EXHIBIT 1(b)
POPULAR NORTH AMERICA, INC.
MEDIUM-TERM NOTES DUE
9 MONTHS OR MORE FROM DATE OF ISSUE
UNCONDITIONALLY GUARANTEED AS TO PAYMENT
OF PRINCIPAL, PREMIUM, IF ANY, AND INTEREST BY
POPULAR, INC.
DISTRIBUTION AGREEMENT
[Date]
[Agents]
Ladies and Gentlemen:
Popular North America, Inc., a Delaware corporation (the "Company"),
confirms its agreement with [ ] (each, an "Agent," and collectively, the
"Agents") with respect to the issue and sale by the Company of its Medium-Term
Notes described herein (the "Notes"). The Notes will be unconditionally
guaranteed as to payment of principal, premium, if any, and interest (the
"Guarantees") by Popular, Inc. (the "Guarantor"). The Notes and the Guarantees
are to be issued pursuant to an Indenture, dated as of October 1, 1991, as
amended and supplemented from time to time (the "Indenture"), among the Company,
the Guarantor and J.P. Morgan Trust Company, National Association, as trustee
(the "Trustee").
As of the date hereof, the Company has authorized the issuance and sale
of Notes with an aggregate initial offering price of up to $[ ] (or
the equivalent thereof in other currencies or currency units) less an amount
equal to the aggregate proceeds from the sale prior to the date hereof of Notes
and prior to or after the date hereof of securities other than the Notes
registered under the Prospectus, dated [ ], relating to debt securities and
preferred stock of the Company, Popular, Inc. and Popular International Bank,
Inc. to or through the Agents pursuant to the terms of this Agreement. It is
understood, however, that the Company may from time to time authorize the
issuance of additional Notes and that such additional Notes may be sold through
or to the Agents pursuant to the terms of this Agreement, all as though the
issuance of such Notes were authorized as of the date hereof.
This Agreement provides both for the sale of Notes by the Company
directly to one or more Agents as principal for resale to investors and other
purchasers and for the sale of the Notes by the Company directly to investors
(as may from time to time be agreed to by the Company and the applicable
Agent(s), in which case each applicable Agent will act as an agent of the
Company in soliciting offers for the purchase of Notes.
The Company and the Guarantor have filed with the Securities and
Exchange Commission (the "SEC") a registration statement on Form S-3 (Nos.
333-[ ], 333-[ ]-01 and
333-[ ]-02) for the registration of debt securities, including the Notes, and
guarantees thereof, including the Guarantees, under the Securities Act of 1933,
as amended (the "1933 Act"), and the offering thereof from time to time in
accordance with Rule 415 of the rules and regulations of the SEC under the 1933
Act (the "1933 Act Regulations"). Such registration statement has been declared
effective by the SEC and the Indenture has been qualified under the Trust
Indenture Act of 1939, as amended (the "1939 Act"), and the Company and the
Guarantor have filed such post-effective amendments thereto as may be required
prior to the Company's acceptance of any offer for the purchase of Notes and
each such post-effective amendment has been declared effective by the SEC. Such
registration statement (as so amended, if applicable) is referred to herein as
the "Registration Statement"; and the final prospectus and all applicable
amendments or supplements thereto (including the final prospectus supplement and
pricing supplement relating to the offering of Notes), in the form first
furnished to the applicable Agent(s) for use in confirming sales of Notes, are
collectively referred to herein as the "Prospectus"; provided, however, that all
references to the "Registration Statement" and the "Prospectus" shall also be
deemed to include all documents incorporated therein by reference that are filed
pursuant to the Securities Exchange Act of 1934, as amended (the "1934 Act"),
prior to any acceptance by the Company of an offer for the purchase of Notes;
provided further, that if the Company and the Guarantor file a registration
statement with the SEC pursuant to Rule 462(b) of the 1933 Act Regulations (the
"Rule 462(b) Registration Statement"), then, after such filing, all references
to the "Registration Statement" shall also be deemed to include the Rule 462(b)
Registration Statement. A "preliminary prospectus" shall be deemed to refer to
any prospectus used before the Registration Statement became effective and any
prospectus furnished by the Company and the Guarantor after the registration
statement became effective and before any acceptance by the Company of an offer
for the purchase of Notes which omitted information to be included upon pricing
of such Notes in a form of prospectus filed with the SEC pursuant to Rule 424(b)
of the 1933 Act Regulations. For purposes of this Agreement, all references to
the "Registration Statement," "Prospectus" or "preliminary prospectus" or to any
amendment or supplement thereto shall be deemed to include any copy filed with
the SEC pursuant to its Electronic Data Gathering, Analysis and Retrieval system
("EDGAR").
All references in this Agreement to financial statements and schedules
and other information which is "disclosed," "contained," "included" or "stated"
(or other references of like import) in the Registration Statement, Prospectus
or preliminary prospectus or any amendment or supplement thereto shall be deemed
to include all such financial statements and schedules and other information
incorporated therein by reference at or prior to the acceptance of any
particular offer for the purchase of Notes; and all references in this Agreement
to amendments or supplements to the Registration Statement, Prospectus or
preliminary prospectus shall be deemed to include the filing of any document
under the 1934 Act incorporated therein by reference after the acceptance of any
particular offer for the purchase of Notes.
SECTION 1. Appointment as Agents.
(a) Appointment. Subject to the terms and conditions stated herein and
subject to the reservation by the Company of the right to sell Notes directly on
its own behalf, the Company hereby agrees that Notes shall be sold exclusively
to or through the Agents. The Company agrees that it will not appoint any other
agents to act on its behalf, or to assist it, in the placement of the Notes.
2
Notwithstanding anything to the contrary contained herein, the Company
may authorize any other person, partnership or corporation (an "Additional
Agent") to act as its agent to solicit offers for the purchase of all of the
Notes or a specific tranche of Notes. Unless the Agents otherwise agree, the
appointment of an Additional Agent shall be effected by the Company's addition
of the name and address of the Additional Agent to the signature page of a
counterpart of this Agreement, the execution of such counterpart by the
Additional Agent, and the prompt delivery of executed copies of such counterpart
and any other contractual arrangements between the Company and such Additional
Agent relating thereto to the Agents and their counsel. Thereafter, with respect
to all of the Notes or the specific tranche of Notes, as the case may be, the
term "Agent" or "Agents," as used in this Agreement, shall mean the Agents and
such Additional Agent. Upon its appointment, the Additional Agent shall specify
its requirement for the delivery of certificates, letters and opinions as are
set forth in Section 5 hereof.
(b) Sale of Notes. The Company shall not sell or approve the
solicitation of offers for the purchase of Notes in excess of the amount which
shall be authorized by the Company from time to time or in excess of the
aggregate initial offering price of Notes registered for sale pursuant to the
Registration Statement. The Agents shall have no responsibility for maintaining
records with respect to the aggregate initial offering price of Notes sold, or
of otherwise monitoring the availability of Notes for sale, under the
Registration Statement.
(c) Purchases as Principal; Solicitations as Agent. The Agents shall
not have any obligation to purchase Notes from the Company as principal.
However, absent an agreement between an Agent and the Company that such Agent
shall be acting solely as an agent for the Company, such Agent shall be deemed
to be acting as principal in connection with any offering of Notes by the
Company through such Agent. Accordingly, the Agents, individually or in a
syndicate, may agree from time to time to purchase Notes from the Company as
principal for resale to investors and other purchasers determined by such
Agents. Any purchase of Notes from the Company by an Agent as principal shall be
made in accordance with Section 3(b) hereof. If agreed upon between an Agent and
the Company, such Agent, acting solely as an agent for the Company and not as
principal, shall solicit offers for the purchase of Notes. Such Agent shall make
reasonable efforts to assist the Company in obtaining performance by each
purchaser whose offer for the purchase of Notes has been solicited by it on an
agency basis and accepted by the Company. Such Agent shall have the right, in
its discretion reasonably exercised, to reject any offer for the purchase of
Notes, in whole or in part, and any such rejection shall not be deemed a breach
of its agreement contained herein. Such Agent shall not have any liability to
the Company in the event that any such purchase is not consummated for any
reason, except in the event that such sale is not consummated due to the failure
of such Agent to perform its obligations hereunder.
(d) Reliance. The Company and the Agents agree that any Notes purchased
from the Company by one or more Agents as principal shall be purchased, and any
Notes the placement of which an Agent arranges as an agent of the Company shall
be placed by such Agent, in reliance on the representations, warranties,
covenants and agreements of the Company and the Guarantor contained herein and
on the terms and conditions and in the manner provided herein.
3
SECTION 2. Representations and Warranties of the Company and the Guarantor.
(a) The Company and the Guarantor jointly and severally represent and
warrant to the Agents as of the date hereof, as of the date of each acceptance
by the Company of an offer for the purchase of Notes (whether through an Agent
as agent or to one or more Agents as principal), as of the date of each delivery
of Notes (whether through an Agent as agent or to one or more Agents as
principal) (the date of each such delivery to one or more Agents as principal
being hereafter referred to as a "Settlement Date"), and as of any time that the
Registration Statement or the Prospectus shall be amended or supplemented (other
than by an amendment or supplement that relates exclusively to an offering of
securities other than the Notes) or there is filed with the SEC any document
incorporated by reference into the Prospectus (other than any Current Report on
Form 8-K relating exclusively to the issuance of securities other than the Notes
under the Registration Statement) (each of the times referenced above being
referred to herein as a "Representation Date") as follows:
(i) Due Incorporation and Qualification. Each of the Guarantor
and the Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of its respective
jurisdiction of incorporation with corporate power and authority to
own, lease and operate its properties and to conduct its business as
described in the Prospectus; the Guarantor is duly registered as a bank
holding company under the Bank Holding Company Act of 1956, as amended
(the "Bank Holding Company Act"); and each of the Guarantor and the
Company is duly qualified as a foreign corporation to transact business
and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or
leasing of property or the conduct of business, except where the
failure to so qualify and be in good standing would not have a material
adverse effect on the condition, financial or otherwise, or the
earnings, business affairs or business prospects of the Guarantor and
its subsidiaries considered as one enterprise.
