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CREDIT AGREEMENT
CREDIT AGREEMENT, dated as of April 1, 1994 (the "Agreement") among
BANPONCE CORPORATION, a Puerto Rico corporation ("BanPonce"), BANPONCE
FINANCIAL CORP., a Delaware corporation ("Financial"), VEHICLE EQUIPMENT
LEASING COMPANY, INC., a Puerto Rico corporation ("VELCO") (BanPonce, Financial
and VELCO are sometimes collectively referred to herein as the "Companies" and,
singly, as a "Company"), and CHEMICAL BANK, acting through its New York head
office (the "Lender").
1. COMMITMENT
Subject to the terms of this Agreement, the Lender agrees to make
loans (the "Loans") to each of the Companies from the date hereof to and
including March 31, 1995 (the "Termination Date"). Each Company may borrow,
repay and reborrow from time to time prior to the Termination Date, provided
that the principal amount of all Loans outstanding at any one time shall not
exceed U.S. $25,000,000 (the "Aggregate Commitment") for all of the Companies.
The Loans shall be evidenced by notes (each, a "Note") duly executed and
delivered by each Company to the Lender in the form attached hereto as Exhibit
"A." This Agreement, the Notes and the Guaranty (as defined below) are herein
called the "Loan Documents."
2. DEFINITIONS
As used in this Agreement, the following capitalized terms shall
have the meanings ascribed to them below:
"BASE RATE" means the higher of (i) the rate designated by the
Lender from time to time as its prime rate in the United States, and (ii) .50%
(1/2%) plus the overnight federal funds rate as published by the Federal
Reserve Bank of New York. The Base Rate is a variable rate which will change
as and when such rates change.
"BUSINESS DAY" means a day other than a Saturday or Sunday on which
commercial banks are open for the conduct of general banking business in New
York and San Juan, Puerto Rico.
"CONSOLIDATED TANGIBLE NEW WORTH" shall mean as at any date the sum
of the capital stock and paid-in surplus, plus preferred stock plus retained
earnings (or minus accumulated deficit) of BanPonce and its Subsidiaries (as
defined in Section 6.1 below) on a consolidated basis minus intangible assets
(including, without limitation, franchises, goodwill, trademarks, unamortized
debt discount and expenses and all write-ups in book value of any asset).
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"INDEBTEDNESS" means each Company's and each Subsidiary's: (i)
obligations for borrowed money; (ii) obligations representing the deferred
purchase price of property other than accounts payable arising in connection
with the purchase of inventory on terms customary in the trade; (iii)
obligations, whether or not assumed, secured by liens or encumbrances on, or
payable out of the proceeds or production from, property now or hereafter owned
or acquired by the Companies or any Subsidiary: (iv) obligations which are
evidenced by notes, acceptances, or other instruments; and (v) capitalized
lease obligations, excluding liabilities of Banco Popular de Puerto Rico or any
Subsidiary Bank which are defined as deposits pursuant to Section 3(1) of the
Federal Deposit Insurance Act, as amended, 12 U.S.C. Section 1813 (1).
"LONG-TERM INDEBTEDNESS" as of any date shall mean all Indebtedness
which is not a current liability as of such date. For the purposes of this
definition, a current liability shall mean Indebtedness with a maturity date of
one year or less.
"MAXIMUM DOUBLE LEVERAGE" shall mean BanPonce's equity investments
in its Subsidiaries plus intangibles divided by the difference between
BanPonce's equity and goodwill.
"NON-PERFORMING ASSETS" shall consist of the sum of: (i) loans
which are ninety (90) days past due as to interest or principal; (ii) loans
which have been placed on non-accrual status by the primary regulator of the
relevant Company; (iii) loans that bear a rate of interest that has been
reduced below market rates due to the deteriorating financial condition of the
borrower; and (iv) assets that either have been acquired in satisfaction of
debt or have been classified as "in-substance foreclosures".
"TOTAL CAPITALIZATION" shall mean the sum of BanPonce's total
Equity Capital plus Long-Term Indebtedness.
"TOTAL EQUITY CAPITAL" means BanPonce's total equity capital
determined in a manner consistent with that used in preparing BanPonce's
consolidated financial statements as of December 31, 1992 plus any other
securities or forms of capital that is included as Tier I Capital of BanPonce
on a consolidated basis.
3. INTEREST, PRINCIPAL AND FEES
3.1 Interest Rate. Loans with a scheduled maturity of 30 days or
less will bear interest at a rate equal to the Base Rate plus 1/2% (.50%) per
annum. Loans with a scheduled maturity of 31 days or more will bear interest
at a rate equal to the Base Rate plus 1% per annum.
3.2 Principal and Interest Payment Dates. Any Loan made hereunder
shall be made with maturities of up to ninety (90) days from the date when made
or less, as notified to the Lender in writing by the borrowing Company at the
time a Loan is made. Each Loan shall be payable in full on its scheduled
maturity date. Interest on a Loan shall accrue daily and shall be
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calculated on the basis of a 360-day year and the actual number of days elapsed
and shall be payable monthly on the last day of each month and on the date of
maturity of such Loan.
