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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): June 17, 1994
BANPONCE CORPORATION
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(Exact name of registrant as specified in its charter)
PUERTO RICO 0-13818 66-041-6582
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(State of incorporation (Commission (I.R.S. employer
or organization) File No.) identification number)
209 MUNOZ RIVERA AVENUE,
HATO REY, PUERTO RICO 00918
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: 809-765-9800
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(Former name or former address, if changed since last report)
This report consists of 61 pages
The Exhibit Index is located at page 4
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
This Current Report on Form 8-K is being filed to incorporate by
reference into Registration Statement No. 33-57038 on Form S-3, which was
declared effective on May 3, 1993, the documents included as Exhibits 1(b),
4(h), and 4(i) hereto, relating to the issuance and sale of the Registrant's
8.35% Non-Cumulative Monthly Income Preferred Stock, 1994 Series A (the
"Series A Preferred Stock").
(c) Exhibits
1(b) Underwriting Agreement dated June 17, 1994, between
BanPonce Corporation and PaineWebber Incorporated of
Puerto Rico.
4(h) Form of Certificate of Resolution creating the Series A
Preferred Stock.
4(i) Form of Series A Preferred Stock Certificate.
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3
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
BANPONCE CORPORATION
(Registrant)
/s/ David H. Chafey, Jr.
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David H. Chafey, Jr.
Executive Vice President
Dated: June 20, 1994
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Page
Number Description Number
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<S> <C> <C>
1(b) Underwriting Agreement dated June 17, 1994, between BanPonce Corporation and 5
PaineWebber Incorporated of Puerto Rico
4(h) Form of Certificate of Resolution creating the Series A Preferred Stock 51
4(i) Form of Series A Preferred Stock Certificate 60
</TABLE>
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EXHIBIT 1(b)
3,600,000 SHARES* OF BANPONCE CORPORATION
8.35% NON-CUMULATIVE MONTHLY INCOME PREFERRED STOCK, 1994 SERIES A
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UNDERWRITING AGREEMENT
DATED AS OF JUNE 17, 1994
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BANPONCE CORPORATION (the "Corporation"), a corporation organized
under the laws of the Commonwealth of Puerto Rico (the "Commonwealth") and
PAINEWEBBER INCORPORATED OF PUERTO RICO (the "Underwriter"), a corporation
organized under the laws of the Commonwealth, hereby agree with each other as
follows:
I. INTRODUCTION
Subject to the terms and conditions and on the basis of the
representations, warranties and agreements set forth herein, the Underwriter
hereby agrees to purchase from the Corporation and the Corporation agrees to
sell and deliver to the Underwriter on June 27, 1994, or at such other time as
shall be designated by the Underwriter, no later than June 30, 1994 (the
"Closing Date"), 3,600,000 shares of the Corporation's 8.35% Non-Cumulative
Monthly Income Preferred Stock, 1994 Series A (the "Securities").
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*Plus an option to purchase from the Corporation up to 400,000 additional
shares to cover over-allotments.
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Subject to the terms and conditions and on the basis of the
representations, warranties and agreements set forth herein, the Corporation
hereby grants an option to the Underwriter (the "Option") to purchase up to
400,000 additional shares of Securities (the "Option Securities") at the same
purchase price per share as the Underwriter shall pay for the Securities
referred to in the preceding paragraph (the "Underwritten Securities"). The
Option may be exercised only to cover over-allotments in the sale of the
Underwritten Securities by the Underwriter. The Option may be exercised in
whole or in part at any time on or before the 30th day after the date of the
Prospectus (as defined below) upon written notice by the Underwriter to the
Corporation setting forth the number of shares of the Option Securities as to
which the Underwriter is exercising the Option and the settlement date.
Delivery of certificates for the Option Securities by the Corporation and
payment therefor to the Corporation shall be made as provided in Section V
hereof.
The Corporation has filed with the Securities and Exchange Commission
(the "Commission") a registration statement on Form S-3 (No. 33-57038),
including a Base Prospectus (as hereinafter defined) relating to the Securities
among other securities, and has filed with, or mailed for filing to, the
Commission, a preliminary prospectus supplement specifically relating to the
issue of the Securities pursuant to Rule 424 under the Securities Act of 1933
(the "Securities Act"). The Corporation will file, within the time period
specified in such Rule 424, a final prospectus supplement specifically relating
to the Securities. The term "Registration Statement" means the registration
statement as amended at the time it became effective (the "Effective Date"),
including financial statements and all exhibits and documents included or
incorporated by reference therein at any time before or after the Effective
Date and any
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information deemed to be included by Rule 430A. The term "Base Prospectus"
means the prospectus, as amended, included in the Registration Statement at the
time the Registration Statement was declared effective under the Securities Act
by the Commission. The term "Prospectus" means the Base Prospectus together
with the final prospectus supplement specifically relating to the Securities,
as filed with, or mailed for filing to, the Commission pursuant to Rule 424.
The term "preliminary prospectus" means the preliminary prospectus supplement
referred to above specifically relating to the Securities together with the
Base Prospectus. As used herein, the terms "Registration Statement," "Base
Prospectus," "Prospectus" and "preliminary prospectus" shall include in each
case any appendices attached thereto, the materials incorporated by reference
therein and the exhibits to such documents.
II. REPRESENTATIONS AND WARRANTIES OF THE CORPORATION
The Corporation hereby represents and warrants to the Underwriter as
follows:
1. The Corporation meets the requirements for the use of Form S-3.
2. Each document filed or to be filed pursuant to the Securities
Exchange Act of 1934 (the "Exchange Act") and incorporated by reference in the
Prospectus complied or will comply when so filed in all material respects with
the Exchange Act and the rules and regulations issued thereunder.
3. The preliminary prospectus filed pursuant to Rule 424 under
the Securities Act complied when so filed in all material respects with such
Act and the applicable rules and regulations issued thereunder.
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4. The Registration Statement and the Prospectus comply and, as
amended or supplemented, if applicable, will comply in all material respects
with the Securities Act and the applicable rules and regulations issued
thereunder.
5. The Registration Statement and the Prospectus do not contain
and, as amended or supplemented, if applicable, will not contain any untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading; except that these representations and
warranties do not apply to statements in or omissions from the Registration
Statement, any preliminary prospectus or the Prospectus based upon information
furnished to the Corporation in writing by the Underwriter expressly for use
therein.
6. This Agreement has been duly and validly authorized, executed
and delivered by the Corporation.
7. When delivered and paid for in accordance with this Agreement,
the Securities will have been duly authorized, validly issued, fully paid and
non assessable.
8. To the knowledge of the Corporation, no event has occurred and
no condition exists which, upon the issuance of the Securities, or thereupon
with notice and/or passage of time, would constitute an event of default or a
breach of this Agreement. To the best of its knowledge, the Corporation is not
in default in any material respect under any term of any indenture, agreement,
by-law or other instrument to which it is a party or by which it may be bound,
which default would have a material adverse effect on the results of operation,
properties, condition (financial or otherwise), assets or business of the
Corporation and its subsidiaries taken as a whole (a "Material Adverse
Effect").
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9. There are no actions, suits, proceedings or investigations at
law or in equity before or by any court, arbitration board or tribunal, public
board or body pending or, to the best knowledge of the Corporation, threatened
against or affecting the Corporation, or, to the best knowledge of the
Corporation, does there exist any basis therefor: (i) to restrain or enjoin the
issuance or delivery of the Securities; (ii) which in any way question or
affect the validity of any of the Securities, any provisions thereof, any
provisions of this Agreement, or any proceedings taken with respect to the
foregoing; (iii) which question the Corporation's creation, organization or
existence; or (iv) wherein an unfavorable decision, ruling or finding would
materially and adversely affect the transactions contemplated by this
Agreement, or which, in any way, would materially and adversely affect the
validity or enforceability of the Securities and/or this Agreement or would
have a Material Adverse Effect.
10. All consents, approvals, authorizations and orders of, or
filing, registration, or qualification with, any governmental or regulatory
authorities which are required to be obtained by the Corporation for (i)
consummation of the transaction contemplated by this Agreement and (ii) the
carrying on of its business (other than, in the case of this clause (ii),
consents, approvals, authorizations, orders, filings, registrations or
qualifications the failure to obtain or make which would not have a Material
Adverse Effect) have been or will be duly and validly obtained or performed on
or before the Closing Date and, as to those already obtained, are in full force
and no default exists thereunder; provided, however, that no representation,
warranty, promise or agreement is made herein by the Corporation with respect
to compliance by the Corporation with the securities or Blue Sky laws of the
various states, territories and possessions of the United States of America
other than the Commonwealth. Neither the issuance and sale of the Securities
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nor the execution and delivery of this Agreement or the consummation of the
transactions herein and therein contemplated, nor compliance with the terms,
conditions or provisions of such instruments, will conflict with, or violate or
result in a breach of, or constitute a default under the by-laws of the
Corporation or any indenture, agreement or other instrument by which the
Corporation or any of its properties may be bound or any statute, rule,
regulation, order, decree or ordinance of any court, government or governmental
body having jurisdiction over the Corporation or any of its property, which
conflict, violation, breach or default would have a Material Adverse Effect.
11. The financial statements and schedules included or
incorporated by reference in the Registration Statement or the Prospectus
present fairly the consolidated financial condition of the Corporation as of
the respective dates thereof and the consolidated results of operations and
cash flows of the Corporation for the respective periods covered thereby, all
in conformity with generally accepted accounting principles applied on a
consistent basis throughout the entire period involved, except as otherwise
disclosed in the Prospectus. No other financial statements or schedules of the
Corporation are required by the Securities Act, the Exchange Act or the rules
and regulations issued thereunder to be included in the Registration Statement
or the Prospectus.
12. Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, except as set forth in
or contemplated by the Registration Statement and the Prospectus, (i) there has
not been any material adverse change in the capitalization of the Corporation,
or in the business, properties, condition (financial or otherwise) or results
of operations of the Corporation and its subsidiaries, taken as a whole,
arising for any reason whatsoever, and (ii) the Corporation has not paid or
declared any
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dividends or other distributions of any kind on any class of its capital stock
other than its regular quarterly dividend on its common stock.
13. The Corporation is not an "investment company" or an
"affiliated person" of, or "promoter" or "principal underwriter" for, an
"investment company" as such terms are defined in the Investment Company Act of
1940, as amended.
14. The outstanding shares of common stock of the Corporation are
designated as NASDAQ National Market System Securities or otherwise qualified
for inclusion in the NASDAQ system and are currently quoted on such market
under the symbol "BPOP."
III. CORPORATION'S COVENANTS
The Corporation hereby covenants with the Underwriter as follows:
1. To furnish the Underwriter without charge, a copy of the
Registration Statement certified by the Secretary or Assistant Secretary of the
Corporation including all exhibits and materials, if any, incorporated by
reference therein and, during the period mentioned in paragraph 6 below, as
many copies of the Prospectus, any and all documents incorporated by reference
therein and any supplements and amendments thereto as the Underwriter may
reasonably request. The terms "supplement" and "amendment" or "amend" as used
in this Agreement shall include all documents filed by the Corporation with the
Commission pursuant to the Exchange Act, subsequent to the date of the Base
Prospectus, which are deemed to be incorporated by reference in the Prospectus.
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2. Before amending or supplementing the Registration Statement or
the Prospectus with respect to the Securities, to furnish the Underwriter with
a copy of each such proposed amendment or supplement.
3. To endeavor to qualify the Securities for offer and sale under
the securities or Blue Sky laws of such jurisdictions as the Underwriter shall
reasonably request and to pay all reasonable expenses (including fees and
disbursements of counsel) in connection with such qualification and the
printing of any memoranda concerning the aforesaid qualification or
eligibility; provided, however, that the Corporation shall not be obliged to
submit to service of process in any such jurisdiction with respect to matters
not related to the Securities.
4. To use its best efforts to have the Securities qualified for
quotation on the National Association of Securities Dealers' Automated
Quotation System.
5. To make generally available to the Corporation's security
holders as soon as practicable, but not later than sixteen months after the
date of this Agreement an earnings statement covering a period of at least
twelve months beginning after the later of: (i) the effective date of the
Registration Statement; (ii) the effective date of the most recent
post-effective amendment to the Registration Statement to become effective
prior to the date of this Agreement; or (iii) the date of the Corporation's
most recent Annual Report on Form 10-K filed with the Commission prior to the
date of this Agreement, which shall satisfy the provisions of Section 11(a) of
the Securities Act.
6. During the period beginning on the date of this Agreement and
continuing to and including the earlier of the Closing Date or the removal by
the Underwriter of trading restrictions on the Securities, not to offer, sell,
contract to sell or otherwise dispose of (other
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than upon exercise of warrants therefor, or on conversion of convertible
securities, in each case outstanding at the date of this Agreement or in an
offering made exclusively outside the United States) any securities of the
Corporation substantially similar to the Securities without the prior written
consent of the Underwriter.