(ii) Subsidiaries. Each subsidiary of the Guarantor or the
Company which is a significant subsidiary (each, a "Significant
Subsidiary"), as defined in Rule 1-02 of Regulation S-X promulgated
under the 1933 Act, has been duly incorporated and is validly existing
as a corporation or a bank in good standing under the laws of the
jurisdiction of its incorporation, has corporate power and authority to
own, lease and operate its properties and conduct its business as
described in the Prospectus and is duly qualified as a foreign
corporation to transact business and is in good standing in each
jurisdiction in which such qualification is required, whether by reason
of the ownership or leasing of property or the conduct of business,
except where the failure to so qualify and be in good standing would
not have a material adverse effect on the condition, financial or
otherwise, or the earnings, business affairs or business prospects of
the Guarantor and its subsidiaries considered as one enterprise; and
all of the issued and outstanding shares of capital stock of each such
Significant Subsidiary have been duly authorized and validly issued,
are fully paid and non-assessable (subject to the provisions of Section
55 of Title 12 of the United States Code in the case of Significant
Subsidiaries which are national banking associations) and, except as
otherwise disclosed in the Prospectus and except for directors'
qualifying shares, are owned by the Company or the Guarantor, directly
or through subsidiaries, free and clear of any security interest,
4
mortgage, pledge, lien, encumbrance, claim or equity or, if such is not
the case, that any such security interest, mortgage pledge, lien,
encumbrance, claim or equity, when exercised, enforced or otherwise
asserted, will not have a material adverse effect on the condition,
financial or otherwise, or the earnings, business affairs or business
prospects of the Guarantor and its subsidiaries considered as one
enterprise.
(iii) Registration Statement and Prospectus. The Company and
the Guarantor meet the requirements for use of Form S-3 under the 1933
Act; the Registration Statement (or any Rule 462(b) Registration
Statement) has become effective under the 1933 Act and no stop order
suspending the effectiveness of the Registration Statement (or any Rule
462(b) Registration Statement) has been issued under the 1933 Act and
no proceedings for that purpose have been instituted or are pending or,
to the knowledge of the Company and the Guarantor, are contemplated by
the SEC, and any request on the part of the SEC for additional
information has been complied with; the Indenture has been duly
qualified under the 1939 Act; at the respective times that the
Registration Statement (including any Rule 462(b) Registration
Statement) and any post-effective amendment thereto (including the
filing of the Guarantor's most recent Annual Report on Form 10-K with
the SEC (the "Annual Report on Form 10-K")) became effective and at
each Representation Date, the Registration Statement (including any
Rule 462(b) Registration Statement but excluding any prospectus
supplement with respect to an offering of securities other than the
Notes that is contained therein) and any amendments thereto complied
and will comply in all material respects with the requirements of the
1933 Act and the 1933 Act Regulations and the 1939 Act and the rules
and regulations of the SEC under the 1939 Act (the "1939 Act
Regulations") and did not and 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 and prospectus filed as part of the
Registration Statement (excluding any prospectus supplement with
respect to an offering of securities other than the Notes that is
contained therein) as originally filed or as part of any amendment
thereto, or filed pursuant to Rule 424 under the 1933 Act, complied
when so filed in all material respects with the 1933 Act Regulations;
each preliminary prospectus and the Prospectus delivered to the
applicable Agent(s) for use in connection with the offering of Notes
are identical to any electronically transmitted copies thereof filed
with the SEC pursuant to EDGAR, except to the extent permitted by
Regulation S-T; and at the date hereof, at the date of the Prospectus
and each amendment or supplement thereto and at each Representation
Date, neither the Prospectus nor any amendment or supplement thereto
included or will include an untrue statement of a material fact or
omitted or will 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; provided, however, that the
representations and warranties in this subsection shall not apply to
statements in or omissions from the Registration Statement or the
Prospectus made in reliance upon and in conformity with information
furnished to the Company in writing by the Agents expressly for use in
the Registration Statement or the Prospectus.
(iv) Incorporated Documents. The documents incorporated or
deemed to be incorporated by reference in the Prospectus, at the time
they were or hereafter are filed with the SEC, complied or when so
filed will comply, as the case may be, in all material
5
respects with the requirements of the 1934 Act and the rules and
regulations promulgated thereunder (the "1934 Act Regulations"), and,
when read together and with the other information in the Prospectus,
did not and will not include an 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 the light of the
circumstances under which they were or are made, not misleading.
(v) Independent Accountants. The accountants who certified the
financial statements and supporting schedules included or incorporated
by reference in the Prospectus are independent public accountants
within the meaning of the 1933 Act and the 1933 Act Regulations.
(vi) Financial Statements. The consolidated financial
statements and any supporting schedules included or incorporated by
reference in the Prospectus present fairly the consolidated financial
position of the Guarantor and its consolidated subsidiaries as of the
dates indicated and the consolidated results of their operations for
the periods specified; except as stated therein, said financial
statements have been prepared in conformity with generally accepted
accounting principles in the United States applied on a consistent
basis during the periods involved; the supporting schedules included or
incorporated by reference in the Prospectus present fairly the
information required to be stated therein; and any pro forma
consolidated financial statements of the Guarantor and its consolidated
subsidiaries and the related notes thereto included in the Prospectus
present fairly the information shown therein, have been prepared in
accordance with the SEC's rules and guidelines with respect to pro
forma financial statements and have been properly compiled on the basis
described therein, and the assumptions used in the preparation thereof
are reasonable and the adjustments used therein are appropriate to give
effect to the transactions and circumstances referred to therein.
(vii) Authorization and Validity of this Agreement, the
Indenture, the Guarantees and the Notes. This Agreement has been duly
authorized, executed and delivered by the Guarantor and the Company;
the Indenture has been duly authorized, executed and delivered by the
Guarantor and the Company and constitutes a valid and legally binding
obligation of the Company and the Guarantor 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; the Notes have been duly and validly authorized for
issuance, offer and sale pursuant to this Agreement and, when issued,
authenticated and delivered pursuant to the provisions of this
Agreement and the Indenture against payment of the consideration
therefor specified in the Prospectus or pursuant to any Terms Agreement
(as defined in Section 3(b)), will constitute valid and legally binding
obligations of the Company enforceable in accordance with their terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or
affecting creditors' rights generally and to general equity principles;
the Guarantees have been duly authorized and, upon due issuance,
authentication and delivery of the related Notes and due endorsement of
the Guarantees, the Guarantees will have been duly executed, issued and
delivered and will be valid and legally binding
6
obligations of the Guarantor enforceable in accordance with their
terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights generally and to general
equity principles; the Notes, the Guarantees and the Indenture will be
substantially in the form heretofore delivered to the Agent and conform
in all material respects to all statements relating thereto contained
in the Prospectus; and the Notes and the Guarantees will be entitled to
the benefits provided by the Indenture.
(viii) Material Changes or Material Transactions. Since the
respective dates as of which information is given in the Registration
Statement and the Prospectus, except as may otherwise be stated therein
or contemplated thereby, there has been no material adverse change in
the condition, financial or otherwise, or in the earnings, business
affairs or business prospects of the Company or the Guarantor and its
subsidiaries considered as one enterprise, whether or not arising in
the ordinary course of business.
(ix) No Defaults; Regulatory Approvals. Neither the Company,
the Guarantor nor any of the Significant Subsidiaries is in violation
of its charter or by-laws or in default in the performance or
observance of any material obligation, agreement, covenant or condition
contained in any contract, indenture, mortgage, loan agreement, note,
lease or other instrument to which it is a party or by which it or any
of them or their properties may be bound; the execution, delivery and
performance of this Agreement and the Indenture and the consummation of
the transactions contemplated herein, therein and pursuant to any
applicable Terms Agreement have been duly authorized by all necessary
corporate action and will not conflict with or constitute a breach of,
or default under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company, the
Guarantor or any of the Significant Subsidiaries pursuant to any
contract, indenture, mortgage, loan agreement, note, lease or other
instrument to which the Company, the Guarantor or any of its
subsidiaries is a party or by which it or any of them may be bound or
to which any of the property or assets of the Company, the Guarantor or
any such subsidiary is subject, nor will such action result in any
violation of the provisions of the charter or by-laws of the Company,
the Guarantor or any such subsidiary or any law, administrative
regulation or administrative or court order or decree which breach,
default, creation, imposition or violation would, in each case, have a
material adverse effect on the Guarantor and its subsidiaries taken as
a whole; and no consent, approval, authorization, order or decree of
any court or governmental agency or body is required for the
consummation by the Guarantor or the Company of the transactions
contemplated by this Agreement, except such as may be required under
the 1933 Act or the 1933 Act Regulations (which have been obtained),
the 1939 Act or state securities or Blue Sky laws.
(x) Legal Proceedings; Contracts. Except as may be set forth
in the Registration Statement, there is no action, suit or proceeding
before or by any court or governmental agency or body, domestic or
foreign, now pending, or, to the knowledge of the Guarantor or the
Company, threatened against or affecting, the Company, the Guarantor or
any of its subsidiaries, which might result in any material adverse
change in the condition, financial or otherwise, or in the earnings,
business affairs or business prospects of the Guarantor and its
subsidiaries considered as one enterprise, or might materially and
7
adversely affect the consummation of this Agreement or any Terms
Agreement; and there are no contracts or documents of the Company or
the Guarantor or any of its subsidiaries which are required to be filed
or incorporated by reference as exhibits to the Registration Statement
by the 1933 Act or by the 1933 Act Regulations which have not been so
filed or incorporated by reference.
(xi) Regulatory Certificates, Authorities and Permits. The
Company, the Guarantor and the Significant Subsidiaries possess
adequate certificates, authorities or permits issued by the appropriate
state, federal or foreign regulatory agencies or bodies necessary to
conduct the business now operated by them except for such certificates,
authorities or permits as are not material to the business, operations,
financial condition or income of the Company, the Guarantor or the
Significant Subsidiaries; and neither the Company, the Guarantor nor
any of the Significant Subsidiaries has received any notice of
proceedings relating to the revocation or modification of any such
certificate, authority or permit which, singly or in the aggregate, if
the subject of an unfavorable decision, ruling or finding, would
materially adversely affect the conduct of the business, operations,
financial condition or income of the Guarantor and its subsidiaries
considered as one enterprise.
(xii) 1940 Act. Neither the Company nor the Guarantor is, or
upon the issuance and sale of the Notes as herein contemplated and the
application of the net proceeds therefrom as described in the
Prospectus will be, an "investment company" within the meaning of the
Investment Company Act of 1940, as amended (the "1940 Act").
