (a) So long as the Investor and its Affiliates
beneficially own at least 5% of the issued and outstanding Common Stock (treating all securities
beneficially owned by the Investor and its Affiliates that are convertible into or exchangeable or
exercisable for Common Stock as converted, exchanged or exercised), the Investor shall be entitled
to designate one individual to serve as an observer to the Board (the “Observer”), which
designation may be changed from time to time in the sole discretion of the Investor. The Observer
shall be entitled to (i) attend all meetings of the Board and the board of directors of each
material Subsidiary, including any committee meetings of such boards of directors, (ii) receive
notices of such meetings concurrently with the members of the Board or such boards of directors or
committees thereof and (iii) receive all information provided to members of the Board or such
boards
of directors or committees thereof at such meetings, other than information specifically
identified in Annex I attached hereto.

          (b) The Observer shall have no voting rights and his or her presence shall not be required for
determining a quorum at any meeting he or she is entitled to attend pursuant to Section 3.01(a).

5

 

ARTICLE IV

REGISTRATION RIGHTS

     Section 4.01. Demand Registration. (a) After receipt of a written request from a
Holder requesting that the Company effect a registration or, in the case of a Shelf Registration
(as defined below), renew a registration (each, a “Demand Registration”) under the
Securities Act covering all or part of such Holder’s Registrable Securities (which specifies the
intended method or methods of disposition thereof), the Company shall promptly notify all Holders
in writing of the receipt of such request and each such Holder, in lieu of exercising its rights
under Section 4.02 hereof, may elect (by written notice sent to the Company within ten Business
Days from the date of such Holder’s receipt of the aforementioned notice from the Company) to have
all or part of such Holder’s Registrable Securities included in such registration thereof pursuant
to this Section 4.01, and such Holder shall specify in such notice the number of Registrable
Securities that such Holder elects to include in such registration. Thereupon the Company shall,
as expeditiously as is possible, but in any event no later than 30 days after receipt of a written
request for a Demand Registration, file with the SEC and use its reasonable best efforts to cause
to be declared effective, a registration statement (a “Demand Registration Statement”)
relating to all shares of Registrable Securities which the Company has been so requested to
register by such Holders (“Participating Demand Holders”) for sale, to the extent required
to permit the disposition (in accordance with the intended method or methods thereof, as aforesaid)
of the Registrable Securities so registered; provided, however, that the Company
shall not be required to effect a Demand Registration (i) unless the aggregate number of the
Registrable Securities requested to be registered constitute at least 3% of the Common Stock issued
and outstanding on the date such written request for a Demand Registration is made or (ii) at the
time when, because the Company’s independent public accounting firm has not completed its audit or
review of the Company’s annual or quarterly financial statements, the Company is not able to file a
registration statement that complies with SEC rules.

          (b) If the Company is eligible to register shares of its common stock for a delayed or
continuous offering by stockholders, the Demand Registration Statement may be required by the
initiating Participating Demand Holder to be with regard to a delayed or continuous offering of all
the Registrable Securities (a “Shelf Registration Statement”) in accordance with the
methods and distribution set forth in the Shelf Registration Statement and Rule 415 under the
Securities Act (the “Shelf Registration”).

     Section 4.02. Piggyback Registration. (a) If the Company proposes to file a
registration statement relating to an offering of Common Stock by the Company or any holder of its
securities (other than a registration statement on Form S-4 or S-8 or any successor form for
securities to be offered in a transaction of the type referred to in Rule 145 under the Securities
Act or of stock issued to employees of the Company pursuant to any employee benefit plan,
respectively) for the registration of Common Stock (a “Piggyback Registration”), it will
give written notice to all Holders at least 20 days before the initial filing with the SEC of such
piggyback registration statement (a “Piggyback Registration Statement”), which notice shall
set forth the
intended method of disposition of the securities proposed to be registered (which, if the
Piggyback Registration is to relate to an underwritten offering, must be for inclusion in the
underwritten offering). The notice shall offer to include in such filing such shares of
Registrable Securities as such Holders may request.

          (b) Each Holder desiring to have Registrable Securities registered under this Section 4.02
(“Participating Piggyback Holders”) shall advise the Company in writing within ten days
after the date of receipt of such offer from the Company, setting forth the amount of such
Registrable Securities for which registration is requested. The Company shall thereupon include in
such filing the number or amount of Registrable Securities for which registration is so requested,
subject to paragraph (c)

6

 

below, and shall use its reasonable best efforts to effect registration of
such Registrable Securities under the Securities Act.

          (c) If the Piggyback Registration relates to an underwritten public offering and the managing
underwriter of such proposed public offering advises in writing that, in its opinion, the amount of
Registrable Securities requested to be included in the Piggyback Registration in addition to the
securities being registered by the Company would be greater than the total number of securities
which can be sold in the offering without having a material adverse effect on the distribution of
such securities or otherwise having a material adverse effect on the marketability thereof (the
“Maximum Number of Securities”), then:

          (i) in the event the Company initiated the Piggyback Registration, the Company shall
include in such Piggyback Registration first, the securities the Company proposes to
register and second, the securities of all other selling security holders, including the
Participating Piggyback Holders, to be included in such Piggyback Registration in an amount
which together with the securities the Company proposes to register, shall not exceed the
Maximum Number of Securities, such amount to be allocated among such selling security
holders on a pro rata basis (based on the number of securities of the Company held by each
such selling security holder);

          (ii) in the event any holder of Common Stock of the Company initiated the Piggyback
Registration, the Company shall include in such Piggyback Registration first, the securities
such initiating security holder proposes to register, second, the securities of any other
selling security holders (including Participating Piggyback Holders), in an amount which
together with the securities the initiating security holder proposes to register, shall not
exceed the Maximum Number of Securities, such amount to be allocated among such other
selling security holders on a pro rata basis (based on the number of securities of the
Company held by each such selling security holder) and third, any securities the Company
proposes to register, in an amount which together with the securities the initiating
security holder and the other selling security holders propose to register, shall not exceed
the Maximum Number of Securities;

          (d) The Company will not hereafter enter into any agreement, which is inconsistent with the
rights of priority provided in paragraph (c) above.

     Section 4.03. Shelf Registration Statement. If at any time the Company is eligible to
file a registration statement relating to an offering on a delayed or continuous basis of the
Registrable Securities on Form S-3 or a successor to that form, the Company may (and the Company
will at the request of the initiating Holder) file a Shelf Registration Statement relating to sales
of all the Registrable Securities (or the maximum amount of Registrable Securities that are
eligible to be included in the Shelf Registration Statement). While that Shelf Registration
Statement is effective, the Company will have no further obligations to file a Demand
Registration Statement or to include Registrable Shares in a Piggyback Registration Statement,
but at the request of any Holder who, but for this Section 4.03, would be eligible to request a
Demand Registration Statement, the Company will file a prospectus supplement permitting Registrable
Securities to be sold in an underwritten offering.