7. If at any time prior to the expiration of ninety (90) days
from the date hereof any event occurs to the knowledge of the Corporation as a
result of which the Prospectus as then amended or supplemented would include an
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements made therein in the light of the circumstances
under which they were made, not misleading, the Corporation shall forthwith
notify the Underwriter thereof and at the Underwriter's request prepare and
furnish to the Underwriter, in such quantity as the Underwriter may reasonably
request, an amendment or supplement after which the Prospectus will not include
an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements made therein in the light of the
circumstances under which they were made, not misleading. The Underwriter or
its counsel may request the Corporation within such period to prepare and
furnish forthwith to the Underwriter, in such quantity as it may request, any
amendment or supplement to the Prospectus, if in their opinion, an event occurs
as a result of which the Prospectus as then amended or supplemented would
include an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements made therein in the light of the
circumstances under which they were made not misleading. The Corporation shall
bear all costs and expenses incurred in connection with the preparation of such
amendment or supplement, including without limitation those of the Underwriter
and its counsel. The Corporation will not
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amend or supplement the Prospectus, at any time prior to the expiration of such
period, unless the Underwriter shall have been previously advised and furnished
with a copy of such amendment or supplement. The Corporation will not
unreasonably refuse to incorporate in any such amendment or supplement the
Underwriter's comments thereto.
IV. REPRESENTATIONS AND WARRANTIES OF THE UNDERWRITER
The Underwriter hereby represents, warrants, agrees and acknowledges
as follows:
1. The Underwriter is organized, validly existing and in good
standing under the laws of the Commonwealth.
2. The Underwriter is a corporation authorized to perform the
obligations to be performed by the Underwriter hereunder.
3. The Underwriter is not, and at the time of delivery of the
Securities will not be, in breach of or in default in any material respect
under any applicable law (including without limitation, any administrative
rule-making law) or administrative regulation, and the execution and delivery
by the Underwriter of this Agreement will not conflict with or constitute a
breach of or default under any law, administrative regulation, judgment, decree
or any agreement or other instrument to which the Underwriter is a party, which
conflict, breach or default might have a material adverse effect on the
performance by the Underwriter of its obligations hereunder.
4. At the time of delivery of the Securities, this Agreement will
constitute the legal, valid and binding obligation of the Underwriter,
enforceable in accordance with its terms.
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V. PAYMENT AND DELIVERY OF THE SECURITIES; UNDERWRITING COMMISSION
Subject to the terms and conditions set forth or incorporated by
reference in this Agreement, the Corporation hereby agrees to sell and the
Underwriter hereby agrees to purchase 3,600,000 shares of the Securities at the
Closing Date at a purchase price of $24.2125 per share.
The Underwriter will pay for the Securities (and the Option Securities
if the Option shall have been exercised on or before the third business day
("Business Day" as such term is defined in the Prospectus) prior to the Closing
Date) upon delivery of the certificates thereof issued in such names and in
such denominations as the Underwriter shall request in writing not less than
two full Business Days prior to the date of delivery, at the offices of
McConnell Valdes at 10:00 A.M. Atlantic Standard time on the Closing Date.
Payment for the Securities shall be made by the Underwriter by wire
transfer of immediately available funds to an account designated by the
Corporation or in such other manner and such other funds as may be mutually
agreed upon by the Corporation and the Underwriter and set forth in an
amendment to this Agreement.
If the Option is exercised after the third Business Day prior to the
Closing Date, the Corporation will deliver (at the expense of the Corporation)
to the Underwriter, at the offices of McConnell Valdes, on the date specified
by the Underwriter (which shall be within three Business Days after exercise of
the Option), certificates for the Option Securities in such names and
denominations as the Underwriter shall have requested against payment of the
purchase price thereof to or upon the order of the Corporation by wire transfer
of immediately available funds to an account designated by the Corporation. If
settlement for the Option Securities occurs after the Closing Date, the
Corporation will deliver to the Underwriter on the settlement date for the
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Option Securities, and the obligation of the Underwriter to purchase the Option
Securities shall be conditioned upon receipt of, supplemental opinions,
certificates and letters confirming as of such date the opinions, certificates
and letters delivered on the Closing Date pursuant to Section VI hereof.
VI. CONDITIONS TO THE OBLIGATIONS OF THE UNDERWRITER
The several obligations of the Underwriter hereunder are subject to
the following conditions, which shall be satisfied or waived prior to the
Closing Date:
1. The Corporation shall have delivered to the Underwriter a copy
of the order from the Commission declaring the Registration Statement effective
under the Securities Act and all filings required by Rule 424 issued under the
Securities Act shall have been made.
2. (i) No stop order suspending the effectiveness of the
Registration Statement shall be in effect and no proceeding for such purpose
shall be pending before or threatened or contemplated by the Commission, (ii)
any request for additional information on the part of the staff of the
Commission shall have been complied with to the satisfaction of the staff of
the Commission, (iii) after the date hereof no amendment or supplement to the
Registration Statement or the Prospectus shall have been filed, except for the
final prospectus supplement relating to the Securities filed pursuant to Rule
424(b) and, in any case, as may have been agreed to by the Underwriter, and
(iv) there shall have been no material adverse change (not in the ordinary
course of business) in the financial condition or results of operations of the
Corporation and its subsidiaries, taken as a whole, since the date hereof and
the Underwriter shall have received on the Closing Date, a certificate dated
the Closing Date and signed by the
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Chief Financial Officer of the Corporation to the foregoing effect. The
officer making such certificate may rely upon the best of his knowledge as to
proceedings pending, threatened or contemplated and whether a stop order
suspending the effectiveness of the Registration Statement is in effect.
3. The Underwriter shall have received on the Closing Date the
opinions of Axtmayer Adsuar Muniz & Goyco, counsel to the Underwriter, dated
the Closing Date, substantially in the Forms of Exhibits A-1 and A-2 hereto.
4. The Underwriter shall have received on the Closing Date an
opinion of McConnell Valdes, counsel for the Corporation, dated the Closing
Date, substantially in the Form of Exhibit B hereto.
5. Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, (i) there shall not have been a
material adverse change in the business, properties, condition (financial or
otherwise) or results of operations of the Corporation and its subsidiaries,
taken as a whole, whether or not arising from transactions in the ordinary
course of business, in each case other than as set forth in or contemplated by
the Registration Statement and the Prospectus, if in the judgment of the
Underwriter any such development makes it impracticable or inadvisable to
consummate the sale and delivery of the Securities by the Underwriter at the
initial public offering price.
6. Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, there shall have been no
litigation or other proceeding instituted against the Corporation or any of its
subsidiaries before or by any Federal, state or local court, commission,
regulatory body, administrative agency or other governmental body, domestic or
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foreign, in which litigation or proceeding an unfavorable ruling, decision or
finding would have a Material Adverse Effect, except as disclosed in the
Registration Statement and the Prospectus.
7. Each of the representations and warranties of the Corporation
contained herein shall be true and correct in all material respects at the
Closing Date, and all covenants and agreements herein contained to be performed
on the part of the Corporation and all conditions herein contained to be
fulfilled or complied with by the Corporation at or prior to the Closing Date,
shall have been duly performed, fulfilled or complied with.
8. Concurrently with the execution and delivery of this
Agreement, Price Waterhouse shall have furnished to the Underwriter a letter,
dated the date of its delivery, addressed to the Underwriter substantially in
the form of Exhibit C hereto. At the Closing Date Price Waterhouse shall have
furnished to the Underwriter a letter, dated the date of its delivery, which
shall confirm, on the basis of a review in accordance with the procedures set
forth in the letter from Price Waterhouse, that nothing has come to their
attention during the period from the date of the letter referred to in the
prior sentence to a date (specified in the letter) not more than five days
prior to the Closing Date which would require any change in their letter dated
the date hereof if it were required to be dated and delivered at the Closing
Date.
9. On the Closing Date no order, directive or communication
suspending the sale of the Securities shall have been issued and no proceedings
for that purpose shall have been instituted or to the knowledge of the
Underwriter or the Corporation contemplated before, or threatened by, the
Commission, the Office of the Commissioner of Financial Institutions of the
Commonwealth or any other federal or Commonwealth governmental agency having
jurisdiction over the Corporation or the Securities.
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10. On the Closing Date there shall have been duly tendered to the
Underwriter a certificate or certificates of Securities representing, in the
aggregate, the number of shares set forth in Article I above.
11. On the Closing Date the Underwriter shall have received, in
form and substance reasonably satisfactory to the Underwriter and its counsel,
the following documents:
(a) Copy of the resolution authorizing the issuance,
authorization, delivery of the Securities and the officials authorized to
execute this Agreement and any other document necessary to consummate the
transaction as contemplated, certified as of the Closing Date by the Secretary
of the Corporation as having been duly adopted by the Corporation and as being
in full force and effect.
(b) A certificate, satisfactory in form and substance to
the Underwriter, of the Chief Financial Officer of the Corporation, dated the
Closing Date, to the effect that: (i) on and as of the Closing Date, each of
the representations and warranties of the Corporation set forth in this
Agreement is true, accurate and complete and all agreements of the Corporation
herein provided and contemplated to be performed on or prior to the Closing
Date have been so performed; (ii) at the Closing Date the Securities will have
been duly authorized, executed and delivered to the Underwriter; (iii) this
Agreement and any and all other agreements and documents required to be
executed and delivered by the Corporation in order to carry out, give effect
to, and consummate the transactions contemplated hereby and thereby have each
been duly authorized, executed and delivered by the Corporation and, as of the
Closing Date, each is in full force and effect and each condition herein
requested to be complied with by the Corporation on or prior to the Closing
Date has been duly, timely and fully complied with; (iv) no litigation
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is pending or threatened to restrain or enjoin the issuance or sale of the
Securities or in any way contesting the validity of the Securities; and (v) the
signer of such certificate has carefully examined the Registration Statement
and the Prospectus (including any documents filed under the Exchange Act and
deemed to be incorporated by reference into the Prospectus) and (A) as of the
Closing Date the Prospectus did not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, and (B) since the Effective Date no
event has occurred as a result of which it is necessary to amend or supplement
the Prospectus in order to make the statements therein not untrue or misleading
in any material respect and there has been no document required to be filed
under the Exchange Act and the rules and regulations issued thereunder that
upon such filing would be deemed to be incorporated by reference into the
Prospectus that has not been so filed.
12. The Corporation shall have delivered to the Underwriter a
certificate substantially in the form of Exhibit D hereto.
13. Such additional certificates, opinions, instruments or other
documents as the Underwriter may reasonably require to evidence the accuracy,
as of the Closing Date, of the representations and warranties herein contained,
and the due performance and satisfaction by the Corporation at or prior to such
time of all agreements then to be performed and all conditions then to be
satisfied by the Corporation in connection with the Securities and this
Agreement.
Any certificate signed by any official or officer of the Corporation
and delivered to the Underwriter shall be deemed a representation and warranty
by the Corporation to the Underwriter as to the statements made therein. If
any condition to the Underwriter's obligations
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hereunder to be fulfilled prior to or at the Closing Date is not so fulfilled,
the Underwriter may terminate this Agreement at, or at any time prior to the
Closing Date, or, if the Underwriter so elects, waive any such conditions which
have not been fulfilled or extend the time for their fulfillment.
VII. INDEMNIFICATION AND CONTRIBUTION
1. The Corporation will indemnify and hold harmless the
Underwriter and its directors, officers, employees and agents, and each person,
if any, who controls the Underwriter within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, from and against any and all
losses, claims, liabilities, expenses and damages (including any and all
investigative, legal and other expenses reasonably incurred in connection with,
and any amount paid in settlement of, any action, suit or proceeding or any
claim asserted), to which they, or any of them, may become subject under the
Securities Act, the Exchange Act, the Uniform Securities Act of Puerto Rico or
other Federal or state statutory law or regulation, at common law or otherwise,
insofar as such losses, claims, liabilities, expenses or damages arise out of
or are based on an untrue
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statement or alleged untrue statement of a material fact contained in any
preliminary prospectus, the Registration Statement or the Prospectus or any
amendment or supplement to the Registration Statement or the Prospectus or in
any documents filed under the Exchange Act and deemed to be incorporated by
reference into the Prospectus, or the omission or alleged omission to state in
such document a material fact required to be stated in it or necessary to make
the statements in it not misleading, provided that the Corporation will not be
liable to the extent that such loss, claim liability, expense or damage is
based on an untrue statement or omission or alleged untrue statement or
omission made in reliance on and in conformity with information relating to the
Underwriter furnished in writing to the Corporation by the Underwriter
expressly for inclusion in the Registration Statement, any preliminary
prospectus or the Prospectus, and provided further that the Corporation will
not be liable to the Underwriter, the directors, officers, employees or agents
of the Underwriter or any person controlling the Underwriter with respect to
any loss, claim, liability, expense, charge or damage arising out of or based
on any untrue statement or alleged untrue statement or omission or alleged
omission to state a material fact in any preliminary prospectus which is
corrected in the Prospectus if: (i) sufficient copies of such Prospectus were
timely delivered to the Underwriter for their distribution prior to the mailing
of written confirmations of the sales of the Securities, and (ii) the person
asserting any such loss, claim, liability, charge or damage purchased
Securities from the Underwriter but was not sent or given a copy of the
Prospectus at or prior to the written confirmation of the sale of the
Securities to such Person. This indemnity agreement will be in addition to any
liability that the Corporation might otherwise have.
2. The Underwriter will indemnify and hold harmless the
Corporation, each person, if any, who controls the Corporation within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act,
each director of the Corporation and each officer of the Corporation who signs
the Registration Statement to the same extent as the foregoing indemnity from
the Corporation to the Underwriter, but only insofar as losses, claims,
liabilities, expenses or damages arise out of or are based on any untrue
statement or omission or alleged untrue statement or omission made in reliance
on and in conformity with information relating to the Underwriter furnished in
writing to the Corporation by the Underwriter expressly for use in the
<PAGE> 19
-19-
Registration Statement, any preliminary prospectus or the Prospectus. The
Corporation and the Underwriter agree that the only information provided by the
Underwriter to the Corporation is the information contained in the last
paragraph of the cover page, and the second paragraph, and the third sentence
of the fourth paragraph under the caption "UNDERWRITING," contained in the
preliminary prospectus supplement dated May 27, 1994, and in the final
prospectus supplement dated June 17, 1994. This indemnity will be in addition
to any liability that the Underwriter might otherwise have.
