EXHIBIT 1
POPULAR CAPITAL TRUST [ ]
_____% Cumulative Monthly Income Trust Preferred Securities,
Guaranteed to the extent set forth in the Guarantee Agreement by
POPULAR, INC.
UNDERWRITING AGREEMENT
___________, 2003
[Name of Representative]
As representative
of the several Underwriters named in Schedule 1
Hato Rey, Puerto Rico 00918
Ladies and Gentlemen:
POPULAR CAPITAL TRUST [ ], a statutory business trust created under the
Business Trust Act (the "Delaware Act") of the state of Delaware (the "Trust"),
proposes, subject to the terms and conditions stated herein, to issue and sell
to you and the other underwriters named in Schedule 1 hereto (collectively, the
"Underwriters"), for whom you are acting as the representative (the
"Representative") ____ of its ____% Cumulative Monthly Income Trust Preferred
Securities (the "Trust Preferred Securities"). The Trust Preferred Securities
shall have the terms described in the Prospectus (as defined below).
The Trust Preferred Securities shall be guaranteed by Popular, Inc.
(the "Company") to the extent set forth in the Prospectus, with respect to the
distributions and amounts payable upon liquidation and redemption, pursuant to
the Guarantee Agreement, to be dated as of the Closing Date (as defined below)
(the "Guarantee Agreement"), and to be executed and delivered by the Company and
Bank One Delaware, Inc., a Delaware corporation (the "Delaware Trustee"),
_______________, _____________, both of whom are employees or officers of or
affiliated with the Company (the "Administrative Trustees"), and Bank One Trust
Company, N.A. ("Bank One"), as "Property Trustee" and "Guarantee Trustee" for
the benefit of the holders of the Trust Preferred Securities. The proceeds from
the sale of the Trust Preferred Securities will be aggregated with the proceeds
from the sale by the Trust to the Company of the Common Securities of the Trust
(the "Common Securities") and will be used by the Trust to purchase ___% junior
subordinated debt securities (the "Debentures") issued by the Company. The Trust
Preferred Securities and the Common Securities will be issued pursuant to an
Amended and Restated Declaration of Trust and Trust Agreement (the "Trust
Agreement") among the Company and the trustees named therein (the
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"Trustees"). The Debentures will be issued pursuant to a Junior Subordinated
Indenture (the "Indenture") among the Company and Bank One, as trustee (the
"Indenture Trustee"). You have agreed to act as representative of the
underwriters (the "Underwriters") in connection with the sale of the Trust
Preferred Securities.
The Company and the Trust jointly and severally hereby confirm as
follows its agreements with the Representative and the several other
Underwriters.
1. Agreement to Sell and Purchase.
(a) On the basis of the representations, warranties and
agreements of the Company and the Trust herein contained and subject to all the
terms and conditions of this Agreement, the Trust agrees to sell to each
Underwriter and each Underwriter, severally and not jointly, agrees to purchase
from the Trust at a purchase price of $_____ per Trust Preferred Security, the
number of Trust Preferred Securities set forth opposite the name of such
Underwriter in Schedule 1 hereto, plus such additional number of Trust Preferred
Securities which such Underwriter may become obligated to purchase pursuant to
Section 9 hereof.
(b) Because the proceeds from the sale of the Trust
Preferred Securities shall be used to purchase the Debentures from the Company,
as compensation for its services hereunder, the Company will pay to the
Underwriters a nonrefundable fee in immediately available funds equal to $_____,
which shall be fully earned upon the delivery of the Trust Preferred Securities
on the Closing Date (as such term is defined below).
2. Delivery and Payment. Delivery of the Trust Preferred
Securities shall be made to the Representative for the accounts of the
Underwriters at the office of Pietrantoni Mendez & Alvarez LLP, counsel to the
Company, Banco Popular Center, Suite 1900, Hato Rey, Puerto Rico, against
payment of the purchase price by wire transfer of immediately available funds to
the bank account designated by the Company. Such payment shall be made at 10:00
a.m., New York City time, on the third full business day following the date of
this Agreement, or such other time on such other date, not later than seven
business days after the date of this Agreement, as may be agreed upon by the
Company and the Representative (such date is hereinafter referred to as the
"Closing Date"). Time shall be of the essence and delivery at the time and place
specified pursuant to this Agreement is a further condition of the obligation of
each Underwriter hereunder.
Certificates evidencing the Trust Preferred Securities shall be in
definitive form and shall be registered in such names and in such denominations
as the Representative shall request at least two business days prior to the
Closing Date by written notice to the Trust. For the purpose of expediting the
checking and packaging of certificates for the Trust Preferred Securities, the
Trust agrees to make such certificates available for inspection at least 24
hours prior to the Closing Date.
Notwithstanding the other provisions of this Section 2, if transactions
in the Trust Preferred Securities can be settled through the facilities of The
Depository Trust Company ("DTC"), payment for and delivery of the Trust
Preferred Securities on the Closing Date will be made through the
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facilities of DTC if you are a member, unless you have otherwise notified us
prior to the date specified by you, or, if you are not a member, settlement may
be made through a correspondent who is a member pursuant to instruction you may
send to us prior to such specified date.The cost of original issue tax stamps,
if any, in connection with the issuance, sale and delivery of the Trust
Preferred Securities by the Trust to the respective Underwriters shall be borne
by the Company. The Company will pay and save each Underwriter and any
subsequent holder of the Trust Preferred Securities harmless from any and all
liabilities with respect to or resulting from any failure or delay in paying
Federal, state or Commonwealth of Puerto Rico stamp and other transfer taxes, if
any, which may be payable or determined to be payable in connection with the
original issuance, sale or delivery to such Underwriter of the Trust Preferred
Securities.
3. Representations and Warranties. Each of the Trust and the
Company jointly and severally represents, warrants and covenants to, and agrees
with, each Underwriter that:
(a) The Company and the Trust, as co-registrant with the
Company, meet the requirements for use of Form S-3, and a registration statement
(Registration No. 333-________) on Form S-3 with respect to the Trust Preferred
Securities, including such amendments to such registration statement as may have
been required to the date of this Agreement, has been prepared by the Company in
conformity with the requirements of the Securities Act of 1933, as amended (the
"Act"), and the rules and regulations (the "Rules and Regulations") of the
Securities and Exchange Commission (the "Commission") thereunder, and has been
filed with the Commission and has become effective. No stop order suspending the
effectiveness of the registration statement or preventing or suspending the use
of the Prospectus or any Preliminary Prospectus (as defined below) has been
issued and, to the Company's knowledge, no proceeding for that purpose has been
instituted or threatened by the Commission. The term "Preliminary Prospectus" as
used herein means a preliminary prospectus relating to the Trust Preferred
Securities included at any time as part of the foregoing registration statement
or any amendment thereto before it became effective under the Act and any
prospectus filed with the Commission by the Company pursuant to Rule 424(a) of
the Rules and Regulations. Copies of such registration statement, any such
amendment and each related Preliminary Prospectus and all documents incorporated
by reference therein that were filed with the Commission on or prior to the date
of this Underwriting Agreement have been delivered to the Representative and its
counsel. A final prospectus relating to the Trust Preferred Securities
containing information permitted to be omitted at the time of effectiveness by
Rule 430A of the Rules and Regulations has been or will be prepared and filed
with the Commission pursuant to Rule 424(b) of the Rules and Regulations on or
before the second business day after the date hereof (or such earlier time as
may be required by the Rules and Regulations). The term "Registration Statement"
means such registration statement as amended at the time it became effective
(the "Effective Date"), including financial statements and all exhibits and any
information deemed by virtue of Rule 430A of the Rules and Regulations to be
included in such Registration Statement at the Effective Date and any prospectus
supplement filed thereafter with the Commission, and shall include the documents
incorporated by reference therein pursuant to Item 12 of Form S-3 which were
filed under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). The term "Prospectus" means, collectively, the base prospectus together
with any prospectus supplement, in the respective forms they are filed with the
Commission pursuant to Rule 424(b) of the Rules and
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Regulations. Any reference herein to the terms "amend", "amendment" or
"supplement" with respect to the Registration Statement, the Prospectus or any
Preliminary Prospectus shall be deemed to refer to and include the filing of any
document under the Exchange Act after the Effective Date, or the date of any
Preliminary Prospectus or the Prospectus, as the case may be, that is
incorporated therein by reference. For purposes of this Underwriting Agreement,
all references to the Registration Statement, the Prospectus, any Preliminary
Prospectus or any amendment or supplement thereto shall be deemed to include any
copy filed with the Commission pursuant to its Electronic Data Gathering
Analysis and Retrieval System (EDGAR), and such copy shall be identical (except
to the extent permitted by Regulation S-T) to any Prospectus delivered to the
Representative for use in connection with the offering of the Trust Preferred
Securities by the Trust.
(b) Each part of the Registration Statement, when such
part became or becomes effective, each Preliminary Prospectus, on the date of
filing thereof with the Commission, and the Prospectus and any amendments or
supplement thereto, on the date of filing thereof with the Commission and at the
Closing Date, conformed or will conform in all material respects with the
requirements of the Act, the Trust Indenture Act of 1939 (the "Trust Indenture
Act") and the Rules and Regulations; each part of the Registration Statement
(excluding any prospectus supplement with respect to an offering of securities
other than the offering of the Trust Preferred Securities contemplated hereby),
when such part became or becomes effective, did not or will not contain an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading;
each Preliminary Prospectus, on the date of filing thereof with the Commission,
and the Prospectus and any amendment or supplement thereto, on the date of
filing thereof with the Commission and at the Closing Date, did not or will not
include an untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; the foregoing shall not apply to the
statements in or omissions from any such document relating to any Underwriter in
reliance upon, and in conformity with, written information relating to such
Underwriter furnished to the Company by the Representative, or by any
Underwriter through the Representative, specifically for use in the preparation
thereof. The Company has not distributed any offering material in connection
with the offering or sale of the Trust Preferred Securities other than the
Registration Statement, any Preliminary Prospectus, the Prospectus or any other
materials, if any, permitted by the Act.
(c) The documents incorporated by reference in the
Registration Statement, the Prospectus and any amendment or supplement to such
Registration Statement or such Prospectus, when they became or become effective
under the Act or were or are filed with the Commission under the Exchange Act,
as the case may be, conformed or will conform in all material respects with the
requirements of the Act, the Trust Indenture Act, the Rules and Regulations, the
Exchange Act and the rules and regulations of the Commission thereunder (the
"Exchange Act Rules and Regulations"), as applicable.
(d) The Trust has been duly formed and is validly
existing and in good standing as a statutory trust under Delaware law with power
and authority to own its property and conduct its business as described in the
Prospectus. All of the outstanding beneficial interests of the Trust have
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been duly authorized and validly issued and are fully paid and nonassessable
undivided beneficial interests in the assets of the Trust; the holders of such
beneficial interests of the Trusts have no preemptive or other rights to acquire
Trust Preferred Securities or Common Securities.
(e) The Trust Agreement has been duly authorized; and
when the Trust Preferred Securities are delivered and paid for pursuant to this
Agreement on the Closing Date, the Trust Agreement will have been duly executed
and delivered and will constitute a valid and legally binding instrument,
enforceable in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to general equity
principles.
