1
EXHIBIT 5(b)
August 4, 1995
BanPonce Corporation,
209 Munoz Rivera Avenue,
Hato Rey, Puerto Rico 00918.
Popular International Bank, Inc.,
c/o BanPonce Corporation,
209 Munoz Rivera Avenue,
Hato Rey, Puerto Rico 00918.
BanPonce Financial Corp.,
521 Fellowship Road,
Mt. Laurel, New Jersey 08054.
Ladies and Gentlemen:
This opinion is delivered in connection with the registration
under the Securities Act of 1933 (the "Act") of (i) senior debt securities (the
"BanPonce Senior Debt Securities"), subordinated debt securities (the "BanPonce
Subordinated Debt Securities") and preferred stock, without par value (the
"BanPonce Preferred Stock"), of BanPonce Corporation, a Puerto Rico corporation
(the "Corporation"), (ii) senior debt securities (the "BanPonce Financial
Senior Debt Securities") of BanPonce Financial Corp., a Delaware corporation
("Financial"), bearing the unconditional guarantees (the "BanPonce Financial
Senior Debt Guarantees")
2
BanPonce Corporation
Popular International Bank, Inc.
BanPonce Financial Corp. -2-
of the Corporation, subordinated debt securities of Financial (the "BanPonce
Financial Subordinated Debt Securities"), bearing the unconditional guarantees
(the "BanPonce Financial Subordinated Debt Guarantees") of the Corporation,
and shares of preferred stock, par value $.01 per share, of Financial (the
"BanPonce Financial Preferred Stock"), bearing the unconditional guarantees
(the "BanPonce Financial Preferred Stock Guarantees") of the Corporation, and
(iii) senior debt securities (the "PIB Senior Debt Securities") of Popular Bank
International, Inc., a Puerto Rico corporation ("PIB"), bearing the
unconditional guarantees (the "PIB Senior Debt Securities Guarantees") of the
Corporation, subordinated debt securities of PIB (the "PIB Subordinated Debt
Securities"), bearing the unconditional guarantees (the "PIB Subordinated Debt
Securities Guarantees") of the Corporation and preferred stock, par value
$25.00 per share, of PIB (the "PIB Preferred Stock"), bearing the unconditional
guarantees (the "PIB Preferred Stock Guarantees") of the Corporation (the
BanPonce Senior Debt Securities, the BanPonce Subordinated Debt Securities, the
BanPonce Financial Senior Debt Securities, the BanPonce
3
BanPonce Corporation
Popular International Bank, Inc.
BanPonce Financial Corp. -3-
Financial Subordinated Debt Securities, the PIB Senior Debt Securities and the
PIB Subordinated Debt Securities are sometimes collectively referred to herein
as the "Debt Securities"; the BanPonce Financial Senior Debt Guarantees, the
BanPonce Financial Subordinated Debt Guarantees, the BanPonce Financial
Preferred Stock Guarantees, the PIB Senior Debt Securities Guarantees, the PIB
Subordinated Debt Securities Guarantees and the PIB Preferred Stock Guarantees
are sometimes collectively referred to herein as the "Guarantees"; and the Debt
Securities, the BanPonce Preferred Stock, the BanPonce Financial Preferred
Stock and the PIB Preferred Stock are sometimes collectively referred to herein
as the "Securities"). The Securities are limited to an aggregate initial
offering price not to exceed $500,000,000. We, as your counsel, have examined
such corporate records, certificates and other documents, and such questions of
law, as we have considered necessary or appropriate for the purposes of this
opinion. On the basis of such examination, we advise you that, in our opinion:
(1) When the registration statement relating to the
Securities and the Guarantees (the "Registration
4
BanPonce Corporation
Popular International Bank, Inc.
BanPonce Financial Corp. -4-
Statement") has become effective under the Act, the terms of the
BanPonce Senior Debt Securities and of their issuance and sale have
been duly established in conformity with the indenture relating to the
BanPonce Senior Debt Securities (the "BanPonce Senior Indenture") so
as not to violate any applicable law or result in a default under or
breach of any agreement or instrument binding upon the Corporation and
so as to comply with any requirement or restriction imposed by any
court or governmental body having jurisdiction over the Corporation,
and the BanPonce Senior Debt Securities have been duly executed and
authenticated in accordance with the BanPonce Senior Indenture and
issued and sold as contemplated in the Registration Statement, the
BanPonce Senior Debt Securities will constitute valid and legally
binding obligations of the Corporation, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles.
5
BanPonce Corporation
Popular International Bank, Inc.