     Section 4.04. Blackout Periods. The Company shall have the right to delay the filing
or effectiveness of a Registration Statement required pursuant to Sections 4.01 or 4.02 during no
more than two periods aggregating not more than 90 days in any twelve-month period (a “Blackout
Period”) in the event that (i) the Company would, in accordance with the advice of its counsel,
be required to disclose in the prospectus information not otherwise then required by Law to be
publicly disclosed and (ii) in the judgment of the Board, there is a reasonable likelihood that
such disclosure, or any other action to be taken in connection with the prospectus, would
materially and adversely affect or interfere with any

7

 

financing, acquisition, merger, disposition
of assets (not in the ordinary course of business), corporate reorganization or other similar
transaction involving the Company. The Company shall promptly give the Holders written notice of
such determination containing a general statement of the reasons for such postponement and an
approximation of the anticipated delay.

     Section 4.05. Registration Procedures. If the Company is required by the provisions
of Section 4.01 or 4.02 to use its reasonable best efforts to effect the registration of any of its
securities under the Securities Act, the Company will, as expeditiously as possible:

          (a) prepare and file with the SEC a Registration Statement with respect to such securities and
use its reasonable best efforts to cause such Registration Statement promptly to become and remain
effective for a period of time required for the disposition of such securities by the holders
thereof but not to exceed 30 days (except with respect to a Shelf Registration Statement which
shall remain effective for a period not required to exceed one year); provided,
however, that before filing such registration statement or any amendments thereto, the
Company shall furnish the representatives of the Holders referred to in Section 4.05(m) copies of
all documents proposed to be filed, which documents will be subject to the review of such counsel.
The Company shall not be deemed to have used its reasonable best efforts to keep a Registration
Statement effective during the applicable period if it voluntarily takes any action that would
result in the Holders of such Registrable Securities not being able to sell such Registrable
Securities during that period, unless such action is required under applicable Law;

          (b) prepare and file with the SEC such amendments and supplements to such Registration
Statement and the prospectus used in connection therewith as may be necessary to keep such
Registration Statement effective and to comply with the provisions of the Securities Act with
respect to the sale or other disposition of all securities covered by such Registration Statement
until the earlier of such time as all of such securities have been disposed of or the time
specified in Section 4.05(a);

          (c) furnish to such selling security holders such number of conformed copies of the applicable
Registration Statement and each such amendment and supplement thereto (including in each case all
exhibits), and of any summary prospectus or other prospectus, including a preliminary prospectus,
in conformity with the requirements of the Securities Act, and such other documents, as such
selling security holders may reasonably request;

          (d) use its reasonable best efforts to register or qualify the securities covered by such
Registration Statement under such other securities or blue sky Laws of such jurisdictions within
the
United States and Puerto Rico as each Holder of such securities shall reasonably request, to
keep such registration or qualification in effect for so long as such Registration Statement
remains in effect, and to take any other action which may be reasonably necessary to enable such
seller to consummate the disposition in such jurisdictions of the securities beneficially owned by
such Holder (provided, however, that the Company shall not be required in
connection therewith or as a condition thereto to qualify to do business, subject itself to
taxation in or to file a general consent to service of process in any jurisdiction wherein it would
not but for the requirements of this paragraph (d) be obligated to do so; and provided,
further, that the Company shall not be required to qualify such Registrable Securities in
any jurisdiction in which the securities regulatory authority requires that any Holder submit any
shares of its Registrable Securities to the terms, provisions and restrictions of any escrow,
lockup or similar agreement(s) for consent to sell Registrable Securities in such jurisdiction
unless such Holder agrees to do so), and do such other reasonable acts and things as may be
required of it to enable such Holder to consummate the disposition in such jurisdiction of the
securities covered by such Registration Statement;

          (e) furnish, at the request of any Holder requesting registration of Registrable Securities
pursuant to Section 4.01, 4.02 or 4.03, if the method of distribution is by means of an
underwriting, on the

8

 

date that the shares of Registrable Securities are delivered to the
underwriters for sale pursuant to such registration, or if such Registrable Securities are not
being sold through underwriters, on the date that the registration statement with respect to such
shares of Registrable Securities becomes effective, (1) a signed opinion, dated such date, of the
independent legal counsel representing the Company for the purpose of such registration, addressed
to the underwriters, if any, and if such Registrable Securities are not being sold through
underwriters, then to the Holders making such request, as to such matters as such underwriters or
the initiating Holder, as the case may be, may reasonably request; (2) letters dated such date and
the date the offering is priced from the independent certified public accountants of the Company,
addressed to the underwriters, if any, and if such Registrable Securities are not being sold
through underwriters, then to the Holders making such request (i) stating that they are independent
registered public accountants within the meaning of the Securities Act and that, in the opinion of
such accountants, the financial statements and other financial data of the Company included in the
Registration Statement or the prospectus, or any amendment or supplement thereto, comply as to form
in all material respects with the applicable accounting requirements of the Securities Act and (ii)
covering such other financial matters (including information as to the period ending not more than
five Business Days prior to the date of such letters) with respect to the registration in respect
of which such letter is being given as such underwriters or the initiating Holder, as the case may
be, may reasonably request and as would be customary in such a transaction; and (3) the written
consent of any other person reasonably requested or required by Law;

          (f) enter into customary agreements (including if the method of distribution is by means of an
underwriting, an underwriting agreement in customary form) and take such other actions as are
reasonably required in order to expedite or facilitate the disposition of such Registrable
Securities;

          (g) otherwise use its reasonable best efforts to comply with all applicable rules and
regulations of the SEC, and make earnings statements satisfying the provisions of Section 11(a) of
the Securities Act generally available to the Holders no later than 40 days after the end of any
twelve-month period (or 60 days, if such period is a fiscal year) (i) commencing at the end of any
fiscal quarter in which Registrable Securities are sold to underwriters in an underwritten public
offering, or (ii) if not sold to underwriters in such an offering, beginning with the first month
of the Company’s first fiscal quarter commencing after the effective date of the Registration
Statement, which statements shall cover said twelve-month periods;

          (h) use its reasonable best efforts to cause all such Registrable Securities to be listed on
each securities exchange or quotation system on which similar securities issued by the Company are
listed or traded;

          (i) use its reasonable best efforts to prevent the issuance or obtain the withdrawal of any
order suspending the effectiveness of such Registration Statement at the earliest possible time;

          (j) give written notice to the Holders:

          (i) when such Registration Statement or any amendment thereto has been filed with the
SEC and when such Registration Statement or any post-effective amendment thereto has become
effective;

