1
EXHIBIT 1(A)
$___,000,000
BANPONCE TRUST I
___% Capital Securities
UNDERWRITING AGREEMENT
January __, 1997
Credit Suisse First Boston Corporation
As Representatives of the Several Underwriters,
c/o Credit Suisse First Boston Corporation,
Eleven Madison Avenue,
New York, N.Y. 10010-3629
Ladies and Gentlemen:
1. Introductory. BanPonce Trust I (the "Issuer"), a statutory business trust
created under the Business Trust Act (the "Delaware Act") of the State of
Delaware (Chapter 38, Title 12, of the Delaware Code, 12 Del. C. Section 3801
et seq.), proposes, subject to the terms and conditions stated herein, to issue
and sell to the several Underwriters ("Underwriters") ______ of its ___%
Capital Securities, Liquidation Amount $1,000 per Capital Security (the
"Capital Securities").
The Capital Securities will be guaranteed by BanPonce
Financial Corp. (the "Corporation") and BanPonce Corporation (the "Guarantor"),
to the extent set forth in the Prospectus (as defined below), with respect to
distributions and amounts payable upon liquidation or redemption (the
"Guarantees"), pursuant to (i) the Guarantee Agreement (the "Guarantee
Agreement"), to be dated as of the Closing Date (as defined below), executed
and delivered by the Corporation and The First National Bank of Chicago, a New
York corporation, as trustee (the "Guarantee Trustee"), and (ii) the Guarantee
Agreement (the "Additional Guarantee Agreement"), to be dated as of the Closing
Date, executed and delivered by the Guarantor and the Guarantee Trustee, each
for the benefit of the holders from time to time of the Capital Securities.
The proceeds from the sale of the Capital Securities to the Underwriters will
be aggregated with the entire proceeds from the sale by the Issuer to the
Corporation of the common securities of the Issuer (the "Common Securities")
and will be used by the Issuer to purchase the ___% Junior Subordinated
Deferrable Interest Debentures (the "Debentures"), issued by the Corporation
and guaranteed (the "Debenture Guarantee") by the Guarantor pursuant to a
Guarantee Agreement (the "Debenture Guarantee Agreement"), to be dated as of
the Closing Date, between the Guarantor and The First National Bank of Chicago,
as trustee. The Capital Securities and the Common Securities will be issued
pursuant to the Amended and Restated Declaration of Trust of the Issuer, to be
dated as of the Closing Date (the "Declaration"), among the Corporation, as
Depositor, the Guarantor and the trustees named therein (the "Trustees") and
the holders from time to time of the Capital Securities and the Common
Securities, which represent undivided beneficial interests in the assets of the
Issuer. The Debentures will be issued pursuant to a Junior Subordinated
Indenture, to be dated as of the Closing Date (the "Indenture"), among the
Guarantor, the Corporation and The First National Bank of Chicago, as trustee
(the "Debenture Trustee"). The Capital Securities, the Guarantees, the
Debentures and the Debenture Guarantee are collectively referred to herein as
the "Securities." This Agreement, the Indenture, the Declaration, the
Guarantee Agreement, the Additional Guarantee Agreement, the Debenture
Guarantee Agreement and the Expense Agreement (as defined herein) are referred
to collectively as the "Operative Documents".
The Issuer, the Corporation and the Guarantor, jointly and
severally, hereby agree with the Underwriters as follows:
2
2
2. Representations and Warranties. Each of the Issuer, the
Corporation and the Guarantor, jointly and severally, represents and warrants
to, and agrees with, the Underwriters that:
(a) The Guarantor, the Corporation and the Issuer have filed
with the Securities and Exchange Commission (the "Commission") a
registration statement, and may have filed an amendment or amendments
thereto, on Form S-3, for the registration of the Securities under the
Securities Act of 1933, as amended (the "Act"), and such registration
statement has become effective under the Act. Such Registration
Statement (including all documents incorporated therein by reference)
is hereinafter referred to as the "Registration Statement." Any
post-effective amendment to such registration statement has been filed
with the Commission prior to the execution and delivery of this
Agreement and the most recent such amendment has been declared
effective by the Commission. For purposes of this Agreement,
"Effective Time" of the Registration Statement means (i) the date and
time as of which such registration statement was declared effective by
the Commission or (ii) the later of (A) the date on which the most
recent post-effective amendment or amendments thereto, if any, became
or become effective and (B) the date of filing of the Guarantor's most
recent Annual Report on Form 10-K, if such filing occurs after the
date set forth in clause (i) above. "Effective Date" means the date
of the Effective Time. "Base Prospectus" means the prospectus
(including all documents incorporated therein by reference) relating
to the Registration Statement, in the form in which such prospectus
has most recently been filed, or transmitted for filing, with the
Commission on or prior to the date hereof (but without regard to any
prospectus supplement relating specifically to securities other than
the Securities); and "Prospectus" means the Base Prospectus together
with the prospectus supplement (including all documents incorporated
therein by reference) specifically relating to the Securities, as such
prospectus supplement is first filed with the Commission on or after
the date hereof pursuant to Rule 424(b) under the Act; provided
however, that if a previously unfiled form of prospectus with an issue
date later that the issue date of the Base Prospectus is to be filed
with the Commission together with the prospectus supplement relating
to the Securities, then "Prospectus" means such new form of prospectus
(including all documents incorporated therein by reference) together
with such prospectus supplement (including all documents incorporated
therein by reference) as first filed with the Commission on or after
the date hereof pursuant to Rule 424(b) under the Act. Any reference
herein to the terms "amend," "amendment" or "supplement" with respect
to the Registration Statement or the Prospectus shall be deemed to
refer to and include the filing under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), on or after the date hereof of
any document deemed to be incorporated therein by reference.
(b) On the Effective Date, the Registration Statement
conformed in all material respects to the requirements of the Act, the
Trust Indenture Act of 1939, as amended ("Trust Indenture Act"), and
the rules and regulations of the Commission ("Rules and Regulations")
and did not include any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to
make the statements therein not misleading, (ii) on the date of this
Agreement, the Registration Statement conforms, and at the time of
filing of the Prospectus pursuant to Rule 424(b), the Prospectus and
any amendments and supplements to the Registration Statement or the
Prospectus will conform, in all material respects to the requirements
of the Act, the Trust Indenture Act and the Rules and Regulations, and
none of such documents includes any untrue statement of a material
fact or omits to state any material fact required to be stated therein
or necessary to make the statements therein not misleading and (iii)
at any time when a Prospectus relating to the Securities is required
to be delivered under the Act, the Registration Statement, the
Prospectus and any amendments or supplements to the Registration
Statement or the Prospectus will not
3
3
include any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading. The preceding sentence does not
apply to statements in or omissions from the Registration Statement or
Prospectus based upon written information furnished to the Guarantor
by any Underwriter specifically for use therein.