BanPonce Financial Corp. -5-
(2) When the Registration Statement has become effective
under the Act, the indenture relating to the BanPonce Subordinated
Debt Securities (the "BanPonce Subordinated Indenture") has been duly
executed and delivered, the terms of the BanPonce Subordinated Debt
Securities and of their issuance and sale have been duly established
in conformity with the BanPonce Subordinated Indenture so as not to
violate any applicable law or result in a default under or breach of
any agreement or instrument binding upon the Corporation and so as to
comply with any requirement or restriction imposed by any court or
governmental body having jurisdiction over the Corporation, and the
BanPonce Subordinated Debt Securities have been duly executed and
authenticated in accordance with the BanPonce Subordinated Indenture
and issued and sold as contemplated in the Registration Statement, the
BanPonce Subordinated Debt Securities will constitute valid and
legally binding obligations of the Corporation, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and
6
BanPonce Corporation
Popular International Bank, Inc.
BanPonce Financial Corp. -6-
similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles.
(3) When the Registration Statement has become effective
under the Act, the terms of the BanPonce Financial Senior Debt
Securities and of the BanPonce Financial Senior Debt Guarantees and of
their issuance and sale have been duly established in conformity with
the indenture relating to the BanPonce Financial Senior Debt
Securities (the "BanPonce Financial Senior Indenture") so as not to
violate any applicable law or result in a default under or breach of
any agreement or instrument binding upon Financial or the Corporation
and so as to comply with any requirement or restriction imposed by any
court or governmental body having jurisdiction over Financial or the
Corporation, the BanPonce Financial Senior Debt Securities and the
BanPonce Financial Service Debt Guarantees have been duly executed and
authenticated, and the BanPonce Financial Senior Debt Guarantees have
been duly executed, each in accordance with the BanPonce
7
BanPonce Corporation
Popular International Bank, Inc.
BanPonce Financial Corp. -7-
Financial Senior Indenture, and the BanPonce Financial Senior Debt
Securities and the BanPonce Financial Senior Debt Guarantees have been
issued and sold as contemplated in the Registration Statement, the
BanPonce Financial Senior Debt Securities will constitute valid and
legally binding obligations of Financial and the BanPonce Financial
Senior Debt Guarantees will constitute valid and legally binding
obligations of the Corporation, in each case subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles.
(4) When the Registration Statement has become effective
under the Act, the indenture relating to the BanPonce Financial
Subordinated Debt Securities (the "BanPonce Financial Subordinated
Indenture") has been duly executed and delivered, the terms of the
BanPonce Financial Subordinated Debt Securities and of the BanPonce
Financial Subordinated Debt Guarantees and of their issuance and sale
have been duly established in
8
BanPonce Corporation
Popular International Bank, Inc.
BanPonce Financial Corp. -8-
conformity with the BanPonce Financial Subordinated Indenture so as
not to violate any applicable law or result in a default under or
breach of any agreement or instrument binding upon Financial or the
Corporation and so as to comply with any requirement or restriction
imposed by any court or governmental body having jurisdiction over
Financial or the Corporation, the BanPonce Financial Subordinated Debt
Securities have been duly executed and authenticated, and the BanPonce
Financial Subordinated Debt Guarantees have been duly executed, each
in accordance with the BanPonce Financial Subordinated Indenture, and
the BanPonce Financial Subordinated Debt Securities and the BanPonce
Financial Subordinated Debt Guarantees have been issued and sold as
contemplated in the Registration Statement, the BanPonce Financial
Subordinated Debt Securities will constitute valid and legally binding
obligations of Financial and the BanPonce Financial Subordinated Debt
Guarantees will constitute valid and legally binding obligations of
the Corporation, in each case subject to bankruptcy, insolvency,
fraudulent transfer,
9
BanPonce Corporation
Popular International Bank, Inc.
BanPonce Financial Corp. -9-
reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity
principles.
(5) When the Registration Statement has become effective
under the Act, the indenture relating to the PIB Senior Debt
Securities (the "PIB Senior Indenture") has been duly executed and
delivered, the terms of the PIB Senior Debt Securities and of the PIB
Senior Debt Securities Guarantees and of their issuance and sale have
been duly established in conformity with the PIB Senior Indenture so
as not to violate any applicable law or result in a default under or
breach of any agreement or instrument binding upon PIB or the
Corporation and so as to comply with any requirement or restriction
imposed by any court or governmental body having jurisdiction over PIB
or the Corporation, the PIB Senior Debt Securities have been duly
executed and authenticated and the PIB Senior Debt Securities
Guarantees have been duly executed, each in accordance with the PIB
Senior Indenture, and the PIB Senior Debt Securities and the PIB
Senior Debt Securities
10
BanPonce Corporation
Popular International Bank, Inc.
BanPonce Financial Corp. -10-
Guarantees have been issued and sold as contemplated in the
Registration Statement, the PIB Senior Debt Securities will constitute
valid and legally binding obligations of PIB and the PIB Senior Debt
Securities Guarantees will constitute valid and legally binding
obligations of the Corporation, in each case subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles.