3.3 Payments. All payments of principal of and interest and tees
on the Loans hereunder shall be made at the New York Office of the Lender, tree
and clear of any set-offs, counterclaim, deduction or withholding for any
reason whatsoever in immediately available funds. If any payment of principal
of or interest on a Loan shall become due on a day which is not a Business Day,
such payment shall be made on the next succeeding Business Day. Payments
received under the Loan Documents shall be applied against principal, interest
and other amounts then due from a Company in the order determined by the
Lender. A borrowing Company may, at any time when no Default shall exist
hereunder, upon not less than two (9) Business Days' prior written notice to
the Lender, prepay all or any portion of a Loan in a minimum amount of U.S. $2
million; provided, however, that any such prepayment must be accompanied by
interest to date on the Loan being prepaid.
3.4 Facility Fee. The Companies, jointly and severally, agree to
pay to the Lender a facility fee of 0.30% per annum on the daily unused portion
of the Aggregate Commitment from the date hereof to the Termination Date. The
facility fee shall be calculated on the basis of a year of 360 days and shall
be payable in arrears on the last Business Day of June, September, December and
March, and on the Termination Date.
3.5 Default Interest. From and after the occurrence of a Default
(as defined in Section 8 below), each Loan shall bear interest at the rate
equal to the Base Rate plus 2% until such default shall be cured; provided,
however, that after judgment, the Loan shall bear interest at the higher of
such rate or the rate provided by applicable law. Interest on any Loan
past-due shall be payable on demand.
4. CHANGE IN CIRCUMSTANCES
The Companies agree to pay to the Lender such amounts as will
compensate the Lender for any increase in the cost to the Lender of making or
maintaining any Loan hereunder or of maintaining its Commitment to make Loans
hereunder, by reason of a change in any reserve, tax, capital guidelines,
special deposits, or similar requirement with respect to assets of, deposits
with or for the account of, or credit extended by, or commitments extended by,
the Lender which are imposed on, or deemed applicable by, the Lender under any
law, treaty, rule, regulation (including, without limitation, Regulation D of
the Board of Governors of the Federal Reserve System), any interpretation
thereof by any governmental fiscal, monetary or other authority charged with
the administration thereof or having jurisdiction over such Loan or the Lender,
or any requirement imposed by any such authority, whether or not having the
force of law. Such additional amounts shall be payable on demand.
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5. CONDITIONS TO LENDING
5.1 The Initial Loan. The Lender's obligation to make the initial
Loan hereunder shall be conditioned upon the receipt by it of the following in
form and substance satisfactory to the Lender and its counsel:
(a) an opinion of counsel for each of the Companies in
the form of Exhibit "B" hereto;
(b) resolutions authorizing the borrowings hereunder of
each of the Company's board of directors along with specimen
signatures of each Company's authorized signatories certified by
each Company's Secretary;
(c) a Note made by each of the Companies in favor of
Lender in the amount of the Aggregate Commitment;
(d) a Guaranty and appropriate resolutions authorizing
the guaranty by BanPonce of the obligations of Financial and VELCO
hereunder, substantially in the form attached hereto as Exhibit "C"
(the "Guaranty");
(e) a certified copy of the Articles of Incorporation and
By-Laws of each of the Companies; and
(f) such other documents as the Lender shall reasonably
request.
5.2 Each Loan. The Lender shall not be obligated to make any Loan
hereunder unless, after giving effect to such Loan:
(a) there exists no Default or event which, with giving
of notice, or lapse of time, or both, would be a Default hereunder;
(b) the representations and warranties set forth in
Section 6 hereof are true and correct as of the borrowing date;
(c) all legal matters incident to making such Loan shall
be satisfactory to the Lender and its counsel; and
(d) the Lender shall be satisfied that no material
adverse change has occurred since the execution of this Agreement
in the financial condition, results of operations or prospects of
BanPonce or the Companies.
Each request for a Loan shall constitute a representation and
warranty by each Company as to the facts set forth in Sections 5.2 (a) and (b).
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6. REPRESENTATIONS
Each Company represents and warrants to the Lender that:
6.1 Corporate Existence and Standing. Such Company and each of
its Subsidiaries is a corporation duly incorporated, validly existing and in
good standing under the laws of its jurisdiction of incorporation, and has all
requisite authority to conduct its business in each jurisdiction in which its
business is conducted. As used in this Agreement "Subsidiary" means (i) any
corporation more than 5076 of the outstanding securities having ordinary voting
power of which shall at the time be owned or controlled, directly or
indirectly, by the Company or by one or more of its Subsidiaries; or (ii) any
partnership, association, joint venture or similar business organization more
than 50% of the ownership interests having ordinary voting power of which shall
at the time bc so owned or controlled.
6.2 Authorization and Validity. Such Company has the corporate
power and authority and legal right to execute and deliver the Loan Documents
to which it is a party and to perform its obligations thereunder. The
execution and delivery by such Company of such Loan Documents and the
performance of its obligations thereunder have been duly authorized by proper
corporate proceedings, and such Loan Documents constitute legal, valid and
binding obligations of such Company enforceable against such Company in
accordance with their terms.