(b) Additional Certifications. Any certificate signed by any officer of
the Guarantor, the Company or a Significant Subsidiary and delivered to the
Agents or to counsel for the Agents in connection with an offering of Notes and
related Guarantees or the sale of Notes to one or more Agents as principal shall
be deemed a representation and warranty by the Company, the Guarantor or such
Significant Subsidiary, as the case may be, to the Agents as to the matters
covered thereby on the date of such certificate.
SECTION 3. Solicitations as Agents; Purchases as Principal.
(a) Solicitations as Agents. On the basis of the representations and
warranties herein contained, but subject to the terms and conditions herein set
forth, when agreed upon by the Company and an Agent, such Agent, as an agent of
the Company, will use its reasonable efforts to solicit offers to purchase the
Notes upon the terms and conditions set forth herein and in the Prospectus.
The Company reserves the right, in its sole discretion, to suspend
solicitation of purchases of the Notes through the Agents, as agents, commencing
at any time for any period of time or permanently. Upon receipt of instructions
from the Company, the Agents will forthwith suspend solicitation of purchases
from the Company until such time as the Company has advised the Agents that such
solicitation may be resumed.
The Company agrees to pay an Agent a commission, in the form of a
discount, equal to the applicable percentage of the principal amount of each
Note sold by the Company as a result
8
of a solicitation made by such Agent as set forth in Schedule A hereto. The
Agents may reallow any portion of the commission payable pursuant hereto to
dealers or purchasers in connection with the offer and sale of any Notes.
The purchase price, interest rate or formula, maturity date and other
terms of the Notes shall be agreed upon by the Company and the applicable Agent
and set forth in a pricing supplement to the Prospectus to be prepared following
each acceptance by the Company of an offer for the purchase of Notes. Except as
may be otherwise provided in such supplement to the Prospectus, the Notes will
be issued in denominations of $1,000 and integral multiples thereof. All Notes
sold through an Agent as agent will be sold at 100% of their principal amount
unless otherwise agreed to by the Company and such Agent.
(b) Purchases as Principal. Each sale of Notes to one or more Agents as
principal shall be made in accordance with the terms contained herein and
(unless the Company and such Agent(s) shall otherwise agree) pursuant to a
separate agreement which will provide for the sale of such Notes to, and the
purchase and reoffering thereof by, such Agent(s). Each such separate agreement
(which may be an oral agreement) between one or more Agents and the Company is
herein referred to as a "Terms Agreement." Unless the context otherwise
requires, each reference contained herein to "this Agreement" shall be deemed to
include any applicable Terms Agreement between the Company and the applicable
Agent(s). Each such Terms Agreement, whether oral or in writing, shall be with
respect to such information (as applicable) as is specified in Exhibit A hereto.
Each Agent's commitment to purchase Notes as principal pursuant to any Terms
Agreement or otherwise shall be deemed to have been made on the basis of the
representations and warranties of the Company and the Guarantor herein contained
and shall be subject to the terms and conditions herein set forth. Each Terms
Agreement shall specify the principal amount of Notes to be purchased by each
applicable Agent pursuant thereto, the price to be paid to the Company for such
Notes (which, if not so specified in a Terms Agreement, shall be at a discount
equivalent to the applicable commission set forth in Schedule A hereto), the
time and place of delivery of and payment for such Notes and such other
provisions (including further terms of the Notes) as may be mutually agreed
upon. The Agents may utilize a selling or dealer group in connection with the
resale of the Notes purchased. Unless expressly provided for in the Terms
Agreement, no opinions, letters or certificates shall be delivered by the
Company in connection with the sale of Notes to one or more Agents as principal.
(c) Administrative Procedures. Administrative procedures with respect
to the sale of Notes shall be agreed upon from time to time by the Agent, the
Company and the Guarantor (the "Procedures"). The Agents, on the one hand, and
the Company and the Guarantor, jointly and severally on the other hand, agree to
perform the respective duties and obligations specifically provided to be
performed by them in the Procedures.
(d) Restrictions on Distribution in Puerto Rico. The Agents agree that
Popular Securities, Inc. shall have the sole right to solicit offers to purchase
the Notes as agent or to make any sales of the Notes as principal, as the case
may be, in Puerto Rico.
(e) Restrictions on Sales to Discretionary Accounts. Each Agent hereby
agrees to refrain from sales to discretionary accounts under its supervision
except in accordance with procedures
9
to obtain the prior specific written approval of the customer that have been
approved by the NASD in compliance with NASD Conduct Rule 2720(l).
SECTION 4. Covenants of the Company and the Guarantor.
The Company and the Guarantor jointly and severally covenant with the
Agents as follows:
(a) Notice of Certain Events. The Company and the Guarantor will notify
the Agents immediately (i) of the effectiveness of any amendment to the
Registration Statement, (ii) of the filing of any supplement to the Prospectus
relating to the Notes or any document filed pursuant to the 1934 Act which will
be incorporated by reference in the Prospectus, (iii) of the receipt of any
comments from the SEC with respect to the Registration Statement or the
Prospectus, (iv) of any request by the SEC for any amendment to the Registration
Statement or any amendment or supplement to the Prospectus or for additional
information and (v) of the issuance by the SEC of any stop order suspending the
effectiveness of the Registration Statement or the initiation of any proceedings
for that purpose. The Company and the Guarantor will use reasonable efforts to
prevent the issuance of any stop order and, if any stop order is issued, to
obtain the lifting thereof.
(b) Notice of Certain Proposed Filings. Except as otherwise provided in
subsection (1) of this Section 4, the Company and the Guarantor will give the
Agents notice of its intention to file or prepare any additional registration
statement with respect to the registration of additional Notes and related
Guarantees, any amendment to the Registration Statement or any amendment or
supplement to the Prospectus (other than an amendment or supplement providing
information solely with respect to the terms of Notes (except with respect to
the applicable Agent(s)) and other than an amendment or supplement that relates
to an offering of securities other than the Notes), whether by the filing of
documents pursuant to the 1934 Act, the 1933 Act or otherwise, and will furnish
the Agents with copies of any such amendment or supplement or other documents
proposed to be filed or prepared a reasonable time in advance of such proposed
filing or preparation, as the case may be, except for documents required to be
filed pursuant to the 1934 Act, which the Company or the Guarantor shall furnish
to the Agents immediately after the filing thereof, and will not file any such
amendment or supplement other than a document required to be filed pursuant to
the 1934 Act in a form to which you or your counsel shall reasonably object.
(c) Copies of the Registration Statement and the Prospectus. The
Company and the Guarantor will deliver to the Agents as many signed and
conformed copies of the Registration Statement (as originally filed) and of each
amendment thereto (including exhibits filed therewith or incorporated by
reference therein and documents incorporated by reference in the Prospectus) as
the Agents may reasonably request. The Company and the Guarantor will furnish
the Agents with as many copies of the Prospectus (as amended or supplemented) as
the Agents shall reasonably request so long as the Agents are required to
deliver a Prospectus in connection with sales or solicitations of offers to
purchase the Notes.
(d) Preparation of Pricing Supplements. The Company and Guarantor will
prepare, with respect to any Notes to be sold through or to the Agents pursuant
to this Agreement, a Pricing
10
Supplement with respect to such Notes in a form previously approved by the
Agents. The Company will deliver such Pricing Supplement to the applicable
Agent(s) no later than 11:00 am, New York City time, on the business day
following the date of the Company's acceptance of the offer for the purchase of
such Notes and will file such Pricing Supplement pursuant to the applicable
clause of Rule 424(b) under the 1933 Act in accordance with the prescribed time
period therein.
(e) Revisions of Prospectus -- Material Changes. Except as otherwise
provided in subsection (1) of this Section, if at any time during the term of
this Agreement any event shall occur or condition exist as a result of which it
is necessary to amend or supplement the Registration Statement or the Prospectus
or any amendment or supplement thereto in order that neither the Registration
Statement or the Prospectus nor any amendment or supplement thereto will include
an untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances in which they were made, not misleading or if it shall be
necessary to amend or supplement the Registration Statement or the Prospectus or
any amendment or supplement thereto in order to comply with the requirements of
the 1933 Act or the 1933 Act Regulations, immediate notice shall be given, and
confirmed in writing, to the Agents to cease the solicitation of offers to
purchase the Notes in the Agents' capacity as agents and to cease sales of any
Notes the Agents may have purchased from the Company as principal, and the
Company and the Guarantor will promptly prepare and file with the SEC such
amendment or supplement, whether by filing documents pursuant to the 1934 Act,
the 1933 Act or otherwise, as may be necessary to correct such untrue statement
or omission or to make the Registration Statement and Prospectus or any
amendment or supplement thereto comply with such requirements.
(f) Prospectus Revisions -- Periodic Financial Information. Except as
otherwise provided in subsection (1) of this Section, on or prior to the date on
which there shall be released to the general public interim consolidated
financial statement information related to the Guarantor with respect to each of
the first three quarters of any fiscal year or preliminary financial statement
information with respect to any fiscal year, the Guarantor shall furnish such
information to the Agents, confirmed in writing, and promptly thereafter shall
cause the Registration Statement and the Prospectus to be amended or
supplemented to include or incorporate by reference capsule financial
information with respect to the results of operations of the Guarantor and its
consolidated subsidiaries for such period and corresponding information for the
comparable period of the preceding fiscal year, as well as such other
information and explanations as shall be necessary for an understanding thereof
or as shall be required by the 1933 Act or the 1933 Act Regulations.
(g) Prospectus Revisions -- Audited Financial Information. Except as
otherwise provided in subsection (1) of this Section, on or prior to the date on
which there shall be released to the general public financial information with
respect to the audited consolidated financial statements of the Guarantor for
the preceding fiscal year, the Guarantor shall furnish such information to the
Agents, confirmed in writing, and promptly thereafter shall cause the
Registration Statement and the Prospectus to be amended or supplemented to
include or incorporate by reference such audited consolidated financial
statements and the report or reports, and consent or consents to such inclusion
or incorporation by reference, of the independent accountants with respect
thereto, as well as such other information and explanations as shall be
11
necessary for an understanding of such consolidated financial statements or as
shall be required by the 1933 Act or the 1933 Act Regulations.
