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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM S-8
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
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POPULAR, INC.
(Exact name of registrant as specified in its charter)
PUERTO RICO 66-0416582
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
209 Munoz Rivera Avenue 00918
Hato Rey, Puerto Rico (Zip code)
(Address of principal executive offices)
BANCO POPULAR DE PUERTO RICO EMPLOYEES' STOCK PLAN (U.S.)
POPULAR, INC. U.S.A. PROFIT SHARING/401(K) PLAN
(Full title of the plans)
----------------------
JORGE A. JUNQUERA
209 MUNOZ RIVERA AVENUE
HATO REY, PUERTO RICO 00918
(Name and address of agent for service)
(809) 765-9800
(Telephone number, including area code, of agent for service)
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Copies to:
DONALD J. TOUMEY
SULLIVAN & CROMWELL
125 BROAD STREET
NEW YORK, NEW YORK 10004
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<PAGE>
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
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Proposed Maximum Proposed Maximum
Title of each Class of Securities to be Amount to be Offering Price Per Aggregate Offering Amount of
Registered registered(1)(2)(3) Share(4) Price(4) Registration Fee
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value $6 per share,
together with attached rights to
purchase Series A Participating
Cumulative Preferred Stock, no par
value .................................. 1,000,000 Shares $30.40625 $30,406,250 $8,453
=============================================================================================================================
<FN>
(1) This Registration Statement registers additional shares of Common Stock relating to Banco Popular de Puerto Rico
Employees' Stock Plan (U.S.); shares of Common Stock issuable under such plan were registered under Registration
Statement No. 33-58373.
(2) The amount being registered also includes an indeterminate number of shares of Common Stock which may be issuable as a
result of stock splits, stock dividends and antidilution provisions and other terms, in accordance with Rule 416 under
the Securities Act.
(3) In addition, pursuant to Rule 416(c) under the Securities Act of 1933, as amended, this Registration Statement also
covers an indeterminate amount of interests to be offered and sold pursuant to the Banco Popular de Puerto Rico
Employees' Stock Plan (U.S.) and the Popular, Inc. U.S.A. Profit Sharing/401(k) Plan.
(4) Estimated solely for the purpose of calculating the registration fee. Such estimate has been computed in accordance with
Rule 457(h) based upon the average of the high and low price of the Common Stock on the NASDAQ National Market System on
June 3, 1999, namely $30.40625.
</FN>
</TABLE>
<PAGE>
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PART I
INFORMATION REQUIRED IN THE PROSPECTUS
As permitted by Rule 428 under the Securities Act of 1933, as amended
(the "Securities Act"), this Registration Statement omits the information
specified in Part I of Form S-8. The documents containing the information
specified in Part I will be delivered to the participants in the plans covered
by this Registration Statement as required by Rule 428(b). Such documents are
not being filed with the Securities and Exchange Commission (the "Commission")
as part of this Registration Statement or as prospectuses or prospectus
supplements pursuant to Rule 424 under the Securities Act.
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<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission by Popular, Inc. (the
"Company"), Banco Popular de Puerto Rico Employees' Stock Plan (U.S.) and
Popular, Inc. U.S.A. Profit Sharing/401(k) Plan are incorporated herein by
reference:
(1) The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1998;
(2) The Annual Reports on Form 11-K for the year ended December 31,
1997 for each of Banco Popular de Puerto Rico Employees' Stock Plan (U.S.)
and Popular, Inc. U.S.A. Profit Sharing/401(k) Plan (which was entitled
Amended and Restated U.S.A. Profit Sharing/401(k) Plan until January 1,
1998);
(3) The Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1999;
(4) The Company's Current Reports on Form 8-K, dated since December
31, 1998;
(5) The descriptions of the Company's Common Stock set forth in the
Company's Registration Statement on Form 8-A, filed August 18, 1988, and
any amendment or report filed for the purpose of updating any such
description; and
(6) The description of the Company's Rights Plan set forth in the
Company's Registration Statement on Form 8-A, filed August 28,1998, and any
amendment or report filed for the purpose of updating such description.
All documents filed by the Company, the Banco Popular de Puerto Rico
Employees' Stock Plan (U.S.) and the Popular, Inc. U.S.A. Profit Sharing/401(k)
Plan pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), subsequent to the date of this
Registration Statement shall be deemed to be incorporated by reference in this
Registration Statement and to be a part hereof from the date of filing of such
documents. Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Registration Statement to the extent that a statement
contained herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Registration
Statement.
ITEM 4. DESCRIPTION OF CAPITAL STOCK
Not applicable. The Company's Common Stock is registered under Section
12 of the Exchange Act.
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<PAGE>
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article ELEVENTH of the Restated Certificate of Incorporation of the
Corporation provides the following:
(1) The Corporation shall indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Corporation)
by reason of the fact that he is or was a director, officer, employee or
agent of the Corporation, or is or was serving at the written request of
the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorney's fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of
any action, suit or proceeding by judgment, order, settlement, conviction,
or upon a plea of nolo contendere or its equivalent, shall not, of itself,
create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the Corporation and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
(2) The Corporation shall indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the Corporation to procure a judgment
in its favor by reason of the fact that he is or was a director, officer,
employee or agent of the Corporation, or is or was serving at the written
request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorney's fees) actually and reasonably
incurred by him in connection with the defense or settlement of such action
or suit if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the Corporation, except that
no indemnification shall be made in respect of any claim, issue or matter
as to which such person shall have been adjudged to be liable for
negligence or misconduct in the performance of his duty to the Corporation
unless and only to the extent that the court in which such action or suit
was brought shall determine upon application that, despite the adjudication
of liability but in view of all the circumstances of the case, such person
is fairly and reasonably entitled to indemnity for such expenses which such
court shall deem proper.
(3) To the extent that a director, officer, employee or agent of the
Corporation has been successful on the merits or otherwise in defense of
any action, suit or proceeding referred to in paragraph 1 or 2 of this
Article ELEVENTH, or in defense of any claim, issue or matter therein, he
shall be indemnified against expenses (including attorney's fees) actually
and reasonably incurred by him in connection therewith.
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(4) Any indemnification under paragraph 1 or 2 of this Article
ELEVENTH (unless ordered by a court) shall be made by the Corporation only
as authorized in the specific case upon a determination that
indemnification of the director, officer, employee or agent is proper in
the circumstances because he has met the applicable standard of conduct set
forth therein. Such determination shall be made (a) by the Board of
Directors by a majority vote of a quorum consisting of directors who were
not parties to such action, suit or proceeding, or (b) if such a quorum is
not obtainable, or, even if obtainable, a quorum of disinterested directors
so directs, by independent legal counsel in a written opinion, or (c) by
the stockholders.
(5) Expenses incurred in defending a civil or criminal action, suit or
proceeding may be paid by the Corporation in advance of the final
disposition of such action, suit or proceeding as authorized by the Board
of Directors in the specific case upon receipt of an undertaking by or on
behalf of the director, officer, employee or agent to repay such amount
unless it shall ultimately be determined that he is entitled to be
indemnified by the Corporation as authorized in this Article ELEVENTH.
(6) The indemnification provided by this Article ELEVENTH shall not be
deemed exclusive of any other rights to which those seeking indemnification
may be entitled under any statute, by-law, agreement, vote of stockholders
or disinterested directors or otherwise, both as to action in his official
capacity and as to action in another capacity while holding such office,
and shall continue as to a person who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the heirs, executors
and administrators of such a person.
(7) By action of its Board of Directors, notwithstanding any interest
of the directors in the action, the Corporation may purchase and maintain
insurance, in such amounts as the Board of Directors deems appropriate, on
behalf of any person who is or was a director, officer, employee or agent
of the Corporation, or is or was serving at the written request of the
Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
any liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or not the
Corporation would have the power or would be required to indemnify him
against such liability under the provisions of this Article ELEVENTH or of
the General Corporation Law of the Commonwealth of Puerto Rico or of any
other State of the United States or foreign country as may be applicable.
Section 1202 of Title 14, Laws of Puerto Rico Annotated provides the
following:
Every corporation created under the provisions of this subtitle shall
have the power to --
* * * (10) indemnify any and all of its directors or officers or
former directors or officers or any person who may have served at its
request as a director or officer of another corporation in which it
owns shares of capital stock or of which it is a creditor against
expenses actually and necessarily incurred by them in connection with
the defense of any action, suit or proceeding in which they, or any of
them, are made parties, or a party, by reason of being or having been
directors or officers or a director or officer of the corporation, or
of such other corporation, except in relation to matters as to which
any such director or officer or former director or officer or
II-3
<PAGE>
person shall be adjudged in such action, suit or proceeding to be
liable for negligence or misconduct in the performance of duty. Such
indemnification shall not be deemed exclusive of any other rights to
which those indemnified may be entitled, under any by-law, agreement,
vote of stockholders or otherwise.
In addition, the Company maintains a directors' and officers' liability
insurance policy.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Not applicable.
ITEM 8. EXHIBITS
The registrant hereby undertakes to submit the Banco Popular de Puerto
Rico Employees' Stock Plan (U.S.) and any amendment thereto and the Popular,
Inc. U.S.A. Profit Sharing/401(k) Plan and any amendment thereto to the Internal
Revenue Service (the "IRS") in a timely manner for a determination that such
plan is qualified under Section 401 of the Internal Revenue Code of 1986 and to
make all changes required by the IRS in order to qualify the plan.
Exhibit
Number Description of Exhibits
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4.1 Restated Certificate of Incorporation of the Company, incorporated
by reference to Exhibit 4(a) to the registrant's Registration
Statement on Form S-3 (Nos. 333-26941, 333- 26941-01 and
333-26941-02) filed with the Securities and Exchange Commission on
May 12, 1997.
4.2 By-laws of the Company, as amended.
4.3 Specimen of Certificate of the registrant's Common Stock, par
value $6 per share, incorporated by reference to Exhibit 4.1 to
the Company's Annual Report on Form 10-K for the year ended
December 31, 1990.
4.4 (a) Banco Popular de Puerto Rico Employees' Stock Plan (U.S.).
(b) Popular, Inc. U.S.A. Profit Sharing/401(k) Plan.
23 Consents of Independent Accountants.
24 Powers of Attorney (included on pages 7 through 9).
II-4
<PAGE>
ITEM 9. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933 (the "Securities Act");
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement; and
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Securities and Exchange Commission by the registrant pursuant to section 13
or section 15(d) of the Exchange Act that are incorporated by reference in
the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Exchange Act (and each filing of an employee benefit plan's annual report
pursuant to section 15(d) of the Exchange Act) that is incorporated by reference
in the registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such
II-5
<PAGE>
director, officer or controlling person against the registrant in connection
with the securities being registered, the registrant will, unless in the opinion
of its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.
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<PAGE>
SIGNATURES
THE REGISTRANT. Pursuant to the requirements of the Securities Act of
1933, the Registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of San Juan, Commonwealth of Puerto Rico, on this
8th day of June, 1999.
POPULAR, INC.
(Registrant)
By /s/ Jorge A. Junquera
-----------------------------------------
Name: Jorge A. Junquera
Title: Senior Executive Vice President
and Director
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, THAT EACH PERSON WHOSE SIGNATURE
APPEARS BELOW CONSTITUTES AND APPOINTS RICHARD L. CARRION, DAVID H. CHAFEY, JR.,
JORGE A. JUNQUERA, ORLANDO BERGES, AMILCAR JORDAN AND ROBERTO R. HERENCIA, AND
EACH OF THEM INDIVIDUALLY, HIS TRUE AND LAWFUL ATTORNEYS-IN-FACT AND AGENTS,
WITH FULL POWER AND IN ANY AND ALL CAPACITIES, TO SIGN THIS REGISTRATION
STATEMENT AND ANY AND ALL AMENDMENTS (INCLUDING POST-EFFECTIVE AMENDMENTS) TO
THIS REGISTRATION STATEMENT, AND TO FILE SUCH REGISTRATION STATEMENT AND ALL
SUCH AMENDMENTS OR SUPPLEMENTS, WITH ALL EXHIBITS THERETO, AND OTHER DOCUMENTS
IN CONNECTION THEREWITH, WITH THE SECURITIES AND EXCHANGE COMMISSION, GRANTING
UNTO SAID ATTORNEYS-IN-FACT AND AGENTS, AND EACH OF THEM, FULL POWER AND
AUTHORITY TO DO AND PERFORM EACH AND EVERY ACT AND THING REQUISITE OR NECESSARY
TO BE DONE IN AND ABOUT THE PREMISES, AS FULLY TO ALL INTENTS AND PURPOSES AS HE
MIGHT OR COULD DO IN PERSON, THEREBY RATIFYING AND CONFIRMING ALL THAT SAID
ATTORNEYS-IN-FACT AND AGENTS OR ANY OF THEM, OR THEIR OR HIS SUBSTITUTES OR
SUBSTITUTE, MAY LAWFULLY DO OR CAUSE TO BE DONE BY VIRTUE THEREOF.
Signature Title Date
- --------- ----- ----
/s/ Richard L. Carrion Chairman of the Board, President June 8, 1999
- ----------------------------- and Chief Executive Officer
Richard L. Carrion
/s/ Alfonso F. Ballester Director June 8, 1999
- -----------------------------
Alfonso F. Ballester
Director
- -----------------------------
Antonio Luis Ferre
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<PAGE>
Signature Title Date
- --------- ----- ----
/s/ Juan J. Bermudez Director June 8, 1999
- -----------------------------
Juan J. Bermudez
Director
- -----------------------------
Francisco J. Carreras
Director
- -----------------------------
Luis E. Dubon, Jr.
/s/ Hector R. Gonzalez Director June 8, 1999
- -----------------------------
Hector R. Gonzalez
/s/ Jorge A. Junquera Senior Executive Vice President June 8, 1999
- ----------------------------- and Director (Principal Financial
Jorge A. Junquera Officer)
Director
- -----------------------------
Manuel Morales, Jr.
/s/ Alberto M. Paracchini Director June 8, 1999
- -----------------------------
Alberto M. Paracchini
/s/ Francisco M. Rexach, Jr. Director June 8, 1999
- -----------------------------
Francisco M Rexach, Jr.
Director
- -----------------------------
J. Adalberto Roig
/s/ Felix J. Serralles Nevares Director June 8, 1999
- -----------------------------
Felix J. Serralles Nevares
/s/ Julio E. Vizcarrondo Director June 8, 1999
- -----------------------------
Julio E. Vizcarrondo, Jr.
/s/ David H. Chafey, Jr. Senior Executive Vice President June 8, 1999
- ----------------------------- and Director
David H. Chafey, Jr.
/s/ Amilcar Jordan Senior Vice President June 8, 1999
- ----------------------------- (Principal Accounting Officer)
Amilcar Jordan
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<PAGE>
THE PLANS. Pursuant to the requirements of the Securities Act of 1933,
the persons who administer the employee benefit plans have duly caused this
registration statement to be signed on behalf of such plans by the undersigned,
thereunto duly authorized, in the City of San Juan, Commonwealth of Puerto Rico,
on this 8th day of June, 1999.
BANCO POPULAR DE PUERTO RICO
EMPLOYEES' STOCK PLAN (U.S.)
POPULAR, INC. U.S.A. PROFIT
SHARING/401(k) PLAN
By: /s/ Maria Isabel Burckhart
----------------------------------------------
Maria Isabel Burckhart
Member of the Administrative Committee
By: /s/Jorge A. Junquera
----------------------------------------------
Jorge A. Junquera
Authorized Representative in the United States
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<PAGE>
EXHIBIT INDEX
Exhibit
Number Description of Exhibits
- ------ -----------------------
4.1 Restated Certificate of Incorporation of the Company, incorporated
by reference to Exhibit 4(a) to the registrant's Registration
Statement on Form S-3 (Nos. 333-26941, 333-26941-01 and
333-26941-02) filed with the Securities and Exchange Commission on
May 12, 1997.
4.2 By-laws of the Company, as amended.
4.3 Specimen of Certificate of the registrant's Common Stock, par
value $6 per share, incorporated by reference to Exhibit 4.1 to
the Company's Annual Report on Form 10-K for the year ended
December 31, 1990.
4.4 (a) Banco Popular de Puerto Rico Employees' Stock Plan (U.S.).
(b) Popular, Inc. U.S.A. Profit Sharing/401(k) Plan.
23 Consents of Independent Accountants.
24 Powers of Attorney (included on pages 7 through 9).
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EXHIBIT 4.2
BY-LAWS
OF
POPULAR, INC.
ARTICLE 1: BOARD OF DIRECTORS
1.1 The business and affairs of the Corporation shall be conducted
under the authority of its Board of Directors. The directors shall be elected in
the manner set forth in the Certificate of Incorporation of the Corporation.
1.2 If for any reason or cause an election of directors is not held on
the Annual Meeting of Stockholders, or at any adjournment thereof, such election
may be held on any subsequent date at a special meeting of stockholders duly
called for such purpose.
1.3 Directors shall receive such reasonable compensation as may be
established from time to time by the Board of Directors by resolution approved
by an absolute majority thereof.
1.4 The Board may hold such regular meetings as may be established from
time to time by resolution approved by an absolute majority of the Board. Once
regular meetings are convened as established herein, notice thereof need not be
given. The Board may hold such extraordinary meetings as may be convened by the
Chairman of the Board, by the President or which may be required by at least
three (3) directors. Such regular or extraordinary meetings may be held at the
Corporation's principal office, at any other place or places within or without
Puerto Rico, or by such other means as permitted by law.
When required notices of meetings shall be mailed to each director,
addressed to him at his residence or usual place of business, not later than
three (3) days before the day on which the meeting is to be held, or shall be
sent to him at such place by telegraph, or be delivered personally or by
telephone, not later than the day before such day of meeting. Whenever notice of
any meeting of the Board of Directors is required to be given under any
provision of law, the Certificate of Incorporation or the By-Laws, a written
waiver thereof signed by the director entitled to notice, whether before, at, or
after the time of such meeting, shall be deemed equivalent to notice. Attendance
of a director at any meeting of the Board of Directors shall constitute a waiver
of notice of such meeting, except when the director attends such meeting for the
express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because such meeting is not lawfully called or
convened.
1.5 The quorum at any meeting of the Board of Directors shall consist
of a majority of the total number of directors. The vote of a majority of the
directors present at
<PAGE>
a meeting at which a quorum is present shall be the act of the Board unless the
Certificate of Incorporation or these By-Laws shall require a vote of a greater
number.
ARTICLE 2: MEETINGS OF STOCKHOLDERS
2.1 An Annual Meeting of Stockholders shall be held not later than the
fifth month following the end of the fiscal year of the Corporation at a place,
date and time fixed by the Board of Directors.
2.2 Special meetings of stockholders may be called by the Board of
Directors, the Chairman of the Board of Directors or the President of the
Corporation. The notice of such special meetings shall specify the purpose or
purposes for which the meeting is called.
2.3 All meeting of stockholders shall be convened by delivering a
notice to each holder or shares entitled to vote, not less than thirty (30) days
before the date of the meeting, either personally or by mail. If mailed, such
notice shall be deemed to be delivered when deposited in the United States mail,
addressed to the stockholder at his or her address as it appears on the Stock
Book of the Corporation, with postage thereon prepaid.
2.4 A majority of the outstanding shares of the Corporation entitled to
vote represented in person or by proxy, shall constitute a quorum at a meeting
of stockholders. If no quorum is present, the meeting shall be adjourned from
time to time without further notice until a date not less than eight (8) days
after the date for which the first meeting was called. Such adjourned meeting
shall be held and shall be lawfully organized whatever the number of shares
entitled to vote may be represented therein, and any business may be transacted
which might have been transacted at the meeting as originally noticed.
2.5 Unless otherwise provided in the Certificate of Incorporation, each
stockholder entitled to vote at any meeting of stockholders shall be entitled to
one vote for each share of stock held by such stockholder which has voting power
upon the matter in question. Each stockholder entitled to vote at a meeting of
stockholders or to express consent or dissent to corporate action in writing
without a meeting may authorize another person or persons to act for such
stockholder by proxy, but no such proxy shall be voted or acted upon after three
years from its date, unless the proxy provides for a longer period. Without
limiting the manner in which a stockholder may authorize another person or
persons to act for him as proxy, the following shall constitute valid means by
which a stockholder may grant such authority:
2.5.1 A stockholder may execute a writing authorizing another
person or persons to act for him as proxy. Execution may be accomplished by
the stockholder or his authorized officer, director, employee or agent
signing such writing or causing
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<PAGE>
his or her signature to be affixed to such writing by any reasonable means
including, but not limited to, by facsimile signature.
2.5.2 A stockholder may authorize another person or persons to
act for him as proxy by transmitting or authorizing the transmission of a
telegram, cablegram, Internet or other means of electronic transmission to
the person who will be the holder of the proxy or to a proxy solicitation
firm, proxy support service organization or like agent duly authorized by
the person who will be the holder of the proxy to receive such
transmission, provided that any such telegram, cablegram, Internet or other
means of electronic transmission must either set forth or be submitted with
information from which it can be determined that the telegram, cablegram,
Internet or other electronic transmission was authorized by the
stockholder. If it is determined that such telegrams, cablegrams, Internet
or other electronic transmissions are valid, the inspectors or, if there
are no inspectors, such other persons making that determination shall
specify the information upon which they relied.
Directors shall be elected by a majority of the votes cast by
Stockholders present in person or represented by proxy at the meeting and
entitled to vote on the election of directors. In all other matters, unless
otherwise provided by law or by the Certificate of Incorporation or these
By-Laws, the affirmative vote of the holders of a majority of the shares present
in person or represented by proxy at the meeting and entitled to vote on the
subject matter shall be the act of the stockholders.
Shares with respect to which a broker, financial institution or
other nominee has physically indicated on the proxy that it does not have
discretionary authority to vote on a particular matter ("broker non-votes"),
will not be considered as present and entitled to vote with respect to that
matter but will be considered as present and entitled to vote for purposes of
determining the presence of a quorum as determined in Section 2.5 of these
By-Laws.
2.6 The Chairman of the Board of Directors shall preside at any meeting
of stockholders and shall conduct such proceedings as are customary in this kind
of meeting, procuring at all times order and impartiality in the debates.
2.7 During the Annual Meeting of Stockholders, the financial statements
of the Corporation shall be presented to the stockholders for their approval,
and the directors shall provide such explanations as may be reasonably requested
by the stockholders regarding such statements as well as the operations of the
Corporation during the year.
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ARTICLE 3: OFFICERS AND EMPLOYEES
3.1 The Board shall appoint one of its members to be the Chairman of
the Board, to serve at the pleasure of the Board. He shall preside at all
meetings of the Board and of the stockholders. He shall also have and may
exercise such executive powers and duties as pertain to the office of Chairman
of the Board, or as from time to time may be conferred upon, or assigned to, him
by the Board.
3.2 The Board shall appoint one of its members to be the President of
the Corporation, to serve at the pleasure of the Board. In the absence of the
Chairman, the President shall preside at any meetings of the Board and of the
stockholders. He shall also have and may exercise such further powers and duties
as pertain to the office of President of the Corporation, or as from time to
time may be conferred upon, or assigned to, him by the Board.
3.3 The Board of Directors may appoint from among its members one or
more Vice Chairmen to serve at the pleasure of the Board. Each Vice Chairman
shall have such powers and duties as may be assigned to him by the Board.
3.4 The Board shall appoint a Secretary. The Secretary shall keep the
minutes of the meetings of the Board and of the stockholders. He or one of the
Assistant Secretaries shall see that proper notices are given of all meetings of
which notice is required. The Secretary shall have custody of the seal and when
necessary shall attest to the same when affixed to written instruments properly
executed on behalf of the Corporation; and generally, shall perform such other
duties as may be prescribed from time to time by the Board, the Chairman or the
President.
3.5 The Board shall appoint one or more Assistant Secretaries. The
Assistant Secretaries shall perform such duties as shall be prescribed by the
Board, The Chairman, the President or the Secretary.
3.6 The Board may appoint such other officers (who need not be
directors) and attorneys-in-fact as from time to time may appear to the Board to
be required or desirable to transact the business of the Corporation. Such
officers shall respectively exercise such powers and perform such duties as
pertain to their several offices, or as may be conferred upon, or assigned to,
them by the Board or the President.
ARTICLE 4: CERTIFICATES AND TRANSFERS OF STOCK
4.1 Certificates for Shares. Subject to the second paragraph of this
Section 4.1, every holder of shares of stock of the Corporation shall be
entitled to have a certificate
-4-
<PAGE>
representing all shares to which he is entitled. The certificates shall be
signed by the President or any Vice President and by the Treasurer or an
Assistant Treasurer, or by the Secretary or an Assistant Secretary. Such
signatures may be facsimiles if the certificate is manually signed on behalf of
a transfer agent or registrar other than the Corporation itself or an employee
of the Corporation. In case any officer who signed, or whose facsimile signature
has been placed upon, such certificate shall have ceased to be such officer
before such certificate is issued, it may be issued by the Corporation with the
same effect as if he were such officer at the date of its issuance. The
certificates representing the stock of the Corporation shall be in such form as
shall be approved by the Board of Directors.
4.2 Transfers of stock shall be made on the books of the Corporation
only by the person named in the certificate in the case of uncertificated
securities, or by attorney lawfully constituted in writing, and, in the case of
certificated securities, upon surrender and cancellation of a certificate or
certificates for a like number of shares of the same class of stock, with duly
executed assignment and power of transfer endorsed thereon or attached thereto,
and with such proof of the authenticity of the signatures as the Corporation or
its agents may reasonably require. No transfer of stock other than on the
records of the Corporation shall affect the right of the Corporation to pay any
dividend upon the stock to the holder of record thereof or to treat the holder
of record as the holder in fact thereof for all purposes, and no transfer shall
be valid, except between the parties thereto, until such transfers shall have
been made upon the records of the Corporation.
4.3 With respect to voting rights, the shares of stock shall be
considered indivisible. In the case of shares belonging to several persons
collectively, the co-owners shall appoint a representative to act on behalf of
the group.
4.4 If the loss, theft or destruction of a Certificate is reasonably
established before the Board of Directors, the latter may authorize the issuance
of a duplicate, provided the concerned stockholder presents before the Board of
Directors a sworn statement in which the stockholder describes circumstances
surrounding the loss, theft or destruction of said Certificate, and if the Board
of Directors so require give the Corporation a bond of indemnity, in form and
with one or more sureties satisfactory to the Board, in such sum as it may
direct as indemnity against any claim which may be made against the Corporation
with respect to the Certificate alleged to have been lost, stolen or destroyed.
The Board of Directors of the Corporation may provide by
resolution or resolutions that some or all of any or all classes or series of
its stock shall be uncertificated securities. Any such resolution shall not
apply to shares represented by a certificate until such certificate is
surrendered to the Corporation. Notwithstanding the adoption of such a
resolution by the Board of Directors, every holder of stock represented by
uncertificated shares, shall be entitled upon request, to a certificate in the
form set forth in the first paragraph of this Section 4.1.