          (ii) of any request by the SEC for amendments or supplements to such Registration
Statement or the prospectus included therein or for additional information;

          (iii) of the issuance by the SEC of any stop order suspending the effectiveness of such
Registration Statement or the initiation of any proceedings for that purpose;

9

 

          (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 or the initiation or threatening of any proceeding for such purpose; and

          (v) of the happening of any event that requires the Company to make changes in such
Registration Statement or the prospectus in order to make the statements made or
incorporated therein not misleading (which notice shall be accompanied by an instruction to
suspend the use of the prospectus until the requisite changes have been made);

          (k) furnish to each Holder, without charge, at least one copy of such Registration Statement
and any post-effective amendment thereto, including financial statements and schedules, and, if the
Holder so requests in writing, all exhibits (including those, if any, incorporated by reference);

          (l) upon the occurrence of any event contemplated by Section 4.05(j)(v) above, promptly
prepare a post-effective amendment to such Registration Statement or a supplement to the related
prospectus or file any other required document so that, as thereafter delivered to the Holders, the
prospectus will not contain or incorporate an untrue statement of a material fact or omit to state
any material fact necessary to make the statements made or incorporated therein, in light of the
circumstances under which they were made, not misleading. If the Company notifies the Holders in
accordance with Section 4.05(j)(v) above to suspend the use of the prospectus until the requisite
changes to the prospectus have been made, then the Holders shall suspend use of such prospectus
and, if asked to do so by the Company, will use their reasonable efforts to return to the Company
all copies of such prospectus (at the Company’s expense) other than permanent file copies then in
such Holder’s possession, and the period of effectiveness of such Registration Statement provided
for above shall be extended by the number of days from and including the date of the giving of such
notice to the date Holders shall have received such amended or supplemented prospectus pursuant to
this Section 4.05(l);

          (m) make reasonably available for inspection by the representatives of the Holders, any
underwriter participating in any disposition pursuant to such Registration Statement and any
attorney, accountant or other agent retained by such representative or any such underwriter all
relevant financial and other records, pertinent corporate documents and properties of the Company
and cause the Company’s officers, directors and employees to supply all relevant information
reasonably requested by such representative or any such underwriter, attorney, accountant or agent
in connection with the registration; and

          (n) use reasonable best efforts to procure the cooperation of the Company’s transfer agent in
settling any offering or sale of Registrable Securities, including with respect to the transfer of
physical stock certificates into book-entry form in accordance with any procedures reasonably
requested by the Holders or the underwriters.

     It shall be a condition precedent to the obligation of the Company to take any action pursuant
to this Agreement in respect of the Registrable Securities which are to be registered at the
request of any Holder that such Holder shall furnish to the Company such information regarding the
Registrable Securities held by such Holder and the intended method of disposition thereof as the
Company shall reasonably request and as shall be required in connection with the action taken by
the Company.

     Section 4.06. Expenses. All expenses incurred in connection with each registration
pursuant to Sections 4.01 or 4.02 of this Agreement, excluding underwriters’ discounts and
commissions, but including without limitation all registration, filing and qualification fees, word
processing, duplicating, printers’ and accounting fees (including the expenses of any special
audits or “comfort” letters required by or incident to such performance and compliance), listing
fees, messenger and delivery expenses, all

10

 

fees and expenses of complying with state securities or
blue sky Laws, fees and disbursements of counsel for the Company, fees and expenses of the Company
and the underwriters relating to “road show” investor presentations, including the cost of any
aircraft chartered for such purposes and the fees and disbursements of one counsel for the selling
Holders (which counsel shall be selected by the Holders holding a majority in interest of the
Registrable Securities being registered), shall be paid by the Company, except that:

          (a) all such expenses in connection with any amendment or supplement to a Registration
Statement or prospectus filed more than 30 days (or in the case of a Shelf Registration Statement,
one year) after the effective date of such Registration Statement because any Holder has not
effected the disposition of the Registrable Securities requested to be registered shall be paid by
such Holder;

          (b) the Holders shall bear and pay the underwriting commissions and discounts applicable to
securities offered for their account in connection with any registrations, filings and
qualifications made pursuant to this Agreement; and

          (c) the Company will only be required to pay the expenses relating to one Demand Registration
(other than a Shelf Registration); provided, however, that the foregoing shall not
in any way limit the number of Demand Registrations the Holders may request under this Article IV.

     Section 4.07. Rule 144 and Rule 144A Information. (a) With a view to making
available the benefits of certain rules and regulations of the SEC which may at any time permit the
sale of the Registrable Securities to the public without registration, the Company agrees to:

          (i) make and keep public information available, as those terms are understood and
defined in Rule 144;

          (ii) file with the SEC in a timely manner all reports and other documents required of
the Company under the Securities Act and the Exchange Act; and

          (iii) furnish to each Holder of Registrable Securities forthwith upon request a written
statement by the Company as to its compliance with the reporting requirements of Rule 144
and of the Securities Act and the Exchange Act, a copy of the most recent annual or
quarterly report of the Company, and such other reports and documents so filed by the
Company as such Holder may reasonably request in availing itself of any rule or regulation
of the SEC allowing such Holder to sell any Registrable Securities without registration;

provided, however, that the Company shall be deemed not to be in breach of clauses
(i) and (ii) of this Section 4.07(a) to the extent that noncompliance with such clauses is the
result of the failure of the Company’s registered public accounting firm to complete its audit of
annual financial statements or its review of interim financial statements, or of other acts or
omissions of any third party that is not an employee, officer or Affiliate of the Company.

          (b) At all times during which the Company is not in compliance with or not current in its
reporting requirements under Section 13 or 15(d) of the Exchange Act, it will provide, upon the
written request of any Holder of Registrable Securities in written form (as promptly as practicable
and in any event within 15 business days), to any prospective buyer of such stock designated by
such Holder, all information required by Rule 144A(d)(4)(i) under the Securities Act and such other
information and assistance as such Holder may reasonably request, subject to the entry into of
reasonably appropriate confidentiality agreements in favor of the Company.

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          (c) Notwithstanding the foregoing, as promptly as practicable following the date of this
Agreement but in no event later than October 31, 2007, the Company shall file all forms, reports,
statements, schedules and other documents, including any amendments thereto, required to be filed
by it with the SEC and necessary to permit a Holder of Registrable Securities to avail itself of
its rights under this Article IV.