6.3 No Conflict; Government Consent. Neither the execution and
delivery by such Company of the Loan Documents to which it is a party, nor the
consummation of the transactions therein contemplated, nor compliance with the
provisions thereof, will violate any law, rule, regulation, order, writ,
judgment, injunction, decree or award binding on such Company or any of its
Subsidiaries or such Company's or any Subsidiary's articles of incorporation or
by-laws or the provisions of any indenture, instrument or agreement to which
such Company or any of its Subsidiaries is a party or is subject, or by which
it, or its property, is bound, or conflict with or constitute a default
thereunder, or result in the creation or imposition of any lien or encumbrance
on the property of such Company or a Subsidiary pursuant to the terms of any
such indenture, instrument or agreement. No order, consent, approval, license,
authorization, or validation of, or filing, recording or registration with, or
exemption by, any governmental or public body or authority, or any subdivision
thereof, is required to authorize, or is required in connection with the
execution, delivery and performance of, or the legality, validity, binding
effect or enforceability of, such Loan Documents.
6.4 Financial Statements. The December 31, 1993 consolidated
financial statements of such Company and its Subsidiaries heretofore delivered
to the Lender were prepared in accordance with generally accepted accounting
principles in effect on the date such statements were prepared and fairly
present the consolidated financial condition and operations of such Company and
its Subsidiaries at such date and the consolidated results of their operations
for the period then ended.
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6.5 Material Adverse Change. Since December 1990, [here has been
no material adverse change in the business, properties, condition, prospects
(financial or otherwise) or results of operations of such Company and its
Subsidiaries.
6.6 Litigation and Contingent Obligations. Except as set forth on
Schedule "I" hereto, there is no litigation, arbitration, governmental
investigation, proceeding or inquiry pending or, to the knowledge of any of
their officers threatened against or affecting such Company or any Subsidiary
which might have a material adverse effect. Other than any liability incident
to such litigations arbitration or proceedings, such Company has no material
contingent obligations not provided for or disclosed in the financial
statements referred to in Section 6.4.
6.7 Compliance with Laws. Such Company and its Subsidiaries have
complied in all material respects with all applicable statutes, rules,
regulations, orders and restrictions of any domestic or foreign government or
any instrumentality or agency thereof having jurisdiction over the conduct of
their respective businesses or the ownership of their respective properties.
6.8 Compliance with Agreements. Such Company and its Subsidiaries
are in material compliance with all agreements, contracts and undertakings
which are binding upon them and their respective properties.
6.9 Taxes. Such Company and its Subsidiaries have duly prepared
and filed all tax returns applicable to them or their properties through
December 31, 1993, and have paid on a timely basis all taxes, charges, levies
and assessments shown thereon, except for such items as they may be contesting
in good faith, adequate reserves having been set aside therefor.
6.10 Excise Duties. There are no excise or stamp taxes or duties
applied in Puerto Rico in connection with the execution, delivery or
enforcement of the Loan Documents.
7. COVENANTS
During the term of this Agreement, unless the Lender shall
otherwise consent in writing:
7.1 Financial Reporting. BanPonce will maintain, for itself and
each of its Subsidiaries, proper books and financial records including a system
of accounting established and administered in accordance with generally accepted
accounting principles consistently applied, and furnish to the Lender:
(a) Within ninety (90) days after the close of each of its
fiscal years, an unqualified audit report certified by independent
certified public accountants, acceptable to the Lender, prepared in
accordance with generally accepted accounting principles on a
consolidated and consolidating basis (consolidating statements need
not be certified by such accountants) for itself and the
Subsidiaries (including Financial and VELCO), including balance
sheets as of the end of such period, related profit and loss and
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reconciliation of surplus statements, and a statement of cash
flows, accompanied by any management letter prepared by such
accountants; and
(b) Within forty-five (45) days after the close of the
first three (3) quarterly periods of each of its fiscal years, for
itself and each of its Subsidiaries, consolidated and consolidating
unaudited balance sheets as at the close of each such period and
consolidated and consolidating profit and loss and reconciliation of
surplus statements for the period from the beginning of such fiscal
year to the end of such quarter, including a comparison with the
similar period of the previous fiscal year, all certified by its
chief financial officer as true and correct.
All financial statements provided by the Companies shall be
prepared in accordance with generally accepted accounting principles applied
consistently with the financial statements referred to in Section 6.4.
7.2 Each of the Companies will use the proceeds of the Loans
solely to pay on a short term basis amounts then coming due in respect
of commercial paper to be issued under certain private placements. Therefore,
the Companies shall use this facility only as a short-term facility for
commercial paper backup purposes.
7.3 Each of the Companies from time to time will provide the Lender
with such information and documents with respect to its financial condition and
business operations, and that of its Subsidiaries, as the Lender may reasonably
request, and will notify the Lender of the occurrence of any Default or any
event which, with giving of notice, or lapse of time, or both, would be a
Default.