(h) Earnings Statements. The Guarantor will timely file such reports
pursuant to the 1934 Act as are necessary in order to make generally available
to the security holders of the Company as soon as practicable an earnings
statement for the purposes of, and to provide the benefits contemplated by, the
last paragraph of Section 11(a) of the 1933 Act.
(i) Blue Sky Qualifications. The Company and the Guarantor will
endeavor, in cooperation with the Agents, to qualify the Notes and related
Guarantees for offering and sale under the applicable securities laws of such
states and other jurisdictions of the United States as the Agents and the
Company shall agree and, unless the Company otherwise notifies the Agents, will
maintain such qualifications in effect for as long as may be required for the
distribution of the Notes and related Guarantees; provided, however, that the
Company and the Guarantor shall not be required to submit to general service of
process in any jurisdiction. The Company and the Guarantor will promptly advise
the Agents of their receipt of any notification with respect to the suspension
of the qualification of the Notes and related Guarantees for sale in any such
state or jurisdiction or the initiating or threatening of any proceeding for
such purpose.
(j) Reporting Requirements. The Guarantor and the Company, during the
period when the Prospectus is required to be delivered under the 1933 Act, will
file promptly all documents required to be filed with the SEC pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the 1934 Act within the time period
prescribed by the 1934 Act and the 1934 Act Regulations.
(k) Stand-Off Agreement. If required pursuant to the terms of a Terms
Agreement, between the date of any Terms Agreement and the Settlement Date with
respect to such Terms Agreement, the Company and the Guarantor will not, without
the consent of the applicable Agent or Agents, offer or sell, or enter into any
agreement to sell, any debt securities of the Company or the Guarantor (other
than the Notes that are to be sold pursuant to such Terms Agreement and
commercial paper).
(l) Suspension of Certain Obligations. The Company and the Guarantor
shall not be required to comply with the provisions of subsections (b), (e), (f)
or (g) of this Section during any period from the time (i) the Agents shall have
suspended solicitation of purchases of the Notes in their capacity as agent
pursuant to a request from the Company and the Guarantor and (ii) the Agents
shall not then hold any Notes purchased from the Company as principal, to the
time the Company and the Guarantor shall determine that solicitation of
purchases of the Notes should be resumed or shall subsequently enter into a new
Terms Agreement with one or more Agents.
(m) Public Reports. The Company and the Guarantor will furnish to the
Agents, at the earliest time the Company and the Guarantor make the same
available to others, copies of their annual reports and other financial reports
furnished or made available to the public generally.
SECTION 5. Conditions of Obligations.
The obligations of the Agents to solicit offers to purchase the Notes
as agent of the Company, the obligations of any purchasers of the Notes sold
through an Agent as agent, and
12
any obligation of an Agent to purchase Notes pursuant to a Terms Agreement or
otherwise will be subject to the accuracy of the representations and warranties
on the part of the Company and the Guarantor contained herein and to the
accuracy of the statements of the officers of the Company and the Guarantor made
in any certificate furnished pursuant to the provisions hereof, to the
performance and observance by the Company and the Guarantor of all their
respective covenants and agreements herein contained and to the following
additional conditions precedent:
(a) Legal Opinions. On the date hereof and, if required by any
applicable Terms Agreement, on the Settlement Date with respect to such Terms
Agreement, the Agents shall have received the following legal opinions, dated as
of the date hereof or such Settlement Date, as the case may be, in form and
substance satisfactory to the Agents:
(1) Opinion of Counsel to the Company and the Guarantor. The
opinion of Sullivan & Cromwell LLP, counsel to the Company and the
Guarantor, to the effect that:
(i) The Company has been duly incorporated and is an
existing corporation in good standing under the laws of the
State of Delaware.
(ii) The Company has the corporate power and
authority to own, lease and operate its properties and to
conduct its business as described in the Registration
Statement.
(iii) The Guarantor is duly registered as a bank
holding company under the Bank Holding Company Act.
(iv) The Indenture has been duly authorized, executed
and delivered by the Company and the Guarantor and duly
qualified under the Trust Indenture Act of 1939 and
constitutes a valid and legally binding obligation of the
Company and the Guarantor 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.
(v) The series of Notes has been duly authorized and
established in conformity with the Indenture and, when the
terms of a particular Note and of its issuance and sale have
been duly authorized and established by all necessary
corporate action in conformity with the Indenture and such
Note has been duly prepared, executed, authenticated and
issued in accordance with the Indenture and delivered against
payment in accordance with this Agreement, such Note will
constitute a valid and legally binding obligation of the
Company 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.
(vi) The issuance of the Guarantees has been duly
authorized, the Guarantees have been established in conformity
with the Indenture and, when the terms of a particular Note
and of its issuance and sale have been duly authorized and
established by all necessary corporate action in conformity
with the
13
Indenture, such Note has been duly prepared, executed,
authenticated and issued in accordance with the Indenture and
delivered against payment in accordance with this Agreement
and the Guarantee endorsed on such Note has been duly executed
in accordance with the Indenture, such Guarantee will
constitute a valid and legally binding obligation of the
Guarantor 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.
(vii) All regulatory consents, authorizations,
approvals and filings required to be obtained or made by the
Company or the Guarantor on or prior to the date hereof or
such Settlement Date, as the case may be, under the Federal
laws of the United States, the laws of the State of New York
and the General Corporation Law of the State of Delaware for
the issuance, sale and delivery of the Notes by the Company to
or through the Agents in accordance with this Agreement have
been obtained or made; provided, however, that such counsel
need express no opinion with respect to state securities laws.
(viii) This Agreement and, if applicable, such Terms
Agreement have each been duly authorized, executed and
delivered by the Company and the Guarantor.
(ix) The execution and delivery by the Company and
the Guarantor of the Indenture and this Agreement and, if
applicable, such Terms Agreement do not, and the preparation,
execution and issuance of each particular Note and Guarantee
in accordance with the Indenture, the sale by the Company of
such Note in accordance with this Agreement and, if
applicable, such Terms Agreement and the performance by the
Company and the Guarantor of their respective obligations
under the Indenture, this Agreement and, if applicable, such
Terms Agreement, the Notes and the Guarantees will not (a)
violate the certificate of incorporation or by-laws of the
Company, in each case as in effect at the date of such
opinion, (b) violate any existing Federal law of the United
States applicable to the Company or the Guarantor or (c)
violate the existing General Corporation Law of the State of
Delaware; provided, however, that, for the purposes of this
paragraph (ix), such counsel need express no opinion with
respect to the Federal or state securities laws, other
antifraud laws, fraudulent transfer laws, the Employee
Retirement Income Security Act of 1974 and related laws, and
laws that restrict transactions between United States persons
and citizens or residents of certain foreign countries or
specially designated nationals and organizations; provided,
further, that insofar as performance by the Company and the
Guarantor of their respective obligations under the Indenture,
this Agreement and, if applicable, such Terms Agreement, the
Notes and the Guarantees is concerned, such counsel need
express no opinion as to bankruptcy, insolvency,
reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights.
14
(x) The Registration Statement is effective under the
1933 Act and, to the best of such counsel's knowledge, (a) no
stop order suspending the effectiveness of the Registration
Statement has been issued under the 1933 Act and (b) no
proceedings therefor have been initiated or threatened by the
SEC.
(xi) As counsel for the Company and the Guarantor,
such counsel reviewed the Registration Statement and the
Prospectus, and any amendment or supplement thereto,
participated in discussions with the Agents' representatives
and those of the Company and the Guarantor and their
independent accountants, and advised the Company and the
Guarantor as to the requirements of the 1933 Act and the
applicable 1933 Act Regulations, and on the basis of the
information that such counsel gained in the course of the
performance of the services referred to above, considered in
the light of their understanding of the applicable law
(including the requirements of Form S-3 and the character of
the prospectus contemplated thereby) and the experience they
have gained through their practice under the 1933 Act, they
confirm to the Agents that, in their opinion, each part of the
Registration Statement, when such part became effective, and
the Prospectus, as of the date of the prospectus supplement
or, if applicable, the pricing supplement forming a part
thereof, appeared on their face to be appropriately
responsive, in all material respects relevant to the offering
of the Notes, to the requirements of the 1933 Act, the 1939
Act and the applicable rules and regulations of the SEC
thereunder, and nothing has come to their attention in the
course of such review that has caused them to believe that,
insofar as relevant to the offering of the Notes, any part of
the Registration Statement, when such part became effective,
contained any untrue statement of a material fact or omitted
to state any material fact required to be stated therein or
necessary to make the statements therein not misleading or
that, insofar as relevant to the offering of the Notes, the
Prospectus, as of the date of the prospectus supplement or, if
applicable, the pricing supplement forming a part thereof, or,
if applicable, the applicable Settlement Date, contained any
untrue statement of a material fact or omitted to state any
material fact necessary in order to make the statements
therein, in the light of the circumstances under which they
were made, not misleading. Such counsel may say that the
limitations inherent in the independent verification of
factual matters and the character of determinations involved
in the registration process are such, however, that they do
not assume any responsibility for the accuracy, completeness
or fairness of the statements contained in the Registration
Statement or the Prospectus, or any amendment or supplement
thereto, except (i) for those made under the captions
"Description of Debt Securities We May Offer" and "Plan of
Distribution" in the Prospectus, under the captions
"Description of Notes We May Offer" and "Supplemental Plan of
Distribution" in the prospectus supplement forming a part of
the Prospectus and under the captions "Description of the
Notes" and "Underwriting," or similar or comparable captions,
in any pricing supplement forming a part of the Prospectus,
insofar as they relate to provisions therein described, of the
Notes, the Guarantees, the Indenture and this Agreement and,
if applicable, such Terms Agreement and (ii) the accuracy of
the descriptions of the Federal laws of the United States
contained in the prospectus supplement forming a part of the
Prospectus under the
15
caption "United States Taxation," and that they do not express
any opinion or belief as to the financial statements or other
financial data contained in the Registration Statement or the
Prospectus, or any amendment or supplement thereto, or as to
the statement of the eligibility of the Trustee under the
Indenture. Such counsel may also say that their letter is
furnished to the Agents by them as counsel for the Company and
the Guarantor and is solely for the benefit of the Agents.