3. Any party that proposes to assert the right to be indemnified
pursuant to the preceding paragraphs, such person (the "indemnified party"),
shall promptly after receipt of notice of commencement of any action against
such party in respect of which a claim is to be made against a person (the
"indemnifying party") under this Article VII, notify such indemnifying party of
the commencement of such action, enclosing a copy of all papers served, but the
omission to notify such indemnifying party will not relieve it from any
liability that it may have to any indemnified party under the foregoing
provisions of this Article VII unless, and only to the extent that, such
omission results in the forfeiture of substantive rights or defenses by the
indemnifying party. If any such action is brought against any indemnified
party and it notifies the indemnifying party of its commencement, the
indemnifying party will be entitled to participate in and, to the extent that
it elects by delivering written notice to the indemnified party promptly after
receiving notice of the commencement of the action from the indemnified party,
to assume the defense of the action, with counsel satisfactory to the
indemnified party, and after notice from the indemnifying party to the
indemnified party of its election to assume the defense, the indemnifying party
will not be liable to the indemnified party for any legal or other expenses
<PAGE> 20
-20-
except as provided below and except for the reasonable costs of investigation
subsequently incurred by the indemnified party in connection with the defense.
The indemnified party will have the right to employ its own counsel in any such
action, but the fees, expenses and other charges of such counsel will be at the
expense of such indemnified party unless (a) the employment of counsel by the
indemnified party has been authorized in writing by the indemnifying party, (b)
the indemnified party has reasonably concluded (based on advice of counsel)
that there may be legal defenses available to it or other indemnified parties
that are different from or in addition to those available to the indemnifying
party, (c) a conflict or potential conflict exists (based on advice of counsel
to the indemnified party) between the indemnified party and the indemnifying
party (in which case the indemnifying party will not have the right to direct
the defense of such action on behalf of the indemnified party) or (d) the
indemnifying party has not in fact employed counsel to assume the defense of
such action within a reasonable time after receiving notice of the commencement
of the action, in each of which cases the reasonable fees, disbursements and
other charges of counsel will be at the expense of the indemnifying party. It
is understood that the indemnifying party shall not, in connection with any
proceeding or related proceedings in the same jurisdiction, be liable for the
reasonable fees, disbursements and other charges of more than one separate firm
admitted to practice in such jurisdiction at any one time for all such
indemnified party or parties. All such fees, disbursements and other charges
will be reimbursed by the indemnifying party promptly as they are incurred. An
indemnifying party will not be liable for any settlement of any action or claim
effected without its written consent (which consent will not be unreasonably
withheld).
<PAGE> 21
-21-
4. In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in the foregoing
paragraphs of this Article VII is applicable in accordance with its terms but
for any reason is held to be unavailable from the Corporation or the
Underwriter, the Corporation and the Underwriter will contribute to the total
losses, claims, liabilities, expenses and damages (including any investigative,
legal and other expenses reasonably incurred in connection with, and any amount
paid in settlement of, any action, suit or proceeding or any claim asserted,
but after deducting any contribution actually received by the Corporation from
persons other than the Underwriter, such as persons who control the Corporation
within the meaning of the Securities Act, officers of the Corporation who
signed the Registration Statement and directors of the Corporation who may also
be liable for contribution, to which the Corporation and the Underwriter may be
subject in such proportion as shall be appropriate to reflect the relative
benefits received by the Corporation on the one hand and the Underwriter on the
other. The relative benefits received by the Corporation and the Underwriter
shall be deemed to be in the same proportion as the total net proceeds from the
offering (before deducting expenses) received by the Corporation bear to the
total underwriting discounts and commissions received by the Underwriter, in
each case as set forth in the table on the cover page of the Prospectus. If,
but only if, the allocation provided by the foregoing sentence is not permitted
by applicable law, the allocation of contribution shall be made in such
proportion as is appropriate to reflect not only the relative benefits referred
to in the foregoing sentence but also the relative fault of the Corporation, on
the one hand, and the Underwriter, on the other, with respect to the statements
or omissions which resulted in such loss, claim, liability, expense or damage,
or action in respect thereof, as well as any other relevant equitable
<PAGE> 22
-22-
considerations with respect to such offering. Such relative fault shall be
determined by reference to whether the untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates
to information supplied by the Corporation or the Underwriter, the intent of
the parties and their relative knowledge, access to information and opportunity
to correct or prevent such statement or omission. The Corporation and the
Underwriter agree that it would not be just and equitable if contributions
pursuant to this Article VII.4 were to be determined by pro rata allocation or
by any other method of allocation which does not take into account the
equitable considerations referred to herein. The amount paid or payable by an
indemnified party as a result of the loss, claim, liability, expense or damage,
or action in respect thereof, referred to above in this Article VII.4 shall be
deemed to include, for purpose of this Article VII.4, any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Article VII.4 the Underwriter shall not be required to
contribute any amount in excess of the underwriting discounts received by it,
and no person found guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) will be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. For
purposes of this Article VII.4, any person who controls a party to this
Agreement within the meaning of the Securities Act will have the same rights to
contribution as that party, and each officer of the Corporation who signed the
Registration Statement will have the same rights to contribution as the
Corporation, subject in each case to the provisions hereof. The provisions of
Article VII.3 above shall be applicable to demands and proceedings relating to
contribution under this Article VII.4. No party will be liable for
<PAGE> 23
-23-
contribution with respect to any action or claim settled without its written
consent (which consent will not be unreasonably withheld).
5. The indemnity and contribution agreements contained in this
Article VII and the representations and warranties of the Corporation contained
in this Agreement shall remain operative and in full force and effect
regardless of (i) any investigation made by or on behalf of the Underwriter,
(ii) acceptance of any of the Securities and payment thereof or (iii) any
termination of this Agreement.
VIII. EVENTS PERMITTING TERMINATION BY THE UNDERWRITER
This Agreement shall be subject to termination in the sole and
absolute discretion of the Underwriter, by notice given to the Corporation, if
on or prior to the Closing Date:
1. Trading in any of the securities of the Corporation or in
securities generally shall have been suspended or materially limited by the
Commission, by an exchange that list any such securities, by the National
Association of Securities Dealers Automated Quotation Market System, and the
New York Stock Exchange, Inc.
2. A general moratorium on commercial banking activities in New
York or the Commonwealth shall have been declared by either Federal, New York
State or Commonwealth authorities.
3. The Corporation shall fail or refuse to comply with the terms
or to fulfill any of the conditions of this Agreement, or if for any reason the
Corporation shall be unable to perform its obligations under this Agreement.
<PAGE> 24
-24-
4. Litigation shall be threatened in writing or pending in any
court after the date hereof: (i) seeking to restrain or enjoin the issuance or
delivery of the Securities; or (ii) in any way questioning or affecting the
validity of the Securities or any provisions of this Agreement or any
proceedings taken by the Corporation with respect to the foregoing; or (iii)
having a Material Adverse Effect on the Corporation.
5. The market value of the Securities shall, in the sole opinion
of the Underwriter, have been materially adversely affected by reason of the
fact that between the date hereof and the Closing Date (a) any legislation,
ordinance, rule or regulation has been introduced in or enacted by any
governmental body, department or agency in the Commonwealth or the United
States, or (b) a decision has been rendered by any court of competent
jurisdiction within the Commonwealth or the United States.
6. An order, ruling, regulation, decree or injunction of any
court of competent jurisdiction or of any governmental agency or authority
shall have been issued or made, or judicial proceedings shall have been
commenced, or any legislation shall have been enacted, with the purpose or
effect of prohibiting the issuance, offering, sale or distribution of the
Securities as contemplated hereby.
7. In the sole judgment of the Underwriter, the market price of
the Securities, or the market price generally of obligations of the general
character of the Securities, shall have been or is likely to be adversely
affected because: (i) additional material restrictions not in force as of the
date hereof shall have been imposed upon trading in securities generally by any
governmental authority or by any national securities exchange or shall have
been established by Federal or Commonwealth authorities; (ii) a material
adverse change in the financial or securities
<PAGE> 25
-25-
market in the Commonwealth or in the United States since the date of this
Agreement; or (iii) a war involving the United States shall have been declared,
or any other national or international event, act, calamity, crisis or
occurrence shall have materially disrupted, or is likely to disrupt materially,
securities markets, or any conflict involving the armed forces of the United
States shall have materially escalated or a material adverse change in the
political situation in the Commonwealth or the United States shall have
occurred or is threatened.
8. If the Underwriter does not purchase the Securities because
any conditions specified in this Agreement shall not have been fulfilled for
any reason, this Agreement shall terminate and neither the Corporation or the
Underwriter shall be under any further obligation hereunder except that the
provisions of Articles VII and VIII shall at all times be an remain in effect
and the Corporation will reimburse the Underwriter for all out-of-pocket
expenses, including counsel fees and disbursements, reasonably incurred by the
Underwriter in making preparations for the purchase, sale and delivery of the
Securities.
IX. NOTICES
Any notice or other communication to be given under this Agreement may
be given in writing by delivering the same to the respective address set forth
below:
If to the Underwriter:
PaineWebber Incorporated of Puerto Rico
American International Plaza, PH
250 Munoz Rivera Avenue
Hato Rey, Puerto Rico 00918
Attention: Carlos V. Ubinas, Esq.
Telephone: (809) 250-2055
Telefax: (809) 250-2218
<PAGE> 26
-26-
With a copy to:
Axtmayer Adsuar Muniz & Goyco
PO Box 70294
San Juan, Puerto Rico 00936-8294
Attention: Jose A. Axtmayer, Esq.
Telephone: (809) 281-1800
Telefax: (809) 756-9023
If to the Corporation:
BANPONCE CORPORATION
209 Munoz Rivera Avenue
Hato Rey, Puerto Rico 00918
Attention: Mr. David H. Chafey, Jr.
Telephone: (809) 765-9800
Telefax: (809) 767-8948
With a copy to:
McConnell Valdes
270 Munoz Rivera Avenue
Hato Rey, Puerto Rico 00918
Attention: Julio Pietrantoni, Esq.
Telephone: (809) 250-5664
Telefax: (809) 759-9292
X. MISCELLANEOUS
1. This Agreement may be signed in any number of counterparts,
each of which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument.
<PAGE> 27
-27-
2. In case any provision of this Agreement shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
3. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth.
4. This Agreement is made solely for the benefit of the
Corporation and the Underwriter and their respective personal representatives,
successors and assigns, and no other person shall acquire or have any right
hereunder or by virtue hereof. All of the representations, warranties and
agreements of the Corporation and the Underwriter and their respective personal
representatives, successors and assigns, shall remain operative and in full
force and effect regardless of: (i) any investigations made by or on behalf of
the Underwriter; (ii) delivery of and payment for the Securities hereunder; and
(iii) any termination of this Agreement.
5. This Agreement supersedes any other prior agreements or
understandings, written or oral, among the parties hereto, with respect to the
subject matter hereof.
<PAGE> 28
-28-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by its authorized officers thereunto as of the date set forth
above.
<TABLE>
<S> <C>
PAINEWEBBER INCORPORATED OF BANPONCE CORPORATION
PUERTO RICO
------------------------------------- -------------------------------------
By: Carlos V. Ubinas By: David H. Chafey, Jr.
Title: Executive Vice President Title: Executive Vice President
</TABLE>
Affidavit No.
---------
Acknowledged and subscribed to before me by Carlos V. Ubinas, of legal
age, married and resident of San Juan, Puerto Rico, in its capacity as
Executive Vice President of PaineWebber Incorporated of Puerto Rico, who is
personally known to me.
In San Juan, Puerto Rico, this day of June, 1994.
----------------------------
NOTARY PUBLIC
Affidavit No.
---------
Acknowledged and subscribed to before me by David H. Chafey, Jr. of
legal age, married, and resident of San Juan, Puerto Rico, in its capacity as
Executive Vice President of BANPONCE CORPORATION, who is personally known to
me.
In San Juan, Puerto Rico, this day of June, 1994.
----------------------------
NOTARY PUBLIC
<PAGE> 29
EXHIBIT A-1
756-9010
[FORM OF UNDERWRITER'S COUNSEL OPINION]
June __, 1994
PaineWebber Incorporated of Puerto Rico
Penthouse, American International Plaza
250 Munoz Rivera Avenue
Hato Rey, Puerto Rico 00918
Re: BANPONCE CORPORATION NON-CUMULATIVE MONTHLY INCOME
PREFERRED STOCK, 1994 SERIES A
Gentlemen:
We have acted as counsel to your firm as the underwriter of the above
referenced securities issued by BanPonce Corporation (the "Corporation"). In
such capacity, you requested our opinion as to whether insurance companies
organized and licensed under the laws of the Commonwealth of Puerto Rico may
invest in the Corporation's Non-Cumulative Monthly Income Preferred Stock, 1994
Series A (the "Preferred Stock") and, if so, whether such investment is subject
to any conditions, restrictions and/or limitations.