-5-
<PAGE>
4.5 The Board of Directors may, in its discretion, appoint one or more
banks or trust companies in any such city or cities as the Board of Directors
may deem advisable, including any banking subsidiaries of the Corporation, from
time to time, to act as Transfer Agents and Registrars of the stock or other
securities of the Corporation; and upon such appointments being made, no stock
certificate shall be valid until countersigned by one of such Agents and
registered by one of such Registrars.
4.6 The Board of Directors may close the Stock Book in their discretion
for a period not exceeding fifty (50) days preceding any meeting of the
Stockholders, or the day appointed for the payment of dividends.
ARTICLE 5: WAIVER OF NOTICE
5.1 Any stockholder, director or officer may waive, in writing, any
notice required to be given under these By-Laws.
ARTICLE 6: FISCAL YEAR
6.1 The fiscal year of the Corporation shall commence on the first day
of January and shall end on the thirty-first day of December of each year.
ARTICLE 7: PROFITS AND DIVIDENDS
7.1 Dividends upon the capital stock of the Corporation, subject to the
provisions of the Certificate of Incorporation, if any, may be declared by the
Board of Directors at any regular or special meeting, pursuant to law. Dividends
may be paid in cash, in property, or in shares of the capital stock.
7.2 Before payment of any dividend or making any distribution of
profits, there may be set aside out of any funds of the Corporation available
for dividends as the Board of Directors from time to time, in their absolute
discretion, think proper as a reserve or reserves to meet contingencies, or for
equalizing dividends, or for repairing or maintaining any property of the
Corporation, or for such other purpose as the Board of Directors shall think
conducive to the interest of the Corporation, and, the Board of Directors may
modify or abolish any such reserve in the manner in which it was created.
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<PAGE>
ARTICLE 8: SEAL
8.1 The corporate seal shall have inscribed thereon the name of the
Corporation and the words "Commonwealth of Puerto Rico". The seal may be used by
causing it or a facsimile thereof to be impressed or affixed or reproduced or
otherwise.
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BANCO POPULAR DE PUERTO RICO
EMPLOYEES' STOCK PLAN (U.S.)
---------------------
<PAGE>
BANCO POPULAR DE PUERTO RICO
----------------------------
EMPLOYEES' STOCK PLAN (U.S.)
--------------------------
Table of Contents
-----------------
Page
----
Article I DEFINITIONS I-1
Article II PARTICIPATION II-1
Article III EMPLOYEE CONTRIBUTIONS III-1
Article IV EMPLOYER CONTRIBUTIONS IV-1
Article V LIMITATIONS ON CONTRIBUTIONS V-1
Article VI INVESTMENT OF CONTRIBUTIONS AND
VALUATIONS VI-1
Article VII DISTRIBUTIONS VII-1
Article VIII PLAN ADMINISTRATION VIII-1
Article IX CLAIMS PROCEDURE IX-1
Article X AMENDMENT OR TERMINATION OF THE PLAN OR
DISCONTINUANCE OF CONTRIBUTIONS X-1
Article XI TOP HEAVY PROVISIONS XI-1
Article XII MISCELLANEOUS PROVISIONS XII-1
<PAGE>
BANCO POPULAR DE PUERTO RICO
----------------------------
EMPLOYEES' STOCK PLAN (U.S.)
--------------------------
Banco Popular de Puerto Rico (the "Employer") adopted the Banco Popular de
Puerto Rico Employees' Stock Plan, hereinafter set forth, effective as of April
1, 1995. The purpose of the Plan is to provide retirement benefits to eligible
Employees and their beneficiaries all as set forth herein.
The Plan established hereunder is intended to qualify as a profit sharing plan
which meets the requirements for qualification and tax-exemption under Sections
401(a), 401(k), and 401(m) of the Internal Revenue Code of 1986, as now in
effect or hereafter amended, or any other applicable provisions of law
including, without limitation, the Employee Retirement Income Security Act of
1974, as now in effect or hereafter amended.
<PAGE>
Article I
DEFINITIONS
Where the following words and phrases appear in the Plan, they shall
have the respective meanings as set forth below, unless the context in which
they are used clearly indicates a different meaning.
1.01 Account
-------
The Account established and maintained on behalf of a Participant
including, as applicable, a Participant's "Elective Deferral Contribution
Account", "Voluntary Contribution Account", "Employer Contribution Account" and
"Rollover Account".
1.02 Administrative Committee
------------------------
The persons appointed by the Employer to administer the Plan in
accordance with the provisions of Article VIII. The Administrative Committee
shall serve as the Plan Administrator.
1.03 Affiliated Company
------------------
The Employer and any corporation which is a member of a controlled
group of corporations (as defined in Section 414(b) of the Internal Revenue
Code) which includes the Employer; any trade or business (whether or not
incorporated) which is under common control (as defined in Section 414(c) of the
Internal Revenue Code) with the Employer; any organization (whether or not
incorporated) which is a member of an affiliated service group (as defined in
Section 414(m) of the Internal Revenue Code) which includes the Employer; and
any other entity required to be aggregated with the Employer pursuant to
regulations under Section 414(o) of the Internal Revenue Code.
1.04 Anniversary Date
----------------
The Effective Date and each December 31 thereafter.
I-1
<PAGE>
1.05 Beneficiary
-----------
The person or persons designated to receive benefits payable under the
Plan in the event of a Participant's death. Such designation may be changed at
any time by the Participant. A Participant may also name one or more contingent
Beneficiaries to receive any benefits payable in the event of his death with no
surviving primary Beneficiary. In the absence of any designation, or if no
designated person is living when a benefit is payable, Beneficiary shall mean
the following person or persons, in the following order:
(a) The Participant's spouse,
(b) The Participant's issue in equal shares per stripes,
(c) The Participant's mother,
(d) The Participant's father,
(e) The Participant's sisters and brothers in equal shares,
(f) The Participant's estate.
Notwithstanding the preceding, the election by a married Participant of a
Beneficiary other than his spouse shall not be deemed to be effective, and the
Participant's spouse shall automatically be deemed to be the Participant's sole
Beneficiary, unless the Participant's spouse agrees to such non-spousal
designation in writing and such spousal consent is witnessed by a member of the
Administrative Committee or a notary public.
1.06 Code
----
The Internal Revenue Code of 1986, as now in effect or as hereafter
amended. All citations to Sections of the Code are to such sections as they may
from time to time be amended or renumbered.
1.07 Compensation
------------
The basic salary or wages paid to a person while he is an Employee of
the Employer and a Participant of the Plan, including the amount of Elective
Deferral Contributions made on the Participant's behalf for such Plan Year, but
excluding overtime pay, bonuses, severance pay, incentive or profit sharing
distributions, payments for life insurance or
I-2
<PAGE>
employee benefit plans, and other forms of special compensation. The annual
Compensation of each Participant taken into account under the Plan for any Plan
Year shall not exceed $150,000. This limitation shall be adjusted by the
Secretary at the same time and in the same manner as under Section 415(d) of the
Code. In determining the Compensation of a Participant for purposes of the
$150,000 limitation, the rules of Section 414(q)(6) of the Code shall apply,
except in applying such rules, the term "family" shall include only the spouse
of the Participant and any lineal descendants of the Participant who have not
attained age 19 before the close of the year. If, as a result of the application
of such rules, the adjusted $150,000 limitation is exceeded, then the limitation
shall be prorated among the affected individuals in proportion to each such
individual's compensation as determined under this Section 1.07 prior to the
application of this limitation of such other method as determined by the
Administrative Committee.
1.08 Effective Date
--------------
April 1, 1995.
1.09 Elective Deferral Contribution
------------------------------
The Election by a Participant to have part of the amount that otherwise
would have been paid to him as Compensation deferred and contributed to his
Account in accordance with Section 3.01.
1.10 Elective Deferral Contribution Account
--------------------------------------
That portion of a Participant's Account under the Plan established for
a Participant to which Elective Deferral Contributions are made pursuant to
Section 3.01.
1.11 Elective Deferral Agreement
---------------------------
The agreement entered into by the Participant and the Employer whereby
the Employer defers a portion of such Participant's Compensation and contributes
an amount
I-3
<PAGE>
equal to such deferred portion of his Compensation to his Elective Deferral
Contribution Account.
1.12 Employee
--------
Any person who is employed by the Employer on a monthly salaried basis,
or who is on an authorized leave of absence in accordance with Subsection
1.17(c) and who was employed on a monthly salaried basis immediately preceding
such leave. Any person who is represented by a collective bargaining agent shall
not be considered an Employee for purposes of the Plan.
1.13 Employer
--------
Banco Popular de Puerto Rico, or any Affiliated Company of BanPonce
Corporation which has expressly adopted the Plan in accordance with adoption
procedures established by BanPonce Corporation, in its sole discretion.
1.14 Employer Contribution Account
-----------------------------
That portion of a Participant's Account under the Plan established for
a Participant to which Employer Basic Contributions or Employer Matching
Contributions are made pursuant to Sections 4.01 and 4.03, respectively.
1.15 Employment Commencement Date
----------------------------
For all purposes of the Plan, the date on which a person employed by
the Employer first performs an Hour of Service.
1.16 Highly Compensated Employee
---------------------------
An employee who during the relevant period is a highly compensated
employee as defined in Code Section 414(q).
I-4
<PAGE>
1.17 Hour of Service
---------------
(a) Each hour for which a person is directly or indirectly
compensated by the Employer or an Affiliated Company for the
performance of duties, including each such hour during which a
person was represented by a collective bargaining agent.
(b) Each hour for which a person is directly or indirectly
compensated by the Employer or an Affiliated Company on account
of a period of time during which no duties are performed or for
which back pay has been received by the person (irrespective of
whether mitigating damages have been awarded or agreed to by the
Employer or the Affiliated Company) due to:
(i) vacation or holiday,
(ii) illness or incapacity,
(iii) layoff,
(iv) jury duty,
(v) military duty,
(vi) leave of absence,
provided that no more than 501 such hours shall be recognized on
account of a single continuous period during which no duties are
performed and further provided that:
(i) such payment is not made or due under a plan maintained
solely for purposes of complying with applicable workers'
compensation, unemployment compensation, or disability
insurance laws, and
(ii) such payment does not solely represent reimbursement for
medical or medically-related expenses, and further provided
that hours shall not be recognized with respect to periods
during which payments are received from the Banco Popular de
Puerto Rico Long Term Disability Plan or this Plan.
I-5
<PAGE>
(c) Each hour for which a person would normally be scheduled to work
for the Employer or an Affiliated Company during an authorized
leave of absence, but only if he returns to work within the time
fixed by the Employer or Affiliated Company. Such leaves of
absence shall be granted under rules uniformly applied to all
persons.
With respect to Subsections (a) and (c) above, hours shall be recognized when
the duties are performed, or would normally have been performed. With respect to
Subsection (b) above, hours shall be recognized when payment is made or becomes
due, or in the case of back pay, in the period to which the award or payment
pertains. The provisions of this Section 1.17 shall be applied in accordance
with the provisions of Federal Regulations Sections 2530.220b-2(b) and (c) as
promulgated by the United States Department of Labor.
1.18 Investment Fund
---------------
The investment fund established for the investment of Plan assets
pursuant to Section 6.02.
1.19 Maternity or Paternity Leave
----------------------------
An Employee's absence from work for the Employer (a) by reason of the
pregnancy of such Employee; (b) by reason of the birth of a child of such
Employee; (c) by reason of the placement of a child with the Employee in
connection with the adoption of such child by such Employee; or (d) for purposes
of caring for a child of such Employee immediately following the birth of the
child or the placement of the child with such Employee.
1.20 Normal Retirement Date
----------------------
The date on which a Participant attains age 65.
I-6
<PAGE>
1.21 Participant
-----------
An Employee eligible to participate in the Plan who has satisfied the
requirements of Section 2.01 (an Active Participant), or a former Employee
receiving or eligible to receive a benefit (an Inactive Participant).
1.22 Period of Severance
-------------------
The period, measured in full years and months (as defined in Section
1.35), between a Participant's Severance from Service Date and a subsequent
Reemployment Commencement Date.
Leaves of absence formally approved by the Employer shall not
constitute a Period of Severance but shall be considered as Years of Service in
determining service for vesting and eligibility provided the Participant returns
to employment of the Employer immediately following such leave of absence.
1.23 Plan
----
The retirement plan set forth herein and as amended hereafter, which is
known as the:
"Banco Popular de Puerto Rico Employees' Stock Plan".
1.24 Plan Year
---------
The period from the Effective Date to the end of the calendar year
containing the Effective Date shall be a short Plan Year. Thereafter, the Plan
Year shall be the calendar year.
1.25 Reemployment Commencement Date
------------------------------
The date on which a person formerly employed by the Employer first
performs an Hour of Service after a Period of Severance.
I-7
<PAGE>
1.26 Retirement
----------
The date on which a Participant incurs a Severance from Service Date
after attaining his (i) Normal Retirement Date or (ii) his Early Retirement Date
as defined under the Banco Popular de Puerto Rico Retirement Plan.
1.27 Severance from Service Date
---------------------------
The later of the following:
(a) The date of a person's resignation from the employ of the
Employer, discharge, retirement, or death.
(b) The day following a period of one full year during which a person
previously employed by the Employer does not complete an Hour of
Service for any reason other than his resignation, discharge,
retirement, or death. These reasons shall include, but shall not
be limited to, vacation, holiday, sickness, disability, leave of
absence, or layoff.
For all purposes of the Plan, a person's employment with the Employer or an
Affiliated Company shall be deemed to have terminated as of a Severance from
Service Date.
1.28 Total and Permanent Disability
------------------------------
A physical condition of a Participant which results in benefit payments
under the Banco Popular de Puerto Rico Long Term Disability Plan.
1.29 Trust Agreement
---------------
The legally-binding agreement between the Employer and the Trustee. Any
term defined in the Trust Agreement shall have the same meaning as therein
ascribed when used herein, unless the context clearly implies a different
meaning.
1.30 Trustee
-------
The trustee named in the Trust Agreement, or its successor, if any.
I-8
<PAGE>
1.31 Trust Fund
----------
The fund created by the Employer to receive Plan contributions,
together with earnings thereon.
1.32 Valuation Date
--------------
The last day of each calendar month during the Plan Year.
1.33 Voluntary Contribution
----------------------
The contribution made to a Participant's Account pursuant to Section
3.02.
1.34 Voluntary Contribution Account
------------------------------
The Account under the Plan established for a Participant pursuant to
Section 3.02.
1.35 Years of Service
----------------
The period measured in full years and months (as defined below)
beginning on a person's Employment Commencement Date and ending on his last
Severance from Service Date, but excluding the following:
(a) any intervening Period of Severance provided that the person's
Reemployment Commencement Date followed a period of at least one
full year during which he completed no Hours of Service.
(b) any Years of Service preceding a Period of Severance of at least
five full years provided:
(i) the person was not entitled to any vested benefit
attributable to Employer Basic or Employer Matching
Contributions at the time of such Severance, and
(ii) the length of the Period of Severance exceeded his Years of
Service determined as of the Severance from Service Date,
and
(iii) the Participant had not incurred a Total and Permanent
Disability, which disability continued throughout the Period
of Severance.
I-9
<PAGE>
In the event of an Employee's absence from the employ of the Employer for a
period:
(i) that commences on or after the Effective Date;
(ii) for which the Employee is not paid or entitled to payment by
the Employer;
(iii) that constitutes Maternity or Paternity Leave; and
(iv) that exceeds one year;
then, solely for purposes of determining the length of a Period of Severance for
purposes of this Section 1.35, the period of such absence commencing on the date
of the commencement of such absence and ending on the second anniversary of the
commencement of such absence (or, if earlier, on the last day of such absence)
shall not be considered a Period of Severance.
Notwithstanding any provision in the Plan to the contrary, the preceding
paragraph shall not apply unless the Employee furnishes to the Administrative
Committee such information as may reasonably be required in order to establish
(i) that the Employee's absence is one described in Section 1.19 and (ii) the
number of days during such absence.
For all purposes of this Section 1.35, a period beginning on any given day of a
month and ending on the day preceding the corresponding day of the following
month shall constitute a full month. Twelve such full months shall constitute a
full year.
In addition, while a Participant is on leave for military service, his Years of
Service will be frozen, and such Participant shall be classified as terminated.
Such Participant will receive credit for purposes of determining his Years of
Service for his actual period of military service if (i) he returns to work for
the Employer within 90 days of his discharge from military service and his
period of military absence involves no voluntary reenlistment, or (ii) he dies
in the course of his military service which involves no voluntary reenlistment.
I-10
<PAGE>
Article II
PARTICIPATION
-------------
2.01 Requirements for Participation
------------------------------
(a) Subject to the provisions of subsections (b), and (c) below, each
Employee as of the Effective Date and each person who becomes an
Employee subsequent to that date who performs services for the
Employer primarily outside of the Commonwealth of Puerto Rico,
shall become a Participant as of the first day of the month
coincident with or next following the completion of one Year of
Service with the Employer.
(b) If an Inactive or former Participant again becomes an Employee
who performs services for the Employer primarily outside of the
Commonwealth of Puerto Rico, he shall immediately be eligible to
participate in the Plan.
(c) Employees who are Leased Employees as determined in accordance
with Section 12.09 shall not be eligible to participate in the
Plan.
An Employee who is eligible to participate in the Plan in accordance with (a)
above shall complete and file the appropriate forms with the Administrative
Committee. Such forms shall include, as applicable, an Elective Deferral
Agreement, a payroll deduction authorization, a Beneficiary designation and an
agreement to be bound by all the terms and conditions of the Plan.
2.02 Cessation of Participation
--------------------------
An Employee's participation in the Plan shall cease upon the complete
distribution of his Account under the Plan.
In the event a Participant is no longer a member of an eligible class
of Employees and becomes ineligible to participate but has not incurred a Period
of Severance, such Employee will participate immediately upon returning to an
eligible class of Employees.
II-1
<PAGE>
In the event an Employee who is not a member of an eligible class of
Employees becomes a member of an eligible class, such Employee will participate
immediately if such Employee has satisfied the service requirements and would
have otherwise previously become a Participant.
2.03 Establishment of Accounts
-------------------------
(a) The Administrative Committee shall establish and maintain or
cause to be established and maintained in respect of each
Participant, an Account showing his interest under the Plan and
in the Trust Fund with respect to Elective Deferral
Contributions, Voluntary Contributions, Employer Contributions,
if any credited to his Account, and all other relevant data
pertaining thereto. Each Participant shall be furnished with a
written statement of his Account and the value of each such
separate interest not less frequently than annually and upon any
distribution to him. In maintaining the Accounts under the Plan
or causing them to be maintained, the Administrative Committee
may conclusively rely on the valuations of the Trust Fund in
accordance with the Plan and the terms of the Trust.
(b) The establishment and maintenance of, or allocations and credits
to, the Account of any Participant shall not vest in any
Participant any right, title or interest in and to any Plan
assets or benefits except at the time or times and upon the terms
and conditions and to the extent expressly set forth in the Plan
and in accordance with the terms of the Trust.
II-2
<PAGE>
Article III
EMPLOYEE CONTRIBUTIONS
----------------------
3.01 Participant's Elective Deferral Contribution
--------------------------------------------
(a) On or after the Effective Date, each Participant may, pursuant to
this Section 3.01 and the overall limitations of Article V, elect
to defer between 0% to 10% of his Compensation each year. Such
deferrals may be made in percent of pay increments or as a fixed
dollar amount. However, no Participant shall be permitted to have
Elective Deferral Contributions made under this Plan, or any
other qualified plan maintained by the Employer, during any
taxable year, in excess of the dollar limitation contained in
Section 402(g) of the Code in effect at the beginning of such
taxable year. Such election shall generally be made before the
Plan Year for which the election is to be effective, but in no
event later than the time permitted under applicable rulings and
regulations. Such election shall be made in writing pursuant to
an Elective Deferral Agreement entered into with the Employer.
The Administrative Committee may reduce (but not increase) the
amount to be deferred by a Participant(s) in order to satisfy the
requirements for cash and deferred profit sharing plans as set
forth in Section 401(k) of the Code and rulings and regulations
thereunder, on a uniform and non-discriminatory basis.
(b) A Participant's Elective Deferral Contribution Account shall at
all times, and in all events, be fully vested and not subject to
forfeiture for any reason whatsoever.
3.02 Voluntary Contributions for Employees of the British Virgin Islands
-------------------------------------------------------------------
(a) Each eligible Employee who performs services for the Employer
primarily in the British Virgin Islands who is prohibited under
local tax law from making Elective Deferral Contributions under
the Plan may elect to make
III-1
<PAGE>
Voluntary Contributions to the Plan in an amount between 0% to
10% of his Compensation each year pursuant to a payroll deduction
authorization. Such deduction may be made in percent of pay
increments or as a fixed dollar amount. The Administrative
Committee may reduce (but not increase) the amount to be deducted
by a Participant(s) in order to satisfy the requirements for cash
and deferred profit sharing plans as set forth in Section 401(m)
of the Code and rulings and regulations thereunder, on a uniform
and non-discriminatory basis.
(b) In any case in which an individual is a Participant in two or
more qualified plans maintained by the same Employer the
aggregate Voluntary Contributions to all plans may not exceed 10%
of his Compensation.
(c) A Participant's Voluntary Contribution Account shall at all times
be fully vested and not subject to forfeiture for any reason
whatsoever.
3.03 Changes to Elective Deferral and/or Voluntary Contributions
-----------------------------------------------------------
Subject to Article V, in accordance with procedures established by the
Administrative Committee, a Participant may increase or decrease his Elective
Deferral Contribution or Voluntary Contribution rate each April 1 or October 1
during the applicable Plan Year. In addition, a Participant may suspend such
contributions as of any payroll period during the Plan Year.
3.04 Payment of Employee Contributions
---------------------------------
All Elective Deferral Contributions and Voluntary Contributions made by
or on behalf of a Participant shall be delivered by the Employer to the Trustee
as soon as practicable, after the close of each calendar month, to be
commingled, managed, invested and reinvested with the other assets of the Plan.
Such contributions shall be credited to the Participant's Account in accordance
with Section 2.03.
III-2
<PAGE>
3.05 Participant's Rollover Account
------------------------------
A Participant may elect to transfer a Rollover Contribution to this
Plan, which amount shall be credited to the Participant's Rollover Account. At
Normal Retirement Date, or such other date when the Participant or his
Beneficiary are entitled to receive benefits from the Plan, the Participant's
Rollover Contribution Account will be used to provide additional benefits to the
Participant and will be distributed in accordance with Article VII. A
Participant's Rollover Account shall at all times and in all events, be fully
vested and not subject to forfeiture for any reason.
For all purposes of this Plan, the term Rollover Contribution shall
mean:
(a) An amount subject to Code Section 417 transferred to this Plan
directly from another qualified plan.
(b) A lump sum distribution received by a Participant from another
qualified plan (which plan is subject to Code Section 417) which
is eligible for tax free rollover treatment and which is
transferred by the Participant to this Plan within sixty days
following his receipt thereof.
(c) An amount transferred to this Plan from a conduit individual
retirement account provided the only assets in such account are
ones which were previously distributed to the Participant by
another qualified plan as a lump sum distribution which was
eligible for a tax free rollover within sixty days of receipt
thereof and other than earnings on said assets.
(d) An amount distributed to the Participant from a conduit
individual retirement account meeting the requirements of (c)
above, and transferred by the Participant to this Plan within
sixty days of his receipt thereof from such conduit individual
retirement account.
Prior to accepting any Rollover Contributions, the Plan Administrator
may require the Participant to establish that amounts to be transferred to this
Plan meet the requirements of this Section 3.05 and may also require that the
Participant provide an opinion of counsel
III-3
<PAGE>
satisfactory to the Employer that the amounts to be transferred meet the
requirements of this Section 3.05 and will not result in any adverse tax
consequences for the Employer or jeopardize the tax exempt status of the Plan.
Notwithstanding the preceding, if the Plan accepts a Rollover
Contribution and it is later determined that such amount does not in fact
satisfy the above requirements, such amounts shall be treated as after-tax
contributions. Such amounts, including investment earnings thereon, shall then
be immediately distributed to the Participant.
III-4
<PAGE>
Article IV
----------
EMPLOYER CONTRIBUTIONS
----------------------
4.01 Employer Basic Contributions
----------------------------
The Employer may contribute to the Plan from the profits of the
Employer for the Plan Year, as may be determined by the Employer in its sole
discretion, a Basic Contribution.
4.02 Allocation of Employer Basic Contributions
------------------------------------------
Basic Contributions made by or on behalf of an Employer for the Plan
Year shall be allocated to the Accounts of those Participants (i) who are
Employees on the last day of the Plan Year or on Maternity or Paternity Leave as
of the last day of the Plan Year or (ii) who retire on or after their Retirement
date, die or incur a Total and Permanent Disability during such Plan Year, in
the ratio which the Compensation of each such Participant for such Plan Year
bears to the total Compensation of all such Participants for such Plan Year.
4.03 Employer Matching Contributions
-------------------------------
The Employer shall contribute to the Plan on behalf of each Participant
employed by the Employer, as a Matching Contribution, an amount equal to 50% of
each Participant's Elective Deferral Contributions or Voluntary Contributions up
to a maximum of 2% of such Participant's Compensation for the Plan Year. In no
event shall such Matching Contribution exceed 1% of such Participant's
Compensation for the Plan Year.
4.04 Payment of Employer Contributions
---------------------------------
(a) The Employer shall make payment of its Basic Contributions
directly to the Trustee with respect to any Plan Year on or
before the last date prescribed by law for the filing of its
federal income tax return, (including any extension of time for
such filing) for the fiscal year which ends within or
concurrently with the Plan Year. In no event shall such Matching
Contribution exceed 1% of such Participant's Compensation for the
Plan Year.
IV-1
<PAGE>
(b) The Employer shall make payment of its Matching Contribution for
each payroll period directly to the Trustee as soon as
practicable after the close of each calendar month in which such
payroll period ends.
4.05 Refunds of Employer Contributions
---------------------------------
Once a contribution is made to the Plan by the Employer, it may not be
refunded to the Employer unless the contribution:
(a) Was made in error as a result of a mistake in fact;
(b) Was made conditional upon receipt of favorable ruling from the
U.S. Internal Revenue Service that the Plan would qualify under
Sections 401(a) and 501(a) of the Internal Revenue Code and such
ruling were not received; or
(c) Was made conditional upon the contribution being allowed as a
deduction for United States Federal income tax purposes and such
deduction was disallowed.
A permissible refund under (a) must be made within one year from the
date the contribution was made to the Plan, and under (b) and (c) must be made
within one year from the date of disallowance of tax qualification or tax
deduction.
IV-2
<PAGE>
Article V
LIMITATIONS ON CONTRIBUTIONS
----------------------------
5.01 Maximum Employer Contributions
------------------------------
In no event shall contributions made by an Employer in any Plan Year,
including for this purpose Elective Deferral Contributions, exceed the amount
deductible by the Employer for such year for federal income tax purposes.