7.4 Each Company will, and will cause its Subsidiaries to, conduct
their business in substantially the same fields and manner as it is presently
conducted, and in material compliance with all applicable laws of any nature
whatsoever.
7.5 BanPonce shall maintain at all times a minimum Consolidated
Tangible Net Worth equal to or greater than 5% of total assets.
7.6 BanPonce shall maintain at all times a ratio of its Long-Term
Indebtedness to Total Capitalization equal to or less than 0.50 to 1.0.
7.7 BanPonce shall not permit its aggregate Non-Performing Assets
the end of any fixed quarter or year to be more than 4.5% of its total (gross)
loans, leases and other owned real estate at the end of such period, as such
items are reported in its financial statements for the relevant period(s).
7.8 BanPonce will maintain at all times its Maximum Double
Leverage at less than 115%.
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7.9 All payments to the Lender hereunder shall be made free and
clear of any deduction, withholding, stamp or other tax applicable in Puerto
Rico, all of which shall be for the account of the Company making such payment.
In the event that any such deduction, withholding or other tax shall be
applicable, the amount payable to the Lender shall be increased so that the
Lender shall receive the same amount as if such deduction, withholding or other
tax had not applied. In addition, to the extent that any deduction withholding
or other tax shall apply in Puerto Rico, the Company making a payment subject to
such tax shall promptly obtain and remit to the Lender original tax receipts
evidencing the payment of such tax.
8. DEFAULT
The occurrence of any one or more of the following events shall
constitute a Default:
8.1 Any Company shall fail to pay any principal, interest, tax,
fee or other amount payable hereunder when due;
8.2 Any Company shall breach the terms of any covenant or provision
hereof or any representation or warranty made in connection with this Agreement
shall prove to have been false or misleading when made;
8.3 Any Company fails to pay any Indebtedness when due or a default
shall occur under any agreement governing any Indebtedness of any Company which
would permit the holder of such Indebtedness to accelerate the maturity thereof;
8.4 Any Company or Subsidiary shall: (i) have an order for relief
entered with respect to it under the federal Bankruptcy Code; (ii) not pay, or
admit in writing its inability to pay, its debts generally as they become due;
(iii) institute any proceeding seeking an order for relief under the federal
Bankruptcy Code or take any corporate action to authorize or effect any of the
foregoing actions set forth in this Section 8.4; (iv) fail to contest in good
faith any appointment or proceeding described in Section 8.5; or (v) become or
be declared insolvent, however evidenced.
8.5 A receiver, trustee, examiner, liquidator or similar official
shall be appointed for any Company or any Subsidiary, or any substantial part of
any Company's or Subsidiary's property or a proceeding described in Section
8.4(iii) shall be instituted against a Company or any Subsidiary and such
appointment continues undischarged or such proceeding continues undismissed or
unstayed for a period of thirty (30) consecutive days.
8.6 Final judgment for the payment of money which together with
other unpaid final judgments theretofore rendered against any Company, exceeds
$5,000,000, and the same shall not have been discharged, or provision made for
its discharge in accordance with the terms thereof within 60 days from the date
that such judgment has become final, or an appeal therefrom or other appropriate
proceeding for the appellate review thereof shall not be taken
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within the term provided by law and a s[an of execution by virtue
thereof or pending such appellate proceeding shall not bc obtained, or such
appellate proceeding shall be dismissed or on such appeal the said judgment
shall, within 60 days after the order or decree of dismissal or affirmance,
become final.
9. ACCELERATION
9.1 Acceleration. If any Default under Section 8.4 or 8.5 occurs
the commitment of the Lender to make Loans hereunder shall automatically
terminate and the principal of and interest on the Loans and all fees, expenses
and other amounts payable under this Agreement (the "Obligations") shall
immediately become due and payable without any election or action on the part of
the Lender. If any other Default occurs, the Lender may, upon notice (as
prescribed in Section 13 hereof) to BanPonce at any time during the continuation
of such Default, terminate or suspend the commitment of the Lender to make loans
hereunder, or declare the Obligations to be due and payable, or both, whereupon
the Obligations shall become immediately due and payable, without presentment,
demand, protest or notice of any other kind, all of which each Company hereby
expressly waives.
9.2 Amendments. Subject to the provisions of this Section 9.2, the
Lender and the Companies may enter into agreements supplemental hereto for the
purpose of adding or modifying any provisions to the Loan Documents or changing
in any manner the rights of the Lender or the Companies hereunder or waiving any
Default hereunder.
9.3 Preservation of Rights. No delay or omission of the Lender to
exercise any right under the Loan Documents shall impair such right or be
construed to be a waiver of any Default or an acquiescence therein, and the
making of a Loan notwithstanding the existence of a Default or the inability of
any Company to satisfy the conditions precedent to such Loan shall not
constitute any waiver or acquiescence.