     Section 4.08. Indemnification and Contribution. (a) The Company shall indemnify and
hold harmless each Holder, such Holder’s directors and officers, each person who participates in
the offering of such Registrable Securities, including underwriters (as defined in the Securities
Act), and each person, if any, who controls such Holder or participating person within the meaning
of the Securities Act, against any losses, claims, damages or liabilities, joint or several, to
which they may become subject under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or proceedings in respect thereof) arise out of or are based on any
untrue or alleged untrue statement of any material fact contained in such registration statement on
the effective date thereof (including any prospectus filed under Rule 424 under the Securities Act
or any amendments or supplements thereto) or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, and shall reimburse each such Holder, such Holder’s directors
and officers, such participating person or controlling person for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that the Company shall not be
liable to any Holder, such Holder’s directors and officers, participating person or controlling
person in any such case for any such loss, claim, damage, liability or action to the extent that it
arises out of or is based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in connection with such registration statement, preliminary prospectus, final
prospectus or amendments or supplements thereto, in reliance upon and in conformity with written
information furnished expressly for use in connection with such registration by any such Holder,
such Holder’s directors and officers, participating person or controlling person. Such indemnity
shall remain in full force and effect regardless of any investigation made by or on behalf of any
such Holder, such Holder’s directors and officers, participating person or controlling person,
and shall survive the transfer of such securities by such Holder.

          (b) Each Holder requesting or joining in a registration severally and not jointly shall
indemnify and hold harmless the Company, each of its directors and officers, each person, if any,
who controls the Company within the meaning of the Securities Act, and each agent and any
underwriter for the Company (within the meaning of the Securities Act) against any losses, claims,
damages or liabilities, joint or several, to which the Company or any such director, officer,
controlling person, agent or underwriter may become subject, under the Securities Act or otherwise,
to the extent that such losses, claims, damages or liabilities (or proceedings in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement of any material
fact contained in such registration statement on the effective date thereof (including any
prospectus filed under Rule 424 under the Securities Act or any amendments or supplements thereto)
or arise out of or are based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not misleading, in each
case to the extent, but only to the extent, that such untrue statement or alleged untrue statement
or omission or alleged omission was made in such registration statement, preliminary or final
prospectus, or amendments or supplements thereto, in reliance upon and in conformity with written
information furnished by or on behalf of such Holder expressly for use in connection with such
registration; and each such Holder shall reimburse any legal or other expenses reasonably incurred
by the Company or any such director, officer, controlling person, agent or underwriter in
connection with investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the liability of each Holder hereunder shall be limited to
the proportion of any such loss, claim, damage, liability or expense which is equal to the
proportion that the net proceeds from the sale of the shares sold by such Holder under such
registration statement bears to the total net proceeds from the sale of all

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securities sold thereunder, but not in any event to exceed the net proceeds received by
such Holder from the sale of Registrable Securities covered by such registration statement.

          (c) If the indemnification provided for in this Section 4.08 from the indemnifying party is
unavailable to an indemnified party hereunder in respect of any losses, claims, damages,
liabilities or expenses referred to therein, then the indemnifying party, in lieu of indemnifying
such indemnified party, shall contribute to the amount paid or payable by such indemnified party as
a result of such losses, claims, damages, liabilities or expenses in such proportion as is
appropriate to reflect the relative fault of the indemnifying party and indemnified parties in
connection with the actions which resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The relative fault of such
indemnifying party and indemnified parties shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact, has been made by, or relates to
information supplied by, such indemnifying party or indemnified parties, and the parties’ relative
intent, knowledge, access to information and opportunity to correct or prevent such action. The
amount paid or payable by a party as a result of the losses, claims, damages, liabilities and
expenses referred to above shall be deemed to include any legal or other fees or expenses
reasonably incurred by such party in connection with any investigation or proceeding. If the
allocation provided in this paragraph (c) is not permitted by applicable Law, the parties shall
contribute based upon the relative benefits received by the Company from the initial sale of the
Registrable Securities on the one hand and the net proceeds received by the Holders from the sale
of Registrable Securities on the other.

          The parties hereto agree that it would not be just and equitable if contribution pursuant to
this Section 4.08(c) were determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred to in the immediately
preceding paragraph. No Person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation.

          (d) Any Person entitled to indemnification hereunder (the “Indemnified Party”) agrees
to give prompt written notice to the indemnifying party (the “Indemnifying Party”) after
the receipt by the Indemnified Party of any written notice of the commencement of any action, suit,
proceeding or investigation or threat thereof made in writing for which the Indemnified Party
intends to claim indemnification or contribution pursuant to this Agreement; provided, that
the failure so to notify the Indemnified Party shall not relieve the Indemnifying Party of any
liability that it may have to the Indemnifying Party hereunder unless such failure is materially
prejudicial to the Indemnifying Party. If notice of commencement of any such action is given to
the Indemnifying Party as above provided, the Indemnifying Party shall be entitled to participate
in and, to the extent it may wish, to assume the defense of such action at its own expense, with
counsel chosen by it and reasonably satisfactory to the Indemnified Party. The Indemnified Party
shall have the right to employ separate counsel in any such action and participate in the defense
thereof, but the fees and expenses of such counsel shall be paid by the Indemnified Party unless
(i) the Indemnifying Party agrees to pay the same, (ii) the Indemnifying Party fails to assume the
defense of such action, or (iii) the named parties to any such action (including any impleaded
parties) have been advised by such counsel that either (A) representation of such Indemnified Party
and the Indemnifying Party by the same counsel would be inappropriate under applicable standards of
professional conduct or (B) there are one or more legal defenses available to it which are
substantially different from or additional to those available to the Indemnifying Party. No
Indemnifying Party shall be liable for any settlement entered into without its written consent,
which consent shall not be unreasonably withheld.

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          (e) The agreements contained in this Section 4.08 shall survive the transfer of the Registered
Securities by any Holder and sale of all the Registrable Securities pursuant to any registration
statement and shall remain in full force and effect, regardless of any investigation made by or on
behalf of any Holder or such director, officer or participating or controlling Person.

     Section 4.09. Certain Additional Limitations on Registration Rights. Notwithstanding
the other provisions of this Agreement, the Company shall not be obligated to register the
Registrable Securities of any Holder (i) if such Holder or any underwriter of such Registrable
Securities shall fail to furnish to the Company necessary information in respect of the
distribution of such Registrable Securities, or (ii) if such registration involves an underwritten
offering, such Registrable Securities are not included in such underwritten offering on the same
terms and conditions as shall be applicable to the other Common Stock being sold through
underwriters in the registration or such Holder fails to enter into an underwriting agreement in
customary form with the underwriter or underwriters selected for such underwritten offering. In
addition, each Holder agrees not to effect any public sale or distribution of any Registrable
Securities or of any securities convertible into or exchangeable or exercisable for such
Registrable Securities, including a sale pursuant to Rule 144 under the Securities Act and to enter
into a customary lock-up agreement with the managing underwriter for an offering, during the 90-day
period beginning on the effective date of any Demand Registration Statement (initiated by such
Holder) or Piggyback Registration Statement or other underwritten offering (initiated by the
Company) (except as part of such registration), and the Company agrees to use its reasonable best
efforts to cause its executive officers to enter into a lock-up agreement of the same term, in each
case if and to the extent requested by the managing underwriter for such offering and if the
Company and its directors, executive officers and other significant stockholders enter into similar
agreements.