(f) The Guarantee Agreement has been duly authorized; and
when the Trust Preferred Securities are delivered and paid for pursuant to this
Agreement on the Closing Date, the Guarantee Agreement will have been duly
executed and delivered and will constitute a valid and legally binding
instrument enforceable in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights and to general
equity principles.
(g) The Trust Preferred Securities have been duly
authorized; when the Trust Preferred Securities are delivered and paid for
pursuant to this Agreement on the Closing Date, such Trust Preferred Securities
will (i) have been validly issued and fully paid, (ii) represent nonassessable
undivided beneficial interest in the assets of the Trust, (iii) be entitled to
the benefits set forth in the Trust Agreement and (iv) conform to the
description thereof contained in the Registration Statement, the Prospectus and
any amendment or supplement to such Registration Statement or such Prospectus;
the issuance of the Trust Preferred Securities is not subject to preemptive or
other similar rights; and the holders of the Trust Preferred Securities will be
entitled to the same limitation of personal liability extended to stockholders
of private corporations for profit incorporated under the General Corporation
Law of the State of Delaware.
(h) The Common Securities have been duly authorized; when
the Common Securities are delivered and paid for pursuant to this Agreement on
the Closing Date, such Common Securities will (i) have been validly issued and
fully paid, (ii) represent nonassessable undivided beneficial interest in the
assets of the Trust, (iii) be entitled to the benefits set forth in the Trust
Agreement and (iv) conform to the description thereof contained in the
Registration Statement, the Prospectus and any amendment or supplement to such
Registration Statement or such Prospectus; the issuance of the Common Securities
is not subject to preemptive or other similar rights; and the holders of the
Common Securities will be entitled to the same limitation of personal liability
extended to stockholders of private corporations for profit incorporated under
the General Corporation Law of the State of Delaware; and at the Closing Date,
all of the issued and outstanding Common Securities of the Trust will be
directly owned by the Company free and clear of any security interest, mortgage,
pledge, lien encumbrance, claim or equity.
(i) The only direct or indirect subsidiaries of the
Company ("Subsidiaries") that are "significant subsidiaries" as defined in Rule
405 of Regulation C of the Rules and Regulations
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under the Act (each, a "Significant Subsidiary") are Banco Popular de Puerto
Rico, a Puerto Rico corporation ("Banco Popular"), Popular International Bank,
Inc., a Puerto Rico corporation, Popular North America, Inc., a Delaware
corporation, Banco Popular North America, Inc., a New York corporation, and
Equity One, Inc., a Delaware corporation. The Company has been and, at the
Closing Date, will be duly organized and validly existing as a corporation under
the laws of the Commonwealth of Puerto Rico and is and, at the Closing Date,
will be in good standing in the Commonwealth of Puerto Rico. The Company is and
will be as of the Closing Date registered with the Board of Governors of the
Federal Reserve System (the "Federal Reserve") as a bank holding company under
the Bank Holding Company Act of 1956 (the "BHCA") and its election to be treated
as a financial holding company under the BHCA, as amended by the
Gramm-Leach-Bliley Act, is and will remain in full force and effect. Each of the
Significant Subsidiaries is and, at the Closing Date, will be a corporation duly
organized, validly existing and in good standing under the laws of its
respective jurisdiction of incorporation. Each of the Company and its
Significant Subsidiaries is and, at the Closing Date, will be duly qualified and
in good standing as a foreign corporation in each jurisdiction in which the
character or location of its properties (owned, leased or licensed) or the
nature or conduct of its business or use of its property and assets makes such
qualification necessary, except where the failure to so qualify would not have a
material adverse effect on the condition, financial or otherwise, or the
earnings, prospects or business affairs of the Company and its Subsidiaries
considered as a single enterprise (a "Material Adverse Effect").
(j) The outstanding shares of capital stock of the
Company have been duly authorized and validly issued and are fully paid and
nonassessable and are not subject to any preemptive or similar rights. The
Debentures to be issued and sold by the Company will be, upon such issuance and
payment therefore, duly authorized, valid, binding and enforceable obligations
of the Company. The Company has, and, upon completion of the sale of the
Debentures, will have, an authorized, issued and outstanding capitalization as
set forth in the Registration Statement and the Prospectus. The description of
the securities of the Company in the Registration Statement, the Preliminary
Prospectus and the Prospectus is, and at the Closing Date, will be, complete and
accurate in all respects. No holders of securities of the Company are entitled
to have such securities registered under the Registration Statement, except
where such rights have been waived.
(k) The consolidated financial statements and the related
notes of the Company included in the Registration Statement or incorporated by
reference therein and in the Prospectus present fairly the financial condition
of the Company and its Subsidiaries as of the dates indicated and the
consolidated results of operations and cash flows of the Company and its
Subsidiaries for the periods covered thereby, all in conformity with generally
accepted accounting principles ("GAAP") applied on a consistent basis throughout
the entire periods involved. PricewaterhouseCoopers LLP (the "Accountants"), who
have reported on those of such financial statements and related notes which are
audited, are independent accountants with respect to the Company and its
Subsidiaries within the meaning of the Act and the applicable and published
rules and regulations.
(l) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurance that (i) transactions are
executed in accordance with management's general or specific authorization, (ii)
transactions are recorded as necessary to permit preparation of
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financial statements in conformity with GAAP and to maintain accountability for
assets, (iii) access to assets is permitted only in accordance with management's
general or specific authorization, and (iv) the recorded accountability for
assets is compared with existing assets at reasonable intervals and appropriate
action is taken with respect to any differences.
(m) Except as set forth in the Registration Statement and
Prospectus, subsequent to the respective dates as of which information is given
in the Registration Statement and the Prospectus and prior to the Closing Date,
(i) there has not been, and will not have been, any material adverse change in
the business, properties, financial condition, net worth or results of
operations of the Company and its Subsidiaries considered as a single
enterprise, (ii) neither the Company nor any of its Significant Subsidiaries has
entered into, or will have entered into any transactions that would be
considered material to the Company and its Subsidiaries considered as a single
enterprise, other than pursuant to this Agreement, and (iii) the Company has
not, and will not have, paid or declared any dividends or other distributions of
any kind on any class of its capital stock, except for the payment or
declaration of quarterly dividends on the Company's common stock (the "Common
Stock"), and the payment of monthly dividends on the Company's preferred stock,
in each case in the ordinary course of its business.
(n) The Company and each of its Significant Subsidiaries
have good and marketable title to all properties and assets described as owned
by it in the Registration Statement, including the documents incorporated by
reference therein, free and clear of all liens, security interests,
restrictions, pledges, encumbrances, charges, equities, claims, easements,
leases and tenancies (collectively, "Encumbrances") other than those described
in the Registration Statement or in the documents incorporated by reference
therein and in the Prospectus, or those that will not materially affect the
value of such properties and assets or will not interfere with the use made and
proposed to be made of such properties and assets. The Company and each of its
Significant Subsidiaries have valid, subsisting and enforceable leases for the
properties and assets described as leased by them in the Registration Statement,
including the documents incorporated by reference therein, free and clear of all
Encumbrances, other than those described in the Registration Statement or in the
documents incorporated by reference therein and in the Prospectus, or those that
will not interfere with the use made and proposed to be made of such properties
and assets.
(o) Neither the Trust nor the Company is and, after
giving effect to the offering and sale of the Trust Preferred Securities and the
Debentures and the application of the proceeds thereof as described in the
Prospectus, neither of them will be, required to be registered under the
Investment Company Act of 1940, as amended (the "Investment Company Act").
(p) Except as set forth or incorporated by reference in
the Registration Statement and the Prospectus, there are no actions, suits,
arbitrations, claims, governmental or other proceedings (formal or informal), or
investigations pending or threatened against or affecting the Company or any of
its Significant Subsidiaries, or any directors, officers or shareholders of the
Company or any of its Significant Subsidiaries in their respective capacities as
such, or any of the properties or assets owned or leased by the Company or any
of its Significant Subsidiaries, before or by any Federal, state or Commonwealth
of Puerto Rico court, commission, regulatory board,
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administrative agency or other governmental body, domestic or foreign
(collectively, a "Governmental Body"), wherein an unfavorable ruling, decision
or finding would adversely affect the business, prospects, financial condition,
net worth or results of operations of the Company and its Subsidiaries
considered as a single enterprise and would be required to be disclosed in the
Registration Statement and Prospectus. Neither the Company nor any Significant
Subsidiary is in violation of, or in default with respect to, any law, rule, or
regulation, or any order, judgment, or decree, except as described in the
Prospectus or such as in the aggregate do not now have and can reasonably be
expected in the future not to have a material adverse effect upon the
operations, business, properties, or assets of the Company and its Subsidiaries
considered as a single enterprise; nor is the Company or any Significant
Subsidiary presently required under any order, judgment or decree to take any
action in order to avoid any such violation or default, except as described in
the Prospectus.
(q) The Company and each of its Significant Subsidiaries
possess and, at the Closing Date, will possess adequate governmental permits,
consents, orders, approvals, franchises, certificates and other authorizations
(collectively, "Licenses") necessary to carry on their respective businesses and
own or lease their respective properties as contemplated in the Registration
Statement and Prospectus. The Company and each of its Significant Subsidiaries
have and, at the Closing Date, will have complied in all material respects with
all laws, regulations and orders applicable to it or its business, assets and
properties, except for such violations, individually or in the aggregate, which
are not reasonably expected to have a material adverse effect upon the
operations, business, properties or assets of the Company and its Significant
Subsidiaries considered as a single enterprise. Neither the Company nor any of
its Significant Subsidiaries is, nor, at the Closing Date, will be in default
(nor has any event occurred which, with notice or lapse of time or both, would
constitute a default) in the due performance and observation of any term,
covenant or condition of any indenture, mortgage, deed of trust, voting trust
agreement, loan agreement, bond, debenture, note agreement or other evidence of
indebtedness, lease, contract or other agreement or instrument (collectively, a
"contract or other agreement") to which they are a party or by which their
respective properties are bound or affected, the violation of which would
individually or in the aggregate have a material adverse effect on the
condition, financial or otherwise, or the earnings, prospects or business
affairs of the Company and its Subsidiaries considered as a single enterprise.
There are no governmental proceedings or actions pending or threatened for the
purpose of suspending, modifying or revoking any License held by the Company or
any of its Significant Subsidiaries, except where such suspension, modification
or revocation would not individually or in the aggregate have a material adverse
effect on the condition, financial or otherwise, or the earnings, prospects or
business affairs of the Company and its Subsidiaries considered as a single
enterprise.
(r) No consent, approval, authorization or order of, or
any filing or declaration with, any Governmental Body is required for the
consummation of the transactions contemplated by this Agreement or in connection
with the issuance and sale of the Trust Preferred Securities by the Trust or in
connection with the issuance and sale of the Debentures by the Company, except
such as have been obtained and such as may be required under state or
Commonwealth of Puerto Rico securities or blue sky laws or the bylaws and rules
of the National Association of Securities Dealers, Inc. (the "NASD") in
connection with the purchase and distribution by the Underwriters of the Trust
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Preferred Securities to be sold hereby.