10. GENERAL PROVISIONS
10.1 Governing Law. This Agreement and the Notes shall be governed
by the law (and not the law of conflicts) of the State of New York, United
States. For any action or proceeding relating to the Loan Documents, BanPonce
and the Companies submit to the non-exclusive jurisdiction of the federal and
state courts in New York, N.Y., waiving any claim that the same are an
inconvenient forum. Process in any such action or proceeding may be served, in
addition to any other manner permitted by applicable law, by mailing the summons
and complaint in the English language, by any form of registered or certified
mail, to the party to be served at the address of such party set forth below its
signature line on this Agreement, as such address may be changed by such party
by written notice delivered to the other parties to this Agreement. Process
served as provided above shall be effective 10 days after posting. The
foregoing provisions shall not affect the right of the Lender to commence an
action or proceeding in any
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other jurisdiction. In connection with any action or proceeding relating to
the Loan Documents, the Lender and the Companies knowingly and voluntarily
waive trial by jury.
10.2 Indemnification. The Companies, jointly and severally, shall
reimburse the Lender for all reasonable out-of-pocket expenses, including
without limitation, reasonable attorneys' fees and expenses in an amount not in
excess of U.S. $3,000, paid or incurred by the Lender in connection with the
preparation, review, execution and delivery of the Loan Documents. In addition
to the foregoing, whether or not the transactions contemplated hereby shall be
consummated, the Companies, jointly and severally, agree to indemnify and hold
the Lender, and its officers, directors, employees and agents harmless, to the
fullest extent permitted by applicable law, from and against, and to indemnify
the Lender for, any and all claims, liabilities, losses, damages, costs and
expenses, including without limitation, reasonable attorneys' fees, arising out
of or related to any litigation or proceeding (whether or not the Lender is a
party thereto) in regard to the Loan Documents (including any such action to
collect or enforce the Loans) or the actual or proposed use of the proceeds of
Loans hereunder. The agreements contained in this Section shall survive the
termination of this Agreement and the payment of the Notes.
10.3 Accounting. Compliance with Sections of this Agreement
(including Sections 7.5, 7.6, 7.7 and 7.8 above) shall be determined on a
consolidated basis for each Company and its Subsidiaries, in accordance with
generally accepted accounting principles applied consistently with the financial
statements referred to in Section 6.4 above.
11. SETOFF
In addition to, and without limitation of, any rights of the Lender
under applicable law, if any Company becomes insolvent, however evidenced, or
any Default, or event which, with giving of notice, or lapse of time, or both,
would be a Default, occurs, any indebtedness from the Lender to any Company
(including any account balances, whether provisional or final, matured or
unmatured) may, at any time while such circumstances shall continue, be offset
and applied toward the payment of the Obligations owing to the Lender. The
Lender will give BanPonce notice of any such offset promptly after effecting
it.
12. BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
12.1 Successors and Assigns. The terms and provisions of the Loan
Documents shall be binding upon and inure to the benefit of the Companies and
the Lender and their respective successors and assigns, except that none of the
Companies shall have the right to assign rights or obligations under the Loan
Documents.
12.2 Participations; Permitted Participants; Effect. The Lender
may, in the ordinary course of its business and in accordance with applicable
law, at any time sell to one or more
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banks or other entities ("Participants") participating interests in the
Loans tile Aggregate Commitment or any other interest of the Lender under the
Loan Documents. In the event of any such sale, the Lender's obligations under
the Loan Documents shall remain unchanged, the Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations,
the Lender shall remain the holder of the Notes for all purposes under the Loan
Documents, all amounts payable by the Companies under this Agreement shall be
determined as if the Lender had not sold such participating interest, and the
Companies shall continue to deal solely and directly with the Lender in
connection with the Lender's rights and obligations under the Loan Documents. In
connection with a proposed sale of a participation, the Lender may disclose to
any prospective purchaser any information concerning the Loans, the Companies
and the Subsidiaries.
13. NOTICES
Any notice required or permitted to be given under this Agreement
may be, and shall be deemed, given when deposited in the United States mail,
postage prepaid, when sent by telecopier or by telex (with confirmed
answerback) to each Company or the Lender at the addresses and telecopier
numbers indicated below their signatures to the Agreement. Notices relating to
borrowings pursuant to Section 2.2 may be made orally, confirmed by telecopier.
14. COUNTERPARTS
This Agreement may be executed in any number of counterparts, all
of which, taken together, shall constitute one agreement, and any of the
parties hereto may execute this Agreement by signing any such counterpart.
This Agreement shall be effective when it has been executed by the Lender and
the Companies and transmitted to each other by telecopier, with original
executed counterparts to be exchanged thereafter by mail.
BANPONCE CORPORATION
By: /s/ Jose Luis Lopez Calderon
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Its: Senior Vice President
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By: /s/ David H. Chafey, Jr.
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Its: Executive Vice President
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Address: 209 Munoz Rivera Avenue
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Telex #:
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Telecopier #: 809-751-2137
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BANPONCE FINANCIAL CORP.
By: /s/ Jose Luis Lopez Calderon
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Its: Senior Vice President
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Address: 209 Munoz Rivera Avenue
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Telex #:
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Telecopier #: 809-751-2137
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VEHICLE EQUIPMENT LEASING
COMPANY, INC.
By: /s/ David H. Chafey, Jr.