5.02 Maximum Employee Elective Deferral Contributions
------------------------------------------------
Subject to Plan Sections 5.03 and 5.05, Elective Deferral Contributions
made on behalf of a Participant in any calendar year shall not exceed $7,000
(adjusted for increases in the cost-of-living in accordance with Code Section
402(g)). In the event that the aggregate amount of Elective Deferral
Contributions made on behalf of a Participant exceeds the limitation in the
previous sentence, the amount of such excess deferrals, increased by any income
and decreased by any losses attributable thereto, shall be refunded to the
Participant no later than April 15 of the calendar year following the calendar
year for which the Elective Deferral Contributions were made. If a Participant
also participates, in any calendar year, in any other plans subject to the
limitations set forth in Code Section 402(g) and has made excess deferrals under
this Plan when combined with the other plans subject to such limits, to the
extent the Participant, in writing submitted to the Administrative Committee no
later than March 1 of the calendar year following the calendar year for which
the Elective Deferral Contributions were made, designates any Elective Deferral
Contributions under this Plan as excess deferrals, the amount of such designated
excess deferrals, increased by any income and decreased by any losses
attributable thereto, shall be refunded to the Participant no later than the
April 15 of the calendar year following the calendar year for which the Elective
Deferral Contributions were made.
V-1
<PAGE>
5.03 Actual Deferral Percentage Tests
--------------------------------
(a) Notwithstanding any other provision of the Plan to the contrary,
the Actual Deferral Percentage for the Plan Year for Highly
Compensated Employees who are eligible to participate in the Plan
pursuant to Section 2.01 shall not exceed the greater of the
following Actual Deferral Percentage tests:
(i) The Actual Deferral Percentage for such Plan Year of
non-Highly Compensated Employees who are eligible to
participate in the Plan pursuant to Plan Section 2.01
multiplied by 1.25; or
(ii) The Actual Deferral Percentage for the Plan Year of
non-Highly Compensated Employees who are eligible to
participate in the Plan pursuant to Section 2.01 multiplied
by 2.0, provided that the Actual Deferral Percentage for
Highly Compensated Employees does not exceed the Actual
Deferral Percentage for such other Employees by more than
2%.
(b) The "Actual Deferral Percentage" for a Plan Year means, for each
specified group of Employees, the average of the ratios
(calculated separately for each Employee in such group) of
Elective Deferral Contributions credited to the Account of each
Participant for the Plan Year to the amount of each Participant's
compensation (as defined in Code Section 414(s)) for such Plan
Year. An Employee's Actual Deferral Percentage shall be zero if
no Elective Deferral Contributions are made on his behalf for
such Plan Year.
(c) The Administrative Committee shall determine as of the end of
each Plan Year, and at such other time or times as it shall
decide in its discretion, whether one of the Actual Deferral
Percentage tests specified above is satisfied for such Plan Year.
This determination shall be made after first determining the
amount, if any, of excess deferrals (within the meaning of Code
Section 402(g)) as provided in Section 5.02.
In the event that neither of the Actual Deferral Percentage
tests is satisfied, the Administrative Committee shall refund the
excess contributions
V-2
<PAGE>
in the manner described below. For purposes of this Plan Section
5.03, "excess contributions" means, with respect to any Plan Year
and with respect to any Participant, the excess of the amount of
Elective Deferral Contributions and any earnings and losses
allocable thereto credited to the Accounts of Highly Compensated
Participants for such Plan Year, over the maximum amount of
Elective Deferral Contributions that could be made on behalf of
such Participants without violating the requirements of (a)
above. The amount of each Highly Compensated Participant's excess
contributions shall be determined by reducing Elective Deferral
Contributions made on behalf of Highly Compensated Participants
in order of the Actual Deferral Percentages beginning with the
highest of such percentages.
(d) If required under (c) above, the Administrative Committee shall
refund excess contributions for a Plan Year to the Participant.
The distribution of such excess contributions shall be made to
Highly Compensated Participants to the extent practicable before
the 15th day of the third month immediately following the Plan
Year for which such excess contributions were made, but in no
event later than the end of the Plan Year following such Plan
Year. Any such distributions shall be made to each Highly
Compensated Participant on the basis of the respective portions
of such amounts attributable to each such Highly Compensated
Participant.
(e) If, as a result of the above test, the amount of Elective
Deferral Contributions is reduced to less than 2% of the
Participant's Compensation for the Plan Year, then any applicable
Employer Matching Contribution shall be forfeited.
5.04 Average Contribution Percentage Tests
-------------------------------------
(a) Notwithstanding any other provision of the Plan to the contrary,
the Average Contribution Percentage for the Plan Year for Highly
Compensated Employees who are eligible to participate in the Plan
pursuant to Section 2.01
V-3
<PAGE>
shall not exceed the greater of the following Average
Contribution Percentage tests:
(i) the Average Contribution Percentage for such Plan Year of
non-Highly Compensated Employees who are eligible to
participate in the Plan pursuant to Plan Section 2.01
multiplied by 1.25; or
(ii) the Average Contribution Percentage for the Plan Year of
non-Highly Compensated Employees who are eligible to
participate in the Plan pursuant to Section 2.01 multiplied
by 2.0, provided that the Average Contribution Percentage
for Highly Compensated Employees does not exceed the Average
Contribution Percentage for such other Employees by more
than 2%.
(b) The "Average Contribution Percentage" for a Plan Year means, for
each specified group of Employees, the average of the ratios
(calculated separately for each Employee in such group) of
(i) Employer Matching Contributions and Voluntary Contributions
credited to the Participant's Account for the Plan Year to
(ii) the amount of the Participant's compensation (as defined in
Code Section 414(s)) for the Plan Year. An Employee's
Average Contribution Percentage shall be zero if no
Voluntary Contributions or Employer Matching Contributions
are made on his behalf for such Plan Year.
(c) The Administrative Committee shall determine as of the end of
each Plan Year, and at such other time or times as it shall
decide in its discretion, whether one of the Average Contribution
Percentage tests specified above is satisfied for such Plan Year.
This determination shall be made after first determining the
amount, if any, of excess deferrals (within the meaning of Code
Section 402(g)) under Section 5.02 and then determining the
amount, if any, of excess contributions under Section 5.03. In
the event that neither of the Average Contribution Percentage
tests is satisfied, the Administrative
V-4
<PAGE>
Committee shall refund or forfeit the excess contributions in the
manner described below. For purposes of this Section 5.04,
"excess contributions" means, with respect to any Plan Year and
with respect to any Participant, the excess of the aggregate
amount of Employer Matching Contributions and Voluntary
Contributions and any earnings and losses allocable thereto
credited to the Accounts of Highly Compensated Participants for
such Plan Year, over the maximum amount of such contributions
that could be made without violating the requirements of (a)
above. The amount of each Highly Compensated Participant's excess
contributions shall be determined by reducing the Average
Contribution percentage of each Highly Compensated Participant
whose Average Contribution Percentage is in excess of the
percentage otherwise permitted under (a) above to the maximum
amount permitted thereunder.
(d) If the Administrative Committee is required to refund or forfeit
excess contributions for any Highly Compensated Participant for a
Plan Year in order to satisfy the requirements of (a) above, then
such refund or forfeiture of such excess contributions shall be
made with respect to such Highly Compensated Participants to the
extent practicable before the 15th day of the third month
immediately following the Plan Year for which such excess
contributions were made, but in no event later than the end of
the Plan Year immediately following such Plan Year for which such
excess contributions were made. For each such Participant,
amounts so refunded or forfeited shall be made in the following
order of priority:
(i) by distributing Voluntary Contributions (increased by any
earnings and decreased by any losses allocable thereto) to
such Participants, and
(ii) by forfeiting any applicable Employer Matching Contributions
and earnings thereon.
V-5
<PAGE>
5.05 Annual Additions Limitations
----------------------------
(a) The provisions of this Section 5.05 shall govern notwithstanding
any other provision of the Plan.
(b) The maximum Annual Additions which may be credited for a Plan
Year to each Participant's Account shall not exceed the lesser of
(i) 25% of his Compensation for the Plan year or
(ii) $30,000, as adjusted from time to time in accordance with
Code Section 415(d). This limitation shall be administered
in compliance with the requirements of Code Section 415, the
provisions of which are incorporated herein by reference.
For purposes of this Section 5.05, "Annual Addition" means the
total amount of Elective Deferral Contributions, Employer Basic
Contributions, Employer Matching Contributions, and Voluntary
Contributions (if applicable) credited to a Participant's Account
for the Plan Year, "compensation" means compensation as defined
in Section 1.415-2(d) of the Regulations and the "limitation
year" means the Plan Year.
(c) If a Participant in the Plan also participates in any defined
benefit plan (as defined in Code Sections 414(j) and 415(k))
maintained by the Employer or any Affiliate, in the event that in
any Plan Year the sum of the Participant's defined benefit
fraction (as defined in Code Section 415(e) (2)) and the
Participant's defined contribution fraction (as defined in Code
Section 415(e) (3)) exceeds 1.0, the benefit under such defined
benefit plan or plans shall be reduced in accordance with the
provisions of that plan or plans, so that the sum of such
fractions with respect to the Participant will not exceed 1.0. If
this reduction does not ensure that the limitation of this
Section 5.05 is not exceeded, than the Annual Addition to any
defined contribution plan maintained by the Employer or any
Affiliated Company, shall be reduced, beginning with this Plan,
but only to the extent necessary to ensure that such limitation
is not exceeded.
V-6
<PAGE>
(d) If the Annual Addition to a Participant's Account under this Plan
exceeds the maximum permissible under Code Section 415,
calculated after the adjustments made in accordance with Sections
5.02, 5.03, 5.04 and (c) above, then the excess amount shall be
disposed of, but only to the extent necessary, by first returning
Voluntary Contributions and any earnings thereon credited to the
Participant's Account. In addition, in the case of a reasonable
error in estimating a Participant's Compensation and in
accordance with applicable Internal Revenue Service rules,
Elective Deferral Contributions may also be refunded to
Participants.
(e) If after the application of (d) above an excess amount still
exists, then
(i) if the Participant is an Active Participant at the end of
the Plan Year, the excess amount will be used to reduce
Employer Contributions for such Participant in the next Plan
Year, and each succeeding Plan Year if necessary, or
(ii) if the Participant is an Inactive Participant at the end of
the Plan Year, the excess amount will be applied to reduce
future Employer Contributions for all remaining Participants
in the next Plan Year, and each succeeding Plan Year if
necessary.
V-7
<PAGE>
Article VI
----------
INVESTMENT OF CONTRIBUTIONS AND VALUATION OF ACCOUNTS
-----------------------------------------------------
6.01 Establishment of Trust Fund
---------------------------
The Employer shall appoint a Trustee who will establish a Trust Fund to
which all Employer contributions shall be made. The Trust Fund shall be held,
invested, reinvested, used and disbursed by the Trustee in accordance with the
provisions of the Plan and a Trust Agreement entered into between the Employer
and the Trustee.
The Employer may remove the Trustee at any time upon the notice
required by the Trust Agreement. The Employer then shall designate a successor
Trustee. The Trustee shall have the sole and complete discretion with respect to
the management and control of the Trust Fund including the exclusive and sole
authority to vote on any matter involving the shares of Employer stock under the
Plan except as provided under Section 6.03. In addition, BanPonce Corporation
shall not influence the manner in which or the timing of any and all stock
purchased by the Trustee.
No person shall have any interest in, or right to, the Trust Fund or
any part thereof, except as expressly provided in the Plan or the Trust
Agreement. Any provisions of the Plan to the contrary notwithstanding, and
except for the payment of expenses, no part of the assets of the Trust Fund
shall, by reason of any modification, amendment, termination, or otherwise, be
used for or diverted to purposes other than for the exclusive benefit of
Participants and their Beneficiaries.
6.02 Operation of the Trust
----------------------
All amounts of money, securities or other property received under the
Plan shall be delivered to the Trustee under the Trust, to be managed, invested,
reinvested and distributed for the exclusive benefit of the Participants and
their Beneficiaries in accordance with the Plan. Separate, commingled funds for
the investment of Plan assets held in the Trust shall be established and
maintained under the Trust. Except for the temporary holding of amounts
VI-1
<PAGE>
representing contributions and distributions, the Investment Fund shall consist
exclusively of shares of common stock of BanPonce Corporation.
6.03 Voting of Stock
---------------
Any and all stock of BanPonce Corporation held in the Trust shall be
voted by the Trustee, in their sole discretion, except upon the occurrence of
the following:
(a) In the event that any bona fide tender, exchange or similar offer
to purchase all or any portion of the outstanding stock of
BanPonce Corporation is made by any person, all shares of such
stock held by the Trust Fund shall be allocated among and
credited to the Accounts of Participants under the Plan based
upon the ratio of each Participant's Account balance to the total
of all such Account balances, determined as of the most recent
Valuation Date coincident with or preceding the date of any
relevant vote or tender. Such stock shall remain allocated to the
Accounts of the Participants under the Plan subsequent to the
pass-through of such rights.
(b) In accordance with an event described in subsection (a), the
Trustee shall permit each Participant or, if applicable, his
Beneficiary to direct the Trustee as to the voting of such stock
allocated to their Accounts. All allocated stock as to which such
instructions have been received in accordance with procedures
established by the Trustee (which may include an instruction to
abstain) shall be voted in accordance with such instructions.
6.04 Valuation
---------
(a) As of each Valuation Date, the Trust Fund shall be valued at its
fair market value pursuant to the terms of the Trust to reflect
the effect of income received and accrued, realized and
unrealized profits and losses, and all other transactions of the
preceding period. Such valuation shall be conclusive and binding
upon all persons having an interest in the Trust Fund.
VI-2
<PAGE>
(b) All contributions made on behalf of, or allocated to, a
Participant shall be credited to his Account. As of any Valuation
Date, the value of a Participant's Account shall be the value of
such Account as of the immediately preceding Valuation Date
adjusted to reflect changes in the value of the Trust Fund
allocable thereto in accordance with (a) above plus the amount of
contributions, if any, credited thereto and less any
distributions made therefrom since the immediately preceding
Valuation Date.
6.05 Accounting Procedures
---------------------
The Administrative Committee shall have complete discretion to
establish and utilize an accounting system to account for the interest of each
Participant. To the extent permitted by the Code and regulations, the
Administrative Committee may change the accounting system from time to time.
6.06 Payment of Expenses
-------------------
All expenses which arise in connection with the administration of the
Plan and the Trust Agreement including, but not limited to, the compensation of
the Trustee and of any recordkeeper, accountant, counsel, or other person
appointed by the Administrative Committee, the Employer, or the Trustee shall be
paid out of the Trust Fund, unless paid by the Employer.
VI-3
<PAGE>
Article VII
-----------
DISTRIBUTIONS
-------------
7.01 Distributions on Retirement or Disability
-----------------------------------------
Each Participant who terminates employment on account of his Retirement
or Total and Permanent Disability shall have a nonforfeitable right to receive a
distribution of his entire Account. Distribution shall be made in accordance
with Sections 7.05 and 7.06.
7.02 Distributions On Death
----------------------
Upon an Active Participant's death, his Beneficiary shall have a
nonforfeitable right to receive a distribution of the Participant's entire
Account. Upon the death of an Inactive Participant, his Beneficiary shall have a
nonforfeitable right to receive the portion of his Account which was vested in
accordance with Section 7.03. Distribution shall be made in accordance with
Sections 7.05 and 7.06.
7.03 Distribution Upon Termination of Employment
-------------------------------------------
Any Participant who terminates employment for any reason other than
Retirement, Total and Permanent Disability or death, shall be entitled to
receive 100% of his Elective Deferral Contribution Account and Rollover Account
and the vested portion of the remainder of his Account as of the Valuation Date
immediately following his termination of employment based on the following
schedule:
Period of Service Nonforfeitable Interest
----------------- -----------------------
Less than 3 years 0%
3 but less than 4 years 20%
4 but less than 5 years 40%
5 but less than 6 years 60%
6 but less than 7 years 80%
7 or more years 100%
VII-1
<PAGE>
Distribution shall be made in accordance with Sections 7.05 and 7.06.
Upon the sale or closure of any operating unit of the Employer, the
Account of each Participant who at the time of such sale or closure was an
employee of such operating unit shall become 100% vested.
Upon the termination of employment of a Participant who is not
otherwise 100% vested in his Account, the Administrative Committee shall reflect
any prior distributions in determining the Participant's current vested interest
in his Account in order to avoid duplication of payments.
7.04 Forfeitures
-----------
That portion of a Participant's Account which shall not be vested at
the date of his termination of employment shall be forfeited. Forfeitures shall
be used to reduce the Employer's contribution to the Plan. In the event such
Participant is later reemployed by the Employer prior to incurring a Period of
Severance of five years, the current value of such forfeited amounts shall be
restored to the Participant's Account.
7.05 Forms of Payment
----------------
Subject to the provisions of Section 7.06, payment of a Participant's
vested Account shall be made in a lump sum. Payment shall be made either in cash
or, if elected by the Participant, shares of stock of BanPonce Corporation, or
both.
7.06 Time of Payment
---------------
Benefits payable to a Participant (or Beneficiary) under this Article
VII shall be paid or commence as soon as practicable after:
(a) The date of his death, Retirement, Total and Permanent Disability
or other termination of employment based on the value of his
vested Account determined as of the Valuation Date coincident
with or next following such date, or
VII-2
<PAGE>
(b) If such date occurs prior to his Normal Retirement Date, any
Valuation Date coincident with or preceding his Normal Retirement
Date, based on the value of his vested Account as of such
Valuation Date.
The Participant (or Beneficiary) shall provide to the Administrative
Committee a written election at least 30 days preceding any applicable Valuation
Date, indicating the date benefits are to be paid or commence and the Form of
Payment elected.
7.07 Limitation On Distributions
---------------------------
(a) Notwithstanding any other provision of the Plan, unless otherwise
provided by law, any benefit payable to a Participant shall
commence no later than the April 1st of the calendar year
following the calendar year in which such Participant attains age
70 1/2. Such benefit shall be paid, in accordance with the
Regulations, over a period not extending beyond the life
expectancy of such Participant or the joint life expectancies of
such Participant and his Beneficiary.
(b) If distribution of a Participant's benefit has commenced prior to
a Participant's death, and such Participant dies before his
entire benefit is distributed to him, distribution of the
remaining portion of the Participant's benefit to the
Participant's Beneficiary shall be made at least as rapidly as
under the method of distribution in effect as of the date of the
Participant's death.
(c) If a Participant dies before distribution of his benefit has
commenced, distributions to any Beneficiary shall be made on or
before the December 31st of the calendar year which contains the
5th anniversary of the date of such Participant's death;
provided, however, at the Beneficiary's irrevocable election,
duly filed with the Administrative Committee before the
applicable commencement date set forth in the following sentence,
any distribution to a Beneficiary may be made over a period not
extending beyond the life expectancy of the Beneficiary. Such
distribution shall commence not later
VII-3
<PAGE>
than the December 31 of the calendar year immediately following
the calendar year in which the Participant died or, in the event
such Beneficiary is the Participant's surviving spouse, on or
before the December 31st of the calendar year in which such
Participant would have attained age 70 1/2, if later (or, in
either case, on any later date prescribed by the regulations). If
such Participant's surviving spouse dies after such Participant's
death but before distributions to such surviving spouse commence,
this Subsection (c) shall be applied to require payment of any
further benefits as if such surviving spouse were the
Participant.
(d) Pursuant to the Regulations, any benefit paid to a child shall be
treated as if paid to a Participant's surviving spouse if such
amount will become payable to such surviving spouse on the
child's attaining majority, or other designated event permitted
by the Regulations.
(e) Notwithstanding the foregoing, unless the Participant elects
otherwise, distribution shall commence no later than the 60th day
after the latest of the last day of the Plan Year in which the
Participant
(i) attains his Normal Retirement Date,
(ii) attains his 10th anniversary of Plan participation or
(iii) terminates his employment.
7.08 Cash Outs
---------
Notwithstanding any other provision of the Plan, to the extent required
by the Code and the regulations, if the value of a Participant's vested Account
at the time he terminates employment is $3,500 or less, such amount will be
distributed to him immediately in one lump sum payment; provided, however, that
no such lump sum payment shall be made after distribution has commenced without
the Participant's written consent. If the value of the Participant's vested
Account exceeds $3,500, no distribution shall be made to such Participant prior
to the date he attains age 65 without his written consent. In the absence of
receipt of such consent by the Administration Committee, distribution to such
Participant
VII-4
<PAGE>
shall be made in a lump sum as of the Valuation Date coincident with or next
following his Normal Retirement Date. Payments shall be made in either cash or,
if elected by the Participant, shares of stock of BanPonce Corporation, or both.
7.09 Direct Rollovers
----------------
Notwithstanding any provision of the Plan to the contrary that would
otherwise limit a Participant's election under this Section 7.09, a Participant
may elect, at the time and in the manner prescribed by the Administrative
Committee, to have any portion of an eligible rollover distribution paid
directly to an eligible retirement plan specified by the Participant in a direct
rollover.
(a) Eligible rollover distribution: An eligible rollover distribution
is any distribution of all or any portion of the balance to the
credit of the Participant, except that an eligible rollover
distribution does not include: any distribution that is one of a
series of substantially equal periodic payments (not less
frequently than annually) made for the life (or life expectancy)
of the Participant or the joint lives (or joint life
expectancies) of the Participant and the Participant's designated
Beneficiary, or for a specified period of ten years or more; any
distribution to the extent such distribution is required under
Section 401(a)(9) of the Code; and the portion of any
distribution that is not includible in gross income (determined
without regard to the exclusion for net unrealized appreciation
with respect to employer securities).
(b) Eligible retirement plan: An eligible retirement plan is an
individual retirement account described in Section 408(a) of the
Code, an individual retirement annuity described in Section
408(b) of the Code, and annuity plan described in Section 403(a)
of the Code, or a qualified trust described in Section 401(a) of
the Code, that accepts the Participant's eligible rollover
distribution. However, in the case of an eligible rollover
distribution to the surviving spouse, an eligible retirement plan
is an individual retirement account or individual retirement
annuity.
VII-5
<PAGE>
(c) A distributee includes an employee or former employee. In
addition, the employee's or former employee's surviving spouse
and the employee's or former employee's spouse or former spouse
who is the alternate payee under a qualified domestic relations
order, as defined in section 414(p) of the Code, are distributees
with regard to the interest of the spouse or former spouse.
(d) Direct rollover: A direct rollover is a payment by the Plan to
the eligible retirement plan specified by the distributee.
VII-6
<PAGE>
Article VIII
------------
PLAN ADMINISTRATION
-------------------
8.01 Appointment of an Administrative Committee
------------------------------------------
The Employer shall appoint an Administrative Committee to serve as Plan
Administrator. The Administrative Committee shall consist of five or more
persons and shall serve at the pleasure of, and may be removed at any time by,
the Employer. The Employer shall designate one of such persons to serve as
Chairman. Participants may be members of the Administrative Committee. No member
of the Administrative Committee shall receive compensation for his services as
such.
8.02 Operation of the Administrative Committee
-----------------------------------------
A majority of the members of the Administrative Committee at the time
in office shall constitute a quorum for the transaction of business. All
resolutions or other action taken by the Administrative Committee shall be by
vote of a majority of its members present at any meeting, or without a meeting,
by instrument in writing signed by all its members.
The Chairman of the Administrative Committee shall appoint a Secretary
who may but need not be a member of the Administrative Committee. The
Administrative Committee may delegate any of its powers or duties among its
members or to others as it shall determine. It may authorize one or more of its
members to execute or deliver any instrument or to make any payment in its
behalf. It may employ such counsel, agents, clerical, accounting and actuarial
services as it may require in carrying out the provisions of the Plan, and to
the extent permitted by law it shall be entitled to rely upon all tables,
valuations, certificates, opinions, or other reports furnished by such persons.
8.03 Powers and Duties of the Administrative Committee
-------------------------------------------------
The Administrative Committee shall have all powers necessary to
administer the Plan except to the extent any such powers are vested in any other
fiduciary by the Plan or by the Administrative Committee. The Administrative
Committee may from time to time establish
VIII-1
<PAGE>
rules for the administration of the Plan, and it shall have the exclusive right
to interpret the Plan and to decide any matters arising in connection with the
administration and operation of the Plan. The Administrative Committee's rules
interpretations and decisions shall be applied in a uniform manner to all
Employees similarly situated and shall be conclusive and binding on the Employer
and on Participants and Beneficiaries to the extent permitted by law.
The Administrative Committee shall compute and certify to the Trustees
the amount of retirement benefits payable under the provisions of the Plan to
any Participant terminating his employment with a retirement benefit or to any
Beneficiary.
8.04 Delegation of Responsibility
----------------------------
Each fiduciary shall discharge his duties with respect to the Plan
solely in the interest of the Participants and Beneficiaries, for the exclusive
purpose of providing benefits to such persons and defraying reasonable expenses
of administering the Plan, while using the care, skill, prudence, and diligence,
under the circumstances then prevailing that a prudent man acting in a like
capacity and familiar with such matters would use in the conduct of an
enterprise of like character and with like aims.
The members of the Administrative Committee and any person to whom the
Administrative Committee may delegate any of its powers under the Plan may
employ persons to render advice with regard to any responsibility he has under
the Plan. No fiduciary shall be liable for any act or omission of another person
in carrying out any fiduciary responsibility where such fiduciary responsibility
is allocated to such other person by or pursuant to the Plan, except to the
extent required by Section 405 of the Employee Retirement Income Security Act of
1974.
8.05 Indemnification of the Administrative Committee
-----------------------------------------------
The Employer may indemnify each member of the Administrative Committee
against all liabilities and expenses, including attorneys' fees, reasonably
incurred by him in connection with any legal action to which he may be a party,
or any threatened legal action
VIII-2
<PAGE>
to which he might have become a party, by reason of his membership on the
Administrative Committee, except with regard to any matters as to which he shall
be adjudged to be liable for willful misconduct in the performance of his duties
as such a member.
VIII-3
<PAGE>
Article IX
CLAIMS PROCEDURE
----------------
9.01 Notification of Benefit Eligibility
-----------------------------------
The Administrative Committee shall notify Participants of the
retirement benefits to which they are entitled as soon as is practical following
each Participant's termination of employment. Filing of a claim shall not be
required for benefit commencement.
9.02 Initial Review of Claims
------------------------
If a Participant or Beneficiary has reason to believe that he is
entitled to retirement benefits from the Plan in excess of those about which he
is notified in accordance with Section 9.01, he may file a claim in writing with
the Administrative Committee.
If the Administrative Committee denies the claim, the claimant shall be
notified in writing of the denial within 30 days after the Administrative
Committee's receipt of the claim. The notice shall (a) set forth the specific
reason or reasons for the denial, making reference to the pertinent provisions
of the Plan on which the denial is based, (b) describe any additional material
or information that should be received before the claim request may be acted
upon favorably, and explain why such material or information, if any, is needed
and (c) inform the person making the claim of his right to request a review of
the decision by the Administrative Committee.
9.03 Review of Claim Denial
----------------------
Any person who believes that he has submitted all available and
relevant information may request a review of the denial of his claim by the
Administrative Committee by submitting a written request for review within 60
days after the date on which such denial is received. This period may be
extended by the Administrative Committee for good cause shown. The person making
the request for review may examine pertinent Plan documents. The request for
review may discuss any issues relevant to the claim.