(c) The Guarantor has been duly incorporated and is an
existing corporation in good standing under the laws of Puerto Rico,
with power and authority (corporate and other) to own its properties
and conduct its business as described in the Prospectus; and the
Guarantor is duly qualified to do business as a foreign corporation in
good standing in all other jurisdictions in which its ownership or
lease of property or the conduct of its business requires such
qualification.
(d) The Corporation has been duly incorporated and is an
existing corporation in good standing under the laws of the State of
Delaware, with power and authority (corporate and other) to own its
properties and conduct its business as described in the Prospectus;
and the Corporation is duly qualified to do business as a foreign
corporation in good standing in all other jurisdictions in which its
ownership or lease of property or the conduct of its business requires
such qualification.
(e) Each subsidiary of the Guarantor has been duly
incorporated and is an existing corporation in good standing under the
laws of the jurisdiction of its incorporation, with power and
authority (corporate and other) to own its properties and conduct its
business as described in the Prospectus; and each subsidiary of the
Guarantor is duly qualified to do business as a foreign corporation in
good standing in all other jurisdictions in which its ownership or
lease of property or the conduct of its business requires such
qualification; all of the issued and outstanding capital stock of each
subsidiary of the Guarantor has been duly authorized and validly
issued and is fully paid and nonassessable and is owned by the
Guarantor, directly or through subsidiaries, free from liens,
encumbrances and defects.
(f) The Issuer has been duly formed and is validly existing
in good standing as a business trust under the Delaware Act with the
power and authority to own property and to conduct its business as
described in the Prospectus.
(g) All of the outstanding beneficial interests of the Issuer
have been duly authorized and validly issued and are fully paid and
nonassessable undivided beneficial interests in the assets of the
Issuer; the holders of such beneficial interests of the Issuer have no
preemptive or other rights to acquire Capital Securities or Common
Securities; and there are no restrictions on transfers of the
Securities.
(h) The Declaration has been duly authorized; and when the
Capital Securities are delivered and paid for pursuant to this
Agreement on the Closing Date, the Declaration will have been duly
executed and delivered and will constitute a valid and legally binding
instrument enforceable in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or
affecting creditors' rights and to general equity principles.
(i) Each of the Guarantee Agreement and the Additional
Guarantee Agreement has been duly authorized; and when the Capital
Securities are delivered and paid for pursuant to this Agreement on
the Closing Date, each of the Guarantee Agreement and the Additional
Guarantee Agreement will have been duly executed and delivered and
will constitute a valid and legally binding instrument enforceable in
accordance with its terms,
4
4
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.
(j) The Capital Securities have been duly authorized; when
the Capital Securities are delivered and paid for pursuant to this
Agreement on the Closing Date, such Capital Securities will (i) have
been validly issued and fully paid, (ii) represent nonassessable
undivided beneficial interests in the assets of the Issuer, (iii) be
entitled to the benefits of the Declaration and (iv) conform to the
description thereof contained in the Prospectus; the issuance of the
Capital Securities is not subject to preemptive or other similar
rights; and the holders of the Capital Securities will be entitled to
the same limitation of personal liability extended to stockholders of
private corporations for profit incorporated under the General
Corporation Law of the State of Delaware.
(k) The Common Securities have been duly authorized; when the
Common Securities are delivered and paid for on the Closing Date, such
Common Securities will (i) have been validly issued and fully paid,
(ii) represent nonassessable undivided beneficial interests in the
assets of the Issuer, (iii) be entitled to the benefits of the
Declaration and (iv) conform to the description thereof contained in
the Prospectus; the issuance of the Common Securities is not subject
to preemptive or other similar rights; the holders of the Common
Securities will be entitled to the same limitation of personal
liability extended to stockholders of private corporations for profit
incorporated under the General Corporation Law of the State of
Delaware; and at the Closing Date, all of the issued and outstanding
Common Securities of the Issuer will be directly owned by the
Corporation free and clear of any security interest, mortgage, pledge,
lien, encumbrance, claim or equity.
(l) The Indenture has been duly authorized; and when the
Debentures are delivered and paid for on the Closing Date, the
Indenture will have been duly executed and delivered, such Debenture
will have been duly executed, authenticated, issued and delivered and
will conform to the description thereof contained in the Prospectus
and the Indenture and such Debentures will constitute valid and
legally binding obligations of the Corporation, enforceable in
accordance with their terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights and
to general equity principles.
(m) The Debenture Guarantee has been duly authorized; and
when the Debentures are delivered and paid for on the Closing Date,
the Debenture Guarantee will have been duly executed and delivered and
the Debenture Guarantee will constitute valid and legally binding
obligation of the Guarantor, enforceable in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity
principles.
(n) The Expense Agreement to be entered into by the Guarantor
and the Property Trustee (the "Expense Agreement") has been duly
authorized; and when the Capital Securities are delivered and paid
for pursuant to this Agreement on the Closing Date, the Expense
Agreement will have been duly executed and delivered and will
constitute a valid and legally binding instrument enforceable in
accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights and
to general equity principles.
(o) No consent, approval, authorization, or order of, or
filing with, any governmental agency or body or any court is required
for the consummation of the transactions contemplated by the Operative
Documents
5
5
in connection with the issuance and sale of the Securities and the
Common Securities by the Guarantor, the Corporation and the Issuer.
(p) The execution, delivery and performance of the Operative
Documents, and the issuance and sale of the Securities and the Common
Securities and compliance with the terms and provisions thereof will
not result in a breach or violation of any of the terms and provisions
of, or constitute a default under, any statute, any rule, regulation
or order of any governmental agency or body or any court, domestic or
foreign, having jurisdiction over the Guarantor, the Corporation, the
Issuer or any subsidiary of the Guarantor or any of their properties,
or any agreement or instrument to which the Guarantor, the Corporation
or the Issuer or any such subsidiary is a party or by which the
Guarantor, the Corporation, the Issuer or any such subsidiary is bound
or to which any of the properties of the Guarantor, the Corporation,
the Issuer or any such subsidiary is subject, or the charter or
by-laws of the Guarantor, the Corporation or any such subsidiary or
the Declaration, and each of the Guarantor, the Corporation and the
Issuer has full power and authority to authorize, issue and sell the
Securities and the Common Securities as contemplated by the Operative
Documents.
(q) This Agreement has been duly authorized, executed and
delivered by each of the Guarantor, the Corporation and the Issuer.
(r) Except as disclosed in the Prospectus, the Guarantor and
its subsidiaries have good and marketable title to all real properties
and all other properties and assets owned by them, in each case free
from liens, encumbrances and defects that would materially affect the
value thereof or materially interfere with the use made or to be made
thereof by them; and except as disclosed in the Prospectus, the
Guarantor and its subsidiaries hold any leased real or personal
property under valid and enforceable leases with no exceptions that
would materially interfere with the use made or to be made thereof by
them.
