1
EXHIBIT 10.9
STOCK DEFERMENT PLAN FOR DIRECTORS
OF BANPONCE CORPORATION AND BANCO POPULAR DE PUERTO RICO
EXECUTIVE SUMMARY
1. THE PLAN. Stock Deferment Plan would implement the purchase of
BanPonce Shares by each outside director. Each director who wishes to
participate would sign an individual agreement with the Bank or
BanPonce, as applicable.
2. PURCHASE OF SHARES. Each director may defer the $12,000 Annual
Retainer, plus the Additional Contribution of $0.25 per dollar, which
amounts shall be applied to the purchase of Shares by an agent.
3. EFFECTIVE DATE. August 15, 1996 (directors may defer unused portion
of this year's retainer).
4. DEFERRAL ELECTION. After this year, the decision to defer any part of
the Annual Retainer must be made prior to April 30 (or the
Stockholders' Meeting), and the annual election may not be revoked
during the Plan Year.
5. VOTING RIGHTS; DIVIDENDS. Directors may vote and receive dividends
payable on the Shares in the Plan. (The dividends may be reinvested
under the Dividend Reinvestment Plan.)
6. TRANSFER RESTRICTIONS. The directors may not sell, transfer or
pledge the Shares while they remain on the Board. The Shares will be
held in custody by Banco Popular until the director is no longer on
the Board, and thereafter transfer restrictions will not apply.
7. FORFEITURE. If a director is removed from office for cause by
appropriate corporate action or under authority of law, he or she will
forfeit all of the Shares acquired with the Additional Contribution,
and must sell the Retainer Shares to BanPonce at the lower of cost or
market value.
8. TAX TREATMENT: The Plan is intended to allow directors to defer
recognition of income on amounts applied for the purchase of Shares,
until the director receives the Shares without the transfer
restrictions. The transfer restrictions (at paragraph 6) and the
forfeiture provisions (at paragraph 7) are intended to strengthen the
argument for deferral of income recognition.
-1-
2
EXHIBIT 10.9 (CONT.)
AGREEMENT
(STOCK DEFERMENT PLAN)
AGREEMENT made as of August 15, 1996 by and between BANCO POPULAR DE
PUERTO RICO, a banking corporation organized under the laws of the Commonwealth
of Puerto Rico (hereafter the "Corporation"), and JUAN A. ALBORS, a director of
the Corporation (hereinafter the "Director").
WITNESSETH
WHEREAS, the Director has served as a director of the Corporation and
the Corporation has derived substantial benefits as a result of his work;
WHEREAS, the Corporation has adopted a compensation program for its
outside directors pursuant to which, among other things, its outside directors
will be paid an annual retainer on a quarterly basis (the "Annual Retainer"),
and the directors have the option on a yearly basis to elect to defer all or
part of the Annual Retainer for the purchase of shares of common stock of
BanPonce Corporation ("Shares");
WHEREAS, the Corporation has established the "Stock Deferment Plan"
(the "Plan") in order to implement the stock deferment option under its
compensation program;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, and intending to be legally bound hereby, the parties hereby
agree as follows:
ARTICLE I
PARTICIPATION IN THE PLAN
1.1 The Director must execute and deliver an election statement (a
"Statement") on a yearly basis to the Corporation, substantially in the form of
Exhibit A hereto or in such form acceptable to the Corporation, pursuant to
which the Director shall designate the amount of the Annual Retainer which
shall be deferred for the purchase of Shares. Said Statement must be received
by the Corporation no later than April 15 of each year (the "Election
Deadline") and shall remain in effect until April 30 of the following year
(each such period, a "Plan Year"); provided, however, that for the current Plan
Year 1996-97, the Statement must be received by the Corporation on or prior to
August 15, 1996, and will be applicable for the portion of the Annual Retainer
which as of such date shall not have been paid or disbursed in favor of the
Director.
-2-
3
EXHIBIT 10.9 (CONT.)
1.2 The Statement made for any Plan Year may not revoked during
such Plan Year, and shall also govern the deferral of all or any designated
portion of the Annual Retainer during the following Plan Year unless the
Director delivers a Statement to the Corporation before the Election Deadline
for the next Plan Year.
ARTICLE II
PURCHASE OF COMMON SHARES AND CONDITIONS AFFECTING SUCH SHARES
2.1 On a quarterly basis the Corporation will apply the portion of
the Annual Retainer that the Director has elected to have deferred under the
Plan (the "Deferred Contribution") towards the purchase of Shares on behalf of
the Director (the "Retainer Shares").
2.2 On a quarterly basis the Corporation will also contribute and
apply an additional amount equal to 25 cents for every dollar of the Deferred
Contribution (the "Additional Contribution"), which shall also be applied
towards the purchase of Shares on behalf of the Director (the "Additional
Shares").