     Section 4.10. Limitations on Registration of Other Securities; Representation. From
and after the date of this Agreement, the Company shall not, without the prior written consent of a
majority in interest of the Holders, enter into any agreement with any holder or prospective holder
of any securities of the Company giving such holder or prospective holder any registration rights
the terms of which are more favorable taken as a whole than the registration rights granted to the
Holders hereunder unless the Company shall also give such rights to the Holders hereunder.

     Section 4.11. No Inconsistent Agreements. The Company will not hereafter enter into
any agreement with respect to its securities, which is inconsistent in any material respects with
the rights granted to the Holders in this Agreement.

     Section 4.12. Selection of Managing Underwriters. In the event the Participating
Demand Holders have requested an underwritten offering, the underwriter or underwriters shall be
selected by the Company and shall be approved by the Holders of a majority of the Registrable
Securities being so registered, which approval shall not be unreasonably withheld or delayed,
provided, (i) that all of the representations and warranties by, and the other agreements
on the part of, the Company to and for the benefit of such underwriters shall also be made to and
for the benefit of such Holders, (ii) that any or all of the conditions precedent to the
obligations of such underwriters under such underwriting agreement shall be conditions precedent to
the obligations of such Holders (other than conditions the fulfillment of which is within the power
of the Holders), and (iii) that no Holder shall be required to make any representations or
warranties to or agreements with the Company or the underwriters other than representations,
warranties or agreements regarding such Holder, the Registrable Securities of such Holder and such Holder’s intended method of distribution
and any other representations required by Law. Subject to the foregoing, all Holders proposing to
distribute Registrable Securities through such underwritten offering shall enter into an
underwriting agreement in customary form with the underwriter or underwriters. If any
Participating Demand Holder disapproves of the terms of the underwriting, such Holder may (except
to the extent it has committed to the underwriters not to do so) elect to withdraw all

14

 

its Registrable Securities by written notice to the Company, the managing underwriter and the other
Participating Demand Holders. The securities so withdrawn shall also be withdrawn from
registration.

ARTICLE V

ADDITIONAL AGREEMENTS

     Section 5.01. Right of First Look. (a) During the period commencing on the date
hereof and ending eighteen months thereafter (the “Look Period”), if (i) the Company
determines to commence any process that involves soliciting, initiating or encouraging (including
by way of furnishing nonpublic information), or taking any other action to knowingly facilitate,
any inquiries or the making of any proposal or offer (including, without limitation, any proposal
or offer to its stockholders) that constitutes, or may reasonably be expected to lead to, any
Acquisition Transaction (as defined below), the Company shall first notify the Investor in writing
as promptly as practicable after having made such determination and shall negotiate in good faith
with the Investor on an exclusive basis for a period of not less than 30 days from the date of
receipt of such notice with respect to an Acquisition Transaction, or (ii) the Investor, in its
sole discretion, offers to effect an Acquisition Transaction, the Company shall negotiate in good
faith with the Investor on an exclusive basis for a period of not less than 30 days from the date
of receipt of such proposal with respect to such Acquisition Transaction.

          (b) An “Acquisition Transaction” means any of the following (other than the
transactions contemplated by the Investment Agreement) in one transaction or a series of related
transactions: (i) any merger, consolidation, share exchange, business combination,
recapitalization, liquidation, dissolution or other similar transaction involving the Company or
any Significant Subsidiary; (ii) any sale, lease, exchange, transfer or other disposition to a
Person of assets or businesses that constitute or represent 10% or more of the total revenue,
operating income or assets of the Company and its Subsidiaries, taken as a whole; or (iii) any
tender offer or exchange offer for Common Stock or securities that are, or may become, convertible
into or exchangeable or exercisable for Common Stock.

     Section 5.02. Right of Last Look. (a) During the Look Period, if the Company
determines to pursue a proposal or offer from a Third Party to effect an Acquisition Transaction (a
“Third Party Offer”), the Company shall first notify the Investor in writing as promptly as
practicable after having made such determination (which notice shall specify the material terms and
conditions thereof and the identity of such Third Party (including material amendments or proposed
material amendments)) (the “Determination Notice”). The Investor shall then have five
Business Days (the “Counteroffer Period”) following the date that such Determination Notice
is received by the Investor to notify the Company in writing if it wishes to make an offer for an
Acquisition Transaction in lieu of such Third Party Offer, which notice shall include the form and
amount of consideration and the structure of the Acquisition Transaction proposed by the Investor
(the “Investor Proposal”). After the expiration of the Counteroffer Period, if (i) the
Company has not received an Investor Proposal or (ii) the Board has determined, in its good faith
judgment (after consultation with a financial advisor of internationally recognized reputation),
that such Third Party Offer constitutes a Superior Proposal (as defined below), the Board may furnish information to, and
enter into discussions with, the Third Party who has made such Third Party Offer and the Company
shall be free thereafter (without liability to the Investor) to enter into a definitive agreement
formalizing the Third Party Offer with such Third Party.

          (b) A “Superior Proposal” means a Third Party Offer that the Board determines, in its
good faith judgment (after consultation with a financial advisor of internationally recognized
reputation), to be (i) more favorable to the stockholders of the Company from a financial point of
view than the Investor Proposal (including any amendments) and (ii) reasonably capable of being
completed, taking into account all financial, legal, regulatory and other aspects of such Third
Party Offer; provided, however,

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that any such offer shall not be deemed to be a
“Superior Proposal” if any financing required to consummate the transaction contemplated by such
offer is not highly likely to be obtained.

     Section 5.03. Investor Right of First Offer. (a) So long as the Investor and its
Affiliates beneficially own at least 5% of the issued and outstanding Common Stock (treating all
securities beneficially owned by the Investor and its Affiliates that are convertible into or
exchangeable or exercisable for Common Stock as converted, exchanged or exercised), if, at any
time, the Company or any Subsidiary proposes to issue New Securities to any Third Party, other than
in connection with an Acquisition Transaction or in a transaction of the type referred to in Rule
145 under the Securities Act, the Company shall first deliver a written notice (an “Investor
Offer Notice”) thereof to the Investor, which notice shall set forth all of the material terms
and conditions on which the Company offers to issue such New Securities to the Investor (the
“Investor Offer”), including, without limitation, the number of New Securities to be issued
(the “Investor Offered Shares”) and the purchase price per New Security, which shall be
stated as the VWAP (plus or minus any absolute or percentage premium or discount to the VWAP) and
payable solely in cash or Cash Equivalents (the “Investor Offer Price”). If the Investor
Offer Price includes any Cash Equivalents, the value of such Cash Equivalents shall be determined
by reference to the closing price thereof on the market with the largest trading volume in such
securities on the Price Determination Date.