(s) The Guarantor and its subsidiaries possess adequate
certificates, authorities or permits issued by appropriate
governmental agencies or bodies necessary to conduct the business now
operated by them and have not received any notice of proceedings
relating to the revocation or modification of any such certificate,
authority or permit that, if determined adversely to the Guarantor or
any of its subsidiaries, would individually or in the aggregate have a
material adverse effect on the Guarantor and its subsidiaries taken as
a whole.
(t) No labor dispute with the employees of the Guarantor or
any subsidiary exists or, to the knowledge of the Guarantor, is
imminent that might have a material adverse effect on the Guarantor
and its subsidiaries taken as a whole.
(u) The Guarantor and its subsidiaries own, possess or can
acquire on reasonable terms, adequate trademarks, trade names and
other rights to inventions, know-how, patents, copyrights,
confidential information and other intellectual property
(collectively, "intellectual property rights") necessary to conduct
the business now operated by them, or presently employed by them, and
have not received any notice of infringement of or conflict with
asserted rights of others with respect to any intellectual property
rights that, if determined adversely to the Guarantor or any of its
subsidiaries, would individually or in the aggregate have a material
adverse effect on the Guarantor and its subsidiaries taken as a whole.
(v) Except as disclosed in the Prospectus, there are no
pending actions, suits or proceedings against or affecting the
Guarantor or any of its subsidiaries or any of their respective
properties that, if determined adversely to the Guarantor or any of
its subsidiaries, would individually or in the aggregate have a
material adverse effect on the
6
6
condition (financial or other), business, properties or results of
operations of the Guarantor and its subsidiaries taken as a whole, or
would materially and adversely affect the ability of the Guarantor,
the Corporation or the Issuer to perform its obligations under the
Operative Documents, or which are otherwise material in the context of
the sale of the Securities; and no such actions, suits or proceedings
are threatened or, to the Guarantor's knowledge, contemplated.
(w) The financial statements included or incorporated by
reference in the Prospectus present fairly the financial position of
the Guarantor and its consolidated subsidiaries as of the dates shown
and their results of operations and cash flows for the periods shown,
and such financial statements have been prepared in conformity with
the generally accepted accounting principles in the United States
applied on a consistent basis.
(x) Except as disclosed in the Prospectus, since the date of
the latest audited financial statements included or incorporated by
reference in the Prospectus there has been no material adverse change,
nor any development or event involving a prospective material adverse
change, in the condition (financial or other), business, properties or
results of operations of the Guarantor and its subsidiaries taken as a
whole, and except as disclosed in or contemplated by the Prospectus.
(y) Neither the Issuer, the Corporation nor the Guarantor is
and, after giving effect to the offering and sale of the Securities
and the application of the proceeds thereof as described in the
Prospectus, neither of them will be, an "investment company" or a
company "controlled" by an investment company as defined in the United
States Investment Company Act of 1940 (the "Investment Company Act").
(z) The Guarantor is duly registered as a bank holding
company under the Bank Holding Company Act of 1956, as amended; the
deposit accounts of each of the Guarantor's domestic bank subsidiaries
are insured by the Bank Insurance Fund of the Federal Deposit
Insurance Corporation ("FDIC") to the fullest extent permitted by law
and the rules and regulations of the FDIC, and no proceedings for the
termination of such insurance are pending or, to the best of the
Guarantor's knowledge, threatened; and neither the Guarantor nor any
of its subsidiaries is party to or otherwise the subject of any
consent decree, memorandum of understanding, written commitment or
other written supervisory agreement with the Board of Governors of the
Federal Reserve System (the "Federal Reserve"), the Superintendent of
Banks of the State of _____, the FDIC or any other federal or state
authority or agency charged with the supervision or insurance of
depositary institutions or their holding companies.
3. Purchase, Sale and Delivery of Securities. On the basis
of the representations, warranties and agreements herein contained, but subject
to the terms and conditions herein set forth, the Issuer agrees to sell to the
Underwriters, and the Underwriters agree, severally and not jointly, to
purchase from the Issuer, at a purchase price of U.S.$1,000 per Capital
Security plus accumulated distributions, if any, from __, ____ to the Closing
Date, the respective liquidation amounts of Securities set forth opposite the
names of the Underwriters in Schedule A hereto.
The Corporation will deliver against payment of the purchase price
the Capital Securities in the form of one or more permanent global securities
in definitive form (the "Global Securities") deposited with the Property
Trustee as custodian for The Depository Trust Company ("DTC") and registered in
the name of Cede & Co., as nominee for DTC. Interests in any permanent Global
Securities will be held only in book-entry form through DTC, except in the
limited circumstances described in the Prospectus. Payment for the Capital
Securities shall be made by the Underwriters in Federal (same day) funds by
official check or checks or wire transfer to an account previously designated
7
7
to Credit Suisse First Boston Corporation ("CSFBC") by the Corporation at a
bank acceptable to CSFBC drawn to the order of the Issuer at the office of
Simpson Thacher & Bartlett, 425 Lexington Avenue, New York New York 10017, at
10:00 A.M. (New York time), on _______ __, 1997 or at such other time not
later than seven full business days thereafter as CSFBC and the Corporation
determine, such time being herein referred to as the "Closing Date," against
delivery to the Property Trustee as custodian for DTC of the Global Securities
representing all of the Capital Securities. The Global Securities will be made
available for checking at the above office at least 24 hours prior to the
Closing Date.
As compensation for the Underwriters' commitment and in view
of the fact that the proceeds of the sale of the Capital Securities and the
Common Securities will be used to purchase the Debentures, the Corporation will
pay, on the Closing Date, to each Underwriter a commission of $__.00 per
Capital Security purchased by such underwriter on the Closing Date by wire
transfer of immediately available funds to bank accounts designated by CSFBC.
4. Offering by Underwriters. It is understood that the
several Underwriters propose to offer the Securities for sale to the public as
set forth in the Prospectus.
5. Certain Agreements of the Guarantor, the Corporation and
the Issuer. Each of the Guarantor, the Corporation and the Issuer, jointly and
severally, agree with the Underwriters that:
(a) The Guarantor will file the Prospectus (or if permitted by
Rule 424(c) under the Act, the prospectus supplement relating to the
Securities which forms a part thereof) with the Commission pursuant to
and in accordance with Rule 424(b)(2) (or, if applicable and if
consented to by you, subparagraph (5)) within the time periods
prescribed. The Guarantor will advise you promptly of any such filing
pursuant to Rule 424(b).