Such counsel may base their opinions, as to certain matters, on
certificates of officers of the Company and the Guarantor and may rely as to all
matters relating to the laws of the Commonwealth of Puerto Rico upon the opinion
of Brunilda Santos de Alvarez, Esq., delivered pursuant to Section 5(a)(2)
hereof.
(2) Opinion of Puerto Rico Counsel to the Company and the
Guarantor. The opinion of Brunilda Santos de Alvarez, Esq., Puerto Rico
Counsel to the Company and the Guarantor, to the effect that:
(i) The Guarantor has been duly incorporated and is
validly existing as a corporation in good standing under the
laws of the Commonwealth of Puerto Rico.
(ii) The Guarantor has corporate power and authority
to own, lease and operate its properties and to conduct its
business as described in the Registration Statement.
(iii) The Guarantor is not required to register as a
foreign corporation in any jurisdiction in order to conduct
the business presently conducted by it.
(iv) Each Significant Subsidiary has been duly
incorporated and is validly existing as a corporation or a
bank in good standing under the laws of the jurisdiction of
its incorporation, has the corporate or other organizational
power and authority to own, lease and operate its properties
and to conduct its business as described in the Registration
Statement, and, to the best of such counsel's knowledge and
information, is duly qualified as a foreign corporation to
transact business and is in good standing in each jurisdiction
in which it owns or leases substantial properties or in which
such qualification is required, whether by reason of the
ownership or leasing of property or the conduct of business,
except where the failure to so qualify and be in good standing
would not have a material adverse effect on the Guarantor and
its subsidiaries taken as a whole; and all of the issued and
outstanding capital stock of each such Significant Subsidiary
has been duly authorized and validly issued and is fully paid
and non-assessable (subject to the provisions of Section 55 of
Title 12 of the United States Code in the case of Significant
Subsidiaries which are national banking associations) and,
except for directors' qualifying shares, is owned, directly or
through such subsidiaries, by the Guarantor free and clear of
any security interest, mortgage, pledge, lien, encumbrance,
claim or equity.
16
(v) This Agreement and, if applicable, such Terms
Agreement, have been duly authorized, executed and delivered
by the Guarantor.
(vi) The Indenture has been duly and validly
authorized, executed and delivered by the Company and the
Guarantor and constitutes a valid and legally binding
obligation of the Company and the Guarantor 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.
(vii) The issuance of the Guarantees has been duly
authorized, the Guarantees have been established in conformity
with the Indenture and, when the terms of a particular Note
and of its issuance and sale have been duly authorized and
established by all necessary corporate action in conformity
with the Indenture, such Note has been duly prepared,
executed, authenticated and issued in accordance with the
Indenture and delivered against payment in accordance with
this Agreement, and the Guarantee endorsed on such Note has
been duly executed in accordance with the Indenture, such
Guarantee will constitute a valid and legally binding
obligation of the Guarantor 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; and the Guarantees will be
entitled to the benefits of the Indenture.
(viii) All regulatory consents, authorizations,
approvals and filings required to be obtained or made by the
Company or the Guarantor on or prior to the date hereof or
such Settlement Date, as the case may be, under the laws of
the Commonwealth of Puerto Rico for the issuance, sale and
delivery of the Notes by the Company to or through the Agents
in accordance with this Agreement have been obtained or made;
provided, however, that such counsel need express no opinion
with respect to state securities laws.
(ix) To the best of such counsel's knowledge, neither
the Company, the Guarantor nor any of the Significant
Subsidiaries is in violation of its charter or by-laws or in
default in the performance or observance of any material
obligation, agreement, covenant or condition contained in any
contract, indenture, mortgage, loan agreement, note or lease
known to such counsel to which it or any of them is a party or
by which their properties may be bound; the execution and
delivery by the Company and the Guarantor of the Indenture,
this Agreement and any Terms Agreement do not, and the
preparation, execution and issuance of each particular Note
and Guarantee in accordance with the Indenture, the sale by
the Company of such Note in accordance with this Agreement,
and the performance by the Company and the Guarantor of their
respective obligations under the Indenture, this Agreement,
the Notes, any Terms Agreement and the Guarantees will not (a)
violate the certificate of incorporation or by-laws of the
Company or the Guarantor as in effect as at the date of such
opinion, (b) violate any existing Federal law of the United
States or any existing law of the Commonwealth of
17
Puerto Rico applicable to the Company or the Guarantor, (c)
constitute a breach of, or a default under, or result in the
creation or imposition of any lien, charge or encumbrance upon
any property or assets of the Company, the Guarantor or any
Significant Subsidiaries pursuant to any contract, indenture,
mortgage, loan agreement, note, lease or other instrument
known to such counsel to which the Company, the Guarantor or
any of the Significant Subsidiaries is a party or by which any
of them may be bound, or to which any of the property or
assets of the Company, the Guarantor or any of the Significant
Subsidiaries is subject or (d) violate any administrative or
court decree as applicable to the Company, the Guarantor or
any Significant Subsidiary or having jurisdiction over the
Company, the Guarantor or any Significant Subsidiary, which
breach, default, creation, imposition or violation would, in
each case, have a material adverse effect on the Guarantor and
its subsidiaries considered as a whole; provided, however,
that, for purposes of this paragraph (ix), such counsel need
express no opinion with respect to Federal or state securities
laws, other antifraud laws, fraudulent transfer laws, the
Employee Retirement Income Security Act of 1974 and related
laws, and laws that restrict transactions between United
States persons and citizens or residents of certain foreign
countries or specially designated nationals and organizations;
provided, further, that insofar as performance by the Company
and the Guarantor of their respective obligations under the
Indenture, this Agreement, any Terms Agreement, the Notes and
the Guarantees is concerned, such counsel need express no
opinion as to bankruptcy, insolvency, reorganization,
moratorium and similar laws of general applicability relating
to or affecting creditors' rights.
(x) To the best of such counsel's knowledge and
information, there are no legal or governmental proceedings
pending or threatened which are required to be disclosed in
the Prospectus, other than those disclosed therein, and all
pending legal or governmental proceedings to which the
Company, the Guarantor or any of its subsidiaries is a party
or to which any of its property or assets is subject which are
not described in the Registration Statement, including
ordinary routine litigation incidental to the business of the
Company, the Guarantor or any such subsidiary, are, considered
in the aggregate, not material.
(xi) To the best of such counsel's knowledge, there
are no contracts, indentures, mortgages, loan agreements,
notes, leases or other instruments or documents required to be
described or referred to in the Registration Statement or to
be filed as exhibits thereto other than those described or
referred to therein or filed or incorporated by reference as
exhibits thereto; and the descriptions thereof or references
thereto are correct.
(xii) The Registration Statement is effective under
the 1933 Act and, to the best of such counsel's knowledge, no
stop order suspending the effectiveness of the Registration
Statement has been issued under the 1933 Act or proceedings
therefor initiated or threatened by the SEC.
18
(xiii) Each document filed pursuant to the 1934 Act
and incorporated by reference in the Prospectus complied when
filed as to form in all material respects with the 1934 Act
and the 1934 Act Regulations.
(xiv) As counsel to the Company and the Guarantor
such counsel has reviewed the Registration Statement and the
Prospectus, and any amendment or supplement thereto,
participated in discussions with representatives of the Agents
and those of the Guarantor, the Company and their accountants,
and on the basis of the information that such counsel gained
in the course of the performance of her services, considered
in the light of her understanding of the applicable law,
including the requirements of Form S-3 and the character of
the prospectus contemplated thereby, such counsel confirms
that, in her opinion, each part of the Registration Statement,
when such part became effective, and the Prospectus, as of the
date of the prospectus supplement or, if applicable, the
pricing supplement forming a part thereof, appeared on their
face to be appropriately responsive in all material respects
to the requirements of the 1933 Act, the 1939 Act and the
applicable rules and regulations of the SEC thereunder; and
that nothing has come to her attention in the course of her
review that has caused her to believe that any part of the
Registration Statement, when such part became effective,
contained any untrue statement of a material fact or omitted
to state any material fact required to be stated therein or
necessary to make the statements therein not misleading; or
that the Prospectus, on the date of the prospectus supplement
or, if applicable, the pricing supplement forming a part
thereof, or (if such opinion is being delivered in connection
with a Terms Agreement pursuant to Section 3(b) hereof) at the
date of any Terms Agreement and at the Settlement Date with
respect thereto, as the case may be, contained any untrue
statement of a material fact or omitted to state a material
fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not
misleading. Such counsel may say that the limitations inherent
in the independent verification of factual matters and the
character of determinations involved in the registration
process are such that she does not assume any responsibility
for the accuracy, completeness or fairness of the statements
contained in the Registration Statement or the Prospectus, or
any amendment or supplement thereto, except for those made
under the captions "Description of Debt Securities We May
Offer" and "Plan of Distribution" in the Prospectus, under the
captions "Description of Notes We May Offer" and "Supplemental
Plan of Distribution" in the prospectus supplement forming a
part of the Prospectus and under the captions "Description of
the Notes" and "Underwriting," or similar or comparable
captions, in any pricing supplement forming a part of the
Prospectus, insofar as they relate to provisions therein
described of the Notes, the Guarantees, the Indenture and this
Agreement and, if applicable, such Terms Agreement and under
"Item 1--Business--Regulation and Supervision" in the
Guarantor's Annual Report on Form 10-K insofar as they relate
to provisions of documents therein described and that she does
not express any opinion or belief as to the financial
statements or other financial data contained in the
Registration Statement or the Prospectus, or any amendment or
supplement thereto, or as to the statement of eligibility of
the Trustee under the Indenture; and that her letter is
furnished as counsel for the
19
Company and the Guarantor to the Agents and is solely for the
benefit of the Agents.
Such counsel may base her opinion, as to certain matters, on
certificates of officers of the Company and the Guarantor and may rely as to all
matters relating to the laws of the State of New York and the General
Corporation Law of the State of Delaware upon the opinion of Sullivan & Cromwell
LLP, delivered pursuant to Section 5(a)(1).