          (b) (i) The receipt of an Investor Offer Notice by the Investor from the Company shall
constitute an exclusive offer by the Company to issue to the Investor all (and only all) of
the Investor Offered Shares at the Investor Offer Price. Such offer shall remain open and
irrevocable until expiration of 15 days after receipt of such Investor Offer Notice by the
Investor (the “Investor Offer Period”). At any time prior to expiration of the
Investor Offer Period, the Investor shall have the right to accept the Company’s offer as to
all (and only all) of the Investor Offered Shares by giving a written notice of election
(the “Investor Notice of Election”) to the Company.

          (ii) If the Investor accepts the Company’s offer in accordance with this Section
5.03(b) by written notice delivered to the Company prior to expiration of the Investor Offer
Period, the Investor shall purchase from the Company, and the Company shall issue to the
Investor, all the Investor Offered Shares. The price per New Security to be paid by the
Investor shall be the Investor Offer Price specified in the Investor Offer Notice, payable
in accordance with the terms of the Investor Offer. In the event the Investor does not
deliver during the Investor Offer Period an Investor Notice of Election in which the
Investor elects to purchase the Investor Offered Shares, the Company may sell the Investor
Offered Shares in accordance with Section 5.03(d).

          (c) If the Investor delivers an Investor Notice of Election during an Investor Offer Period,
the Investor and the Company shall select, for consummation of the issuance of the Investor Offered Shares to the Investor, a date not later than 30 days (or longer, if required by Law
or applicable regulatory approval or notice requirements) after expiration of the Investor Offer
Period. At the consummation of such issuance, the Company shall, against delivery by the Investor
of the Investor Offer Price multiplied by the number of shares of Common Stock being purchased by
the Investor, deliver to the Investor certificates representing the Investor Offered Shares being
sold free and clear of any and all Encumbrances.

          (d) In the event that (x) the Investor shall have received an Investor Offer Notice from the
Company but the Company shall not have received an Investor Notice of Election prior to expiration
of the Investor Offer Period or (y) the Investor shall have given an Investor Notice of Election to
the Company but shall have failed to consummate, as a result of the fault of the Investor, the
purchase of the

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Investor Offered Shares within the time frame specified in paragraph (c) above,
then nothing in this Section 5.03 shall limit the right of the Company thereafter to issue the
Investor Offered Shares to one or more Third Parties; provided that:

          (i) the total number of New Securities issued by the Company to one or more Third
Parties shall be not more than the number of Investor Offered Shares specified in the
Investor Offer Notice; and

          (ii) all the New Securities that are issued or otherwise disposed of by the Company are
issued (A) within 30 days (or longer, if required by Law or applicable regulatory approval
or notice requirements) after expiration of the Investor Offer Period, (B) at an amount not
less than the VWAP (plus or minus any absolute or percentage premium or discount offered in
the Investor Offer Price included in the Investor Offer Notice) and (C) on terms not more
favorable to the purchaser than those specified in the Investor Offer Notice.

     Section 5.04. Rights to Purchase New Securities. (a) Notwithstanding any other
rights the Investor may have under this Agreement, in the event that the Company issues or proposes
to issue New Securities to a Third Party (the “Third Party New Securities”), including
pursuant to Section 5.03, at a time when the Investor and its Affiliates beneficially own at least
5% of the issued and outstanding Common Stock (treating all securities beneficially owned by the
Investor and its Affiliates that are convertible into or exchangeable or exercisable for Common
Stock as converted, exchanged or exercised), the Investor shall have the right to purchase from the
Company, in accordance with paragraph (b) below, a number of additional New Securities such that,
after giving effect to the proposed issuance of the Third Party New Securities and the issuance of
the additional New Securities to the Investor pursuant to this Section 5.04, the Investor would
beneficially own the same percentage of the issued and outstanding Common Stock (treating all such
New Securities as converted into or exchanged or exercised for Common Stock) as it beneficially
owned prior to such issuances. The rights of the Investor under this Section 5.04(a) shall
terminate if unexercised within 30 days after receipt of the Notice of Issuance referred to in
paragraph (b) below. However, the Company may issue the New Securities to persons other than the
Investor before the expiration of that 30 day period.

          (b) In the event that the Company issues or proposes to issue Third Party New Securities, it
shall give written notice (a “Notice of Issuance”) thereof to the Investor, describing the
number of Third Party New Securities to be issued, the price per Third Party New Security (which
shall be the Investor Offer Price) and all other material terms and conditions. The Investor shall
have 30 days from the date of receipt of the Notice of Issuance to agree to purchase all or a
portion of the New Securities it is entitled to purchase as described in paragraph (a) above, for
cash or Cash Equivalents, and otherwise upon the terms specified in the Notice of Issuance, by
giving written notice to the Company, and stating therein its agreement to purchase New Securities and the quantity of New
Securities to be purchased by the Investor. If the Investor Offer Price includes any Cash
Equivalents, the value of such Cash Equivalents shall be determined by reference to the closing
price thereof on the market with the largest trading volume in such securities on the Price
Determination Date.

          (c) The Company and the Investor shall select a date not later than 30 days (or longer if
required by Law or applicable regulatory approval or notice requirements) after the expiration of
the 30-day notice period referenced in Section 5.04(b) for the closing of the purchase and sale of
the New Securities to the Investor.

     Section 5.05. Furnishing of Information. The Company shall promptly furnish or make
available to the Investor any documents filed by the Company pursuant to each of Section 13, 14 and
15(d) of the Exchange Act and all annual, quarterly or other reports furnished to the Company’s
public

17

 

security holders and all such other information concerning the Company and the Subsidiaries
as the Investor may reasonably request.

     Section 5.06. Company Right of First Offer. (a) If, at any time, the Investor or any
of its Affiliates desires to sell Investor Stock representing the greater of 5% of the issued and
outstanding Common Stock or 75% of the remaining Investor Stock to any one Third Party, the
Investor or its Affiliate, as the case may be, shall first deliver a written notice (a “Company
Offer Notice”) thereof to the Company, which notice shall set forth all of the material terms
and conditions on which the Investor or its Affiliate, as the case may be, offers to sell such New
Securities to the Company (the “Company Offer”), including, without limitation, the number
of shares of Investor Stock to be sold (the “Company Offered Shares”) and the purchase
price per share of Investor Stock, which shall be stated as the VWAP (plus or minus any absolute or
percentage premium or discount to the VWAP) and payable solely in cash or Cash Equivalents (the
“Company Offer Price”). If the Company Offer Price includes any Cash Equivalents, the
value of such Cash Equivalents shall be determined by reference to the closing price thereof on the
market with the largest trading volume in such securities on the Price Determination Date.