In rendering the opinion contained herein, we expressly limited our
analysis to the applicable Puerto Rico statutory and regulatory framework under
which insurance companies operate and are regulated in Puerto Rico. As a
result, our opinion should be construed as limited in scope and application
only to those insurance companies that properly qualify as "domestic insurers"
as such term is defined in Article 3.010 of the Insurance Code of Puerto Rico
(the "Code")(1), namely those "formed under the laws of Puerto Rico"(2)
(hereinafter referred
__________________________________
(1) Law No. 77 of June 19, 1957, 26 LPRA Section 101 et seq.
(2) As used herein, the term "insurance companies" also includes the
"insurance cooperatives" organized pursuant to articles 34.010 to 34.230 of
the Code, 26 LPRA Section 3401 et seq.
<PAGE> 30
2
to as "PRICOs"). Other insurers, including "foreign insurers" as such term is
defined and used in the Code and other entities engaged in the insurance
business, may not rely on the contents or conclusions reached in this opinion
and should consult with counsel of their choice regarding the applicability of
the matters discussed herein to their particular investment decisions.
In addition, our opinion is being rendered without any consultation or
discussion with any official or employee of the Office of the Insurance
Commissioner of Puerto Rico (the "Insurance Commissioner") having any
regulatory authority over such companies. Lastly, in rendering our opinion, we
relied in part on the contents of the certification from the Corporation
attached hereto.
As further discussed below, we are of the opinion that an investment
in the Preferred Stock by insurance companies organized and licensed in Puerto
Rico is authorized and permissible under the Code. The Code, however, contains
certain conditions, restrictions and limitations to such investment, which are
discussed below.
THE APPLICABLE STATUTORY FRAMEWORK
In furtherance of the public policy to safeguard the financial health
of insurers, the Code contains numerous provisions regulating the PRICOs'
conduct and management of their assets, among which are provisions attempting
to regulate the nature, amount and type of investments which PRICOs can make as
well as to limit such investments to certain qualified entities deemed as
secured investments given their well-regulated operations and proven
performance.
Specifically, Article 6.130 of the Code limits to ten percent (10%) of
its assets(3) the total amount which a PRICO may invest or hold at any time in
preferred stock of corporations organized under the laws of Puerto Rico or any
jurisdiction of the United States.(4) In addition, Article 6.130 of the Code
also limits the corporations in which such investment may be made by a PRICO to
those corporations that have paid continuously and regularly the dividends
- - - ----------------------------------
(3) This ten percent (10%) limit may affect the amount of assets that a
PRICO may invest in preferred stock of an eligible issuer to the extent that
such PRICO already holds assets invested in other eligible preferred stock
and is thereby limited to the remaining uninvested portion of the ten percent
(10%) amount limit of Article 6.130.
(4) Although this opinion addresses only investments by PRICOs in the
Preferred Stock issued by BanPonce, the provisions of Article 6.130 must be
read in conjunction with those contained in Article 6.040 of the Code, 26 LPRA
Section 604(1). The latter limits a PRICO's investments in the securities
(regardless of class or type) issued by one single issuer to a maximum of six
percent (6%) of the PRICO's assets. Accordingly, a PRICO may not possess at
any time securities of a single issuer, except with the consent of the
Insurance Commissioner, exceeding in the aggregate six percent (6%) percent of
its assets.
<PAGE> 31
3
stipulated by their preferred stocks during the five (5) years immediately
preceding the proposed investment (the "Preferred-Dividend Rule").
The Preferred Dividend Rule applies to preferred stock that was issued
at least five years prior to the proposed investment.(5) With respect to
preferred stock issued within such five-year period, there is a two-prong rule
contained in Article 6.130.
First, the Preferred-Dividend Rule still applies, but this time its
application commences on the date of the preferred stock issue. That is, the
issuing corporation must have paid dividends on its preferred stock
continuously and regularly since the original date of issuance of its preferred
stock.
Secondly, in addition to the compliance with Preferred-Dividend Rule,
Article 6.130 requires that the corporation issuing the preferred stock meet
another requirement, namely: the "net earnings available for fixed charges" of
the issuing corporation and its subsidiaries (on a consolidated basis) "must
have averaged an amount per annum for the five years preceding the making of
the investment at least equal to two times the total annual interest charges
(including amortization of debt and expense)and dividends guaranteed, if any,
and the preferred dividend requirement on a pro forma basis." Stated
otherwise, the ratio (the "Statutory Ratio") resulting from dividing a
numerator of "earnings available for fixed charges" by a denominator made up by
the "total annual interest charges (including amortization of debt and expense)
and dividends guaranteed, if any, and the preferred dividend requirement on a
pro forma basis" (the denominator hereinafter referred to as the "Fixed
Charges") must be equal to or greater than two (2) when averaged over the five
years inmediately preceding the proposed investment. The term "net earnings
available for fixed charges," in turn, is defined in the Code as the "net
income after deducting operating and maintenance expenses, taxes other than
federal, Commonwealth, and state income taxes, depreciation and depletion, but
excluding extraordinary nonrecurring items of income or expense appearing in
the regular financial statement of the issuing" corporation. In other words,
"net earnings available for fixed charges" is the equivalent of operating
income before extraordinary items, interest and income taxes; such operating
income must be at least twice the interest charges, guaranteed dividends and
the preferred stock dividends on a pro-forma basis.
DISCUSSION
1. The nature of the issuer. The Corporation, as issuer of the
Preferred Stock, is not a "bank."(6) The limitations and conditions contained
in Article 6.150 of the Code as
- - - ----------------------------------
(5) Article 6.130 of the Code, 26 LPRA Section 613.
(6) The Corporation is a legal entity separate and distinct from its
subsidiaries and is deemed a bank holding company under applicable law. The
Corporation is not a bank under the laws of the Commonwealth of Puerto Rico or
<PAGE> 32
4
applicable to investments by PRICOs in securities (and specifically in
preferred stock) issued by a bank are therefore not applicable to the
Corporation's Preferred Stock and, accordingly, PRICOs may acquire and/or hold
the Corporation's Preferred Stock subject only to the other Code provisions
applicable to investments by PRICOs.
2. The Statutory Ratio.
In order to calculate the Statutory Ratio in the instant case, one
must consider that the Corporation's main subsidiary, Banco Popular de Puerto
Rico, is a bank organized under the laws of Puerto Rico. In the case of banks,
Article 6.150 of the Code provides that insurer's may invest in bank stocks
without regards to any financial ratios.
The receipt of deposits and the payment of interest on such deposits
is the core activity in a banking operation. Thus, for financial reporting
purposes, interest on deposits are considered the equivalent of "costs of goods
sold" of a bank and not a fixed charge. Such is not the case in non-financial
corporations, where the "total annual interest charges (including amortization
of debt and expense)" portion of the "Fixed Charges" refers to the interest
charges associated with the payment of the corporation's debt service. While
Puerto Rico courts have not construed the provisions of Article 6.130 of the
Code in this respect, we are of the opinion that the "interest on deposits"
entry in the consolidated financial statements of the Corporation must be
excluded from the Fixed Charges for purposes of calculating the Statutory
Ratio.(7)
The certification attached hereto from the Corporation demonstrates
that the Corporation complies with the Statutory Ratio requirements of Article
6.130 of the Code.
- - - ----------------------------------
under federal law. The Code does not define the term "bank," so the
applicable Puerto Rico rules of statutory construction mandate the use of the
definition of the term "bank" contained in Article 3 of the Puerto Rico Banking
Law, 7 LPRA Section 3. See, Article 18 of the Puerto Rico Civil Code, 31 LPRA
Section 18 (establishing the principle of in pari materia). Even assuming,
arguendo, that the Corporation were to be treated as a bank for purposes of the
Code, PRICOs would be able to invest in the Preferred Stock. Pursuant to
Article 6.150 of the Code, 26 LPRA Section 615, the only requirements for the
eligibility of investments by PRICOs in bank stocks are that the bank be
solvent, located in Puerto Rico, the United States or Canada, and that the
bank in question have been in existence for five years prior to the
investment. If such were the case, PRICOs would be able to invest in
aggregate amount up to five percent (5%) of their assets in such bank stocks,
without regards to any financial ratios such as the one required by Article
6.130 of the Code.
(7) It should be noted that a 2:1 operating income to interest ratio is a
financial ratio often required by lenders to ensure that there is enough cash
flow in a debtor corporation to pay interest on the debt. The Code requires a
minimum of twice operating income to cover not only interest, but also
guaranteed dividends and dividends on the Preferred Stock. Since the interest
on deposits is offset against interest income in computing operating income,
it reduces operating income by the amount thereof. Accordingly, including
interest on deposits as part of "Fixed Charges" would result in deducting
interest on deposits twice against the flow of income available for the
payment of Fixed Charges. Given that there is no indication that this is the
intention of the statute, and that in the case of banks Article 6.150 of the
Code does not even require a coverage ratio, we concluded that interest on
deposits does not form part of the "Fixed Charges" for purposes of Article
6.130 of the Code.
<PAGE> 33
5
OPINION
Relying on the certificate of the Corporation attached hereto, we are
of the opinion that an investment in the Preferred Stock of the Corporation by
a PRICO is a permissible investment under Article 6.130 of the Code, subject to
the restrictions, conditions and limitations of the Code described herein.
This opinion is being furnished at your request and may be relied and
used only by or as authorized by you. No other person or party may receive,
use or rely on this opinion nor any part hereof for any other transaction or
any other purpose whatsoever without our express prior written consent.
Respectfully submitted,
<PAGE> 34
June , 1994
Axtmayer Adsuar Muniz & Goyco
Plaza Scotiabank
Sixth Floor
273 Ponce de Leon Avenue
Hato Rey, Puerto Rico 00917
Re: BANPONCE CORPORATION 8.35% NON-CUMULATIVE MONTHLY INCOME
PREFERRED STOCK, 1994 SERIES A
Gentlemen:
BanPonce Corporation (the "Corporation") hereby certifies that its ratio of (a)
net earnings available to pay fixed charges to (b) interest, guaranteed
dividends and preferred stock dividends (the "Ratio") averaged for the five
years ended December 31, 1993, calculated on a consolidated basis for the
Corporation and its subsidiaries in accordance with your interpretation of the
provisions of Article 6.130 of the Insurance Code of Puerto Rico (the "Code"),
26 LPRA Section 613, as described below, is . In accordance with your
instructions, for purposes of calculating the Ratio,
(i) we deducted from the Corporation's "net earnings" mentioned in item
(a) above and excluded from the "interest" mentioned in item (b) above
the interest on deposits paid by the Corporation's principal
subsidiary, Banco Popular de Puerto Rico, for all five years specified
above and the interest on deposits paid by the Corporation's former
subsidiary, Banco de Ponce, for the years ended December 31, 1989 and
1990;
(ii) we calculated an average Ratio for the entire five year period
specified above by calculating the Ratio for each of the five years
within such five-year period, adding such Ratios and dividing the
total by five;
(iii) we included the operating results of the former subsidiaries of the
Corporation, Banco de Ponce and VELCO, for the years ended December
31, 1989 and 1990;
(iv) we included, on a pro forma basis, the dividends on the non-cumulative
monthly income preferred stock to be issued by the Corporation,
assuming a dividend rate of 8.35% on 4,000,000 shares with a
liquidation preference of $25.00 per share; and
<PAGE> 35
Axtmayer Adsuar Muniz & Goyco
June , 1994
Page 2
(v) except for the inclusion of the operating results of the Corporation's
former subsidiaries as described in (iii) above and the pro forma
dividends as described in (iv) above, the financial information used
in the calculation of the Ratio was that reported in the audited
financial statements of the Corporation.
The ratio was calculated in accordance with your instructions and in reliance
on your interpretation of Article 6.130 of the Code.
Very truly yours,
David H. Chafey, Jr.
Executive Vice President
<PAGE> 36
EXHIBIT A-2
FORM OF OPINION OF UNDERWRITER'S COUNSEL
June___, 1994
PaineWebber Incorporated of Puerto Rico
Penthouse, American International Plaza
250 Munoz Rivera Avenue
Hato Rey, Puerto Rico 00918
RE: BANPONCE CORPORATION 8.35% NON-CUMULATIVE MONTHLY INCOME
PREFERRED STOCK, 1994 SERIES A
Gentlemen:
We have acted as counsel to your firm as the underwriter (the
"Underwriter") in connection with the issuance by BanPonce Corporation (the
"Corporation") of a maximum of 4,000,000 shares of the Corporation's 8.35%
non-cumulative monthly income preferred stock, 1994 series A (the
"Securities").
In such capacity, we have examined copies, certified or otherwise
authenticated to our satisfaction (sometimes hereinafter collectively referred
to as the "Closing Documents") of:
(a) the Underwriting Agreement, dated as of June 17,
1994, executed by and between the Underwriter and the Corporation;
(b) the Registration Statement on Form S-3 (File No.
33-57038) filed by the Corporation with the Securities and Exchange Commission
on January 14, 1993, as amended on April 30, 1993 (such Registration Statement,
in the form in which it became effective under the Securities Act of 1933, as
amended, including all materials incorporated by reference therein, is
hereinafter called the "Registration Statement");
(c) the Prospectus dated May 3, 1993 (the "Base
Prospectus"), as supplemented by the preliminary prospectus supplement dated
May 27, 1994 and the prospectus supplement dated June 17, 1994 (such
preliminary prospectus supplement and prospectus supplement are hereinafter
collectively referred to as the "Prospectus Supplement"), in the form in which
they were filed with the Securities and Exchange Commission pursuant to Rule
424 (b) under the Securities Act of 1933, as amended (such Base Prospectus and
Prospectus Supplement,
<PAGE> 37
PaineWebber Incorporated June __, 1994
of Puerto Rico Page -2-
including all material incorporated by reference therein, are hereinafter
collectively referred to as the "Final Prospectus");
(d) the order of the Securities and Exchange Commission
declaring the Registration Statement effective on May 3, 1993;
(e) the Good Standing Certificate of the Corporation
dated June [ ], 1994, issued by the Department of State of the Commonwealth of
Puerto Rico;
(f) the certification dated June 21, 1994, issued by the
Federal Reserve Board of New York, certifying that the Corporation is
registered as a bank holding company under the Bank Holding Company Act of
1956, as amended; and
(g) certain resolutions adopted by the Board of Directors
of the Corporation on December 10, 1992, and June 16, 1994.