IX-1
<PAGE>
The Administrative Committee shall decide whether or not to grant the
claim within 30 days after receipt of the request for review, but this period
may be extended for up to an additional 90 days in special circumstances. The
Administrative Committee's decision shall be in writing, shall include specific
reasons for the decision, and shall refer to the pertinent provisions of the
Plan on which the decision is based.
IX-2
<PAGE>
Article X
AMENDMENT OR TERMINATION OF THE PLAN OR
DISCONTINUANCE OF CONTRIBUTIONS
-------------------------------
10.01 Right to Amend or Terminate the Plan
------------------------------------
The Employer may amend the Plan, retroactively or otherwise, at any
time. No such amendment may have the effect of vesting in the Employer any part
of the Trust Fund, or of diverting any part of the Trust Fund to purposes other
than for the exclusive benefit of Participants and Beneficiaries, until all
liabilities with respect to such persons have been satisfied or provided for. No
amendment shall deprive any Participant or Beneficiary of any retirement benefit
therefore vested in him.
The continuance of the Plan and the payment of contributions under the
Plan are entirely voluntary and are not assumed as contractual obligations of
the Employer. The Employer reserves the right to terminate the Plan in whole or
in part or to discontinue contributions thereunder.
10.02 Result of Termination
---------------------
(a) Upon termination of the Plan as to any Employer, such Employer
shall not make any further contributions under the Plan and no
amount shall thereafter be payable under the Plan to or in
respect of any Participants then employed by such Employer except
as provided in this Article X. To the maximum extent permitted by
ERISA, the rights of Participants no longer employed by such
Employer and of former Participants and their Beneficiaries under
the Plan shall be unaffected by such termination and any
transfers, distributions or other dispositions of the assets of
the Plan as provided in this Article X shall constitute a
complete discharge of all liabilities under the Plan with respect
to such Employer's participation in the Plan and any Participant
then employed by such Employer.
X-1
<PAGE>
(b) The interest of each such Participant in service with such
Employer as of the termination date in his Account after payment
of or provision for expenses and charges and appropriate
adjustment of the Accounts of all such Participants for expenses,
charges, forfeitures and profits and losses shall be
nonforfeitable as of the termination date, and upon receipt by
the Administrative Committee of IRS approval of such termination,
the full current value of such amount shall be paid from the
Trust Fund in the manner described in Article VII or transferred
to a successor employee benefit plan which is qualified under
Code Section 401(a); provided, however, that in the event of any
transfer of assets to a successor employee benefit plan the
provisions of Section 12.04 will apply.
(c) All determinations, approvals and notifications referred to above
shall be in form and substance and from a source satisfactory to
counsel for the Plan. To the maximum extent permitted by ERISA,
the termination of the Plan as to any Employer shall not in any
way affect any other Employer's participation in the Plan.
X-2
<PAGE>
Article XI
TOP HEAVY PROVISIONS
--------------------
11.01 Top Heavy and Super Top Heavy Defined
-------------------------------------
For purposes of this Article XI, Top Heavy shall mean that as of the
Determination Date the aggregate Account balances of all Key Employees
(including any amounts distributed to Key Employees during the five Plan Years
ending on the Determination Date) exceeds 60% of the aggregate of the Account
balances of all Participants as of such Determination Date. Super Top Heavy
shall mean that as of the Determination Date, the aggregate Account balances of
all Key Employees (including any amounts distributed to Key Employees during the
five Plan Years ending on the Determination Date) exceeds 90% of the aggregate
of the Account balances of all Participants as of such Determination Date.
Participants who are former Key Employees shall be excluded from all such
determinations under this Section 11.01. If any individual has not performed
services for the Employer or any Affiliated Company at any time during the five
year period ending on the Determination Date, any Account Balance of such
individual shall be disregarded.
For purposes of this Section 11.01, Determination Date shall be defined
as the last day of the Plan Year preceding the Plan Year for which the Top Heavy
determination is made. For purposes of this Section 11.01, Account balance may
also include benefits accrued under any other United States tax qualified
retirement plan maintained by the Employer or any Affiliated Company which must
or may be aggregated (as required pursuant to Sections 11.02 and 11.03) for
purposes of this Section 11.01 as required under the provisions of Section 416
of the Code and the regulations thereunder.
11.02 Required Aggregation Group
--------------------------
For purposes of this Article XI, a Required Aggregation Group shall
consist of (a) this Plan; (b) the Banco Popular de Puerto Rico Retirement Plan;
(c) the Banco Popular de Puerto Rico Profit Sharing Plan; (d) any other
qualified plans maintained by the Employer
XI-1
<PAGE>
that cover Key Employees; and (e) any other qualified plans that are required to
be aggregated for purposes of satisfying the requirements of Sections 401(a)(4)
and 410(b) of the Code.
11.03 Permissible Aggregation Group
-----------------------------
For purposes of this Article XI, a Permissible Aggregation Group shall
consist of (a) the Required Aggregation Group and (b) any other qualified plans
maintained by the Employer; provided however, that the Permissible Aggregation
Group must satisfy the requirements of Sections 401(a)(4) and 410(b) of the
Code.
11.04 Key Employee Defined
--------------------
For purposes of this Article XI, Key Employee shall be defined as in
Section 416(i)(1) of the Code and the regulations thereunder. All other
Participants shall be referred to as Non-Key Employees.
11.05 Employer Contributions
----------------------
For each Plan Year that the Plan is a Top Heavy Plan, the Employer's
contribution (including contributions attributable to salary reduction or
similar arrangements) allocable to the Account of each Non-Key Employee who has
satisfied the eligibility requirements of Plan Section 2.01, whether or not a
Participant in the Plan, and who is in service at the end of the Plan Year shall
not be less than the lesser of (i) 3% of such Employee's compensation (as
defined in Code Section 414(s)), or (ii) the percentage at which contributions
for such Plan Year are made and allocated on behalf of the Key Employee for whom
such percentage is the highest. For the purpose of determining the appropriate
percentage under clause (ii), all defined contribution plans required to be
included in an Aggregation Group shall be treated as one plan. Clause (ii) shall
not be applicable if the Plan is required to be included in an Aggregation Group
which enables a defined benefit plan also required to be included in said
Aggregation Group to satisfy Code Sections 401(a)(4) or 410.
XI-2
<PAGE>
11.06 Effect on Vesting Percentages
-----------------------------
If the Plan should ever be Top Heavy, the provisions of Section 7.03
shall be modified to provide that each Participant shall be entitled to a vested
percentage in his Account determined in accordance with the following schedule:
Full Years Vested
of Service Percentage
---------- ----------
Less than 2 years 0%
2 years 20%
3 years 40%
4 years 60%
5 years 80%
6 or more years 100%
11.07 Effect on Application of Maximum Benefit Limitations
----------------------------------------------------
For each Plan Year in which the Plan is Top Heavy, the provisions of
Section 5.05 shall be modified with respect to the operation of Code Section
415(e) by substituting "1.0" for "1.25" wherever the latter appears in that
Section of the Code.
The provisions of the preceding paragraph shall not apply if the
requirements below are satisfied:
(a) Section 11.05 is applied by substituting 4% for 3% wherever the
latter appears.
(b) To the extent required by Section 416 of the Code and the
regulations, any defined benefit plan of the Employer or an
Affiliated Company meets the requirements of Section 416(c)(1)(B)
of the Code (relating to minimum benefit accruals) after such
Section is modified by substituting "3%" for
XI-3
<PAGE>
"2%" and by increasing "20%" by "1%" for each Plan Year (not to
exceed 10) that the Plan was required to be taken into account
under Section 11.05.
(c) The Plan is not Super Top Heavy.
XI-4
<PAGE>
Article XII
MISCELLANEOUS PROVISIONS
------------------------
12.01 Contract of Employment
----------------------
The Plan shall not be deemed to constitute a contract between any
Employee and the Employer or to be a consideration or an inducement to any
Employee for his employment by the Employer. Nothing contained in the Plan shall
be deemed to give any Employee the right to be retained in the employ of the
Employer or to interfere with the right of the Employer to discharge or to
terminate the employment of an Employee at any time without regard to the effect
of such action on his rights under the Plan. No Participant or Beneficiary shall
have any rights against the Employer for benefits payable under the Plan other
than rights, if any, which he may have with respect to the Trust Fund.
12.02 Furnishing of Information
-------------------------
Unless otherwise expressly provided in the Plan, all benefits to which
any Participant may be entitled shall be determined in accordance with the
provisions of the Plan as in effect on such Participant's Severance from Service
Date. In order to receive any benefits under the Plan, a Participant must
furnish the Administrative Committee with such information as may reasonably be
required for purposes of the proper administration of the Plan.
12.03 Assignment or Alienation of Benefits
------------------------------------
Any benefit payable under the Plan shall not be subject in any manner
to assignment, alienation, anticipation, sale, transfer, pledge, encumbrance,
lien or charge, and any attempt to cause any such benefit to be so subjected
shall not be recognized except to such extent as may be required by law.
12.04 Merger of Plans
---------------
In the event of any merger or consolidation of the Plan with, or
transfer of assets or liabilities of the Plan to, any other qualified plan, each
Participant shall (if such other plan
XII-1
<PAGE>
then terminates) be entitled to receive a benefit immediately after any such
merger, consolidation or transfer which is equal to or greater than the benefit
to which he would have been entitled immediately before such merger,
consolidation or transfer (if the Plan had then terminated).
12.05 Substitute Payee
----------------
If a Participant or Beneficiary entitled to receive any retirement
benefits from the Plan is in his minority, or is, in the judgment of the
Administrative Committee, legally, physically or mentally incapable of
personally receiving and receipting for any distribution, the Administrative
Committee may make distributions to his legally appointed guardian, or to such
other person, persons or institutions as it may judge to be then maintaining or
to have custody of the payee.
12.06 Domestic Relations Order
------------------------
For purposes of this Article XII, a Domestic Relations Order shall
refer to a judgment, decree or order (including the approval of a property
settlement) that is made pursuant to a state domestic relations or community
property law, and which relates to the provisions of child support, alimony
payments, or marital property rights to a spouse, child or other dependent of a
Participant.
12.07 Qualified Domestic Relations Order
----------------------------------
For purposes of this Article XII, a Qualified Domestic Relations Order
shall refer to a Domestic Relations Order that (a) clearly specifies (i) the
name and last known mailing address of the Participant and of each person given
rights under such Domestic Relations Order, (ii) the amount or percentages of
the Participant's benefits under this Plan to be paid to each person covered by
such Domestic Relations Order, (iii) the number of payments or the period to
which such Domestic Relations Order applies, and (iv) the name of this Plan; and
(b) does not require the payment of a benefit in a form or amount that is (i)
not otherwise
XII-2
<PAGE>
provided for under the Plan, or (ii) inconsistent with a previous Qualified
Domestic Relations Order.
12.08 Procedures Involving Domestic Relations Orders
Notwithstanding the provisions of Section 12.03 to the contrary, upon
receiving a Domestic Relations Order, the Administrative Committee shall
segregate in a separate account or in an escrow account the amounts payable to
any person pursuant to such Domestic Relations Order, pending a determination
whether such Domestic Relations Order constitutes a Qualified Domestic Relations
Order, and shall give notice of the receipt of the Domestic Relations Order to
the Participant and each other person affected thereby.
If, within 18 months after receipt of such Domestic Relations Order, it
is determined by the Administrative Committee, by a court of competent
jurisdiction, or otherwise, that such Domestic Relations Order constitutes a
Qualified Domestic Relations Order, the Administrative Committee shall direct
the Trustee to segregate the amounts (plus any interest thereon) an account of
the person (or persons) entitled thereto under the Qualified Domestic Relations
Order. Such individual shall, thereafter, be considered a terminated vested
Participant under the Plan. If it is determined that the Domestic Relations
Order is not a Qualified Domestic Relations Order or if no determination is made
within the prescribed 18-month period, the segregated amounts shall be
desegregated as though the Domestic Relations Order had not been received, and
any later determination that such Domestic Relations Order constitutes a
Qualified Domestic Relations Order shall be applied only with respect to
benefits on the date of such determination.
The Administrative Committee shall be authorized to establish such
reasonable administrative procedures as is deemed necessary or appropriate to
administer this Section 12.08. This Section 12.08 shall be construed and
administered so as to comply with the requirements of Section 401(a)(13) of the
Code.
XII-3
<PAGE>
12.09 Leased Employees
----------------
(a) Subject to Subsection 12.09(b), a Leased Employee shall be
treated as an Employee for all purposes of the Plan. For purposes
of this Section 12.09, a Leased Employee shall refer to any
person (i) who would not, but for the application of this Section
12.09, be an Employee and (ii) who pursuant to an agreement
between the Employer and any other person (a Leasing
Organization) has performed for the Employer (or for the Employer
and related persons determined in accordance with Section
414(n)(6) of the Code), on a substantially full-time basis for a
period of at least one year, services of a type historically
performed by employees in the business field of the Employer.
(b) For purposes of the Plan:
(i) contributions or benefits provided to the Leased Employee by
the Leasing Organization which are attributable to services
performed for the Employer shall be treated as provided by
the Employer; and
(ii) Subsection 12.09(a) shall not apply to a Leased Employee if
such Leased Employee is covered by a money purchase pension
plan providing (A) a non-integrated contribution rate of at
least 7-1/2% of the Leased Employee's compensation; (B)
immediate participation; and (C) full and immediate vesting.
12.10 Gender and Number
-----------------
The masculine pronoun, whenever used herein, shall include the feminine
pronoun, and the singular number shall include the plural number, unless the
context of the Plan clearly indicates otherwise.
12.11 Governing Law
-------------
The Plan shall be governed and construed in accordance with ERISA and
the laws of the State of New York.
XII-4
<PAGE>
IN WITNESS WHEREOF, the Employer has caused this Plan to be executed
this 28 day of February, 1999.
By: [Maria I. Burkhart]
-------------------------------------
Title: Member Administrative Committee
----------------------------------
By:
-------------------------------------
Title:
----------------------------------
By:
-------------------------------------
Title:
----------------------------------
XII-5
<PAGE>
BANCO POPULAR DE PUERTO RICO
EMPLOYEES' STOCK PLAN (U.S.)
---------------------
PLAN AMENDMENT NUMBER 1
WHEREAS, Banco Popular de Puerto Rico, hereinafter referred to as the
"Employer", has established the Banco Popular de Puerto Rico Employees' Stock
Plan, hereinafter referred to as the "Plan", and
WHEREAS, the Employer under Article X of the Plan reserves the right to amend
the Plan at any time.
NOW THEREFORE, BE IT
RESOLVED, that the Plan is hereby amended effective July 1, 1995 in the
following respect:
ARTICLE II, Section 2.01(a) shall be amended in its entirety to read as follows:
"(a) Subject to the provisions of subsections (b) and (c) below, each Employee
as of the Effective Date and each person who becomes as Employee subsequent
to that date who performs services for the employer primarily outside the
Commonwealth of Puerto Rico, shall become a Participant as of the first day
of the month coincident with or next following the completion of three
months of Service with the Employer, for purposes of eligibility for making
Elective Deferral Contributions, Voluntary Contributions and Rollover
Contributions, and receiving Employer Matching Contributions. However, for
purposes of receiving Employer Basic Contributions, eligibility shall occur
as of the first day of the month coincident with or next following the
completion of one Year of Service with the Employer."
XII-6
<PAGE>
BANCO POPULAR DE PUERTO RICO
EMPLOYEES' STOCK PLAN (U.S.)
---------------------
PLAN AMENDMENT NUMBER 2
WHEREAS, Banco Popular de Puerto Rico, hereinafter referred to as the
"Employer", has established the Banco Popular de Puerto Rico Employees' Stock
Plan, hereinafter referred to as the "Plan", and
WHEREAS, the Employer under Article X of the Plan reserves the right to amend
the Plan at any time.
NOW THEREFORE, BE IT
RESOLVED, that the Plan is hereby amended effective September 1, 1996 in the
following respect:
"12.12 Transfer of Certain Employees
-----------------------------
Upon the transfer of all Participants of a unit of the Employer to an Affiliated
Company which does not participate in the Plan or in the Banco Popular de Puerto
Rico Employees' Stock Plan, the Accounts of such Participants shall be
transferred to the tax-qualified defined contribution plan sponsored by such
Affiliated Company, to the extent such plan allows such transfers, as soon as
administratively feasible thereafter. Such Participants shall be eligible to
receive an allocation of the Employer's contribution during the Plan Year of
their transfer based on their Compensation earned prior to their date of
transfer. Such allocations shall also be transferred to the tax-qualified
defined contribution plan sponsored by such Affiliated Company, to the extent
such plan allows such transfers, as soon as administratively feasible
thereafter."
XII-7
<PAGE>
BANCO POPULAR DE PUERTO RICO
EMPLOYEES' STOCK PLAN (U.S.)
---------------------
PLAN AMENDMENT NUMBER 3
WHEREAS, Banco Popular de Puerto Rico, hereinafter referred to as the
"Employer", has established the Banco Popular de Puerto Rico Employees' Stock
Plan, hereinafter referred to as the "Plan", and
WHEREAS, the Employer under Article X of the Plan reserves the right to amend
the Plan at any time.
NOW THEREFORE, BE IT
RESOLVED, that the Plan is hereby amended effective January 1, 1998 in the
following respect:
ARTICLE VII, Section 7.08, each occurrence of the phrase "$3,500" shall be
substituted by the phrase "$5,000".
XII-8
<PAGE>
BANCO POPULAR DE PUERTO RICO
EMPLOYEES' STOCK PLAN (U.S.)
--------------------------------------
PLAN AMENDMENT NUMBER 4
WHEREAS, Banco Popular de Puerto Rico, hereinafter referred to as the
"Employer", has established the Banco Popular de Puerto Rico Employees' Stock
Plan, hereinafter referred to as the "Plan", and
WHEREAS, the Employer under Article X of the Plan reserves the right to amend
the Plan at any time.
NOW THEREFORE, BE IT
RESOLVED, that the Plan is hereby amended in the following respect:
The Plan shall be revised effective January 1, 1998, by replacing all references
to "BanPonce Corporation" to "Popular, Inc."
ARTICLE I, Section 1.12 of the Plan shall be amended effective as of January 1,
1999, by adding a sentence at the end thereof to read as follows:
"An individual who is employed by Banco Popular North America shall not be
considered an Employee on or after January 1, 1999, and he shall neither be
eligible to make any Elective Deferrals or Voluntary Contributions nor to
receive any Employer Basic Contributions or Employer Matching Contributions."
XII-9
<PAGE>
BANCO POPULAR DE PUERTO RICO
EMPLOYEES' STOCK PLAN (U.S.)
---------------------
PLAN AMENDMENT NUMBER 5
WHEREAS, Banco Popular de Puerto Rico, hereinafter referred to as the
"Employer", has established the Banco Popular de Puerto Rico Employees' Stock
Plan, hereinafter referred to as the "Plan", and
WHEREAS, the Employer under Section 10.01 of the Plan reserves the right to
amend the Plan at any time.
WHEREAS, the Tax Reform Act of 1997 amended the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") and the federal Internal Revenue Code
of 1986, as amended (the "US IRC") to establish investment limitations in
employer securities by certain qualified plans effective on the first day of the
first Plan year beginning on or after January 1, 1999; and
WHEREAS, BPPR wishes to amend the Plan to allow itself more time in which to
effect amendments to comply with the requirements of the Tax Reform Act of 1997.
NOW, THEREFORE, in consideration of the foregoing, the Plan is hereby amended as
follows.
1. Section 1.28 of the Plan is amended to read in its entirety as follows:
1.28 PLAN YEAR
---------
The period from the Effective Date to the end of calendar year containing the
Effective Date shall be a Short Plan Year. Thereafter the Plan Year shall be the
calendar year until calendar year 1998 in which the Plan Year shall end on
December 30, 1998. The Plan Year thereafter shall commence on December 31 and
end on December 30.
XII-10
AMENDED AND RESTATED BANPONCE U.S.A. PROFIT SHARING/401(K) PLAN
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE 1 ESTABLISHMENT AND PURPOSE OF PLAN.............................................6
ARTICLE 2 DEFINITIONS...................................................................6
2.1 Definitions............................................................................6
2.2 Gender and Number.....................................................................10
ARTICLE 3 PARTICIPATION................................................................10
3.1 Eligibility...........................................................................10
3.2 Effective Date of Participation.......................................................11
3.3 Cessation of Eligible Status..........................................................11
3.4 Reemployment..........................................................................11
3.5 Determination.........................................................................12
ARTICLE 4 EMPLOYEE CONTRIBUTIONS.......................................................12
4.1 Employee Contributions................................................................12
4.2 Dates of Election.....................................................................12
ARTICLE 5 EMPLOYER CONTRIBUTIONS.......................................................12
5.1 Employer Matching Contributions.......................................................12
5.2 Employer Bonus Matching Contributions.................................................12
5.3 Discretionary Employer Contributions..................................................13
5.4 Dates of Employer Contributions.......................................................13
5.5 Allocation of Discretionary Employer Contributions and Forfeitures....................13
5.6 Restoration of Forfeited Amounts Upon Reemployment....................................13
5.7 Rollover Contributions................................................................13
5.8 Qualified Military Service Contributions..............................................14
ARTICLE 6 LIMITATIONS..................................................................15
6.1 Limitations on Annual Account Additions...............................................15
6.2 Maximum Amount of Before-Tax Deposits.................................................16
6.3 Actual Deferral Percentage Tests......................................................17
6.4 Adjustment to Actual Deferral Percentage Tests........................................18
6.5 Maximum Contribution Percentage.......................................................19
6.6 Adjustment For Excessive Contribution Percentage......................................20
6.7 Limit on Total Contribution of Employer; Precluding Excess Allocations................21
ARTICLE 7 CREDITING OF CONTRIBUTIONS AND DEPOSITS TO
</TABLE>
-i-
<PAGE>
<TABLE>
<S> <C> <C>
INVESTMENT FUNDS.............................................................22
7.2 Participant's Choice of Investments...................................................22
7.3 Change of Prior Investments...........................................................22
7.4 Investment Elections and Other Transactions By Officers...............................22
ARTICLE 8 ACCOUNTS.....................................................................23
8.1 Separate Accounts.....................................................................23
8.2 Adjusting the Value of the Account....................................................23
8.3 Valuation of Separate Accounts........................................................24
8.4 Determination of Fund Performance.....................................................24
ARTICLE 9 WITHDRAWALS DURING EMPLOYMENT................................................24
9.1 Hardship Withdrawals..................................................................24
9.2 Loans to Participants.................................................................26
9.3 Withdrawal and Loan Fees..............................................................27
ARTICLE 10 DISTRIBUTIONS................................................................27
10.1 Retirement............................................................................27
10.2 Death.................................................................................27
10.3 Permanent Disability..................................................................27
10.4 Other Termination of Employment.......................................................28
10.5 Designation of Beneficiary............................................................28
10.6 Timing of Distributions...............................................................29
10.7 Manner of Benefit Distribution........................................................29
10.8 Manner of Distribution and Timing of Death Distributions..............................31
10.9 Limitations on Benefits and Distributions.............................................32
10.10 Distributions Payable to Incompetents.................................................32
10.11 Distribution of Before-Tax Deposits...................................................32
ARTICLE 11 NON-ASSIGNABILITY............................................................33
ARTICLE 12 TRUST AGREEMENT..............................................................33
ARTICLE 13 MANAGEMENT AND ADMINISTRATION................................................33
13.1 Administrator.........................................................................33
13.2 Claims Review Procedure...............................................................33
13.3 Delegation............................................................................34
13.4 Expenses of Administration............................................................34
ARTICLE 14 EMPLOYER RIGHTS..............................................................34
14.1 Employer's Interest in Trust..........................................................34
14.2 Inspection of Records.................................................................35
</TABLE>
-ii-
<PAGE>
<TABLE>
<S> <C> <C>
14.3 Amendment.............................................................................35
14.4 Employment Rights.....................................................................35
14.5 Employer Liability....................................................................35
ARTICLE 15 AFFILIATES...................................................................36
15.1 Adoption By Affiliates................................................................36
15.2 Requirements of Affiliates............................................................36
15.3 Designation of Agent..................................................................36
15.4 Employee Transfers....................................................................36
15.5 Discontinuance of Participation.......................................................36
15.6 Administrator's Authority.............................................................37
ARTICLE 16 CONDITION OF QUALIFICATION...................................................37
ARTICLE 17 TERMINATION..................................................................37
17.1 Event of Termination..................................................................37
17.2 Effect of Termination.................................................................37
ARTICLE 18 TRANSFERS, MERGERS AND CONSOLIDATIONS........................................38
ARTICLE 19 SUCCESSORS...................................................................38
ARTICLE 20 INTERPRETATION OF AGREEMENT..................................................38
20.1 Interpretation of Plan................................................................38
20.2 Forms.................................................................................38
20.3 Applicable Law........................................................................38
APPENDIX A Merger of COMBANCORP Employees Stock Savings Plan
APPENDIX B Merger of Pioneer Bank and Trust Company Profit Sharing Plan
APPENDIX C MERGER OF NATIONAL BANCORP INC.401(k) PROFIT SHARING
PLAN 55
</TABLE>
-iii-
<PAGE>
AMENDED AND RESTATED BANPONCE U.S.A. PROFIT SHARING/401 (k) PLAN
ARTICLE 1
ESTABLISHMENT AND PURPOSE OF PLAN
Establishment and Purpose. Effective as of March 1, 1997, BanPonce
Corporation (the "Employer") hereby adopts the Amended and Restated BanPonce
U.S.A. Profit Sharing/401(k) Plan (the "Plan") in recognition of the
contribution made to its successful operation by its employees and for the
exclusive benefit of such eligible employees.
The Plan is intended to meet the qualification requirements of Section
401 et. seq. of the Internal Revenue Code of 1986 (the "Code") and the Employee
Retirement Income Security Act of 1974 ("ERISA"), as both may be amended from
time to time.
Except as otherwise noted below, this Plan made and entered in this
_____ day of ____________, 1997 shall be effective as of March 1, 1997. The
provisions of the Plan as set forth herein, shall apply only to a Participant
who terminates employment on or after March 1, 1997.
ARTICLE 2
DEFINITIONS
2.1 Definitions. Wherever used in the Plan, the following terms shall
have the meanings set forth below unless the context clearly indicates
otherwise:
(1) Account: The bookkeeping account established and maintained by
the Administrator for each Participant with respect to that Participant's
interest in the Trust.
(2) Administrator: The Administrator is the individual or
individuals, appointed to administer the Plan pursuant to Section 13.1.
(3) Affiliate: The Company and any corporation which is a member
of a controlled group of corporations (as defined in Code Section 414(b)) which
includes the Company; any trade or business (whether or not incorporated) which
is under common control (as defined in Code Section 414(c)) with the Company;
any organization (whether or not incorporated) which is a member of an
affiliated service group (as defined in Code Section 414(m)) which includes the
Company; and any other entity required to be aggregated with the Company
pursuant to Regulations under Code Section 414(o).
(4) Board: The Board of Directors of the Company.
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(5) Break in Service: Break in Service means a twelve-month Period
measured from a Participant's latest date of employment, and anniversaries
thereof, in which the Participant does not complete more than five hundred (500)
Hours of Service due to a termination of employment.