(s) Both the Trust and the Company have full power
(corporate and other) and authority to enter into this Agreement and to carry
out all the terms and provisions hereof to be carried out by it. This Agreement
has been duly authorized, executed and delivered by the Trust and the Company
and constitutes a valid and binding agreement of each of them and is enforceable
against each of them in accordance with the terms hereof, except as rights to
indemnity and contribution may be limited by federal, state or Commonwealth of
Puerto Rico securities laws or the public policy underlying such laws. Except as
disclosed in the Registration Statement and the Prospectus, the execution,
delivery and the performance of this Agreement and the consummation of the
transactions contemplated hereby will not result in the creation or imposition
of any Encumbrance upon any of the properties or assets of the Trust, the
Company or any of the Significant Subsidiaries pursuant to the terms or
provisions of, or result in a breach or violation of or conflict with any of the
terms or provisions of, or constitute a default under, or give any other party a
right to terminate any of its obligations under, or result in the acceleration
of any obligation under, (i) the Trust Agreement or the Certificate of
Incorporation or By-laws of the Company or any Significant Subsidiary, in each
case as amended, or (ii) any contract or other agreement to which the Trust or
the Company or any of the Significant Subsidiaries is a party or by which it or
any of their respective assets or properties are bound or affected, the
violation of which, in the case of the Company and the Significant Subsidiaries,
would individually or in the aggregate have a material adverse effect on the
condition, financial or otherwise, or the earnings, prospects or business
affairs of the Company and its Subsidiaries considered as a single enterprise,
or (iii) any judgment, ruling, decree, order, law, statute, rule or regulation
of any Governmental Body applicable to the Trust, the Company or any of the
Significant Subsidiaries or their respective businesses or properties, the
violation of which, in the case of the Company and the Significant Subsidiaries,
would individually or in the aggregate have a material adverse effect on the
financial condition or the earnings, prospects or business affairs of the
Company and its Subsidiaries considered as a single enterprise.
(t) No statement, representation, or warranty made by the
Trust or by the Company in this Agreement or made in any certificate or document
required by this Agreement to be delivered to the Representative was or will be,
when made, inaccurate, untrue or incorrect in any material respect. Each
certificate signed by an officer of the Company and delivered to the
Representative or counsel for the Underwriters shall be deemed to be a
representation and warranty by the Company to each Underwriter as to the matters
covered thereby.
(u) Neither the Trust, the Company nor any of their
directors, officers or affiliates has taken, nor will he, she or it take,
directly or indirectly, any action designed, or which might reasonably be
expected in the future, to cause or result in, under the Act or otherwise, or
which has constituted, stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the Trust Preferred
Securities or otherwise.
(v) Neither the Company nor any of its Significant
Subsidiaries is involved in any collective labor dispute with its employees nor
is any such dispute threatened or imminent.
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(w) Neither the Trust, the Company nor any of its
Significant Subsidiaries nor, to their best knowledge, any employee or agent of
the Trust, the Company or any Significant Subsidiary has made any payment of
funds of the Trust, the Company or any Significant Subsidiary or received or
retained any payment of funds of the Trust, the Company or any Significant
Subsidiary in violation of any law, rule or regulation, which payment, receipt
or retention of funds is of a character required to be disclosed in the
Prospectus.
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(x) The business, operations and facilities of the Trust,
the Company and its Significant Subsidiaries have been and are being conducted
in compliance with all applicable laws, ordinances, rules, regulations,
licenses, permits, approvals, plans, authorizations or requirements relating to
occupational safety and health, or pollution, or protection of health or the
environment (including, without limitation, those relating to emissions,
discharges, releases or threatened releases of pollutants, contaminants or
hazardous or toxic substances, materials or wastes into ambient air, surface
water, groundwater or land, or relating to the manufacture, processing,
distribution, use, treatment storage, disposal, transport or handling of
chemical substances, pollutants, contaminants or hazardous or toxic substances,
materials or wastes, whether solid, gaseous or liquid in nature) of any
governmental department, commission, board, bureau, agency or instrumentality of
the United States, any state, or the Commonwealth of Puerto Rico or any
political subdivision thereof, and all applicable judicial or administrative
agency or regulatory decrees, awards, judgments and orders relating thereto; and
neither the Company nor any of its Significant Subsidiaries has received any
notice from any governmental instrumentality or any third party alleging any
violation thereof or liability thereunder (including, without limitation,
liability for costs of investigating or remediating sites containing hazardous
substances or damages to natural resources), except where failure to so comply
would not have a material adverse effect on the financial condition, or the
earnings or business affairs of the Company and its Subsidiaries considered as a
single enterprise.
(y) The Trust, the Company and each of its Significant
Subsidiaries has filed all foreign, federal, state and local tax returns that
are required to be filed or has requested extensions thereof and has paid all
taxes required to be paid by it and any other assessment, fine or penalty levied
against it, to the extent that any of the foregoing is due and payable, except,
in the case of the Company and each of its Significant Subsidiaries, for any
failure to file that would not have a material adverse effect on the financial
condition, or the earnings or business affairs of the Company and its
Subsidiaries considered as a single enterprise.
(z) The Company and the Trust meet the requirements for
use of Form S-3 under the Rules and Regulations and the use of Rule 415 under
the Rules and Regulations.
(aa) The deposit accounts of Banco Popular, and of each of
the other Significant Subsidiaries of the Company that are depository
institutions, are insured by the Bank Insurance Fund (the "BIF") of the Federal
Deposit Insurance Corporation ("FDIC") to the legal maximum, and no proceeding
for the termination or revocation of such insurance is pending or threatened.
Banco Popular is a member in good standing of the Federal Reserve Bank of New
York and of the Federal Home Loan Bank of New York.
(bb) Neither of the Trust, the Company nor any of its
Significant Subsidiaries or any of their respective directors or officers is
subject to any order or directive of, or party to any agreement with, any
regulatory agency having jurisdiction with respect to its business or
operations, except as disclosed in the Prospectus and except, in the case of the
Company and its Significant Subsidiaries, for any such order, directive or
agreement that is not material to the Company and its Subsidiaries considered as
a single enterprise.
11
(cc) The Company has derived more than 20% of its gross
income from Puerto Rico sources on an annual basis since its incorporation in
accordance with the applicable sourcing rules under the Puerto Rico Internal
Revenue Code of 1994, as amended.
(dd) The Company and each Subsidiary has fulfilled its
respective obligations, if any, under the minimum funding standards of Section
302 of the United States Employee Retirement Income Security Act of 1974
("ERISA") and the regulations and published interpretations thereunder with
respect to each "plan"(as defined in Section 3(3) of ERISA and such regulations
and published interpretations) in which employees of the Company or any
Subsidiary are eligible to participate and each such plan is in compliance with
presently applicable provisions of ERISA and such regulations and published
interpretations, except for any failure to fulfill any such obligations, or
failure to comply, that singly or in the aggregate would not have a material
adverse effect upon the operations, business, properties, or assets of the
Company and its Subsidiaries considered as a single enterprise. None of the
Company or any Subsidiaries has incurred any unpaid liability to the Pension
Benefit Guaranty Corporation (other than for payment of premiums in the ordinary
course) or to any plan under Title IV of ERISA, except for any such liability
that would not have a material adverse effect upon the operations, business,
properties, or assets of the Company and its Subsidiaries considered as a single
enterprise.
(ee) The Company is not a "passive foreign investment
company" ("PFIC") within the meaning of Section 1296 of the United States
Internal Revenue Code of 1986, as amended, and does not anticipate that it will
become a PFIC in the foreseeable future.
(ff) The Company is not a party to any agreement or order
of any governmental entity or court that, as of the date hereof, and assuming no
material adverse change to the Company's financial condition, restricts its
ability to pay interest on a monthly basis on the Debentures or restricts the
ability of the Trust to make monthly distributions on the Trust Preferred
Securities.
(gg) The Trust is not a party to any agreement and has not
conducted any activities other than those incidental to its organization and to
the issuance of the Trust Preferred Securities and the Common Securities, and is
not subject to any order of any court or other governmental entity.
4. Agreements of the Company and the Trust. Each of the Trust and
the Company, jointly and severally covenants and agrees with each of the several
Underwriters as follows:
(a) If a Prospectus Supplement has not been filed as
contemplated by Section 3(a) hereof, the Company and the Trust will cause the
Prospectus Supplement to be filed as contemplated by Section 3(a) hereof (but
only if the Representative has not reasonably objected thereto by notice to the
Company and the Trust after having been furnished a copy within a reasonable
time prior to filing) and will notify the Representative promptly of such
filing. The Company and the Trust will not during such period as the Prospectus
is required by law to be delivered in connection with sales of the Trust
Preferred Securities by any Underwriter or dealer (the "Prospectus Delivery
Period"), file any amendment or supplement to the Registration Statement or the
Prospectus, unless a copy thereof shall first have been submitted to the
Representative within a reasonable period of time prior
12
to the filing thereof and the Representative shall not have objected thereto in
good faith.
(b) Each of the Company and the Trust will use its best
efforts to cause the Registration Statement to remain effective through the
completion of the Underwriters' distribution of the Trust Preferred Securities,
and will notify the Representative promptly, and will confirm such advice in
writing, (i) of the preparation and filing (subject to Section 4(a)) of any
post-effective amendment to the Registration Statement and when any such
post-effective amendment becomes effective, (ii) of any request by the
Commission for amendments or supplements to the Registration Statement or the
Prospectus or for additional information, (iii) of the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement or the initiation of any proceedings for that purpose or the threat
thereof, (iv) of the suspension of the qualification or registration of the
Trust Preferred Securities for offering or sale in any jurisdiction, or of the
initiation or threat of any proceeding for any such purpose; (v) of the
happening of any event during the Prospectus Delivery Period that in the
judgment of the Company makes any statement made in the Registration Statement
or the Prospectus untrue or that requires the making of any changes in the
Registration Statement or the Prospectus in order to make the statements
therein, in light of the circumstances in which they are made, not misleading
and (vi) of the receipt by the Company or any representative or attorney of the
Company of any other communication from the Commission relating to the Company,
the Registration Statement, any Preliminary Prospectus or the Prospectus. If at
any time the Commission or any jurisdiction shall threaten to issue, or shall
issue, any order suspending the effectiveness of the Registration Statement or
suspending the qualification or registration of the Trust Preferred Securities
for sale in any jurisdiction, the Company and the Trust will make every
reasonable effort to prevent the issuance of such order and, if such an order
should be issued, to obtain the withdrawal of such order at the earliest
possible moment. Each of the Company and the Trust will use its best efforts to
comply with the provisions of and make all requisite filings with the Commission
pursuant to Rule 430A and to notify the Representative promptly of all such
filings.
(c) If, at any time when a Prospectus relating to the
Trust Preferred Securities is required to be delivered under the Act, any event
occurs as a result of which, in the judgment of the Company or the Underwriters,
the Prospectus, as then amended or supplemented, would include any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading, or the Registration Statement, as then amended
or supplemented, would include any untrue statement of a material fact or omit
to state a material fact necessary to make the statements therein not
misleading, or if for any other reason it is necessary at any time to amend or
supplement the Prospectus or the Registration Statement to comply with the Act
or the Rules and Regulations, the Trust and the Company will promptly notify the
Representative thereof and, subject to Section 4(b) hereof, will prepare and
file with the Commission, at the Company's expense, an amendment to the
Registration Statement or an amendment or supplement to the Prospectus that
corrects such statement or omission or effects such compliance.