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Its:
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Address: 209 Munoz Rivera Avenue
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Telex #:
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Telecopier #: 809-759-8900
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CHEMICAL BANK
By: /s/ Roger A. Parker
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Roger A. Parker
Its: Vice President
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Address: 270 Park Ave, New York, NY 10017
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Telex #: 422803 Answer Back CBUNUI
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Telecopier #: (212) 270-1789
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EXHIBIT "A"
NOTE
U.S. $25,000,000
April 1, 1994
______________________________, a __________ corporation (the
"Company"), promises to pay to the order of Chemical Bank (the "Lender") the
principal sum of U.S. $25,000,000 or the aggregate unpaid principal amount of
all Loans made by the Bank to the Company pursuant to Section 1 of the Credit
Agreement dated as of April 1, 1994, among BanPonce Corporation, a Puerto Rico
corporation, Vehicle Equipment Leasing Company, Inc., a Puerto Rico
corporation, BanPonce Financial Corp., a Delaware corporation, and the Lender
(the "Agreement"), whichever is less, in immediately available funds at the New
York Office of the Lender, currently located at 270 Park Avenue, New York, New
York 10017, together with interest on the unpaid principal amount hereof, free
and clear of any set-off, counterclaim, deduction or withholding for any reason
whatsoever. Interest and principal shall be payable at the rates and on the
dates set forth in the Agreement.
The Lender shall, and is hereby authorized to, record on the
schedule attached hereto, or to otherwise record in accordance with its usual
practice, the date and amount of each Loan and the date and amount of each
principal payment.
This Note is issued pursuant to the provisions of the Agreement, to
which Agreement, as it may be amended from time to time, reference is hereby
made for the definitions of capitalized terms used herein which are not
otherwise defined and for a statement of the terms and conditions under which
this Note may be prepaid or its maturity date accelerated.
Presentment, demand, protest and notice, other than as provided in
Section 9.1 of the Agreement, are hereby waived.
This Note is governed by laws of the State of New York.
[NAME OF COMPANY]
By:______________________________
Title:___________________________
14
SCHEDULE OF LOANS AND PAYMENTS OF PRINCIPAL TO
NOTE OF __________,
DATED _____________, 1994
Principal Principal
Amount of Amount Unpaid
Date Loan Maturity Paid Balance
---- --------- -------- ------ ---------
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EXHIBIT "B"
FORM OF COMPANY COUNSEL OPINION
April 1, 1994
Gentlemen:
We are counsel for each of BanPonce Corporation, a Puerto Rico
corporation ("BanPonce"); BanPonce Financial Corp., a Delaware corporation
("Financial"); and Vehicle Equipment Leasing Company, Inc., a Puerto Rico
corporation ("VELCO", each of BanPonce, Financial and VELCO, a "Company") and
have represented the Companies in connection with their execution and delivery
of a Credit Agreement (the "Agreement") between the Companies and Chemical Bank
(the "Lender") providing for Loans in an aggregate principal amount not
exceeding U.S. $95,000,000 at any one time outstanding and dated as of April 1,
1994. All capitalized terms used in this opinion shall have the meanings
attributed to them in the Agreement.
We have examined the Companies' articles of incorporation, by-laws,
resolutions, the Agreement and such other matters of fact and law which we
deemed necessary in order to render this opinion. Based upon the foregoing, it
is our opinion that:
1. Each Company is a corporation duly incorporated, validly
existing and in good standing under the laws of its respective jurisdiction of
incorporation and has all requisite authority to conduct its business in each
jurisdiction in which its business is conducted.
2. The execution and delivery of the Agreement and the Note by
BanPonce, Financial and VELCO; the execution and delivery of the Guaranty by
BanPonce; and the performance by each Company of its obligations under its Loan
Documents to which it is a party, have been duly authorized by all necessary
corporate action and proceedings on the part of such Company, and will not:
(a) require any consent of the Company's shareholders;
(b) violate any applicable law, rule, regulation, order,
writ, judgment, injunction, decree or award binding on such
Company, or any indenture, instrument or agreement binding upon
such Company; or
(c) result in, or require, the creation or imposition of
any lien or encumbrance pursuant to the provisions of any
indenture, instrument or agreement binding upon such Company.
3. Each of the Agreement, the Note and the Guaranty has been duly
executed and delivered by the Companies which are parties thereto, and
constitutes the legal, valid and
16
binding obligation of such Company enforceable in accordance with its terms
except to the extent the enforcement thereof may be limited by bankruptcy,
insolvency or similar laws affecting the enforcement of creditors' rights
generally and subject also to the availability of equitable remedies if
equitable remedies are sought.
4. To the best of our knowledge after due inquiry, there is no
litigation or proceeding against any Company or any Subsidiary which, if
adversely determined, would materially adversely affect the business or
condition of such Company or Subsidiary.
5. No approval, authorization, consent, adjudication,
registration or order of any governmental authority which has not been obtained
by the Companies, is required to be obtained by the Companies in connection
with the execution and delivery of the Agreement, the Note and the Guaranty,
the borrowings under the Agreement, or the performance by the Companies of
their respective obligations under the Loan Documents.