(3) Opinion of Counsel to the Agents. The opinion of Sidley
Austin Brown & Wood LLP, counsel to the Agents, covering the matters
referred to in subparagraph (1) above under the subheadings (i), (iv),
(v), (vi), (viii) and (x), and subparagraph (2) above under the
subheading (xii). Sidley Austin Brown & Wood LLP shall additionally
state that no facts have come to their attention that would cause them
to believe that (other than (i) the financial statements, schedules and
other financial data included or incorporated by reference therein or
omitted therefrom and (ii) the statement of eligibility of the Trustee,
as to which such counsel is not requested to comment) the Registration
Statement, at the time it became effective or, if an amendment to the
Registration Statement or an Annual Report on Form 10-K has been filed
by the Guarantor with the SEC subsequent to the effectiveness of the
Registration Statement, then at the time such amendment became
effective or at the time of the most recent such filing, at the date
hereof, or (if such opinion is being delivered in connection with a
Terms Agreement pursuant to Section 3(b) hereof) at the date of any
Terms Agreement, as the case may be, contained an 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 amended or supplemented at the date hereof or
(if such opinion is being delivered in connection with a Terms
Agreement pursuant to Section 3(b) hereof) at the date of any Terms
Agreement or at the Settlement Date with respect thereto, as the case
may be, included or includes, as the case may be, an untrue statement
of a material fact or omitted or omits, as the case may be, 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.
(b) Officer's Certificates. At the date hereof, and, if required in any
applicable Terms Agreement, on the Settlement Date with respect to such Terms
Agreement, the Agents shall have received certificates of the President or Vice
President of each of the Company and the Guarantor, dated as of the date hereof
or such Settlement Date, as the case may be, to the effect that (i) since the
respective dates as of which information is given in the Registration Statement
and the Prospectus or since the time that any applicable Terms Agreement was
entered into, there has not been any material adverse change in the condition,
financial or otherwise, or in the earnings, business affairs or business
prospects of the Guarantor and its subsidiaries considered as one enterprise,
whether or not arising in the ordinary course of business, (ii) the other
representations and warranties of the Company and the Guarantor contained in
Section 2 hereof are true and correct with the same force and effect as though
expressly made at and as of the date of such certificate, (iii) the Company and
the Guarantor have performed or complied with all agreements and satisfied all
conditions on their respective parts to be performed or satisfied at or prior to
the date of such certificate and (iv) no stop order suspending the effectiveness
of the
20
Registration Statement has been issued and no proceedings for that purpose have
been initiated or threatened by the SEC.
(c) Comfort Letter. On the date hereof and, if required by any
applicable Terms Agreement, the Settlement Date with respect to such Terms
Agreement, the Agents or the applicable Agent(s), as the case may be, shall
receive a letter from PricewaterhouseCoopers LLP, the Guarantor's independent
public accountants, dated as of the date hereof or such Settlement Date, as the
case may be, in form and substance reasonably satisfactory to the Agents or the
applicable Agent(s), as the case may be, containing statements and information
of the type ordinarily included in accountants' "comfort letters" to
underwriters with respect to the financial statements and certain financial
information contained in or incorporated by reference in the Registration
Statement and the Prospectus, and confirming that they are independent
accountants within the meaning of the 1933 Act and the 1933 Act Regulations.
(d) Other Documents. On the date hereof and, if counsel to the Agents
is required to deliver its opinion in accordance with any applicable Terms
Agreement, on each Settlement Date with respect to such Terms Agreement, counsel
to the Agents shall have been furnished with such documents as such counsel may
reasonably require for the purpose of enabling such counsel to pass upon the
issuance and sale of Notes and issuance of the related Guarantees as herein
contemplated and related proceedings and all proceedings taken by the Company or
the Guarantor in connection with the issuance and sale of Notes or issuance of
the related Guarantees, as the case may be, as herein contemplated shall be
satisfactory in form and substance to the Agents and to counsel to the Agents.
If any condition specified in this Section 5 shall not have been
fulfilled when and as required to be fulfilled, this Agreement (or, at the
option of the applicable Agent(s), any applicable Terms Agreement) may be
terminated by the Agents or the applicable Agent(s), as the case may be, by
notice to the Company at any time and any such termination shall be without
liability of any party to any other party, except that the covenant regarding
provision of an earnings statement set forth in Section 4(h) hereof, the
provisions concerning payment of expenses under Section 10 hereof, the indemnity
and contribution agreement set forth in Sections 8 and 9 hereof, the provisions
concerning the representations, warranties and agreements to survive delivery of
Section 11 hereof, the provisions set forth under "Parties" of Section 15 hereof
and the provisions of Sections 14 and 16 hereof shall remain in effect.
SECTION 6. Delivery of and Payment for Notes Sold through the Agents.
Delivery of Notes sold through an Agent as agent shall be made by the
Company to such Agent for the account of any purchaser only against payment
therefor in immediately available funds. In the event that a purchaser shall
fail either to accept delivery of or to make payment for a Note on the date
fixed for settlement, such Agent shall promptly notify the Company and deliver
the Note to the Company, and, if such Agent has theretofore paid the Company for
such Note, the Company will promptly return such funds to such Agent. If such
failure occurred for any reason other than default by such Agent in the
performance of its obligations hereunder, the Company will reimburse such Agent
on an equitable basis for its loss of the use of the funds for the period such
funds were credited to the Company's account.
21
SECTION 7. Additional Covenants of the Company and the Guarantor.
The Company and the Guarantor jointly and severally covenant with the
Agents as follows:
(a) Reaffirmation of Representations and Warranties. Each acceptance by
it of an offer for the purchase of Notes, and each delivery of Notes to one or
more Agents pursuant to a Terms Agreement, shall be deemed to be an affirmation
that the representations and warranties of the Company and the Guarantor
contained in this Agreement and in any certificate theretofore delivered to the
Agents pursuant hereto are true and correct at the time of such acceptance or
sale, as the case may be, and an undertaking that such representations and
warranties will be true and correct at the time of delivery to the purchaser or
his agent, or to the Agents, of the Note or Notes relating to such acceptance or
sale, as the case may be, as though made at and as of each such time (and it is
understood that such representations and warranties shall relate to the
Registration Statement and Prospectus as amended and supplemented to each such
time).
(b) Subsequent Delivery of Certificates. Each time that the
Registration Statement or the Prospectus shall be amended or supplemented (other
than by an amendment or supplement providing information solely with respect to
the terms of Notes and other than by an amendment or supplement which relates
exclusively to an offering of securities other than the Notes) and each time
that the Company sells Notes to or through one or more Agents, unless waived by
the Agent(s) participating in such sale, the Company shall furnish or cause to
be furnished to the Agents or the applicable Agent(s), as the case may be,
forthwith certificates dated the date of filing with the SEC of such supplement,
the date of effectiveness of such amendment or the date of such sale, as the
case may be, in form satisfactory to the Agents or the applicable Agent(s), as
the case may be, to the effect that the statements contained in the certificates
referred to in Section 5(b) hereof which were last furnished to the Agents are
true and correct at the time of such amendment, supplement or sale, as the case
may be, as though made at and as of such time (except that such statements shall
be deemed to relate to the Registration Statement and the Prospectus as amended
and supplemented to such time) or, in lieu of such certificates, certificates of
the same tenor as the certificates referred to in said Section 5(b), modified as
necessary to relate to the Registration Statement and the Prospectus as amended
and supplemented to the time of delivery of such certificates.
(c) Subsequent Delivery of Legal Opinions. Each time that the
Registration Statement or the Prospectus shall be amended or supplemented (other
than by an amendment or supplement providing information solely with respect to
the terms of Notes or solely for the inclusion of additional financial
information, and, unless the Agents shall otherwise specify, other than by an
amendment or supplement which relates exclusively to an offering of securities
other than the Notes) and each time that the Company sells Notes to or through
one or more Agents, unless waived by the Agent(s) participating in such sale,
the Company shall furnish or cause to be furnished forthwith to the Agents or
the applicable Agent(s), as the case may be, with a copy to counsel to the
Agents, a written opinion or opinions of counsel to the Company and the
Guarantor satisfactory to the Agents or the applicable Agent(s), as the case may
be, dated the date of filing with the SEC of such supplement, the date of
effectiveness of such amendment, or the date of such sale, as the case may be,
in form and substance satisfactory to the Agents or the applicable Agent(s), as
the case may be, of the same tenor as the opinions referred to in Section
22
5(a) (1) and (2) hereof, but modified, as necessary, to relate to the
Registration Statement and the Prospectus as amended and supplemented to the
time of delivery of such opinion; or, in lieu of such opinion or opinions,
counsel last furnishing such opinion to the Agents shall furnish the Agents or
the applicable Agent(s), as the case may be, with a letter to the effect that
the Agents or the applicable Agent(s), as the case may be, may rely on such last
opinion to the same extent as though it was dated the date of such letter
authorizing reliance (except that statements in such last opinion shall be
deemed to relate to the Registration Statement and the Prospectus as amended and
supplemented to the time of delivery of such letter authorizing reliance).
(d) Subsequent Delivery of Comfort Letters. Each time that the
Registration Statement or the Prospectus shall be amended or supplemented to
include additional financial information and each time that the Company sells
Notes to or through one or more Agents, unless waived by the Agent(s)
participating in such sale, the Guarantor shall cause PricewaterhouseCoopers LLP
forthwith to furnish the Agents or the applicable Agent(s), as the case may be,
with a letter, dated the date of effectiveness of such amendment or supplement,
or the date of such sale, as the case may be, in form and substance reasonably
satisfactory to the Agents or the applicable Agent(s), as the case may be, of
the same tenor as the portions of the letter referred to in Section 5(c) hereof
but modified to relate to the Registration Statement and Prospectus, as amended
and supplemented to the date of such letter: provided, however, that if the
Registration Statement or the Prospectus is amended or supplemented solely to
include financial information as of and for a fiscal quarter,
PricewaterhouseCoopers LLP may limit the scope of such letter to the unaudited
financial statements included in such amendment or supplement unless any other
information included therein of an accounting, financial or statistical nature
is of such a nature that, in the reasonable judgment of the Agents or the
applicable Agent(s), as the case may be, such letter should cover such other
information.
SECTION 8. Indemnification.