(d) The Company will furnish to the Representative,
without charge, two signed copies of the Registration Statement and of any
post-effective amendment thereto, including
13
financial statements and schedules, and all exhibits thereto and will furnish to
the Representative, without charge, for transmittal to each of the other
Underwriters, copies of the Registration Statement and any post-effective
amendment thereto, including financial statements and schedules but without
exhibits.
(e) The Company will comply with all the provisions of
all undertakings contained in the Registration Statement.
(f) During the Prospectus Delivery Period, the Company
will promptly furnish to the Underwriters, without charge, as many copies of the
Prospectus (containing the Prospectus Supplement) and any amendment or
supplement thereto as the Underwriters may from time to time reasonably request.
The Company consents to the use of the Prospectus, as amended or supplemented
from time to time, by the Underwriters and by all dealers to whom the Trust
Preferred Securities may be sold, both in connection with the offering or sale
of the Trust Preferred Securities and, thereafter, during the Prospectus
Delivery Period. If during the Prospectus Delivery Period any event shall occur
which in the judgment of the Company or the Underwriters should be set forth in
the Prospectus in order to make any statement therein, in the light of the
circumstances under which it was made, not misleading, or if, in the judgment of
the Company or the Underwriters, it is necessary to supplement or amend the
Prospectus to comply with law, the Company will forthwith prepare and duly file
with the Commission an appropriate supplement or amendment thereto. Except as
required by the Exchange Act or the Exchange Act Rules and Regulations, the
Company shall not file any document under the Exchange Act to which the
Representative reasonably objects before the termination of the Prospectus
Delivery Period if such document would be deemed to be incorporated by reference
into the Prospectus.
(g) Prior to any public offering of the Trust Preferred
Securities by the Underwriters, the Trust and the Company will cooperate with
the Representative and its counsel in connection with the registration or
qualification of the Trust Preferred Securities for offer and sale under the
securities or blue sky laws of such jurisdictions as the Representative may
reasonably request; provided, that in no event shall the Company be obligated to
qualify to do business in any jurisdiction where it is not now so qualified or
to take any action which would subject it to general service of process in any
jurisdiction where it is not now so subject.
(h) The Company will furnish to the Representative and
each other Underwriter who may so request copies of such financial statements
and other periodic and special reports as the Company may from time to time
distribute generally to the holders of any class of its capital stock, and will
furnish to the Representative and each other Underwriter who may so request a
copy of each annual or other report it shall be required to file with the
Commission.
(i) The Company will make generally available to its
security holders as soon as practicable, but not later than 90 days after the
close of the period covered thereby, an earnings statement (in form complying
with the provisions of Section 11(a) of the Act and Rule 158 of the Rules and
Regulations) covering a twelve-month period beginning not later than the first
day of the Company's fiscal quarter next following the "effective date" (as
defined in said Rule 158) of the
14
Registration Statement.
(j) The Trust and the Company will apply the net proceeds
from the offering and sale of the Trust Preferred Securities in the manner set
forth in the Prospectus under "Use of Proceeds".
(k) The Trust and the Company will not at any time,
directly or indirectly, take any action intended, or which might reasonably be
expected, to cause or result in, or which will constitute, stabilization of the
price of the shares of Trust Preferred Securities to facilitate the sale or
resale of any of the Trust Preferred Securities.
(l) Until the 30th business day following the Closing
Date or such earlier time as you may notify the Trust or the Company, neither
the Company nor any entity controlled by it will, without the consent of the
Representative, publicly offer or sell, or announce the public offering of, any
debt securities within the Commonwealth of Puerto Rico.
5. Expenses.
(a) Whether or not the transactions contemplated by this
Agreement are consummated or this Agreement is terminated, the Company will pay,
or reimburse if paid by the Representative, all costs and expenses incidental to
the performance by the Trust of its obligations under this Agreement, including,
but not limited to, costs and expenses of or relating to (i) the preparation,
printing and filing by the Company of the Registration Statement and exhibits
thereto, each Preliminary Prospectus prior to or during the period specified in
the first sentence of Section 4(f) but not exceeding nine months after the
Effective Date, the Prospectus and any amendment or supplement to the
Registration Statement or the Prospectus, (ii) the preparation and delivery of
certificates representing the Trust Preferred Securities, (iii) furnishing
(including costs of shipping and mailing) such copies of the Registration
Statement, the Prospectus and any Preliminary Prospectus, and all amendments and
supplements thereto, as may be requested for use in connection with the offering
and sale of the Trust Preferred Securities by the Underwriters or by dealers to
whom Trust Preferred Securities may be sold, (iv) the filing fees and
out-of-pocket expenses relating to such filings for any filings required to be
made by the Underwriters with the NASD, (v) the registration or qualification of
the Trust Preferred Securities for offer and sale under the securities or blue
sky laws of such jurisdictions designated pursuant to Section 4(g) and the
preparation and printing of preliminary, supplemental and final blue sky
memoranda, (vi) counsel and accountants to the Company and counsel to the
Representative, and (vii) the transfer agent for the Trust Preferred Securities.
The Company will also pay all fees and expenses of the Debenture Trustee,
including the fees and disbursements of counsel for the Debenture Trustee in
connection with the Indenture and the Debentures; the fees and expenses of the
Property Trustee and the Delaware Trustee, including the fees and disbursements
of counsel for the Property Trustee and the Delaware Trustee in connection with
the Certificate of Trust filed with the Delaware Secretary of State with respect
to the Trust (the "Certificate of Trust") and the Trust Agreement; and the fees
and expenses of the Guarantee Trustee, including the fees and disbursements of
counsel for the Guarantee Trustee in connection with the Guarantee and the
Guarantee Agreement.
15
(b) If the transactions contemplated by this Agreement
are not consummated or if this Agreement is terminated by the Company or the
Trust pursuant to any of the provisions hereof, the Company will reimburse the
Representative for all of their accountable out-of-pocket fees and expenses
(including the fees, disbursements and other charges of their counsel) incurred
by them in connection herewith.
6. Conditions of the Obligations of the Underwriters. The
obligations of the Underwriters to purchase the Trust Preferred Securities shall
be subject to the accuracy of the representations and warranties on the part of
the Trust and the Company contained herein as of the date hereof, as of the date
of the effectiveness of any amendment to the Registration Statement filed after
the date hereof and prior to the Closing Date (including the filing of any
document incorporated by reference therein) and as of the Closing Date, to the
accuracy of the statements of the Trust and the Company made in any certificates
pursuant to the provisions hereof, to the performance by the Trust and the
Company of their obligations hereunder and to the following additional
conditions:
(a) All filings required under Rule 424 and 430A of the
Rules and Regulations to be made by the Company or the Trust prior to the
Closing shall have been made by the Company or the Trust, as the case may be.
(b) (i) No stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall be pending or threatened by the Commission, (ii) no order
suspending the effectiveness of the Registration Statement or the qualification
or registration of the Trust Preferred Securities under the securities or blue
sky laws of any jurisdiction shall be in effect, and no proceeding for such
purpose shall be pending before or threatened or contemplated by the Commission
or the authorities of any such jurisdiction, (iii) any request for additional
information on the part of the staff of the Commission or any such authorities
shall have been complied with to the satisfaction of the staff of the Commission
or such authorities, and (iv) after the date hereof no amendment or supplement
to the Registration Statement or the Prospectus shall have been filed unless a
copy thereof was first submitted to the Representative and the Representative
did not object thereto in good faith, and the Representative shall have received
certificates, dated the Closing Date and signed by the Chief Executive Officer,
the President or any Senior Executive Vice President of the Company and the
Chief Financial Officer, the Treasurer or the Chief Accounting Officer of the
Company (who may, as to proceedings threatened, rely upon the best of their
information and belief), to the effect of the foregoing clauses (i), (ii) and
(iii).
(c) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, (i) there shall not have
been a material adverse change in the general affairs, business, properties,
management, financial condition or results of operations of the Trust, or of the
Company and its Subsidiaries considered as a single enterprise, whether or not
arising from transactions in the ordinary course of business, and (ii) the
Trust, or the Company and its Subsidiaries considered as a single enterprise,
shall not have sustained any material loss or interference with its business,
assets or properties from fire, explosion, flood or other casualty, or from any
labor dispute or any court or legislative or other governmental action, order or
decree.
16
(d) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, there shall have been no
litigation or other proceeding instituted against the Trust, the Company or any
Significant Subsidiary, or any of their officers, directors or shareholders in
their capacities as such, or any of their assets or properties, before or by any
Governmental Body in which litigation or proceeding, in the case of the Company
and its Significant Subsidiaries, an unfavorable ruling, decision or finding
would materially and adversely affect the business, properties, financial
condition, net worth or results of operations of the Company and its
Subsidiaries considered as a single enterprise.
(e) Each of the representations and warranties of the
Trust and the Company contained herein shall be true and correct at the Closing
Date as if made on such date, and all covenants and agreements herein contained
to be performed on the part of the Trust or the Company and all conditions
herein contained to be fulfilled or complied with by the Trust or the Company at
or prior to the Closing Date shall have been fully performed, fulfilled or
complied with.