In addition, we have examined such other documents, instruments and
records and such certificates and other instruments of the Corporation and its
officials and we have made such investigations of law, as we have deemed
necessary or appropriate for purpose of rendering the opinions expressed
herein.
Our opinions expressed herein are also subject to the following
assumptions, limitations, exceptions and qualifications:
(a) We have assumed (i) that there is no
misrepresentation, omission or deceit by any party to, or contained in, any of
the Closing Documents related to the issuance of the Securities, and in
connection with the execution, delivery or performance thereof; (ii) that
each such party has the power, authority, legal capacity, standing and ability
to execute, deliver and perform under the Closing Documents to which it is a
party; (iii) that all factual matters, representations and warranties
contained in the Closing Documents are true, accurate and complete; and (iv)
the genuineness of all signatures on, and authenticity of, all documents
submitted to us as originals and the conformity to original documents of all
documents submitted to us as copies. Based on our inquiries, we have no
knowledge that the assumptions contained herein are untrue or incorrect, nor
do we know of any reason to believe that we would not be justified in relying
thereupon.
(b) We are members of the bar of the Commonwealth and,
accordingly, our opinion is limited solely to the laws of the Commonwealth and,
as to matters of Federal
<PAGE> 38
PaineWebber Incorporated June __, 1994
of Puerto Rico Page -3-
jurisdiction applicable herein, to the applicable laws of the United States of
America. Without limitation, we are not opining as to any laws, rules or
regulations or any jurisdiction or any requirement of any governmental body,
agency, instrumentality or court which has no jurisdiction in the Commonwealth.
(c) Our opinion is based upon applicable laws and facts
as of the date hereof. We assume no obligation to update or supplement our
opinion to reflect any facts or circumstances which may hereafter come to our
attention or changes in law which may hereafter occur.
(d) We render no opinion as to the validity or
enforceability of provisions waiving, expressly or by implication, stated
rights, defenses or rights granted by laws, where such waivers are or may be
deemed to be against public policy or prohibited by law.
(e) We render no opinion on the effect on any of the
agreements and documents referred to or addressed in our opinion of applicable
bankruptcy, insolvency, reorganization, fraudulent conveyance, arrangement,
moratorium or other similar laws relating to or affecting the rights and
remedies of creditors and/or debtors generally, regardless of whether such
enforceability is considered in a proceeding in equity or at law.
(f) The availability of the remedy of specific
performance, of injunctive relief, or of any equitable remedy, is subject to
the discretion of the court before which any proceedings therefor may be
brought, and we are not rendering an opinion on the question of whether such
remedies would be available.
(g) We are not rendering an opinion on the enforceability
of indemnity provisions in any of the agreements and documents referred to or
addressed in our opinion, to the extent that any such provision is sought to be
enforced with respect to a loss or liability arising from an action or omission
of the indemnities which includes the negligence or willful misconduct of, or a
violation of law by, the party seeking to enforce any such provision.
(h) We have assumed that any and all of the documents or
applications that were required to be filed with and/or notified to any federal
or state (other than the Commonwealth), governmental office or agency (in order
to consummate the transaction contemplated therein) have or shall be duly filed
and/or notified, and that such filing(s) and/or notice(s) are and shall be in
full force and effect.
On the basis of the information developed in the course of the
performance of the services referred to above, considered in light of our
understanding of the applicable law and the experience we have gained through
our practice thereunder, and subject to the assumptions,
<PAGE> 39
PaineWebber Incorporated June __, 1994
of Puerto Rico Page -4-
limitations, exceptions and qualifications expressed in the preceding
paragraphs, we are of the following opinions:
1. The Securities are exempt from registration under the
Uniform Securities Act of Puerto Rico ("USAPR"), as amended, pursuant to
Article 402(a)(8) of the USAPR (10 P.R. Laws Ann. Section 882(a)(8)).
2. We have participated in the preparation of the
Prospectus Supplement and in certain conferences with officers and other
representatives of the Underwriter, the Corporation and counsel for the
Corporation, at which conferences the contents of the Prospectus Supplement and
related matters were discussed. Although we are not passing upon and do not
assume any responsibility for the accuracy, completeness or fairness of the
statements contained in the Prospectus Supplement, on the basis of the
foregoing, no facts have come to our attention which would lead us to believe
that the Prospectus Supplement (except for the financial statements and other
financial and statistical information relating to the Corporation, as to which
no opinion is hereby expressed) contains any untrue statement of a material
fact or omits to state any material fact the omission of which makes any of the
statements made, in light of the circumstances under which they are made,
either false or misleading in any material respect.
The matters set forth in this letter may only be relied upon by the
party to whom this letter is addressed. No other party may rely on the
opinions set forth herein unless expressly authorized in writing by the
undersigned.
Very truly yours,
AXTMAYER ADSUAR MUNIZ & GOYCO
------------------------------------
By: Jose A. Axtmayer
<PAGE> 40
EXHIBIT B
[LETTERHEAD OF MCCONNELL VALDES]
June 27, 1994
PaineWebber Incorporated of
Puerto Rico
American International Plaza
Penthouse Floors
250 Munoz Rivera Avenue
San Juan, Puerto Rico
RE: BANPONCE CORPORATION
8.35% NON-CUMULATIVE MONTHLY INCOME
PREFERRED STOCK, 1994 SERIES A
Gentlemen:
We have acted as counsel to BanPonce Corporation (the "Corporation"),
a bank holding company registered under the Bank Holding Company Act of 1956,
as amended, and incorporated under the laws of the Commonwealth of Puerto Rico,
in connection with the issuance and sale by the Corporation of 3,600,000 shares
of its 8.35% Non-Cumulative Monthly Income Preferred Stock, 1994 Series A
(the "Shares"), to PaineWebber Incorporated of Puerto Rico (the "Underwriter")
pursuant to the Underwriting Agreement dated June 17, 1994 (the "Underwriting
Agreement"), between the Corporation and the Underwriter.
In connection with this opinion, we have examined originals, or copies
certified or otherwise identified to our satisfaction, of such corporate
records, certificates of corporate officers and government officials and such
other documents as we have deemed necessary or appropriate for the purposes of
this opinion, including the following documents:
<PAGE> 41
PaineWeber Incorporated of
Puerto Rico
June 27, 1994
Page 2
(a) the Certificate of Incorporation of the Corporation, as certified
by the Department of State of the Commonwealth of Puerto Rico;
(b) the Bylaws of the Corporation, as certified by the Secretary of
the Corporation;
(c) the Underwriting Agreement, as executed;
(d) the Registration Statement on Form S-3 (File No. 33-57038) filed
by the Corporation with the Securities and Exchange Commission on January 14,
1993, as amended on April 30, 1993 (such Registration Statement, in the form in
which it became effective under the Securities Act of 1933, as amended,
including all materials incorporated by reference therein, is hereinafter
called the "Registration Statement");
(e) the Prospectus dated May 3, 1993 (the "Base Prospectus"), as
supplemented by the Prospectus Supplement dated June 17, 1994 (the "Prospectus
Supplement"), in the form in which they were filed with the Securities and
Exchange Commission pursuant to Rule 424(b) under the Securities Act of 1933,
as amended (such Base Prospectus and Prospectus Supplement, including all
materials incorporated by reference therein, is hereinafter called the "Final
Prospectus");
(f) the order of the Securities and Exchange Commission declaring the
Registration Statement effective on May 3, 1993;
(g) the Good Standing Certificate of the Corporation dated June 14,
1994, issued by the Department of State of the Commonwealth of Puerto Rico;
<PAGE> 42
PaineWebber Incorporated of
Puerto Rico
June 27, 1994
Page 3
(h) the certification dated June 21, 1994, issued by the Federal
Reserve Board of New York, certifying that the Corporation is registered as a
bank holding company under the Bank Holding Company Act of 1956, as amended;
and
(i) certain resolutions adopted by the Board of Directors of the
Corporation on December 10, 1992, and June 16, 1994.
As to various questions of fact material to this opinion, we have
relied upon certificates of officers of the Corporation and documents furnished
to us by the Corporation, and upon the representations and warranties of the
Corporation set forth in the Underwriting Agreement, without independent
verification of their accuracy. We have also assumed the genuineness of all
signatures, the authenticity of all documents submitted to us as originals, and
the conformity to authentic original documents of all documents submitted to us
as copies.
Based upon the foregoing, and subject to the assumptions and
qualifications set forth herein, we are of the opinion as follows:
(1) the Corporation has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the Commonwealth of Puerto
Rico and is duly registered as a bank holding company under the Bank Holding
Company Act of 1956, as amended;
(2) the Underwriting Agreement has been duly authorized, executed, and
delivered by the Corporation;
<PAGE> 43
PaineWebber Incorporated of
Puerto Rico
June 27, 1994
Page 4
(3) the Shares have been duly authorized and validly issued and will
be fully paid and non-assessable when delivered against payment therefor in
accordance with the Underwriting Agreement;
(4) the execution and delivery by the Corporation of the Underwriting
Agreement do not, and the issuance and sale by the Corporation to the
Underwriter pursuant to the Underwriting Agreement of the Shares and the
performance by the Corporation of its agreements thereunder will not, (i)
violate the Certificate of Incorporation or Bylaws of the Corporation; or (ii)
violate any federal law or administrative regulation of the United States or
any law or administrative regulation of the Commonwealth of Puerto Rico
existing on the date of this opinion applicable to the Corporation or any
administrative or court decree of the United States or the Commonwealth of
Puerto Rico known to us, after due inquiry, applicable to the Corporation; or
(iii) conflict with or constitute a material breach of, or a default under, or
result in the creation or imposition of any material lien, charge, or
encumbrance upon any material amount of the property or assets of the
Corporation pursuant to, any material contract, indenture, mortgage, loan
agreement, note, lease, or other instrument known to us to which the
Corporation is a party or by which it is be bound, or to which any material
amount of the property or assets of the Corporation is subject;
(5) all regulatory consents, authorizations, approvals, and filings
required to be obtained or made by the Corporation on or prior to the date
hereof under the federal laws of the United States and the laws of the
Commonwealth of Puerto Rico for the issuance, sale and delivery of the Shares
by the Corporation to the Underwriter have been obtained or made;
(6) the Registration Statement and the Final Prospectus appear on
their face to be appropriately responsive in all material respects to the
requirements of the Securities Act of
<PAGE> 44
PaineWebber Incorporated of
Puerto Rico
June 27, 1994
Page 5
1933, as amended, and the applicable rules and regulations of the Securities
and Exchange Commission issued thereunder; and
(7) the information in the Prospectus Supplement under the captions
"Certain Puerto Rico Tax Considerations" and "Certain United States Income Tax
Considerations," to the extent constituting matters of Puerto Rico law or
United States federal law or legal conclusions as to Puerto Rico law or United
States federal law, has been reviewed by us and is correct in all material
respects.
In passing upon the form of the Registration Statement and the form of
the Final Prospectus, we have necessarily assumed the correctness and
completeness of the statements made by the Corporation and the information
included or incorporated by reference therein and take no responsibility
therefor. We note that, although we have reviewed the Registration Statement
and the Base Prospectus and certain of the documents incorporated by reference
in the Final Prospectus, we did not participate in the preparation thereof.
However, in the course of the preparation by the Corporation of the Prospectus
Supplement, we had conferences with certain officers and representatives of the
Corporation at which the contents of the Registration Statement and Final
Prospectus were discussed. Our examination of the Registration Statement and
the Final Prospectus and our discussions in the above-mentioned conferences did
not disclose to us any information, and nothing has come to our attention,
which gives us reason to believe that the Registration Statement, as of the
date of the information contained therein, or the Final Prospectus, as of the
date of the Prospectus Supplement or as of the date hereof, contained any
untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. We express no
opinion as to the financial statements and other financial or statistical data
contained or incorporated by reference in the Registration Statement or the
Final
<PAGE> 45
PaineWebber Incorporated of
Puerto Rico
June 27, 1994
Page 6
Prospectus or as to the statements contained in the Form T-1 filed as an
exhibit to the Registration Statement.
We are admitted to practice only in the Commonwealth of Puerto Rico
and express no opinion as to matters governed by any laws other than the laws
of the Commonwealth of Puerto Rico and the federal laws of the United States of
America.
This opinion is rendered only to you and is solely for your benefit in
connection with the transactions contemplated by the Underwriting Agreement.
This opinion may not be relied upon by you for any other purpose; nor may this
opinion be relied upon by any other person, firm, or corporation for any
purpose without our prior written consent.