(6) Company: BanPonce Corporation, a Puerto Rican corporation, and
any organization that is a successor thereto.
(7) Compensation: Compensation means the amount of compensation
actually paid to the Participant by the Employer which is reportable on the
Participant's IRS Form W-2, excluding payments for group term life insurance,
moving expenses, tuition expenses and automobile expenses. Compensation shall
include before-tax deposits and any salary reduction contributions made on
behalf of a Participant under a plan which qualifies under Code Section 401(k)
and/or Code Section 125. Compensation shall not include any amounts in excess of
$150,000, as adjusted for increases in the cost-of-living in accordance with
Code Section 401(a)(17)(B).
(8) Credited Service: Except as otherwise provided below, credited
service means a Participant's years of employment with an Affiliate or a
predecessor of an Affiliate. A Participant's period of employment by an
Affiliate is measured from the Participant's date of employment and
anniversaries thereof to the date of the Participants termination of employment
for any reason.
In calculating a Participant's Credited Service, all periods
of employment with an Affiliate or predecessor thereof shall be considered, with
the following exceptions:
(1) Service prior to the attainment of age eighteen (18).
(2) Service performed prior to five (5) consecutive one-year
Breaks in Service unless the Participant is reemployed and the prior service is
reinstated in accordance with Section 3.5. In no event, however shall Credited
Service performed after five (5) consecutive one-year Breaks in Service be
considered in determining a Participant's vested interest in amounts allocated
to his Account prior to the period of consecutive Breaks in Service.
However, the above exceptions shall not apply in the extent it
would cause service to be disregarded that was taken into account under a plan
that is treated as a "predecessor plan" to this Plan as determined in accordance
with the Code.
(9) Employee: Any person who is employed by an Employer in a
participating division as so designated by the Board excluding: (i) any
non-resident aliens, (ii) any independent contractor, (iii) any leased employee
and (iv) any individual who is included within a unit of employees covered by a
collective bargaining agreement for whom retirement benefits were the subject of
good faith bargaining, unless the collective bargaining agreement provides for
said individuals participation in this Plan. A "leased employee" means any
person who is not an
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employee of the Employer, and provides services to the Employer if (1) such
services are provided pursuant to an agreement between the Employer and any
other person (the "leasing organization"), (2) such person has performed such
services for the Employer (or for the Employer and related persons determined in
accordance with Code Section 414(n)) on a substantially full time basis for a
period of at least one (1) year, and (3) such services are performed under the
primary direction or control of the Employer. If a leased employee participates
in the Plan as a result of subsequent employment with the Employer, such person
shall receive credit for Hours of Service and Credited Service for such
employment as a leased employee.
(10) Employer: The Company and such Affiliates as have adopted the
Plan with the consent of the Board.
(11) Former Participant: A person who has been a Participant, but
who has ceased to be a Participant for any reason.
(12) Highly Compensated Participant: A Highly Compensated
Participant means an individual described in Code Section 414(q) and the
Regulations thereunder, and generally means an Employee who performed services
for the Employer during the determination year and is in one or more of the
following groups:
(1) Employees who at any time during the determination year
or the preceding year were 5% owners of the Employer. A 5% owner means any
person who owns (or is considered as owning within the meaning of Code Section
318) more than 5% of the outstanding stock of the Employer or stock possessing
more than 5% of the total combined voting power of all stock of the Employer or,
in the case of an unincorporated business, any person who owns more than 5% of
the capital or profits interest in the Employer. In determining percentage
ownership hereunder, employers that would otherwise be aggregated under Code
Sections 414(b), (c), (m) and (o) should be treated as separate employers.
(2) Employees who for the preceding year had compensation from
the Employer in excess of $80,000 (as adjusted at the same time and in such
manner as prescribed by the Secretary of the Treasury).
The determination year shall be the Plan Year for which
testing is being performed.
The foregoing exclusions set forth in this Section shall be
applied on a uniform and consistent basis for all purposes for which the Code
Section 414(q) definition is applicable.
For this purpose, a Highly Compensated Employee shall include
a former Employee who had a separation year prior to the determination year and
was a Highly Compensated
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Employee in the year of separation from service or in any determination year
after attaining age fifty-five (55). Notwithstanding the foregoing, an Employee
who separated from service prior to 1987 will be treated as a Highly Compensated
Employee only if during the separation year for year preceding the separation
year) or any year after the Employee attains age fifty-five (55) (or the last
year ending before the Employee's fifty-fifth (55th) birthday), the Employee
either received Compensation in excess of $50,000 or was a 5% owner.
(13) Hour of Service:
(1) Each hour for which an Employee is paid, or entitled to
payment, for the performance of duties for an Affiliate or a corporation, trade,
or business if it and an Affiliate are members of a controlled group of
corporations as defined in Code Section 414(b) or under common control as
defined in Code Section 414(c) or members of an affiliated service group as
defined in Code Section 414(m). These hours shall be credited to the Employee
for the computation period in which the duties are performed.
(2) Each hour for which an Employee is paid, or entitled to
payment, by an Affiliate on account of a period of time during which no duties
are performed (irrespective of whether the employment relationship is
terminated) due to vacation, holiday, illness, incapacity (including
disability), lay-off, jury duty, military leave or leave of absence. No more
than five hundred one (501) hours shall be credited under this subsection for
any single continuous period of absence (whether or not such period occurs in a
single computation period.
(3) Each hour for which back pay, irrespective of mitigation
of damages, is either awarded or agreed to by an Affiliate. The same hours shall
not be credited both under paragraph (1) or (2), as the case may be, and under
this paragraph (3). These hours shall be credited to the Employee for the
computation period or periods to which the award or agreement pertains rather
than the computation period in which the award, agreement or payment is made,
(4) Solely for purposes of determining whether an Employee has
a Break in Service under Section 2.1(e), each hour, based on the number of hours
per week that the Employee would have normally worked, of a pro rata portion
thereof, during which an Employee is absent from work (i) by reason of the
pregnancy of the Employee, (ii) by reason of the birth of the child of the
Employee, (iii) by reason of the placement of a child with the Employee, or (iv)
due to the caring of a child during the period immediately after the birth,
placement or adoption of the child by the Employee. Not more than five hundred
one (501) Hours of Service shall be credited to any Employee under this
paragraph for any one occurrence. Such hours shall be credited to the
computation period during which the event occurs to the extent necessary to
prevent a Break in Service, and to the extent not so necessary, to the next
following computation period, and
(5) Each hour, other than hours credited under paragraphs (l),
(2), (3), and (4), during any customary period of work, based on a forty-hour
week or pro rata portion thereof,
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during which the employee is laid off, in on an Employer approved leave of
absence or sick or disability leave, or is on jury or military duty.
(6) The provisions of Department of Labor regulations
2530.2006-2(b) and (c) are incorporated by reference.
(14) Investment Manager: The entity or entities appointed by the
Trustee to manage and invest specified Trust assets and who acknowledges
acceptance of such appointment as a Fiduciary in writing.
(15) Non-Highly Compensated Participant: Any Participant or Former
Participant who is not a Highly Compensated Participant.
(16) Participant: An Employee who meets the eligibility
requirements of Section 3.1.
(17) Permanent Disability: A physical or mental condition of a
Participant resulting from bodily injury, disease, or mental disorder which
renders him incapable of continuing his usual and customary employment with the
Employer. The disability of a Participant shall be determined by a licensed
physician chosen by the Administrator. The determination shall be applied
uniformly to all Participants.
(18) Plan Year: Plan Year means the twelve-month period beginning
on January 1 and ending on December 31.
(19) Trust: The legal entity created by the trust agreement
between the Company and Trustee, fixing the rights and liabilities of each with
respect to managing and controlling the trust funds for the purposes of the
Plan.
(20) Trustee: Banco Popular, Illinois, an Illinois banking
corporation.
(21) Valuation Date: The last day of each calendar quarter, and
such other dates as may be designated by the Administrator in a uniform and
nondiscriminatory manner.
2.2 Gender and Number. Except as otherwise indicated by the context,
masculine terminology shall include the feminine and the singular shall include
the plural.
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ARTICLE 3
PARTICIPATION
3.1 Eligibility. Each Employee who was employed by the Employer on
February 28, 1997, shall be eligible to participate in the Plan as of the
effective date, subject to the terms and provisions of this Plan. Every other
Employee shall be eligible to become a Participant on the date such person
becomes an Employee.
3.2 Effective Date of Participation. An Employee who has become
eligible to be a Participant shall become a Participant effective as of the
first day of the month following completion of the eligibility requirements of
Section 3.1 if still employed on that date.
3.3 Cessation of Eligible Status. If any Participant ceases to be an
Employee, but does not terminate employment with all Affiliates, such
Participant shall not be credited with any Employer contributions or forfeitures
for Credited Service during the period in which he ceases to be an eligible
Participant; however, such Participant shall receive credit for vesting purposes
for Credited Service during the period in which he is not an eligible
Participant.
3.4 Reemployment. A former Employee's eligibility to participate in the
Plan and the reinstatement of his Credited Service following his reemployment by
the Employer shall be governed by the following rules:
(1) Return Prior to Five (5) Consecutive One-Year Breaks in
Service. The former Employee shall resume participation in the Plan and his
Credited Service shall be reinstated immediately upon his reemployment if he was
a Participant in the Plan prior to his departure and he is reemployed by the
Employer prior to incurring five (5) consecutive one-year Breaks in Service. If
the former Employee terminated employment after satisfying the age and service
requirements specified in Section 3.1 but prior to becoming a Participant, his
Credited Service will be reinstated and he will become a Participant as of the
later of his date of reemployment or the day on which he would have become a
Participant if his employment had not been terminated as long as he is
reemployed prior to incurring five (5) consecutive one-year Breaks in Service.
(2) Return After Five (5) Consecutive One-Year Breaks in Service.
If a former Employee had a non-forfeitable right to all or a portion of his
Account at the time of his termination of employment, his Credited Service will
be reinstated and he shall resume participation in the Plan immediately upon his
reemployment if he is reemployed by the Employer after incurring five (5)
consecutive one-year Breaks in Service. If the former Employee did not have a
non-forfeitable right to any portion of his Account at the time of his
termination, he shall be considered a new Employee for all purposes if the
number of his consecutive one-year Breaks in Service equal or exceed the greater
of (1) five (5) years or (2) the aggregate number of years of Credited Service
before such breaks. If such former Participant's years or Credited Service
before his termination exceed the greater of (1) five (5) years or (2) the
number of consecutive one-year Breaks in Service after such
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termination, his Credited Service will be reinstated and the Participant shall
participate immediately. In determining a former Employee's aggregate number of
years of Credited Service before the consecutive Breaks in Service, years of
Credited Service disregarded in accordance with this Section as the result of
prior periods of consecutive Breaks in Service shall not be considered.
Except as noted above, for eligibility purposes a former Employee
will be treated as a new Employee, and his prior Credited Service shall be
disregarded upon his reemployment.
3.5 Determination. Subject to the claims review provisions of Section
13.2, the Administrator's determinations as to compliance with the foregoing
eligibility and participation requirements shall in each case be conclusive.
ARTICLE 4
EMPLOYEE CONTRIBUTIONS
4.1 Employee Contributions. Subject to the limitations of Article 6,
each Participant may make contributions to the Plan, only by payroll deduction,
in any whole percentage of his Compensation, between 1% and 10%, as he elects.
The before-tax deposits elected by the Participant will be deducted from his
Compensation for each payroll period and shall be paid by the Employer to the
Trust not later than the fifteenth (15th) business day after such deduction.
4.2 Dates of Election.
(1) A Participant may elect to make before-tax deposits, as
provided in Section 4.1, by authorizing payroll deductions at least thirty (30)
days prior to the beginning of any calendar quarter.
(2) A Participant may change his before-tax deposit percentage
to any other percentage authorized under Section 4.1 by giving the Employer
notice at least thirty (30) days prior to the beginning of any calendar quarter.
(3) A Participant may discontinue before-tax deposits,
effective as of the beginning of any payroll period, by giving the Employer
notice at least thirty (3) days prior to the discontinuance.
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ARTICLE 5
EMPLOYER CONTRIBUTIONS
5.1 Employer Matching Contributions. The Employer shall contribute to
the Plan for each Plan Year an amount equal to 50% of the before-tax deposits of
each Participant, provided, however, no contribution shall be made with respect
to before-tax deposits in excess of 6% of any Participant's Compensation in any
Plan Year.
5.2 Employer Bonus Matching Contributions. In addition, to the Matching
Contributions provided for in Section 5.1 above, the Employer shall contribute
to the Plan for each Plan Year an amount equal to an additional 50% of that
portion of the before-tax deposits of each Participant that have been invested
in the BanPonce Stock Fund, provided that (a) the Participant has not made any
transfers from the BanPonce Stock Fund during the Plan Year, and (b) the
Participant is employed on the last day of the Plan Year and has completed at
least one thousand (1,000) Hours of Service during the Plan Year or who
terminated employment due to death, disability or retirement on or after Normal
Retirement Age during the Plan Year; provided, however, no contribution shall be
made with respect to before-tax deposits in excess of 6% of any Participant's
Compensation in any Plan Year.
5.3 Discretionary Employer Contributions. The Employer may make a
discretionary contribution to the Trust in such amount, if any, determined
separately for each division of each Employer, as determined by the Board.
5.4 Dates of Employer Contributions. The Employer's contribution for
the year as determined under Section 5.1, 5.2, and 5.3 will be made within the
time prescribed for filing its Federal income tax return, including extensions
thereof.
5.5 Allocation of Discretionary Employer Contributions and Forfeitures.
As of the last day of each Plan Year, each Participant's allocable share (as
hereinafter determined), if any, of the Employer's contributions for the Plan
Year shall be credited to his Account. Forfeitures, if any, shall be used to
reduce Employer contributions under Sections 5.1, 5.2, and 5.3. The
discretionary Employer Contributions, if any, for each division will be
allocated to all Participants who: (i) are employed in that division on the last
day of the Plan Year and have completed at least one thousand (1,000) Hours of
Service during the Plan Year, or (ii) who terminated employment with that
division due to beech, disability or retirement on or after Normal Retirement
Age during the Plan Year, in the ratio that each such Participant's Compensation
bears to all such Participants' Compensation or that division.
5.6 Restoration of Forfeited Amounts Upon Reemployment. If a person who
was a Participant on or after April 1, 1975 is reemployed by the Employer before
he incurs five (5) consecutive one-year Breaks in Service, the Employer shall
make a special contribution to the Participant's Account in an amount equal to
the amount forfeited, if any, from such Account upon
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the Participant's prior termination of employment. The special contribution will
be made as of the end of the Plan Year in which the Participant is reemployed
and shall be in addition to the contributions described above. A separate
Account will be established for the Participant's interest in the special
contribution and at any relevant time the Participant's nonforfeitable portion
of the separate Account will be equal to an amount ("X") determined by the
following formula:
X = P[AB + (R x D)]- (R x D)
For purposes of applying the formula, P is the nonforfeitable percentage at the
relevant time, AB is the Account balance at the relevant time, D is the amount
of the distribution, and R is the Basics of the Account balance at the relevant
time to the Account balance after distribution.
5.7 Rollover Contributions. An Employee who receives or is credited
with a distribution described in subsection (a), (b) or (c) of this Section may,
during the period beginning on the date the Employee is first eligible to
participate in the Plan and ending three (3) months following the date the
Employee's first eligible to participate in the Plan, but need not, make a
special contribution to this Plan, which contribution will hereafter be referred
to as a "Rollover Contribution." In making a Rollover Contribution, the Employee
must transfer, or direct the transfer of, cash equal to the value of all or part
of the property the Employee received or is entitled to receive in the
distribution to the Trustees, to the extent the fair market value of such
property exceeds an amount equal to after-tax contributions made by the Employee
to the plan from which the distribution is being made. In addition, prior to the
acceptance of a Rollover Contribution, the Employer may require the submission
of such evidence as the Employer deems necessary or desirable to enable it to
determine whether the transfer qualifies as a Rollover Contribution. If the
Employer determines subsequent to any Rollover Contribution that any such
Rollover Contribution did not in fact qualify as such, the value of such
Rollover Contribution shall be immediately distributed to the Employee. For
purposes of this Section 5.7, the following shall be eligible to be treated as a
Rollover Contribution:
(1) A distribution to an Employee from an employee's trust
described in Code Section 401(a), which trust is exempt from tax under Code
Section 501(a), or from an annuity plan Qualified under Code Section 403(a),
which distribution qualifies for rollover treatment pursuant to the Code, which
was received by the Employee not earlier than 60 days prior to the date the
Rollover Contribution is credited to the Trust; or
(2) A distribution to an Employee from an Individual Retirement
Account or an Individual Retirement Annuity (other than an endowment contract)
within the meaning of Code Section 408(a) or 408(b), the assets of which are
derived solely from a rollover or transfer thereto of a prior distribution to
the Employee described in (a) above, which was received by the Employee not
earlier than sixty (60) days prior to the date the Rollover Contribution is
credited to the Trust; or
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(3) A distribution directly to the Plan from an eligible
retirement plan (as defined in Code Section 401(a)(31)(D)) of all or any portion
of the balance to the credit of the Employee, except that the following amounts
shall not be included: any distribution that is one (1) of a series of
substantially equal periodic payments (not less frequently than annually) made
for the life (or life expectancy) of the distributee or the joint lives (or
joint life expectancies) of the distributee and the distributee's designated
beneficiary, or for a specified period of ten (10) years or more; any
distribution to the extent such distribution is required under Code Section
401(a)(9); and that portion of any distribution that would not have been
includible in gross income (determined without regard to the exclusion for net
unrealized appreciation with respect to employer securities) if it would have
been distributed directly to the Employee.
5.8 Qualified Military Service Contributions. Notwithstanding any
provision of this Plan to the contrary, contributions, benefits and service
credit with respect to qualified military service will be provided in accordance
with Code Section 414(u).
ARTICLE 6
LIMITATIONS
6.1 Limitations on Annual Account Additions.
(1) Annual Account Additions. The term "Annual Account Additions"
means, for any Participant for any Plan Year, the sum of
(1) Employer contributions made for the Participant under any
defined contribution plan" for the Plan Year;
(2) the Participant's after-tax contributions to "any defined
contribution plan;"
(3) forfeitures, if any, allocated to the Participant for the
year under "any defined contribution plan;" and
(4) contributions allocated on the Participant's behalf to a
medical account described in Code Section 415(1)(1) or 419A(d)(2), although the
percentage limit described in Subsection (b)(2) below shall not apply to such
amounts;
but shall not include any Rollover Contributions under the Plan. "Any defined
contribution plan@ means this Plan and all other defined contribution plans of
the Employer considered as one plan.
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(2) Limitation. Notwithstanding the foregoing provisions of this
Section 6.1, the Annual Account Additions of a Participant for any Plan Year,
which shall be the Plan Year, shall not exceed the lesser of
(1) the greater of $30,000 or 3 of the defined benefit dollar
limitation set forth in Code Section 415(b) in effect for such Plan Year, or
(2) 25% of the Participant's compensation as defined in
Subsection (c) below, for such Plan Year.
(3) Compensation. The term compensation as user in this Section
6.1 means compensation as defined in Code Section 415(c)(3) and Treasury
Regulation thereunder, which generally means amounts actually paid during a Plan
Year which are the Participant's wages, salary, fees for personal services,
actually rendered in the course of employment with the Employer, including
amounts described in Treasury Regulation 1.415-2(d)(1), and excluding amounts
which are reduced pursuant to a salary reduction arrangement and other amounts
described in Treasury Regulation 1.415-2(d)(2). Such "compensation" may not
exceed $150,000 as adjusted by the Commissioner for increases in the
cost-of-living in accordance with Code Section 401(a)(17)(B). Notwithstanding
anything herein to the contrary, for Plan Years beginning on or after November
1, 1998, the term "compensation" shall include elective deferrals pursuant to a
salary reduction agreement (as defined in Code Section 402(g)(3)) and any amount
which is contributed or deferred by the Employer at the election of the Employee
and which is not includible in the gross income of the Employee by reason of
Code Section 125 or 457.
(4) Reduction in Annual Account Additions. If in any Plan
Year a Participant's Annual Account Additions exceed the applicable limitation
determined under Subsection (b) above, by reason of a reasonable error in
estimating a Participant's compensation or otherwise, such excess (referred to
herein as the "Annual Account Excess") shall not be allocated to the
Participant's Account, but shall be treated in the following manner:
(1) The Participant's after-tax contributions, if any, under
"any defined contribution plan" shall be refunded up to the amount of the Annual
Account Excess.
(2) If there is any remaining Annual Account Excess after the
application of paragraph (1) above, the Participant's before-tax deposits and
any Employer Matching Contributions relating thereto for that year shall be
reduced proportionately, up to the remaining amount of the Annual Account
Excess, and such before-tax deposits shall be returned to the Participant.
(3) If there is any remaining Annual Account Excess after the
application of paragraph (2) above, the Participant's share of Employer
contributions, if any, allocated to the
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Participant under any other defined contribution plan for that year shall be
reduced in accordance with such plan, up to the remaining amount of the Annual
Account Excess.
(4) Any reduction in such a Participant's allocation of
Employer contributions under paragraph (3) above shall be deemed to-be a
forfeiture for such Plan Year and used to reduce Employer contributions.
(5) Dual Plan Limitation. For Plan Years beginning prior to
January 1, 2000, if in any Plan Year a Participant is both an active participant
in any defined contribution plan and a participant of any "qualified" defined
benefit plan of the Employer, the sum of the defined benefit plan fraction (as
defined in Code Section 415(e)(2)) and the defined contribution plan fraction
(as defined in Code Section 415(e)(3)) shall not exceed 1.0. For Plan Years
beginning prior to January 1, 2000, it is intended to reduce the Annual Account
Additions under the defined contribution plan to the extent possible, if
necessary, to prevent the sum of the defined benefit plan fraction and the
defined contribution fraction from exceeding 1.0, before reducing the accrued
benefits under any defined benefit plan.
6.2 Maximum Amount of Before-Tax Deposits. In no event shall a
Participant's aggregate before-tax deposits for any calendar year, when combined
with all other elective pre-tax deferrals under Code Section 402(g) on behalf of
the Participant, exceed $7,000 (or such higher annual amount as may be
determined by the Secretary of the Treasury to reflect increases in the cost of
living). The annual limit shall be reduced as provided under Section 9.1
following a Participant's hardship withdrawal. To the extent that such a
Participant's before-tax deposits exceed the applicable dollar limit for a
calendar year, such deposits shall be treated as income to the Participant for
such calendar year. Such excess deferral, adjusted for earnings or losses
thereon, shall be distributed to the Participant not later than April 15 of the
calendar year following the calendar year in which such excess deferral was
made. Any such distribution of earnings on excess deferrals shall be treated as
income to the Participant in the year of distribution.
6.3 Actual Deferral Percentage Tests. The limits described in this
Section 6.3 apply to before-tax deposits made pursuant to Section 4.1.
Notwithstanding any provision to the contrary in this Plan concerning the
amount, availability, or allocation of before tax deposits, no amount of
before-tax deposits shall be allocated to a Participant's Account in excess of
the limits contained in this Section 6.3.
(1) Actual Deferral Percentage means for each Plan Year the
average of the ratios (calculated separately for each active Participant) of:
(1) the amount of before-tax deposits of each such
Participant for such Plan Year, to
(2) such Participant's Compensation;
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provided, however, that if a Highly Compensated Participant
also participates in another qualified retirement plan with a salary reduction
feature maintained by the Employer under Code Sections 401(a) and 401(k), such
Participant's Actual Deferral Percentage shall be determined as if all such
qualified plans with a salary reduction feature ending within the same calendar
year were a single plan.
(2) The Actual Deferral Percentage test described hereinafter
shall be made as of the end of each Plan Year. The Administrator in its
discretion may choose to make the Actual Deferral Percentage test more
frequently than annually. Any excess deferral described in Section 6.2 shall be
included in the computation of the Actual Deferral Percentage notwithstanding
the distribution of any portion thereof, unless otherwise provided under rules
prescribed by the Secretary of the Treasury. For any Plan Year, the Actual
Deferral Percentage for the group of Highly Compensated Participants for the
Plan Year must not exceed the greater of:
(1) 125% of such percentage for the preceding Plan Year for
all Non-Highly Compensated Participants, or
(2) the lesser of 200% of such percentage for the preceding
Plan Year for the Non-Highly Compensated Participants, or such percentage for
the preceding Plan Year for the Non-Highly Compensated Participants plus two (2)
percentage points. The provisions of Code Section 401(k)(3) and Regulation
1.401(k)-l(b) are incorporated herein by reference. However, in order to prevent
the multiple use of the alternative method described in this paragraph and in
Code Section 401(m)(9)(A), any Highly Compensated Participant eligible to make
before-tax deposits pursuant to Section 4.1 or to receive Employer Matching
Contributions under this Plan or under any other plan maintained by the Employer
shall have his Actual Contribution Percentage reduced pursuant to Regulation
1.401(m)-2, the provisions of which are incorporated herein by reference.
If two (2) or more qualified plans which include a salary
reduction feature described in Code Section 401(k) are considered as one plan
for purposes of Code Sections 401(a)(4) or 410(b), the salary reduction feature
included in such plans shall be treated as one salary reduction arrangement for
purposes of the Actual Deferral Percentage test. Plans may be aggregated in
order to satisfy Code Section 401(k) only if they have the same Plan Year. In
the event the Actual Deferral Percentage test is not met as of the end of any
Plan Year, the provisions of Section 6.4 shall apply.
6.4 Adjustment to Actual Deferral Percentage Tests. In the event the
Actual Deferral Percentage test is not met as of the end of any Plan Year, the
Administrator shall take the actions called for in this Section 6.4. Excess
Contributions with respect to any Participant are before-tax deposits which do
not meet the Actual Deferral Percentage test described in Section 6.3.
If it appears that there will be Excess Contributions as of the
end of any Plan Year, the Administrator shall inform the Employer. The Employer,
in its discretion, may make a supplemental contribution which shall be allocated
to the Accounts of Participants who are
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Non-Highly Compensated Participants. Any such supplemental contribution shall be
allocated in a uniform and nondiscriminatory manner in an amount sufficient to
eliminate any Excess Contributions. Such supplemental contribution by the
Employer must be made, if at all, within the first two and one-half (22) months
after the close of the Plan Year in which the Excess Contributions arose. Such
supplemental contribution shall be treated for all purposes as a before-tax
deposit. The allocation of a portion of any such supplemental contribution to
the Account of an affected Participant is subject to the Code Section 415
limits. If the Employer chooses to make a supplemental contribution in an amount
less than that required to completely eliminate all Excess Contributions, the
remaining Excess Contributions shall be disposed of in the manner hereinafter
described.
Should the Employer not choose to make a supplemental contribution
for the purpose of eliminating any Excess Contributions, or if Excess
Contributions remain after a supplemental contribution has been made, the
before-tax deposits of the Participants who are Highly Compensated Participants
shall be reduced to the extent necessary so that the Actual Deferral Percentage
test set forth in Section 6.3 is met as of the end of the applicable Plan Year.