(f) The Representative shall have received opinions,
dated the Closing Date from Pietrantoni Mendez & Alvarez, LLP, counsel for the
Company, and Brunilda Santos de Alvarez, General Counsel of the Company, to the
following effect:
(A) in the case of the opinion from Pietrantoni
Mendez & Alvarez, LLP:
(i) The Company has been duly organized
and is validly existing as a corporation under the laws of the Commonwealth of
Puerto Rico and is in good standing with the Commonwealth of Puerto Rico; Banco
Popular is a corporation duly organized, validly existing and in good standing
under the laws of the Commonwealth of Puerto Rico and is in good standing with
the Commonwealth of Puerto Rico;
(ii) The Registration Statement is
effective under the Act; any required filing of the Prospectus Supplement
pursuant to Rule 424(b) has been made in the manner and within the time period
required by Rule 424(b); and to the best knowledge of such counsel, no stop
order suspending the effectiveness of the Registration Statement or any
amendment thereto and no order directed at any document incorporated by
reference in the Registration Statement or any amendment thereto has been
issued, and no proceedings for that purpose have been instituted or are pending
or are threatened or contemplated under the Act;
(iii) The Registration Statement and the
Prospectus, as of their respective dates, appeared on their face to be
appropriately responsive, in all material respects (other than the documents
incorporated therein by reference and not including the financial statements,
schedules and other financial data contained therein, as to which such counsel
need not express any opinion), with the requirements of the Act and the related
Rules and Regulations thereunder;
(iv) The descriptions contained and
summarized in the Registration Statement or the Prospectus, or incorporated
therein by reference, are accurate and fairly represent in
17
all material respects the information required to be shown in the Registration
Statement and Prospectus by the Act and the Rules and Regulations; and the
statements set forth under the headings "Description of Junior Subordinated Debt
Securities", "Description of Trust Preferred Securities", "Description of
Guarantees", "Relationship Among the Trust Preferred Securities, the Junior
Subordinated Debt Securities and the Guarantees," and "Plan of Distribution",
insofar as such statements constitute a summary of the legal matters, documents
or proceedings referred to therein, provide an accurate summary of such legal
matters, documents and proceedings;
(v) The Company has full legal right,
power, and authority to enter into this Agreement and to consummate the
transactions provided for herein; and this Agreement has been duly authorized,
executed and delivered by the Company;
(vi) The Indenture has been duly
authorized, executed and delivered by the Company, has been duly qualified under
the Trust Indenture Act, as amended, and (assuming the Indenture has been duly
authorized, executed and delivered by the Debenture Trustee) constitutes a valid
and legally binding instrument enforceable against the Company in accordance
with its terms (subject, as to enforcement of remedies, to applicable
bankruptcy, reorganization, insolvency, moratorium or other laws affecting
creditors' rights generally from time to time in effect and subject to general
equity principles; and the Debentures have been duly authorized and executed by
the Company and, when authenticated in accordance with the provisions of the
Indenture and delivered to and paid for by the Trust, the Debentures will
constitute valid and legally binding obligations of the Company enforceable
against the Company in accordance with their terms and entitled to the benefits
of the Indenture, subject, as to enforcement of remedies, to applicable
bankruptcy, reorganization, insolvency, moratorium or other laws affecting
creditors' rights generally from time to time in effect and subject to general
equity principles;
(vii) The Guarantee Agreement has been
duly authorized, executed and delivered by the Company, and (assuming the
Guarantee Agreement has been duly authorized, executed and delivered by the
Guarantee Trustee) constitutes a valid and legally binding instrument,
enforceable against the Company in accordance with its terms, subject, as to
enforcement of remedies, to applicable bankruptcy, reorganization, insolvency,
moratorium or other laws affecting creditors' rights generally from time to time
in effect and subject to general equity principles; and the Trust Agreement has
been duly authorized, executed and delivered by the Company and each of the
Administrative Trustees.
(viii) None of the Company's execution or
delivery of this Agreement, its performance hereof, its consummation of the
transactions contemplated herein or its application of the net proceeds of the
offering in the manner set forth under the caption "Use of Proceeds" conflicts
or will conflict with or results or will result in any breach or violation of
any of the terms or provisions of, or constitutes or will constitute a default
under, or results or will result in the creation or imposition of any
Encumbrance upon, any property or assets of the Company pursuant to (A) the
terms of the Certificate of Incorporation or By-laws of the Company, in each
case as amended; or (B) any statute, rule or regulation of any Governmental Body
having jurisdiction over
18
the Company or any of its activities or properties; and no consent, approval,
authorization or order of any Governmental Body has been or is required for the
Company's performance of this Agreement, the Guarantee Agreement, the Indenture,
the Debentures, or the Trust Agreement, or the consummation of the transactions
contemplated hereby, except such as have been obtained under the Act or may be
required under state or Commonwealth of Puerto Rico securities or blue sky laws
in connection with the purchase and distribution by the Underwriters of the
Trust Preferred Securities;
(ix) Neither the Company nor the Trust
are required to be registered as an investment company under the Investment
Company Act; and
(x) The deposit accounts of Banco
Popular are insured by the BIF of the FDIC to the legal maximum, and to such
counsel's knowledge no proceeding for the termination or revocation of such
insurance is pending or threatened. Banco Popular is a member of the Federal
Reserve Bank of New York and of the Federal Home Loan Bank of New York.
In addition, such counsel shall state that in the course of the
preparation of the Prospectus, such counsel has participated in conferences with
officers and representatives of the Company and with the Accountants, at which
conferences such counsel made inquiries of such officers, representatives and
Accountants and discussed the contents of the Prospectus and, on the basis of
the foregoing and of the experience such counsel has gained through its practice
under the Act, nothing has come to such counsel's attention that causes such
counsel to believe that the Registration Statement as of the date it became
effective or the Prospectus as of its date and as of the Closing Date contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading or that the Prospectus as of the date hereof and as of the Closing
Date, contained any untrue statement of a material fact or omitted or omits to
state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading (it being understood that such counsel need not express any
opinion with respect to the financial statements, schedules and other financial
data included in the Prospectus). Such counsel may state that they make no
representation that they have independently verified the accuracy or
completeness of the statements contained in the Registration Statement and
Prospectus.
(B) in the case of the opinion from Brunilda Santos
de Alvarez:
(i) The Company has been duly organized
and is validly existing as a corporation under the laws of the Commonwealth of
Puerto Rico and is in good standing with the Commonwealth of Puerto Rico. Each
of Banco Popular and each of the other Significant Subsidiaries is a corporation
duly organized, validly existing and in good standing under the laws of its
respective jurisdiction of incorporation. Each of the Company, Banco Popular,
and each of the other Significant Subsidiaries is duly qualified and in good
standing as a foreign corporation in each jurisdiction in which the character or
location of its properties (owned, leased or licensed) or the nature or conduct
of its business or use of its property and assets makes such qualification
necessary, except where the failure to so qualify would not have a material
adverse effect on the financial condition, or the earnings or business affairs
of the Company and its Subsidiaries considered as a
19
single enterprise;
(ii) All of the outstanding shares of
capital stock of each Significant Subsidiary have been duly and validly
authorized and issued and are fully paid and nonassessable, and are owned
directly or indirectly by the Company free and clear of any perfected security
interest and, to the knowledge of such counsel, any other security interests,
claims, liens or encumbrances;
(iii) The Company has an authorized
capitalization as set forth in the Prospectus; the Company has duly authorized
the issuance and sale of the Debentures to be sold by it to the Trust and has
duly authorized the creation of the Trust and the issuance and sale by the Trust
of the Trust Preferred Securities to be sold by it hereunder; such Debentures
and Trust Preferred Securities, when issued by the Company and the Trust,
respectively, will be validly issued, fully paid and nonassessable legal, valid
and binding obligators of the Company and the Trust, respectively, enforceable
in accordance with their terms, will conform in all material respects to the
descriptions thereof contained in the Prospectus, and will not be subject to any
preemptive, subscription or other similar rights; and no holders of securities
of the Company are entitled to have such securities registered under the
Registration Statement, except for holders who have waived any such registration
rights;
(iv) The Guarantee Agreement has been
duly authorized, executed and delivered by the Company, and (assuming the
Guarantee Agreement has been duly authorized, executed and delivered by the
Guarantee Trustee) constitutes a valid and legally binding instrument,
enforceable against the Company in accordance with its terms, subject, as to
enforcement of remedies, to applicable bankruptcy, reorganization, insolvency,
moratorium or other laws affecting creditors' rights generally from time to time
in effect and subject to general equity principles; and the Trust Agreement has
been duly authorized, executed and delivered by the Company and each of the
Administrative Trustees;
(v) To the knowledge of such counsel,
there are no contracts or documents which are required by the Act to be
described in the Registration Statement or the Prospectus or to be filed as
exhibits to the Registration Statement which are not filed or incorporated
therein by reference as required by the Act and the Rules and Regulations;
(vi) To the knowledge of such counsel,
there is not pending or threatened against the Trust, the Company or any of its
Significant Subsidiaries, any legal action or proceeding, suit, arbitration,
claim, or governmental or other proceeding (informal or formal) or investigation
before or by any Governmental Body, of a character required to be disclosed in
the Registration Statement or the Prospectus which is not so disclosed therein
or in the materials incorporated by reference therein, and to the knowledge of
such counsel, no such proceedings have been threatened against the Trust, the
Company or any of its Significant Subsidiaries, or any of their respective
assets or properties. To the knowledge of such counsel, neither the Trust, the
Company, nor any Significant Subsidiary is in violation of, or in default with
respect to, any law, rule, or regulation, or any order, judgment or decree,
except as described in the Registration Statement or
20
Prospectus or in the materials incorporated by reference therein, or, in the
case of the Company and its Significant Subsidiaries, such as in the aggregate
do not now have and can reasonably be expected in the future not to have a
material adverse effect upon the operations, business, properties, or assets of
the Company and its Subsidiaries considered as a single enterprise; nor is the
Trust, the Company, or any Significant Subsidiary presently required under any
order, judgment or decree to take any action in order to avoid any such
violation or default;
(vii) Each of the Company and the Trust
has full legal right, power, and authority to enter into this Agreement and to
consummate the transactions provided for herein; and this Agreement has been
duly authorized, executed and delivered by the Company and the Trust;
(viii) None of the Company's or the
Trust's execution or delivery of this Agreement, its performance hereof, its
consummation of the transactions contemplated herein or its application of the
net proceeds of the offering in the manner set forth under the caption "Use of
Proceeds" conflicts or will conflict with or results or will result in any
breach or violation of any of the terms or provisions of, or constitute a
default under, or result in the creation or imposition of any Encumbrance upon,
any property or assets of the Trust, the Company, or any of its Significant
Subsidiaries, pursuant to (A) the terms of Trust Agreement or the Certificate of
Incorporation or By-laws of the Company or any Significant Subsidiary, in each
case as amended; (B) the terms of any contract or other agreement to which the
Trust, the Company or any Significant Subsidiary is a party or by which any of
them is or may be bound or to which any of their properties is or may be subject
and of which such counsel has knowledge; (C) any statute, rule or regulation of
any Governmental Body having jurisdiction over the Trust, the Company or any
Significant Subsidiary or any of their activities or properties; or (D) the
terms of any judgment, decree or order of any court, arbitrator or Governmental
Body having such jurisdiction and of which such counsel has knowledge, the
breach of which, in the case of the Company and the Significant Subsidiaries,
would result in a material adverse effect on the financial condition of the
Company and its Subsidiaries, considered as a single enterprise; and no consent,
approval, authorization or order of any Governmental Body has been or is
required for the Company's or the Trust's performance of this Agreement, the
Guarantee Agreement, the Indenture, the Debentures or the Trust Agreement, or
the consummation of the transactions contemplated thereby, except such as have
been obtained under the Act or may be required under state or Commonwealth of
Puerto Rico securities or blue sky laws in connection with the purchase and
distribution by the Underwriters of the Trust Preferred Securities;
(ix) To such counsel's knowledge, the
conduct of the respective businesses of the Trust, the Company and its
Significant Subsidiaries are not in violation of any federal, state or local
statute, administrative regulation or other law, which violation, in the case of
the Company and the Significant Subsidiaries, is likely to have a material
adverse effect on the Company and its Subsidiaries considered as a single
enterprise; and the Trust, the Company and its Significant Subsidiaries have
obtained all material licenses as are necessary or required for the conduct of
their businesses as presently conducted;
(x) Neither the Company nor the Trust
are required to be registered as an investment company under the Investment
Company Act;
21
(xi) To the knowledge of such counsel,
none of the Trust, the Company or any of the Significant Subsidiaries is in
breach or violation of any of the terms or provisions of, or in default under
(nor has an event occurred which with notice or lapse of time or both would
constitute a default or acceleration under), (A) the terms of the Trust
Agreement or its Certificate of Incorporation or By-laws, in each case as
amended; (B) the terms of any contract or other agreement known to such counsel
to which the Trust, the Company or any Significant Subsidiary is a party or by
which any of them is or may be bound or to which any of their properties or
assets is or may be subject, which breach, violation or default, in the case of
the Company and the Significant Subsidiaries, could have a material adverse
effect on the Company and its Subsidiaries considered as a single enterprise;
(C) any statute, rule or regulation of any Government Body having jurisdiction
over the Trust, the Company or any Significant Subsidiary, or any of their
activities, assets or properties, which breach, violation or default, in the
case of the Company and the Significant Subsidiaries, could have a material
adverse effect on the Company and its Subsidiaries considered as a single
enterprise; or (D) the terms of any judgment, decree or order known to such
counsel, of any arbitrator or Governmental Body having such jurisdiction, which
breach, violation or default, in the case of the Company and the Significant
Subsidiaries, could have a material adverse effect on the Company and its
Subsidiaries considered as a single enterprise;
(xii) The deposit accounts of Banco
Popular and of each other Significant Subsidiary of the Company that is a
depository institution are insured by the BIF of the FDIC to the legal maximum,
and to such counsel's knowledge no proceeding for the termination or revocation
of such insurance is pending or threatened. Banco Popular is a member of the
Federal Reserve Bank of New York and of the Federal Home Loan Bank of New York;
and
(xiii) To the knowledge of such counsel,
none of the Trust, the Company or any of its Significant Subsidiaries, or any of
their respective directors or officers, is subject to any order or directive of,
or party to any agreement with, any regulatory agency having jurisdiction with
respect to the business or operations of the Trust, the Company or any of its
Significant Subsidiaries, except as disclosed in the Registration Statement or
the Prospectus or in the materials incorporated by reference therein, and
except, in the case of the Company and the Significant Subsidiaries, for any
such order, directive or agreement that is not material to the Company and its
Subsidiaries considered as a single enterprise.
