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As filed with the Securities and Exchange Commission dated August 4, 1995
Registration No. 33-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
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BANPONCE CORPORATION
(Exact name of co-registrant as specified in its charter)
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PUERTO RICO 66-0416582
(State or other jurisdiction of (IRS employer
incorporation or organization) identification number)
209 Munoz Rivera Avenue 00918
Hato Rey, Puerto Rico (Zip Code)
(Address of principal executive offices)
(809) 765-9800
(Co-registrant's telephone number, including area code)
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POPULAR INTERNATIONAL BANK, INC.
(Exact name of co-registrant as specified in its charter)
PUERTO RICO N/A
(State or other jurisdiction of (IRS employer
incorporation or organization) identification number)
209 Munoz Rivera Avenue 00918
Hato Rey, Puerto Rico (Zip Code)
(Address of principal executive offices)
(809) 765-9800
(Co-registrant's telephone number, including area code)
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BANPONCE FINANCIAL CORP.
(Exact name of co-registrant as specified in its charter)
DELAWARE 66-0476353
(State or other jurisdiction of (IRS employer
incorporation or organization) identification number)
521 Fellowship Road 08054
Mt. Laurel, New Jersey (Zip Code)
(Address of principal executive office)
(809) 765-9800
(Co-registrant's telephone number, including area code)
DAVID H. CHAFEY, JR.
209 Munoz Rivera Avenue
Hato Rey, Puerto Rico 00918
(809) 765-9800
(Name, address, and telephone number, including area code, of agent for service)
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COPIES TO:
DONALD J. TOUMEY, ESQ.
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
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Approximate date of commencement of proposed sale to the public: From
time to time after the effective date of this Registration Statement as
determined by the Registrants on the basis of market conditions and other
factors.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, please check the following box.
[x]
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF SECURITIES AMOUNT TO BE OFFERING PRICE PER AGGREGATE OF OFFERING REGISTRATION
TO BE REGISTERED REGISTERED UNIT(1) PRICE(1) FEE
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Debt Securities and Preferred Stock.. $500,000,000 100% $500,000,000 $172,414
Guarantees........................... (2) (2) (2) (2)
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(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457.
(2) No additional consideration will be received for the Guarantees.
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The Co-registrants hereby amend this Registration Statement on such
date or dates as may be necessary to delay its effective date until the
Co-registrants shall file a further amendment which specifically states that
this Registration Statement shall thereafter become effective in accordance
with Section 8(a) of the Securities Act of 1933 or until this Registration
Statement shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED AUGUST 4, 1995
PROSPECTUS
DEBT SECURITIES
OF
BANPONCE CORPORATION
OR
POPULAR INTERNATIONAL BANK, INC.
(UNCONDITIONALLY GUARANTEED
BY BANPONCE CORPORATION)
OR
BANPONCE FINANCIAL CORP.
(UNCONDITIONALLY GUARANTEED
BY BANPONCE CORPORATION)
PREFERRED STOCK
OF
BANPONCE CORPORATION
OR
POPULAR INTERNATIONAL BANK INC.
(UNCONDITIONALLY GUARANTEED
BY BANPONCE CORPORATION)
OR
BANPONCE FINANCIAL CORP.
(UNCONDITIONALLY GUARANTEED
BY BANPONCE CORPORATION)
_______________
BanPonce Corporation (the "Corporation") intends to issue from time to
time in one or more series its (i) unsecured debt securities, which may be
either senior or subordinated, and (ii) shares of preferred stock. Popular
International Bank, Inc. ("PIB") intends to issue from time to time in one or
more series its (i) unsecured debt securities, which may be either senior or
subordinated, and (ii) shares of preferred stock. BanPonce Financial Corp.
("Financial") intends to issue from time to time in one or more series its (i)
unsecured debt securities, which may be either senior or subordinated, and (ii)
shares of preferred stock. Unsecured debt securities issued by PIB or Financial
will be unconditionally guaranteed as to the payment of principal, premium, if
any, and interest by the Corporation. Shares of preferred stock issued by PIB
or Financial will be unconditionally guaranteed as to the payment of dividends,
redemption price, if any, and liquidation preference, if any, by the
Corporation. The foregoing debt securities and shares of preferred stock are
collectively referred to herein as the "Securities." The Corporation's
guarantees of debt securities or preferred stock issued by PIB or Financial are
collectively referred to herein as the "Guarantees." The Securities and the
Guarantees collectively will be limited to an aggregate initial offering price
not to exceed $500,000,000 or, in the case of debt securities, the equivalent
thereof in one or more foreign currencies, including composite currencies. The
Securities offered may be offered, separately or together, in separate series,
in amounts, at prices and on terms to be determined at the time of sale and to
be set forth in a supplement to this Prospectus (a "Prospectus Supplement").
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The subordinated debt securities when issued will be subordinated as
described herein under "Description of Debt Securities and Guarantees." Unless
otherwise indicated in the Prospectus Supplement, payment of the principal of
the subordinated debt securities may be accelerated only in the case of certain
events involving the bankruptcy, insolvency or reorganization of the
Corporation, PIB or Financial, as the case may be. There is no right of
acceleration of payment of subordinated debt securities in the case of a
default in the performance of any covenant of the Corporation, PIB or
Financial, including the payment of principal or interest.
The specific terms of the Securities in respect of which this
Prospectus is being delivered, including (i) in the case of debt securities,
the issuer, the specific designation, aggregate principal amount,
denominations, maturity, premium, if any, rate (which may be fixed or variable)
and time of payment of interest, if any, terms for redemption at the option of
the Corporation, PIB, Financial or the holder, if any, currency or currencies
of denomination and payment, if other than U.S. dollars, the terms, if any, for
conversion into other debt securities or preferred stock and any other terms in
connection with the offering and sale of the debt securities in respect of
which this Prospectus is being delivered, as well as the initial public
offering price, and the principal amounts, if any, to be purchased by
underwriters and (ii) in the case of preferred stock, the issuer, the specific
title and stated value, number of shares or fractional interests therein, any
dividend, liquidation, redemption, voting and other rights, the terms, if any,
for conversion into other preferred stock, the securities exchanges, if any, on
which the preferred stock is to be listed, the initial public offering price,
and the number of shares, if any, to be purchased by the underwriters, will be
as set forth in the accompanying Prospectus Supplement. All or a portion of the
debt securities may be issued in permanent global form.
The Securities may be sold to underwriters for public offering
pursuant to terms of offering fixed at the time of sale. In addition, the
Securities may be sold by the Corporation, PIB or Financial directly or through
dealers or agents designated from time to time, which agents may be affiliates
of the Corporation. The Prospectus Supplement will also set forth with respect
to the sale of the Securities in respect of which this Prospectus is being
delivered the names of the underwriters, dealers or agents, if any, together
with the terms of offering, the compensation of such underwriters and the net
proceeds to the Corporation.
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THE SECURITIES WILL BE UNSECURED OBLIGATIONS OF THE CORPORATION, PIB
OR FINANCIAL, AS THE CASE MAY BE, AND WILL NOT BE SAVINGS ACCOUNTS, DEPOSITS OR
OTHER OBLIGATIONS OF ANY BANK OR SAVINGS ASSOCIATION AND ARE NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE BANK INSURANCE FUND OR ANY OTHER
GOVERNMENT AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, THE SECURITIES OFFICE OF THE OFFICE OF THE COMMISSIONER
OF FINANCIAL INSTITUTIONS OF THE COMMONWEALTH OF PUERTO RICO OR ANY STATE
SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION,
SUCH SECURITIES OFFICE, OR ANY STATE SECURITIES COMMISSION, PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
_______________
The date of this Prospectus is ______________, 1995
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AVAILABLE INFORMATION
The Corporation is subject to the informational requirements of the
Securities Exchange Act of 1934 (the "Exchange Act") and, in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information concerning the Corporation can be inspected
and copied at the Commission's office at 450 Fifth Street, N.W., Washington,
D.C. 20549, and the Commission's Regional Offices in New York (7 World Trade
Center, New York, New York 10048) and Chicago (Citicorp Center, 500 West
Madison Street, Chicago, Illinois 60661). Copies of such material can be
obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. This Prospectus does
not contain all of the information set forth in the Registration Statement
which the Corporation has filed with the Commission under the Securities Act of
1933 (the "Act"), to which reference is hereby made.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Corporation hereby incorporates by reference into this Prospectus
the following documents filed by the Corporation with the Commission:
1. The Corporation's Annual Report on Form 10-K for the year
ended December 31, 1994, provided, however, that the information
referred to in Item 402(a)(8) of Regulation S-K promulgated by the
Commission shall not be deemed to be specifically incorporated by
reference herein.
2. The Corporation's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1995.
3. The Corporation's Current Reports on Form 8-K, dated March
7, 1995 and April 13, 1995 (as amended by the Corporation's Amendment
on Form 8-K/A, dated May 16, 1995).
4. The Corporation's Registration Statement on Form 8-A, dated
August 18, 1988, filed pursuant to Section 12(g) of the Exchange Act,
pursuant to which the Corporation registered its Series A
Participating Cumulative Preferred Stock Purchase Rights.
5. The Corporation's Registration Statement on Form 8-A, dated
June 17, 1994, as amended by the Corporation's Amendment on Form
8-A/A, dated June 21, 1994, filed pursuant to Section 12(g) of the
Exchange Act, pursuant to which the Corporation registered its 8.35%
Non-Cumulative Monthly Income Preferred Stock, 1994 Series A.
All documents filed by the Corporation subsequent to the date of this
Prospectus and prior to the termination of the offering of the Securities and
the Guarantees pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange
Act shall be deemed to be incorporated by reference into this Prospectus and to
be a part thereof from the date of filing of such documents. Any statement
contained in a document incorporated or deemed to be incorporated by reference
herein shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies
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or supersedes such statement. Any such statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a part
of this Prospectus.
Any person receiving a copy of this Prospectus, including any
beneficial owner, may obtain without charge, upon oral or written request, a
copy of any of the documents incorporated by reference herein, except for the
exhibits to such documents. Written requests should be mailed to Amilcar
Jordan, Senior Vice President, BanPonce Corporation, P.O. Box 362708, San Juan,
Puerto Rico 00936-2708. Telephone requests may be directed to (809) 765-9800.
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BANPONCE CORPORATION
The Corporation is a bank holding company registered under the Bank
Holding Company Act of 1956 and incorporated in 1984 under the laws of the
Commonwealth of Puerto Rico ("Puerto Rico"). The Corporation is the largest
financial institution in Puerto Rico, with consolidated assets of $13.1
billion, total deposits of $9.4 billion and stockholders' equity of $1.4
billion as of March 31, 1995. Based on both total assets and total deposits at
December 31, 1994, the Corporation was the 52nd largest bank holding company in
the United States. The Corporation's principal executive offices are located at
209 Munoz Rivera Avenue, Hato Rey, Puerto Rico 00918 and its telephone number
is (809) 765-9800.
The Corporation's principal subsidiary, Banco Popular de Puerto Rico
("Banco Popular" or the "Bank"), was incorporated over 100 years ago in 1893
and is Puerto Rico's largest bank with total assets of $11.6 billion, deposits
of $8.9 billion and stockholders' equity of $849.6 million at March 31, 1995.
The Bank accounted for 88.4% of the total consolidated assets of the
Corporation at March 31, 1994. A consumer-oriented bank, Banco Popular has the
largest retail franchise in Puerto Rico, operating 208 branches and 296
automated teller machines. The Bank also has the largest trust operation in
Puerto Rico and is a leader in the mortgage banking business. In addition, it
operates the largest Hispanic bank branch network in the mainland United States
with 30 branches in New York, one branch in Los Angeles and an agency in
Chicago. As of March 31, 1995, these branches had a total of approximately $1.3
billion in deposits. The Bank also operates seven branches in the U.S. Virgin
Islands and one branch in the British Virgin Islands. Banco Popular has three
subsidiaries, Popular Leasing & Rental, Puerto Rico's second largest vehicle
leasing and daily rental company, Popular Consumer Services, Inc., a small-loan
company with 27 offices in Puerto Rico operating under the name of Best Finance
and Popular Mortgage, Inc., a mortgage loan company with three offices in
Puerto Rico operating under the name of Puerto Rico Home Mortgage.
The Corporation has two other principal subsidiaries: Vehicle
Equipment Leasing Company, Inc. ("VELCO") and Financial. VELCO is engaged
primarily in the finance leasing of passenger vehicles and is the largest
leasing company in Puerto Rico. For additional information regarding Financial,
see "BanPonce Financial Corp." Also, BP Capital Markets is, effective April 30,
1995, a direct subsidiary of BanPonce Corporation and engages in the business
of a securities broker-dealer in Puerto Rico, with institutional brokerage,
financial advisory, and investment and security brokerage operations.
POPULAR INTERNATIONAL BANK INC.
Popular International Bank, Inc. ("PIB") is a wholly owned subsidiary
of the Corporation organized in 1992 under the laws of the Commonwealth of
Puerto Rico and operating as an "international banking entity" under the
International Banking Center Regulatory Act of Puerto Rico (the "IBC Act"). PIB
owns all of the outstanding capital stock of Financial. Summary consolidated
financial statements of PIB are included in the notes to the Corporation's
consolidated financial statements.
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BANPONCE FINANCIAL CORP.
BanPonce Financial Corp. ("Financial"), a wholly owned subsidiary of
PIB and an indirect, wholly owned subsidiary of the Corporation, was organized
in 1991 under the laws of the State of Delaware.
On March 31, 1994, Financial acquired all of the common stock of
Pioneer Bancorp, Inc., a corporation organized under the laws of Delaware and
headquartered in Chicago, Illinois, and a registered bank holding company under
the Bank Holding Company Act of 1956, as amended (the "BHC Act"), which through
its wholly owned subsidiary River Associates Bancorp, Inc., a Delaware
corporation, owns and operates Pioneer Bank & Trust Company ("Pioneer"), a bank
organized under the laws of the State of Illinois with two branches in that
state. The deposits of Pioneer are insured by the Federal Deposit Insurance
Corporation (the "FDIC"). On August 31, 1994, Pioneer acquired most of the
assets and assumed all of the liabilities of a branch of Banco Popular
operating in Chicago. As of December 31, 1994, the assets of Pioneer were
$385.4 million and its deposits were $325.8 million. Effective January 16,
1995, Banco Popular converted its branch in Chicago into an agency. See
"BanPonce Corporation" above.
On January 20, 1995, Financial became the direct owner of all the
common stock of Banco Popular, FSB, a new federal savings bank which acquired
from the Resolution Trust Corporation certain assets and all of the deposits of
four New Jersey branches of the former Carteret Federal Savings Bank, a federal
savings bank under Resolution Trust Corporation (the "RTC") conservatorship.
The deposits of Banco Popular, FSB are insured by the FDIC. As a result of the
acquisition of Pioneer and of becoming the owner of all shares of Banco
Popular, FSB, Financial and PIB have become registered bank holding companies
under the BHC Act and registered savings and loan holding companies under the
Home Owners' Loan Act.
On January 20, 1995, simultaneously with the organization of Banco
Popular, FSB, Financial transferred the control of all the issued and
outstanding shares of its wholly owned subsidiary Equity One, Inc., a Delaware
corporation (formerly Spring Financial Services, Inc.) ("Equity One"), to Banco
Popular, FSB, and Equity One became an operating subsidiary of Banco Popular,
FSB. Equity One is a diversified consumer finance company engaged in the
business of granting personal and mortgage loans and providing dealer financing
through 73 offices in 20 states with total assets of $620.5 million as of
December 31, 1994. Equity One had initially been acquired by Financial on
September 30, 1991, prior to which time Financial had no significant business
operations.
Summary consolidated financial statements of Financial are included in
the notes to the Corporation's consolidated financial statements.
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CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES
OF THE CORPORATION
Quarter Ended Year Ended December 31,
June 30, 1995 1994 1993 1992 1991 1990
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Ratio of Earnings to Fixed Charges:
Excluding Interest on Deposits . . . . . . . . . . . . . 2.0 2.6 3.0 2.9 2.1 3.6
Including Interest on Deposits . . . . . . . . . . . . . 1.4 1.5 1.5 1.3 1.2 1.3
Ratio of Earnings to Fixed Charges and Preferred Stock
Dividends:
Excluding Interest on Deposits . . . . . . . . . . . . . 1.9 2.5 3.0 2.9 2.0 3.6
Including Interest on Deposits . . . . . . . . . . . . . 1.3 1.5 1.5 1.3 1.2 1.3
For purposes of computing these consolidated ratios, earnings
represent income (loss) before income taxes, cumulative effect of a change in
accounting principles and equity in undistributed income of unconsolidated
subsidiaries and affiliates, plus fixed charges excluding capitalized interest.
Fixed charges represent all interest expense (ratios are presented both
excluding and including interest on deposits), the portion of net rental
expense which is deemed representative of the interest factor, the amortization
of debt issuance expense and capitalized interest.
USE OF PROCEEDS
The Corporation intends to use the net proceeds from the sale of the
Securities issued by the Corporation for general corporate purposes, including
investments in, or extensions of credit to, its existing and future
subsidiaries, for the acquisition of other banking and financial institutions
and repayment of outstanding borrowings. The Corporation does not at present
have any plans to use the proceeds from any offering for a material acquisition
or to repay outstanding borrowings. All or a substantial portion of the
proceeds from the sale of Securities issued by Financial will be lent by
Financial to its direct or indirect subsidiaries, including Equity One, or used
by Financial for general corporate purposes. The net proceeds from the sale of
Securities by PIB will be lent by PIB to its affiliates or used by PIB for
general corporate purposes. The precise amounts and timing of the application
of proceeds will depend on various factors existing at the time of offering of
the Securities, including the Corporation's subsidiaries' funding requirements
and the availability of other funds. Pending such use, the proceeds may be
temporarily invested in short-term obligations.
CERTAIN REGULATORY MATTERS
GENERAL
Each of the Corporation, PIB and Financial are bank holding companies
subject to supervision and regulation by the Board of Governors of the Federal
Reserve System (the "Federal Reserve Board") under the BHC Act. As a bank
holding company, the Corporation's, PIB's and Financial's activities and those
of their banking and nonbanking subsidiaries are limited to the business of
banking and activities closely related or incidental to banking, and neither
the Corporation, PIB or Financial may directly or indirectly acquire the
ownership or control of more than 5% of any class of voting shares or
substantially all of the assets of any company in the United States, including
a bank, without the prior approval of the Federal Reserve Board. In addition,
bank holding companies are generally prohibited under the BHC Act
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from engaging in nonbanking activities, subject to certain exceptions. As a
result of the acquisition of Banco Popular, FSB, the Corporation, PIB and
Financial are also subject to the regulation and supervision of the Office of
Thrift Supervision (the "OTS") as savings and loan holding companies registered
under the Home Owners' Loan Act, as amended.
Banco Popular is considered a foreign bank for purposes of the
International Banking Act of 1978 (the "IBA"). Under the IBA and the BHC Act,
the Corporation and Banco Popular are not permitted to operate a branch or
agency, or acquire more than 5% of any class of the voting shares or
substantially all the assets of, or control of, an additional bank or bank
holding company that is located outside of their "home state," except that (i)
the Corporation may acquire control of a bank in a state if the laws of that
state explicitly authorize a bank holding company from such bank holding
company's home state to do so and (ii) Banco Popular may continue to operate a
"grandfathered" branch or agency and will be permitted to branch interstate as
described under "-- Recent Banking Legislation" below. Puerto Rico is not
considered a state for purposes of these geographic limitations. Banco Popular
has designated the state of New York as its home state. In addition, some
states have laws prohibiting or restricting foreign banks from acquiring banks
located in such states and treat Puerto Rico's banks and bank holding companies
as foreign banks for such purposes.
Effective January 16, 1995, Banco Popular converted its branch in
Chicago into an agency. See "BanPonce Financial Corp." above.
Banco Popular, Pioneer Bank and Banco Popular, FSB are subject to
supervision and examination by applicable federal and state banking agencies
including, in the case of Banco Popular, the Federal Reserve Board and the
Office of the Commissioner of Financial Institutions of Puerto Rico, in the
case of Pioneer Bank, the FDIC and the Illinois Commissioner of Banks and Trust
Companies, and in the case of Banco Popular, FSB, the OTS and the FDIC. Banco
Popular, Pioneer Bank and Banco Popular, FSB are subject to requirements and
restrictions under federal and state law, including requirements to maintain
reserves against deposits, restrictions on the types and amounts of loans that
may be granted and the interest that may be charged thereon, and limitations on
the types of other investments that may be made and the types of services that
may be offered. Various consumer laws and regulations also affect the
operations of Banco Popular, Pioneer Bank and Banco Popular, FSB. In addition
to the impact of regulation, commercial banks are affected significantly by the
actions of the Federal Reserve Board as it attempts to control the money supply
and credit availability in order to influence the economy.