(b) The Guarantor will advise you promptly of any proposal to
amend or supplement the Registration Statement or the Prospectus
(other than a supplement relating solely to an offering of securities
other than the Securities) and will not effect such amendment or
supplementation without your consent; and the Guarantor will also
advise you promptly of the (other than a supplement relating solely to
an offering of securities other than the Securities) filing and
effectiveness of any amendment or supplementation of the Registration
Statement or the Prospectus and of the institution by the Commission
of any stop order proceedings in respect of the Registration Statement
and will use its best efforts to prevent the issuance of any such stop
order and to obtain as soon as possible its lifting, if issued.
(c) If at any time when a prospectus relating to the
Securities is required to be delivered under the Act, any event occurs
as a result of which the Prospectus as then amended or supplemented
would include an untrue statement of a material fact or omit to state
any material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading,
or if it is necessary at any time to amend the Prospectus to comply
with the Act, the Guarantor promptly will prepare and file with the
Commission an amendment or supplement which will correct such
statement or omission or an amendment which will effect such
compliance. Neither your consent to, nor your delivery of, any such
amendment or supplement shall constitute a waiver of any of the
conditions set forth in Section 6.
(d) As soon as practicable, but not later than the
Availability Date (as defined below), the Guarantor will make
generally available to its security holders an earnings statement
covering a period of at least 12 months beginning after the Effective
Date which will satisfy the provisions of Section 11(a) of the Act.
For the purpose of the
8
8
preceding sentence, "Availability Date" means the 45th day after the
end of the fourth fiscal quarter following the fiscal quarter that
includes the Closing Date, except that, if such fourth fiscal quarter
is the last quarter of the Guarantor's fiscal year, "Availability
Date" means the 90th day after the end of such fourth fiscal quarter.
(e) The Guarantor will furnish to each of the Underwriters
copies of the Registration Statement (of which will be signed and will
include all exhibits), each related preliminary prospectus, the
Prospectus and all amendments and supplements to such documents, in
each case in such quantities as CSFBC requests.
(f) The Guarantor will arrange for the qualification of the
Securities for sale and the determination of their eligibility for
investment under the laws of such jurisdictions as CSFBC designates
and will continue such qualifications in effect so long as required
for the distribution.
(g) During the period of five years hereafter, the Guarantor
will furnish to CSFBC, as soon as practicable after the end of each
fiscal year, a copy of its annual report to stockholders for such
year; and the Guarantor will furnish to CSFBC (i) as soon as
available, a copy of each report and any definitive proxy statement of
the Guarantor filed with the Commission under the Exchange Act or
mailed to stockholders, and (ii) from time to time, such other
information concerning the Guarantor or the Corporation as CSFBC may
reasonably request.
(h) The Corporation will pay all expenses incident to the
performance of its obligations under this Agreement and will reimburse
the Underwriters for any expenses (including fees and disbursements of
counsel) incurred by them in connection with qualification of the
Securities for sale and determination of their eligibility for
investment under the laws of such jurisdictions as CSFBC designates
and the printing of memoranda relating thereto, for any fees charged
by investment rating agencies for the rating of the Securities, for
the filing fee incident to, and the fees and disbursements of counsel
to the Underwriters in connection with, the review by the National
Association of Securities Dealers, Inc. of the Securities, for any
travel expenses of the Corporation's officers and employees and any
other expenses of the Corporation in connection with attending or
hosting meetings with prospective purchasers of the Securities and for
expenses incurred in distributing preliminary prospectuses and the
Prospectus (including any amendments and supplements thereto) to the
Underwriters.
(i) Neither the Guarantor nor the Corporation will offer,
sell, contract to sell, pledge or otherwise dispose of, directly or
indirectly, or file with the Commission a registration statement under
the Act relating to debt securities issued or guaranteed by the
Corporation or the Guarantor and having a maturity of more than one
year from the date of issue, or publicly disclose the intention to
make any such offer, sale, pledge, disposal or filing, without the
prior written consent of CSFBC for a period beginning at the date of
this Agreement and ending at the later of the Closing Date or the
lifting of trading restrictions by the Underwriters.
6. Conditions of the Obligation of the Underwriters. The
obligation of the Underwriters to purchase and pay for the Capital Securities
will be subject to the accuracy of the representations and warranties on the
part of the Guarantor, the Corporation and the Issuer herein, to the accuracy
of the statements of officers of the Guarantor, the Corporation and the Issuer
made pursuant to the provisions hereof, to the performance by the Guarantor,
the Corporation and the Issuer of their respective obligations hereunder and to
the following additional conditions precedent:
9
9
(a) CSFBC shall have received a letter, dated the date of
delivery thereof, of Price Waterhouse confirming that they are
independent public accountants within the meaning of the Act and the
applicable published Rules and Regulations thereunder and stating to
the effect that:
(i) In their opinion the financial statements
examined by them and included in the Registration Statements
comply as to form in all material respects with the applicable
accounting requirements of the Act and the related published
Rules and Regulations;
(ii) they have performed the procedures specified
by the American Institute of Certified Public Accountants for a
review of interim financial information as described in
Statement of Auditing Standards No. 71, Interim Financial
Information, on the unaudited financial statements included in
the Registration Statements;
(iii) on the basis of the review referred to in
clause (ii) above, a reading of the latest available interim
financial statements of the Guarantor, inquiries of officials
of the Guarantor who have responsibility for financial and
accounting matters and other specified procedures, nothing
came to their attention that caused them to believe that:
(A) the unaudited financial statements
included in the Registration Statements do not comply
as to form in all material respects with the
applicable accounting requirements of the Securities
Act, the Exchange Act and the related published Rules
and Regulations or any material modifications should
be made to such unaudited financial statements for
them to be in conformity with generally accepted
accounting principles;
(B) at the date of the latest available
balance sheet read by such accountants, or at a
subsequent specified date not more than three days
prior to the date of this Agreement, there was any
decrease in the capital stock or any increase in
long-term debt of the Guarantor and its consolidated
subsidiaries or, at the date of the latest available
balance sheet read by such accountants, there was any
decrease in consolidated total assets, as compared
with amounts shown on the latest balance sheet
included in the Prospectus; or
(C) for the period from the date of the
latest income statement included in the Prospectus to
the closing date of the latest available income
statement read by such accountants and to a
subsequent specified date not more than three days
prior to the date of this Agreement there were any
decreases, as compared with the corresponding periods
of the previous year, in consolidated revenues, net
interest income, consolidated net income or in the
ratio of earnings to fixed charges and preferred
stock dividends combined;
except in all cases set forth in clauses (B) and (C) above for
changes, increases or decreases which the Prospectus disclose
have occurred or may occur or which are described in such
letter; and
(iv) they have compared specified dollar amounts
(or percentages derived from such dollar amounts) and other
financial information contained in the Registration Statements
(in each case to the extent that such dollar amounts,
percentages and other financial information are derived from
the general accounting records of the Guarantor and its
subsidiaries subject to the
10
10
internal controls of the Guarantor's accounting system or are
derived directly from such records by analysis or computation)
with the results obtained from inquiries, a reading of such
general accounting records and other procedures specified in
such letter and have found such dollar amounts, percentages
and other financial information to be in agreement with such
results, except as otherwise specified in such letter.