In rendering any such opinion, such counsel may rely, as to matters of
fact, to the extent such counsel deems proper, on certificates of responsible
officers of the Company and the Trust and public officials and, as to matters
involving the application of laws of any jurisdiction other than the
Commonwealth of Puerto Rico and the United States (to the extent satisfactory in
form and scope to counsel for the Underwriters) such counsel may rely upon the
opinion of local (including in-house) counsel to the Company. The foregoing
opinion shall also state that such counsel has no reason to believe that the
Underwriters are not justified in relying upon such opinion of local counsel,
and copies of such opinion shall be delivered to the Representative and its
counsel.
In addition, such counsel shall state that in the course of the
preparation of the Prospectus,
22
such counsel has participated in conferences with officers and representatives
of the Company and with the Accountants, at which conferences such counsel made
inquiries of such officers, representatives and Accountants and discussed the
contents of the Prospectus and, on the basis of the foregoing and of the
experience such counsel has gained through its practice under the Act, nothing
has come to such counsel's attention that causes such counsel to believe that
the Registration Statement as of the date it became effective or the Prospectus
as of its date and as of the Closing Date contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading or that the
Prospectus as of the date hereof and as of the Closing Date, contained any
untrue statement of a material fact or omitted or omits to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading (it
being understood that such counsel need not express any opinion with respect to
the financial statements, schedules and other financial data included in the
Prospectus). Such counsel may state that she makes no representation that she
has independently verified the accuracy or completeness of the statements
contained in the Registration Statement and Prospectus.
References to the Registration Statement and the Prospectus in this
paragraph (f) shall include any amendment or supplement thereto at the date of
such opinion.
(g) The Representative shall have received the opinion of
counsel to Bank One, as Property Trustee under the Trust Agreement, Indenture
Trustee under the Indenture, and Guarantee Trustee under the Guarantee
Agreement, dated the Closing Date, to the effect that:
(i) Bank One is duly incorporated and is validly
existing in good standing as a banking corporation under the law of the United
States.
(ii) Bank One has the power and authority to
execute, deliver and perform its obligations under the Trust Agreement, the
Indenture and the Guarantee Agreement.
(iii) Each of the Trust Agreement, the Indenture
and the Guarantee Agreement has been duly authorized, executed and delivered by
Bank One and constitutes a legal, valid and binding obligation of Bank One,
enforceable against Bank One in accordance with its terms.
(iv) The execution, delivery and performance by
Bank One of the Trust Agreement, the Indenture and the Guarantee Agreement do
not conflict with or constitute a breach of the charter or by-laws of Bank One.
(v) No consent, approval or authorization of, or
registration with or notice to, any governmental authority or agency of the
United States of America governing the banking or trust powers of Bank One is
required for the execution, delivery or performance by Bank One of the Trust
Agreement, the Indenture and the Guarantee Agreement.
(h) The Representative shall have received an opinion,
dated the Closing Date,
23
from Richards, Layton & Finger, P.A., special Delaware counsel to the Company,
to the effect that:
(i) The Trust has been duly created and is
validly existing in good standing as a business trust under the Delaware
Statutory Trust Act (the "Delaware Act"), and all filings required as of the
date hereof under the Delaware Act with respect to the creation and valid
existence of the Trust as a business trust have been made.
(ii) Under the Trust Agreement and the Delaware
Act, the Trust has the trust power and authority to own property and to conduct
its business, all as described in the Prospectus.
(iii) The Trust Agreement constitutes a valid and
legally binding instrument enforceable against the Company and each of the
Administrative Trustees in accordance with its terms (subject, as to enforcement
of remedies, to applicable bankruptcy, reorganization, insolvency, moratorium or
other laws affecting creditors' rights generally from time to time in effect and
subject to general equity principles and except further as enforcement thereof
may be limited by any governmental authority that limits, delays or prohibits
the making of payments outside the United States).
(iv) Under the Trust Agreement and the Delaware
Act, the Trust has the trust power and authority (i) to execute and deliver, and
to perform its obligations under, this Agreement, and (ii) to issue, and to
perform its obligations under, the Trust Preferred Securities and the Trust
Common Securities.
(v) Under the Trust Agreement and the Delaware
Act, the execution and delivery by the Trust of this Agreement, and the
performance by the Trust of its obligations under this Agreement, have been duly
authorized by all necessary trust action on the part of the Trust.
(vi) Under the Delaware Act, the certificate
attached to the Trust Agreement as Exhibit [A] is an appropriate form of
certificate to evidence ownership of the Trust Preferred Securities. The Trust
Preferred Securities have been duly authorized by the Trust pursuant to the
Trust Agreement and, when issued and delivered in accordance with this
Agreement, will be duly and validly issued, and, subject to the qualifications
hereinafter expressed in this paragraph (vi), fully paid and non-assessable
undivided beneficial interests in the assets of the Trust and are entitled to
the benefits of the Trust Agreement. The Trust Common Securities have been duly
authorized by the Trust Agreement and are duly and validly issued undivided
beneficial interests in the assets of the Trust and are entitled to the benefits
of the Trust Agreement. The holders of the Trust Preferred Securities, as
beneficial owners of the Trust, will be entitled to the same limitation of
personal liability extended to stockholders of private corporations for profit
organized under the General Corporation Law of the State of Delaware.
(vii) Under the Trust Agreement and the Delaware
Act, the issuance of the Trust Preferred Securities and the Trust Common
Securities is not subject to preemptive or similar rights.
24
(viii) The issuance and sale by the Trust of the
Trust Preferred Securities and the Trust Common Securities, the purchase by the
Trust of the Debentures, the execution, delivery and performance by the Trust of
this Agreement, the consummation by the Trust of the transactions contemplated
by this Agreement and compliance by the Trust with its obligations under this
Agreement do not violate (a) any of the provisions of the Certificate of Trust
or the Trust Agreement, (b) any applicable Delaware law or Delaware
administrative regulation.
(i) The Representative shall have received an opinion,
dated the Closing Date, from O'Neill & Borges, counsel to the Underwriters,
which opinion shall be satisfactory in all respects to the Representative.
(j) Concurrently with the execution and delivery of this
Agreement, the Accountants shall have furnished to the Representative a letter,
dated the date of its delivery (the "Accountants Letter"), addressed to the
Representative and in form and substance satisfactory to the Representative, to
the effect that:
(i) they are independent accountants within the
meaning of the Act and the applicable published rules and regulations
thereunder;
(ii) in their opinion, the consolidated financial
statements of the Company and its Subsidiaries audited by them and incorporated
by reference in the Prospectus comply as to form in all material respects with
the applicable accounting requirements of the Act, the Exchange Act and the
published rules and regulations thereunder with respect to registration
statements on Form S-3;
(iii) on the basis of procedures (but not an audit
in accordance with generally accepted auditing standards) consisting of (a)
reading the minutes of meetings of the stockholders and the Board of Directors
of the Company and its Subsidiaries since December 31, 2002, as set forth in the
minute books through a date five business days before the date hereof; (b)
performing the procedures specified by the American Institute of Certified
Public Accountants for a review of interim financial information as described in
SAS No. 71, "Interim Financial Information" on the unaudited consolidated
interim financial statements of the Company and its Subsidiaries included in the
Prospectus and reading the unaudited interim financial data for the period from
the date of the latest audited balance sheet incorporated by reference in the
Prospectus to the date of the latest available interim financial data; and (c)
making inquiries of certain officials of the Company who have responsibility for
financial and accounting matters regarding the specific items for which
representations are requested below, nothing has come to their attention (as of
a date not earlier than five business days before the date hereof) as a result
of the foregoing procedures that caused them to believe that: (1) the unaudited
consolidated interim financial statements incorporated by reference in the
Registration Statement or in the Prospectus, do not comply as to form in all
material respects with the applicable accounting requirements of the Exchange
Act and the published rules and regulations thereunder; (2) any material
modifications should be made to the unaudited consolidated interim financial
statements, if any, incorporated by reference in the Registration Statement or
in the
25
Prospectus, for them to be in conformity with generally accepted accounting
principles; (3)(i) at the date of the latest available interim financial data
and at a specified date not earlier than five business days before the date
hereof, there was any decrease in the total assets or consolidated stockholders'
equity, any increase in long term debt, or any change in capital stock of the
Company and its Subsidiaries as compared with amounts shown in the most recent
balance sheet incorporated by reference in the Prospectus and (ii) for the
period from the date of the most recent balance sheet incorporated by reference
in the Prospectus to the date of the latest interim financial data available,
and to a date not earlier than five business days before the date hereof, there
were any decreases, as compared with the corresponding period in the preceding
year, in consolidated net interest income, non-interest income, or in the total
or per share amounts of net income, except in all instances for changes or
decreases which the Registration Statement discloses have occurred or may occur,
or they shall state any specific changes or decreases; and
(iv) the information set forth under the captions
"Ratios of Earnings to Fixed Charges and Preferred Stock Dividends", ["Recent
Development"], "Capitalization", and "Selected Consolidated Financial and Other
Data" in the Prospectus and Prospectus Supplement, and under the headings
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Statistical Summaries" in the Company's Annual Report,
incorporated by reference in the Prospectus, which is expressed in dollars (or
percentages derived from such dollar amounts) and has been obtained from
accounting records which are subject to the internal controls of the Company's
accounting system or which has been derived directly from such accounting
records and analysis or computations, is in agreement with such records or
computations made therefrom.