Sincerely,
<PAGE> 46
EXHIBIT C
[OMITTED]
<PAGE> 47
EXHIBIT D
June , 1994
Axtmayer Adsuar Muniz & Goyco
Plaza Scotiabank
Sixth Floor
273 Ponce de Leon Avenue
Hato Rey, Puerto Rico 00917
RE: BANPONCE CORPORATION 8.35% NON-CUMULATIVE MONTHLY INCOME
PREFERRED STOCK, 1994 SERIES A
Gentlemen:
BanPonce Corporation (the "Corporation") hereby certifies that its ratio of (a)
net earnings available to pay fixed charges to (b) interest, guaranteed
dividends and preferred stock dividends (the "Ratio") averaged for the five
years ended December 31, 1993, calculated on a consolidated basis for the
Corporation and its subsidiaries in accordance with your interpretation of the
provisions of Article 6.130 of the Insurance Code of Puerto Rico (the "Code"),
26 LPRA Section 613, as described below, is . In accordance with your
instructions, for purposes of calculating the Ratio,
(i) we deducted from the Corporation's "net earnings" mentioned in
item (a) above and excluded from the "interest" mentioned in
item (b) above the interest on deposits paid by the
Corporation's principal subsidiary, Banco Popular de Puerto
Rico, for all five years specified above and the interest on
deposits paid by the Corporation's former subsidiary, Banco de
Ponce, for the years ended December 31, 1989 and 1990;
(ii) we calculated an average Ratio for the entire five year period
specified above by calculating the Ratio for each of the five
years within such five-year period, adding such Ratios and
dividing the total by five;
(iii) we included the operating results of the former subsidiaries
of the Corporation, Banco de Ponce and VELCO, for the years
ended December 31, 1989 and 1990;
(iv) we included, on a pro forma basis, the dividends on the
non-cumulative monthly income preferred stock to be issued by
the Corporation, assuming a dividend rate of 8.35% on
4,000,000 shares with a liquidation preference of $25.00 per
share; and
<PAGE> 48
Axtmayer Adsuar Muniz & Goyco
June , 1994
Page 2
(v) except for the inclusion of the operating results of the
Corporation's former subsidiaries as described in (iii) above
and the pro forma dividends as described in (iv) above, the
financial information used in the calculation of the Ratio was
that reported in the audited financial statements of the
Corporation.
The ratio was calculated in accordance with your instructions and in reliance
on your interpretation of Article 6.130 of the Code.
Very truly yours,
David H. Chafey, Jr.
Executive Vice President
<PAGE> 1
EXHIBIT 4(h)
FORM OF
CERTIFICATE OF RESOLUTION
OF THE BOARD OF DIRECTORS OF BANPONCE CORPORATION
8.35% NON-CUMULATIVE
MONTHLY INCOME PREFERRED STOCK, 1994 SERIES A
(Pursuant to Article 501 of the General Corporation Law of the Commonwealth of
Puerto Rico)
We, the undersigned, Executive Vice President and Secretary of
BANPONCE CORPORATION (hereinafter called the "Corporation"), a corporation duly
organized and existing under the laws of the Commonwealth of Puerto Rico, do
hereby certify that, pursuant to the authority conferred upon the Board of
Directors of the Corporation by the Certificate of Incorporation of the
Corporation, the said Board of Directors on June 16, 1994, adopted the
following resolutions creating a series of 4,000,000 shares of Preferred Stock
designated as the "8.35% Non-Cumulative Monthly Income Preferred Stock, 1994
Series A."
RESOLVED, that pursuant to the authority expressly granted to
and vested in the Board of Directors of the Corporation in accordance
with the provisions of its Certificate of Incorporation, a series of
Preferred Stock of the Corporation be and it hereby is created.
FURTHER RESOLVED, that the directors have determined that the
preferences and relative, participating, optional or other special
rights of the shares of such series of Preferred Stock, and the
qualifications, limitations or restrictions thereof, as stated and
expressed herein, are under the circumstances prevailing on the date
hereof fair and equitable to all the existing shareholders of the
Corporation.
FURTHER RESOLVED, that the designation and amount of such
series and the voting powers, preferences and relative, participating,
optional or other special rights of the shares of such series of
Preferred Stock, and the qualifications, limitations or restrictions
thereof are as follows:
A. DESIGNATION AND AMOUNT
The shares of such series of Preferred Stock shall be
designated as the "8.35% Non-Cumulative Monthly Income Preferred
Stock, 1994 Series A" (hereinafter called the "Series A Preferred
Stock"), and the number of authorized shares constituting such series
shall be 4,000,000.
B. DIVIDENDS
1. Holders of record of the Series A Preferred Stock
will be entitled to receive, when, as and if declared
by the Board of Directors of the Corporation, out of
funds of the Corporation legally available therefor,
non-cumulative cash dividends at the annual rate per
share of 8.35% of the liquidation preference of $25
per share, or $0.173958 per share per month, with
each aggregate payment made to each record holder
of the Series A Preferred Stock being rounded to the
next lowest cent.
2. Dividends on the Series A Preferred Stock will accrue
from their date of original issuance and will be
payable (when, as and if declared by the Board of
Directors of the Corporation out of funds of the
Corporation legally available therefor) monthly in
arrears in United States dollars commencing on July
31, 1994, and on the last day of each calendar month
of each year thereafter to the holders of record of
the Series A Preferred Stock as they appear
<PAGE> 2
-2-
on the books of the Corporation on the second Business
Day (as defined below) immediately preceding the
relevant date of payment. In the case of the
dividend payable on July 31, 1994, such dividend
shall cover the period from the date of issuance of
the Series A Preferred Stock to July 31, 1994. In
the event that any date on which dividends are
payable is not a Business Day, then payment of the
dividend payable on such date will be made on the
next succeeding Business Day without any interest or
other payment in respect of any such delay, except
that, if such Business Day is in the next succeeding
calendar year, such payment will be made on the
Business Day immediately preceding the relevant date
of payment, in each case with the same force and
effect as if made on such date. A "Business Day" is
a day other than a day on which banking institutions
in San Juan, Puerto Rico or New York, New York are
authorized or required by law to close.
3. Dividends on the Series A Preferred Stock will be
non-cumulative. The Corporation is not obligated or
required to declare or pay dividends on the Series A
Preferred Stock, even if it has funds available for
the payment of such dividends. If the Board of
Directors of the Corporation or an authorized
committee thereof does not declare a dividend payable
on a dividend payment date in respect of the Series A
Preferred Stock, then the holders of the Series A
Preferred Stock shall have no right to receive a
dividend in respect of the monthly dividend period
ending on such dividend payment date and the
Corporation will have no obligation to pay the
dividend accrued for such monthly dividend period or
to pay any interest thereon, whether or not dividends
on such Series A Preferred Stock are declared for any
future monthly dividend period.
4. The amount of dividends payable for any monthly
dividend period will be computed on the basis of
twelve 30-day months and a 360-day year. The amount
of dividends payable for any period shorter than a
full monthly dividend period will be computed on the
basis of the actual number of days elapsed in such
period.
5. Subject to any applicable fiscal or other laws and
regulations, each dividend payment will be made by
dollar check drawn on a bank in New York, New York or
San Juan, Puerto Rico and mailed to the record holder
thereof at such holder's address as it appears on the
register for such Series A Preferred Stock.
6. So long as any shares of the Series A Preferred Stock
remain outstanding, the Corporation shall not
declare, set apart or pay any dividend or make any
other distribution of assets (other than dividends
paid or other distributions made in stock of the
Corporation ranking junior to the Series A Preferred
Stock as to the payment of dividends and as to the
distribution of assets upon liquidation, dissolution
or winding up of the Corporation) on, or redeem,
purchase, set apart or otherwise acquire (except upon
conversion or exchange for stock of the Corporation
ranking junior to the Series A Preferred Stock as to
the payment of dividends and as to the distribution of
assets upon liquidation, dissolution or winding up of
the Corporation), shares of common stock or of any
other class of stock of the Corporation ranking
junior to the Series A Preferred Stock as to the
payment of dividends or as to the distribution of
assets upon liquidation, dissolution or winding up of
the Corporation, unless (i) all
<PAGE> 3
-3-
accrued and unpaid dividends on the Series A
Preferred Stock for the twelve monthly dividend
periods ending on the immediately preceding dividend
payment date shall have been paid or are paid
contemporaneously and the full monthly dividend on
the Series A Preferred Stock for the then current
month has been or is contemporaneously declared and
paid or declared and set apart for payment and (ii)
the Corporation has not defaulted in the payment of
the redemption price of any shares of Series A
Preferred Stock called for redemption.
7. When dividends are not paid in full on the Series A
Preferred Stock and any other shares of stock of the
Corporation ranking on a parity as to the payment of
dividends with the Series A Preferred Stock, all
dividends declared upon the Series A Preferred Stock
and any such other shares of stock of the Corporation
will be declared pro rata so that the amount of
dividends declared per share on the Series A
Preferred Stock and any such other shares of stock
will in all cases bear to each other the same ratio
that the liquidation preference per share of the
Series A Preferred Stock and any such other shares of
stock bear to each other.
8. Holders of record of the Series A Preferred Stock
will not be entitled to any dividend, whether payable
in cash, property or stock, in excess of the
dividends provided for herein on the shares of Series
A Preferred Stock. The Corporation may, however, at
its discretion, declare a special dividend in an
amount sufficient to allow the Corporation to pay
dividends on any stock of the Corporation ranking
junior to the Series A Preferred Stock in compliance
with the provisions of Section B.6 above.
C. CONVERSION; EXCHANGE
The Series A Preferred Stock will not be convertible into or
exchangeable for any other securities of the Corporation.
D. REDEMPTION AT THE OPTION OF THE CORPORATION
1. The shares of the Series A Preferred Stock are not
redeemable prior to June 30, 1998. On and after that
date, the shares of the Series A Preferred Stock will
be redeemable in whole or in part from time to time
at the option of the Corporation, upon not less than
30 nor more than 60 days' notice by mail, at
the redemption prices set forth below, during the
twelve-month periods beginning on June 30 of the
years set forth below, plus accrued and unpaid
dividends for the then current monthly dividend
period to the date fixed for redemption.
YEAR REDEMPTION PRICE
---- ----------------
1998 . . . . . . . . . . . . . . $26.25
1999 . . . . . . . . . . . . . . $26.00
2000 . . . . . . . . . . . . . . $25.75
2001 . . . . . . . . . . . . . . $25.50
2002 and thereafter . . . . . . $25.00
<PAGE> 4
-4-
2. In the event that less than all of the outstanding
shares of the Series A Preferred Stock are to be
redeemed in any redemption at the option of the
Corporation, the total number of shares to be
redeemed in such redemption shall be determined by
the Board of Directors and the shares to be redeemed
shall be allocated pro rata or by lot as may be
determined by the Board of Directors or by such other
method as the Board of Directors may approve and deem
equitable, including any method to conform to any
rule or regulation of any national or regional stock
exchange or automated quotation system upon which the
shares of the Series A Preferred Stock may at the
time be listed or eligible for quotation.
3. Notice of any proposed redemption shall be given by
the Corporation by mailing a copy of such notice to
the holders of record of the shares of Series A
Preferred Stock to be redeemed, at their address of
record, not more than sixty nor less than thirty days
prior to the redemption date. The notice of
redemption to each holder of shares of Series A
Preferred Stock shall specify the number of shares of
Series A Preferred Stock to be redeemed, the
redemption date and the redemption price payable to
such holder upon redemption, and shall state that
from and after said date dividends thereon will cease
to accrue. If less than all the shares owned by a
holder are then to be redeemed at the option of the
Corporation, the notice shall also specify the number
of shares of Series A Preferred Stock which are to be
redeemed and the numbers of the certificates
representing such shares. Any notice which is mailed
as herein provided shall be conclusively presumed to
have been duly given, whether or not the stockholder
receives such notice; and failure duly to give such
notice by mail, or any defect in such notice, to the
holders of any shares designated for redemption shall
not affect the validity of the proceedings for the
redemption of any other shares of Series A Preferred
Stock.
4. Notice having been mailed as aforesaid, from and
after the redemption date (unless default be made in
the payment of the redemption price for any shares to
be redeemed), all dividends on the shares of Series A
Preferred Stock called for redemption shall cease to
accrue and all rights of the holders of such shares
as stockholders of the Corporation by reason of the
ownership of such shares (except the right to receive
the redemption price, on presentation and surrender
of the respective certificates representing the
redeemed shares), shall cease on the redemption date,
and such shares shall not after the redemption date
be deemed to be outstanding. In case less than all
the shares represented by any such certificate are
redeemed, a new certificate shall be issued without
cost to the holder thereof representing the
unredeemed shares.
5. At its option, the Corporation may, on or prior to
the redemption date, irrevocably deposit the
aggregate amount payable upon redemption of the
shares of the Series A Preferred Stock to be redeemed
with a bank or trust company designated by the
Corporation having its principal office
in New York, New York, San Juan, Puerto Rico, or any
other city in which the Corporation shall at that
time maintain a transfer agent with respect to its
capital stock, and having a combined capital and
surplus (as shown by its latest published statement)
of at least $50,000,000 (hereinafter referred to as
the "Depositary"), to be held in trust by the
Depositary for payment to the holders of the shares
of the Series A Preferred Stock to be redeemed. If
<PAGE> 5
-5-
such deposit is made and the funds so deposited are
made immediately available to the holders of the
shares of the Series A Preferred Stock to be
redeemed, the Corporation shall thereupon be released
and discharged (subject to the provisions of Section
D.6) from any obligation to make payment of the
amount payable upon redemption of the shares of the
Series A Preferred Stock to be redeemed, and the
holders of such shares shall look only to the
Depositary for such payment.