Such reduction shall be accomplished first by determining the maximum deferral
for the group of Participants who are Highly Compensated Participants permitted
by the Actual Deferral Percentage test. Next, the before-tax deposits of the
Participant with the largest deferrals shall be reduced in the order of their
actual deferral amounts beginning with the highest of such deferrals in
accordance with procedures adopted by the Administrator until the actual
deferrals for the group of Participants who are Highly Compensated Participants
does not exceed the maximum deferral determined for that group.
The Administrator shall cause the amount of Excess Contributions
(and income allocable thereto) attributable to each affected Participant to be
returned to such Participant not later than the end of the Plan Year following
the Plan Year as of which the Excess Contributions arose. However, the
Administrator shall use its best efforts to cause the amount of Excess
Contributions (and any income allocable thereto) attributable to each affected
Participant to be returned to such Participant within two and one-half (22)
months following the end of the Plan Year as of which the Excess Contributions
arose. The income allocable to the Excess Contributions of each affected
Participant is equal to the sum of (a) the income allocable to the Account of
the affected Participant for the applicable Plan Year, and (b) the income
allocable to the Account of the Affected Participant for the period between the
end of the applicable Plan Year and the date of distribution with the sum of (a)
and (b) being multiplied by a fraction. The numerator of the fraction is the
Excess Contribution attributable to each affected Participant and the
denominator of the fraction is the closing balance (inclusive of any income), as
of the end of the applicable Plan Year, of the Participant's Account containing
the Excess Contributions.
6.5 Maximum Contribution Percentage. The limits described in this
Section 6.5 apply to Employer Matching Contributions and after-tax
contributions. Notwithstanding any provision to the contrary in this Plan
concerning the amount, availability, or allocation of Employer Matching
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Contributions, no amount of such contributions shall be allocated to the Account
of any Participant in excess of the limits contained in this Section 6.5.
(1) Actual Contribution Percentage means for each Plan Year
the average of the ratios (ACR) (calculated separately for each Participant) of:
(1) the amount of matching Employer contributions and
after-tax contributions of each such Participant for such Plan Year, to:
(2) such Participant's Compensation;
provided, however, that if a Highly Compensated Participant
who also participates in another qualified retirement plan maintained by the
Employer to which matching contributions, employee contributions, or elective
deferrals are made, such active Participant's Actual Contribution Percentage
shall be determined by aggregating all Employer Matching Contributions and
after-tax contributions in plans which end within the same calendar year.
(2) The Actual Contribution Percentage test described hereinafter
shall be made as of the end of each Plan Year. The Administrator in its
discretion may choose to make the Actual Contribution Percentage test more
frequently than annually. For any Plan Year, the Actual Contribution Percentage
for the group of Highly Compensated Participants for the Plan Year must not
exceed the greater of:
(1) 125% of such percentage for the preceding Plan Year for
all Non-Highly Compensated Participants; or
(2) the lesser of 200% of such percentage for the preceding
Plan Year for the Non-Highly Compensated Participants, or such percentage for
the preceding Plan Year for the Non-Highly Compensated Participants plus two (2)
percentage points. However, to prevent the multiple use of the alternative
method described in this paragraph and Code Section 401(m)(9)(A), any Highly
Compensated Participant eligible to make before-tax deposits pursuant to Section
4.1 or any other cash or deferred arrangement maintained by the Employer or to
receive matching contributions under this Plan or under any other plan
maintained by the Employer shall have his Actual Contribution Percentage reduced
pursuant to Regulation 1.401(m)-2. The provisions of Code Section 401(m) and
Regulations 1.401(m)-l(b) and 1.401(m)-2 are incorporated herein by reference.
For purposes of this subsection (b), the amount taken into account as the Actual
Contribution Percentage of Non-highly Compensated Participants for the preceding
Plan Year shall be 3%.
If two (2) or more qualified plans which include matching
contributions, employee contributions, or elective deferrals are considered as
one plan for purposes of Code Section 410(b), such plans shall be treated as one
plan for purposes of the Actual Contribution Percentage test. Plans
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may be aggregated in order to satisfy Code Section 401(m) only if they have the
same Plan Year. In the event the Actual Contribution Percentage test is not met
as of the end of any Plan Year, the provisions of Section 6.6 shall apply.
6.6 Adjustment For Excessive Contribution Percentage. In the event the
Actual Contribution Percentage test is not met as of the end of any Plan Year,
the Administrator shall take the actions called for in this Section 6.6. Excess
Aggregate Contributions with respect to any Participant are Employer Matching
Contributions and after-tax deposits which do not meet the Actual Contribution
Percentage test described in Section 6.5.
If it appears that there will be Excess Aggregate Contributions as
of the end of any Plan Year, the Administrator shall inform the Employer. The
Employer, in its discretion, may make an additional Employer Matching
Contribution which shall be allocated to the Accounts of all Participants who
are not Highly Compensated Participants. In lieu of making an additional
Employer Matching Contribution, the Employer may make a supplemental
contribution which shall be allocated to the Accounts of all active Participants
who are not Highly Compensated Participants. Any additional Employer Matching
Contribution or supplemental contribution shall be allocated in a uniform and
nondiscriminatory manner in an amount sufficient to eliminate any Excess
Aggregate Contributions. Such additional Employer Matching Contribution or
supplemental contribution by the Employer must be made, if at all, within the
first two and one-half (22) months after the close of the Plan Year in which the
Excess Aggregate Contributions arose.
Any additional Employer Matching Contribution shall be treated for
all purposes as an Employer Matching Contribution and any supplemental
contribution shall be treated for all purposes as an after-tax employee
contribution. The allocation of either an additional Employer Matching
Contribution or a supplemental contribution to the Participant Account of an
affected Participant is subject to the Code Section 415 limits. If the Employer
chooses to make an additional Employer Matching Contribution, a supplemental
contribution, or a combination of both in an amount less than that required to
completely eliminate all Excess Aggregate Contributions, the remaining Excess
Aggregate Contributions shall be disposed of in the manner hereinafter
described.
Should the Employer not choose to make an additional Employer
Matching Contribution, a supplemental contribution, or a combination of both for
the purpose of eliminating any Excess Aggregate Contributions or if Excess
Aggregate Contributions remain after any such contributions have been made, the
Employer Matching Contributions of the Participants who are Highly Compensated
Participants shall be reduced to the extent necessary so that the Actual
Contribution Percentage test set forth in Section 6.5 is met as of the end of
the applicable Plan Year. Such reduction shall be accomplished first by
determining the maximum contribution for the group of Participants who are
Highly Compensated Participants permitted by the Actual Contribution Percentage
test. Next, the Employer Matching Contributions of the Participants with the
largest contributions shall be reduced in the order of their actual contribution
amounts beginning with the highest of such contributions in accordance with
procedures adopted by the Administrator until the
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actual contributions for the group of Participants who are Highly Compensated
Participants does not exceed the maximum contribution determined for that group.
The Administrator Shall cause the amount of Excess Aggregate
Contributions (and any income allocable thereto) attributable to each affected
Participant to be returned to such Participant not later than the end of the
Plan Year following the Plan Year as of which the Excess Aggregate Contributions
arose. However, the Administrator shall use its best efforts to cause the amount
of Excess Aggregate Contributions (and any income allocable thereto)
attributable to each affected Participant to be returned to such Participant
within two and one-half (22) months following the end of the Plan Year as of
which the Excess Aggregate Contributions arose. The income allocable to the
Excess Aggregate Contributions of each affected Participant is equal to the sum
of (a) the income allocable to the Account of the affected Participant for the
applicable Plan Year, and (b) the income allocable to the Account of the
affected Participant for the period between the end of the applicable Plan Year
and the date of distribution, with the sum of (a) and (b) being multiplied by a
fraction. The numerator of the fraction is the Excess Aggregate contribution
attributable to each affected Participant and the denominator of the fraction is
the closing balance (inclusive of any income), as of the end of the applicable
Plan Year, of the Account containing the Excess Aggregate Contribution.
6.7 Limit on Total Contribution of Employer; Precluding Excess
Allocations. The total contributions of the Employer, as determined under
Sections 4.l, 5.1, 5.2 and 5.3, for any Plan Year shall not exceed the maximum
tax deductible contribution permitted by law. In addition, in no event will the
amount Allocated to a Participant's Account in any Plan Year exceed the
limitations set forth in this Article 6.
ARTICLE 7
CREDITING OF CONTRIBUTIONS AND DEPOSITS TO INVESTMENT FUNDS
7.1 Investment of Participant Accounts. Each Participant shall direct
the investment and reinvestment of his Account, other than his Bonus Matching
Employer Contribution Account, in one or more of the investment funds
established from time to time by the Trustee pursuant to the Trust. If a
Participant fails direct the investment and reinvestment of that portion of his
Account subject to investment direction, the Trustee shall invest 100% of that
portion of such Participant's Account in a domestic balanced fund maintained
under the Trust. Each Participant's Bonus Matching Employer Contribution Account
shall be invested and reinvested at all times in the BanPonce Stock Fund.
7.2 Participant's Choice of Investments. At least thirty (30) days
prior to the beginning of each calendar quarter, a Participant may elect in
writing that all future contributions subject to investment direction be
invested, in 5% increments, in one (1) or more of the investment funds
established by the Trustee pursuant to the Trust. If a Participant fails to make
any election, 100% of
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his contributions subject to investment direction shall be invested in a
domestic balanced fund maintained under the Trust.
7.3 Change of Prior Investments. At least thirty (30) days prior to the
beginning of each calendar Quarter, each Participant may reallocate all or a
portion of his assets subject to investment direction from one (1) investment
fund established by the Trustee pursuant to the Trust to another such investment
fund, in 5% increments with such election to be effective on the last day of the
quarter; provided, however, that any limitations on transfers imposed by any
investment fund shall apply. The Administrator may, in its sole discretion,
designate more frequent investment transfer dates if the Administrator deems it
appropriate in light of the market volatility to which the investment
alternatives may reasonably be expected to be subject.
7.4 Investment Elections and Other Transactions By Officers.
Notwithstanding any other provision of this Plan, except as hereinafter further
limited, in the case of a Participant who is an officer as that term is used in
Section 16a-1, promulgated under the Securities Exchange Act of 1934, as amended
(the "1934 Act"), or any similar rule which may subsequently be in effect (an
Officer"), an election to transfer account balances to or from the Company stock
fund established pursuant to the Trust (the "BanPonce Stock Fund") pursuant to
Section 7.3 shall be made only during the period and in the manner set forth in
the Rules then in effect promulgated by the Securities and Exchange Commission
under Section 16 of the 1934 Act which provide for exemptions from the
provisions of Section 16 for transactions by certain persons in securities
issued by certain employee benefit plans.
Further, in the case of a Participant who is an Officer who
engages in any transactions with the Plan which may be effected by Section 16 of
the 1934 Act, such as making an election to discontinue tax-deferred deposits to
the Banco Popular Fund, making a withdrawal from the BanPonce Stock Fund
pursuant to Section 9.1 hereof, or securing certain loans pursuant to Section
9.2, the Participant shall be eligible to engage in further transactions with
the Plan which may be effected by Section 16 of the 1934 Act, only in accordance
with the Rules then in effect promulgated by the Securities and Exchange
Commission under Section 16 of the Securities Exchange Act of 1934, as amended,
which provide for exemptions from the provisions of Section 16 for transactions
by certain persons in securities issued by certain employee benefit plans;
provided, however, that if a longer period of ineligibility is applicable under
Section 9.1 hereof, such longer period shall apply.
ARTICLE 8
ACCOUNTS
8.1 Separate Accounts. The following Accounts shall be maintained for
each Participant:
(1) a Before-Tax Deposit Account for each Participant who elects
to direct the Employer to make contributions on his behalf pursuant to Section
4.1;
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(2) a Matching Employer Contribution Account for each Participant
to which Employer matching contributions are allocated pursuant to Section 5.1;
(3) a Bonus Matching Employer Contribution Account for each
Participant to which Employer Bonus Matching Contributions are allocated
pursuant to Section 5.2;
(4) a Discretionary Employer Contribution Account for each
Participant to which Employer discretionary contributions, if any, are allocated
pursuant to Section 5.3, and
(5) a Rollover Contribution Account for each Participant who is
permitted to make a Rollover Contribution pursuant to Section 5.7.
8.2 Adjusting the Value of the Account. As of the end of each Plan
Year, the value of each of a Participant's Account shall be equal to:
(1) The value of such Account at the end of the preceding Plan
Year;
(2) Plus such Account's share of the income of the appropriate
investment fund or funds attributable to Participant directed investment funds
during such Plan Year;
(3) Plus or minus such Account's share of the appreciation or
depreciation in the value of the Trust attributable to Employer directed
investment funds during such-Plan Year;
(4) In the case of a Before-Tax Deposit Account, plus the
contributions, if any, which are allocable to such Account during such Plan
Year;
(5) Minus the amount of any withdrawals made from such Account as
of the end of the preceding Plan Year;
(6) Minus the amount of any distribution paid from such Account
during such Plan Year; and
(7) For each Discretionary Employer Contribution Account, Matching
Employer Contribution Account and Bonus Matching Employer Contribution Account
only:
(1) Plus the allocation to such Account of Employer
contributions and forfeitures for the Plan Year ending on such date;
(2) Plus any amount restored to such Account after a
Participant's reemployment in accordance with Section 5.6; and
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(3) Minus the amount, if any, forfeited by the Participant
from such Account as the result of his termination of employment with the
Employer during such Plan Year.
8.3 Valuation of Separate Accounts. As of each Valuation Date, the
Administrator shall adjust the previous Account; balances for before tax
deposits, matching contributions, discretionary employer contributions,
after-tax contributions, earnings, gains losses, withdrawals, expenses,
Participant loans and any Participant rollover and transfer contributions in
order to obtain new Account balances.
8.4 Determination of Fund Performance. For purposes of determining
Account values, each Account's share of the income, appreciation and
depreciation of each Investment Fund as of any Valuation Date shall be that
proportion of the total income, appreciation or depreciation of such Investment
Fund during such period that the average balance of such accounts during such
period bears to the average balance of all such accounts in such investment,
fund during such period. The value of each account, each Investment Fund, and
the Trust fund as of the end of any period shall be the fair market value of
such account or fund. The total before-tax deposits and after-tax deposits, if
any, for the period will be reflected in said determination.
ARTICLE 9
WITHDRAWALS DURING EMPLOYMENT
9.1 Hardship Withdrawals. Upon the request of a Participant made in
accordance with such uniform and nondiscriminatory-rules as the Administrator
may prescribe, the Administrator shall permit a Participant to make a hardship
withdrawal from his Before-Tax Deposit Account from the Plan prior to the
Participant is termination of employment or Permanent Disability if the Trustee,
in accordance with the provisions of Internal Revenue Regulation Section
1.401(k)-l(d)(2) and with the following paragraph, finds that such withdrawal is
necessary because of the Participant's immediate and heavy financial need. The
minimum amount that can be withdrawn under this Section 9.1 shall be $500. The
maximum amount that can be withdrawn under this Section 9.1 shall be the least
of (a) the amount which the Trustee, in accordance with the provisions of
Internal Revenue Regulation Section 1.401(k)-l(d)(2) and with the following
paragraph, deems to be necessary to meet the immediate and heavy financial need
of the withdrawing Participant created by the hardship, (b) 50% of the lesser
of: (i) the total of the Participant's before-tax deposits (determined without
earnings) and (ii) the value of the Participant's Before-Tax Deposit Account,
and (c) $50,000.
For purposes of this Section, a distribution will be deemed to be
on account of immediate and heavy financial need if the distribution is on
account of:
(1) Medical expenses described in Code Section 213(d) incurred
by the Employee, the Employee's spouse, or any dependents of the Employee (as
defined in Code Section 152) or expenses necessary for these persons to obtain
medical care;
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(2) Purchase (excluding mortgage payments) of a principal
residence for the Employee; or
(3) Payment of tuition for the next year of post-secondary
education for the Employee, his or her spouse, children or dependents.
(4) The need to prevent the eviction of the Employee from his
principal residence or foreclosure on the mortgage of the Employee's principal
residence.
Further, a distribution will be deemed to be necessary to satisfy
the immediate and heavy financial need if the distribution is not in excess of
the amount necessary to relieve the need and cannot be satisfied from other
resources that are reasonably available to the Employee including other
withdrawals and loans currently available under all plans maintained by the
Employer.
Hardship withdrawals under this Section 9.1 shall be charged
against the value of the withdrawing Participant's subaccount in each of the
Investment Funds proportionally.
Any Participant receiving a hardship distribution must certify and
agree to satisfy all of the following conditions:
(1) The distribution is not in excess of the amount of the
Participant's immediate and heavy financial need:
(2) The Participant has obtained all distributions, other than
hardship distributions, and all non-taxable loans currently available under all
plans maintained by the Employer or its Affiliates;
(3) The Participant's before-tax deposits shall be suspended for
at least twelve (12) months after the receipt of the hardship distribution; and
(4) The Participant shall not be eligible to make any before-tax
deposits until the first day of the first Plan Year following the first
anniversary of the date on which the hardship distribution was made.
9.2 Loans to Participants.
(1) Upon the request of a Participant, made with the written
consent of the Participant's spouse in accordance with Code Section 417(a)(4)
and the regulations thereunder, the Trustee shall make loans to Participants
under the following circumstances: (1) loans shall be made available to all
Participants on a reasonably equivalent basis; (2) loans shall not be made
available to highly compensated Employees, officers, or shareholders in an
amount greater than the amount
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made available to other Participants; (3) loans shall-bear a reasonable rate of
interest; (4) loans shall be adequately secured; and (5) shall provide for
repayment over a reasonable period of time.
(2) Loans shall be made on such terms as the Administrator may
prescribe, provided that the minimum loan is $500, that only one loan may be
outstanding at any time, and that loan repayment, other than repayment in full
on termination of employment or otherwise, shall be by payroll deduction only.
Any such loan shall be evidenced by a note. Loans shall bear a rate of interest
on the unpaid balance thereof equal to two (2) points over the prime rate set by
Chase Manhattan Bank in effect on the date the loan is granted. The loan shall
be secured by the Participant's Account.
(3) Loans made pursuant to this Section (when added to the
outstanding balance of all other loans made by the Plan to the Participant)
shall be limited to the lesser of:
(1) $50,000 reduced by the excess (if any) or the highest
outstanding balance of loan from the Plan to the Participant during the one-year
period ending on the day before the date on which such loan is made, over the
outstanding balance of loans from the Plan to the Participant on the date on
which such loan was made, or
(2) one-half (2) of the present value of the non-forfeitable
accrued benefit of the Employee under the Plan, and
(3) one-half (2) of the total of the Employee's Before-Tax
Deposit Account, Matching Employer Contribution Account and Bonus Matching
Employer Contribution Account determined on the Valuation Date preceding the
date of the loan request.
For purposes of the limit in item (2) above, all plans of the
Employer shall be considered one plan.
(4) Loans shall provide for level amortization with payments to be
made not less frequently than quarterly over a period not to exceed five (5)
years. However, loans used to acquire any dwelling unit which, within a
reasonable time, is to be used (determined at the time the loan is made) as a
principal residence of the Participant shall provide for periodic repayment over
a reasonable period of time that may exceed five (5) years.
(5) Any loan made pursuant to this Section 9.2 where the vested
interest of the Participant is used to secure such loan shall require the
written consent of the Participant's spouse. Such written consent must be
obtained within the ninety-day period prior to the date the loan is made.
(6) Loans shall be an asset of the Participant's Accounts and
shall be treated in the manner of a segregated account. Upon the failure of a
Participant to make loan payments or some
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other event of default set forth in the promissory note, upon the Participant's
termination of employment, or upon termination of the Plan pursuant to Section
17.1, such loan shall become due and payable, and if not paid within ninety (90)
days from the date of default the unpaid balance of such loan, including any
unpaid interest, shall be charged against the Participant's segregated loan
account; provided, that any unpaid balance of such loan, including any unpaid
interest, shall be charged against the Participant's segregated loan account
before any distribution to the Participant.
Loan repayments will be suspended under this Plan as permitted
under Code Section 414(u)(4).
9.3 Withdrawal and Loan Fees. Notwithstanding anything herein to the
contrary, withdrawals and loans made pursuant to the provisions of this Article
9 shall be reduced by any fees imposed on such withdrawals and loans by third
party administrators.
ARTICLE 10
DISTRIBUTIONS
10.1 Retirement. A Participant whose employment is terminated on or
after his sixty-fifth (65th) birthday shall be eligible to receive the full
value of his Account as of the end of the Plan Year in which the termination
occurs.
10.2 Death. Subject to Section 10.5, the designated beneficiary of a
Participant who dies during a Plan Year shall be eligible to receive the full
value of the Participant's Account as of the end of the Plan Year in which the
death of the Participant occurs.
10.3 Permanent Disability. A Participant whose employment is terminated
due to permanent disability shall be eligible to receive the full value of his
Account as of the end of the Plan Year in which his disability is established to
the satisfaction of the Administrator.
10.4 Other Termination of Employment. If a Participant's employment is
terminated other than in accordance with Section 10.1 through 10.3, he shall be
eligible to receive 100% of the value of his Before-Tax Deposit Account and a
percentage of the value of his Matching Employer Contribution Account, Bonus
Matching Contribution Account and Discretionary Employer Contribution Account
(his "vested interest") as determined below:
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YEARS OF VESTED
CREDITED SERVICES INTEREST
Less than 2 0%
2 25%
3 50%
4 75%
5 or more 100%
The non-vested portion of a Participant's Account, if any, shall be forfeited as
of the earlier of (i) the date the Participant receives his distribution; or
(ii) the date in which the Participant suffers his fifth (5th) consecutive
one-year Break in Service, but is subject to reinstatement in accordance with
Section 5.5. For purposes of this Section, the Participant's Account will be
valued as of the last day of such Plan Year. Such amounts will be distributed to
the Participants as provided in Sections 10.7 and 10.8.
10.5 Designation of Beneficiary. A Participant shall designate, upon
such forms as may be provided for that purpose, a beneficiary or beneficiaries
to whom distribution shall be made in the event of his death, and may, upon such
forms as may be provided for that purpose, change or revoke his beneficiary or
beneficiaries; provided, however, that in the event a married Participant
designates a primary beneficiary other than his spouse, unless it is established
to the Administrator's satisfaction that the spouse cannot be located, or unless
such other circumstances as the Secretary of Treasury may by regulations
prescribe exist, such designation, change or revocation shall not be effective
unless the spouse consents in writing to such designation, and the spouse's
consent acknowledges the effect of such election and is witnessed by a plan
representative or a notary public. The designation, change, or revocation of a
beneficiary or beneficiaries shall not be effective for any purpose unless and
until it has been received by the Administrator or his designated representative
during such Participants lifetime. If beneficiaries are named without specifying
the proportions to each, distribution shall be made in equal shares to the named
beneficiaries who shall be living at the time of distribution, or all to the
survivor if only one beneficiary shall then be living.
In the event that a Participant does not designate a beneficiary
or beneficiaries in the manner above provided, or if for any reason such
designation shall be legally ineffective or revoked, or if no designated
beneficiary is living at the time any distribution is to be made, then the
distribution shall be made by the Trustee to the then surviving members of the
following classes of persons, with preference for classes in the order listed,
in equal shares among class members should there be more than one class member
then living:
(1) Spouse;
(2) Children (including children by adoption);
(3) Parents (including adopting parents);
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(4) Brothers and sisters (including brothers and sisters of
the half blood and brothers and sisters by adoption); and
(5) The executor or administrator of the Participant's estate.
10.6 Timing of Distributions. If a Participant's vested Account
eligible for distribution pursuant to Sections 10.1, 10.3 or 10.4 is not and
never was in excess of $3,500, the distribution will be made as soon as
practicable following the end of the calendar quarter in which the termination
occurred. If the Participant's vested Account eligible for distribution pursuant
to Sections 10.1, 10.3 or 10.4 is or ever was in excess of $3,500, distribution
will be made on the later of (i) as soon as administratively feasible following
the end of the calendar quarter in which termination of employment occurs, or
(ii) as soon as administratively feasible following the Participant's written
request for distribution. Further, distribution to an alternate payee pursuant
to a qualified domestic relations order (QDRO), as defined in Code Section
414(p), may be made as soon as practicable following the alternate payee's
written request for distribution in accordance with the terms of the QDRO.
Finally, a Participant whose vested Account is 0% shall be deemed to have
received a lump sum distribution upon termination of employment.
Provided, however, notwithstanding anything herein to the
contrary, payment of benefits shall commence not later than the sixtieth (60th)
day after the close of the Plan Year in which the latest of the following events
occur: (i) the Participant attains age sixty-five (65) or, if earlier, his
Normal Retirement Age; (ii) ten (10) Plan Years have elapsed from the time the
Participant commenced participation in the Plan; or (iii) the Participant
terminates his service with the Employer. Further, notwithstanding any provision
in this Plan to the contrary, a Participant's benefits shall be distributed to
him not later than April 1 of the calendar year following the calendar year in
which the later of the following occurs: (i) he attains age seventy and one half
(70 l/2), or (ii), except for Participants who are 5% Owners, he retires.
Alternatively, distributions to a Participant must begin no later than April 1
following such calendar year and must be made over the life of the Participant
(or the lives of the Participant and the Participant's designated beneficiary)
or the life expectancy of the Participant (or the life expectancies of the
Participant and his designated beneficiary).
10.7 Manner of Benefit Distribution.
(1) The Administrator shall direct the Trustee to distribute to a
Participant or his beneficiary any amount to which he is entitled under the Plan
in a lump sum or in substantially equal monthly, quarterly, semi-annual or
annual installments over a period determined by the Participant or beneficiary.
If a distribution is made in installments, such distribution shall be taken pro
rata from the Participant's subaccounts in the investment funds and the
Participant shall retain his transfer rights as provided in Section 7.3.
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(2) Lump sum distribution of a Participant's Account shall
generally be made in cash; provided, however, if a Participant or beneficiary
makes a written election for a stock distribution of the portion of that
Participant's Account invested in the BanPonce Stock Fund shall be in shares of
common stock of BanPonce and cash in lieu of a fractional share. Lump sum
distribution of a Participant's interest in the other investment funds shall be
made in cash. Installment distributions of a Participant's Account shall be made
in cash.
(3) If the Participant's entire interest is to be distributed in
other than a lump sum, then the amount to be distributed each year must be at
least an amount equal to the quotient obtained by dividing the Participant's
entire interest by the life expectancy of the Participant or joint and last
survivor expectancy of the Participant and beneficiary. Life expectancy and
joint and last survivor expectancy are computed by the use of the return
multiples contained in Section 1.72-9 of the Income Tax Regulations. For
purposes of this computation, a Participant's life expectancy may be
recalculated no more frequently than annually, however, the life expectancy of a
nonspouse beneficiary may not be recalculated. If the Participant's eligible
spouse is not the beneficiary, the method of distribution selected must assure
that more than 50% of the present value of the amount available for distribution
is paid within the life expectancy of the Participant.