HOLDING COMPANY STRUCTURE
Banco Popular, Pioneer Bank and Banco Popular, FSB are subject to
restrictions under federal law that limit the transfer of funds between them
and the Corporation, Financial, PIB and the Corporation's other nonbanking
subsidiaries, whether in the form of loans, other extensions of credit,
investments or asset purchases. Such transfers by Banco Popular, Pioneer Bank
or Banco Popular, FSB, respectively, to the Corporation, Financial or PIB, as
the case may be, or to any one nonbanking subsidiary, are limited in amount to
10% of the transferring institution's capital stock and surplus and, with
respect to the Corporation and all of its nonbanking subsidiaries, to an
aggregate of 20% of the transferring institution's capital stock and surplus.
Furthermore, such loans and extensions of credit are required to be secured in
specified amounts.
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Under Federal Reserve Board policy, a bank holding company, such as
the Corporation, PIB or Financial, is expected to act as a source of financial
strength to each of its subsidiary banks and to commit resources to support
each such subsidiary bank. This support may be required at times when, absent
such policy, the bank holding company might not otherwise provide such support.
In addition, any capital loans by a bank holding company to any of its
subsidiary banks are subordinate in right of payment to deposits and to certain
other indebtedness of such subsidiary bank. In the event of a bank holding
company's bankruptcy, any commitment by the bank holding company to a federal
bank regulatory agency to maintain the capital of a subsidiary bank will be
assumed by the bankruptcy trustee and entitled to a priority of payment. Banco
Popular, Pioneer Bank and Banco Popular, FSB are currently the only subsidiary
depository institutions of the Corporation, PIB and Financial.
Because the Corporation, PIB and Financial are holding companies,
their right to participate in the assets of any subsidiary upon the latter's
liquidation or reorganization will be subject to the prior claims of the
subsidiary's creditors (including depositors in the case of depository
institution subsidiaries) except to the extent that the Corporation, PIB or
Financial, as the case may be, may itself be a creditor with recognized claims
against the subsidiary.
Under the Federal Deposit Insurance Act (the "FDIA"), a depository
institution (which term includes both banks and savings associations), the
deposits of which are insured by the FDIC, can be held liable for any loss
incurred by, or reasonably expected to be incurred by, the FDIC after August 9,
1989 in connection with (i) the default of a commonly controlled FDIC-insured
depository institution or (ii) any assistance provided by the FDIC to any
commonly controlled FDIC-insured depository institution "in danger of default."
"Default" is defined generally as the appointment of a conservator or a
receiver and "in danger of default" is defined generally as the existence of
certain conditions indicating that a default is likely to occur in the absence
of regulatory assistance. Banco Popular, Pioneer Bank and Banco Popular, FSB
are currently the only controlled FDIC-insured depository institutions of the
Corporation. In some circumstances (depending upon the amount of the loss or
anticipated loss suffered by the FDIC), cross-guarantee liability may result in
the ultimate failure or insolvency of one or more insured depository
institutions in a holding company structure. Any obligation or liability owed
by a subsidiary bank to its parent company is subordinated to the subsidiary
bank's cross-guarantee liability with respect to commonly controlled insured
depository institutions.
CAPITAL ADEQUACY
Under the Federal Reserve Board's risk-based capital guidelines for
bank holding companies and member banks, the minimum guidelines for the ratio
of qualifying total capital ("Total capital") to risk-weighted assets
(including certain off-balance sheet items, such as standby letters of credit)
is 8%. At least half of the Total capital is to be comprised of common equity,
retained earnings, minority interests in unconsolidated subsidiaries,
noncumulative perpetual preferred stock and a limited amount of cumulative
perpetual preferred stock, less goodwill and certain other intangible assets
discussed below ("Tier 1 capital"). The remainder may consist of a limited
amount of subordinated debt, other preferred stock, certain other instruments
and a limited amount of loan and lease loss reserves ("Tier 2 capital").
The Federal Reserve Board has adopted regulations that require most
intangibles, including core deposit intangibles, to be deducted from Tier 1
Capital. The regulations, however, permit the inclusion of a limited amount of
intangibles related to purchased mortgage servicing rights and purchased credit
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card relationships and include a "grandfather" provision permitting the
continued inclusion of certain existing intangibles.
In addition, the Federal Reserve Board has established minimum
leverage ratio guidelines for bank holding companies and member banks. These
guidelines provide for a minimum ratio of Tier 1 capital to total assets, less
goodwill and certain other intangible assets discussed below (the "leverage
ratio") of 3% for bank holding companies and member banks that meet certain
specified criteria, including that they have the highest regulatory rating. All
other bank holding companies and member banks will be required to maintain a
leverage ratio of 3% plus an additional cushion of at least 100 to 200 basis
points. The guidelines also provide that banking organizations experiencing
internal growth or making acquisitions will be expected to maintain strong
capital positions substantially above the minimum supervisory levels, without
significant reliance on intangible assets. Furthermore, the guidelines indicate
that the Federal Reserve Board will continue to consider a "tangible Tier 1
leverage ratio" and other indicia of capital strength in evaluating proposals
for expansion or new activities. The tangible Tier 1 leverage ratio is the
ratio of a banking organization's Tier 1 capital, less all intangibles, to
total assets, less all intangibles.
Under the Federal Reserve Board's requirements, the Corporation's and
Banco Popular's capital ratios at December 31, 1994 are set forth below:
CORPORATION BANCO POPULAR
----------- -------------
Tier 1 capital . . . . . . . . . . . . . . . . . . . . 12.85% 11.87%
Total capital . . . . . . . . . . . . . . . . . . . . 14.25% 13.29%
Leverage ratio . . . . . . . . . . . . . . . . . . . . 7.62% 6.99%
Pioneer Bank and Banco Popular, FSB are subject to similar capital
requirements adopted by the FDIC and the OTS, respectively.
Failure to meet capital guidelines could subject a bank to a variety
of enforcement remedies, including the termination of deposit insurance by the
FDIC, and to certain restrictions on its business. See "FDICIA" below.
Bank regulators have in the past indicated their desire to raise
capital requirements applicable to banking organizations beyond current levels.
However, management is unable to predict whether and when higher capital
requirements would be imposed and, if so, at what levels or on what schedule.
FDICIA
Under the Federal Deposit Insurance Corporation Improvement Act of
1991 ("FDICIA") federal banking regulators must take prompt corrective action
in respect of depository institutions that do not meet minimum capital
requirements. The FDICIA and regulations thereunder establish five capital
tiers: "well capitalized," "adequately capitalized," "undercapitalized,"
"significantly undercapitalized," and "critically undercapitalized." A
depository institution is deemed well capitalized if it maintains a leverage
ratio of at least 5%, a risk-based Tier 1 capital ratio of at least 6% and a
risk-based Total capital ratio of at least 10% and is not subject to any
written agreement or directive to meet a specific capital level. A depository
institution is deemed adequately capitalized if it is not well capitalized but
maintains a leverage ratio of at least 4% (or at least 3% if given the highest
regulatory rating and not experiencing or anticipating significant growth), a
risk-based Tier 1 capital ratio of at least 4% and a risk-based Total
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capital ratio of at least 8%. A depository institution is deemed
undercapitalized if it fails to meet the standards for adequately capitalized
institutions (unless it is deemed significantly or critically
undercapitalized). An institution is deemed significantly undercapitalized if
it has a leverage ratio of less than 3%, a risk-based Tier 1 capital ratio of
less than 3% or a risk-based Total capital ratio of less than 6%. An
institution is deemed critically undercapitalized if it has tangible equity
equal to 2% or less of total assets. A depository institution may be deemed to
be in a capitalization category that is lower than is indicated by its actual
capital position if it receives a less than satisfactory examination rating in
any one of four categories.
At March 31, 1995, Banco Popular, Banco Popular, FSB and Pioneer Bank
were well capitalized. An institution's capital category, as determined by
applying the prompt corrective action provisions of law, may not constitute an
accurate representation of the overall financial condition or prospects of the
Corporation or its banking subsidiaries, and should be considered in
conjunction with other available information regarding the Corporation's
financial condition and results of operations.
FDICIA generally prohibits a depository institution from making any
capital distribution (including payment of a dividend) or paying any management
fee to its holding company if the depository institution would thereafter be
undercapitalized. Undercapitalized depository institutions are subject to
restrictions on borrowing from the Federal Reserve System. In addition,
undercapitalized depository institutions are subject to growth limitations and
are required to submit capital restoration plans. A depository institution's
holding company must guarantee the capital plan, up to an amount equal to the
lesser of 5% of the depository institution's assets at the time it becomes
undercapitalized or the amount of the capital deficiency when the institution
fails to comply with the plan. The federal banking agencies may not accept a
capital plan without determining, among other things, that the plan is based on
realistic assumptions and is likely to succeed in restoring the depository
institution's capital. If a depository institution fails to submit an
acceptable plan, it is treated as if it is significantly undercapitalized.
Significantly undercapitalized depository institutions may be subject to a
number of requirements and restrictions, including orders to sell sufficient
voting stock to become adequately capitalized, requirements to reduce total
assets and cessation of receipt of deposits from correspondent banks.
Critically undercapitalized depository institutions are subject to appointment
of a receiver or conservator.
The capital-based prompt corrective action provisions of the FDICIA
and their implementing regulations apply to FDIC insured depository
institutions such as the banking subsidiaries of the Corporation, PIB and
Financial, but they are not directly applicable to holding companies, such as
the Corporation, PIB or Financial which control such institutions. However,
federal banking agencies have indicated that, in regulating holding companies,
they may take appropriate action at the holding company level based on their
assessment of the effectiveness of supervisory actions imposed upon subsidiary
insured depository institutions pursuant to such provisions and regulations.
RECENT BANKING LEGISLATION
The recently enacted Riegle-Neal Interstate Banking and Branching
Efficiency Act of 1994 will permit bank holding companies, with Federal Reserve
Board approval, to acquire banks located in states other than the holding
company's home state without regard to whether the transaction is prohibited
under state law, beginning September 29, 1995. In addition, commencing June 1,
1997, national and state banks with different home states will be permitted to
merge across state lines, with approval of the appropriate federal banking
agency, unless the home state of a participating bank passes legislation prior
to this date
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expressly prohibiting interstate mergers. States may "opt in" to permit
interstate branching by merger prior to June 1, 1997 and to permit de novo
interstate branching. A foreign bank, like Banco Popular, may branch interstate
by merger or de novo to the same extent as domestic banks in the foreign bank's
home state, which, in the case of Banco Popular, is New York.
Various other legislation, including proposals to overhaul the bank
regulatory system, expand bank and bank holding company powers and limit the
investments that a depository institution may make with insured funds, is from
time to time introduced in Congress. The Corporation, PIB and Financial cannot
determine the ultimate effect that such potential legislation, if enacted, or
implementing regulations, would have upon their financial condition or results
of operations.
DIVIDEND RESTRICTIONS
The principal source of cash flow for the Corporation is dividends
from Banco Popular. Various statutory provisions limit the amount of dividends
Banco Popular can pay to the Corporation without regulatory approval. As a
member bank subject to the regulation of the Federal Reserve Board, Banco
Popular must obtain the approval of the Federal Reserve Board for any dividend
if the total of all dividends declared by the bank in any calendar year would
exceed the total of its net profits, as defined by the Federal Reserve Board,
for that year, combined with its retained net profits for the preceding two
years. In addition, a member bank may not pay a dividend in an amount greater
than its undivided profits then on hand after deducting its losses and bad
debts. For this purpose, bad debts are generally defined to include the
principal amount of loans that are in arrears with respect to interest by six
months or more unless such loans are fully secured and in the process of
collection. Moreover, for purposes of this limitation, a member bank is not
permitted to add the balance in its allowance for loan losses account to its
undivided profits then on hand. A member bank may, however, net the sum of its
bad debts as so defined against the balance in its allowance for loan losses
account and deduct from undivided profits only bad debts as so defined in
excess of that account. At March 31, 1995, Banco Popular could have declared a
dividend of approximately $150.8 million without the approval of the Federal
Reserve Board. Illinois law contains similar limitations on the amount of
dividends that Pioneer Bank can pay. In addition, OTS regulations limit the
amount of capital distributions (whether by dividend or otherwise) that any
savings association may make without prior OTS approval, based upon the savings
association's regulatory capital levels. These limitations are applicable to
Banco Popular, FSB. Also, in connection with the acquisition by Banco Popular,
FSB, from the RTC of four New Jersey branches of the former Carteret Federal
Savings Bank, the RTC provided Banco Popular FSB and Financial interim
financial assistance. See "BanPonce Financial Corp." above. Pursuant to the
terms of such financing, evidenced by a promissory note (which matures on
January 20, 2000 but is prepayable any time before then), Banco Popular may
not, among other things, declare or pay any stock dividends on its outstanding
capital stock (unless such dividends are used exclusively for payment of
principal of or interest on such promissory note) or make any distributions of
its assets until payment in full of such promissory note.
The payment of dividends by Banco Popular, Pioneer Bank or Banco
Popular, FSB, may also be affected by other regulatory requirements and
policies, such as the maintenance of adequate capital. If, in the opinion of
the applicable regulatory authority, a depository institution under its
jurisdiction is engaged in, or is about to engage in, an unsafe or unsound
practice (that, depending on the financial condition of the depository
institution, could include the payment of dividends), such authority may
require, after notice and hearing, that such depository institution cease and
desist from such practice. The Federal Reserve Board has issued a policy
statement that provides that insured banks and bank holding
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companies should generally pay dividends only out of current operating
earnings. In addition, all insured depository institutions are subject to the
capital-based limitations required by the FDICIA. See "FDICIA."
See "Certain Regulatory Matters -- Puerto Rico Regulation" for a
description of certain restrictions on Banco Popular's ability to pay dividends
under Puerto Rico law.
FDIC INSURANCE ASSESSMENTS
Banco Popular, Pioneer Bank and Banco Popular, FSB are subject to FDIC
deposit insurance assessments.
Pursuant to FDICIA, the FDIC has adopted a risk-based assessment
system, under which the assessment rate for an insured depository institution
varies according to the level of risk incurred in its activities. An
institution's risk category is based partly upon whether the institution is
well capitalized, adequately capitalized or less than adequately capitalized.
Each insured depository institution is also assigned to one of the following
"supervisory subgroups": "A," "B" or "C". Group "A" institutions are
financially sound institutions with only a few minor weaknesses; group "B"
institutions are institutions that demonstrate weaknesses that, if not
corrected, could result in significant deterioration; and group "C"
institutions are institutions for which there is a substantial probability that
the FDIC will suffer a loss in connection with the institution unless effective
action is taken to correct the areas of weakness. Based on its capital and
supervisory subgroups, each FDIC member institution is assigned an annual FDIC
assessment rate varying between 0.23% and 0.31%. The FDIC has the authority to
raise or lower assessment rates on Bank Insurance Fund-insured deposits and to
impose additional special assessments in order to achieve certain statutorily
mandated reserve ratios in each fund. Any such increase would have an adverse
effect upon the net earnings of Banco Popular, Pioneer Bank and Banco Popular,
FSB, and, therefore, the Corporation. The FDIC has proposed to establish a new
Bank Insurance Fund assessment rate schedule providing for assessments of from
4 cents for each $100 of deposits to 41 cents per $100, depending upon the
institution's assigned risk category. There is no certainty that this new
assessment rate schedule will be adopted by the FDIC as proposed.
BROKERED DEPOSITS
FDIC regulations adopted under FDICIA govern the receipt of brokered
deposits. Under these regulations, a bank cannot accept, rollover or renew
brokered deposits (which term is defined also to include any deposit with an
interest rate more than 75 basis points above prevailing rates) unless (i) it
is well capitalized, or (ii) it is adequately capitalized and receives a waiver
from the FDIC. A bank that is adequately capitalized may not pay an interest
rate on any deposits in excess of 75 basis points over certain prevailing
market rates specified by regulation. There are no such restrictions on a bank
that is well capitalized. The Corporation does not believe the brokered
deposits regulation has had or will have a material effect on the funding or
liquidity of Banco Popular, Pioneer Bank or Banco Popular, FSB.
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PUERTO RICO REGULATION
General
As a commercial bank organized under the laws of the Commonwealth,
Banco Popular is subject to supervision, examination and regulation by the
Office of the Commissioner of Financial Institutions of the Commonwealth (the
"Office of the Commissioner"), pursuant to the Puerto Rico Banking Act of 1933,
as amended (the "Banking Law").
Section 27 of the Banking Law requires that at least ten percent (10%)
of the yearly net income of the Bank be credited annually to a reserve fund.
This apportionment shall be done every year until the reserve fund shall be
equal to ten percent (10%) of the total deposits or the total paid-in capital,
whichever is greater. At the end of its most recent fiscal year, Banco Popular
had an adequate reserve fund established.
Section 27 of the Banking Law also provides that when the expenditures
of a bank are greater than the receipts, the excess of the former over the
latter shall be charged against the undistributed profits of the bank, and the
balance, if any, shall be charged against the reserve fund, as a reduction
thereof. If there is no reserve fund sufficient to cover such balance in whole
or in part, the outstanding amount shall be charged against the capital account
and no dividend shall be declared until said capital has been restored to its
original amount and the reserve fund to 20% of the original capital.
Section 16 of the Banking Law requires every bank to maintain a legal
reserve which shall not be less than 20% of its demand liabilities, except
government deposits (federal, state and municipal) which are secured by actual
collateral. However, if a bank becomes a member of the Federal Reserve System,
the 20% legal reserve shall not be effective and the reserve requirements
demanded by the Federal Reserve System shall be applicable. However, pursuant
to an order of the Federal Reserve Board dated November 24, 1982, the Bank has
been exempted from such reserve requirements with respect to deposits payable
in Puerto Rico. As to those deposits, the Section 16 reserve requirements are
applicable.
Section 17 of the Banking Law permits the Bank to make loans to any
one person, firm, partnership or corporation, up to an aggregate amount of
fifteen percent (15%) of the paid-in capital and reserve fund of the Bank. As
of March 31, 1995, the legal lending limit for the Bank under this provision
was approximately $85 million. If such loans are secured by collateral worth at
least twenty-five percent (25%) more than the amount of the loan, the aggregate
maximum amount may reach one third of the paid-in capital of the Bank, plus its
reserve fund. There are no restrictions under Section 17 on the amount of loans
that are wholly secured by bonds, securities and other evidences of
indebtedness of the Government of the United States or the Commonwealth, or by
current debt bonds, not in default, of municipalities or instrumentalities of
the Commonwealth.
Section 14 of the Banking Law authorizes the Bank to conduct certain
financial and related activities directly or through subsidiaries, including
finance leasing of personal property, making and servicing mortgage loans and
operating a small-loan company. The Bank engages in these activities through
its wholly owned subsidiaries, Popular Leasing & Rental, Inc., Popular Mortgage,
Inc., and Popular Consumer Services, Inc., respectively, all of which are
organized and operate in Puerto Rico.
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The Finance Board, which is a part of the Office of the Commissioner,
but also includes as its members the Secretary of the Treasury, the Secretary
of Commerce, the Secretary of Consumer Affairs, the President of the Planning
Board, and the President of the Government Development Bank for Puerto Rico,
has the authority to regulate the maximum interest rates and finance charges
that may be charged on loans to individuals and unincorporated businesses in
the Commonwealth. The current regulations of the Finance Board provide that the
applicable interest rate on loans to individuals and unincorporated businesses
(including real estate development loans but excluding certain other personal
and commercial loans secured by mortgages on real estate properties) is to be
determined by free competition. The Finance Board also has authority to
regulate the maximum finance charges on retail installment sales contracts,
which are currently set at 21%, and for credit card purchases, which are
currently set at 26%. There is no maximum rate set for installment sales
contracts involving motor vehicles, commercial, agricultural and industrial
equipment, commercial electric appliances and insurance premiums.
IBC Act
Under the IBC Act, without the prior approval of the Office of the
Commissioner, PIB may not amend its articles of incorporation or issue
additional shares of capital stock or other securities convertible into
additional shares of capital stock unless such shares are issued directly to
the shareholders of PIB previously identified in the application to organize
the international banking entity, in which case notification to the Office of
the Commissioner must be given within ten business days following the date of
the issue. Pursuant to the IBC Act, without the prior approval of the Office of
the Commissioner, PIB may not initiate the sale, encumbrance, assignment,
merger or other transfer of shares if by such transaction a person or persons
acting in concert could acquire direct or indirect control of 10% or more of
any class of the Company's stock. Such authorization must be requested at least
30 days prior to the transaction.
PIB must submit to the Office of the Commissioner a report of its
condition and results of operation on a monthly basis and its annual audited
financial statement at the close of its fiscal year. Under the IBC Act, PIB may
not deal with "domestic persons" as such term is defined in the IBC Act. Also,
it may only engage in those activities authorized in the IBC Act, the
regulations adopted thereunder and its license.
The IBC Act empowers the Office of the Commissioner to revoke or
suspend, after a hearing, the license of an international banking entity if,
among other things, it fails to comply with the IBC Act, regulations issued by
the Office of the Commissioner or the terms of its license, or if the Office of
the Commissioner finds that the business of the international banking entity is
conducted in a manner not consistent with the public interest.