(6) When the Registration Statement has become effective
under the Act, the indenture relating to the PIB Subordinated Debt
Securities (the "PIB Subordinated Indenture") has been duly executed
and delivered, the terms of the PIB Subordinated Debt Securities and
of the PIB Subordinated Debt Securities Guarantees and of their
issuance and sale have been duly established in conformity with the
PIB Subordinated Indenture so as not to violate any applicable law or
result in a default under or breach of any agreement or instrument
binding upon PIB or the Corporation and so as to comply
11
BanPonce Corporation
Popular International Bank, Inc.
BanPonce Financial Corp. -11-
with any requirement or restriction imposed by any court or
governmental body having jurisdiction over PIB or the Corporation, the
PIB Subordinated Debt Securities have been duly executed and
authenticated and the PIB Subordinated Debt Securities Guarantees have
been duly executed, each in accordance with the PIB Subordinated
Indenture, and the PIB Subordinated Debt Securities and the PIB
Subordinated Debt Securities Guarantees have been issued and sold as
contemplated in the Registration Statement, the PIB Subordinated Debt
Securities will constitute valid and legally binding obligations of
PIB and the PIB Subordinated Debt Securities Guarantees will
constitute valid and legally binding obligations of the Corporation,
in each case subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity
principles.
(7) When the Registration Statement has become effective
under the Act, a certificate of designations
12
BanPonce Corporation
Popular International Bank, Inc.
BanPonce Financial Corp. -12-
with respect to the BanPonce Financial Preferred Stock has been duly
filed and recorded with the Secretary of State of the State of
Delaware, the terms of the BanPonce Financial Preferred Stock and of
its issue and sale have been duly established in conformity with
Financial's certificate of incorporation, as amended, so as not to
violate any applicable law or result in a default under or breach of
any agreement or instrument binding upon Financial or the Corporation
and so as to comply with any requirement or restriction imposed by any
court or governmental body having jurisdiction over Financial or the
Corporation, all regulatory consents or approvals for the issuance and
sale of the BanPonce Financial Preferred Stock and for the issuance of
the BanPonce Financial Preferred Stock Guarantees have been obtained,
and the BanPonce Financial Preferred Stock and the BanPonce Financial
Preferred Stock Guarantees have been duly issued and sold as
contemplated by the Registration Statement, the BanPonce Financial
Preferred Stock will be validly issued, fully paid and nonassessable,
and when the terms of the BanPonce
13
BanPonce Corporation
Popular International Bank, Inc.
BanPonce Financial Corp. -13-
Financial Preferred Stock Guarantees have been duly approved by the
Board of Directors or other authorized officials of the Corporation
and the BanPonce Preferred Stock Guarantees have been duly executed,
the BanPonce Financial Preferred Stock Guarantees will constitute
valid and legally binding obligations of the Corporation, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or
affecting creditors' rights and to general equity principles.
We note that, as of the date of this opinion, a judgment for
money in an action based on a Debt Security denominated in a foreign currency
or currency unit, or on a related Guarantee, in a Federal or state court in the
United States ordinarily would be enforced in the United States only in United
States dollars. The date used to determine the rate of conversion of the
foreign currency or currency unit in which a particular Debt Security is
denominated into United States dollars will depend on various factors,
including which court renders the judgment. In the case of
14
BanPonce Corporation
Popular International Bank, Inc.
BanPonce Financial Corp. -14-
a Debt Security denominated in a foreign currency, or a related Guarantee, a
state court in the State of New York rendering a judgment on a Debt Security,
or on a related Guarantee, would be required under Section 27 of the New York
Judiciary Law to render such judgment in the foreign currency in which the Debt
Security is denominated, and such judgment would be converted into United
States dollars at the exchange rate prevailing on the date of entry of the
judgment.
The foregoing opinion is limited to the Federal laws of the
United States, the laws of the State of New York and the Commonwealth of Puerto
Rico, and the General Corporation Law of the State of Delaware, and we are
expressing no opinion as to the effect of the laws of any other jurisdiction.
With respect to all matters of the laws of the Commonwealth of Puerto Rico, we
have relied upon the opinion, dated the date hereof, of Brunilda Santos de
Alvarez, Counsel to the Corporation, and our opinion is subject to the same
assumptions, qualifications and limitations with respect to such matters as are
contained in such opinion of Brunilda Santos de Alvarez.
15
BanPonce Corporation
Popular International Bank, Inc.
BanPonce Financial Corp. -15-
Also, we have relied as to certain matters on information
obtained from public officials, officers of the Corporation, Financial and PIB,
and other sources believed by us to be responsible, and we have assumed that
each of the BanPonce Senior Indenture and the BanPonce Financial Senior
Indenture has been duly authorized, executed and delivered by the respective
Trustee thereunder, assumptions that we have not independently verified.
We hereby consent to the filing of this opinion as an exhibit
to the Registration Statement and to the references to us under the heading
"Validity of Offered Securities" in the Prospectus contained in the
Registration Statement. In giving such consent, we do not thereby admit that
we are in the category of persons whose consent is required under Section 7 of
the Act.
Very truly yours,
/s/ Sullivan & Cromwell
Sullivan & Cromwell