(a) Indemnification of the Agents. The Company and the Guarantor
jointly and severally agree to indemnify and hold harmless each Agent and each
person, if any, who controls such Agent within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement or
alleged untrue statement of a material fact contained in the
Registration Statement (or any amendment thereto), or the omission or
alleged omission therefrom of a material fact required to be stated
therein or necessary to make the statements therein not misleading, or
arising out of any untrue statement or alleged untrue statement of a
material fact included in any preliminary prospectus or the Prospectus
(or any amendment or supplement thereto), or the omission or alleged
omission therefrom of a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading unless such untrue statement or omission or
alleged untrue statement or omission was made in reliance upon and in
conformity with written information furnished to the Company and the
Guarantor by the Agents expressly for use in the Registration Statement
or the Prospectus;
23
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened,
or any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission, if such
settlement is effected with the written consent of the Company and the
Guarantor; and
(iii) against any and all expense whatsoever, as incurred
(including the fees and disbursements of counsel chosen by such Agent),
reasonably incurred in investigating, preparing or defending against
any litigation, or any investigation or proceeding by any governmental
agency or body, commenced or threatened, or any claim whatsoever based
upon any such untrue statement or omission, or any such alleged untrue
statement or omission, to the extent that any such expense is not paid
under subparagraph (i) or (ii) above.
The indemnity is subject to the conditions that, insofar as it relates
to any untrue statement or omission, or any alleged untrue statement or
omission, made in a preliminary prospectus or the Prospectus but eliminated or
remedied in the Prospectus or in an amended or supplemented Prospectus, as the
case may be, at the time of the sale of the related Note, it shall not inure to
the benefit of an Agent (or to the benefit of any person who controls such
Agent) if a copy of the Prospectus or the Prospectus as amended or supplemented
at the time of the sale of such Note, as the case may be, excluding documents
incorporated therein by reference, was delivered by the Company or the Guarantor
to such Agent a reasonable amount of time in advance of the delivery of written
confirmations by such Agent to investors but such Agent failed to deliver such
Prospectus or the Prospectus as amended or supplemented, as the case may be, to
the person in question at or prior to the time required by the 1933 Act and the
receipt of such Prospectus or the Prospectus as amended or supplemented, as the
case may be, would have constituted a sufficient defense to the claim asserted
by such person.
(b) Indemnification of Company, Guarantor, Directors and Officers. Each
Agent severally agrees to indemnify and hold harmless the Company and the
Guarantor, their directors, each of their officers who signed the Registration
Statement and each person, if any, who controls the Company or the Guarantor
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act
against any and all loss, liability, claim, damage and expense described in the
indemnity contained in Section 8(a) hereof, as incurred, but only with respect
to untrue statements or omissions, or alleged untrue statements or omissions,
made in the Registration Statement (or any amendment thereto) or any preliminary
prospectus or the Prospectus (or any amendment or supplement thereto) in
reliance upon and in conformity with written information furnished to the
Company or the Guarantor by such Agent expressly for use in the Registration
Statement (or any amendment thereto) or such preliminary prospectus or the
Prospectus (or any amendment or supplement thereto).
(c) Actions Against Parties; Notification. Each indemnified party shall
give prompt notice to each indemnifying party of any action commenced against it
in respect of which indemnity may be sought hereunder, but failure to so notify
an indemnifying party shall not relieve such indemnifying party from any
liability which it may have otherwise than on account of this indemnity
agreement. In the case of parties indemnified pursuant to Section 8(a) hereof,
24
counsel to the indemnified parties shall be selected by the applicable Agent(s)
and, in the case of parties indemnified pursuant to Section 8(b) hereof, counsel
to the indemnified parties shall be selected by the Company and the Guarantor.
An indemnifying party may participate at its own expense in the defense of any
such action; provided, however, that counsel to the indemnifying party shall not
(except with the consent of each indemnified party) also be counsel to any
indemnified party. In no event shall the indemnifying parties be liable for fees
and expenses of more than one counsel (in addition to any local counsel)
separate from their own counsel for all indemnified parties in connection with
any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances.
No indemnifying party shall, without the prior written consent of the
indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim
whatsoever in respect of which indemnification or contribution could be sought
under this Section 8 or Section 9 hereof (whether or not the indemnified parties
are actual or potential parties thereto), unless such settlement, compromise or
consent (i) includes an unconditional release of each indemnified party from all
liability arising out of such litigation, investigation, proceeding or claim and
(ii) does not include a statement as to or an admission of fault, culpability or
a failure to act by or on behalf of any indemnified party.
SECTION 9. Contribution. If the indemnification provided for in Section 8 hereof
is for any reason unavailable to or insufficient to hold harmless an indemnified
party in respect of any losses, liabilities, claims, damages or expenses
referred to therein, then each indemnifying party shall contribute to the
aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company and the
Guarantor, on the one hand, and the applicable Agent(s), on the other hand, from
the offering of the Notes that were the subject of the claim for indemnification
or (ii) if the allocation provided by 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
Company or the Guarantor, on the one hand, and the applicable Agent(s), on the
other hand, in connection with the statements or omissions which resulted in
such losses, liabilities, claims, damages or expenses, as well as any other
relevant equitable considerations.
The relative benefits received by the Company and the Guarantor, on the
one hand, and the applicable Agent(s), on the other hand, in connection with the
offering of the Notes that were the subject of the claim for indemnification
shall be deemed to be in the same respective proportions as the total net
proceeds from the offering of such Notes (before deducting expenses) received by
the Company and the Guarantor and the total discount or commission received by
each applicable Agent, as the case may be, bears to the aggregate initial
offering price of such Notes.
The relative fault of the Company or the Guarantor, on the one hand,
and the applicable Agent(s), on the other hand, shall be determined by reference
to, among other things, whether any untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates
to information supplied by the Company, the Guarantor or by the
25
applicable Agent(s) and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company, the Guarantor and the Agents agree that it would not be
just and equitable if contribution pursuant to this Section 9 were determined by
pro rata allocation (even if the applicable Agent(s) were treated as one entity
for such purpose) or by any other method of allocation which does not take
account of the equitable considerations referred to above in this Section 9. The
aggregate amount of losses, liabilities, claims, damages and expenses incurred
by an indemnified party and referred to above in this Section 9 shall be deemed
to include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any applicable untrue or alleged
untrue statement or omission or alleged omission.
Notwithstanding the provisions of this Section 9, (i) no Agent shall be
required to contribute any amount in excess of the amount by which the total
discount or commission received by such Agent in connection with the offering of
the Notes that were the subject of the claim for indemnification exceeds the
amount of any damages which such Agent has otherwise been required to pay by
reason of any applicable untrue or alleged untrue statement or omission or
alleged omission and (ii) no person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the 1933 Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. In addition, in connection with an offering of Notes
purchased from the Company by two or more Agents as principal, the respective
obligations of such Agents to contribute pursuant to this Section 9 are several,
and not joint, in proportion to the aggregate principal amount of Notes that
each such Agent has agreed to purchase from the Company.
For purposes of this Section, each person, if any, who controls an
Agent within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934
Act shall have the same rights to contribution as such Agent, and each director
of the Company or the Guarantor, each officer of the Company or the Guarantor
who signed the Registration Statement and each person, if any, who controls the
Company or the Guarantor within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act shall have the same rights to contribution as the
Company or the Guarantor, as the case may be.
SECTION 10. Payment of Expenses.
The Company and the Guarantor shall pay all expenses incident to the
performance of their respective obligations under this Agreement, including:
(i) The preparation and filing of the Registration Statement
and all amendments thereto and the Prospectus and any amendments or
supplements thereto;
(ii) The preparation, filing and reproduction of this
Agreement;
(iii) The preparation, printing, issuance and delivery of the
Notes and the related Guarantees, including any fees and expenses
relating to the use of book-entry notes;
26
(iv) The fees and disbursements of the Company's accountants
and counsel, of the Trustee and its counsel, and of any calculation
agent or exchange rate agent;
(v) The reasonable fees and disbursements of counsel to the
Agents incurred from time to time in connection with the transactions
contemplated hereby;
(vi) The qualification of the Notes and the related Guarantees
under state securities laws in accordance with the provisions of
Section 4(i) hereof, including filing fees and the reasonable fees and
disbursements of legal counsel in connection therewith and in
connection with the preparation of any Blue Sky Survey and any Legal
Investment Survey;
(vii) The printing and delivery to the Agents in quantities as
hereinabove stated of copies of the Registration Statement and any
amendments thereto, and of the Prospectus and any amendments or
supplements thereto, and the delivery by the Agents of the Prospectus
and any amendments or supplements thereto in connection with
solicitations or confirmations of sales of the Notes;
(viii) The preparation, printing, reproducing and delivery to
the Agents of copies of the Indenture and all supplements and
amendments thereto;
(ix) Any fees charged by rating agencies for the rating of the
Notes;
(x) Any advertising and other out-of-pocket expenses of the
Agents incurred with the written approval of the Company and the
Guarantor;
(xi) The cost of preparing and providing any CUSIP or other
identification numbers for the Notes; and
(xii) The fees and expenses of any Depositary (as defined in
the Indenture) and any nominees thereof in connection with the Notes.
SECTION 11. Representations, Warranties and Agreements to Survive Delivery.
All representations, warranties and agreements contained in this
Agreement or in certificates of officers of the Company or the Guarantor
submitted pursuant hereto or thereto shall remain operative and in full force
and effect, regardless of any investigation made by or on behalf of the Agents
or any controlling person of the Agents, or by or on behalf of the Company or
the Guarantor, and shall survive each delivery of and payment for any of the
Notes.
SECTION 12. Termination.
(a) Termination of This Agreement. This Agreement (excluding any Terms
Agreement with one or more Agents to purchase Notes from the Company as
principal) may be terminated for any reason, at any time by either the Company
and the Guarantor or an Agent, as to itself, upon the giving of prior written
notice of such termination to the other party hereto.
27
(b) Termination of a Terms Agreement to Purchase Notes as Principal.