DESCRIPTION OF DEBT SECURITIES AND GUARANTEES
The Corporation's senior debt securities (the "Senior Debt
Securities"), may be issued from time to time in one or more series under an
Indenture, dated as of February 15, 1995 (the "Senior Indenture") between the
Corporation and The First National Bank of Chicago (the successor trustee to
Citibank, N.A.), as trustee (the "Senior Trustee"). The Corporation's
subordinated debt securities (the "Subordinated Debt Securities") may be issued
from time to time in one or more series under an Indenture (the "Subordinated
Indenture") between the Corporation and the trustee named in the applicable
Prospectus Supplement, as trustee (the "Subordinated Trustee").
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PIB's senior debt securities (the "PIB Senior Debt Securities") may be
issued from time to time in one or more series under an Indenture (the "PIB
Senior Indenture") among the Corporation, PIB and the trustee named in the
applicable Prospectus Supplement, as trustee (the "PIB Senior Trustee"). PIB's
subordinated debt securities ("PIB Subordinated Debt Securities") may be issued
from time to time in one or more series under an Indenture (the "PIB
Subordinated Indenture") among the Corporation, PIB and the trustee named in
the applicable Prospectus Supplement, as trustee (the "PIB Subordinated
Trustee"). Financial's senior debt securities (the "Financial Senior Debt
Securities") may be issued from time to time in one or more series under an
Indenture, dated as of October 1, 1991, as supplemented by the First
Supplemental Indenture thereto, dated as of February 28, 1995 (collectively,
the "Financial Senior Indenture"), among the Corporation, Financial and The
First National Bank of Chicago (the successor trustee to Citibank N.A.), as
trustee (the "Financial Senior Trustee"). Financial's subordinated debt
securities (the "Financial Subordinated Debt Securities") may be issued from
time to time in one or more series under an Indenture (the "Financial
Subordinated Indenture") among the Corporation, Financial and the trustee named
in the applicable Prospectus Supplement, as trustee (the "Financial
Subordinated Trustee"). The Senior Debt Securities, the Subordinated Debt
Securities, the PIB Senior Debt Securities, the PIB Subordinated Debt
Securities, the Financial Senior Debt Securities and the Financial Subordinated
Debt Securities are sometimes referred to collectively as the "Debt
Securities." The Senior Indenture, the Subordinated Indenture, the PIB Senior
Indenture, the PIB Subordinated Indenture, the Financial Senior Indenture and
the Financial Subordinated Indenture are sometimes referred to collectively as
the "Indentures," and the Senior Trustee, the Subordinated Trustee, the PIB
Senior Trustee, the PIB Subordinated Trustee, the Financial Senior Trustee and
the Financial Subordinated Trustee are sometimes referred to collectively as
the "Trustees." The statements under this caption are brief summaries of
material provisions contained in the Indentures, do not purport to be complete
and are qualified in their entirety by reference to the Indentures, including
the definition therein of certain terms, copies of which are filed as exhibits
to the Registration Statement of which this Prospectus is a part.
GENERAL
Each Indenture provides for the issuance of debt securities in one or
more series, and does not limit the principal amount of debt securities which
may be issued thereunder.
Reference is made to the Prospectus Supplement for the following terms
of the Debt Securities being offered hereby: (1) the specific title of the Debt
Securities; (2) whether the Debt Securities are Senior Debt Securities,
Subordinated Debt Securities, PIB Senior Debt Securities, PIB Subordinated Debt
Securities, Financial Senior Debt Securities or Financial Subordinated Debt
Securities; (3) the aggregate principal amount of the Debt Securities; (4) the
percentage of their principal amount at which the Debt Securities will be
issued; (5) the date or dates on which the Debt Securities will mature; (6) the
rate or rates (which may be fixed or variable) per annum or the method for
determining such rate or rates, if any, at which the Debt Securities will bear
interest; (7) the times, if any, at which any such interest will be payable;
(8) any provisions relating to optional or mandatory redemption of the Debt
Securities; (9) the denominations in which the Debt Securities are authorized
to be issued; (10) the extent to which Debt Securities will be issuable in
global form and, if so, the identity of the Depositary for such global Debt
Securities; (11) the currency or units of two or more currencies in which the
Debt Securities are denominated, if other than United States dollars, and the
currency in which interest is payable if other than the currency in which the
Debt Securities are denominated; (12) the place or places at which the
Corporation, PIB or Financial will make payments of principal (and premium, if
any) and interest, if any, and the method of such payment; (13) the Person to
whom any Debt Security of such series will be
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payable, if other than the Person in whose name that Debt Security (or one or
more Predecessor Debt Securities) is registered at the close of business on the
Regular Record Date for such interest; (14) whether the Debt Securities may be
issued as Original Issue Discount Securities; (15) whether the amount of
payment of principal of or any premium or interest on any Debt Security may be
determined with reference to an index, formula or other method and the manner
in which such amount shall be determined; (16) any additional covenants and
Events of Default and the remedies with respect thereto not currently set forth
in the respective Indenture; and (17) any other specific terms of Debt
Securities.
One or more series of the Debt Securities may be issued as Discount
Securities. A "Discount Security" is a debt security, including any zero-coupon
security, which is issued at a price lower than the amount payable at the
Stated Maturity thereof and which provides that upon redemption or acceleration
of the Maturity thereof an amount less than the amount payable upon the Stated
Maturity thereof and determined in accordance with the terms thereof shall
become due and payable.
Unless otherwise indicated in the applicable Prospectus Supplement,
the covenants contained in the Indentures and the Debt Securities will not
afford holders of the Debt Securities protection in the event of a sudden
decline in credit rating that might result from a recapitalization,
restructuring, or other highly leveraged transaction.
FORM, EXCHANGE, REGISTRATION AND TRANSFER
Debt Securities of a series may be issuable in certificated or global
form. Debt Securities in certificated form may be presented for registration of
transfer (with the form of transfer endorsed thereon duly executed), at the
office of the Security Registrar or at the office of any transfer agent
designated by the Corporation, PIB or Financial, as the case may be, for such
purpose with respect to any series of Debt Securities and referred to in an
applicable Prospectus Supplement, without service charge and upon payment of
any taxes and other governmental charges as described in the relevant
Indenture. Such transfer or exchange will be effected upon the Security
Registrar being satisfied with the documents of title and identity of the
Person making the request. The Security Registrar with respect to the Debt
Securities will be designated in the applicable Prospectus Supplement. If a
Prospectus Supplement refers to any transfer agents (in addition to the
Security Registrar) initially designated by the Corporation, PIB or Financial
with respect to any series of Debt Securities, the Corporation, PIB or
Financial, as the case may be, may at any time rescind the designation of any
such transfer agent or approve a change in the location through which any such
transfer agent acts, except that the Corporation, PIB or Financial, as the case
may be, will be required to maintain a transfer agent in each Place of Payment
for such series. The Corporation, PIB or Financial, as the case may be, may at
any time designate additional transfer agents with respect to any series of
Debt Securities.
In the event of any redemption in part, the Corporation, PIB or
Financial, as the case may be, shall not be required to (i) issue, register the
transfer of or exchange any Debt Security during a period beginning at the
opening of business 15 days before the mailing of a notice of redemption of
Debt Securities of like tenor and of the series of which such Debt Security is
a part and ending at the close of business on the day of such mailing and (ii)
register the transfer of or exchange any Debt Security so selected for
redemption, in whole or in part, except the unredeemed portion of any Debt
Security being redeemed in part.
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PAYMENT AND PAYING AGENT
Unless otherwise indicated in an applicable Prospectus Supplement,
payment of principal of and premium (if any) on any Debt Security will be made
only against surrender to the Paying Agent of such Debt Security. Unless
otherwise indicated in an applicable Prospectus Supplement, principal of and
any premium and interest on the Debt Securities will be payable, subject to any
applicable laws and regulations, at the office of such Paying Agent or Paying
Agents as the Corporation, PIB or Financial, as the case may be, may designate
from time to time, except that at the option of the Corporation, PIB or
Financial, as the case may be, payment of any interest may be made by check
mailed to the address of the person entitled thereto as such address shall
appear in the Security Register with respect to such Debt Securities. Unless
otherwise indicated in an applicable Prospectus Supplement, payment of interest
on a Debt Security on any Interest Payment Date will be made to the Person in
whose name such Debt Security (or Predecessor Debt Security) is registered at
the close of business on the Regular Record Date for such interest.
The Paying Agent for payments with respect to Debt Securities of each
series will be specified in the applicable Prospectus Supplement. The
Corporation, PIB or Financial, as the case may be, may at any time designate
additional Paying Agents or rescind the designation of any Paying Agent or
approve a change in the office through which any Paying Agent acts, except that
the Corporation, PIB or Financial, as the case may be, will be required to
maintain a Paying Agent in each Place of Payment for each series of Debt
Securities.
All moneys paid by the Corporation, PIB or Financial, as the case may
be, to a Paying Agent for the payment of the principal of and any premium or
interest on any Debt Security which remain unclaimed at the end of two years
after such principal, premium or interest shall have become due and payable
will be repaid to the Corporation, PIB or Financial, as the case may be, and
the Holder of such Debt Security will thereafter look only to the Corporation,
PIB or Financial, as the case may be, for payment thereof.
CERTAIN COVENANTS
Each of the Senior Indenture, the PIB Senior Indenture and the
Financial Senior Indenture provides that the Corporation, subject to the
provisions described under "Consolidation, Merger, Sale or Conveyance," will
not sell, assign, transfer, or otherwise dispose of, or permit Banco Popular to
issue, sell, assign, transfer or otherwise dispose of any shares of, or
securities convertible into or options to subscribe for, Voting Stock of Banco
Popular unless Banco Popular remains a Controlled Subsidiary (as defined below)
of the Corporation, and will not permit Banco Popular to merge or consolidate
or convey, transfer, lease or sell its properties substantially as an entirety,
unless the surviving corporation or transferee, as the case may be, is a
Controlled Subsidiary of the Corporation. There is no similar restriction in
the Subordinated Indenture, the PIB Subordinated Indenture or the Financial
Subordinated Indenture.
Each of the Senior Indenture, the PIB Senior Indenture and the
Financial Senior Indenture also provides that the Corporation will not, and it
will not permit any Material Banking Subsidiary (as defined below) at any time
directly or indirectly to, create, assume, incur or permit to exist any
indebtedness for borrowed money secured by a pledge, lien or other encumbrance
on the Voting Stock of any Material Banking Subsidiary without making effective
provision whereby the Debt Securities and the Guarantees
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(and, if the Corporation so elects, any other indebtedness ranking on a parity
with the Debt Securities and the Guarantees) shall be secured equally and
ratably with such secured indebtedness so long as such other indebtedness shall
be so secured; provided, however, that the foregoing covenant shall not be
applicable to liens for taxes or assessments or governmental charges or levies
not then due and delinquent or the validity of which is being contested in good
faith or which are less than $10,000,000 in amount, liens created by or
resulting from any litigation or legal proceeding which is currently being
contested in good faith by appropriate proceedings or which involve claims of
less than $10,000,000, or deposits to secure (or in lieu of) surety, stay,
appeal or customs bonds. There is no similar restriction in the Subordinated
Indenture, the PIB Subordinated Indenture or the Financial Subordinated
Indenture.
For the purpose of the foregoing provisions, "Material Banking
Subsidiary" means any Controlled Subsidiary chartered as a banking corporation
under federal, state or Puerto Rican law that is a significant subsidiary of
the Corporation as defined in Rule 1-02 of Regulation S-X of the Rules and
Regulations of the Commission. "Controlled Subsidiary" means any corporation
more than 80% of the outstanding Voting Stock of which is owned by the
Corporation. As of the date of this Prospectus, Banco Popular is the only
"Material Banking Subsidiary" of the Corporation.
REDEMPTION
General
If the Debt Securities of a series provide for mandatory redemption by
the Corporation, PIB or Financial, as the case may be, or redemption at the
election of the Corporation, PIB or Financial, as the case may be, unless
otherwise provided in the applicable Prospectus Supplement, such redemption
shall be on not less than 30 nor more than 60 days' notice and, in the event of
redemption of Debt Securities of a series of like tenor in part, the Debt
Securities to be redeemed will be selected by the Trustee in such usual manner
as it shall deem fair and appropriate. Notice of such redemption will be
mailed to Holders of Debt Securities of such series to their last addresses as
they appear on the register of the Debt Securities of such series.
For Taxation
Should the Corporation or PIB, on the occasion of the next payment in
respect of any series of the Debt Securities, be obliged to pay any Additional
Amounts as are referenced in "Taxation by the Commonwealth of Puerto Rico"
below, due to a change in law, regulation or interpretation, the Corporation,
PIB or Financial, as the case may be, may, at its option, on the giving of not
less than 30 nor more than 60 days' notice to the Holders of the Debt
Securities of each series, redeem such series of the Debt Securities as a whole
at a redemption price of 100% of the principal amount thereof with the accrued
interest to the date fixed for redemption or such other redemption price as set
forth in the applicable Prospectus Supplement.
Global Securities
The Debt Securities may be issued in whole or in part in the form of
one or more Global Securities that will be deposited with, or on behalf of, a
depositary (the "Depositary") identified in the Prospectus Supplement relating
to such Debt Securities. Unless and until it is exchangeable in whole or in
part for Debt Securities in definitive form, a Global Security may not be
transferred except as a whole
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by the Depositary for such Global Security to a nominee of such Depositary or
by a nominee of such Depositary to such Depositary or another nominee of such
Depositary or by such Depositary or any such nominee to a successor of such
Depositary or a nominee of such successor.
The specific terms of the depositary arrangement, if any, with respect
to a series of Debt Securities will be described in the Prospectus Supplement
relating to such series. The Corporation, PIB and Financial anticipate that the
following provisions will apply to all depositary arrangements.
Ownership of beneficial interests in a Global Security will be limited
to persons that have accounts with the Depositary for such Global Security or
its nominee ("Participant") or persons that may hold interests through
Participants. Such accounts shall be designated by the underwriters or agents
with respect to the Debt Securities underwritten or solicited by them or by the
Corporation, PIB or Financial in the case of Debt Securities offered and sold
directly by the Corporation, PIB or Financial, as the case may be. The
Corporation, PIB or Financial, as the case may be, will obtain confirmation
from the Depositary that upon the issuance of a Global Security the Depositary
for such Global Security will credit, on its book-entry registration and
transfer system, the Participants' accounts with the respective principal
amounts of the Debt Securities represented by such Global Security. Ownership
of beneficial interests in such Global Security will be shown on, and the
transfer of such ownership interests will be effected only through, records
maintained by the Depositary (with respect to interests of Participants) and on
the records of Participants (with respect to interests of persons held through
Participants). The laws of some states may require that certain purchasers of
securities take physical delivery of such securities in definitive form. Such
limits and such laws may impair the ability to own, transfer or pledge
beneficial interests in a Global Security.
So long as the Depositary for a Global Security, or its nominee, is
the registered owner of such Global Security, such Depositary or such nominee,
as the case may be, will be considered the sole owner or Holder of the Debt
Securities represented by such Global Security for all purposes under the
Indentures. Except as provided below, owners of beneficial interests in a
Global Security will not be entitled to have the Debt Securities represented by
such Global Security registered in their names, will not receive or be entitled
to receive physical delivery of the Debt Securities in definitive form and will
not be considered the owners or Holders thereof under the Indentures.
Accordingly, each person owning a beneficial interest in such a Global Security
must rely on the procedures of the Depositary and, if such person is not a
Participant, on the procedures of the Participant through which such person
owns its interests, to exercise any rights of a Holder under the applicable
Indenture. The Corporation, PIB and Financial understand that under existing
industry practices, in the event that the Corporation, PIB or Financial, as the
case may be, requests any action of Holders or that an owner of a beneficial
interest in such a Global Security desires to give or take any action that a
Holder is entitled to give or take under the applicable Indenture, the
Depositary would authorize the Participants holding the relevant beneficial
interests to give or take such action, and such Participants would authorize
beneficial owners owning through such Participants to give or take such action
or would otherwise act upon the instructions of beneficial owners owning
through them.
Payment of principal of, and premium and interest, if any, on Debt
Securities registered in the name of a Depositary or its nominee will be made
to the Depositary or its nominee, as the case may be, as the registered owner
of the Global Security representing such Debt Securities. None of the
Corporation, PIB, Financial, the Trustee, any Paying Agent or any other agent
of the Corporation, PIB, Financial or the Trustee will have any responsibility
or liability for any aspect of the records relating to
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payments made on account of beneficial ownership interests in the Global
Security for such Debt Securities or for maintaining, supervising or reviewing
any records relating to such beneficial ownership interests.
The Corporation, PIB or Financial, as the case may be, will obtain
confirmation from the Depositary that upon receipt of any payment of principal
of, or premium or interest on, a Global Security, the Depositary will
immediately credit Participants' accounts with payments in amounts
proportionate to their respective beneficial interests in the principal amount
of such Global Security as shown on the records of the Depositary. Payments by
Participants to owners of beneficial interests in such Global Security held
through such Participants will be the responsibility of such Participants, as
is now the case with securities held for the accounts of customers registered
in "street names."
If the Depositary for any Debt Securities represented by a Global
Security notifies the Corporation, PIB or Financial, as the case may be, that
it is unwilling or unable to continue as Depositary or ceases to be a clearing
agency registered under the Exchange Act and a successor Depositary is not
appointed by the Corporation, PIB or Financial, as the case may be, then within
ninety days after receiving such notice or becoming aware that Depositary is no
longer so registered, the Corporation, PIB or Financial, as the case may be,
will issue such Debt Securities in definitive form in exchange for such Global
Security. In addition, if an event of default, or an event which with notice or
the lapse of time or both would become an event of default, with respect to the
Debt Securities of a series has occurred and is continuing or either the
Corporation, PIB or Financial, as the case may be, at any time and in its sole
discretion determines not to have the Debt Securities represented by one or
more Global Securities, the Corporation, PIB or Financial, as the case may be,
will issue Debt Securities in definitive form in exchange for all of the Global
Securities representing such Debt Securities.
TAXATION BY THE COMMONWEALTH OF PUERTO RICO
All payments of, or in respect of, principal of, and any premium or
interest on, the Debt Securities and all payments pursuant to the Guarantees
will be made without withholding or deduction for, or on account of, any
present or future taxes, duties, assessments or governmental charges of
whatever nature imposed or levied by or on behalf of Puerto Rico or by or with
any district, municipality or other political subdivision thereof or authority
therein having power to tax unless such taxes, duties, assessments or
governmental charges are required by law to be withheld or deducted.
In the event that the Corporation or PIB is required by law to deduct
or withhold any amounts in respect of taxes, duties, assessments or
governmental charges, the Corporation or PIB, as the case may be, will pay such
additional amounts of, or in respect of, principal, premium and interest as
will result (after deduction of the said taxes, duties, assessments or
governmental charges) in the payment to the Holders of the Debt Securities, of
the amounts which would otherwise have been payable in respect to the Debt
Securities in the absence of such deduction or withholding ("Additional
Amounts"), except that no such Additional Amounts shall be payable:
(i) to any Holder of a Debt Security or any interest therein
or rights in respect thereof where such deduction or withholding is
required by reason of such Holder having some connection with Puerto
Rico or any political subdivision or taxing authority thereof or
therein other than the mere holding of and payment in respect of such
Debt Security;
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(ii) in respect of any deduction or withholding that would not
have been required but for the presentation by the Holder of a Debt
Security for payment on a date more than 30 days after Maturity or the
date on which payment thereof is duly provided for, whichever occurs
later; or
(iii) in respect of any deduction or withholding that would
not have been required but for the failure to comply with any
certification, identification or other reporting requirements
concerning the nationality, residence, identity or connection with
Puerto Rico, or any political subdivision or taxing authority thereof
or therein, of the Holder of a Debt Security or any interest therein
or rights in respect thereof, if compliance is required by Puerto
Rico, or any political subdivision or taxing authority thereof or
therein, as a precondition to exemption from such deduction or
withholding.
GOVERNING LAW
The Indentures, the Debt Securities and the Guarantees of the Debt
Securities of PIB and Financial will be governed by, and construed in
accordance with, the laws of the State of New York.