For purposes of this subsection all financial statements and schedules
included in material incorporated by reference into the Prospectus shall be
deemed included in the Registration Statement for purposes of this subsection.
(b) Prior to the Closing Date, no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been instituted or, to the knowledge of
the Guarantor, the Corporation or CSFBC, shall be contemplated by the
Commission.
(c) Subsequent to the execution and delivery of this
Agreement, there shall not have occurred (i) any change, or any development or
event involving a prospective change, in the condition (financial or other),
business, properties or results of operations of the Guarantor or its
subsidiaries which, in the judgment of a majority in interest of the
Underwriters, is material and adverse and makes it impractical or inadvisable
to proceed with completion of the public offering or the sale of and payment
for the Securities; (ii) any downgrading in the rating of any debt securities
of the Guarantor by any "nationally recognized statistical rating organization"
(as defined for purposes of Rule 436(g) under the Act), or any public
announcement that any such organization has under surveillance or review its
rating of any debt securities of the Guarantor (other than an announcement with
positive implications of a possible upgrading, and no implication of a possible
downgrading, of such rating); (iii) any suspension or limitation of trading in
securities generally on the New York Stock Exchange, or any setting of minimum
prices for trading on such exchange, or any suspension of trading of any
securities of the Guarantor on any exchange or in the over-the-counter market;
(iv) any banking moratorium declared by U.S. Federal, Puerto Rico or New York
authorities; or (v) any outbreak or escalation of major hostilities in which
the United States is involved, any declaration of war by Congress or any other
substantial national or international calamity or emergency if, in the judgment
of a majority in interest of the Underwriters, the effect of any such outbreak,
escalation, declaration, calamity or emergency makes it impractical or
inadvisable to proceed with completion of the public offering or the sale of
and payment for the Securities.
(d) CSFBC shall have received an opinion, dated the Closing
Date, of Sullivan & Cromwell, counsel for the Guarantor, in form and
substance reasonably satisfactory to counsel to the Underwriters, to
the effect that:
(i) The Guarantor has been duly incorporated and
is an existing corporation in good standing under the laws of
Puerto Rico, with corporate power and authority to own its
properties and conduct its business as described in the
Prospectus; and the Corporation is duly qualified to do
business as a foreign corporation in good standing in all
other jurisdictions in which its ownership or lease of
property or the conduct of its business requires such
qualification;
(ii) The Corporation has been duly incorporated and
is an existing corporation in good standing under the laws of
the State of Delaware, with corporate power and authority to
own its properties and conduct its business as described in
the Prospectus; and the Corporation is duly qualified to do
business as a foreign corporation in good standing in all other
11
11
jurisdictions in which its ownership or lease of property or
the conduct of its business requires such qualification;
(iii) The Indenture has been duly authorized,
executed and delivered; the Debentures have been duly
authorized, executed, authenticated, issued and delivered and
conform to the description thereof contained in the
Prospectus; and the Indenture and the Debentures constitute
valid and legally binding obligations of the Corporation
enforceable in accordance with their terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating
to or affecting creditors' rights and to general equity
principles;
(iv) The Debenture Guarantee has been duly
authorized, executed and delivered and constitutes valid and
legally binding obligation of the Guarantor enforceable in
accordance with their terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium
and similar laws of general applicability relating to or
affecting creditors' rights and to general equity principles;
(v) Each of the Declaration, the Guarantee
Agreement, the Expense Agreement and the Additional Guarantee
Agreement has been duly authorized, executed and delivered,
and each of the Guarantee Agreement, the Expense Agreement
and the Additional Guarantee Agreement constitutes a valid and
legally binding obligation of the Corporation and the
Guarantor, respectively, enforceable in accordance with its
terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and
to general equity principles.
(vi) Neither the Guarantor, the Corporation nor the
Issuer is, and after giving effect to the offering and sale of
the Securities and the application of the proceeds thereof as
described in the Prospectus will be, an "investment company"
or a company "controlled" by an investment company as defined
in the Investment Company Act.
(vii) No consent, approval, authorization or order
of, or filing with, any governmental agency or body or any
court is required for the consummation of the transactions
contemplated by the Operative Documents in connection with the
issuance or sale of the Securities by the Guarantor, the
Corporation and the Issuer, except such as may be required
under state securities laws;
(viii) The execution, delivery and performance of
Operative Documents and the issuance and sale of the
Securities and compliance with the terms and provisions
thereof will not result in a breach or violation of any of the
terms and provisions of, or constitute a default under, any
statute, any rule, regulation or order of any governmental
agency or body or any court having jurisdiction over the
Guarantor or any subsidiary of the Guarantor or any of their
properties, or any agreement or instrument known to such
counsel to which the Guarantor or any such subsidiary is a
party or by which the Guarantor or any such subsidiary is
bound or to which any of the properties of the Guarantor or
any such subsidiary is subject, or the charter or by-laws of
the Guarantor or any such subsidiary, and the Guarantor, the
Corporation and the Issuer has full power and authority to
authorize, issue and sell the Securities as contemplated by
this Agreement;
(ix) The Registration Statement has become
effective under the Act, the Prospectus was filed with the
Commission pursuant to the subparagraph of Rule 424(b)
specified in such opinion on the
12
12
date specified therein, and, to the best of the knowledge of
such counsel, no stop order suspending the effectiveness of
the Registration Statement or of any part thereof has been
issued and no proceedings for that purpose have been
instituted or are pending or contemplated under the Act;
(x) The Registration Statement, as of its
effective date, and the Prospectus, and any amendment or
supplement thereto as of its date, complied as to form in all
material respects with the requirements of the Act, the Trust
Indenture Act and the Rules and Regulations; the Exchange Act
filings incorporated by reference or deemed to be incorporated
by reference in the Prospectus complied as to form when filed
in all material respects with the requirements of the Exchange
Act and the applicable rules and regulations of the Commission
thereunder.