          (b) (i) The receipt of a Company Offer Notice by the Company from the Investor or its
Affiliate, as the case may be, shall constitute an exclusive offer by the Investor or its
Affiliate, as the case may be, to sell to the Company all (and only all) of the Company
Offered Shares at the Company Offer Price. Such offer shall remain open and irrevocable
until expiration of 15 days after receipt of such Company Offer Notice by the Company (the
“Company Offer Period”). At any time prior to expiration of the Company Offer
Period, the Company shall have the right to accept the offer the Investor or its Affiliate,
as the case may be, as to all (and only all) of the Company Offered Shares by giving a
written notice of election (the “Company Notice of Election”) to the Investor or its
Affiliate, as the case may be.

          (ii) If the Company accepts the offer by the Investor or its Affiliate, as the case may
be, in accordance with this Section 5.06(b) by written notice delivered to the Investor or
its Affiliate, as the case may be, prior to expiration of the Company Offer Period, the
Company shall purchase from the Investor or its Affiliate, as the case may be, and the
Investor or its Affiliate, as the case may be, shall sell to the Company, the Company
Offered Shares. The price per share to be paid by the Company shall be the Company Offer
Price specified in the Company Offer Notice, payable in accordance with the terms of the
Company Offer. In the event the Company does not deliver during the Company Offer Period a
Company Notice of Election in which the Company elects to purchase the Company Offered Shares, the Investor or its Affiliate,
as the case may be, may sell the Company Offered Shares in accordance with Section 5.06(d).

          (c) If the Company delivers a Company Notice of Election during a Company Offer Period, the
Company and the Investor or its Affiliate, as the case may be, shall select, for consummation of
the sale of the Company Offered Shares to the Company, a date not later than 30 days (or longer, if
required by Law or applicable regulatory approval or notice requirements) after expiration of the
Company Offer Period. At the consummation of such sale, the Investor or its Affiliate, as the case
may be, shall, against delivery by the Company of the Company Offer Price multiplied by the number
of shares of Common Stock being purchased by the Company, deliver to the Company certificates
representing Company Offered Shares being sold free and clear of any and all Encumbrances.

          (d) In the event that (x) the Company shall have received a Company Offer Notice from the
Investor or its Affiliate, as the case may be, but the Investor or its Affiliate, as the case may
be, shall not have received a Company Notice of Election prior to expiration of the Company Offer
Period or (y) the Company shall have given a Company Notice of Election to the Investor or its
Affiliate, as the case may be, but shall have failed to consummate, as a result of the fault of the
Company, the purchase of the

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Company Offered Shares within the time frame specified in paragraph
(c) above, then nothing in this Section 5.06 shall limit the right of the Investor or its
Affiliate, as the case may be, thereafter to sell the Company Offered Shares; provided
that:

          (i) the total number of shares of Investor Stock sold by the Investor or its Affiliate,
as the case may be, to one Third Party shall be not more than the number of Company Offered
Shares specified in the Company Offer Notice; and

          (ii) all the shares of Investor Stock that are sold or otherwise disposed of by the
Investor or its Affiliate, as the case may be, are sold (A) within 30 days (or longer, if
required by Law or applicable regulatory approval or notice requirements) after expiration
of the Company Offer Period, (B) at an amount not less than the VWAP (plus or minus any
absolute or percentage premium or discount offered in the Company Offer Price included in
the Company Offer Notice) and (C) on terms not more favorable to the purchaser than those
specified in the Company Offer Notice.

          (e) This Section 5.06 shall be suspended for so long as, and to the extent that, the Company
is not authorized to purchase or redeem Common Stock without prior written notice to the Federal
Reserve Board pursuant to Section 225.4(b) of Regulation Y (12 C.F.R. Section 225.4(b)). In
addition, this Section 5.06 shall terminate, and no longer be of any force or effect, upon the
Investor and its Affiliates becoming the beneficial owners of 25% or more of the issued and
outstanding Common Stock.

ARTICLE VI

MISCELLANEOUS

     Section 6.01. Termination. This Agreement shall terminate with respect to any Holder
only (a) when that Holder no longer beneficially owns (i) during any 90-day period so long as the
Company is in compliance with or current in its reporting requirements under Section 13 or 15(d) of
the Exchange Act, at least 5% of the issued and outstanding Common Stock (treating all securities
beneficially owned by the Investor and its Affiliates that are convertible into or exchangeable or
exercisable for Common Stock as converted, exchanged or exercised) and (ii) any Registrable Securities, or (b) by virtue of a written
agreement to that effect, signed by such Holder and the Company; provided, however,
that no termination of this Agreement shall affect the right of any party to recover damages or
collect indemnification for any breach of the representations, warranties or covenants herein that
occurred prior to such termination.

     Section 6.02. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be deemed to have been
duly given upon receipt) by delivery in person, by courier service, by fax or email or by
registered or certified mail (postage prepaid, return receipt requested) to the respective parties
at the following addresses (or at such other address for a party as shall be specified by notice
given in accordance with this Section 6.02):

          (a) if to the Company:

First BanCorp.

1519 Ponce De León Ave

San Juan, Puerto Rico 00908

Facsimile: (787) 753-8402

Email: lawrence.odell@firstbankpr.com

Attention: General counsel

19

 

with a copy to:

Clifford Chance US LLP

31 W. 52nd Street

New York, New York 10019

Facsimile: (212) 878-8375

Email: david.bernstein@cliffordchance.com

Attention: David Bernstein

          (b) if to the Investor:

The Bank of Nova Scotia

44 King Street West, 6th Fl.

Toronto, Canada M5H 1H1

Facsimile: (416) 866-5903

Email: andres.cruells@scotiabank.com

Attention: Andres Cruells

with a copy to:

The Bank of Nova Scotia

44 King Street West, 6th Fl.

Toronto, Canada M5H 1H1

Facsimile:

Email: tim.hayward@scotiabank.com

Attention: Tim Hayward

and to:

The Bank of Nova Scotia

44 King Street West, 6th Fl.

Toronto, Canada M5H 1H1

Facsimile: (416) 866-5090

Email: deborah.alexander@scotiabank.com

Attention: Deborah Alexander

and to:

Shearman & Sterling LLP

599 Lexington Avenue

New York, New York 10022

Facsimile: (212) 848 7179

Email: spetepiece@shearman.com

Attention: Scott Petepiece

and to:

20

 

McCarthy Tétrault LLP

Suite 4700

Toronto Dominion Bank Tower

Toronto, Canada M5K 1E6

Facsimile: (416) 868-0673

Email: iarellan@mccarthy.ca

Attention: Ian W. Arellano

     Section 6.03. Amendments and Waivers. (a) Any provision of this Agreement may be
amended or waived if, and only if, such amendment or waiver is in writing and signed, in the case
of an amendment, by all parties hereto, or in the case of a waiver, by the party or parties giving
the waiver.