At the Closing Date, the Accountants shall have furnished to the
Representative a letter, dated the date of its delivery, which shall confirm, on
the basis of a review in accordance with the procedures set forth in the
Accountants Letter, that nothing has come to their attention during the period
from the date of the Accountants Letter referred to in the prior sentence to a
date (specified in the letter) not more than five business days prior to the
Closing Date, which would require any change in the original letter if it were
required to be dated and delivered at the Closing Date.
In the event that the Accountants Letter sets forth any such changes,
decreases or increases, it shall be a further condition to the obligations of
the Underwriters that (A) such letter shall be accompanied by a written
explanation of the Company as to the significance thereof, unless the
Representative deems such explanation unnecessary, and (B) such changes,
decreases or increases do not, in the sole judgment of the Representative, make
it impractical or inadvisable to proceed with the purchase and delivery of the
Trust Preferred Securities as contemplated by the Registration Statement and the
Prospectus, as amended as of the date hereof.
(k) At the Closing Date, there shall be furnished to the
Representative an accurate certificate, dated the date of its delivery, signed
by each of the Chief Executive Officer, or any Senior Executive Vice President
and the Chief Financial Officer, the Treasurer or the Chief Accounting Officer
of the Company and with respect to the Trust, by an Administrative Trustee of
the Trust, in form and substance satisfactory to the Representative, to the
effect that to the best of their knowledge:
26
(i) Each signer of such certificate has
carefully examined the Registration Statement and the Prospectus and (A) as of
the date of such certificate, (x) the Registration Statement does not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein not misleading and (y) the Prospectus does not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading and (B) since the
Effective Date no event has occurred as a result of which it is necessary to
amend or supplement the Prospectus in order to make the statements therein not
untrue or misleading in any material respect;
(ii) Each of the representations and warranties
of the Trust and the Company contained in this Agreement were, when originally
made, and are, at the time such certificate is delivered, true and correct in
all respects; each of the covenants required herein to be performed by any of
them on or prior to the date of such certificate has been duly, timely and fully
performed and each condition herein required to be complied with on or prior to
the delivery of such certificate has been duly, timely and fully complied with;
and
(iii) No stop order suspending the effectiveness
of the Registration Statement or any post-effective amendment thereto and no
order directed at any document incorporated by reference in the Registration
Statement or any amendment thereto or the Prospectus has been issued, and no
proceedings for that purpose have been instituted or threatened by the
Commission.
(l) The Trust Preferred Securities shall be qualified for
sale in such states and possessions as the Representative may reasonably
request, and each such qualification shall be in effect and not subject to any
stop order or other proceeding on the Closing Date.
(m) The Company and the Trust shall have furnished to the
Representative such officers' certificates, certificates of government
officials, letters and other documents, in addition to those specifically
mentioned herein, as the Representative may have reasonably requested as to the
accuracy and completeness at the Closing Date of any statement in the
Registration Statement or the Prospectus, as to the accuracy at the Closing Date
of the representations and warranties of the Company, as to the performance by
the Company of its obligations hereunder, and as to the fulfillment of the
conditions concurrent and precedent to the obligations hereunder of the
Underwriters.
(n) The Representative shall have received a copy of the
ruling from the Puerto Rico Department of the Treasury to the effect that the
Trust will be considered a grantor trust for purposes of Puerto Rico income tax
purposes, and a copy of a confirmation letter from the Puerto Rico Department of
the Treasury to the effect that said ruling is applicable to the Trust.
(o) The Representative shall have received copies, duly
certified by the Secretary or an Assistant Secretary of the Company, of the
resolutions or other corporate actions adopted or
27
taken by the Company in connection with the transactions contemplated herein.
(p) The Representative shall have received a copy of the
certificate of incorporation of the Company, as amended, certified as of a
recent date by the appropriate officer of the Commonwealth, together with
certificates dated as of a recent date from the Secretary of the Sate of the
Commonwealth as to the existence and good standing of the Company under the laws
of the Commonwealth and copies of the by-laws of the Company certified by the
Secretary or an Assistant Secretary of the Company. The Representative shall
further have received a copy, certified by the Secretary or an Assistant
Secretary of the Company, of the Trust Agreement, the Indenture and the
Guarantee Agreement.
All such opinions, certificates, letters and other documents will be in
compliance with the provisions hereof only if they are satisfactory in form and
substance to you. The Company will furnish you with such conformed copies of
such opinions, certificates, letters and other documents as you shall reasonably
request.
If (i) any of the conditions specified in this Section 6 shall not have
been fulfilled when and as provided in this Agreement, or (ii) any of the
opinions and certificates mentioned above or elsewhere in this Agreement shall
not be reasonably satisfactory in form and substance to the Representatives and
their counsel, this Agreement and all obligations of the Underwriters hereunder
may be cancelled on, or at any time prior to, the Closing Date by the
Representatives. Notice of such cancellation shall be given to the Trust and the
Company in writing or by telephone or facsimile confirmed in writing.
7. Indemnification and Contribution.
(a) Each of the Trust and the Company, jointly and
severally, agrees to indemnify and hold harmless each Underwriter, the
directors, officers, employees and agents of each Underwriter and each person,
if any, who controls each Underwriter within the meaning of Section 15 of the
Act or Section 20 of the Exchange Act, from and against any and all losses,
claims, damages or liabilities, joint or several (and actions in respect
thereof), to which they, or any of them, may become subject under the Act or
other Federal, state or Commonwealth of Puerto Rico statutory law or regulation,
at common law or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon (i)
any untrue statement or alleged untrue statement made by the Company in Section
3 of this Agreement, (ii) any untrue statement or alleged untrue statement of
any material fact contained in (A) any Preliminary Prospectus, the Registration
Statement or the Prospectus or any amendment or supplement to the Registration
Statement or the Prospectus or (B) any application or other document, or any
amendment or supplement thereto, executed by the Company or based upon written
information furnished by or on behalf of the Company filed in any jurisdiction
in order to qualify the Trust Preferred Securities under the securities or blue
sky laws thereof or filed with the Commission or any securities association or
securities exchange (each, an "Application"), or (iii) the omission or alleged
omission to state in any Preliminary Prospectus, the Registration Statement or
the Prospectus or any amendment or supplement to the Registration Statement or
the Prospectus or any Application a material fact
28
required to be stated therein or necessary to make the statements therein not
misleading, and will reimburse, as incurred, each Underwriter and each such
other person for any legal or other expenses reasonably incurred by such
Underwriter or such other person in connection with investigating, defending or
appearing as a third-party witness in connection with any such loss, claim,
damage, liability or action; provided, however, that the Company and the Trust
will not be liable in any such case to the extent that any such loss, claim,
damage or liability is based solely upon an untrue statement or omission or
alleged untrue statement or omission in any of such documents made in reliance
upon and in conformity with information relating to any Underwriter furnished in
writing to the Company by the Representative on behalf of any Underwriter
expressly for inclusion therein; provided, further that such indemnity with
respect to any Preliminary Prospectus shall not inure to the benefit of any
Underwriter (or any such other person) from whom the person asserting any such
loss, claim, damage, liability or action purchased Trust Preferred Securities
which are the subject thereof to the extent that any such loss, claim, damage or
liability (i) results from the fact that such Underwriter failed to send or give
a copy of the Prospectus (as amended or supplemented) to such person at or prior
to the confirmation of the sale of such Trust Preferred Securities to such
person, in any case where such delivery is required by the Act and (ii) arises
out of or is based upon an untrue statement or omission of a material fact
contained in such Preliminary Prospectus that was corrected in the Prospectus
(or any amendment or supplement thereto), unless such failure to deliver the
Prospectus (as amended or supplemented) was the result of noncompliance by the
Company with Section 4(f). This indemnity agreement will be in addition to any
liability that the Company might otherwise have. The Company will not, without
the prior written consent of each Underwriter, settle or compromise or consent
to the entry of any judgment in any pending or threatened claim, action, suit or
proceeding in respect of which indemnification may be sought hereunder (whether
or not such Underwriter or any person who controls such Underwriter within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act is a party to
each claim, action, suit or proceeding), unless such settlement, compromise or
consent includes an unconditional release of each Underwriter and each such
other person from all liability arising out of such claim, action, suit or
proceeding.
(b) Each Underwriter will severally and not jointly
indemnify and hold harmless each of the Company and the Trust, its employees,
officers and directors and each person, if any, who controls the Company within
the meaning of Section 15 of the Act or Section 20 of the Exchange Act, against
all losses, claims, damages or liabilities (or actions in respect thereof) to
which any of them may become subject under the Act or other federal, state or
Commonwealth of Puerto Rico statutory law or regulation, at common law or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon (i) any untrue statement or
alleged untrue statement of a material fact contained in any Preliminary
Prospectus, the Registration Statement or the Prospectus or any amendment or
supplement to the Registration Statement or the Prospectus or any Application,
or (ii) the omission or the alleged omission to state in the Registration
Statement, any Preliminary Prospectus or the Prospectus or any amendment or
supplement to the Registration Statement or the Prospectus, or any Application,
a material fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or omission or
alleged omission was made in reliance upon and in conformity with written
information furnished to the Company by such Underwriter through the
Representative expressly for use therein;
29
and, subject to the limitation set forth immediately preceding this clause, will
reimburse, as incurred, any legal or other expenses reasonably incurred by the
Company and any such director, officer or controlling person in connection with
investigating or defending any such loss, claim, damage, liability or any action
in respect thereof. The Company acknowledges that, for all purposes under this
Agreement, the statements relating to the Underwriters set forth under the
heading "Underwriting" (which do not include information on the Company's
expenses [and the listing of the Trust Preferred Securities]) constitute the
only information furnished in writing to the Company by the Representative on
behalf of the Underwriters expressly for inclusion in the Registration
Statement, any Preliminary Prospectus or the Prospectus. This indemnity
agreement will be in addition to any liability that each Underwriter might
otherwise have.
(c) Promptly after receipt by an indemnified party under
this Section 7 of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against an indemnifying
party or parties under this Section 7, notify the indemnifying party or parties
of the commencement thereof, but the omission so to notify the indemnifying
party or parties will not relieve it or them from any liability which it or they
may have to any indemnified party under the foregoing provisions of this Section
7 or otherwise unless, and only to the extent that, such omission results in the
forfeiture of substantive rights or defenses by the indemnifying party. If any
such action is brought against an indemnified party and it notifies an
indemnifying party or parties of its commencement, the indemnifying party or
parties against which a claim is made will be entitled to participate therein
and, to the extent that it or they may wish, to assume the defense thereof with
counsel reasonably satisfactory to such indemnified party; provided, however,
that if the defendants in any such action include both the indemnified party and
the indemnifying party and the indemnified party shall have reasonably concluded
that there may be one or more legal defenses available to it or other
indemnified parties which are different from or additional to those available to
the indemnifying party, the indemnifying party shall not have the right to
direct the defense of such action on behalf of such indemnified party or parties
and such indemnified party or parties shall have the right to select separate
counsel to defend such action on behalf of such indemnified party or parties.
After notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof and approval by such indemnified party
of counsel appointed to defend such action, the indemnifying party will not be
liable to such indemnified party under this Section 7 for any legal or other
expenses other than reasonable costs of investigation subsequently incurred by
such indemnified party in connection with the defense thereof, unless (i) the
indemnified party shall have employed separate counsel in accordance with the
proviso to the next preceding sentence (it being understood that, in connection
with such action, the indemnifying party shall not be liable for the reasonable
fees and expenses of more than one separate counsel (in addition to the fees and
expenses of local counsel necessary in connection with any such proceedings) in
any one action or separate but substantially similar actions in the same
jurisdiction arising out of the same general allegations or circumstances,
designated by the Representative in the case of paragraph (a) of this Section 7,
representing the indemnified parties under paragraph (a) who are parties to such
action or actions), or (ii) the indemnifying party has authorized in writing the
employment of counsel for the indemnified party at the expense of the
indemnifying party. After such notice from the indemnifying party to such
indemnified party, the indemnifying party will not be liable for the costs and
expenses of any settlement of such action effected by such indemnified party
without the written consent of the
30
indemnifying party, unless such indemnified party waived its right under this
Section 7, in which case the indemnified party may effect such a settlement
without such consent.
(d) If the indemnification provided for in the foregoing
paragraphs of this Section 7 is unavailable or insufficient to hold harmless an
indemnified party under paragraph (a) or (b) above in respect of any losses,
claims, damages or liabilities (or actions in respect thereof) referred to
therein, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages or
liabilities (or actions in respect thereof) (i) in such proportion as is
appropriate to reflect the relative benefits received by the indemnifying party
or parties, on the one hand, and the indemnified party, on the other, from the
offering of the Trust Preferred Securities or (ii) if, but only if, the
allocation provided by the foregoing clause (i) is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault of the
indemnifying party or parties on the one hand, and the indemnified party, on the
other, in connection with the statements or omissions or alleged statements or
omissions that resulted in such losses, claims, damages or liabilities (or
actions in respect thereof), as well as any other relevant equitable
considerations. The relative benefits received by the Trust and the Company, on
the one hand, and the Underwriters, on the other, shall be deemed to be in the
same proportion as the total proceeds from the offering of the Trust Preferred
Securities (before deducting expenses) received by the Company bear to the total
underwriting discounts and commissions received by the Underwriters, in each
case as set forth in the table on the cover page of the Prospectus. Relative
fault shall be determined by reference to whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company or the
Representative on behalf of the Underwriters, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company, the Trust and the Underwriters agree that it
would not be just and equitable if contributions pursuant to this Section 7(d)
were to be determined by pro rata allocation (even if the Underwriters were
treated as one entity for such purpose) or by any other method of allocation
which does not take into account the equitable considerations referred to
herein. The amount paid or payable by an indemnified party as a result of the
losses, claims, damages, liabilities (or actions in respect thereof) referred to
above in this Section 7(d) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 7(d), no Underwriter shall be required to contribute
any amount in excess of the total underwriting discounts and commissions
received by it with respect to the Trust Preferred Securities purchased by such
Underwriter under this Agreement, less the aggregate amount of any damages that
such Underwriter has otherwise been required to pay in respect of the same or
any substantially similar claim. No person found guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) will be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute as provided in
this Section 7(d) are several in proportion to their respective underwriting
obligations and not joint. For purposes of this Section 7(d), each person, if
any, who controls an Underwriter within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act will have the same rights to contribution as such
Underwriter, and each director or officer of the Company and each person, if
any, who controls the
31
Company within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act, will have the same rights to contribution as the Company, subject
in each case to the provisions of this paragraph (d). The provisions of section
7(c) shall be applicable to any claim for contribution under this Section 7(d).
Any party entitled to contribution will, promptly after receipt of notice of
commencement of any action, suit or proceeding against such party in respect of
which a claim for contribution may be made under this Section 7(d), notify any
such party or parties from whom contribution may be sought, but the omission so
to notify will not relieve the party or parties from whom contribution may be
sought from any other obligations it or they may have hereunder or otherwise
than under this paragraph (d) or to the extent that such party or parties were
not adversely affected by such omission. The contribution agreement set forth
above shall be in addition to any liabilities which any indemnifying party may
otherwise have. No party will be liable for contribution with respect to any
action or claim settled without its written consent (which consent will not be
unreasonably withheld).
(e) The indemnity and contribution agreements contained
in this Section 7 and the representations and warranties of the Company
contained in this Agreement shall remain operative and in full force and effect
regardless of (i) any investigation made by or on behalf of the Underwriters,
(ii) acceptance of any of the Trust Preferred Securities and payment therefor or
(iii) any termination of this Agreement.
8. Termination. The obligations of the several Underwriters under
this Agreement may be terminated at any time prior to the Closing Date by notice
to the Company and the Trust from the Representative, without liability on the
part of any Underwriter to the Company and the Trust if, prior to delivery and
payment for the Securities, in the sole judgment of the Representative, (i)
trading in the Common Stock, the Preferred Stock or any trust preferred
securities of the Company or any affiliate of the Company or in securities
generally shall have been suspended by the Commission or by the Nasdaq, (ii)
minimum or maximum prices shall have been established for the Common Stock, the
Preferred Stock or any trust preferred securities of the Company or any
affiliate of the Company or for securities generally on either the Nasdaq or the
NYSE, or additional material governmental restrictions, not in force on the date
of this Agreement, shall have been imposed upon trading in securities generally
by any of such market or exchange or by order of the Commission or any court or
other Governmental Authority, (iii) a general banking moratorium shall have been
declared by United States, New York State, or Commonwealth of Puerto Rico
authorities, or (iv) any material adverse change in the financial or securities
markets in the United States or any outbreak or material escalation of
hostilities or declaration by the United States of war or other calamity or
crisis shall have occurred, the effect of any of which is such as to make it, in
the sole judgment of the Representative, impracticable or inadvisable to market
the Trust Preferred Securities on the terms and in the manner contemplated by
the Prospectus. Any termination pursuant to Section 8 shall be without liability
of any party to any other party except as provided in Sections 5(a) and 7.
9. Default of Underwriters. If one or more Underwriters default
in their obligations to purchase Trust Preferred Securities hereunder and the
aggregate number of such Trust Preferred Securities that such defaulting
Underwriter or Underwriters agreed but failed to purchase is ten percent or less
of the aggregate number of Trust Preferred Securities to be purchased by all of
the
32
Underwriters at such time hereunder, the other Underwriters may make
arrangements satisfactory to the Representative for the purchase of such Trust
Preferred Securities by other persons (who may include one or more of the
nondefaulting Underwriters, including the Representative), but if no such
arrangements are made by the Closing Date, the other Underwriters shall be
obligated severally in proportion to their respective commitments hereunder to
purchase the Trust Preferred Securities that such defaulting Underwriter or
Underwriters agreed but failed to purchase. If one or more Underwriters so
default with respect to an aggregate number of Trust Preferred Securities that
is more than ten percent of the aggregate number of Trust Preferred Securities,
as the case may be, to be purchased by all of the Underwriters at such time
hereunder, and if arrangements satisfactory to the Representative are not made
within 36 hours after such default for the purchase by other persons (who may
include one or more of the nondefaulting Underwriters, including the
Representative) of the Trust Preferred Securities with respect to which such
default occurs, this Agreement will terminate without liability on the part of
any nondefaulting Underwriter, the Trust and the Company other than as provided
in Section 10 hereof. In the event of any default by one or more Underwriters as
described in this Section 9, the Representative shall have the right to postpone
the Closing Date, established as provided in Section 9 hereof for not more than
seven business days in order that any necessary changes may be made in the
arrangements or documents for the purchase and delivery of the Trust Preferred
Securities. As used in this Agreement, the term "Underwriter" includes any
person substituted for an Underwriter under this Section 9. Nothing herein shall
relieve any defaulting Underwriter from liability for its default.
10. Survival. The respective representations, warranties,
agreements, covenants, indemnities and other statements of the Trust, the
Company, its officers, and the several Underwriters set forth in this Agreement
or made by or on behalf of them, respectively, pursuant to this Agreement shall
remain in full force and effect, regardless of (i) any investigation made by or
on behalf of the Trust, the Company, any of its officers or directors, any
Underwriter or any controlling person referred to in Section 7 hereof and (ii)
delivery of and payment for the Trust Preferred Securities. The respective
agreements, covenants, indemnities and other statements set forth in Sections 5
and 7 hereof shall remain in full force and effect, regardless of any
termination or cancellation of this Agreement.
11. Notices. Notice given pursuant to any of the provisions of
this Agreement shall be in writing and, unless otherwise specified, shall be
mailed or delivered (a) if to the Company, at the office of the Company, Banco
Popular Center, 268 Munoz Rivera Avenue, Hato Rey, PR 00918, Attention: Jorge
Junquera, (b) if to the Trust, to the office of ____________________,
__________________, or (c) if to the Underwriters, to the office of the
Representative, Banco Popular Center, Suite 1020, 268 Munoz Rivera Avenue, Hato
Rey, PR 00918, Attention: Kenneth McGrath, President. Any such notice shall be
effective only upon receipt. Any notice under Section 7 or 8 may be made by
telex or telephone, but if so made shall be subsequently confirmed in writing.
12. Successors. This Agreement shall inure to the benefit of and
shall be binding upon the several Underwriters, the Trust, the Company, and
their respective successors and legal representatives, and nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any other
person any legal or equitable right, remedy or claim under or in respect of
33
this Agreement, or any provisions herein contained, this Agreement and all
conditions and provisions hereof being intended to be and being for the sole and
exclusive benefit of such persons and for the benefit of no other person except
that (i) the indemnities of the Trust and the Company contained in Section 7 of
this Agreement shall also be for the benefit of any person or persons who
control any Underwriter within the meaning of Section 15 of the Act or Section
20 of the Exchange Act and (ii) the indemnities of the Underwriters, contained
in Section 7 of this Agreement shall also be for the benefit of the directors,
employees and officers of the Company and any person or persons who control the
Company within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act. No purchaser of Trust Preferred Securities from any Underwriter
shall be deemed a successor because of such purchase. This Agreement shall not
be assignable by any party hereto without the prior written consent of the other
party.
13. APPLICABLE LAW. THE VALIDITY AND INTERPRETATION OF THIS
AGREEMENT, AND THE TERMS AND CONDITIONS SET FORTH HEREIN, SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF PUERTO RICO,
WITHOUT GIVING EFFECT TO ANY PROVISIONS RELATING TO CONFLICTS OF LAWS.
14. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Please confirm that the foregoing correctly sets forth the agreement
among the Company and the several Underwriters.
Very truly yours,
POPULAR CAPITAL TRUST [ ]
By:________________________________
Name:
Title
POPULAR, INC.
By:________________________________
Name:
Title:
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Confirmed as of the date first above mentioned:
[Name of Representative]
Acting on its behalf and as representative
of the several Underwriters named in Schedule 1 hereof
By:___________________________________
Name:
Title:
35
SCHEDULE 1
UNDERWRITERS
Aggregate Number of Trust
Preferred Securities to be
Purchased
Total:
36