The applicable Agent(s) may terminate any Terms Agreement with such Agent(s) to
purchase Notes from the Company as principal, immediately upon notice to the
Company and the Guarantor, at or at any time prior to the Settlement Date
relating thereto, if (i) there has been, since the date of such Terms Agreement
or since the respective dates as of which information is given in the
Prospectus, any material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs or business prospects of the
Guarantor and its subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business, (ii) there has occurred any material
adverse change in the financial markets in the United States or, if such Notes
are denominated and/or payable in, or indexed to, one or more foreign
currencies, in the international financial markets, or any outbreak or
escalation of hostilities or other national or international calamity or crisis,
in each case the effect of which is such as to make it, in the judgment of such
Agent(s), impracticable to market such Notes or enforce contracts for the sale
of such Notes, (iii) trading in any securities of the Company or the Guarantor
has been suspended or materially limited by the SEC or a national securities
exchange, or if trading generally on the New York Stock Exchange or the American
Stock Exchange or in the Nasdaq National Market has been suspended or materially
limited, or minimum or maximum prices for trading have been fixed, or maximum
ranges for prices for securities have been required, by either of said exchanges
or by such system or by order of the SEC, the NASD or any other governmental
authority, (iv) a general banking moratorium has been declared by U.S. federal,
New York or Puerto Rico authorities or by the relevant authorities in the
country or countries of origin of any non-U.S. currency in which such Notes are
denominated and/or payable or (v) the rating assigned by any nationally
recognized statistical rating organization to the Medium-Term Note Program or
any debt securities (including the Notes) of the Company or the Guarantor as of
the date of such agreement shall have been lowered or withdrawn since that date
or if any such rating organization shall have publicly announced that it has
under surveillance or review (other than with positive implications) its rating
of the Medium-Term Note Program or any such debt securities.
(c) General. In the event of any such termination, no party will have
any liability to any other party hereto, except that (i) the Agents shall be
entitled to any commissions earned in accordance with the third paragraph of
Section 3(a) hereof, (ii) if at the time of termination (a) any Agent shall own
any Notes purchased by it from the Company as principal or (b) an offer to
purchase any of the Notes has been accepted by the Company but the time of
delivery to the purchaser or his agent of such Notes relating thereto has not
occurred, the covenants set forth in Sections 4 and 7 hereof shall remain in
effect until such Notes are so resold or delivered, as the case may be, and
(iii) the covenant set forth in Section 4(h) hereof, the provisions of Section
10 hereof, the indemnity and contribution agreements set forth in Sections 8 and
9 hereof, and the provisions of Sections 11, 14, 15 and 16 hereof shall remain
in effect.
SECTION 13. Notices.
Unless otherwise provided herein, all notices required under the terms
and provisions hereof shall be in writing, either delivered by hand, by mail or
by telex, telecopier or telegram, and any such notice shall be effective when
received at the address specified below.
28
If to the Company or the Guarantor:
Popular, Inc.
209 Munoz Rivera Avenue
Hato Rey, Puerto Rico 00918
Attention: Brunilda Santos de Alvarez, Esq.,
Telecopy No.: (787) 756-0277
If to the Agents:
[ ]
or at such other address as such parties may designate from time to time by
notice duly given in accordance with the terms of this Section 13.
SECTION 14. Governing Law.
This Agreement and all the rights and obligations of the parties shall
be governed by and construed in accordance with the laws of the State of New
York applicable to agreements made and to be performed in such State. Any suit,
action or proceeding brought by the Company or the Guarantor against any Agent
in connection with or arising under this Agreement shall be brought solely in
the state or federal court of appropriate jurisdiction located in the Borough of
Manhattan, The City of New York.
SECTION 15. Parties.
This Agreement shall inure to the benefit of and be binding upon the
Agents, the Company, the Guarantor and their respective successors. Nothing
expressed or mentioned in this Agreement is intended or shall be construed to
give any person, firm or corporation, other than the parties hereto and their
respective successors and the controlling persons and officers and directors
referred to in Sections 8 and 9 and their heirs and legal representatives, any
legal or equitable right, remedy or claim under or in respect of this Agreement
or any provision herein contained. This Agreement and all conditions and
provisions hereof are intended to be for the sole and exclusive benefit of the
parties hereto and respective successors and said controlling persons and
officers and directors and their heirs and legal representatives, and for the
benefit of no other person, firm or corporation. No purchaser of Notes shall be
deemed to be a successor by reason merely of such purchase.
SECTION 16. Consent to Jurisdiction; Appointment of Agent to Accept Service of
Process.
(a) The Guarantor irrevocably consents and agrees, for the benefit of
the holders from time to time of the Notes, the Agents and the other persons
referred to in Section 15 that any legal action, suit or proceeding against it
with respect to its obligations, liabilities or any other matter arising out of
or in connection with the Notes, this Agreement, any Terms Agreement or the
Guarantees may be brought in the courts of the State of New York located in The
City of New York or the courts of the United States of America located in The
City of New York and, until all amounts due and to become due in respect of all
the Notes or the Guarantees have been paid, or until any such legal action, suit
or proceeding commenced prior to such payment has been concluded, hereby
irrevocably consents and submits to the non-exclusive jurisdiction of
29
each such court in personam, generally and unconditionally with respect to any
action, suit or proceeding for itself and in respect of its properties, assets
and revenues.
(b) The Guarantor hereby irrevocably designates, appoints, and empowers
Brian Doran, with offices currently at Banco Popular North America, Legal
Division, 120 Broadway, 15th floor, New York, New York 10271, as its designee,
appointee and agent to receive, accept and acknowledge for and on its behalf,
service of any and all legal process, summons, notices and documents that may be
served in any action, suit or proceeding brought against the Guarantor in any
such United States or State court with respect to its obligations, liabilities
or any other matter arising out of or in connection with this Agreement, any
Terms Agreement or the Guarantees and that may be made on such designee,
appointee and agent in accordance with legal procedures prescribed for such
courts. If for any reason such designated agent shall cease to be available to
act as such, the Guarantor agrees to designate a new designee, appointee and
agent in The City of New York on the terms and for the purposes of this Section
16 reasonably satisfactory to the Agents. The Guarantor further hereby
irrevocably consents and agrees to the service of any and all legal process,
summons, notices and documents in any such action, suit or proceeding against it
by serving a copy thereof upon the relevant agent for service of process
referred to in this Section 16 (whether or not the appointment of such agent
shall for any reason prove to be ineffective or such agent shall accept or
acknowledge such service) or by mailing copies thereof to the Guarantor at its
address specified in or designated pursuant to this Agreement. The Guarantor
agrees that the failure of any such designee, appointee and agent to give any
notice of such service to it shall not impair or affect in any way the validity
of such service or any judgment rendered in any action or proceeding based
thereon. Nothing herein shall in any way be deemed to limit the ability of the
holders of the Notes, the Agents and the other persons referred to in Section 15
to serve such legal process, summons, notices and documents in any other manner
permitted by applicable law or to obtain jurisdiction over the Guarantor or
bring actions, suits or proceedings against the Guarantor in such other
jurisdictions, and in such manner, as may be permitted by applicable law. The
Guarantor hereby irrevocably and unconditionally waives, to the fullest extent
permitted by law, any objection that it may now or hereafter have to the laying
of venue of any of the aforesaid actions, suits or proceedings arising out of or
in connection with this Agreement or the Guarantees brought in the United States
federal courts located in The City of New York or the courts of the State of New
York located in The City of New York and hereby further irrevocably and
unconditionally waives and agrees not to plead or claim in any such court that
any such action, suit or proceeding brought in any such court has been brought
in an inconvenient forum.
(c) The provisions of this Section 16 shall survive any termination of
this Agreement, in whole or in part.
SECTION 17. Effect of Headings.
The Section headings herein are for convenience only and shall not
affect the construction hereof.
30
SECTION 18. Counterparts.
This Agreement may be executed in one or more counterparts and, if
executed in more than one counterpart, the executed counterparts hereof shall
constitute a single instrument.
If the foregoing is in accordance with the Agents' understanding of our
agreement, please sign and return to us a counterpart hereof, whereupon this
instrument along with all counterparts will become a binding agreement among the
Agents and the Company and the Guarantor in accordance with its terms.
Very truly yours,
POPULAR NORTH AMERICA, INC.
By:
---------------------------------
Name:
Title:
POPULAR, INC.
By:
---------------------------------
Name:
Title:
31
Accepted:
[ ]
By:
-----------------------------------
Name:
Title:
32
EXHIBIT A
SCHEDULE A
As compensation for the services of the Agents hereunder, the Company
shall pay the applicable Agent, on a discount basis, a commission for the sale
of each Note equal to the principal amount of such Note multiplied by the
appropriate percentage set forth below:
PERCENT OF
MATURITY RANGES PRINCIPAL AMOUNT
--------------- ----------------
From 9 months to less than 1 year.......................................... .125%
From 1 year to less than 18 months......................................... .150
From 18 months to less than 2 years........................................ .200
From 2 years to less than 3 years.......................................... .250
From 3 years to less than 4 years.......................................... .350
From 4 years to less than 5 years.......................................... .450
From 5 years to less than 6 years.......................................... .500
From 6 years to less than 7 years.......................................... .550
From 7 years to less than 10 years......................................... .600
From 10 years to less than 15 years........................................ .625
From 15 years to less than 20 years........................................ .700
From 20 years to 30 years.................................................. .750
Greater than 30 years...................................................... *
- ----------------------------
* As agreed to by the Company and the applicable Agent at the time of sale.
EXHIBIT A
PRICING TERMS
Principal Amount: $_______
(or principal amount of foreign or composite currency)
Interest Rate or Formula:
If Fixed Rate Note,
Interest Rate:
Regular Record Dates:
Interest Payment Dates:
If Floating Rate Note,
Interest Rate Basis:
Index Maturity:
Spread and/or Spread Multiplier, if any:
Initial Interest Rate, if any:
Maximum Rate, if any:
Minimum Rate, if any:
Interest Reset Dates:
Interest Determination Dates:
Interest Payment Dates:
Calculation Agent:
Redemption Provisions:
Redemption Commencement Date, if any:
Repayment Provisions:
Repayment Date(s), if any:
Original Issue Date:
Stated Maturity Date:
Specified Currency:
Exchange Rate Agent:
Denomination:
Purchase Price: ___%, plus accrued interest, if any, from ___________
Price to Public: ___%, plus accrued interest, if any, from __________
Issue Price:
Settlement Date and Time:
Additional/Other Terms:
Also, in connection with the purchase of Notes from the Company by one or more
Agents as principal, agreement as to whether the following will be required:
Officers' Certificates pursuant to Section 7(b) of the Distribution
Agreement.
Legal Opinions pursuant to Section 7(c) of the Distribution Agreement.
Comfort Letter pursuant to Section 7(d) of the Distribution Agreement.