6. Any funds remaining unclaimed at the end of two years
from and after the redemption date in respect of
which such funds were deposited shall be returned to
the Corporation forthwith and thereafter the holders
of shares of the Series A Preferred Stock called for
redemption with respect to which such funds were
deposited shall look only to the Corporation for the
payment of the redemption price thereof. Any
interest accrued on any funds deposited with the
Depositary shall belong to the Corporation and shall
be paid to it from time to time on demand.
7. Any shares of the Series A Preferred Stock which
shall at any time have been redeemed shall, after
such redemption, have the status of authorized but
unissued shares of Preferred Stock, without
designation as to series, until such shares are once
more designated as part of a particular series by the
Board of Directors.
E. LIQUIDATION PREFERENCE
1. Upon any voluntary or involuntary liquidation,
dissolution, or winding up of the Corporation, the
then record holders of shares of Series A Preferred
Stock will be entitled to receive out of the assets
of the Corporation available for distribution to
shareholders, before any distribution is made to
holders of common stock or any other equity
securities of the Corporation ranking junior upon
liquidation to the Series A Preferred Stock,
distributions upon liquidation in the amount of $25
per share plus an amount equal to any accrued and
unpaid dividends for the current monthly dividend
period to the date of payment. Such amount shall be
paid to the holders of the Series A Preferred Stock
prior to any payment or distribution to the holders
of the common stock of the Corporation or of any
other class of stock or series thereof of the
Corporation ranking junior to the Series A Preferred
Stock in respect of dividends or as to the
distribution of assets upon liquidation.
2. If upon any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, the
amounts payable with respect to the Series A
Preferred Stock and any other shares of stock of the
Corporation ranking as to any such distribution on a
parity with the Series A Preferred Stock are not paid
in full, the holders of the Series A Preferred Stock
and of such other shares will share ratably in any
such distribution of assets of the Corporation in
proportion to the full liquidation preferences to
which each is entitled. After payment of the full
amount of the liquidation preference to which they
are entitled, the holders of shares of Series A
Preferred Stock will not be entitled to any further
participation in any distribution of assets of the
Corporation.
3. Neither the consolidation or merger of the
Corporation with any other corporation, nor any sale,
lease or conveyance of all or any part of the
property or
<PAGE> 6
-6-
business of the Corporation, shall be deemed to be a
liquidation, dissolution, or winding up of the
Corporation.
4. If the assets distributable upon any dissolution,
liquidation, or winding up of the Corporation shall
be insufficient to permit the payment to the holders
of the Series A Preferred Stock of the full
preferential amounts aforesaid, then such assets or
the proceeds thereof shall be distributed among the
holders of the Series A Preferred Stock ratably in
proportion to the respective amounts the holders of
such shares of stock would be entitled to receive if
they were paid the full preferential amounts
aforesaid.
F. VOTING RIGHTS
1. Except as described in this Section F, or except as
required by applicable law, holders of the Series A
Preferred Stock will not be entitled to receive
notice of or attend or vote at any meeting of
stockholders of the Corporation.
2. If the Corporation does not pay dividends in full on
the Series A Preferred Stock for eighteen consecutive
monthly dividend periods, the holders of outstanding
shares of the Series A Preferred Stock, together with
the holders of any other shares of stock of the
Corporation having the right to vote for the election
of directors solely in the event of any failure to
pay dividends, acting as a single class without
regard to series, will be entitled, by written notice
to the Corporation given by the holders of a majority
in liquidation preference of such shares or by
ordinary resolution passed by the holders of a
majority in liquidation preference of such shares
present in person or by proxy at a separate general
meeting of such holders convened for the purpose, to
appoint two additional members of the Board of
Directors of the Corporation, to remove any such
member from office and to appoint another person in
place of such member. Not later than 30 days
after such entitlement arises, if written notice by a
majority of the holders of such shares has not been
given as provided for in the preceding sentence, the
Board of Directors or an authorized committee thereof
will convene a separate general meeting for the above
purpose. If the Board of Directors or such
authorized committee fails to convene such meeting
within such 30-day period, the holders of 10% of
the outstanding shares of the Series A Preferred
Stock and any such other stock will be entitled to
convene such meeting. The provisions of the
Certificate of Incorporation and By-laws of the
Corporation relating to the convening and conduct of
general meetings of stockholders will apply with
respect to any such separate general meeting. Any
member of the Board of Directors so appointed shall
vacate office if, following the event which gave rise
to such appointment, the Corporation shall have
resumed the payment of dividends in full on the
Series A Preferred Stock and each such other series
of stock for twelve consecutive monthly dividend
periods.
3. Any variation or abrogation of the rights,
preferences and privileges of the Series A Preferred
Stock by way of amendment of the Corporation's
Certificate of Incorporation or otherwise (including,
without limitation, the authorization or issuance of
any shares of the Corporation ranking, as to dividend
rights or rights on liquidation, winding up and
dissolution, senior to the Series A Preferred Stock)
shall not be effective (unless otherwise required by
applicable law) except with the consent in writing of
the holders of at least
<PAGE> 7
-7-
two-thirds of the outstanding shares of the Series A
Preferred Stock or with the sanction of a special
resolution passed at a separate general meeting by
the holders of at least two-thirds in liquidation
preference of the outstanding shares of the Series A
Preferred Stock. Notwithstanding the foregoing, the
Corporation may, without the consent or sanction of
the holders of the Series A Preferred Stock,
authorize and issue shares of the Corporation
ranking, as to dividend rights and rights on
liquidation, winding up and dissolution, on a parity
with or junior to the Series A Preferred Stock.
4. No vote of the holders of the Series A Preferred
Stock will be required for the Corporation to redeem
or purchase and cancel the Series A Preferred Stock
in accordance with the Certificate of Incorporation
of the Corporation or the Certificate of Resolution
for the Series A Preferred Stock.
5. The Corporation will cause a notice of any meeting at
which holders of the Series A Preferred Stock are
entitled to vote to be mailed to each record holder
of such Series A Preferred Stock. Each such notice
will include a statement setting forth (i) the date
of such meeting, (ii) a description of any resolution
to be proposed for adoption at such meeting on which
such holders are entitled to vote and (iii)
instructions for deliveries of proxies.
6. Except as set forth in this Section F, holders of
Series A Preferred Stock shall have no special voting
rights and their consent shall not be required
(except to the extent they are entitled to vote as
set forth herein) for taking any corporate action.
G. RANK
The Series A Preferred Stock will, with respect to dividend
rights and rights on liquidation, winding up and dissolution, rank (i)
senior to all classes of common stock of the Corporation, to the
Corporation's Series A Participating Preferred Stock and to all other
equity securities issued by the Corporation the terms of which
specifically provide that such equity securities will rank junior to
the Series A Preferred Stock (or to all series of the Preferred Stock
in general); (ii) on a parity with all equity securities issued by the
Corporation the terms of which specifically provide that such equity
securities will rank on a parity with the Series A Preferred Stock
(or to all series of the Preferred Stock in general); and (iii) junior
to all equity securities issued by the Corporation the terms of which
specifically provide that such equity securities will rank senior to
the Series A Preferred Stock (or to all series of the Preferred Stock
in general). For this purpose, the term "equity securities" does not
include debt securities convertible into or exchangeable for equity
securities.
H. FORM OF CERTIFICATE FOR SERIES A PREFERRED STOCK; TRANSFER AND
REGISTRATION
1. The Series A Preferred Stock shall be issued in
registered form only. The Corporation may treat the
record holder of a share of Series A Preferred Stock,
including the Depository Trust Company and its
nominee and any other holder that holds such share on
behalf of any other person, as such record holder
appears on the books of the registrar for the Series
A Preferred Stock, as the sole owner of such share
for all purposes.
<PAGE> 8
-8-
2. The transfer of a share of Series A Preferred Stock
may be registered upon the surrender of the
certificate evidencing the share of Series A
Preferred Stock to be transferred, together with the
form of transfer endorsed on it duly completed and
executed, at the office of the transfer agent and
registrar.
3. Registration of transfers of shares of Series A
Preferred Stock will be effected without charge by or
on behalf of the Corporation, but upon payment (or
the giving of such indemnity as the transfer agent
and registrar may require) in respect of any tax or
other governmental charges which may be imposed in
relation to it.
4. The Corporation will not be required to register the
transfer of a share of Series A Preferred Stock after
such share has been called for redemption.
I. REPLACEMENT OF LOST CERTIFICATES
If any certificate for a share of Series A Preferred Stock is
mutilated or alleged to have been lost, stolen or destroyed, a new
certificate representing the same share may be issued to the holder
upon request subject to delivery of the old certificate or, if alleged
to have been lost, stolen or destroyed, compliance with such
conditions as to evidence, indemnity and the payment of out-of-pocket
expenses of the Corporation in connection with the request as the
Board of Directors of the Corporation may determine.
J. NO PREEMPTIVE RIGHTS
Holders of the Series A Preferred Stock will have no
preemptive rights to purchase any securities of the Corporation.
K. NO REPURCHASE AT THE OPTION OF THE HOLDERS; MISCELLANEOUS
Holders of the Series A Preferred Stock will have no right to
require the Corporation to repurchase any shares of Series A Preferred
Stock, and the shares of Series A Preferred Stock are not subject to
any sinking fund or similar obligation. The Corporation may, at its
option, purchase shares of the Series A Preferred Stock from holders
thereof from time to time, by tender, in privately negotiated
transactions or otherwise.
The undersigned hereby certify that the capital of the Corporation
will not be reduced under or by reason of the adoption of the above resolutions
providing for the creation of the above described series of Preferred Stock.
<PAGE> 9
-9-
IN WITNESS WHEREOF, the Corporation has caused its corporate seal to
be hereunto affixed and this Certificate to be signed by its Executive Vice
President, David H. Chafey, Jr., and its Secretary, Samuel T. Cespedes, this
16th day of June, 1994.
BANPONCE CORPORATION
By:________________________________
David H. Chafey, Jr.
Executive Vice President
[CORPORATE SEAL]
By:________________________________
Samuel T. Cespedes
Secretary
Affidavit No. ________
Acknowledged and subscribed before me in San Juan, Puerto Rico, this
16th day of June, 1994, by the following persons: David H. Chafey, Jr., of
legal age, married, executive, and resident of San Juan, Puerto Rico, in his
capacity as Executive Vice President of BanPonce Corporation; and Samuel T.
Cespedes, of legal age, married, attorney, and resident of San Juan, Puerto
Rico, in his capacity as Secretary of BanPonce Corporation, both personally
known to me.
________________________________
Notary Public
<PAGE> 1
EXHIBIT 4(i)
<TABLE>
<S> <C> <C>
NUMBER SHARES
8.35% NON CUMULATIVE BANPONCE CORPORATION 8.35% NON CUMULATIVE
MONTHLY INCOME PREFERRED INCORPORATED UNDER THE LAWS OF THE COMMONWEALTH OF PUERTO RICO MONTHLY INCOME PREFERRED
STOCK, 1994 SERIES A STOCK, 1994 SERIES A
THIS CERTIFICATE IS TRANSFERABLE IN SAN JUAN, PUERTO RICO
THIS IS TO CERTIFY THAT CUSIP 066704206
IS THE OWNER OF
FULLY PAID AND NON-ASSESSABLE SHARES OF THE 8.35% NON-CUMULATIVE MONTHLY INCOME PREFERRED STOCK, 1994 SERIES A OF
BANPONCE CORPORATION, transferable only on the books of the Corporation by the holder hereof in
person or by its duly authorized attorney upon surrender of this Certificate properly endorsed. The
designations, preferences, limitations, and relative rights of the 8.35% Non-Cumulative Monthly
Income Preferred Stock, 1994 Series A, are fixed in the Certificate of Incorporation and the
Certificate of Resolution filed in the Department of State of the Commonwealth of Puerto Rico.
This Certificate is not valid until countersigned by the Transfer Agent and registered by the
Registrar.
IN WITNESS WHEREOF the seal of the Corporation is affixed to this Certificate and is signed
by duly authorized officers of the Corporation.
BANPONCE CORPORATION by
----------------------------------------
Authorized Officer
----------------------------------------
Authorized Officer
Date
</TABLE>
<PAGE> 2
A. DESIGNATION AND AMOUNT
The shares of such series of Preferred Stock shall be
designated as the "8.35% Non-Cumulative Monthly Income Preferred
Stock, 1994 Series A" (hereinafter called the "Series A Preferred
Stock"), and the number of authorized shares constituting such series
shall be 4,000,000.
B. DIVIDENDS
1. Holders of record of the Series A Preferred Stock
will be entitled to receive, when, as and if declared
by the Board of Directors of the Corporation, out of
funds of the Corporation legally available therefor,
non-cumulative cash dividends at the annual rate per
share of 8.35% of the liquidation preference of $25
per share, or $0.173958 per share per month, with
each aggregate payment made to each record holder
of the Series A Preferred Stock being rounded to the
next lowest cent.
2. Dividends on the Series A Preferred Stock will accrue
from their date of original issuance and will be
payable (when, as and if declared by the Board of
Directors of the Corporation out of funds of the
Corporation legally available therefor) monthly in
arrears in United States dollars commencing on July
31, 1994, and on the last day of each calendar month
of each year thereafter to the holders of record of
the Series A Preferred Stock as they appear
<PAGE> 3
-2-
on the books of the Corporation on the second Business
Day (as defined below) immediately preceding the
relevant date of payment.