(xi) Such counsel have no reason to believe that
the Registration Statement, as of its effective date, or the
Prospectus, or any amendment or supplement thereto, as of its
date or as of the Closing Date, contained any untrue statement
of a material fact or omitted to state any material fact
required to be stated therein or necessary to make the
statements therein not misleading; the descriptions in the
Registration Statement and Prospectus, and any amendment or
supplement thereto, of statutes, legal and governmental
proceedings and contracts and other documents are accurate and
fairly present the information required to be shown; and such
counsel do not know of any legal or governmental proceedings
required to be described in the Prospectus which are not
described as required or of any contracts or documents of a
character required to be described in the Registration
Statement or Prospectus or to be filed as exhibits to the
Registration Statement which are not described and filed as
required; it being understood in all events that such counsel
need express no opinion as to the financial statements or
other financial data contained in the Registration Statement
or the Prospectus;
(xii) This Agreement has been duly authorized,
executed and delivered by the Guarantor, the Corporation and
the Issuer;
(xiii) To such counsel's knowledge, there are no
pending actions, suits or proceedings against or affecting the
Guarantor, any of its subsidiaries or any of their respective
properties that, if determined adversely to the Guarantor or
any of its subsidiaries, would individually or in the
aggregate have a material adverse effect on the condition
(financial or other), business, properties or results of
operations of the Guarantor and its subsidiaries taken as a
whole, or would materially and adversely affect the ability of
the Guarantor, the Corporation or the Issuer to perform their
respective obligations under the Operative Documents, or which
are otherwise material in the context of the sale of the
Securities; and no such actions, suits or proceedings are
threatened or, to such counsel's knowledge, contemplated; and
(xiv) The Guarantor is duly registered as a bank
holding company under the Bank Holding Company Act of 1956, as
amended; the deposit accounts of each of the Guarantor's
domestic bank subsidiaries are insured by the Bank Insurance
Fund of the FDIC to the fullest extent permitted by law and
the rules and regulations of the FDIC, and no proceedings for
the termination of such insurance are pending or, to such
counsel's knowledge, threatened; and neither the Guarantor nor
any of its subsidiaries is party to or otherwise the subject
of any consent decree, memorandum of understanding, or written
agreement as defined in the Financial
13
13
Institutions Reform, Recovery and Enforcement Act of 1989 (12
U.S.C. 1818(e)(1)(A)(i)).
(e) CSFBC shall have received an opinion, dated the Closing
Date, of [ ], counsel to the Delaware Trustee, in form and
substance reasonably satisfactory to counsel to the Underwriters, to the effect
that:
(i) First Chicago Delaware Inc., a Delaware corporation,
has been duly incorporated and is validly existing in good standing as
a corporation under the laws of the State of Delaware and has the
corporate power to act as Trustee of a Delaware business trust under
the laws of the State of Delaware, 12 Del. Section 3801 et seq.
(f) CSFBC shall have received an opinion, dated the Closing
Date, of [ ], counsel to The First National Bank of Chicago, in
form and substance reasonably satisfactory to counsel to the Underwriters, to
the effect that:
(i) The First National Bank of Chicago is a banking
corporation duly incorporated and validly existing under the laws of
the State of New York.
(ii) The execution, delivery and performance by The First
National Bank of Chicago, as Property Trustee of the Issuer, of the
Declaration, the execution, delivery and performance by The First
National Bank of Chicago, as Guarantee Trustee, of the Guarantee
Agreement and the Additional Guarantee Agreement and the execution,
delivery and performance by The First National Bank of Chicago, as the
Debenture Trustee, of the Indenture and the Debenture Guarantee
Agreement have been duly authorized by all necessary corporate action
on the part of the Property Trustee, the Guarantee Trustee and the
Debenture Trustee, respectively. The Declaration, the Guarantee
Agreement, the Additional Guarantee Agreement, the Indenture and the
Debenture Guarantee Agreement have been duly executed and delivered by
the Property Trustee, the Guarantee Trustee and the Debenture Trustee,
respectively, and constitute the legal, valid and binding obligations
of the Property Trustee, the Guarantee Trustee and the Debenture
Trustee, respectively, enforceable against the Property Trustee, the
Guarantee Trustee and the Debenture Trustee, respectively, in
accordance with their terms, except as enforcement thereof may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium, liquidation, receivership or similar laws relating to the
enforcement of creditors' rights generally, and by general principles
of equity.
(iii) The execution, delivery and performance of the
Declaration, the Guarantee Agreement, the Additional Guarantee
Agreement, the Indenture and the Debenture Guarantee Agreement by the
Property Trustee, the Guarantee Trustee and the Debenture Trustee,
respectively, do not conflict with or constitute a breach of the
applicable organizational documents or by-laws of the Property
Trustee, the Guarantee Trustee or the Debenture Trustee, respectively,
or the terms of any indenture or other agreement or instrument known
to such counsel and to which the Property Trustee, the Guarantee
Trustee or the Debenture Trustee, respectively, is a party or is bound
or any judgment, order or decree known to such counsel to be
applicable to the Property Trustee, the Guarantee Trustee or the
Debenture Trustee, respectively, of any court, regulatory body,
administrative agency, governmental body or arbitrator having
jurisdiction over the Property Trustee, the Guarantee Trustee or the
Debenture Trustee, respectively.
(iv) No consent, approval or authorization of, or
registration with or notice to, any federal or New York State banking
authority is required for the execution, delivery or performance by
the Property Trustee, the Guarantee Trustee or the Debenture Trustee
of the Declaration, the Guarantee Agreement, the Additional Guarantee
14
14
Agreement, the Indenture or the Debenture Guarantee Agreement,
respectively.
(g) CSFBC shall have received an opinion, dated the Closing
Date, of Sullivan & Cromwell, special United States tax counsel to the
Guarantor and the Issuer, in form and substance reasonably satisfactory to
counsel for the Underwriters, to the effect that:
(i) Subject to the qualifications set forth therein, the
statements made in the Prospectus under the caption "Certain United
States Federal Income Tax Consequences" fairly present in all material
respects the principal United States federal income tax consequences
of an investment in the Capital Securities.
(h) CSFBC shall have received an opinion, dated the Closing
Date, of _____________, special counsel to the Guarantor and special counsel to
the Issuer, in form and substance reasonably satisfactory to counsel for the
Underwriters, to the effect set forth below.
(i) The Issuer has been duly created and is validly
existing in good standing as a business trust under the Delaware Act,
and all filings required under the laws of the State of Delaware with
respect to the creation and valid existence of the Issuer as a
business trust have been made.
(ii) Under the Delaware Act and the Declaration, the
Issuer has the trust power and authority to own its property and
conduct its business, all as described in the Prospectus.
(iii) The Declaration constitutes a valid and binding
obligation of the Guarantor, the Corporation and the Trustees, and is
enforceable against the Guarantor, the Corporation and the Trustees in
accordance with its terms, subject, as to enforcement, to the effect
upon the Declaration of (i) bankruptcy, insolvency, moratorium,
receivership, reorganization, liquidation, fraudulent transfer and
other similar laws relating to the rights and remedies of creditors
generally, (ii) principles of equity, including applicable law
relating to fiduciary duties (regardless of whether considered and
applied in a proceeding in equity or at law), and (iii) the effect of
applicable public policy on the enforceability of provisions relating
to indemnification or contribution.