TERMS APPLICABLE TO THE SENIOR DEBT SECURITIES OR
SUBORDINATED DEBT SECURITIES
MODIFICATION OF THE SENIOR AND SUBORDINATED INDENTURES
The Senior and Subordinated Indentures contain provisions permitting
the Corporation and the respective Trustees, with the consent of Holders of not
less than a majority in principal amount of the Senior Debt Securities or
Subordinated Debt Securities which are affected by the modification, to modify
the particular Indenture or any supplemental indenture or the rights of the
Holders of the Senior Debt Securities or Subordinated Debt Securities issued
under such Indenture; provided that no such modification may, without the
consent of the Holder of each Outstanding Senior Debt Security or Subordinated
Debt Security affected thereby, (a) change the stated maturity date of the
principal of, or any installment of principal of or interest, if any, on, any
Senior Debt Security or Subordinated Debt Security, (b) reduce the principal
amount of, or premium or rate of interest, if any, on, any Senior Debt Security
or Subordinated Debt Security, (c) reduce the amount of principal of an
Original Issue Discount Security payable upon acceleration of the maturity
thereof, (d) change the place or coin or currency of payment of principal of,
or premium or interest, if any, on, any Senior Debt Security or Subordinated
Debt Security, (e) impair the right to institute suit for the enforcement of
any payment on or with respect to any Senior Debt Security or Subordinated Debt
Security, (f) reduce the percentage in principal amount of Outstanding Senior
Debt Securities or Subordinated Debt Securities of any series, the consent of
whose Holders is required for modification or amendment of the Indenture or for
waiver of compliance with certain provisions of the Indenture or for waiver of
certain defaults, (g) modify (with certain exceptions) any provision of the
Indenture which requires the consent of the Holder of each Outstanding Senior
Debt Security or Subordinated Debt Security affected thereby or (h) with
respect to the Subordinated Indenture, modify the subordination provisions in a
manner adverse to Holders of Outstanding Subordinated Debt Securities.
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SUBORDINATION
Unless otherwise indicated in the applicable Prospectus Supplement,
the following provisions shall apply to the Subordinated Debt Securities.
The payment of the principal of, premium, if any, and interest on the
Subordinated Debt Securities will, to the extent set forth in the Subordinated
Indenture, be subordinated in right of payment to the prior payment in full of
all Senior Indebtedness (as defined below) of the Corporation. In certain
events of insolvency, the payment of the principal of, premium, if any, and
interest on the Subordinated Debt Securities will, to the extent set forth in
the Subordinated Indenture, also be effectively subordinated in right of
payment to the prior payment in full of all Other Financial Obligations (as
defined below) of the Corporation. As of March 31, 1995, $1,021 million
aggregate principal amount of Senior Indebtedness and no Other Financial
Obligations of the Corporation were outstanding. Upon any payment or
distribution of assets to creditors upon any liquidation, dissolution, winding
up, reorganization, assignment for the benefit of creditors, marshalling of
assets or any bankruptcy, insolvency or similar proceedings of the Corporation,
the holders of all Senior Indebtedness of the Corporation will first be
entitled to receive payment in full of all amounts due or to become due thereon
before the Holders of the Subordinated Debt Securities will be entitled to
receive any payment in respect of the principal of, premium, if any, or
interest on the Subordinated Debt Securities. If, upon any such payment or
distribution of assets to creditors, there remain, after giving effect to such
subordination provisions in favor of the holders of Senior Indebtedness of the
Corporation, any amounts of cash, property or securities available for payment
or distribution in respect of Subordinated Debt Securities (as defined in the
Subordinated Indenture, "Corporation Excess Proceeds") and if, at such time,
any person entitled to payment pursuant to the terms of Other Financial
Obligations of the Corporation has not received payment in full of all amounts
due or to become due on or in respect of such Other Financial Obligations of
the Corporation, then such Corporation Excess Proceeds shall first be applied
to pay or provide for the payment in full of such Other Financial Obligations
of the Corporation before any payment or distribution may be made in respect of
the Subordinated Debt Securities. In the event of the acceleration of the
maturity of any Subordinated Debt Securities, the holders of all Senior
Indebtedness of the Corporation will first be entitled to receive payment in
full of all amounts due or to become due thereon before the Holders of the
Subordinated Debt Securities will be entitled to receive any payment of the
principal of, premium, if any, or interest on the Subordinated Debt Securities.
Accordingly, in case of such an acceleration, all Senior Indebtedness of the
Corporation would have to be repaid before any payment could be made in respect
of the Subordinated Debt Securities. No payments on account of principal,
premium, if any, or interest in respect of the Subordinated Debt Securities may
be made if there shall have occurred and be continuing a default in any payment
with respect to any Senior Indebtedness of the Corporation, or an event of
default with respect to any Senior Indebtedness of the Corporation permitting
the holders thereof to accelerate the maturity thereof, or if any judicial
proceeding shall be pending with respect to any such default.
By reason of such subordination, in the event of the insolvency of the
Corporation, creditors of the Corporation who are not holders of Senior
Indebtedness of the Corporation or the Subordinated Debt Securities may recover
less, ratably, than holders of Senior Indebtedness of the Corporation and may
recover more, ratably, than Holders of the Subordinated Debt Securities.
"Senior Indebtedness" of the Corporation is defined in the
Subordinated Indenture to mean the principal of, premium, if any, and interest
on (i) all indebtedness of the Corporation for money borrowed
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(including indebtedness of others guaranteed by the Corporation) other than the
Subordinated Debt Securities, whether outstanding on the date of the
Subordinated Indenture or thereafter created, assumed or incurred and (ii) any
amendments, renewals, extensions, modifications and refundings of any such
indebtedness, unless in either case in the instrument creating or evidencing
any such indebtedness or pursuant to which it is outstanding it is provided
that such indebtedness is not superior in right of payment to the Subordinated
Debt Securities. For the purposes of this definition, "indebtedness for money
borrowed" is defined as (i) any obligation of, or any obligation guaranteed by,
the Corporation for the repayment of borrowed money, whether or not evidenced
by bonds, debentures, notes or other written instruments, (ii) any deferred
payment obligation of, or any such obligation guaranteed by, the Corporation
for the payment of the purchase price of property or assets evidenced by a note
or similar instrument and (iii) any obligation of, or any such obligation
guaranteed by, the Corporation for the payment of rent or other amounts under a
lease of property or assets which obligation is required to be classified and
accounted for as a capitalized lease on the balance sheet of the Corporation
under generally accepted accounting principles.
"Other Financial Obligations" of the Corporation is defined in the
Subordinated Indenture to mean all obligations of the Corporation to make
payment pursuant to the terms of financial instruments, such as (i) securities
contracts and foreign currency exchange contracts, (ii) derivative instruments,
such as swap agreements (including interest rate and currency and foreign
exchange rate swap agreements), cap agreements, floor agreements, collar
agreements, interest rate agreements, foreign exchange agreements, options,
commodity futures contracts, commodity options contracts and (iii) similar
financial instruments; provided that the term Other Financial Obligations shall
not include (x) obligations on account of Senior Indebtedness of the
Corporation and (y) obligations on account of indebtedness for money borrowed
ranking pari passu with or subordinate to the Subordinated Debt Securities.
EVENTS OF DEFAULT
Senior Indenture
An Event of Default with respect to Senior Debt Securities of any
series is defined in the Senior Indenture as being: default for 30 days in
payment of any interest on Senior Debt Securities of such series; default in
payment of principal of, or premium, if any, on any Senior Debt Securities of
such series; default in deposit of any mandatory sinking fund payment required
by the Senior Debt Securities of such series; default for 60 days after notice,
in performance or breach of any other covenant or warranty in the Senior
Indenture (except for a covenant expressly relating to a series of Senior Debt
Securities other than that series of Senior Debt Securities) or in the Senior
Debt Securities of such series; acceleration of the Senior Debt Securities of
any other series or any other indebtedness for borrowed money of the
Corporation or any Material Banking Subsidiary, in each case exceeding
$10,000,000 in an aggregate principal amount, as a result of a default under
the terms of the instrument or instruments under which such indebtedness is
issued or secured, unless such acceleration is annulled within 30 days after
written notice as provided in the Indenture, provided that if such default is
remedied or cured by the Corporation or any Material Banking Subsidiary or
waived by holders of such indebtedness, the Event of Default by reason thereof
shall be deemed to have been thereupon remedied, cured or waived; certain
events of bankruptcy, insolvency or reorganization with respect to the
Corporation or any Material Banking Subsidiary; or any other Event of Default
specified in the applicable Prospectus Supplement. In case an Event of Default
with respect to Senior Debt Securities of any series shall occur and be
continuing, the Senior Trustee or the Holders of not less than 25% in principal
amount of the Senior Debt Securities of
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such series then outstanding may declare the principal of all such Senior Debt
Securities of such series to be due and payable. The Corporation is required to
furnish to the Senior Trustee annually a statement as to the performance by the
Corporation of its obligations under the Senior Indenture and as to any default
in such performance. Under certain circumstances any declaration of
acceleration with respect to Senior Debt Securities of any series may be
rescinded and past defaults (except a default in the payment of principal of or
interest on the Senior Debt Securities) may be waived by the Holders of a
majority in aggregate principal amount of the Senior Debt Securities of such
series then outstanding. The Senior Indenture provides that the Senior Trustee
may withhold notice to the Holders of Senior Debt Securities of any series of
any continuing default (except in the payment of the principal of (or premium,
if any) or interest on any Senior Debt Securities of such series) if such
Senior Trustee considers it in the interest of Holders of such series of Senior
Debt Securities to do so.
Subordinated Indenture
An Event of Default with respect to the Subordinated Debt Securities
of any series is defined in the Subordinated Indenture as being certain events
involving a bankruptcy, insolvency or reorganization of the Corporation. If an
Event of Default with respect to Subordinated Debt Securities of any series
shall have occurred and be continuing, either the Subordinated Trustee or the
Holders of not less than 25% in aggregate principal amount of the Subordinated
Debt Securities of such series then outstanding may declare the principal of
the Subordinated Debt Securities of such series to be due and payable
immediately. The Corporation is required to furnish to the Subordinated Trustee
annually a statement as to the performance by the Corporation of its
obligations under the Subordinated Indenture and as to any default in such
performance. Under certain circumstances, any declaration of acceleration with
respect to Subordinated Debt Securities of any series may be rescinded and past
defaults (except a default in the payment of principal of or interest on the
Subordinated Debt Securities) may be waived by the Holders of a majority in
aggregate principal amount of the Subordinated Debt Securities of such series
then outstanding. The Subordinated Indenture provides that the Subordinated
Trustee may withhold notice to the Holders of the Subordinated Debt Securities
of any series of any continuing default (except in the payment of the principal
of (or premium, if any) or interest on any Subordinated Debt Securities of such
series) if the Subordinated Trustee considers it in the interest of the Holders
of such series of Subordinated Debt Securities to do so.
The Subordinated Indenture does not provide for any right of
acceleration of the payment of principal of a series of Subordinated Debt
Securities upon a default in the payment of principal or interest or in the
performance of any covenant or agreement in the Subordinated Debt Securities of
the particular series or in the Subordinated Indenture.
CONSOLIDATION, MERGER, SALE OR CONVEYANCE
The Corporation has covenanted in the Senior and Subordinated
Indentures that it will not merge or consolidate with any other corporation or
sell, convey, transfer or lease all or substantially all of its assets to any
person, firm or corporation unless the Corporation is the continuing
corporation or the successor corporation expressly assumes the obligations
under any outstanding Senior Debt Securities and Subordinated Debt Securities
and the respective Senior and Subordinated Indentures and the Corporation or
such successor corporation is not, immediately after such merger,
consolidation, sale or conveyance, in default in the performance of any of the
covenants or conditions of the respective Indenture. The Indentures do not
contain any other covenant which restricts the Corporation's ability to merge
or
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consolidate with any other corporation, sell, convey, transfer or lease all or
substantially all of its assets to any persons, firm or corporation or
otherwise engage in restructuring transactions.
TERMS APPLICABLE TO THE FINANCIAL SENIOR DEBT SECURITIES OR FINANCIAL
SUBORDINATED DEBT SECURITIES
MODIFICATION OF THE FINANCIAL SENIOR AND
FINANCIAL SUBORDINATED INDENTURES
The Financial Senior and Financial Subordinated Indentures contain
provisions permitting the Corporation, Financial and the respective Financial
Trustees, with the consent of Holders of not less than a majority in principal
amount of the Financial Senior Debt Securities or Financial Subordinated Debt
Securities that are affected by the modification, to modify the particular
Indenture or any supplemental indenture or the rights of the Holders of the
Financial Senior Debt Securities or Financial Subordinated Debt Securities
issued under such Indenture, provided that no such modification may, without
the consent of the Holder of each Outstanding Financial Senior Debt Security or
Financial Subordinated Debt Security affected thereby, (a) change the stated
maturity date of the principal of, or any installment of principal of or
interest, if any, on, any Financial Senior Debt Security or Financial
Subordinated Debt Security, (b) reduce the principal amount of, or premium or
rate of interest, if any, on, any Financial Senior Debt Security or Financial
Subordinated Debt Security, (c) reduce the amount of principal of an Original
Issue Discount Financial Senior Debt Security or Financial Subordinated Debt
Security payable upon acceleration of the maturity thereof, (d) change the
place or coin or currency of payment of principal of, or premium or interest,
if any, on, any Financial Senior Debt Security or Financial Subordinated Debt
Security, (e) impair the right to institute suit for the enforcement of any
payment on or with respect to any Financial Senior Debt Security or Financial
Subordinated Debt Security, (f) modify or affect in any manner adverse to
Holders the terms and conditions of the obligations of the Guarantor in respect
of the due and punctual payment of principal or any premium and interest,
sinking fund payment or Additional Amounts in respect of the Financial Senior
Debt Securities or Financial Subordinated Debt Securities, (g) reduce the
percentage in principal amount of Outstanding Financial Senior Debt Securities
or Financial Subordinated Debt Securities of any series, the consent of whose
Holders is required for modification or amendment of the Indenture or for
waiver of compliance with certain provisions of the Indenture or for waiver of
certain defaults, (h) modify (with certain exceptions) any provision of the
Indenture that requires the consent of the Holder of each Outstanding Financial
Senior Debt Security or Financial Subordinated Debt Security affected thereby
or (i) with respect to the Financial Subordinated Indenture, modify the
subordination provisions in a manner adverse to Holders of Outstanding
Financial Subordinated Debt Securities.
SUBORDINATION
Unless otherwise indicated in the applicable Prospectus Supplement,
the following provisions shall apply to the Financial Subordinated Debt
Securities and the guarantee of them by the Corporation.
The payment of the principal of, premium, if any, and interest on the
Financial Subordinated Debt Securities and the Corporation's Guarantees thereof
(the "Financial Subordinated Guarantees")
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will, to the extent set forth in the Financial Subordinated Indenture, be
subordinated in right of payment to the prior payment in full of all Senior
Indebtedness (as defined below) of Financial or the Corporation, as the case
may be. In certain events of insolvency, the payment of the principal of,
premium, if any, and interest on the Financial Subordinated Debt Securities and
any payments with respect to the Financial Subordinated Guarantees will, to the
extent set forth in the Financial Subordinated Indenture, also be effectively
subordinated in right of payment to the prior payment in full of all Other
Financial Obligations (as defined below) of Financial or the Corporation, as
the case may be. As of March 31, 1995, $524.4 million aggregate principal
amount of Senior Indebtedness and no Other Financial Obligations of Financial
were outstanding. Upon any payment or distribution of assets to creditors upon
any liquidation, dissolution, winding up, reorganization, assignment for the
benefit of creditors, marshalling of assets or any bankruptcy, insolvency or
similar proceedings of Financial or the Corporation, the holders of all Senior
Indebtedness thereof will first be entitled to receive payment in full of all
amounts due or to become due thereon before the Holders of the Financial
Subordinated Debt Securities or the Financial Subordinated Guarantees will be
entitled to receive any payment in respect of the principal of, premium, if
any, or interest on the Financial Subordinated Debt Securities or the Financial
Subordinated Guarantees, as the case may be. If, upon any such payment or
distribution of assets to creditors, there remain, after giving effect to such
subordination provisions in favor of the holders of Senior Indebtedness of
Financial and the Corporation, any amounts of cash, property or securities
available for payment or distribution in respect of Financial Subordinated Debt
Securities or the Financial Subordinated Guarantees (as defined in the
Financial Subordinated Indenture, "Financial Excess Proceeds") and if, at such
time, any person entitled to payment pursuant to the terms of Other Financial
Obligations of Financial or the Corporation has not received payment in full of
all amounts due or to become due on or in respect of such Other Financial
Obligations of Financial or the Corporation, then such Financial Excess
Proceeds shall first be applied to pay or provide for the payment in full of
such Other Financial Obligations of Financial or the Corporation, as the case
may be, before any payment or distribution may be made in respect of the
Financial Subordinated Debt Securities or the Financial Subordinated
Guarantees. In the event of the acceleration of the maturity of any Financial
Subordinated Debt Securities, the holders of all Senior Indebtedness of
Financial or the Corporation, as the case may be, will first be entitled to
receive payment in full of all amounts due or to become due thereon before the
Holders of the Financial Subordinated Debt Securities or the Financial
Subordinated Guarantees will be entitled to receive any payment of the
principal of, premium, if any, or interest on the Financial Subordinated Debt
Securities or the Financial Subordinated Guarantees, as the case may be.
Accordingly, in case of such an acceleration, all Senior Indebtedness of
Financial or the Corporation would have to be repaid before any payment could
be made in respect of the Financial Subordinated Debt Securities or the
Financial Subordinated Guarantees, as the case may be. No payments on account
of principal, premium, if any, or interest in respect of the Financial
Subordinated Debt Securities or the Financial Subordinated Guarantees may be
made if there shall have occurred and be continuing a default in any payment
with respect to any Senior Indebtedness of Financial or the Corporation, an
event of default with respect to any Senior Indebtedness of Financial or the
Corporation permitting the holders thereof to accelerate the maturity thereof,
or if any judicial proceeding shall be pending with respect to any such
default.
By reason of such subordination, in the event of the insolvency of
Financial or the Corporation, creditors of Financial or the Corporation who are
not holders of Senior Indebtedness, the Financial Subordinated Debt Securities
or the Financial Subordinated Guarantees may recover less, ratably, than
holders of Senior Indebtedness of Financial or the Corporation, as the case may
be,
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and may recover more, ratably, than Holders of the Financial Subordinated Debt
Securities or the Financial Subordinated Guarantees.
"Senior Indebtedness" of Financial is defined in the Financial
Subordinated Indenture to mean the principal of, premium, if any, and interest
on (i) all indebtedness of Financial for money borrowed (including indebtedness
of others guaranteed by Financial) other than the Financial Subordinated Debt
Securities, whether outstanding on the date of the Financial Subordinated
Indenture or thereafter created, assumed or incurred and (ii) any amendments,
renewals, extensions, modifications and refundings of any such indebtedness,
unless in either case in the instrument creating or evidencing any such
indebtedness or pursuant to which it is outstanding it is provided that such
indebtedness is not superior in right of payment to the Financial Subordinated
Debt Securities. For the purposes of this definition, "indebtedness for money
borrowed" is defined as (i) any obligation of, or any obligation guaranteed by,
Financial for the repayment of borrowed money, whether or not evidenced by
bonds, debentures, notes or other written instruments, (ii) any deferred
payment obligation of, or any such obligation guaranteed by, Financial for the
payment of the purchase price of property or assets evidenced by a note or
similar instrument, and (iii) any obligation of, or any such obligation
guaranteed by, Financial for the payment of rent or other amounts under a lease
of property or assets which obligation is required to be classified and
accounted for as a capitalized lease on the balance sheet of Financial under
generally accepted accounting principles.
"Other Financial Obligations" of Financial is defined in the Financial
Subordinated Indenture to mean all obligations of Financial to make payment
pursuant to the terms of financial instruments, such as (i) securities
contracts and foreign currency exchange contracts, (ii) derivative instruments,
such as swap agreements (including interest rate and currency and foreign
exchange rate swap agreements), cap agreements, floor agreements, collar
agreements, interest rate agreements, foreign exchange agreements, options,
commodity futures contracts, commodity options contracts and (iii) similar
financial instruments; provided that the term Other Financial Obligations shall
not include (x) obligations on account of Senior Indebtedness of Financial and
(y) obligations on account of indebtedness for money borrowed ranking pari
passu with or subordinate to the Financial Subordinated Debt Securities.
"Senior Indebtedness" of the Corporation is defined in the Financial
Subordinated Indenture to mean the principal of, premium, if any, and interest
on (i) all indebtedness of the Corporation for money borrowed (including
indebtedness of others guaranteed by the Corporation other than the Financial
Subordinated Guarantees), whether outstanding on the date of the Financial
Subordinated Indenture or thereafter created, assumed or incurred and (ii) any
amendments, renewals, extensions, modifications and refundings of any such
indebtedness, unless in either case in the instrument creating or evidencing
any such indebtedness or pursuant to which it is outstanding it is provided
that such indebtedness is not superior in right of payment to the Financial
Subordinated Guarantees. For the purposes of this definition, "indebtedness for
money borrowed" is defined as (i) any obligation of, or any obligation
guaranteed by, the Corporation for the repayment of borrowed money, whether or
not evidenced by bonds, debentures, notes or other written instruments, (ii)
any deferred payment obligation of, or any such obligation guaranteed by, the
Corporation for the payment of the purchase price of property or assets
evidenced by a note or similar instrument, and (iii) any obligation of, or any
such obligation guaranteed by, the Corporation for the payment of rent or other
amounts under a lease of property or assets which obligation is required to be
classified and accounted for as a
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capitalized lease on the balance sheet of the Corporation under generally
accepted accounting principles.