(4) Notwithstanding any provision of the Plan to the contrary that
would otherwise limit a distributee's election under this Paragraph, a
distributee may elect, at the time and in the manner prescribed by the
Administrator, to have any portion of an eligible rollover distribution paid
directly to an eligible retirement plan specified by the distributee in a direct
rollover. For purposes of this paragraph, the following terms shall have the
following meaning:
(1) Eligible rollover distribution. An eligible rollover
distribution is any distribution of all or any portion of the balance to the
credit of the distributee, except that an eligible rollover distribution does
not include: any distribution that is one of a series of substantially equal
periodic payments (not less frequently than annually) made for the life (or life
expectancy) of the distributee or the joint lives (or joint life expectancies)
of the distributee and the distributee designated beneficiary, or for a
specified period of ten (10) years or more; any distribution to the extent such
distribution is required under Code Section 401(a)(9); and the portion of any
distribution that is not includible in gross income (determined without regard
to the exclusion for net unrealized appreciation with respect to employer
securities).
(2) Eligible retirement plan. An eligible retirement plan is
an individual retirement account described in Code Section 408(a), an individual
retirement annuity described in Code Section 408(b), an annuity plan described
in Code Section 403(a), or a qualified trust described in Code Section 401(a),
that accepts the distributee's eligible rollover distribution. However, in the
case of an eligible rollover distribution to the surviving spouse, an eligible
retirement plan is an individual retirement account or individual retirement
annuity.
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(3) Distributee. A distributee includes an Employee or former
Employee. In addition, the Employee's or former Employee's surviving spouse and
the Employee's or former Employee's spouse or former spouse who is the alternate
payee under a qualified domestic relations order, as defined in Code Section
414(p), are distributees with regard to the interest of the spouse or former
spouse.
(4) Direct rollover. A direct rollover is a payment by the
Plan to the eligible retirement plan specified by the distributee.
(5) If a distribution-is one to which Code Sections 401(a)(11) and
417 do not apply, such distribution may commence less than thirty (30) days
after the notice required under Section 1.411(a)-ll(c) of the Income Tax
Regulations is given, provided that:
(1) the Administrator clearly informs the Employee that the
Employee has a right to a period of at least thirty (30) days after receiving
the notice to consider the decision of whether or not to elect a distribution
and, if applicable, a particular distribution option, and
(2) the Employee, after receiving the notice, affirmatively
elects a distribution.
10.8 Manner of Distribution and Timing of Death Distributions. The
distribution of a deceased Participant's Account will normally be made as soon
as practicable following the end of the Plan Year in which the benefits become
due if the deceased Participant's Account is not and never was in excess of
$3,500. If a deceased Participant's vested Account eligible for distribution
pursuant to Section 10.2 is or ever was in excess of $3,500, distribution will
be made on the later of (i) as soon as practicable following the Participant's
death, or (ii) as soon as practicable following the beneficiary's written
request for distribution. Payments will be made as provided in Section 10.7. If
the Participant's surviving spouse is her beneficiary, the provisions of the
second paragraph of Section 10.7 shall apply to any distribution to the
surviving spouse.
If a Participant dies before he receives distribution of his
Account, the deceased Participant's Account shall be distributed within five (5)
years after the date of the Participant's death. However, notwithstanding
anything herein to contrary, if the distribution of a Participant's Account has
begun pursuant to Section 10.7 and the Participant dies after the required
commencement date under Section 10.6 but before the Participant's entire account
has been distributed, the remaining portion of the deceased Participant's
Account shall be distributed at least as rapidly as under the method in effect
on the date of the Participant's death. Further, if the deceased Participant
designates his surviving spouse as his beneficiary, the distribution need not be
made earlier than the date on which the deceased Participant would have attained
age seventy and one-half (702). If the surviving spouse dies before distribution
is made, this Section 10.8 shall be applied as if the surviving spouse was the
Participant.
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10.9 Limitations on Benefits and Distributions. All rights and
benefits, including elections, provided to a Participant in this Plan shall be
subject to the rights afforded to any "alternate payee" under a "qualified
domestic relations order" as those terms are defined in Code Section 414(p).
10.10 Distributions Payable to Incompetents. If any person entitled to
distribution payments hereunder shall be under a legal disability or, in the
sole judgment of the Administrator, shall otherwise be unable to apply such
payments to his own best interest and advantage, the Administrator, in the
exercise of his discretion, may direct all or any portion of such payments to be
made in any one or more of the following ways:
(1) Directly to such person;
(2) To his legal guardian or conservator; or
(3) To his spouse or to any other person, to be expended for his
benefit.
The decision of the Administrator will, in each case, be final and
binding upon all persons, and the Administrator shall not be obliged to see to
the proper application or expenditure of any payment so made. Subject to the
claims review provisions of Section 14.2, any payment made pursuant to the power
herein conferred upon the Administrator shall operate as a complete discharge of
all obligations under the Plan as to such payments.
10.11 Distribution of Before-Tax Deposits. In no event may a
Participants before-tax deposits be distributed earlier than:
(1) a Participant's separation from service, death or disability;
(2) termination of the Plan without the establishment of a
successor plan;
(3) the date of the sale by the Employer of substantially all the
assets (within the meaning of Code Section 409(d)(2)) used by the Employer in a
trade or business of the Employer with respect to an Employee who continues
employment with the corporation acquiring such assets;
(4) the date of the sale by the Employer of the Employer's
interest in a subsidiary (within the meaning. of Code Section 409(d) (3) ) with
respect to an Employee who continues employment with such subsidiary; or
(5) the attainment of age fifty-nine and one-half (592).
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ARTICLE 11
NON-ASSIGNABILITY
It is a condition of the Plan to which all rights of any person shall
be subject, that payments hereunder shall be made only to those persons entitled
thereto under the terms of this Plan, and no right or interest in the Plan or
the Trust shall be transferable or assignable; such right or interest may not be
anticipated, charged or encumbered, and shall not be subject to or reached by
any legal or equitable process (including execution, garnishment, attachment,
pledge or bankruptcy) in satisfaction of any debt, liability, or obligation
prior to its receipt; provided, however, that notwithstanding any provisions of
the Plan or the Trust to the contrary, compliance with a domestic relations
order of a court of competent jurisdiction which the Administrator finds to be a
"qualified domestic relations order" within the meaning of the Code shall not be
prohibited hereunder and shall satisfy all provisions of the Plan and the Trust.
ARTICLE 12
TRUST AGREEMENT
The Company has entered into the Trust with the Trustee establishing a
Trust to fund and implement the Plan. The Trust shall be deemed to form a part
of the Plan and any and all rights and benefits which may accrue to any person
under the Plan shall be subject to all of the terms and provisions thereof.
ARTICLE 13
MANAGEMENT AND ADMINISTRATION
13.1 Administrator. The Administrator, which may be one or more
individuals, shall be appointed from time to time by the Board and shall serve
at the pleasure of the Board. The Administrator shall have full power and
authority, within the limits of the Plan and the Trust, to supervise the
operation and administration of the Plan and the Trust. The Administrator shall
from time to time establish rules for the administration of the Plan and the
Trust including the establishment of procedures for making claims and appealing
decisions under the Plan. The Administrator shall have the exclusive right to
interpret the Plan and the Trust and decide any matters arising hereunder in the
administration and the operation of the Plan and the Trust, and any
interpretations or decisions so made will be conclusive and binding on any
persons having an interest-in the Plan and the Trust and will be determined and
applied so as not to discriminate in favor of Participants who are officers,
shareholders or highly compensated employees. The Employer shall be deemed to be
the "named fiduciary" under the Plan within the meaning of ERISA, and the
Administrator shall be deemed to be the "named plan administrator."
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13.2 Claims Review Procedure. A Participant or beneficiary shall make
all claims for benefits under the Plan in writing addressed to the Administrator
at the address of the Company. Each claim shall be reviewed by the Administrator
within a reasonable time after it is submitted, but in no event longer than
ninety (90) days after it is received by the Administrator. If a claim is wholly
or partially denied, the claimant shall be sent written notice of such fact
within fourteen (14) days of the denial. The denial notice, which shall be
written in a manner calculated to be understood by the claimant, shall contain
(a) the specific reason or reasons for the denial, (b) specific reference to
pertinent Plan provisions on which the denial is based, (c) a description of any
additional material information necessary for the claimant to perfect his claim
and an explanation of why such material or information is necessary, and (d) an
explanation of the Plan's claim review procedure.
Within sixty (60) days after receipt by the claimant of written
notice of the denial, the claimant or his duly authorized representative may
appeal such denial by filing a written application for review with the
individual or individuals to whom the power to review claims has been delegated
by the Employer. Such application shall be addressed to the Employer and may
include a statement of the issues and other comments. Each such application
shall state the grounds upon which the claimant seeks to have the claim
reviewed. The claimant or his representative shall have access to all pertinent
documents relative to the claim for the purpose of preparing the application.
The delegated reviewer shall then review the decision and notify the claimant in
writing of the results of the redetermination within sixty (60) days of receipt
of the application for review, which decision shall be in writing, written in a
manner calculated to be understood by the claimant and induce specific reasons
for the decision and specific reference to the pertinent Plan provisions on
which the decision is based. The sixty (60) day period for the decision of the
delegated reviewer may be extended if specific circumstances require an
extension of time for processing, in which case the decision shall be rendered
as soon as possible, but no later than one hundred (120) days after receipt of
the application for review.
13.3 Delegation. The Administrator shall have the right, from time to
time, to delegate in writing to any individual member of the Administrator or
group of members of the Administrator, or to any other person or persons,
subject to, such terms, conditions and restrictions as they may prescribe, such
of their rights, powers, authorities, discretions and duties hereunder, except
those dealing with interpretation of the provisions of the Plan, as they shall
determine; and all actions taken by any such person or persons pursuant to and
in accordance with any such delegations shall be effective and binding upon all
parties to the same extent as though taken by the Administrator.
13.4 Expenses of Administration. All expenses and liabilities incurred
in connection with the administration of the Plan may be paid by the Employee,
but if not so paid shall be paid from the Trust.
ARTICLE 14
EMPLOYER RIGHTS
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14.1 Employer's Interest in Trust. The Trust and Plan hereby created
shall be maintained for the exclusive benefit of Participants and their
beneficiaries, and is intended to Qualify under Code Sections 401(a) and 501(a)
and under ERISA, as amended from time to time. In no event shall the Company or
any other employer have any right, claim, or beneficial or reversionary interest
in any Trust assets, and the Trustee shall make no payment or other distribution
to the Company or any other employer except to repay loans made by the employer
to the Trust and interest thereon, or taxes which the Company or any other
employer is obligated to withhold and remit to tax collecting agencies and to
return to the Company or any other employer a contribution made by a mistake of
fact within one year of such contribution; but nothing contained in the Trust
agreement shall be construed to impair the Company's right to see to the proper
administration of the Trust in accordance with Plan provisions.
14.2 Inspection of Records. The Employer shall have the right to have
the books, accounts and records of the Trustee examined at any time, or from
time to time, by such accountants, attorneys, agents or employees as the
Employer may select, and to make such copies of, or extracts from, such books,
accounts and records as the Employer desires. The cost c, such examination and
report shall be paid by the Employer.
14.3 Amendment. The Company alone reserves the right by action of the
Board to amend the Plan at any time, and from time to time. The Company shall
promptly notify the Trustee of any amendment. However, the Trustee's duties and
responsibilities may not be increased without their consent, and no such
amendment shall vest in the Company or any other employer any right, title or
interest in and to Trust assets, divest Participants or their beneficiaries of
any vested rights in their accounts, or allow any part of Trust assets to be
used for, or diverted to, purposes other than for the exclusive benefit of
Participants and their beneficiaries within the meaning of the Code and ERISA,
as amended from time to time except to the extent necessary to conform the Plan
and Trust to the requirements of any applicable future legislation, regulation
or other rule of law.
14.4 Employment Rights. This Plan shall not be construed to create a
contract of employment between an Employer and any Participant, to create a
right in any Participant to be continued in employment, or to limit an Employers
right to discharge any Participant with or without cause.
14.5 Employer Liability. The Employer does nor in any manner guarantee
that the Trust will not sustain losses, that Trust assets will not depreciate or
that the value of the Trust may not otherwise be reduced.
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ARTICLE 15
AFFILIATES
15.1 Adoption By Affiliates. Notwithstanding anything herein to the
contrary, with the consent of the Employer, any Affiliate may adopt this Plan
and all of the provisions hereof, and participate herein by a properly executed
separate document or by executing this document evidencing said intent and will
of such Affiliates.
15.2 Requirements of Affiliates.
(1) Each such Affiliate shall be required to use the same Trustee
as provided in this Plan.
(2) The Trustee may, but shall not be required to, commingle, hold
and invest as one Trust all contributions made by the Employer and Affiliates,
as well as all increments thereof.
(3) Any expenses of the Trust which are to be paid by the Employer
or borne by the Trust shall be paid by each Employer in the same proportion that
the total amount standing to the credit of all Participants employed by such
Employer bears to the total amount standing to the credit of all Participants.
15.3 Designation of Agent. Each Employer shall be deemed to be a part
of this Plan; provided, however, that with respect to all of its relations with
the Trustee and Administrator for the purpose of this Plan, each Employer shall
be deemed to have designated irrevocably the Company as its agent. Unless the
context of the Plan clearly indicates the contrary, the word "Employer" shall be
deemed to include each Employer as related to its adoption of the Plan.
15.4 Employee Transfers. It is anticipated that an Employee may be
transferred between Employers, and in the event of any such transfer, the
Employee involved shall carry with him his accumulated service and eligibility.
No such transfer shall effect a termination of employment hereunder, and the
Employer to which the Employee is transferred shall thereupon become obligated
hereunder with respect to such Employee in the same manner as was the Employer
from whom the Employee was transferred.
15.5 Discontinuance of Participation. Any Employer shall be permitted
to discontinue or revoke its participation in the Plan. At the time of any such
discontinuance or revocation, satisfactory evidence thereof and of any
applicable conditions imposed shall be delivered to the Trustee. The Trustee
shall thereafter transfer, deliver and assign contracts and other Trust assets
allocable to the Participants of such Employer to such new Trustee as shall have
been designated by such Employer, in the event that it has established a
separate pension plan for its Employees. If no successor is designated, the
Trustee shall retain such assets for the employees of said Employer. In no such
event
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shall any part of the corpus or income of the Trust as it relates to such
Employer be used for or diverted for purposes other than for the exclusive
benefit of the Employees of such Employer.
15.6 Administrator's Authority. The Administrator shall have authority
to make any and all necessary rules or regulations, binding upon all Employers
and all Participants, to effectuate the purpose of this Article 15.
ARTICLE 16
CONDITION OF QUALIFICATION
This Plan is established and contributions thereto are made on the
condition that it shall be approved and qualified by the Internal Revenue
Service as meeting the requirements of the Internal Revenue Code and Regulations
issued thereunder with respect to employees' trusts. If it is determined by the
Internal Revenue Service that this Plan is not so approved and qualified and if
this Agreement is not amended so as to be approved and qualified or if the
Employer elects to litigate the issue of qualification and if it is finally
determined that this Plan is not qualified or if the Employer abandons the
litigation, then at the Employer's election the interest of all then living
Participants and beneficiaries under this Plan shall cease and terminate to the
same extent as though this Plan had not been executed and Trustee shall pay to
the Employer all amounts in the Trust less the costs and expenses of the Plan
(and Trust).
ARTICLE 17
TERMINATION
17.1 Event of Termination. The Company alone reserves the right to
terminate the Plan and Trust by giving written notice to the Trustee at any
time, in which event there shall be no Employer duty to make contributions to
the Trust for the year in which such notice is given. A permanent discontinuance
of Employer contributions shall constitute a termination of the Plan as to the
Employees of the Employer. However, the Company reserves the right to suspend
its contribution for any year, without terminating the Plan, by providing
written notice to the Trustee not less than thirty (30) days prior to the
beginning of such year.
17.2 Effect of Termination. Upon the termination or partial termination
of the Plan and Trust, each Participant affected by such termination or partial
termination or his beneficiary or beneficiaries, as the case may be, shall be
entitled to 100% of his account, determined on the termination dated as if it
were a Valuation Date. Distribution, in the event of a termination or partial
termination of the Plan, shall be made by the Trustee in one sum or in
substantially equal installments during a period not exceeding one year
following such termination. In the case of complete termination, when all Trust
assets have been distributed, the Trustee shall be discharged,
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but the Trust shall nevertheless continue as a legal entity during the period
for the purpose of distributing all property to the persons entitled thereto.
ARTICLE 18
TRANSFERS, MERGERS AND CONSOLIDATIONS
The Plan may not merge or consolidate with, or transfer its assets or
liabilities to, any other plan unless each Participant would (if the Plan then
terminated) receive a benefit immediately after the merge, consolidation or
transfer which is equal to or greater than the benefit he would have been
entitled to receive immediately before the merger, consolidation or transfer (if
the Plan had then terminated).
ARTICLE 19
SUCCESSORS
This Plan shall be binding upon all persons entitled to distributions
hereunder, their respective heirs, next-of-kin and legal representatives; and
upon the Employer, its successors and assigns.
ARTICLE 20
INTERPRETATION OF AGREEMENT
20.1 Interpretation of Plan. The Administrator may, from time to time,
adopt resolutions for carrying out the purposes of the Plan. All questions of
interpretation of the Plan, or amendments thereto, or the resolutions pertaining
thereto, or relating to any matter of accounting, values, profits or any other
matters or differences which may arise, shall be determined solely by the
Administrator, and except as otherwise provided in Section 13.1, the decisions
of the Administrator shall be final and conclusive upon all Participants and
their beneficiaries hereunder.
20.2 Forms. The Administrator may prescribe or provide for appropriate
forms to be used by Participants of the Plan.
20.3 Applicable Law. Since the Administrator's domicile is in the State
of Illinois, and since it is contemplated that the situs of administration of
the Plan will be in such State, all rights under the Plan shall be governed,
construed and administered in accordance with the laws of the State of Illinois
to the extent such law is not superseded by ERISA.
IN WITNESS WHEREOF, BanPonce Corporation has caused this instrument to
be signed by its duly authorized officer as of this 7th day of July, 1997.
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BANPONCE CORPORATION
Attest:
By: [Roberto Herencia]
[Phyllis Robinson] Executive Vice-President
Assistant Secretary
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APPENDIX I
TOP-HEAVY PROVISIONS
(1) Top-Heavy Provisions. If the Plan is or becomes a Top-Heavy Plan in
any Plan Year, the provisions or this Appendix I will supersede any conflicting
provisions in the Plan.
(2) Definitions of Terms. For purposes of this Appendix I, the
following words and terms shall have the respective meanings hereinafter set
forth unless a different meaning is clearly required by context.
(1) Determination Date. For any Plan Year subsequent to the first
Plan Year, the last day of the preceding Plan Year. For the first Plan Year of
the Plan, the last day of that year.
(2) Determination Period. The Plan Year containing the
Determination Date and the four (4) preceding Plan Years.
(3) Key Employee. Any Employee or former Employee (and the
beneficiaries of such Employee) who at any time during the Determination Period
was:
(1) An officer of an Employer whose annual Compensation is
greater than 50% of the amount in effect under Code Section 415(b)(1)(A) for
such Plan Year; provided, however, that no more than the lesser of:
(1) fifty (50) employees, or the greater of (i) three
(3) Employees or (ii) 10% all Employees, shall be treated as officers, and such
officers shall be those with the highest annual Compensation in the five (5)
year period;
(2) An owner (or considered an owner under Code Section
318) of one (1) of the ten (10) largest interests in the Employer if such
individual's Compensation exceeds the dollar limitation under Code Section
415(c)(1)(A), if two (2) Employees have the same interest in the Employer, then
the Employee having greater annual Compensation shall be treated as having a
larger interest;
(3) A 5% owner of an Employer; or
(4) A 1% owner of an Employer or affiliate who has an
annual Compensation of more than $150,000.
The determination of who is a Key Employee will be made
in accordance with Code Section 416(i)(1) and the regulations thereunder.
Further, for purposes of this Appendix, Compensation shall mean compensation as
defined in Code Section 415(c)(3), but
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including amounts contributed by the Employer pursuant to a salary reduction
agreement which are excludable from the Employee's gross income under Code
Sections 125, 402(a)(8), 402(h) or 403(b).
(4) Non-Key Employee. An Employee who is not a Key Employee.
(5) Permissive Aggregation Group. The Required Aggregation Group
of plans plus any other plan or plans of the Employer which, when considered as
a group with the Required Aggregation Group, would continue to satisfy the
requirements of Code Sections 401(a)(4) and 410.
(6) Present Value of Accrued Benefits. Present Value of Accrued
Benefits shall be based on the interest and mortality rates specified in the
defined benefit plan for determining the top-heavy status of the Plan. If the
defined benefit plan does not specifically provide for this determination, the
Present Value of Accrued Benefits shall be based on 5% interest per annum and,
on the 1984 Unisex Pension mortality tables.
(7) Required Aggregation Group.
(1) Each Qualified Plan of the Employer in which at least one
(1) Key Employee participates; and
(2) Any other Qualified Plan of the Employer which enables a
plan described in (1) to meet the requirements of Code Section 401(a)(4) or 410.
(8) Top-Heavy Plan. This Plan is a Top Heavy Plan if any of the
following conditions exist:
(1) If the Top-Heavy Ratio for this Plan exceeds 60% and this
Plan is not part of any Required Aggregation of Group or Permissive Aggregation
Group of plans;
(2) If this Plan is a part of a Required Aggregation Group of
plans (but which is not part of a Permissive Aggregation Group) and the
Top-Heavy Ratio for the group of plans exceeds 60%; or
(3) If this Plan is a part of a Required Aggregation Group of
plans and part of a Permissive Aggregation Group and the Top-Heavy Ratio for the
Permissive Aggregation Group exceeds 60%.
(9) Top-Heavy Ratio:
(1) If the Employer maintains one (1) or more defined
contribution plans (including any Simplified Employee Pension Plan) and the
Employer has never maintained any defined benefit plan which has covered or
could cover a Participant in this Plan, the Top-Heavy
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Ratio is a fraction, the numerator of which is the sum of the Accounts of all
Key Employees as of the Determination Date (including any part of any account
distributed in the five (5) year period ending on the Determination Date and any
amount distributed in the five (5) year period ending on the Determination Date
from a terminated plan which, if it has not been terminated, would have been
part of a Required Aggregation Group), and the denominator of which is the sum
of all Accounts (including any part of any Account distributed in the five (5)
year period ending on the Determination Date) of all Participants as of the
Determination Date. However, if an individual has not been an Employee with
respect to the Plan and has not performed services for the Employer during the
five (5) year period ending on the Determination Date, the Account of that
individual shall be disregarded. Both the numerator and denominator of the
Top-Heavy Ratio are adjusted to reflect any contribution which is due but unpaid
as of the Determination Date.
(2) If the Employer maintains one (1) or more defined
contribution plans (including any Simplified Employee Pension Plan) and the
Employer maintains or has maintained one or more defined benefit plans which
have covered or could cover a Participant in this Plan, the Top-Heavy Ratio is a
fraction, the numerator of which is the sum of Accounts under the defined
contribution plans for all Key Employees and the Present Value of Accrued
Benefits under the defined benefit plans for all Key Employees, and the
denominator of which is the sum of the Accounts under the defined contribution
plans for all Participants and the Present Value of Accrued Benefits under the
defined benefit plans for all Participants. Both the numerator and denominator
of the Top-Heavy Ratio are adjusted for any distribution of an Account or an
Accrued Benefit made in the five (5) year period ending on the Determination
Date and any contribution due but unpaid as of the Determination Date, and any
amount distributed in the five (5) year period ending on the Determination Date
from a terminated plan which, if it had not been terminated, would have been
part of a Required Aggregation Group. However, if an individual has not been an
Employee with respect to the Plan and has not performed services for the
Employer during the five (5) year period ending on the Determination Date, the
Account and the Accrued Benefit of that individual shall be disregarded.
(3) For purposes of (1) and (2) above, the value of Accounts
and the Present Value of Accrued Benefits will be determined as of the most
recent Valuation Date that falls within or ends with the twelve (12) month
period ending on the Determination Date. The Accounts and Accrued Benefits of a
Participant who is not a Key Employee but who was a Key Employee in a prior year
will be disregarded. The calculation of the Top-Heavy Ratio, and the extent to
which distributions, rollovers, and transfers are taken into account will be
made in accordance with Code Section 416 and the regulations thereunder.
Deductible Employee Contributions will not be taken into account for purposes of
computing the Top-Heavy Ratio. When aggregating plans, the value of Accounts and
Present Value of Accrued Benefits will be calculated with reference to the
Determination Dates that fall within the same calendar year.
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(3) Minimum Vesting Schedule. For any Plan Year in which this is a
Top-Heavy Plan, the following vesting schedule shall apply, to the extent that
the following vesting schedule is more favorable than the vesting schedule which
normally applies;
Vested Percentage
Years of Service (Nonforfeitable)
Less than 2 0%
2 20%
3 40%
4 60%
5 80%
6 or more 100%
The minimum vesting schedule applies to all Accounts within the
meaning of Code Section 411(a)(7) except those attributable to Employee
contributions, including allocations credited before the Effective Date of Code
Section 416 and allocations credited before the Plan became a Top-Heavy Plan.
Further, no reduction in vested Accounts may occur in the event the Plan's
status as a Top-Heavy Plan changes for any Plan Year. However, this section does
not apply to the Account of any Employee who does not have an Hour-of-Service
after the Plan has initially become a Top-Heavy Plan and such Employee~s Account
attributable to Employer contributions will be determined without regard to this
section.
If the vesting schedule under the Plan shifts in or out of the above
schedule for any Plan Year because of a change in Top-Heavy Plan status, such
shift is an amendment to the vesting schedule and the election below applies:
(1) If the vesting schedule under this Plan is amended, each
Participant who has completed at least three (3) years of Credited Service may
elect, during the election period specified in (b) below, to have the vested
percentage of his or her Account determined without regard to such amendment.
(2) For purposes of (a) above, the election period shall begin
as of the date on which the amendment changing the vesting schedule is adopted,
and shall end on the latest of ;he following dates:
(1) The date occurring sixty (60) days after the Plan
amendment is adopted; or
(2) The date which is sixty (60) days after the day on which
the Plan amendment becomes effective; or
-39-
<PAGE>
(3) The date which is sixty (60) days after the day the
Participant is issued written notice of the Plan amendment by the Administrator;
or
(4) Such later date as may be specified by the Administrator.
The election provided for in this Section shall be made in writing
and shall be irrevocable when made.
For the purposes of Section III and IV, years of Credited Service
shall not include:
(a) years of Credited Service before age eighteen (18); or
(b) years of Credited Service during which the Employer did not
maintain the Plan or a predecessor plan.
(4) Change in Top-Heavy Status. If the Plan becomes a Top-Heavy Plan
and subsequently ceases to be a Top-Heavy Plan, the vesting schedule in Section
III shall continue to apply in determining the vested percentage of any
Participant who had at least three (3) years of Credited Service as of the last
day of the last Plan Year during which the Plan is a Top-Heavy Plan.