(iv) Under the Delaware Act and the Declaration, the Issuer
has the trust power and authority (i) to execute and deliver, and to
perform its obligations under, this Agreement and (ii) to issue and
perform its obligations under the Capital Securities and the Common
Securities.
(v) Under the Delaware Act and the Declaration, the
execution and delivery by the Issuer of this Agreement, and the
performance by the Issuer of its obligations hereunder, have been duly
authorized by all necessary trust action on the part of the Issuer.
(vi) The Capital Securities have been duly authorized by
the Declaration and are duly and validly issued and, subject to the
qualifications set forth herein, fully paid and nonassessable
undivided beneficial interests in the assets of the Issuer and are
entitled to the benefits of the Declaration. The holders of the
Capital Securities, as beneficial owners of the Issuer, will be
entitled to the same limitation of personal liability extended to
stockholders of private corporations for profit organized under the
General Corporation Law of the State of Delaware. Such counsel may
note that the holders of Capital Securities may be obligated, pursuant
to the Declaration, (i) to provide indemnity and/or security in
connection with and pay taxes or governmental charges arising from
transfers or exchanges of certificates for Capital Securities and the
issuance of replacement certificates for Capital
15
15
Securities, and (ii) to provide security or indemnity in connection
with requests of or directions to the Property Trustee to exercise its
rights and powers under the Declaration.
(vii) Under the Delaware Act and the Declaration, the
issuance of the Capital Securities is not subject to preemptive rights.
(viii) The issuance and sale by the Issuer of the Capital
Securities, the execution, delivery and performance by the Issuer of
this Agreement, the consummation by the Issuer of the transactions
contemplated hereby and compliance by the Issuer with its obligations
hereunder, and the performance by the Corporation, as sponsor, of its
obligations under the Declaration (A) do not violate (i) any of the
provisions of the certificate of trust of the Issuer or the
Declaration or (ii) any applicable Delaware law or administrative
regulation (except that such counsel need express no opinion with
respect to the securities laws of the State of Delaware) and (B) do
not require any consent, approval, license, authorization or
validation of, or filing or registration with, any Delaware
legislative, administrative or regulatory body under the laws or
administrative regulations of the State of Delaware (except that such
counsel need express no opinion with respect to the securities laws of
the state of Delaware).
(ix) Assuming that the Issuer derives no income from or in
connection with sources within the State of Delaware and has no
assets, activities (other than maintaining the Delaware Trustee and
the filing of documents with the Secretary of State of the State of
Delaware) or employees in the State of Delaware, the holders of the
Capital Securities (other than those holders of Capital Securities who
reside or are domiciled in the State of Delaware) will have no
liability for income taxes imposed by the State of Delaware solely as
a result of their participation in the Issuer, and the Issuer will not
be liable for any income tax imposed by the State of Delaware.
(i) CSFBC shall have received from Simpson Thacher &
Bartlett, counsel for the Underwriters, such opinion or opinions, dated such
Closing Date, with respect to the incorporation of the Guarantor and the
Corporation, the validity of the Securities delivered on such Closing Date, the
Registration Statements, the Prospectus and other related matters as the
Underwriters may require, and the Guarantor and the Corporation shall have
furnished to such counsel such documents as they request for the purpose of
enabling them to pass upon such matters.
(j) Each Underwriter shall have received a certificate, dated
the Closing Date, of the President or any Vice President and a principal
financial or accounting officer of the Guarantor in which such officers, to the
best of their knowledge after reasonable investigation, shall state that the
representations and warranties of the Guarantor, the Corporation and the Issuer
in this Agreement are true and correct, that each of the Guarantor, the
Corporation and the Issuer has complied with all agreements and satisfied all
conditions on its part to be performed or satisfied hereunder at or prior to
the Closing Date, and that, subsequent to the date of the most recent financial
statements included in or incorporated by reference in the Prospectus there has
been no material adverse change, nor any development or event involving a
prospective material adverse change, in the condition (financial or other),
business, properties or results of operations of the Guarantor and its
subsidiaries taken as a whole except as set forth in or contemplated by the
Prospectus or as described in such certificate.
(k) CSFBC shall have received a letter, dated the Closing
Date, of Price Waterhouse which meets the requirements of subsection (a) of
this Section, except that the specified date referred to in such subsection
will be a date not more than three days prior to the Closing Date for the
purposes of this subsection.
16
16
The Guarantor will furnish the Underwriter with such conformed copies of such
opinions, certificates, letters and documents as the Underwriters reasonably
request.
7. Indemnification and Contribution. (a) Each of the
Guarantor, the Corporation and the Issuer will, jointly and severally,
indemnify and hold harmless each Underwriter against any losses, claims,
damages or liabilities, joint or several, to which such Underwriter may become
subject, under the Securities Act or the Exchange Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in any Registration Statement, the Prospectus,
or any amendment or supplement thereto, or any related preliminary prospectus
or preliminary prospectus supplement, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
will reimburse each Underwriter for any legal or other expenses reasonably
incurred by such Underwriter in connection with investigating or defending any
such loss, claim, damage, liability or action as such expenses are incurred;
provided, however, that neither the Guarantor, the Corporation nor the Issuer
will be liable in any such case to the extent that any such loss, claim, damage
or liability arises out of or is based upon an untrue statement or alleged
untrue statement in or omission or alleged omission from any of such documents
in reliance upon and in conformity with written information furnished to the
Guarantor by any Underwriter specifically for use therein, it being understood
and agreed that the only such information furnished by any Underwriter consists
of the information described as such in subsection (b) below.
(b) Each Underwriter will severally and not jointly indemnify
and hold harmless each of the Guarantor, the Corporation and the Issuer against
any losses, claims, damages or liabilities to which any of them may become
subject, under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
any Registration Statement, the Prospectus, or any amendment or supplement
thereto, or any related preliminary prospectus or preliminary prospectus
supplement, or arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with written information furnished to the Guarantor by such
Underwriter specifically for use therein, and will reimburse any legal or other
expenses reasonably incurred by any of them in connection with investigating or
defending any such loss, claim, damage, liability or action as such expenses
are incurred, it being understood and agreed that the only such information
furnished by any Underwriter consists of the following information in the
Prospectus furnished on behalf of each Underwriter: the last paragraph at the
bottom of the cover page concerning the terms of the offering by the
Underwriters, the legend concerning over-allotments, stabilizing and passive
market making on the inside front cover page, the concession and reallowance
figures appearing in the paragraph under the caption "Underwriting."