"Other Financial Obligations" of the Corporation is defined in the
Financial Subordinated Indenture to mean all obligations of the Corporation to
make payment pursuant to the terms of financial instruments, such as (i)
securities contracts and foreign currency exchange contracts, (ii) derivative
instruments, such as swap agreements (including interest rate and currency and
foreign exchange rate swap agreements), cap agreements, floor agreements,
collar agreements, interest rate agreements, foreign exchange agreements,
options, commodity futures contracts, commodity options contracts and (iii)
similar financial instruments; provided that the term Other Financial
Obligations shall not include (x) obligations on account of Senior Indebtedness
and (y) obligations on account of indebtedness for money borrowed ranking pari
passu with or subordinate to the Financial Subordinated Guarantees.
EVENTS OF DEFAULT
Financial Senior Indenture
An Event of Default with respect to Financial Senior Debt Securities
of any series is defined in the Financial Senior Indenture as being: default
for 30 days in payment of any interest on Financial Senior Debt Securities of
such series; default in payment of principal of (or premium, if any) on any
Financial Senior Debt Securities of such series; default in deposit of any
mandatory sinking fund payment required by the Financial Senior Debt Securities
of such series; default for 60 days, after notice, in performance or breach of
any other covenant or warranty in the Financial Senior Indenture (except for a
covenant expressly relating to a series of Financial Senior Debt Securities
other than that series of Financial Senior Debt Securities) or in the Financial
Senior Debt Securities of such series; acceleration of the Financial Senior
Debt Securities of any other series or any other indebtedness for borrowed
money of the Corporation, Financial or any Material Banking Subsidiary, in each
case exceeding $10,000,000 in an aggregate principal amount, as a result of a
default under the terms of the instrument or instruments under which such
indebtedness is issued or secured, unless such acceleration is annulled within
30 days after written notice as provided in the Indenture, provided that if
such default is remedied or cured by the Corporation, Financial or any Material
Banking Subsidiary or waived by the holders of such indebtedness, the Event of
Default by reason thereof shall be deemed to have been thereupon remedied,
cured or waived; certain events of bankruptcy, insolvency or reorganization of
the Corporation, any Material Banking Subsidiary or Financial; or any other
Event of Default specified in the applicable Prospectus Supplement. In case an
Event of Default with respect to Financial Senior Debt Securities of any series
shall occur and be continuing, the Financial Senior Trustee or the Holders of
not less than 25% in principal amount of the Financial Senior Debt Securities
of such series then outstanding may declare the principal of all the Financial
Senior Debt Securities of such series to be due and payable. The Corporation
and Financial are required to furnish to the Financial Senior Trustee annually
a statement or statements as to the performance by the Corporation and
Financial of their respective obligations under the Financial Senior Indenture
of such series and as to any default in such performance. Under certain
circumstances any declaration of acceleration with respect to Financial Senior
Debt Securities of any series may be rescinded and past defaults (except a
default in the payment of principal of or interest on the Financial Senior Debt
Securities) may be waived by the Holders of a majority in aggregate principal
amount of the Financial Senior Debt Securities of such series then outstanding.
The
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Financial Senior Indenture provides that the Financial Senior Trustee may
withhold notice to the Holders of Financial Senior Debt Securities of any
series of any continuing default (except in the payment of the principal of (or
premium, if any) or interest on any Financial Senior Debt Securities of such
series) if such Financial Senior Trustee considers it in the interest of
Holders of such series of Financial Senior Debt Securities to do so.
Financial Subordinated Indenture
An Event of Default with respect to the Financial Subordinated Debt
Securities of any series is defined in the Financial Subordinated Indenture as
being certain events involving a bankruptcy, insolvency or reorganization of
the Corporation or Financial. If an Event of Default with respect to Financial
Subordinated Debt Securities of any series shall have occurred and be
continuing, either the Financial Subordinated Trustee or the Holders of not
less than 25% in aggregate principal amount of the Financial Subordinated Debt
Securities of such series then outstanding may declare the principal of the
Financial Subordinated Debt Securities of such series to be due and payable
immediately. The Corporation and Financial are required to furnish to the
Financial Subordinated Trustee annually a statement as to the performance by
the Corporation and Financial of their respective obligations under the
Financial Subordinated Indenture and as to any default in such performance.
Under certain circumstances, any declaration of acceleration with respect to
Financial Subordinated Debt Securities of any series may be rescinded and past
defaults (except a default in the payment of principal of or interest on the
Financial Subordinated Debt Securities) may be waived by the Holders of a
majority in aggregate principal amount of the Financial Subordinated Debt
Securities of such series then outstanding. The Financial Subordinated
Indenture provides that the Financial Subordinated Trustee may withhold notice
to the Holders of the Financial Subordinated Debt Securities of any series of
any continuing default (except in the payment of the principal of (or premium,
if any) or interest on any Financial Subordinated Debt Securities of such
series) if the Financial Subordinated Trustee considers it in the interest of
the Holders of such series of Financial Subordinated Debt Securities to do so.
The Financial Subordinated Indenture does not provide for any right of
acceleration of the payment of principal of a series of Financial Subordinated
Debt Securities upon a default in the payment of principal or interest or in
the performance of any covenant or agreement in the Financial Subordinated Debt
Securities of the particular series, in the Financial Subordinated Indenture or
in the Financial Subordinated Guarantees.
CONSOLIDATION, MERGER, SALE OR CONVEYANCE
Each of the Corporation and Financial has covenanted in the Financial
Senior and Financial Subordinated Indentures that it will not merge or
consolidate with any other corporation or sell, convey, transfer or lease all
or substantially all of its assets to any person, firm or corporation unless
the Corporation or Financial, as the case may be, is the continuing corporation
or the successor corporation expressly assumes the obligations under any
outstanding Financial Senior Debt Securities and Financial Subordinated Debt
Securities and the Financial Subordinated Guarantees and the respective
Financial Senior and Financial Subordinated Indentures and the Corporation or
Financial, as the case may be, or such successor corporation is not,
immediately after such merger, consolidation, sale or conveyance, in default in
the performance of any of the covenants or conditions of the respective
Indenture. The Indentures do not contain any other covenant that restricts the
Corporation's or Financial's ability to merge or consolidate with any other
corporation, sell, convey,
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transfer or lease all or substantially all of its assets to any person, firm or
corporation or otherwise engage in restructuring transactions.
GUARANTEE
Financial Senior Debt Securities
The Corporation will guarantee the punctual payment of the principal
of, premium, if any, and interest on the Financial Senior Debt Securities, when
and as the same are due and payable. The guarantee is absolute and
unconditional, irrespective of any circumstance that might otherwise constitute
a legal or equitable discharge of a surety or guarantor. To evidence the
guarantee, a Guarantee, executed by the Corporation, will be endorsed on each
Financial Senior Debt Security. Holders of the Financial Senior Debt Securities
may proceed directly against the Corporation in the event of default under the
Financial Senior Debt Securities without first proceeding against Financial.
The Guarantees will rank pari passu with all other unsecured and unsubordinated
obligations of the Corporation.
Financial Subordinated Debt Securities
The Corporation will guarantee, on a subordinated basis, the punctual
payment of the principal of, premium, if any, and interest on the Financial
Subordinated Debt Securities, when and as the same are due and payable. The
guarantee is absolute and unconditional, irrespective of any circumstance that
might otherwise constitute a legal or equitable discharge of a surety or
guarantor. To evidence the guarantee, a Guarantee, executed by the Corporation,
will be endorsed on each Financial Subordinated Debt Security. Holders of the
Financial Subordinated Debt Securities may proceed directly against the
Corporation in the event of default under the Financial Subordinated Debt
Securities without first proceeding against Financial. The Financial
Subordinated Guarantees will rank pari passu with all other unsecured and
subordinated obligations of the Corporation. See "Subordination."
TERMS APPLICABLE TO THE PIB SENIOR DEBT SECURITIES
OR PIB SUBORDINATED DEBT SECURITIES
MODIFICATION OF THE PIB SENIOR AND PIB SUBORDINATED INDENTURES
The PIB Senior and PIB Subordinated Indentures contain provisions
permitting the Corporation, PIB and the respective PIB Trustees, with the
consent of Holders of not less than a majority in principal amount of the PIB
Senior Debt Securities or PIB Subordinated Debt Securities that are affected
by the modification, to modify the particular Indenture or any supplemental
indenture or the rights of the Holders of the PIB Senior Debt Securities or PIB
Subordinated Debt Securities issued under such Indenture; provided that no such
modification may, without the consent of the Holder of each outstanding PIB
Senior Debt Security or PIB Subordinated Debt Security affected thereby, (a)
change the stated maturity date of the principal of, or any installment of
principal of or interest, if any, on, any PIB Senior Debt Security or PIB
Subordinated Debt Security, (b) reduce the principal amount of, or premium or
rate of interest, if any, on, any PIB Senior Debt Security or PIB Subordinated
Debt Security, (c) reduce the amount of principal of an Original Issue Discount
Security
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payable upon acceleration of the maturity thereof, (d) change the place or coin
or currency of payment of principal of, or premium or interest, if any, on, any
PIB Senior Debt Security or PIB Subordinated Debt Security, (e) impair the
right to institute suit for the enforcement of any payment on or with respect
to any PIB Senior Debt Security or PIB Subordinated Debt Security, (f) modify
or affect in any manner adverse to Holders the terms and conditions of the
obligations of the Guarantor in respect of the due and punctual payment of
principal or any premium and interest, sinking fund payment or Additional
Amounts in respect of the PIB Senior Debt Securities or PIB Subordinated Debt
Securities, (g) reduce the percentage in principal amount of Outstanding PIB
Senior Debt Securities or PIB Subordinated Debt Securities of any series, the
consent of whose Holders is required for modification or amendment of the
Indenture or for waiver of compliance with certain provisions of the Indenture
or for waiver of certain defaults, (h) modify (with certain exceptions) any
provision of the Indenture that requires the consent of the Holder of each
Outstanding PIB Senior Debt Security or PIB Subordinated Debt Security affected
thereby or (i) with respect to the PIB Subordinated Indenture, modify the
subordination provisions in a manner adverse to Holders of Outstanding PIB
Subordinated Debt Securities.
SUBORDINATION
Unless otherwise indicated in the applicable Prospectus Supplement,
the following provisions shall apply to the PIB Subordinated Debt Securities
and the guarantee of them by the Corporation.
The payment of the principal of, premium, if any, and interest on the
PIB Subordinated Debt Securities and the Corporation's Guarantees thereof (the
"PIB Subordinated Guarantees") will, to the extent set forth in the PIB
Subordinated Indenture, be subordinated in right of payment to the prior
payment in full of all Senior Indebtedness (as defined below) of PIB or the
Corporation, as the case may be. In certain events of insolvency, the payment
of the principal of, premium, if any, and interest on the PIB Subordinated Debt
Securities and any payments with respect to the PIB Subordinated Guarantees
will, to the extent set forth in the PIB Subordinated Indenture, also be
effectively subordinated in right of payment to the prior payment in full of
all Other Financial Obligations (as defined below) of PIB or the Corporation,
as the case may be. As of March 31, 1995, no Senior Indebtedness and no Other
Financial Obligations of PIB were outstanding. Upon any payment or distribution
of assets to creditors upon any liquidation, dissolution, winding up,
reorganization, assignment for the benefit of creditors, marshalling of assets
or any bankruptcy, insolvency or similar proceedings of PIB or the Corporation,
the holders of all Senior Indebtedness thereof will first be entitled to
receive payment in full of all amounts due or to become due thereon before the
Holders of the PIB Subordinated Debt Securities or the PIB Subordinated
Guarantees will be entitled to receive any payment in respect of the principal
of, premium, if any, or interest on the PIB Subordinated Debt Securities or the
PIB Subordinated Guarantees, as the case may be. If, upon any such payment or
distribution of assets to creditors, there remain, after giving effect to such
subordination provisions in favor of the holders of Senior Indebtedness of PIB
and the Corporation, any amounts of cash, property or securities available for
payment or distribution in respect of PIB Subordinated Debt Securities or the
PIB Subordinated Guarantees (as defined in the PIB Subordinated Indenture, "PIB
Excess Proceeds") and if, at such time, any person entitled to payment pursuant
to the terms of Other Financial Obligations of PIB or the Corporation has not
received payment in full of all amounts due or to become due on or in respect
of such Other Financial Obligations of PIB or the Corporation, then such PIB
Excess Proceeds shall first be applied to pay or provide for the payment in
full of such Other Financial Obligations of PIB or the Corporation, as the case
may be,
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before any payment or distribution may be made in respect of the PIB
Subordinated Debt Securities or the PIB Subordinated Guarantees. In the event
of the acceleration of the maturity of any PIB Subordinated Debt Securities,
the holders of all Senior Indebtedness of PIB or the Corporation, as the case
may be, will first be entitled to receive payment in full of all amounts due or
to become due thereon before the Holders of the PIB Subordinated Debt
Securities or the PIB Subordinated Guarantees will be entitled to receive any
payment of the principal of, premium, if any, or interest on the PIB
Subordinated Debt Securities or the PIB Subordinated Guarantees, as the case
may be. Accordingly, in case of such an acceleration, all Senior Indebtedness
of PIB or the Corporation would have to be repaid before any payment could be
made in respect of the PIB Subordinated Debt Securities or the PIB Subordinated
Guarantees, as the case may be. No payments on account of principal, premium,
if any, or interest in respect of the PIB Subordinated Debt Securities or the
PIB Subordinated Guarantees may be made if there shall have occurred and be
continuing a default in any payment with respect to any Senior Indebtedness of
PIB or the Corporation, an event of default with respect to any Senior
Indebtedness of PIB or the Corporation permitting the holders thereof to
accelerate the maturity thereof, or if any judicial proceeding shall be pending
with respect to any such default.
By reason of such subordination, in the event of the insolvency of PIB
or the Corporation, creditors of PIB or the Corporation who are not holders of
Senior Indebtedness, the PIB Subordinated Debt Securities or the PIB
Subordinated Guarantees may recover less, ratably, than holders of Senior
Indebtedness of PIB or the Corporation, as the case may be, and may recover
more, ratably, than Holders of the PIB Subordinated Debt Securities or the PIB
Subordinated Guarantees.
"Senior Indebtedness" of PIB is defined in the PIB Subordinated
Indenture to mean the principal of, premium, if any, and interest on (i) all
indebtedness of PIB for money borrowed (including indebtedness of others
guaranteed by PIB) other than the PIB Subordinated Debt Securities, whether
outstanding on the date of the PIB Subordinated Indenture or thereafter
created, assumed or incurred and (ii) any amendments, renewals, extensions,
modifications and refundings of any such indebtedness, unless in either case in
the instrument creating or evidencing any such indebtedness or pursuant to
which it is outstanding it is provided that such indebtedness is not superior
in right of payment to the PIB Subordinated Debt Securities. For the purposes
of this definition, "indebtedness for money borrowed" is defined as (i) any
obligation of, or any obligation guaranteed by, PIB for the repayment of
borrowed money, whether or not evidenced by bonds, debentures, notes or other
written instruments, (ii) any deferred payment obligation of, or any such
obligation guaranteed by, PIB for the payment of the purchase price of property
or assets evidenced by a note or similar instrument, and (iii) any obligation
of, or any such obligation guaranteed by, PIB for the payment of rent or other
amounts under a lease of property or assets which obligation is required to be
classified and accounted for as a capitalized lease on the balance sheet of PIB
under generally accepted accounting principles.
"Other Financial Obligations" of PIB is defined in the PIB
Subordinated Indenture to mean all obligations of PIB to make payment pursuant
to the terms of financial instruments, such as (i) securities contracts and
foreign currency exchange contracts, (ii) derivative instruments, such as swap
agreements (including interest rate and currency and foreign exchange rate swap
agreements), cap agreements, floor agreements, collar agreements, interest rate
agreements, foreign exchange agreements, options, commodity futures contracts,
commodity options contracts and (iii) similar financial instruments; provided
that the term Other Financial Obligations shall not include (x)
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obligations on account of Senior Indebtedness of PIB and (y) obligations on
account of indebtedness for money borrowed ranking pari passu with or
subordinate to the PIB Subordinated Debt Securities.
"Senior Indebtedness" of the Corporation is defined in the PIB
Subordinated Indenture to mean the principal of, premium, if any, and interest
on (i) all indebtedness of the Corporation for money borrowed (including
indebtedness of others guaranteed by the Corporation other than the PIB
Subordinated Guarantees), whether outstanding on the date of the PIB
Subordinated Indenture or thereafter created, assumed or incurred and (ii) any
amendments, renewals, extensions, modifications and refundings of any such
indebtedness, unless in either case in the instrument creating or evidencing
any such indebtedness or pursuant to which it is outstanding it is provided
that such indebtedness is not superior in right of payment to the PIB
Subordinated Guarantees. For the purposes of this definition, "indebtedness for
money borrowed" is defined as (i) any obligation of, or any obligation
guaranteed by, the Corporation for the repayment of borrowed money, whether or
not evidenced by bonds, debentures, notes or other written instruments, (ii)
any deferred payment obligation of, or any such obligation guaranteed by, the
Corporation for the payment of the purchase price of property or assets
evidenced by a note or similar instrument, and (iii) any obligation of, or any
such obligation guaranteed by, the Corporation for the payment of rent or other
amounts under a lease of property or assets which obligation is required to be
classified and accounted for as a capitalized lease on the balance sheet of the
Corporation under generally accepted accounting principles.
"Other Financial Obligations" of the Corporation is defined in the PIB
Subordinated Indenture to mean all obligations of the Corporation to make
payment pursuant to the terms of financial instruments, such as (i) securities
contracts and foreign currency exchange contracts, (ii) derivative instruments,
such as swap agreements (including interest rate and currency and foreign
exchange rate swap agreements), cap agreements, floor agreements, collar
agreements, interest rate agreements, foreign exchange agreements, options,
commodity futures contracts, commodity options contracts and (iii) similar
financial instruments; provided that the term Other Financial Obligations shall
not include (x) obligations on account of Senior Indebtedness and (y)
obligations on account of indebtedness for money borrowed ranking pari passu
with or subordinate to the PIB Subordinated Guarantees.
EVENTS OF DEFAULT
PIB Senior Indenture
An Event of Default with respect to PIB Senior Debt Securities of any
series is defined in the PIB Senior Indenture as being: default for 30 days in
payment of any interest on PIB Senior Debt Securities of such series; default
in payment of principal of (or premium on, if any) any PIB Senior Debt
Securities of such series; default in deposit of any mandatory sinking fund
payment required by the PIB Senior Debt Securities of such series; default for
60 days, after notice, in performance or breach of any other covenant or
warranty in the PIB Senior Indenture (except for a covenant expressly relating
to a series of PIB Senior Debt Securities other than that series of PIB Senior
Debt Securities) or in the PIB Senior Debt Securities of such series;
acceleration of the PIB Senior Debt Securities of any other series or any other
indebtedness for borrowed money, of the Corporation, PIB or any Material
Banking Subsidiary, in each case in an aggregate principal amount exceeding
$10,000,000, as a result of a default under the terms of the instrument or
instruments under which such indebtedness is issued or secured, unless such
acceleration is annulled within 30 days after written notice as provided in the
Indenture, provided that if such default is remedied or cured by the
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Corporation, PIB or any Material Banking Subsidiary or waived by holders of
such indebtedness, the Event of Default by reason thereof shall be deemed to
have been thereupon remedied, cured or waived; certain events of bankruptcy,
insolvency or reorganization with respect to the Corporation, PIB or any
Material Banking Subsidiary; or any other Event of Default specified in the
applicable Prospectus Supplement. In case an Event of Default with respect to
PIB Senior Debt Securities of any series shall occur and be continuing, the PIB
Senior Trustee or the Holders of not less than 25% in principal amount of the
PIB Senior Debt Securities of such series then outstanding may declare the
principal of all the PIB Senior Debt Securities of such series to be due and
payable. The Corporation and PIB are required to furnish to the PIB Senior
Trustee annually a statement as to the performance by the Corporation and PIB
of their respective obligations under the PIB Senior Indenture and as to any
default in such performance. Under certain circumstances any declaration of
acceleration with respect to PIB Senior Debt Securities of any series may be
rescinded and past defaults (except a default in the payment of principal of or
interest on the PIB Senior Debt Securities) may be waived by the Holders of a
majority in aggregate principal amount of the PIB Senior Debt Securities of
such series then outstanding. The PIB Senior Indenture provides that the PIB
Senior Trustee may withhold notice to the Holders of PIB Senior Debt Securities
of any series of any continuing default (except in the payment of the principal
of (or premium, if any) or interest on any PIB Senior Debt Securities of such
series) if such PIB Senior Trustee considers it in the interest of Holders of
such series of PIB Senior Debt Securities to do so.