[6. Discussion of applicable taxes in Puerto Rico.]
Very truly yours,
______________________________
17
EXHIBIT "C"
GUARANTY
The undersigned, BanPonce Corporation, a Puerto Rico corporation,
hereby requests the Lender (as hereinafter defined) through any of its
branches, offices, subsidiaries or affiliates, to extend credit or to permit
credit to remain outstanding to BanPonce Financial Corp., a Delaware
corporation, and/or Vehicle Equipment Leasing Company, a Puerto Rico
corporation teach, a "Company" and, collectively, the "Companies"), as the
Companies may desire and as the Lender may extend or permit from time to time
in its sole discretion, whether to a Company alone, to the Companies
collectively, or to either Company or the Companies and others, and, in
consideration of any credit granted or continued, the undersigned hereby
absolutely, unconditionally and irrevocably guarantees (as primary obligor and
not as surety merely) prompt payment when due, whether at stated maturity, upon
acceleration or otherwise, and at all times thereafter, of any and all existing
and future indebtedness and liability of every kind, nature and character,
direct or indirect, absolute or contingent (including all renewals, extensions
and modifications thereof and all attorneys' fees incurred by the Lender in
connection with the collection or enforcement hereof or thereof), of the
Companies to the Lender, arising, evidenced or acquired pursuant to that
certain Credit Agreement, as defined below (the "Guaranteed Debt"); provided,
however, that the maximum aggregate principal amount extended under the Credit
Agreement for which the undersigned shall be liable hereunder, is U.S.
$25,000,000; provided, furthermore, that the foregoing limitation shall not
apply to interest or other non-principal amounts which may become due under the
Credit Agreement.
The undersigned waives notice of the acceptance of this Guaranty
and of the extension or continuation of the Guaranteed Debt or any part
thereof. The undersigned further waives presentment, protest, notice, the
benefit of any statutes of limitations, demand or action or delinquency in
respect of the Guaranteed Debt or any part thereof, including any right to
require the Lender to sue the Company and any other guarantor or any person
obligated with respect to the Guaranteed Debt or any part thereof, or otherwise
18
to enforce payment thereof against any collateral securing the Guaranteed Debt
or any part thereof.
This Guaranty is a guaranty of payment and not of collection
merely, and shall be a continuing guaranty and as such, shall remain operative
and in full force and effect until all the Guaranteed Debt shall have been paid
and actually received in full by the Lender.
The validity and enforceability of this Guaranty shall not be
impaired or affected by any of the following: (a) any extension, modification
or renewal of, or indulgence with respect to, or substitutions for, the
Guaranteed Debt or any part thereof or any agreement relating thereto at any
time; (b) any failure or omission to enforce any right, power or remedy with
respect to the Guaranteed Debt or any part thereof or any agreement relating
thereto, or any collateral securing the Guaranteed Debt or any part thereof;
(c) any waiver of any right, power or remedy or of any default with respect to
the Guaranteed Debt or any part thereof or any agreement relating thereto or
with respect to any collateral securing the Guaranteed Debt or any part
thereof; (d) any release, surrender, compromise, settlement, waiver,
subordination or modification with or without consideration, of any collateral
securing the Guaranteed Debt or any part thereof, any other guaranties with
respect to the Guaranteed Debt or any part thereof or any other obligation of
any person or entity with respect to the Guaranteed Debt or any part thereof;
(e) the enforceability or validity of the Guaranteed Debt or any part thereof
or the genuineness, enforceability or validity or any agreement relating
thereto or with respect to any collateral securing, the Guaranteed Debt or any
part thereof: (t) the application of payments received from any source to the
payment of indebtedness other than the Guaranteed Debt, any part thereof or
amount which are not covered by this Guaranty even though the Lender might
lawfully have elected to apply such payments to any part or all of the
Guaranteed Debt or to amounts which are not covered by this Guaranty; (g) any
change of ownership of either Company or the insolvency, bankruptcy or any
other change in the legal status of either Company; (h) the change in or the
imposition of any law, decree, regulation or other governmental act which does
or might impair, delay or in any way affect the validity, enforceability or the
payment when due of the Guaranteed Debt; (i) the failure of either Company or
the undersigned to maintain in full force, validity or effect or to obtain or
renew when required all governmental and other approvals, licenses or consents
required in connection with the Guaranteed Debt or this Guaranty, or to take
any other action required in connection with the performance of all
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obligations pursuant to the Guaranteed Debt or this Guaranty; or (j) the
existence of any claim, set off or other rights which the undersigned may have
at any time against either Company in connection herewith or an unrelated
transaction, all whether or not the undersigned shall have had notice of
knowledge of any act or omission referred to in the foregoing clauses (a)
through (j) of this paragraph. It is agreed that the undersigned's liability
hereunder is several and independent of any other guaranties or other
obligations at any time in effect with respect to the Guaranteed Debt or any
part thereof and that the undersigned's liability hereunder may be enforced
regardless of the existence, validity, enforcement or non-enforcement of any
such other guaranties or other obligations or any provisions of any applicable
law or regulation purporting to prohibit payment by either Company of the
Guaranteed Debt in the manner agreed upon between the Lender and the Companies.