For Participants with less than three (3) years of Credited
Service, the schedule in Section III shall apply only to their Accounts as of
the last day of the last Plan Year during which the Plan is a Top-Heavy Plan.
(5) Maximum Benefit Exception. Notwithstanding anything herein to the
contrary, in any Plan Year in which a Non-Key Employee is a Participant in a
Plan that is Top-Heavy, the minimum contribution benefit shall be made in
accordance with the provisions of Code Section 416(c)(2).
(6) Nonduplication of Top-Heavy Minimum Benefits. Notwithstanding
anything herein to the contrary, in any Plan Year in which a Non-Key Employee is
a Participant in both this Plan and a defined benefit plan, and both such plans
are Top-Heavy Plans, the Employer shall not be required to provide a Non-Key
Employee with both the full separate minimum defined contribution plan
allocations and the full separate defined benefit plan benefit. Therefore, the
Employer may satisfy the minimum benefit requirement of Code Section
416(c)(1)(E) for the Non-Key Employee by providing any combination of benefits
and/or contributions that satisfy any one of the four safe harbor rules of
Regulation 1.416-l(m-12).
(7) Minimum Benefit.
(1) Except as otherwise provided in (c) and (d) below, the
Employer contributions and forfeitures allocated on behalf of any Participant
who is a Non-Key Employee shall not be less than the lesser of 3% of such
Participant's Compensation or in the case where the Employer has no
-40-
<PAGE>
defined benefit plan which designates this Plan to satisfy Code Section 401, the
largest percentage of Employer contributions and forfeitures, as a percentage of
the first $150,000, as adjusted by the Commissioner for increases in the cost of
living in accordance with Code Section 401(a)(17)(B), of the Key Employee's
Compensation, allocated on behalf of any Key Employee for that Plan Year. The
minimum allocation is determined without regard to any Social Security
contribution. This minimum allocation shall be made even though, under other
Plan provisions, the Participant would not otherwise be entitled to receive an
allocation, or would have received a lesser allocation for the Plan Year because
of (i) the Participant's failure to complete one thousand (1,000) Hours of
Service, or (ii) the Participant's failure to make mandatory Employee
contributions to the Plan, or (iii) Compensation less than a stated amount.
(2) For purposes of computing the minimum allocation, Compensation
will mean Compensation as defined in Regulation Section 1.416-1.
(3) The provision in (a) above shall not apply to any Participant
who was not employed by the Employer on the last day of the Plan Year.
(4) The provision in (a) above shall not apply to any
Participant to the extent the Participant is covered under any other plan or
plans of the Employer and the Employer has provided in such other plan or plans
that the minimum allocation or benefit requirement applicable to top-heavy plans
will be met in the other plan or plans.
-41-
<PAGE>
APPENDIX A
MERGER OF COMBANCORP EMPLOYEES STOCK SAVINGS PLAN
1-1. Purpose. Effective March 1, 1997 (the "Merger Date"), the
COMBANCORP Employees Stock Savings Plan, as last amended, restated and renamed
effective January 1, 1995, (the "COMBANCORP Plan") is hereby merged into this
Plan. Certain of the individuals who are employees of COMBANCORP immediately
prior to the Merger Date ("COMBANCORP Employees") will become Employees eligible
to participate in the Plan on the Merger Date. It is the purpose of this
Appendix A to provide for the merger into this Plan of the COMBANCORP Plan, and
the participation in the Plan of the COMBANCORP Employees, both effective as of
the Merger Date.
1.2. Participation in the Plan. Each COMBANCORP Employee who is a
participant in the COMBANCORP Plan immediately preceding the Merger Date will
become eligible to participate in the Plan on the Merger Date.
1-3. Transfer and Merger of COMBANCORP Accounts. Effective as of the
Merger Date: (i) a "COMBANCORP Before-Tax Account" will be established for each
COMBANCORP Employee's Pretax Deferred Account under the COMBANCORP Plan; (ii) a
"COMBANCORP Matching Employer Contribution Account" for each COMBANCORP
Employee's Employer Matching Account and Qualified Employer Contribution Account
under the COMBANCORP Plan; and (iii) a "COMBANCORP Discretionary Employer
Contribution Account" for each COMBANCORP Employee's Employee Stock Ownership
Account under the COMBANCORP Plan; (collectively referred to as the "COMBANCORP
Accounts"). From and after the Merger Date, the amount in each of the COMBANCORP
Accounts will be 100% nonforfeitable. Amounts held in COMBANCORP Accounts will
be subject to the provisions of the Plan (except insofar as they conflict with
paragraph A-4 and A-5 below) and to the provisions of paragraphs A-4 and A-5
below.
1-4. In-Service Withdrawals. This section shall apply only to the
lesser of (a) amounts transferred to this Plan from the COMBANCORP Plan and (b)
the value of such amounts at any point in time. Notwithstanding any other
provisions in the Plan to the contrary, subject to the approval of the
Administrator, a Participant who has attained age fifty-nine and one-half
(59-1/2) may elect, in accordance with such rules as the Administrator may
prescribe, to have his COMBANCORP Accounts, valued as of the last Valuation Date
if applicable, distributed to him on or after the date he attains age fifty-nine
and one-half (59-1/2) in the form of a single lump sum.
1-5. Loans. Notwithstanding anything in the Plan to the contrary, for
COMBANCORP Employees, Section 9.2(c)(3) of the Plan shall read as follows:
"(3) the greater of: (i) one-half (2) of the total of the
Employee's Before-Tax Deposit Account, Matching Employer
Contribution Account and Bonus Matching Contribution Account
determined on the Valuation Date preceding the date of the
A-1
<PAGE>
loan request, and (ii) one-half (2) of the balance of the
Participant's COMBANCORP Accounts as of the Merger Date."
A-2
<PAGE>
APPENDIX B
MERGER OF PIONEER BANK AND TRUST COMPANY PROFIT SHARING PLAN
B-1. Purpose. Effective April 1, 1997 (the "Merger Date"), the Pioneer
Bank and Trust Company Profit Sharing Plan, as last amended, restated effective
January 1, 1987, (the "Banco Popular, Illinois Plan") is hereby merged into this
Plan. Certain of the individuals who are employees of Banco Popular, Illinois
immediately prior to the Merger Date ("Banco Popular, Illinois Employees") will
become Employees eligible to participate in the Plan on the Merger Date. It is
the purpose of this Appendix B to provide for the merger into this Plan of the
Banco Popular, Illinois Plan, and the participation in the Plan of the Banco
Popular, Illinois Employees, both effective as of the Merger Date.
B-2. Participation in the Plan. Each Banco Popular, Illinois Employee
who is a participant in the Banco Popular, Illinois Plan immediately preceding
the Merger Date will become eligible to participate in the Plan on the Merger
Date.
B-3. Transfer and Merger of Banco Popular. Illinois Accounts. Effective
as of the Merger Date: (i) a "Before-Tax Deposit Account" will be established
for each Banco Popular, Illinois Employee's 401(k) Account under the Banco
Popular, Illinois Plan; (ii) a "Banco Popular, Illinois Matching Employer
Contribution Account" for each Banco Popular, Illinois Employee's Bank Matching
Account under the Banco Popular, Illinois Plan; (iii) a "Banco Popular, Illinois
Discretionary Employer Contribution Account" for each Banco Popular, Illinois
Employee's Bank Profit Sharing Account under the Banco Popular, Illinois Plan;
and (iv) a "Banco Popular, Illinois Transferred BP Employee Account" for each
Banco Popular, Illinois Employee's Transferred BP Employee Account under the
Banco Popular, Illinois Plan. From and after the Merger Date, the amount in each
of the Banco Popular, Illinois Before-Tax Deposit Accounts, Banco Popular,
Illinois Matching Employee Contribution Accounts and the Banco Popular, Illinois
Transferred BP Employee Accounts will be 100% nonforfeitable. Amounts held in
Banco Popular, Illinois accounts will be subject to the provisions of the Plan
(except insofar as they conflict with paragraph B-4 and B-5 below) and to the
provisions of paragraphs B-4 and B-5 below.
B-4. In-Service Withdrawals. After a period of participation in the
Plan (and predecessor thereto) of not less than three (3) years, each
Participant with a Banco Popular, Illinois Transferred BP Employee Account may
withdraw an amount not in excess of 50% of the amount of his Banco Popular,
Illinois Transferred BP Employee Account that had accrued up through September
1, 1994. Notice of any such withdrawal must be made in writing to the
Administrator not later than the first day of May of the Plan Year on which the
Participant intends to make the withdrawal and the amount of the withdrawal will
be disbursed to the withdrawing Participant on the first day of June following
the notice to the Administrator.
Withdrawals in accordance with this Section B-4 will be made only from funds
accumulated prior to January 1, 1978.
B-1
<PAGE>
B-5 Loans. Notwithstanding anything in the Plan to the contrary, for
Banco Popular, Illinois Employees, Section 9.2(c)(3) shall read as follows:
"(3) the greater of : (i) one-half (2) of the total of the
Employee's Before-Tax Deposit Account, Matching Employer
Contribution Account and Bonus Matching Contribution Account
determined on the Valuation Date preceding the date of the loan
request, and (ii) one-half (2) of the vested Banco Popular,
Illinois accounts determined as of the Merger Date not to exceed
the sum of the Banco Popular, Illinois 401(k) Account, the Banco
Popular, Illinois Matching Employer Contribution Account both
determined as of the Merger Date. Plus, for non-highly
compensated Transferred BP Employees, the balance in the
Transferred BP Employee's Transferred Profit Sharing Account
accrued through September 1, 1994."
B-2
<PAGE>
APPENDIX C
MERGER OF NATIONAL BANCORP INC.
401(K) PROFIT SHARING PLAN
C-1. Purpose. Effective as soon as practicable following June 1, 1997
(the "Merger Date"), the National Bancorp Inc. 401(k) Profit Sharing Plan, as
last amended and restated effective January 1, 1994, (the "National Bancorp
Plan"), which is sponsored by AmericanMidwest Bank & Trust, is hereby merged
into this Plan. Certain of the individuals who are employees of AmericanMidwest
Bank & Trust immediately prior to the Merger Date (the "AmericanMidwest
Employees") will become Employees eligible to participate in the Plan on the
Merger Date. It is the purpose of this Appendix C to provide for the merger into
this Plan of the National Bancorp Plan and the participation in the Plan of the
AmericanMidwest Employees, both effective as of the Merger Date.
C-2. Participation in the Plan. Each AmericanMidwest Employee who is a
participant in the National Bancorp Plan on May 31, 1997 who becomes an Employee
on June 1, 1997 will become eligible to participate in the Plan on June 1, 1997.
C-3. Transfer and Merger of National Bancorp Accounts. Effective as of
the Merger Date: (i) a "National Bancorp Elective Deferral Account" will be
established for each AmericanMidwest Employee's Elective Deferral Account under
the National Bancorp Plan; (ii) a "National Bancorp Employer Contribution
Account" for each AmericanMidwest Employee's Employer and matching contributions
under the National Bancorp Plan; and (iii) a "National Bancorp Rollover
Contribution Account" for each AmericanMidwest Employee's Rollover Account under
the National Bancorp Plan; (collectively referred to as the "National Bancorp
Accounts"). From and after the Merger Date, all Participant's National Bancorp
Accounts will be 100% nonforfeitable.
C-4. Optional Forms of Distribution.
Notwithstanding any other provision in the Plan to the contrary,
this section shall only apply to distributions of the National Bancorp Accounts
transferred to this Plan, valued as of the Merger Date, for the benefit of
AmericanMidwest Employees who have become Participants hereunder as of the
Merger Date.
(a) The optional forms of retirement benefit shall be (1) in a
lump sum; (2) in installment payments over a period not to exceed the life
expectancy of the Participant or the joint and last survivor life expectancy of
the Participant and his designated beneficiary; or (3) applied to the purchase
of an annuity contract requested by the Participant and approved by the
Administrator provided that such annuity is available from an appropriate
insurance company at commercially reasonable rates. If installment payments are
elected, the balance of the Participant's National
B-3
<PAGE>
Bancorp Accounts payable pursuant to the provisions of this Section, if any,
will be payable on the Participant's death to his beneficiary in a single sum.
(b) The optional forms of death benefit are a single-sum payment,
installment payouts over a period not to exceed the life expectancy of the
beneficiary and any annuity that is an optional form of retirement benefit.
However, a series of installments shall not be available if the beneficiary is
no; the spouse of the deceased Participant.
(c) If the Participant's entire interest is to be distributed in
other than a lump sum, then the amount to be distributed each year must be at
least an amount equal to the quotient obtained by dividing the Participant's
entire interest by the life expectancy of the Participant or joint and last
survivor expectancy of the Participant and beneficiary. Life expectancy and
joint and last survivor expectancy are computed by the use o the return
multiples contained in Section 1.72-9 of the Income Tax Regulations. For
purposes of this computation, a Participant's life expectancy may be
recalculated no more frequently than annually, however, the life expectancy of a
nonspouse beneficiary may not be recalculated. If the Participant's eligible
spouse is not the beneficiary, the method of distribution selected must assure
that more than 50% of the present value of the amount available for distribution
is paid within the life expectancy of the Participant.
(d) If a married Participant selects an annuity, the annuity
shall be in the form of a qualified joint and survivor
annuity (as defined in Code Section 417) unless the
Participant selects another form of annuity and the
Participant's spouse consents to such alternate form and
such consent is witnessed by a notary public.
C-5. Hardship Withdrawals. This section shall only apply to amounts
transferred from the National Bancorp Plan into this Plan for an AmericanMidwest
Employee as of the Merger Date. Each AmericanMidwest Employee shall be permitted
to make a hardship withdrawal of up to his entire National Bancorp Accounts
balance.
C-6. Loans. Notwithstanding any other provision in the Plan to the
contrary, all outstanding loans that an AmericanMidwest Employee has as of the
Merger Date shall continue to be repaid pursuant to the terms of such
outstanding loans. Effective as of the Merger Date, each AmericanMidwest
Employee shall be permitted to make one loan under the Plan pursuant to Section
9.2. However, any outstanding loans that an AmericanMidwest Employee had under
the National Bancorp Plan as of the Merger Date shall not be considered when
applying the limitation on the number of loans which can be outstanding at any
time under the Plan. Further, an AmericanMidwest Employee shall be permitted to
make the loan from his entire National Bancorp Accounts balance.
B-4
<PAGE>
AMENDMENT NO. 1 TO THE
AMENDED AND RESTATED BANPONCE U.S.A. PROFIT SHARING/401(K) PLAN
This Amendment No. 1 to the Amended and Restated BanPonce U.S.A. Profit
Sharing 401(k)/P1an is made this 15th day of October, 1998 by Popular, Inc. as
plan sponsor ("Sponsor").
R E C I T A L S
Effective March 1, 1997, the Sponsor adopted the Amended and Restated
BanPonce U.S.A. Profit Sharing/401(k) Plan (the "Plan"), intending that the Plan
qualify under the applicable provisions of the Internal Revenue Code of 1986 and
the Employee Retirement Income Security Act of 1974, as both have been and may
be amended from time to time, to be a qualified Plan. Pursuant to the powers
reserved to it in the Plan, the Sponsor hereby adopt this Amendment No. 1 to the
Plan effective, except as otherwise noted herein, March 1, 1997.
AMENDMENTS
1. Section 5.7 of the Plan is hereby amended effective November 1, 1998
to read as follows:
5.7 Rollover Contributions. An Employee who receives or is
credited with a distribution described in subsection (a), (b) or
(c) of this Section may make a special contribution to this Plan,
which contribution will hereafter be referred to as a "Rollover
Contribution." In making a Rollover Contribution, the Employee
must transfer, or direct the transfer of, cash equal to the value
of all or part of the property the Employee received or is
entitled to receive in the distribution to the Trustees, to the
extent the fair market value of such property exceeds an amount
equal to after tax contributions made by the Employee to the plan
from which the distribution is being made. In addition, prior to
the acceptance of a Rollover Contribution, the Employer may
require the submission of such evidence as the Employer deems
necessary or desirable to enable it to determine whether the
transfer qualifies as a Rollover Contribution. If the Employer
determines subsequent to any Rollover Contribution that any such
Rollover Contribution did not in fact qualify as such, the value
of such Rollover Contribution shall be immediately distributed to
the Employee. For purposes of this Section 5.7, the following
shall be eligible to be treated as a Rollover Contribution:
B-1
<PAGE>
(a) A distribution to an Employee from an employee's trust
described in Code Section 401(a), which trust is exempt from tax
under Code Section 501(a), or from an annuity plan qualified
under Code Section 403(a), which distribution qualifies for
rollover treatment pursuant to the Code, which was received by
the Employee not earlier than sixty (60) days prior to the date
the Rollover Contribution is credited to the Trust; or
(b) A distribution to an Employee from an Individual
Retirement Account or an Individual Retirement Annuity (other
than an endowment contract) within the meaning of Code Section
408(a) or 408(b), the assets of which are derived solely from a
rollover or transfer thereto of a prior distribution to the
Employee described in (a) above, which was received by the
Employee not earlier than sixty (60) days prior to the date the
Rollover Contribution is credited to the Trust; or
(c) A distribution directly to the Plan from an eligible
retirement plan (as defined in Code Section 401(a)(31)(D)) of all
or any portion of the balance to the credit of the Employee,
except that the following amounts shall not be included: any
distribution that is one (1) of a series of substantially equal
periodic payments (not less frequently than annually) made for
the life (or life expectancy) of the distribute or the joint
lives (or Joint life expectancies) of the distributee and the
distributee's designated beneficiary, or for a specified period
of ten (10) years or more; any distribution to the extent such
distribution is required under Code Section 401(a)(9); and that
portion of any distribution that would not have been includible
in gross income (determined without regard to the exclusion for
net unrealized appreciation with respect to employer securities)
if it would have been distributed directly to the Employee.
2. The second paragraph of Section 10.6 of the Plan is hereby amended
to read as follows:
Provided, however, notwithstanding anything herein to the contrary,
payment of benefits shall commence not later than the sixtieth (60th) day after
the close of the Plan Year in which the latest of the following events occur:
(i) the Participant attains age sixty-five (65) or, if earlier, his Normal
Retirement Age; (ii) ten (10) Plan Years have elapsed from the time the
Participant commenced participation in the Plan; or (iii) the Participant
terminates his service with the Employer Notwithstanding any provision in this
Plan to the contrary, a Participant's benefits shall be distributed to him not
later than April 1 of the calendar year following the later of the calendar year
in which: (a) he attains age seventy and one half (702), (ii) for a Participant
who is not a 5% Owner and who reaches age seventy and one-half (702) prior to
December 31, 1998, if the Participant elects to defer distribution in accordance
with such rules and procedures as are determined by the Administrator he
retires, or (iii) for a Participant who is not a 5% Owner and who reaches age
seventy and one-half (702) after December 31, 1998, he retires. Alternatively,
distributions to a Participant must begin no later than April 1 following such
calendar year and must be made over the life of the Participant (or the lives of
the Participant and the Participant's designated beneficiary) or
B-2
<PAGE>
the life expectancy of the Participant (or the life expectancies of the
Participant and the Participant's designated beneficiary).
3. The first paragraph of Section 10.6 of the Plan is hereby amended,
effective January 1, 1998, to read as follows:
10.6 Timing of Distributions. If a Participant's vested account
eligible for distribution pursuant to Sections 10.1, 10.3 or 10.4 is
not and never was in excess of $5,000, the distribution will be made
as soon as practicable following the end of the calendar quarter in
which the termination occurred. If the Participant's vested Account
eligible for distribution pursuant to Sections 10.1, 10.3 or 10.4 is
or ever was in excess of $5,000, distribution will be made on the
later of (i) as soon as administratively feasible following the end of
the calendar quarter in which termination of employment occurs, or
(ii) as soon as administratively feasible following the Participant's
written request for distribution. Further, distribution to an
alternate payee pursuant to a qualified domestic relations order
(QDRO), as defined in Code Section 414(p), may be made as soon as
practicable following the alternate payee's written request for the
distribution in accordance with the terms of the QDRO. Finally, a
Participant whose vested Account is 0% shall be deemed to have
received a lump sum distribution upon termination of employment.
4. The first paragraph of Section 10.8 of the Plan is hereby amended,
effective January 1, 1998, to read as follows:
10.8 Manner of distribution and Timing of Death Distribution. The
distribution of a deceased Participant's Account will normally be made
as soon as practicable following the end of the Plan Year in which the
benefits become due if the deceased Participant's Account is not and
never was in excess of $5,000. If a deceased Participant's vested
Account eligible for distribution pursuant to Section 10.2 is or ever
was in excess of $5,000, distribution will be made on the later of (i)
as soon as practicable following the Participant's death, or (ii) as
soon as practicable following the beneficiary's written request for
distribution. Payments will be made as provided in Section 10.7. If
the Participant's surviving spouse is her beneficiary, the provisions
of the second paragraph of Section 10.7 shall apply to any
distribution to the surviving spouse.
5. In all other respects the Plan, as amended herein, is hereby
ratified and confirmed.
B-3
<PAGE>
IN WITNESS WHEREOF, Popular, Inc. has caused this agreement to be
executed upon the signature of its duly qualified officer who has hereto set his
hand as of the date first set forth above.
POPULAR, INC.
By: [Emily Arean]
Its: Vice President
B-4
<PAGE>
BANPONCE U.S.A. PROFIT SHARING/401(K) PLAN
-------------------------------------------
PLAN AMENDMENT 2
WHEREAS, Popular, Inc. (previously BanPonce Corporation), hereinafter referred
to as the "Company", has established the BanPonce U.S.A. Profit Sharing/401(k)
Plan, hereinafter referred to as the "Plan", and
WHEREAS, the Company under Article 15 of the Plan is authorized to permit
affiliated companies to adopt the Plan at any time.
NOW THEREFORE, BE IT RESOLVED, that effective as of January 1, 1998, the name of
the Plan shall be changed from the BanPonce U.S.A. Profit Sharing/401(k) Plan to
the Popular, Inc. U.S.A. Profit Sharing/401(k) Plan and all references in the
Plan to "BanPonce Corporation" shall be changed to "Popular, Inc."
FURTHER RESOLVED, that Banco Popular North America; Banco Popular, N.A. (Texas);
Popular Leasing, U.S.A.; New Banco Popular, N.A. (Florida); First State Bank of
Southern California; and Gore-Bronson Bancorp (collectively referred to as
"Adopting Employers") are authorized to adopt the Plan and the Company on behalf
of the Adopting Employers authorizes their adoption of the Plan.
FURTHER RESOLVED that the Plan is hereby amended to provide for the inclusion of
new Adopting Employers as follows:
ARTICLE 2, Section 2.1 of the Plan shall be amended effective as of January 1,
1999, by replacing the first sentence of paragraph (i) with the following
sentence:
"(i) Employee: Any person who is employed by an Employer in a participating
division as so designated by the Board excluding (i) any employees included
in Popular Cash Express cost center; (ii) any non-resident aliens, (iii)
any independent contractor, (iv) any leased employee and (v) any individual
who is included within a unit of employees covered by a collective
bargaining agreement for whom retirement benefits were the subject of good
faith bargaining, unless the collective bargaining agreement provides for
said individuals participation in this Plan."
<PAGE>
ARTICLE 3, Section 3.2 shall be amended effective as of January 1, 1999, by
adding a sentence to the end thereof to read as follows:
"An individual who is an Employee and employed by Banco Popular, North
America; Banco Popular, N.A. (Texas); Popular Leasing, U.S.A.; New Banco
Popular, N.A. (Florida); First State Bank of Southern California; and
Gore-Bronson Bancorp on January 1, 1999, shall be eligible to participate
in the Plan as of this date. In the case of an individual who was a
Participant in the Plan on December 31, 1998, he shall continue to
participate in the Plan on January 1, 1999."
ARTICLE 5, Section 5.3 shall be amended effective as of January 1, 1999, by
adding a new paragraph to the end thereof to read as follows:
"In the case of a Participant who is an employee of the New York branch of
Banco Popular de Puerto Rico on December 31, 1998, the Employer may for any
Plan Year beginning on or after January 1, 1999 and before January 1, 2003
make an additional discretionary contribution to the Trust. The amount of
such additional discretionary contribution, if any, shall be determined by
the Board in its sole discretion.
ARTICLE 5, Section 5.5 shall be amended effective as of January 1, 1999, by
adding a sentence to the end thereof to read as follows:
"The additional discretionary contributions, if any, under the last
paragraph of Section 5.3 will be allocated to all Participants who satisfy
the criteria for such contributions under Section 5.3 and either (i) are
employed by Banco Popular North America on the last day of the applicable
Plan Year and have completed at least one thousand (1,000) Hours of Service
during the Plan Year, or (ii) who terminated employment with Banco Popular
North America due to death, disability or retirement on or after Normal
Retirement Age during the Plan Year, in the ratio that each eligible
Participant's Compensation bears to all such eligible Participants'
Compensation."
ARTICLE 15, shall be amended by adding a new Section 15.6 after Section 15.5 as
set forth below and renumbering the remaining sections:
"15.6 Participation by Affiliate. At the time an Affiliate first adopts
this Plan (or, any time thereafter) the Employer will determine whether or
not to permit a transfer to this Plan of a portion of the assets of any
other defined contribution plan attributable to account balances of the
employees of such participating Affiliate. No such transfer shall be
permitted unless the Plan and or the Appendices are amended to specifically
provide for the transfer."
<PAGE>
FURTHER RESOLVED, that Section 9.2 shall provide that, notwithstanding any prior
amendments or any contrary Plan language, a Participant may only have one
outstanding loan under the Plan at any given time.
In WITNESS WHEREOF, the Employer has caused this Amendment to be executed this
30 day of April , 1999.
By: /s/ Maria Isabel Burckhart
Title: EXECUTIVE VICEPRESIDENT
Date: April 30, 1999
By:
Title:
Date:
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of our report dated March 5, 1999 relating to the
financial statements, which appears in the 1998 Annual Report to Shareholders of
Popular, Inc., which is incorporated by reference in Popular, Inc.'s Annual
Report on Form 10-K for the year ended December 31, 1998. We also consent to the
incorporation by reference in the Registration Statement of our report dated
March 29, 1999 relating to the financial statements, which appears in the Annual
Report of the Banco Popular de Puerto Rico Employees' Stock Plan (U.S.) on Form
11-K for the year ended December 31, 1997.
/s/ PRICEWATERHOUSECOOPERS LLP
PricewaterhouseCoopers LLP
San Juan, Puerto Rico
June 7, 1999
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of our report dated March 5, 1999 relating to the
financial statements, which appears in the 1998 Annual Report to Shareholders of
Popular, Inc., which is incorporated by reference in Popular, Inc.'s Annual
Report on Form 10-K for the year ended December 31, 1998. We also consent to the
incorporation by reference in the Registration Statement of our report dated
October 13, 1998 relating to the financial statements, which appears in the
Annual Report of the BanPonce U.S.A. Profit Sharing/401(k) Plan on Form 11-K for
the year ended December 31, 1997.
/s/ PRICEWATERHOUSECOOPERS LLP
PricewaterhouseCoopers LLP
San Juan, Puerto Rico
June 7, 1999