PIB Subordinated Indenture
An Event of Default with respect to the PIB Subordinated Debt
Securities of any series is defined in the PIB Subordinated Indenture as being
certain events involving a bankruptcy, insolvency or reorganization of the
Corporation or PIB. If an Event of Default with respect to PIB Subordinated
Debt Securities of any series shall have occurred and be continuing, either the
PIB Subordinated Trustee or the Holders of not less than 25% in aggregate
principal amount of the PIB Subordinated Debt Securities of such series then
outstanding may declare the principal of the PIB Subordinated Debt Securities
of such series to be due and payable immediately. The Corporation and PIB are
required to furnish to the PIB Subordinated Trustee annually a statement as to
the performance by the Corporation and PIB of their respective obligations
under the PIB Subordinated Indenture and as to any default in such performance.
Under certain circumstances, any declaration of acceleration with respect to
PIB Subordinated Debt Securities of any series may be rescinded and past
defaults (except a default in the payment of principal of or interest on the
PIB Subordinated Debt Securities) may be waived by the Holders of a majority in
aggregate principal amount of the PIB Subordinated Debt Securities of such
series then outstanding. The PIB Subordinated Indenture provides that the PIB
Subordinated Trustee may withhold notice to the Holders of the PIB Subordinated
Debt Securities of any series of any continuing default (except in the payment
of the principal of (or premium, if any) or interest on any PIB Subordinated
Debt Securities of such series) if the PIB Subordinated Trustee considers it in
the interest of the Holders of such series of PIB Subordinated Debt Securities
to do so.
The PIB Subordinated Indenture does not provide for any right of
acceleration of the payment of principal of a series of PIB Subordinated Debt
Securities upon a default in the payment of principal or interest or in the
performance of any covenant or agreement in the PIB Subordinated Debt
Securities of the particular series, in the PIB Subordinated Indenture or in
the PIB Subordinated Guarantees.
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CONSOLIDATION, MERGER, SALE OR CONVEYANCE
Each of the Corporation and PIB has covenanted in the PIB Senior and
PIB Subordinated Indentures that it will not merge or consolidate with any
other corporation or sell, convey, transfer or lease all or substantially all
of its assets to any person, firm or corporation unless the Corporation or PIB,
as the case may be, is the continuing corporation or the successor corporation
expressly assumes the obligations under any outstanding PIB Senior Debt
Securities and Subordinated Debt Securities and the PIB Subordinated Guarantees
and the respective PIB Senior and PIB Subordinated Indentures and the
Corporation, or PIB, as the case may be, or such successor corporation is not,
immediately after such merger, consolidation, sale or conveyance, in default in
the performance of any of the covenants or conditions of the respective
Indenture. The Indentures do not contain any other covenant that restricts the
Corporation's or PIB's ability to merge or consolidate with any other
corporation, sell, convey, transfer or lease all or substantially all of its
assets to any persons, firm or corporation or otherwise engage in restructuring
transactions.
GUARANTEE
PIB Senior Debt Securities
The Corporation will guarantee the punctual payment of the principal
of, premium, if any, and interest on the PIB Senior Debt Securities, when and
as the same are due and payable. The guarantee is absolute and unconditional,
irrespective of any circumstance that might otherwise constitute a legal or
equitable discharge of a surety or guarantor. To evidence the guarantee, a
Guarantee, executed by the Corporation, will be endorsed on each PIB Senior
Debt Security. Holders of the PIB Senior Debt Securities may proceed directly
against the Corporation in the event of default under the PIB Senior Debt
Securities without first proceeding against PIB. The Guarantees will rank pari
passu with all other unsecured and unsubordinated obligations of the
Corporation.
PIB Subordinated Debt Securities
The Corporation will guarantee, on a subordinated basis, the punctual
payment of the principal of, premium, if any, and interest on the PIB
Subordinated Debt Securities, when and as the same are due and payable. The
guarantee is absolute and unconditional, irrespective of any circumstance that
might otherwise constitute a legal or equitable discharge of a surety or
guarantor. To evidence the guarantee, a Guarantee, executed by the Corporation,
will be endorsed on each PIB Subordinated Debt Security. Holders of the PIB
Subordinated Debt Securities may proceed directly against the Corporation in
the event of default under the PIB Subordinated Debt Securities without first
proceeding against PIB. The PIB Subordinated Guarantees will rank pari passu
with all other unsecured and subordinated obligations of the Corporation. See
"Subordination."
DESCRIPTION OF PREFERRED STOCK OF THE CORPORATION
The following summary contains a description of certain general terms
of the Corporation's preferred stock (the "Preferred Stock") to which any
Prospectus Supplement may relate. Certain terms of any series of the Preferred
Stock offered by any Prospectus Supplement will be described in the Prospectus
Supplement relating thereto. If so indicated in the Prospectus Supplement, the
terms of any series may differ from the terms set forth below. The description
of certain provisions of the
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Preferred Stock does not purport to be complete and is subject to and qualified
in its entirety by reference to the provisions of the Corporation's Restated
Certificate of Incorporation, as amended, the Certificates of Designation
describing the Corporation's 8.35% Non-Cumulative Monthly Income Preferred
Stock, 1994 Series A (the "Series A Preferred Stock") and the Corporation's
Series A Participating Preferred Stock (the "Series A Participating Preferred
Stock"), respectively, and the Certificate of Resolution (the "Certificate of
Resolution") relating to each particular series of the Preferred Stock, each of
which will be filed or incorporated by reference, as the case may be, as an
exhibit to the Registration Statement of which this Prospectus is a part at or
prior to the time of the issuance of such Preferred Stock.
GENERAL
Under the Corporation's Restated Certificate of Incorporation, the
Board of Directors of the Corporation is authorized, without further
stockholder action, to provide for the issuance of up to 10,000,000 shares of
preferred stock (of which 4,000,000 shares have been designated and issued as
Series A Preferred Stock and 350,000 shares have been authorized and designated
but not issued for the Series A Participating Preferred Stock), without par
value, in one or more series, with such designations of titles; dividend rates;
special or relative rights in the event of a liquidation, distribution or sale
of assets or dissolution or winding up of the Corporation; sinking fund
provisions; redemption or purchase account provisions; conversion provisions;
and voting rights, as shall be set forth as and when established by the Board
of Directors of the Corporation. The shares of any series of Preferred Stock
will be, when issued, fully paid and non-assessable and holders thereof shall
have no preemptive rights in connection therewith.
The liquidation preference of any series of the Preferred Stock is not
necessarily indicative of the price at which shares of such series of Preferred
Stock will actually trade at or after the time of their issuance. The market
price of any series of Preferred Stock can be expected to fluctuate with
changes in market and economic conditions, the financial condition and
prospects of the Corporation and other factors that generally influence the
market prices of securities.
RANK
Any series of Preferred Stock will, with respect to dividend rights
and rights on liquidation, winding up and dissolution, rank (i) senior to all
classes of common stock of the Corporation and to all equity securities issued
by the Corporation the terms of which specifically provide that such equity
securities will rank junior to the Preferred Stock (collectively referred to as
the "Junior Securities"); (ii) on a parity with all equity securities issued by
the Corporation the terms of which specifically provide that such equity
securities will rank on a parity with the Preferred Stock (collectively
referred to as the "Parity Securities"); and (iii) junior to all equity
securities issued by the Corporation the terms of which specifically provide
that such equity securities will rank senior to the Preferred Stock. As used
in any Certificate of Resolution for these purposes, the term "equity
securities" will not include debt securities convertible into or exchangeable
for equity securities.
DIVIDENDS
Holders of each series of Preferred Stock will be entitled to receive,
when, as and if declared by the Board of Directors of the Corporation out of
funds legally available therefor, cash dividends at
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such rates and on such dates as are set forth in the Prospectus Supplement
relating to such series of Preferred Stock. Dividends will be payable to
holders of record of the Preferred Stock as they appear on the books of the
Corporation on such record dates as shall be fixed by the Board of Directors.
Dividends on any series of Preferred Stock may be cumulative or non-cumulative.
The Corporation's ability to pay dividends on its Preferred Stock is subject to
policies established by the Federal Reserve Board. See "Certain Regulatory
Matters -- Dividend Restrictions."
No full dividends may be declared or paid or funds set apart for the
payment of dividends on any Parity Securities unless dividends shall have been
paid or set apart for such payment on the Preferred Stock. If full dividends
are not so paid, the Preferred Stock shall share dividends pro rata with the
Parity Securities.
The holders of any series of shares of Preferred Stock at the close of
business on a dividend payment record date will be entitled to receive the
dividend payable on such shares (except that holders of shares called for
redemption on a redemption date occurring between such record date and the
dividend payment date shall not be entitled to receive such dividend on such
dividend payment date but instead will receive accrued and unpaid dividends to
such redemption date) on the corresponding dividend payment date
notwithstanding the conversion thereof or the Corporation's default in payment
of the dividend due. Except as provided above, the Corporation will make no
payment or allowance for unpaid dividends, whether or not in arrears, on
converted shares or for dividends on the shares of preferred stock or issued
upon conversion.
CONVERSION
The Prospectus Supplement for any series of Preferred Stock will state
the terms, if any, on which shares of that series are convertible into shares
of another series of preferred stock of the Corporation.
For any series of Preferred Stock which is convertible, the
Corporation shall at all times reserve and keep available, out of the aggregate
of its authorized but unissued preferred stock or preferred stock held in its
treasury or both, for the purpose of effecting the conversion of the shares of
such series of Preferred Stock, the full number of shares of preferred stock
then deliverable upon the conversion of all outstanding shares of such series.
No fractional shares or scrip representing fractional shares of
preferred stock will be issued upon the conversion of shares of any series of
convertible Preferred Stock. Each holder to whom fractional shares would
otherwise be issued will instead be entitled to receive, at the Corporation's
election, either (a) a cash payment equal to the current market price of such
holder's fractional interest or (b) a cash payment equal to such holder's
proportionate interest in the net proceeds (following the deduction of
applicable transaction costs) from the sale promptly by an agent, on behalf of
such holders, of shares of preferred stock representing the aggregate of such
fractional shares.
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EXCHANGEABILITY
If so determined by the Board of Directors of the Corporation, the
holders of shares of Preferred Stock of any series may be obligated at any time
or at maturity to exchange such shares for preferred stock or debt securities
of the Corporation. The terms of any such exchange and any such preferred stock
or debt securities will be described in the Prospectus Supplement relating to
such series of Preferred Stock.
REDEMPTION
A series of Preferred Stock may be redeemable at any time, in whole or
in part, at the option of the Corporation or the holder thereof upon terms and
at the redemption prices set forth in the Prospectus Supplement relating to
such series.
In the event of partial redemptions of Preferred Stock, whether by
mandatory or optional redemption, the shares to be redeemed will be determined
by lot or pro rata, as may be determined by the Board of Directors of the
Corporation or by any other method determined to be equitable by the Board of
Directors.
On or after a redemption date, unless the Corporation defaults in the
payment of the redemption price, dividends will cease to accrue on shares of
Preferred Stock called for redemption and all rights of holders of such shares
will terminate except for the right to receive the redemption price.
Under current regulations, bank holding companies may not exercise any
option to redeem shares of preferred stock included as Tier 1 capital, or
exchange such preferred stock for debt securities, without the prior approval
of the Federal Reserve Board. Ordinarily, the Federal Reserve Board would not
permit such a redemption unless (1) the shares are redeemed with the proceeds
of a sale by the bank holding company of common stock or perpetual preferred
stock or (2) the Federal Reserve Board determines that the bank holding
company's condition and circumstances warrant the reduction of a source of
permanent capital.
LIQUIDATION PREFERENCE
Upon any voluntary or involuntary liquidation, dissolution or winding
up of the Corporation, holders of each series of Preferred Stock that ranks
senior to the Junior Securities will be entitled to receive out of assets of
the Corporation available for distribution to shareholders, before any
distribution is made on any Junior Securities, including Common Stock,
distributions upon liquidation in the amount set forth in the Prospectus
Supplement relating to such series of Preferred Stock, plus an amount equal to
any declared and unpaid dividends. If upon any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation, the amounts payable
with respect to the Preferred Stock of any series and any other Parity
Securities are not paid in full, the holders of the Preferred Stock of such
series and the Parity Securities will share ratably in any such distribution of
assets of the Corporation in proportion to the full liquidation preferences to
which each is entitled. After payment of the full amount of the liquidation
preference to which they are entitled, the holders of such series of Preferred
Stock will not be entitled to any further participation in any distribution of
assets of the Corporation.
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VOTING RIGHTS
Except as indicated in the Prospectus Supplement relating to a
particular series of Preferred Stock, or except as expressly required by
applicable law, the holders of the Preferred Stock will have no voting rights.
Under regulations adopted by the Federal Reserve Board, if the holders
of shares of any series of Preferred Stock of the Corporation become entitled
to vote for the election of directors, such series may then be deemed a "class
of voting securities" and a holder of 25% or more of such series (or a holder
of 5% if it otherwise exercises a "controlling influence" over the Corporation)
may then be subject to regulation as a bank holding company in accordance with
the BHC Act. In addition, at such time as such series is deemed a class of
voting securities, (i) any other bank holding company may be required to obtain
the approval of the Federal Reserve Board to acquire or retain 5% or more of
such series, and (ii) any person other than a bank holding company may be
required to file with the Federal Reserve Board under the Change in Bank
Control Act to acquire or retain 10% or more of such series.
Section 12 of the Banking Law requires the prior approval of the
Office of the Commissioner to obtain control of any bank organized under the
Banking Law. The Banking Law requires that in any transfer of voting and
outstanding capital stock of any bank organized under the laws of Puerto Rico
to any person or entity that, upon consummation of the transfer, will become
the owner, directly or indirectly, of more than 5% of the voting and
outstanding capital stock of said bank, the parties to the transfer shall
inform the Office of the Commissioner of the proposed transfer at least 60 days
prior to the date such transfer is to be effected. The Banking Law does not
contain any provision allowing for the extension of such 60-day time period.
The transfer requires the approval of the Office of the Commissioner if it
results in a change of control of the bank. For the purposes of Section 12 of
the Banking Law, the term "control" means the power to, directly or indirectly,
direct or influence decisively the administration or the norms of the bank. The
Department of the Treasury (predecessor to the Office of the Commissioner) made
a determination that the foregoing provisions of the Banking Law are applicable
to a change in control of the Corporation in a letter dated April 9, 1985.
Pursuant to Section 12(d) of the Banking Law, as soon as the Office of
the Commissioner receives notice of a proposed transaction that may result in
the control or in a change of control of a bank, the Office of the Commissioner
shall have the duty to make the necessary investigations. The Office of the
Commissioner shall issue authorization for the transfer of control of the bank
if the results of his investigations are in his judgment satisfactory. The
decision of the Office of the Commissioner is final and unreviewable.
DESCRIPTION OF PREFERRED STOCK OF PIB
The following summary contains a description of certain general terms
of PIB's preferred stock (the "PIB Preferred Stock") to which any Prospectus
Supplement may relate. Certain terms of any series of the Preferred Stock
offered by any Prospectus Supplement will be described in the Prospectus
Supplement relating thereto. If so indicated in the Prospectus Supplement, the
terms of any series may differ from the terms set forth below. The description
of certain provisions of the PIB
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Preferred Stock does not purport to be complete and is subject to and qualified
in its entirety by reference to the provisions of PIB's Certificate of
Incorporation, as amended, and the Certificate of Amendment relating to each
particular series of the PIB Preferred Stock, each of which will be filed or
incorporated by reference, as the case may be, as an exhibit to the
Registration Statement of which this Prospectus is a part at or prior to the
time of the issuance of such PIB Preferred Stock.
The authorized capital stock of PIB consists of 1,000,000 shares of
Common Stock, par value $5.00 per share, and 25,000,000 shares of preferred
stock, par value $25.00 per share. The preferred stock is issuable in one or
more series, with such terms, and at such times and for such consideration as
the Board of Directors of PIB determines. As of the date of this Prospectus, no
shares of preferred stock of PIB were issued and outstanding. All of the common
stock of PIB is owned by the Corporation.
GENERAL
Under PIB's Certificate of Incorporation, the Board of Directors of
the Corporation is authorized, without further stockholder action, to provide
for the issuance of up to 25,000,000 shares of preferred stock, par value
$25.00 per share, in one or more series, with such designations of titles;
dividend rates; special or relative rights in the event of a liquidation,
distribution or sale of assets or dissolution or winding up of PIB; sinking
fund provisions; any redemption or purchase account provisions; conversion
provisions; and voting rights, as shall be set forth as and when established by
the Board of Directors of PIB. The shares of any series of PIB Preferred Stock
will be, when issued, fully paid and nonassessable and holders thereof shall
have no preemptive rights in connection therewith.
The liquidation preference of any series of the PIB Preferred Stock is
not necessarily indicative of the price at which shares of such series of PIB
Preferred Stock will actually trade at or after the time of their issuance. The
market price of any series of PIB Preferred Stock can be expected to fluctuate
with changes in market and economic conditions, the financial condition and
prospects of the Corporation and PIB and other factors that generally influence
the market prices of securities.
RANK
Any series of PIB Preferred Stock will, with respect to dividend
rights and rights on liquidation, winding up and dissolution, rank (i) senior
to all classes of common stock of PIB and to all equity securities issued by
PIB the terms of which specifically provide that such equity securities will
rank junior to the PIB Preferred Stock (collectively referred to as the "PIB
Junior Securities"); (ii) on a parity with all equity securities issued by PIB,
the terms of which specifically provide that such equity securities will rank
on a parity with the PIB Preferred Stock (collectively referred to as the "PIB
Parity Securities"); and (iii) junior to all equity securities issued by PIB,
the terms of which specifically provide that such equity securities will rank
senior to the PIB Preferred Stock (collectively referred to as the "PIB Senior
Securities"). As used in any Certificate of Amendment for these purposes, the
term "equity securities" will not include debt securities convertible into or
exchangeable for equity securities.
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DIVIDENDS
Holders of each series of PIB Preferred Stock will be entitled to
receive, when, as and if declared by the Board of Directors of PIB out of funds
legally available therefor, cash dividends at such rates and on such dates as
are set forth in the Prospectus Supplement relating to such series of the PIB
Preferred Stock. Dividends will be payable to holders of record of the PIB
Preferred Stock as they appear on the books of PIB on such record dates as
shall be fixed by the Board of Directors. Dividends on any series of PIB
Preferred Stock may be cumulative or non-cumulative. PIB's ability to pay
dividends on its Preferred Stock is subject to policies established by the
Federal Reserve Board. See "Certain Regulatory Matters -- Dividend
Restrictions."
No full dividends may be declared or paid or funds set apart for the
payment of dividends on any PIB Parity Securities unless dividends shall have
been paid or set apart for such payment on the PIB Preferred Stock. If full
dividends are not so paid, the PIB Preferred Stock shall share dividends pro
rata with the PIB Parity Securities.
The holders of any series of shares of PIB Preferred Stock at the
close of business on a dividend payment record date will be entitled to receive
the dividend payable on such shares (except that holders of shares called for
redemption on a redemption date occurring between such record date and the
dividend payment date shall not be entitled to receive such dividend on such
dividend payment date but instead will receive accrued and unpaid dividends to
such redemption date) on the corresponding dividend payment date
notwithstanding the conversion thereof or PIB's default in payment of the
dividend due. Except as provided above, PIB will make no payment or allowance
for unpaid dividends, whether or not in arrears, on converted shares or for
dividends on the shares of preferred stock issued upon conversion.
CONVERSION
The Prospectus Supplement for any series of the PIB Preferred Stock
will state the terms, if any, on which shares of that series are convertible
into shares of another series of preferred stock of PIB.
For any series of PIB Preferred Stock which is convertible, PIB shall
at all times reserve and keep available, free from preemptive rights, out of
the aggregate of its authorized but unissued preferred stock or shares of
preferred stock held in its treasury or both, for the purpose of effecting the
conversion of the shares of such series of PIB Preferred Stock, the full number
of shares of preferred stock then deliverable upon the conversion of all
outstanding shares of such series.
No fractional shares or scrip representing fractional shares of
preferred stock will be issued upon the conversion of shares of any series of
convertible PIB Preferred Stock. Each holder to whom fractional shares would
otherwise be issued will instead be entitled to receive, at PIB's election,
either (a) a cash payment equal to the current market price of such holder's
fractional interest or (b) a cash payment equal to such holder's proportionate
interest in the net proceeds (following the deduction of applicable transaction
costs) from the sale promptly by an agent, on behalf of such holders, of shares
of preferred stock representing the aggregate of such fractional shares.
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EXCHANGEABILITY
If so determined by the Board of Directors of PIB, the holders of
shares of PIB Preferred Stock of any series may be obligated at any time or at
maturity to exchange such shares for preferred stock or debt securities of PIB.
The terms of any such exchange and any such preferred stock or debt securities
will be described in the Prospectus Supplement relating to such series of PIB
Preferred Stock.
REDEMPTION
A series of PIB Preferred Stock may be redeemable at any time, in
whole or in part, at the option of PIB or the holder thereof upon terms and at
the redemption prices set forth in the Prospectus Supplement relating to such
series.