          (b) No failure or delay by any party in exercising any right, power or privilege hereunder
(other than a failure or delay beyond a period of time specified herein) shall operate as a waiver
thereof and, except as expressly stated, no single or partial exercise of any right, power or
privilege shall preclude any other or further exercise thereof or the exercise of any other right,
power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive
of any rights or remedies provided by Law.

          (c) This Agreement shall not be assigned without the express written consent of all the
parties hereto (which consent shall not be unreasonably withheld, delayed or conditioned).

     Section 6.04. Binding Effect. This Agreement shall be binding upon and inure to the
benefit of all of the parties, and to the extent permitted by this Agreement, their successors,
executors, administrators, heirs, legal representatives and assigns.

     Section 6.05. Expenses. Except as otherwise specified in this Agreement, all costs and expenses, including, without
limitation, fees and disbursements of counsel, financial advisors and accountants, incurred in
connection with this Agreement and the transactions contemplated hereby shall be paid by the party
incurring such costs or expenses.

     Section 6.06. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the Laws of the State of New York applicable to contracts executed in and to be
performed in that State, without regard to any principles of conflicts of Laws that would apply the
Laws of any other jurisdiction. All Actions arising out of or relating to this Agreement shall be
heard and determined exclusively in any New York federal court sitting in the Borough of Manhattan
of The City of New York, provided, however, that if such federal court does not
have jurisdiction over such Action, such Action shall be heard and determined exclusively in any
New York state court sitting in the Borough of Manhattan of The City of New York. Consistent with
the preceding sentence, the parties hereto hereby (a) submit to the exclusive jurisdiction of any
federal or state court sitting in the Borough of Manhattan of The City of New York for the purpose
of any Action arising out of or relating to this Agreement brought by any party hereto and (b)
irrevocably waive, and agree not to assert by way of motion, defense, or otherwise, in any such
Action, any claim that it is not subject personally to the jurisdiction of the above-named courts,
that its property is exempt or immune from attachment or execution, that the Action is brought in
an inconvenient forum, that the venue of the Action is improper, or that this Agreement or the
transactions contemplated by this Agreement may not be enforced in or by any of the above-named
courts.

     Section 6.07. Waiver of Jury Trial. Each of the parties hereto hereby waives to the
fullest extent permitted by applicable Law any right it may have to a trial by jury with respect to
any litigation directly or indirectly arising out of, under or in connection with this Agreement or
the transactions

21

 

contemplated by this Agreement. Each of the parties hereto hereby (a) certifies
that no representative, agent or attorney of the other party has represented, expressly or
otherwise, that such other party would not, in the event of litigation, seek to enforce the
foregoing waiver and (b) acknowledges that it has been induced to enter into this Agreement and the
transactions contemplated by this Agreement, as applicable, by, among other things, the mutual
waivers and certifications in this Section 6.07.

     Section 6.08. Specific Performance. The parties hereto agree that irreparable damage
would occur in the event any provision of this Agreement was not performed in accordance with the
terms hereof and that the parties hereto shall be entitled to seek specific performance of the
terms hereof, in addition to any other remedy at Law or in equity, without proof of actual damages
and without being required to post a bond or other security.

     Section 6.09. Counterparts. This Agreement may be executed and delivered (including
by facsimile transmission or portable document format (“.pdf”)) in one or more counterparts, and by
the different parties hereto in separate counterparts, each of which when executed and delivered
shall be deemed to be an original but all of which taken together shall constitute one and the same
agreement. Copies of executed counterparts transmitted by telecopy or other electronic
transmission service shall be considered original executed counterparts for purposes of this
Section 6.09.

     Section 6.10. Entire Agreement. This Agreement and the Investment Agreement constitute the entire agreement among the
parties hereto pertaining to the subject matter hereof and supersede all prior agreements and
understandings pertaining thereto.

     Section 6.11. Headings. The headings and subheadings in this Agreement are included
for convenience and identification only and are in no way intended to describe, interpret, define
or limit the scope, extent or intent of this Agreement or any provision hereto.

     Section 6.12. Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any Law or public policy, all other terms and
provisions of this Agreement shall nevertheless remain in full force and effect for so long as the
economic or legal substance of the transactions contemplated hereby is not affected in any manner
materially adverse to either party hereto. Upon a determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good
faith to modify this Agreement so as to effect the original intent of the parties as closely as
possible in an enforceable manner in order that the transactions contemplated hereby are
consummated as originally contemplated to the greatest extent possible.

     Section 6.13. Public Announcements. Neither party hereto shall make, or cause to be
made, any press release or public announcement in respect of this Agreement or the transactions
contemplated hereby or which refer to the other party hereto or otherwise communicate with any news
media regarding any of the foregoing without, to the extent practicable, the prior written consent
of the other party (such consent not to be unreasonably withheld or delayed), and the parties
hereto shall cooperate as to the timing and contents of any such press release, public announcement
or communication. However, nothing in this Section will prevent any party from issuing any press
release or making any filing when required by Law or by the rules of any securities exchange on
which securities of the party or an Affiliate are listed

     Section 6.14. Cumulative Remedies. The rights and remedies provided by this Agreement
are cumulative and the use of any one right or remedy by any party shall not preclude or waive its
right to use any or all other remedies. Said rights and remedies are given in addition to any
other rights the parties may have by Law.

22

 

     Section 6.15. Interpretation. Throughout this Agreement, nouns, pronouns and verbs
shall be construed as masculine, feminine, neuter, singular or plural, whichever shall be
applicable. Unless otherwise specified, all references herein to “Articles”, “Sections” and
paragraphs shall refer to corresponding provisions of this Agreement.

     Section 6.16. No Third Party Beneficiaries. This Agreement shall be binding upon and
inure solely to the benefit of the parties hereto and their permitted assigns and successors, and
nothing herein, express or implied, is intended to or shall confer upon any other Person or entity,
any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this
Agreement.

     Section 6.17. Construction. Each party hereto acknowledges and agrees it has had the
opportunity to draft, review and edit the language of this Agreement and that no presumption for or
against any party arising out of drafting all or any part of this Agreement will be applied in any
dispute, claim or controversy relating to, in connection with or involving this Agreement.
Accordingly, the parties hereto hereby waive the benefit of any rule of Law or any legal decision
that would require, in cases of uncertainty, that the language of a contract should be interpreted
most strongly against the party who drafted such language.

23

 

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first set
forth above.

	 	 	 	 	 
	 	FIRST BANCORP

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	[THE BANK OF NOVA SCOTIA]

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

24

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