Credit may be granted or continued from time to time by the Lender
to a Company without notice to or authorization from the undersigned regardless
of such Company's financial or other condition at the time of any such grant or
continuation. The Lender shall have no obligation to disclose or discuss with
the undersigned its assessment of the financial condition of the Companies.
Until the Guaranteed Debt is paid in full, the undersigned shall
not exercise any right of subrogation with respect to payments made by the
undersigned pursuant to this Guaranty. The undersigned hereby waives any
claim, as that term is defined in the federal Bankruptcy Code, that the
undersigned might now have or hereafter acquire against either Company that
arises from the existence or performance of the undersigned's obligations under
this Guaranty. In addition, the undersigned waives any benefit of the
collateral, if any, which may, from time to time, secure the Guaranteed Debt or
any part thereof and authorizes the Lender to take any action or exercise any
remedy with respect thereto, which the Lender, in its sole discretion, shall
determine, without notice to the undersigned. In the event the Lender, in its
sole discretion, elects to give notice of any action with respect to the
collateral, if any, securing the Guaranteed Debt or any part thereof, ten (10)
days' written notice mailed to the undersigned by ordinary mail at the address
shown hereof shall be deemed reasonable notice of any matters contained in such
notice.
In the event that acceleration of the time for payment of any of
the Guaranteed
20
Guaranty Ratification
May 20, 1994
Page 88
Debt is stayed, upon the insolvency bankruptcy or reorganization of either
Company, or otherwise, all such amounts shall nonetheless be payable by the
undersigned forthwith upon demand by the Lender. In the event that any payment
made under this Guaranty or the other Loan Documents shall subsequently be
recovered by any trustee in bankruptcy, receiver or debtor in possession of a
Company or of the undersigned, whether pursuant to litigation or by voluntary
payment by the Lender, the amount so recovered shall become immediately due and
payable under this Guaranty which, to the extent it may otherwise have
terminated, shall be reinstated.
No provision of this Guaranty may be amended, supplemented or
modified, or any of the terms and provisions hereof waived, except by a written
instrument executed by the Lender and the undersigned. No failure on the part
of the Lender to exercise, and no delay in exercising, any right hereunder,
shall operate as a waiver thereof; nor shall any single or partial exercise or
any right hereunder preclude any other or further exercise thereof or the
exercise of any other right. The remedies herein provided are cumulative and
not exclusive of any remedies provided by law.
The undersigned shall pay all reasonable costs, fees and expenses
(including reasonable attorneys' fees and expenses) incurred by the Lender in
collecting or enforcing the undersigned's obligations under this Guaranty.
The provisions of this Guaranty are several, and in any action or
proceeding involving any state corporate law, or any state or federal
bankruptcy, insolvency reorganization or other law affecting the rights of
creditors generally, if the obligations of the undersigned hereunder would
otherwise be held or determined to be avoidable, invalid or unenforceable on
account of the amount of the undersigned's liability under this Guaranty, then,
notwithstanding any other provision of this Guaranty to the contrary, the
amount of such liability shall, without any further action by the undersigned
or the Lender be automatically limited and reduced to the highest amount which
is valid and enforceable as determined in such action or proceeding.
This Guaranty is a continuing guaranty and shall remain in full
force and effect until the payment in full (on or after the Termination Date)
of the Guaranteed Debt and all other amounts payable under this Guaranty. This
Guaranty shall bind the undersigned
21
Guaranty Ratification
May 20, 1994
Page 89
and the successors and assigns of the undersigned. This Guaranty shall be
binding upon the undersigned and shall inure to the benefit of and be
enforceable by the Lender, its successors and assigns. All references herein
shall be deemed to include its successors and assigns. Such successors and
assigns shall include, without limitation, a receiver, trustee or debtor in
possession of or for the Company or the undersigned, as the case may be.
Without limiting the generality of the third sentence of this paragraph, the
Lender may assign or otherwise transfer any portion of the Guaranteed Debt to
any other person or entity, and such other person or entity shall thereupon
become vested with all the rights in respect thereof granted to the Lender
herein or otherwise. This Guaranty shall be governed by the laws of the State
of New York. The provisions of the Credit Agreement pertaining to
jurisdiction, service of process and payments pursuant to Section 7.9 thereof
shall apply, mutatis mutandis, to this Guaranty.
This Guaranty is delivered pursuant to the terms of that certain
Credit Agreement dated as of April 1, 1994, (the "Credit Agreement") by and
among BanPonce Corporation, a Puerto Rico corporation, BanPonce Financial
Corp., a Delaware corporation, and Vehicle Equipment Leasing Company, Inc., a
Puerto Rico corporation, and the Lender. Capitalized terms used herein and not
otherwise defined shall have the meanings given to such terms in the Credit
Agreement.
BANPONCE CORPORATION
By:______________________________
Title:______________________________
By:______________________________
Title:______________________________