(c) Promptly after receipt by an indemnified party under this
Section of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying
party under subsection (a) or (b) above, notify the indemnifying party of the
commencement thereof, but the omission to so notify the indemnifying party will
not relieve it from any liability which it may have to any indemnified party
otherwise than under subsection (a) or (b) above. In case any such action is
brought against any indemnified party and it notifies the indemnifying party of
the commencement thereof, the indemnifying party will be entitled to
participate therein and, to the extent that it may wish, jointly
17
17
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party (who shall not,
except with the consent of the indemnified party, be counsel to the
indemnifying party), and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under this
Section for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened action in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such indemnified
party unless such settlement includes an unconditional release of such
indemnified party from all liability on any claims that are the subject matter
of such action.
(d) If the indemnification provided for in this Section is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of the losses,
claims, damages or liabilities referred to in subsection (a) or (b) above (i)
in such proportion as is appropriate to reflect the relative benefits received
by the Guarantor, the Corporation and the Issuer on the one hand and the
Underwriters on the other from the offering of the Securities or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Guarantor,
the Corporation and the Issuer on the one hand and the Underwriters on the
other in connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities as well as any other relevant equitable
considerations. The relative benefits received by the Guarantor, the
Corporation and the Issuer on the one hand and the Underwriters on the other
shall be deemed to be in the same proportion as the total net proceeds from the
offering (before deducting expenses) received by the Guarantor bear to the
total underwriting discounts and commissions received by the Underwriters from
the Guarantor under this Agreement. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Guarantor, the
Corporation, the Issuer or the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
untrue statement or omission. The amount paid by an indemnified party as a
result of the losses, claims, damages or liabilities referred to in the first
sentence of this subsection (d) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with any
action or claim which is the subject of this subsection (d). Notwithstanding
the provisions of this subsection (d), no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at which
the Securities underwritten by it and distributed to the public were offered to
the public exceeds the amount of any damages which such Underwriter has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations in this subsection (d) to
contribute are several in proportion to their respective underwriting
obligations and not joint.
(e) The obligations of the Guarantor, the Corporation and the
Issuer under this Section shall be in addition to any liability which they may
otherwise have and shall extend, upon the same terms and conditions, to each
person, if any, who controls any Underwriter within the meaning of the Act; and
the obligations of the Underwriters under this Section shall be in addition to
any liability which the respective Underwriter may otherwise have and shall
extend, upon the same terms and conditions, to each director of the
18
18
Guarantor and the Corporation, to each officer of the Guarantor or the
Corporation who has signed a Registration Statement and to each person, if any,
who controls the Guarantor, the Corporation or the Issuer within the meaning of
the Act.
8. Default of Underwriters. If any Underwriter or
Underwriters default in their obligations to purchase Securities hereunder and
the aggregate liquidation amount of the Securities that such defaulting
Underwriter or Underwriters agreed but failed to purchase does not exceed 10%
of the total liquidation amount of the Securities, you may make arrangements
satisfactory to the Guarantor for the purchase of such Securities by other
persons, including any of the Underwriters, but if no such arrangements are
made by the Closing Date, the non-defaulting Underwriters shall be obligated
severally, in proportion to their respective commitments hereunder, to purchase
the Securities that such defaulting Underwriters agreed but failed to purchase.
If any Underwriter or Underwriters so default and the aggregate principal
amount of the Securities with respect to which such default or defaults occur
exceeds 10% of the total principal amount of the Securities and arrangements
satisfactory to you and the Guarantor for the purchase of such Securities by
other persons are not made within 36 hours after such default, this Agreement
will terminate without liability on the part of any nondefaulting Underwriter,
the Guarantor, the Corporation or the Issuer, except as provided in Section 9.
As used in this Agreement, the term "Underwriter" includes any person
substituted for an Underwriter under this Section. Nothing herein will relieve
a defaulting Underwriter from liability for its default.
9. Survival of Certain Representations and Obligations. The
respective indemnities, agreements, representations, warranties and other
statements of the Guarantor, the Corporation or the Issuer or their respective
officers and of the several Underwriters set forth in or made pursuant to this
Agreement will remain in full force and effect, regardless of any
investigation, or statement as to the results thereof, made by or on behalf of
any Underwriter, the Guarantor, the Corporation, the Issuer or any of their
respective representatives, officers or directors or any controlling person,
and will survive delivery of and payment for the Securities. If this Agreement
is terminated pursuant to Section 8 or for any reason the purchase of the
Securities by the Underwriters is not consummated, the Guarantor shall remain
responsible for the expenses to be paid or reimbursed by it pursuant to Section
5 and the respective obligations of the Guarantor, the Corporation, the Issuer
and the Underwriters pursuant to Section 7 shall remain in effect. If the
purchase of the Securities by the Underwriters is not consummated for any
reason other than solely because of the termination of this Agreement pursuant
to Section 8 or the occurrence of any event specified in clause (iii), (iv) or
(v) of Section 6(c), the Guarantor will reimburse the Underwriters for all out-
of-pocket expenses (including fees and disbursements of counsel) incurred by
them in connection with the offering of the Securities.
10. Notices. All communications hereunder will be in writing
and, if sent to the Underwriters, will be mailed, delivered or telegraphed and
confirmed to them at their addresses furnished to the Guarantor in writing for
the purpose of communications hereunder or, if sent to the Guarantor, will be
mailed, delivered or telegraphed and confirmed to it at _______ .
11. Representation of Underwriters. Any action under this
Agreement taken by you jointly or by CSFBC will be binding upon all the
Underwriters.
12. Successors. This Agreement will inure to the benefit of
and be binding upon the parties hereto and their respective successors and the
controlling persons referred to in Section 7, and no other person will have any
right or obligation hereunder.
19
19
13. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original, but
all such counterparts shall together constitute one and the same Agreement.
14. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD
TO PRINCIPLES OF CONFLICTS OF LAWS.
The Guarantor hereby submits to the non-exclusive jurisdiction
of the Federal and state courts in the Borough of Manhattan in The City of New
York in any suit or proceeding arising out of or relating to this Agreement or
the transactions contemplated hereby.
If the foregoing is in accordance with your understanding of
our agreement, kindly sign and return to the Guarantor one of the counterparts
hereof, whereupon it will become a binding agreement among the Guarantor, the
Corporation, the Issuer and the several Underwriters in accordance with its
terms.
Very truly yours,
BANPONCE CORPORATION
By:
-------------------------------------
[Insert title]
BANPONCE FINANCIAL CORP.
By:
-------------------------------------
[Insert title]
BANPONCE TRUST I
By:
-------------------------------------
[Insert title]
The foregoing Underwriting Agreement
is hereby confirmed and accepted
as of the date first above
written.
CREDIT SUISSE FIRST BOSTON
CORPORATION
By
--------------------------------
[Insert title]
20
SCHEDULE A
UNDERWRITER [PRINCIPAL
----------- AMOUNT OF]
[NUMBER OF]
FIRM SECURITIES
---------------
Credit Suisse First Boston Corporation ..................... [$]
---------------
Total ..................................... [$]
===============