In the event of partial redemptions of PIB Preferred Stock, whether by
mandatory or optional redemption, the shares to be redeemed will be determined
by lot or pro rata, as may be determined by the Board of Directors of PIB or by
any other method determined to be equitable by the Board of Directors.
On or after a redemption date, unless PIB defaults in the payment of
the redemption price, dividends will cease to accrue on shares of PIB Preferred
Stock called for redemption and all rights of holders of such shares will
terminate except for the right to receive the redemption price.
Under current regulations, bank holding companies may not exercise any
option to redeem shares of preferred stock included as Tier 1 capital, or
exchange such preferred stock for debt securities, without the prior approval
of the Federal Reserve Board. Ordinarily, the Federal Reserve Board would not
permit such a redemption unless (1) the shares are redeemed with the proceeds
of a sale by the bank holding company of common stock or perpetual preferred
stock or (2) the Federal Reserve Board determines that the bank holding
company's condition and circumstances warrant the reduction of a source of
permanent capital.
LIQUIDATION PREFERENCE
Upon any voluntary or involuntary liquidation, dissolution or winding
up of PIB, holders of each series of PIB Preferred Stock that ranks senior to
the PIB Junior Securities will be entitled to receive out of assets of PIB
available for distribution to shareholders, before any distribution is made on
any PIB Junior Securities, including common stock, distributions upon
liquidation in the amount set forth in the Prospectus Supplement relating to
such series of Preferred Stock, plus an amount equal to any accrued and unpaid
dividends. If upon any voluntary or involuntary liquidation, dissolution or
winding up of PIB the amounts payable with respect to the PIB Preferred Stock
of any series and any other PIB Parity Securities are not paid in full, the
holders of the PIB Preferred Stock of such series and the PIB Parity Securities
will share ratably in any such distribution of assets of PIB in proportion to
the full liquidation preferences to which each is entitled. After payment of
the full amount of the liquidation preference to which they are entitled, the
holders of such series of PIB Preferred Stock will not be entitled to any
further participation in any distribution of assets of PIB.
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VOTING RIGHTS
Except as indicated in the Prospectus Supplement relating to a
particular series of PIB Preferred Stock, or except as expressly required by
applicable law, the holders of the PIB Preferred Stock will have no voting
rights.
Under regulations adopted by the Federal Reserve Board, if the holders
of shares of any series of PIB Preferred Stock become entitled to vote for the
election of directors, such series may then be deemed a "class of voting
securities" and a holder of 25% or more of such series (or a holder of 5% if it
otherwise exercises a "controlling influence" over PIB) may then be subject to
regulation as a bank holding company in accordance with the BHC Act. In
addition, at such time as such series is deemed a class of voting securities,
(i) any other bank holding company may be required to obtain the approval of
the Federal Reserve Board to acquire or retain 5% or more of such series, and
(ii) any person other than a bank holding company may be required to file with
the Federal Reserve Board under the Change in Bank Control Act to acquire or
retain 10% or more of such series.
GUARANTEE
Unless otherwise specified in the applicable Prospectus Supplement,
the Corporation will guarantee the punctual payment of (i) any accrued and
unpaid dividends, whether or not declared, on the PIB Preferred Stock of any
series, (ii) the redemption price for any shares of PIB Preferred Stock called
or redemption at the option of PIB or the holder thereof in accordance with the
terms of such series of PIB Preferred Stock, (iii) the liquidation preference
of PIB Preferred Stock and (iv) any additional amounts with respect to a series
of PIB Preferred Stock.
The Guarantee of the PIB Preferred Stock shall constitute an unsecured
obligation of the Corporation and will rank junior to all liabilities of the
Corporation. The Guarantee will rank senior to the Corporation's common stock
and shall have such rank relative to the preferred stock of the Corporation as
shall be specified in the applicable Prospectus Supplement.
DESCRIPTION OF PREFERRED STOCK OF FINANCIAL
The following summary contains a description of certain general terms
of Financial's preferred stock (the "Financial Preferred Stock") to which any
Prospectus Supplement may relate. Certain terms of any series of the Financial
Preferred Stock offered by any Prospectus Supplement will be described in the
Prospectus Supplement relating thereto. If so indicated in the Prospectus
Supplement, the terms of any series may differ from the terms set forth below.
The description of certain provisions of the Financial Preferred Stock does not
purport to be complete and is subject to and qualified in its entirety by
reference to the provisions of Financial's Certificate of Incorporation, as
amended, and the Certificate of Designation relating to each particular series
of the Financial Preferred Stock, each of which will be filed or incorporated
by reference, as the case may be, as an exhibit to the Registration Statement
of which this Prospectus is a part at or prior to the time of the issuance of
such Financial Preferred Stock.
The authorized capital stock of Financial consists of 10,000 shares of
Common Stock, par value $1.00 per share, and 10,000,000 shares of preferred
stock, par value $.01 per share. The
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preferred stock is issuable in one or more series, with such terms, and at such
times and for such consideration as the Board of Directors of Financial
determines. As of the date of this Prospectus, no shares of preferred stock of
Financial were issued and outstanding. All of the common stock of Financial is
owned by PIB.
GENERAL
Under Financial's Certificate of Incorporation, the Board of Directors
of the Corporation is authorized, without further stockholder action, to
provide for the issuance of up to 10,000,000 shares of preferred stock, par
value $.01 per share, in one or more series, with such designations of titles;
dividend rates; special or relative rights in the event of a liquidation,
distribution or sale of assets or dissolution or winding up of Financial;
sinking fund provisions; any redemption or purchase account provisions;
conversion provisions; and voting rights, as shall be set forth as and when
established by the Board of Directors of Financial. The shares of any series of
Financial Preferred Stock will be, when issued, fully paid and nonassessable
and holders thereof shall have no preemptive rights in connection therewith.
The liquidation preference of any series of the Financial Preferred
Stock is not necessarily indicative of the price at which shares of such series
of Financial Preferred Stock will actually trade at or after the time of their
issuance. The market price of any series of Financial Preferred Stock can be
expected to fluctuate with changes in market and economic conditions, the
financial condition and prospects of the Corporation and Financial and other
factors that generally influence the market prices of securities.
RANK
Any series of Financial Preferred Stock will, with respect to dividend
rights and rights on liquidation, winding up and dissolution, rank (i) senior
to all classes of common stock of Financial and to all equity securities issued
by Financial the terms of which specifically provide that such equity
securities will rank junior to the Financial Preferred Stock (collectively
referred to as the "Financial Junior Securities"); (ii) on a parity with all
equity securities issued by Financial, the terms of which specifically provide
that such equity securities will rank on a parity with the Financial Preferred
Stock (collectively referred to as the "Financial Parity Securities"); and
(iii) junior to all equity securities issued by Financial, the terms of which
specifically provide that such equity securities will rank senior to the
Financial Preferred Stock (collectively referred to as the "Financial Senior
Securities"). As used in any Certificate of Designation for these purposes, the
term "equity securities" will not include debt securities convertible into or
exchangeable for equity securities.
DIVIDENDS
Holders of each series of Financial Preferred Stock will be entitled
to receive, when, as and if declared by the Board of Directors of Financial out
of funds legally available therefor, cash dividends at such rates and on such
dates as are set forth in the Prospectus Supplement relating to such series of
the Financial Preferred Stock. Dividends will be payable to holders of record
of the Financial Preferred Stock as they appear on the books of Financial on
such record dates as shall be fixed by the Board of Directors. Dividends on any
series of Financial Preferred Stock may be cumulative or non-
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cumulative. Financial's ability to pay dividends on its Preferred Stock is
subject to policies established by the Federal Reserve Board. See "Certain
Regulatory Matters -- Dividend Restrictions."
No full dividends may be declared or paid or funds set apart for the
payment of dividends on any Financial Parity Securities unless dividends shall
have been paid or set apart for such payment on the Financial Preferred Stock.
If full dividends are not so paid, the Financial Preferred Stock shall share
dividends pro rata with the Financial Parity Securities.
The holders of any series of shares of Financial Preferred Stock at
the close of business on a dividend payment record date will be entitled to
receive the dividend payable on such shares (except that holders of shares
called for redemption on a redemption date occurring between such record date
and the dividend payment date shall not be entitled to receive such dividend on
such dividend payment date but instead will receive accrued and unpaid
dividends to such redemption date) on the corresponding dividend payment date
notwithstanding the conversion thereof or Financial's default in payment of the
dividend due. Except as provided above, Financial will make no payment or
allowance for unpaid dividends, whether or not in arrears, on converted shares
or for dividends on the shares of preferred stock issued upon conversion.
CONVERSION
The Prospectus Supplement for any series of the Financial Preferred
Stock will state the terms, if any, on which shares of that series are
convertible into shares of another series of preferred stock of Financial.
For any series of Financial Preferred Stock which is convertible,
Financial shall at all times reserve and keep available, free from preemptive
rights, out of the aggregate of its authorized but unissued preferred stock or
shares of preferred stock held in its treasury or both, for the purpose of
effecting the conversion of the shares of such series of Financial Preferred
Stock, the full number of shares of preferred stock then deliverable upon the
conversion of all outstanding shares of such series.
No fractional shares or scrip representing fractional shares of
preferred stock will be issued upon the conversion of shares of any series of
convertible Financial Preferred Stock. Each holder to whom fractional shares
would otherwise be issued will instead be entitled to receive, at Financial's
election, either (a) a cash payment equal to the current market price of such
holder's fractional interest or (b) a cash payment equal to such holder's
proportionate interest in the net proceeds (following the deduction of
applicable transaction costs) from the sale promptly by an agent, on behalf of
such holders, of shares of preferred stock representing the aggregate of such
fractional shares.
EXCHANGEABILITY
If so determined by the Board of Directors of Financial, the holders
of shares of Financial Preferred Stock of any series may be obligated at any
time or at maturity to exchange such shares for preferred stock or debt
securities of Financial. The terms of any such exchange and any such preferred
stock or debt securities will be described in the Prospectus Supplement
relating to such series of Financial Preferred Stock.
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REDEMPTION
A series of Financial Preferred Stock may be redeemable at any time,
in whole or in part, at the option of Financial or the holder thereof upon
terms and at the redemption prices set forth in the Prospectus Supplement
relating to such series.
In the event of partial redemptions of Financial Preferred Stock,
whether by mandatory or optional redemption, the shares to be redeemed will be
determined by lot or pro rata, as may be determined by the Board of Directors
of Financial or by any other method determined to be equitable by the Board of
Directors.
On or after a redemption date, unless Financial defaults in the
payment of the redemption price, dividends will cease to accrue on shares of
Financial Preferred Stock called for redemption and all rights of holders of
such shares will terminate except for the right to receive the redemption
price.
Under current regulations, bank holding companies may not exercise any
option to redeem shares of preferred stock included as Tier 1 capital, or
exchange such preferred stock for debt securities, without the prior approval
of the Federal Reserve Board. Ordinarily, the Federal Reserve Board would not
permit such a redemption unless (1) the shares are redeemed with the proceeds
of a sale by the bank holding company of common stock or perpetual preferred
stock or (2) the Federal Reserve Board determines that the bank holding
company's condition and circumstances warrant the reduction of a source of
permanent capital.
LIQUIDATION PREFERENCE
Upon any voluntary or involuntary liquidation, dissolution or winding
up of Financial, holders of each series of Financial Preferred Stock that ranks
senior to the Financial Junior Securities will be entitled to receive out of
assets of Financial available for distribution to shareholders, before any
distribution is made on any Financial Junior Securities, including common
stock, distributions upon liquidation in the amount set forth in the Prospectus
Supplement relating to such series of Preferred Stock, plus an amount equal to
any accrued and unpaid dividends. If upon any voluntary or involuntary
liquidation, dissolution or winding up of Financial the amounts payable with
respect to the Financial Preferred Stock of any series and any other Financial
Parity Securities are not paid in full, the holders of the Financial Preferred
Stock of such series and the Financial Parity Securities will share ratably in
any such distribution of assets of Financial in proportion to the full
liquidation preferences to which each is entitled. After payment of the full
amount of the liquidation preference to which they are entitled, the holders of
such series of Financial Preferred Stock will not be entitled to any further
participation in any distribution of assets of Financial.
VOTING RIGHTS
Except as indicated in the Prospectus Supplement relating to a
particular series of Financial Preferred Stock, or except as expressly required
by applicable law, the holders of the Financial Preferred Stock will have no
voting rights.
Under regulations adopted by the Federal Reserve Board, if the holders
of shares of any series of Financial Preferred Stock become entitled to vote
for the election of directors, such series
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may then be deemed a "class of voting securities" and a holder of 25% or more
of such series (or a holder of 5% if it otherwise exercises a "controlling
influence" over Financial) may then be subject to regulation as a bank holding
company in accordance with the BHC Act. In addition, at such time as such
series is deemed a class of voting securities, (i) any other bank holding
company may be required to obtain the approval of the Federal Reserve Board to
acquire or retain 5% or more of such series, and (ii) any person other than a
bank holding company may be required to file with the Federal Reserve Board
under the Change in Bank Control Act to acquire or retain 10% or more of such
series.
GUARANTEE
Unless otherwise specified in the applicable Prospectus Supplement,
the Corporation will guarantee the punctual payment of (i) any accrued and
unpaid dividends, whether or not declared, on the Financial Preferred Stock of
any series, (ii) the redemption price for any shares of Financial Preferred
Stock called for redemption at the option of Financial or the holder thereof in
accordance with the terms of such series of Financial Preferred Stock, (iii)
the liquidation preference of Financial Preferred Stock and (iv) any additional
amounts with respect to a series of Financial Preferred Stock.
The Guarantee of the Financial Preferred Stock shall constitute an
unsecured obligation of the Corporation and will rank junior to all liabilities
of the Corporation. The Guarantee will rank senior to the Corporation's common
stock and shall have such rank relative to the preferred stock of the
Corporation as shall be specified in the applicable Prospectus Supplement.
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51
VALIDITY OF OFFERED SECURITIES
The validity of the Preferred Stock and the PIB Preferred Stock will
be passed upon for the Corporation and PIB by Brunilda Santos de Alvarez,
counsel to the Corporation. The validity of the Senior Debt Securities, the
Subordinated Debt Securities, the PIB Senior Debt Securities, the PIB
Subordinated Debt Securities and the Guarantees will be passed upon for the
Corporation and PIB by Ms. Alvarez as to matters of the laws of the
Commonwealth of Puerto Rico and by Sullivan & Cromwell as to matters of New
York law. The validity of the Financial Preferred Stock, the Financial Senior
Debt Securities and the Financial Subordinated Debt Securities will be passed
upon for Financial by Sullivan & Cromwell. The validity of the Securities will
be passed upon for any underwriters or agents by counsel named in the
Prospectus Supplement.
EXPERTS
The financial statements incorporated in this Prospectus by reference
from the Corporation's Annual Report on Form 10-K for the year ended December
31, 1994 have been so incorporated in reliance on the report of Price
Waterhouse, independent accountants, given on the authority of said firm as
experts in auditing and accounting.
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PLAN OF DISTRIBUTION
The Corporation, PIB or Financial, as the case may be, may sell
Securities to or through underwriting syndicates represented by managing
underwriters, or through one or more underwriters without a syndicate for
public offering and sale by them, or may sell Securities to investors directly
or through agents. Any such underwriter or agent involved in the offer and sale
of the Securities will be named in the Prospectus Supplement.
Underwriters may offer and sell the Securities at a fixed price or
prices, which may be changed, or from time to time at market prices prevailing
at the time of sale, at prices related to such prevailing market prices or at
negotiated prices. In connection with the sale of the Securities, underwriters
may be deemed to have received compensation from the Corporation, PIB or
Financial, as the case may be, in the form of underwriting discounts or
commissions and may also receive commissions from purchasers of the Securities
for whom they may act as agent. Underwriters may sell the Securities to or
through dealers, and such dealers may receive compensation in the form of
discounts, concessions or commissions from the underwriters and/or commissions
from the purchasers for whom they may act as agent.
Any compensation paid by the Corporation, PIB or Financial, as the
case may be, to underwriters or agents in connection with the offering of the
Securities, and any discounts, concessions or commissions allowed by
underwriters to participating dealers, will be set forth in the Prospectus
Supplement. Underwriters, dealers and agents participating in the distribution
of the Securities may be deemed to be underwriters, and any discounts and
commissions received by them and any profit realized by them on resale of the
Securities may be deemed to be underwriting discounts and commissions under the
Securities Act of 1933. Underwriters, dealers and agents may be entitled, under
agreements entered into with Corporation, PIB or Financial, as the case may be,
to indemnification against certain civil liabilities, including liabilities
under the Securities Act of 1933.
All Securities will be a new issue of securities with no established
trading market. Any underwriters to whom Securities are sold by the
Corporation, PIB or Financial, as the case may be, for public offering and sale
may make a market in such Securities, but such underwriters will not be
obligated to do so and may discontinue any market making at any time without
notice. No assurance can be given as to the liquidity of the trading market for
any Securities.
Certain of the underwriters and their associates may be customers of,
engage in transactions with, and perform services for, the Corporation or its
subsidiaries in the ordinary course of business.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses in connection with the issuance and
distribution of the securities being registered are:
Registration Fee $172,414
Fees and Expenses of Accountants 20,000
Fees and Expenses of Counsel 100,000
Blue Sky Fees and Expenses 22,500
Printing and Engraving Expenses 16,000
Rating Agency Fees 125,000
Trustee's Fees 20,000
Miscellaneous 4,086
Total $480,000
========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
(a) The Corporation and PIB are Puerto Rico corporations.
(i) Article ELEVENTH of the Restated Certificate of Incorporation of
the Corporation provides the following:
(1) The Corporation shall indemnify any person who was or is
a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the
right of the Corporation) by reason of the fact that he is or was a
director, officer, employee or agent of the Corporation, or is or was
serving at the written request of the Corporation as a director,
officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests
of the Corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was
unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner
which he reasonably believed to be in or not opposed to the best
interests of the Corporation and, with respect to any criminal action
or proceeding, had reasonable cause to believe that his conduct was
unlawful.
(2) The Corporation shall indemnify any person who was or is
a party or is threatened to be made a party to any threatened, pending
or completed action or suit by or in the right of the Corporation to
procure a judgment in its favor by reason of the fact that he is or
was a director, officer, employee or agent of the Corporation, or is
or was serving at the written request of the Corporation as a
director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against
expenses (including attorney's fees) actually and reasonably incurred
by him in connection with the defense or settlement of such action or
suit if he acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the Corporation,
except that no indemnification shall be made in respect of any claim,
issue or matter as to which such person shall have been adjudged to be
liable for negligence or misconduct in the performance of his duty to
the Corporation unless and only to the extent that the court in which
such action or suit was brought shall determine upon application that,
despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which such court shall deem
proper.
(3) To the extent that a director, officer, employee or agent
of the Corporation has been successful on the merits or otherwise in
defense of any action, suit or proceeding referred to in paragraph 1
or 2 of this Article ELEVENTH, or in
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defense of any claim, issue or matter therein, he shall be indemnified
against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection therewith.
(4) Any indemnification under paragraph 1 or 2 of this Article
ELEVENTH (unless ordered by a court) shall be made by the Corporation
only as authorized in the specific case upon a determination that
indemnification of the director, officer, employee or agent is proper
in the circumstances because he has met the applicable standard of
conduct set forth therein. Such determination shall be made (a) by the
Board of Directors by a majority vote of a quorum consisting of
directors who were not parties to such action, suit or proceeding, or
(b) if such a quorum is not obtainable, or, even if obtainable, a
quorum of disinterested directors so directs, by independent legal
counsel in a written opinion, or (c) by the stockholders.
(5) Expenses incurred in defending a civil or criminal action,
suit or proceeding may be paid by the Corporation in advance of the
final disposition of such action, suit or proceeding as authorized by
the Board of Directors in the specific case upon receipt of an
undertaking by or on behalf of the director, officer, employee or
agent to repay such amount unless it shall ultimately be determined
that he is entitled to be indemnified by the Corporation as authorized
in this Article ELEVENTH.
(6) The indemnification provided by this Article ELEVENTH
shall not be deemed exclusive of any other rights to which those
seeking indemnification may be entitled under any statute, by-law,
agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as to action
in another capacity while holding such office, and shall continue as
to a person who has ceased to be a director, officer, employee or
agent and shall inure to the benefit of the heirs, executors and
administrators of such a person.
(7) By action of its Board of Directors, notwithstanding any
interest of the directors in the action, the Corporation may purchase
and maintain insurance, in such amounts as the Board of Directors
deems appropriate, on behalf of any person who is or was a director,
officer, employee or agent of the Corporation, or is or was serving at
the written request of the Corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status
as such, whether or not the Corporation would have the power or would
be required to indemnify him against such liability under the
provisions of this Article ELEVENTH or of the General Corporation Law
of the Commonwealth of Puerto Rico or of any other state of the United
States or foreign country as may be applicable.