3. Dividends on the Series A Preferred Stock will be
non-cumulative. The Corporation is not obligated or
required to declare or pay dividends on the Series A
Preferred Stock, even if it has funds available for
the payment of such dividends. If the Board of
Directors of the Corporation or an authorized
committee thereof does not declare a dividend payable
on a dividend payment date in respect of the Series A
Preferred Stock, then the holders of the Series A
Preferred Stock shall have no right to receive a
dividend in respect of the monthly dividend period
ending on such dividend payment date.
4. The amount of dividends payable for any monthly
dividend period will be computed on the basis of
twelve 30-day months and a 360-day year. The amount
of dividends payable for any period shorter than a
full monthly dividend period will be computed on the
basis of the actual number of days elapsed in such
period.
5. Subject to any applicable fiscal or other laws and
regulations, each dividend payment will be made by
dollar check drawn on a bank in New York, New York or
San Juan, Puerto Rico and mailed to the record holder
thereof at such holder's address as it appears on the
register for such Series A Preferred Stock.
6. So long as any shares of the Series A Preferred Stock
remain outstanding, the Corporation shall not
declare, set apart or pay any dividend or make any
other distribution of assets (other than dividends
paid or other distributions made in stock of the
Corporation ranking junior to the Series A Preferred
Stock as to the payment of dividends and as to the
distribution of assets upon liquidation, dissolution
or winding up of the Corporation) on, or redeem,
purchase, set apart or otherwise acquire (except upon
conversion or exchange for stock of the Corporation
ranking junior to the Series A Preferred Stock as to
the payment of dividends and as to the distribution of
assets upon liquidation, dissolution or winding up of
the Corporation), shares of common stock or of any
other class of stock of the Corporation ranking
junior to the Series A Preferred Stock as to the
payment of dividends or as to the distribution of
assets upon liquidation, dissolution or winding up of
the Corporation, unless (i) all
<PAGE> 4
-3-
accrued and unpaid dividends on the Series A
Preferred Stock for the twelve monthly dividend
periods ending on the immediately preceding dividend
payment date shall have been paid or are paid
contemporaneously and the full monthly dividend on
the Series A Preferred Stock for the then current
month has been or is contemporaneously declared and
paid or declared and set apart for payment and (ii)
the Corporation has not defaulted in the payment of
the redemption price of any shares of Series A
Preferred Stock called for redemption.
7. When dividends are not paid in full on the Series A
Preferred Stock and any other shares of stock of the
Corporation ranking on a parity as to the payment of
dividends with the Series A Preferred Stock, all
dividends declared upon the Series A Preferred Stock
and any such other shares of stock of the Corporation
will be declared pro rata so that the amount of
dividends declared per share on the Series A
Preferred Stock and any such other shares of stock
will in all cases bear to each other the same ratio
that the liquidation preference per share of the
Series A Preferred Stock and any such other shares of
stock bear to each other.
8. Holders of record of the Series A Preferred Stock
will not be entitled to any dividend, whether payable
in cash, property or stock, in excess of the
dividends provided for herein on the shares of Series
A Preferred Stock.
C. CONVERSION; EXCHANGE
The Series A Preferred Stock will not be convertible into or
exchangeable for any other securities of the Corporation.
D. REDEMPTION AT THE OPTION OF THE CORPORATION
1. The shares of the Series A Preferred Stock are not
redeemable prior to June 30, 1998. On and after that
date, the shares of the Series A Preferred Stock will
be redeemable in whole or in part from time to time
at the option of the Corporation, upon not less than
30 nor more than 60 days' notice by mail, at
the redemption prices set forth below, during the
twelve-month periods beginning on June 30 of the
years set forth below, plus accrued and unpaid
dividends for the then current monthly dividend
period to the date fixed for redemption.
YEAR REDEMPTION PRICE
---- ----------------
1998 . . . . . . . . . . . . . . $26.25
1999 . . . . . . . . . . . . . . $26.00
2000 . . . . . . . . . . . . . . $25.75
2001 . . . . . . . . . . . . . . $25.50
2002 and thereafter . . . . . . $25.00
<PAGE> 5
-4-
2. In the event that less than all of the outstanding
shares of the Series A Preferred Stock are to be
redeemed in any redemption at the option of the
Corporation, the total number of shares to be
redeemed in such redemption shall be determined by
the Board of Directors and the shares to be redeemed
shall be allocated pro rata or by lot as may be
determined by the Board of Directors or by such other
method as the Board of Directors may approve and deem
equitable.
3. Notice of any proposed redemption shall be given by
the Corporation by mailing a copy of such notice to
the holders of record of the shares of Series A
Preferred Stock to be redeemed, at their address of
record, not more than sixty nor less than thirty days
prior to the redemption date.
4. Notice having been mailed as aforesaid, from and
after the redemption date (unless default be made in
the payment of the redemption price for any shares to
be redeemed), all dividends on the shares of Series A
Preferred Stock called for redemption shall cease to
accrue and all rights of the holders of such shares
as stockholders of the Corporation by reason of the
ownership of such shares (except the right to receive
the redemption price, on presentation and surrender
of the respective certificates representing the
redeemed shares), shall cease on the redemption date.
5. At its option, the Corporation may, on or prior to
the redemption date, irrevocably deposit the
aggregate amount payable upon redemption of the
shares of the Series A Preferred Stock to be redeemed
with a bank or trust company designated by the
Corporation, to be held in trust by the Depositary
for payment to the holders of the shares of the
Series A Preferred Stock to be redeemed. If
<PAGE> 6
-5-
such deposit is made and the funds so deposited are
made immediately available to the holders of the
shares of the Series A Preferred Stock to be
redeemed, the Corporation shall thereupon be released
and discharged (subject to the provisions of Section
D.6) from any obligation to make payment of the
amount payable upon redemption of the shares of the
Series A Preferred Stock to be redeemed, and the
holders of such shares shall look only to the
Depositary for such payment.
6. Any funds remaining unclaimed at the end of two years
from and after the redemption date in respect of
which such funds were deposited shall be returned to
the Corporation forthwith and thereafter the holders
of shares of the Series A Preferred Stock called for
redemption with respect to which such funds were
deposited shall look only to the Corporation for the
payment of the redemption price thereof. Any
interest accrued on any funds deposited with the
Depositary shall belong to the Corporation and shall
be paid to it from time to time on demand.
E. LIQUIDATION PREFERENCE
1. Upon any voluntary or involuntary liquidation,
dissolution, or winding up of the Corporation, the
then record holders of shares of Series A Preferred
Stock will be entitled to receive out of the assets
of the Corporation available for distribution to
shareholders distributions upon liquidation in the
amount of $25 per share plus an amount equal to
any accrued and unpaid dividends for the current
monthly dividend period to the date of payment.
2. If upon any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, the
amounts payable with respect to the Series A
Preferred Stock and any other shares of stock of the
Corporation ranking as to any such distribution on a
parity with the Series A Preferred Stock are not paid
in full, the holders of the Series A Preferred Stock
and of such other shares will share ratably in any
such distribution of assets of the Corporation in
proportion to the full liquidation preferences to
which each is entitled. After payment of the full
amount of the liquidation preference to which they
are entitled, the holders of shares of Series A
Preferred Stock will not be entitled to any further
participation in any distribution of assets of the
Corporation.
<PAGE> 7
-6-
3. If the assets distributable upon any dissolution,
liquidation, or winding up of the Corporation shall
be insufficient to permit the payment to the holders
of the Series A Preferred Stock of the full
preferential amounts aforesaid, then such assets or
the proceeds thereof shall be distributed among the
holders of the Series A Preferred Stock ratably in
proportion to the respective amounts the holders of
such shares of stock would be entitled to receive if
they were paid the full preferential amounts
aforesaid.
F. VOTING RIGHTS
1. Except as described in this Section F, or except as
required by applicable law, holders of the Series A
Preferred Stock will not be entitled to receive
notice of or attend or vote at any meeting of
stockholders of the Corporation.
2. If the Corporation does not pay dividends in full on
the Series A Preferred Stock for eighteen consecutive
monthly dividend periods, the holders of outstanding
shares of the Series A Preferred Stock, together with
the holders of any other shares of stock of the
Corporation having the right to vote for the election
of directors solely in the event of any failure to
pay dividends, acting as a single class without
regard to series, will be entitled, by written notice
to the Corporation given by the holders of a majority
in liquidation preference of such shares or by
ordinary resolution passed by the holders of a
majority in liquidation preference of such shares
present in person or by proxy at a separate general
meeting of such holders convened for the purpose, to
appoint two additional members of the Board of
Directors of the Corporation, to remove any such
member from office and to appoint another person in
place of such member. Not later than 30 days
after such entitlement arises, if written notice by a
majority of the holders of such shares has not been
given as provided for in the preceding sentence, the
Board of Directors or an authorized committee thereof
will convene a separate general meeting for the above
purpose. If the Board of Directors or such
authorized committee fails to convene such meeting
within such 30-day period, the holders of 10% of
the outstanding shares of the Series A Preferred
Stock and any such other stock will be entitled to
convene such meeting. The provisions of the
Certificate of Incorporation and By-laws of the
Corporation relating to the convening and conduct of
general meetings of stockholders will apply with
respect to any such separate general meeting. Any
member of the Board of Directors so appointed shall
vacate office if, following the event which gave rise
to such appointment, the Corporation shall have
resumed the payment of dividends in full on the
Series A Preferred Stock and each such other series
of stock for twelve consecutive monthly dividend
periods.
3. Any variation or abrogation of the rights,
preferences and privileges of the Series A Preferred
Stock by way of amendment of the Corporation's
Certificate of Incorporation or otherwise (including,
without limitation, the authorization or issuance of
any shares of the Corporation ranking, as to dividend
rights or rights on liquidation, winding up and
dissolution, senior to the Series A Preferred Stock)
shall not be effective (unless otherwise required by
applicable law) except with the consent in writing of
the holders of at least
<PAGE> 8
-7-
two-thirds of the outstanding shares of the Series A
Preferred Stock or with the sanction of a special
resolution passed at a separate general meeting by
the holders of at least two-thirds in liquidation
preference of the outstanding shares of the Series A
Preferred Stock. Notwithstanding the foregoing, the
Corporation may, without the consent or sanction of
the holders of the Series A Preferred Stock,
authorize and issue shares of the Corporation
ranking, as to dividend rights and rights on
liquidation, winding up and dissolution, on a parity
with or junior to the Series A Preferred Stock.
4. No vote of the holders of the Series A Preferred
Stock will be required for the Corporation to redeem
or purchase and cancel the Series A Preferred Stock
in accordance with the Certificate of Incorporation
of the Corporation or the Certificate of Resolution
for the Series A Preferred Stock.
G. RANK
The Series A Preferred Stock will, with respect to dividend
rights and rights on liquidation, winding up and dissolution, rank (i)
senior to all classes of common stock of the Corporation, to the
Corporation's Series A Participating Preferred Stock and to all other
equity securities issued by the Corporation the terms of which
specifically provide that such equity securities will rank junior to
the Series A Preferred Stock (or to all series of the Preferred Stock
in general); (ii) on a parity with all equity securities issued by the
Corporation the terms of which specifically provide that such equity
securities will rank on a parity with the Series A Preferred Stock
(or to all series of the Preferred Stock in general); and (iii) junior
to all equity securities issued by the Corporation the terms of which
specifically provide that such equity securities will rank senior to
the Series A Preferred Stock (or to all series of the Preferred Stock
in general). For this purpose, the term "equity securities" does not
include debt securities convertible into or exchangeable for equity
securities.
H. FORM OF CERTIFICATE FOR SERIES A PREFERRED STOCK; TRANSFER AND
REGISTRATION
1. The Series A Preferred Stock shall be issued in
registered form only. The Corporation may treat the
record holder of a share of Series A Preferred Stock,
including the Depository Trust Company and its
nominee and any other holder that holds such share on
behalf of any other person, as such record holder
appears on the books of the registrar for the Series
A Preferred Stock, as the sole owner of such share
for all purposes.
<PAGE> 9
-8-
2. The transfer of a share of Series A Preferred Stock
may be registered upon the surrender of the
certificate evidencing the share of Series A
Preferred Stock to be transferred, together with the
form of transfer endorsed on it duly completed and
executed, at the office of the transfer agent and
registrar.
3. Registration of transfers of shares of Series A
Preferred Stock will be effected without charge by or
on behalf of the Corporation, but upon payment (or
the giving of such indemnity as the transfer agent
and registrar may require) in respect of any tax or
other governmental charges which may be imposed in
relation to it.
4. The Corporation will not be required to register the
transfer of a share of Series A Preferred Stock after
such share has been called for redemption.
I. REPLACEMENT OF LOST CERTIFICATES
If any certificate for a share of Series A Preferred Stock is
mutilated or alleged to have been lost, stolen or destroyed, a new
certificate representing the same share may be issued to the holder
upon request subject to delivery of the old certificate or, if alleged
to have been lost, stolen or destroyed, compliance with such
conditions as to evidence, indemnity and the payment of out-of-pocket
expenses of the Corporation in connection with the request as the
Board of Directors of the Corporation may determine.
J. NO PREEMPTIVE RIGHTS
Holders of the Series A Preferred Stock will have no
preemptive rights to purchase any securities of the Corporation.
K. NO REPURCHASE AT THE OPTION OF THE HOLDERS; MISCELLANEOUS
Holders of the Series A Preferred Stock will have no right to
require the Corporation to repurchase any shares of Series A Preferred
Stock, and the shares of Series A Preferred Stock are not subject to
any sinking fund or similar obligation. The Corporation may, at its
option, purchase shares of the Series A Preferred Stock from holders
thereof from time to time, by tender, in privately negotiated
transactions or otherwise.