(ii) Article ELEVENTH of the Certificate of Incorporation of PIB
provides the following:
(1) PIB shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of PIB) by
reason of the fact that he is or was a director, officer, employee or
agent of PIB, or is or was serving at the written request of PIB as a
director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts
paid in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding if he acted in good
faith and in a manner he reasonably believed to be in or not opposed
to the best interests of PIB, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was
unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner
which he reasonably believed to be in or not opposed to the best
interests of PIB and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was
unlawful.
(2) PIB shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of PIB to procure a judgment in its
favor by reason of the fact that he is or was a director, officer,
employee or agent of PIB, or is or was serving at the written request
of PIB as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection with the defense or settlement of such
action or suit if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of PIB,
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except that no indemnification shall be made in respect of any claim,
issue or matter as to which such person shall have been adjudged to be
liable for negligence or misconduct in the performance of his duty to
PIB unless and only to the extent that the court in which such action
or suit was brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the
case, such person is fairly and reasonably entitled to indemnity for
such expenses which such court shall deem proper.
(3) To the extent that a director, officer, employee or agent
of PIB has been successful on the merits or otherwise in defense of
any action, suit or proceeding referred to in paragraph 1 or 2 of this
Article ELEVENTH, or in defense of any claim, issue or matter therein,
he shall be indemnified against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection therewith.
(4) Any indemnification under paragraph 1 or 2 of this Article
ELEVENTH (unless ordered by a court) shall be made by PIB only as
authorized in the specific case upon a determination that
indemnification of the director, officer, employee or agent is proper
in the circumstances because he has met the applicable standard of
conduct set forth therein. Such determination shall be made (a) by the
Board of Directors by a majority vote of a quorum consisting of
directors who were not parties to such action, suit or proceeding, or
(b) if such a quorum is not obtainable, or, even if obtainable, a
quorum of disinterested directors so directs, by independent legal
counsel in a written opinion, or (c) by the stockholders.
(5) Expenses incurred in defending a civil or criminal action,
suit or proceeding may be paid by PIB in advance of the final
disposition of such action, suit or proceeding as authorized by the
Board of Directors in the specific case upon receipt of an undertaking
by or on behalf of the director, officer, employee or agent to repay
such amount unless it shall ultimately be determined that he is
entitled to be indemnified by PIB as authorized in this Article
ELEVENTH.
(6) The indemnification provided by this Article ELEVENTH
shall not be deemed exclusive of any other rights to which those
seeking indemnification may be entitled under any statute, by-law,
agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as to action
in another capacity while holding such office, and shall continue as
to a person who has ceased to be a director, officer, employee or
agent and shall inure to the benefit of the heirs, executors and
administrators of such a person.
(7) By action of its Board of Directors, notwithstanding any
interest of the directors in the action, PIB may purchase and maintain
insurance, in such amounts as the Board of Directors deems
appropriate, on behalf of any person who is or was a director,
officer, employee or agent of PIB, or is or was serving at the written
request of PIB as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise,
against any liability asserted against him and incurred by him in any
such capacity, or arising out of his status as such, whether or not
PIB would have the power or would be required to indemnify him against
such liability under the provisions of this Article ELEVENTH or of the
General Corporation Law of the Commonwealth of Puerto Rico or of any
other state of the United States or foreign country as may be
applicable.
(b) Financial is a Delaware corporation.
(i) Section 102 of the Delaware General Corporation Law allows a
corporation to eliminate the personal liability of a director to the
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except in cases where the director breached his duty of
loyalty, failed to act in good faith, engaged in intentional misconduct or
knowing violation of law, authorized the unlawful payment of a dividend or
approved an unlawful stock repurchase or obtained an improper personal benefit.
Section 145 of the Delaware General Corporation Law, as amended, provides that
a corporation may indemnify any person who was or is a party or is threatened
to be a party to any threatened, pending or completed action, suit, or
proceeding, whether civil, criminal, administrative or investigative, other
than an action by or in right of the Corporation, by reason of the fact that he
is or was a director, officer, employee or agent of the corporation or is or
was serving at its request in such capacity in another corporation or business
association against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement, actually and reasonably incurred by him in
connection with such action, suit or proceeding if he acted in good faith and
in a manner he reasonably believed to be in or not opposed to the best
interests of the corporation and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful.
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(ii) Section 6.4 of the By-laws of Financial provides the following:
Section 6.4. Indemnification of Directors, Officers and
Employees. The Corporation shall indemnify to the full extent
permitted by law any person made or threatened to be made a party to
any action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that such
person or such person's testator or intestate is or was a director,
officer or employee of the Corporation or serves or served at the
request of the Corporation any other enterprise as a director, officer
or employee. Expenses, including attorneys' fees, incurred by any such
person in defending any such action, suit or proceeding shall be paid
or reimbursed by the Corporation promptly upon receipt by it of an
undertaking of such person to repay such expenses if it shall
ultimately be determined that such person is not entitled to be
indemnified by the Corporation. The rights provided to any person by
this by-law shall be enforceable against the Corporation by such
person who shall be presumed to have relied upon it in serving or
continuing to serve as a director, officer or employee as provided
above. No amendment of this by-law shall impair the rights of any
person arising at any time with respect to events occurring prior to
such amendment. For purposes of this by-law, the term "Corporation"
shall include any predecessor of the Corporation and any constituent
corporation (including any constituent of a constituent) absorbed by
the Corporation in a consolidation or merger; the term "other
enterprise" shall include any corporation, partnership, joint venture,
trust or employee benefit plan; service "at the request of the
Corporation" shall include service as a director, officer or employee
of the Corporation which imposes duties on, or involves services by,
such director, officer or employee with respect to an employee benefit
plan, its participants or beneficiaries; any excise taxes assessed on
a person with respect to an employee benefit plan shall be deemed to
be indemnifiable expenses; and action by a person with respect to an
employee benefit plan which such person reasonably believes to be in
the interest of the participants and beneficiaries of such plan shall
be deemed to be action not opposed to the best interests of the
Corporation.
ITEM 16. EXHIBITS
(1)(a) Form of Underwriting Agreement. (Incorporated by reference
from Registration Statement No. 33-57038)
(4)(a) Restated Certificate of Incorporation of BanPonce Corporation,
as amended (English translation). (Incorporated by reference
from Registration Statement No. 33-54299)
(4)(b) Certificate of Incorporation of Popular International Bank,
Inc. (English translation). (Incorporated by Reference from
Registration Statement No. 33-54299)
(4)(c) Certificate of Incorporation of BanPonce Financial Corp., as
amended.
(4)(d) Copy of Senior Indenture of BanPonce Corporation, dated as of
February 15, 1995, between BanPonce Corporation and The First
National Bank of Chicago, as trustee. (Incorporated by
reference from the Corporation's Current Report on Form 8-K/A
dated May 16, 1995)
(4)(e) Form of Subordinated Indenture of BanPonce Corporation.
(Incorporated by reference from Registration Statement No.
33-57038)
(4)(f) Copy of Senior Indenture of BanPonce Financial Corp., dated as
of October 1, 1991, as supplemented by the First Supplemental
Indenture thereto, dated as of February 28, 1995, each among
BanPonce Financial Corp., BanPonce Corporation, as Guarantor,
and The First National Bank of Chicago, as trustee.
(4)(g) Form of Subordinated Indenture of BanPonce Financial Corp.
(4)(h) Form of Senior Indenture of Popular International Bank, Inc.
(Incorporated by reference from Registration Statement No.
33-57038)
(4)(i) Form of Subordinated Indenture of Popular International Bank,
Inc. (Incorporated by reference from Registration Statement
No. 33-57038)
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(4)(j) Rights Agreement, dated as of August 11, 1988, between
BanPonce Corporation and Chemical Bank (as successor to
Manufacturers Hanover Trust Company). (Incorporated by
reference from Registration Statement No. 33-39028)
(4)(k) Amendment to Rights Agreement, dated as of December 11, 1990,
between BanPonce Corporation and Chemical Bank (as successor
to Manufacturers Hanover Trust Company). (Incorporated by
reference from Registration Statement No. 33-39028)
(5)(a) Opinion of Brunilda Santos de Alvarez, Esq.
(5)(b) Opinion of Sullivan & Cromwell.
(12) Computation of Consolidated Ratios of Earnings to Fixed
Charges and Earnings to Fixed Charges and Preferred Stock
Dividends.
(23)(a) Consent of Independent Auditors.
(23)(b) Consents of Counsel (included in Exhibit (5)(a) and (b)).
(24) Powers of attorney (included on pages II-7 through II-12).
(25)(a) Form T-1 Statement of Eligibility under the Trust Indenture
Act of 1939 of The First National Bank of Chicago, as Trustee
under the Senior Indenture of BanPonce Corporation.
(25)(b) Form T-1 Statement of Eligibility under the Trust Indenture
Act of 1939 of The First National Bank of Chicago, as Trustee
under the Senior Indenture of BanPonce Financial Corp.
ITEM 17. UNDERTAKINGS
The undersigned Co-registrants hereby undertake:
(a)(1) To file, during any period in which offers or sales
are being made, a post-effective amendment to this Registration
Statement:
(i) To include any prospectus required by section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the Registration Statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the Registration
Statement;
(iii) To include any material information with respect
to the plan of distribution not previously disclosed in the
Registration Statement or any material change to such
information in the Registration Statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed
by the Co-registrants pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in
the Registration Statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold
at the termination of the offering.
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(b) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the Corporation's annual report pursuant
to section 13(a) or 15(d) of the Securities Exchange Act of 1934 that is
incorporated by reference in this Registration Statement shall be deemed to be
a new registration statement relating to the securities offered therein and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) That, for purposes of determining any liability under
the Securities Act, the information omitted from the form of prospectus filed
as part of this Registration Statement in reliance upon Rule 430A and contained
in a form of prospectus filed by any Co-registrant pursuant to Rule 424(b)(1)
or (4) or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
The undersigned Co-registrants hereby undertake to file an application
for the purpose of determining the eligibility of the Subordinated Trustee,
Financial Subordinated Trustee, PIB Senior Trustee and PIB Subordinated Trustee
to act under Subsection (a) of Section 310 of the Trust Indenture Act in
accordance with the rules and regulations prescribed by the Commission under
Section 305(b)(2) of such Act.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Co-registrants pursuant to the provisions referred to in Item 15
of this Registration Statement, or otherwise, the Co-registrants have been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification by the
Co-registrants against such liabilities (other than the payment by the
Co-registrants of expenses incurred or paid by a director, officer or
controlling person of the Co-registrants in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Co-registrants will, unless in the opinion of their counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by them is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
undersigned Co-registrant certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-3 and has duly
caused this Registration Statement to be signed on its behalf by the
undersigned thereunto duly authorized, in the City of San Juan, Commonwealth of
Puerto Rico, on the 3rd day of August, 1995.
BANPONCE CORPORATION
(Co-registrant)
By /s/ David H. Chafey, Jr.
--------------------------------
Name: David H. Chafey, Jr.
Title: Executive Vice President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned directors
and/or officers of BANPONCE CORPORATION (the "Corporation") hereby constitutes
and appoints Richard L. Carrion, David H. Chafey, Jr., Jorge A. Junquera,
Orlando Berges and Roberto Herencia, and each of them singly, the true and
lawful agents and attorneys-in-fact of the undersigned with full power of
substitution and resubstitution and with full power and authority in said
agents and attorneys-in-fact, and in any one of them, to sign for each of the
undersigned and in his name, place or stead in any and all capacities indicated
below, a Registration Statement on Form S-3 to be filed with the Securities and
Exchange Commission under the Securities Act of 1933, as amended, relating to
the registration of up to $500,000,000 aggregate initial offering price of
debt, securities, preferred stock and guarantees, and to sign any and all
pre-effective amendments or post-effective amendments to such Registration
Statement and to file the same, with all exhibits thereto and other documents
in connection therewith with the Securities and Exchange Commission, granting
unto said agents and attorneys-in-fact, and each of them, full power and
authority to do and perform each and every act and thing requisite or necessary
to be done in and about the premises, as fully to all intents and purposes as
he might or could do in person, hereby ratifying and confirming all that said
agents and attorneys-in-fact or any of them, or their or his substitutes or
substitute, may lawfully do or cause to be done by virtue thereof.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Richard L. Carrion Chairman and President August 2, 1995
------------------------------------------------- (Principal Executive Officer) -----------------
Richard L. Carrion
/s/ Alfonso F. Ballester Director August 2, 1995
------------------------------------------------- -----------------
Alfonso F. Ballester
/s/ Juan J. Bermcdez Director August 2, 1995
------------------------------------------------- -----------------
Juan J. Bermcdez
/s/ Francisco J. Carreras Director August 2, 1995
------------------------------------------------- -----------------
Francisco J. Carreras
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SIGNATURE TITLE DATE
--------- ----- ----
Director
------------------------------------------------- -----------------
Waldemar del Valle
Director
------------------------------------------------- -----------------
Luis E. Dubon, Jr.
/s/ Antonio Luis Ferre Director August 2, 1995
------------------------------------------------- -----------------
Antonio Luis Ferre
/s/ Hector R. Gonzalez Director August 2, 1995
------------------------------------------------- -----------------
Hector R. Gonzalez
/s/ Jorge A. Junquera Executive Vice President and August 2, 1995
------------------------------------------------- Director -----------------
Jorge A. Junquera
/s/ Franklin A. Mathias Director August 2, 1995
------------------------------------------------- -----------------
Franklin A. Mathias
Director
------------------------------------------------- -----------------
Manuel Morales, Jr.
/s/ Alberto M. Paracchini Director August 2, 1995
------------------------------------------------- -----------------
Alberto M. Paracchini
Director
------------------------------------------------- -----------------
Francisco Perez, Jr.
/s/ Francisco M. Rexach, Jr. Director August 2, 1995
------------------------------------------------- -----------------
Francisco M. Rexach, Jr.
/s/ Felix J. Serralles Nevares Director August 2, 1995
------------------------------------------------- -----------------
Felix J. Serralles Nevares
/s/ Emilio Jose Venegas Director August 2, 1995
------------------------------------------------- -----------------
Emilio Jose Venegas
/s/ Julio E. Vizcarrondo Director August 2, 1995
------------------------------------------------- -----------------
Julio E. Vizcarrondo
/s/ David H. Chafey, Jr. Executive Vice President August 2, 1995
------------------------------------------------- (Principal Financial Officer) -----------------
David H. Chafey, Jr.
/s/ Amilcar Jordan Senior Vice President August 2, 1995
------------------------------------------------- (Principal Accounting Officer) -----------------
Amilcar Jordan
II-8
61
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
undersigned Co-registrant certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-3 and has duly
caused this Registration Statement to be signed on its behalf by the
undersigned thereunto duly authorized, in the City of San Juan, Commonwealth of
Puerto Rico, on the 3rd day of August, 1995.
POPULAR INTERNATIONAL BANK, INC.
(Co-registrant)
By /s/ David H. Chafey, Jr.
-----------------------------
Name: David H. Chafey, Jr.
Title: President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned directors
and/or officers of POPULAR INTERNATIONAL BANK, INC. (the "Corporation") hereby
constitutes and appoints Richard L. Carrion, David H. Chafey, Jr., Jorge A.
Junquera, Orlando Berges and Roberto Herencia, and each of them singly, the
true and lawful agents and attorneys-in-fact of the undersigned with full power
of substitution and resubstitution and with full power and authority in said
agents and attorneys-in-fact, and in any one of them, to sign for each of the
undersigned and in his name, place or stead in any and all capacities indicated
below, a Registration Statement on Form S-3 to be filed with the Securities and
Exchange Commission under the Securities Act of 1933, as amended, relating to
the registration of up to $500,000,000 aggregate initial offering price of
debt, securities, preferred stock and guarantees, and to sign any and all pre-
effective amendments or post-effective amendments to such Registration
Statement and to file the same, with all exhibits thereto and other documents
in connection therewith with the Securities and Exchange Commission, granting
unto said agents and attorneys-in-fact, and each of them, full power and
authority to do and perform each and every act and thing requisite or necessary
to be done in and about the premises, as fully to all intents and purposes as
he might or could do in person, hereby ratifying and confirming all that said
agents and attorneys-in-fact or any of them, or their or his substitutes or
substitute, may lawfully do or cause to be done by virtue thereof.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Richard L. Carrion Chairman of the Board August 2, 1995
------------------------------------------------- -----------------
Richard L. Carrion
/s/ Alfonso F. Ballester Director August 2, 1995
------------------------------------------------- -----------------
Alfonso F. Ballester
/s/ David H. Chafey, Jr. President and Director August 2, 1995
------------------------------------------------- -----------------
David H. Chafey, Jr.
Director
------------------------------------------------- -----------------
Manuel L. del Valle
II-9
62
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Jorge A. Junquera Executive Vice President and August 2, 1995
------------------------------------------------- Director -----------------
Jorge A. Junquera
/s/ Amilcar Jordan Senior Vice President and August 2, 1995
------------------------------------------------- Treasurer -----------------
Amilcar Jordan (Principal Accounting Officer)
II-10
63
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Co-registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned thereunto
duly authorized, in the City of San Juan, Commonwealth of Puerto Rico, on the
3rd day of August, 1995.
BANPONCE FINANCIAL CORP.
(Co-registrant)
By /s/ David H. Chafey, Jr.
---------------------------
Name: David H. Chafey, Jr.
Title: President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned directors
and/or officers of BANPONCE FINANCIAL CORP. (the "Corporation") hereby
constitutes and appoints Richard L. Carrion, David H. Chafey, Jr., Jorge A.
Junquera, Orlando Berges and Roberto Herencia, and each of them singly, the
true and lawful agents and attorneys-in-fact of the undersigned with full power
of substitution and resubstitution and with full power and authority in said
agents and attorneys-in-fact, and in any one of them, to sign for each of the
undersigned and in his name, place or stead in any and all capacities indicated
below, a Registration Statement on Form S-3 to be filed with the Securities and
Exchange Commission under the Securities Act of 1933, as amended, relating to
the registration of up to $500,000,000 aggregate initial offering price of
debt, securities, preferred stock and guarantees, and to sign any and all
pre-effective amendments or post-effective amendments to such Registration
Statement and to file the same, with all exhibits thereto and other documents
in connection therewith with the Securities and Exchange Commission, granting
unto said agents and attorneys-in-fact, and each of them, full power and
authority to do and perform each and every act and thing requisite or necessary
to be done in and about the premises, as fully to all intents and purposes as
he might or could do in person, hereby ratifying and confirming all that said
agents and attorneys-in-fact or any of them, or their or his substitutes or
substitute, may lawfully do or cause to be done by virtue thereof.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Richard L. Carrion Chairman August 2, 1995
------------------------------------------------- ----------------
Richard L. Carrion
/s/ Alfonso F. Ballester Director August 2, 1995
------------------------------------------------- ----------------
Alfonso F. Ballester
/s/ David H. Chafey, Jr. President and Director August 2, 1995
------------------------------------------------- ----------------
David H. Chafey, Jr.
II-11
64
SIGNATURE TITLE DATE
--------- ----- ----
Director
------------------------------------------------- -----------------
Manuel L. del Valle
/s/ Thomas J. Fitzpatrick Director August 2, 1995
------------------------------------------------- -----------------
Thomas J. Fitzpatrick
/s/ Jorge A. Junquera Director August 2, 1995
------------------------------------------------- -----------------
Jorge A. Junquera
Executive Vice President and
------------------------------------------------- Director -----------------
Larry B. Kesler
/s/ Roberto R. Herencia Senior Vice President and August 2, 1995
------------------------------------------------- Director -----------------
Roberto R. Herencia
/s/ Amilcar Jordan Senior Vice President August 2, 1995
------------------------------------------------- (Principal Accounting Officer) -----------------
Amilcar Jordan
II-12
65
Exhibit Index
Page
(4)(c) Certificate of Incorporation of BanPonce Financial Corp., as
amended.
(4)(f) Copy of Senior Indenture of BanPonce Financial Corp., dated as
of October 1, 1991, as supplemented by the First Supplemental
Indenture thereto, dated as of February 28, 1995, each among
BanPonce Financial Corp., BanPonce Corporation, as Guarantor,
and The First National Bank of Chicago, as trustee.
(4)(g) Form of Subordinated Indenture of BanPonce Financial Corp.
(5)(a) Opinion of Brunilda Santos de Alvarez, Esq.
(5)(b) Opinion of Sullivan & Cromwell.
(12) Computation of Consolidated Ratios of Earnings to Fixed
Charges and Earnings to Fixed Charges and Preferred Stock
Dividends.
(23)(a) Consent of Independent Auditors.
(23)(b) Consents of Counsel (included in Exhibit (5)(a) and (b)).
(24) Powers of attorney (included on pages II-7 through II-12).
(25)(a) Form T-1 Statement of Eligibility under the Trust Indenture
Act of 1939 of The First National Bank of Chicago, as Trustee
under the Senior Indenture of BanPonce Corporation.
(25)(b) Form T-1 Statement of Eligibility under the Trust Indenture
Act of 1939 of The First National Bank of Chicago, as Trustee
under the Senior Indenture of BanPonce Financial Corp.