2.3 (a) The Shares will be purchased in the open market or in
negotiated transactions by an agent designated by the Corporation for all of
the directors participating in the Plan (the "Agent"). Purchase of Shares in
the open market by the Agent may be made in the over-the-counter market or on
any securities exchange where the Shares may be traded.
(b) Purchases of Shares on the open market or in
negotiated transactions shall be made by the Agent during the period from and
including the fifteenth day of the month until the last day of the month in
which the funds are made available to the Agent in accordance with Sections 2.1
and 2.2 hereto (the "Investment Period"), subject to any applicable
requirements of federal or state securities laws affecting the timing and
manner of purchases of Shares under the Plan.
(c) Subject to any limitations imposed by federal or
state securities laws, the Agent will have full discretion as to all matters
relating to open market purchases during each Investment Period, including the
number of Shares, if any, to be purchased on any given day or at any time of
day, the price paid for such Shares, the markets on which such Shares are to be
purchased (including on any securities exchange, in the over-the-counter market
or in negotiated transactions) and the persons (including other brokers and
dealers) from or through whom such purchases are made.
(d) The Director's account under the Plan will be
credited on a quarterly basis with the number of Shares equal to the amount of
the Deferred Contribution and Additional Contribution divided by the purchase
price per Share. The "purchase price per Share" wi ll be the weighted average
paid for all Shares purchased for all directors under the Plan during such
Investment Period.
-3-
4
EXHIBIT 10.9 (CONT.)
2.4 All certificates representing Shares purchased on behalf of
the Director pursuant to the Plan (the "Certificates") shall be held in custody
by the Corporation on behalf of the Director and will not be delivered to the
Director until his participation in the Plan terminates as described in
Section 3.1 hereto.
2.5 The Director will be entitled to receive all dividends
payable with respect to Shares held on his behalf under the Plan, and
will be entitled to all voting rights associated with Shares held on his behalf
under the Plan.
2.6 The Director understands and agrees that until his
participation in the Plan terminates as described in Section 3.1 hereto and the
Certificates are delivered to the Director, the Director will not sell,
transfer, assign, pledge or in any way encumber Shares held on his behalf under
the Plan.
2.7 The Corporation will prepare and deliver to the Director
periodic statements showing the number of Shares being held on the Director's
behalf under the Plan. Such statements will separately itemize (i) the number
of Retainer Shares purchased during the preceding reporting period and the
aggregate number of Retainer Shares purchased to date and (ii) the number of
Additional Shares purchased during the preceding reporting period and the
aggregate number of Additional Shares purchased to date.
ARTICLE III
TERMINATION OF PARTICIPATION IN THE PLAN
3.1 The Director's participation in the Plan pursuant to this
Agreement will terminate when his membership in the Board of Directors of the
Corporation (and/or of BanPonce Corporation) terminates (for reasons other
than removal from office for cause by appropriate corporate action or under
authority of law). At such time, all of the Certificates representing Shares
held in custody by the Corporation on behalf of the Director under the Plan
will be delivered to the Director; provided, however, that Certificates
representing Shares that have been held under the Plan for less than six months
from their date of purchase will be delivered to the Director by the
Corporation once the six-month holding period has been met.
3.2 It is agreed by the parties that once the Director's
participation in the Plan terminates and the delivery of the Certificates to
the Director has taken place, all restrictions under the Plandescribed in
Section 2.6 hereto above relating to the non-transferability of such Shares
will terminate.
-4-
5
EXHIBIT 10.9 (CONT.)
ARTICLE IV
PENALTIES FOR REMOVAL FOR CAUSE
4.1 In the event that the Director is removed from office for
cause by appropriate corporate action or under authority of law:
(a) all Additional Shares held on behalf of the Director under
the Plan will be forfeited to BanPonce Corporation at no cost; and
(b) the Director must sell to BanPonce Corporation all of the
Retainer Shares purchased in his name under the Plan at the lower of:
(i) the purchase price per Share at the time each such
Retainer Share was purchased on behalf of the Director, and
(ii) the Average Market Price (as defined below) of the
Shares as of the date the Director was removed from office
for cause. The "Average Market Price" shall be equal to the
average of the last reported sales price of Shares on the
NASDAQ National Market System (or the principal exchange on
which Shares may be listed) during the last twenty (20)
reported trading days preceding the date of such removal from
office.
4.2 In the event that BanPonce Corporation is not permitted,
pursuant to applicable law, contract provisions or otherwise, to purchase the
Retainer Shares on the date of removal from office as provided in Section
4.1(b) above, BanPonce Corporation shall be entitled to purchase the Retainer
Shares within thirty (30) days after the lapse of such restrictions, in which
case the "Average Market Price" shall be based upon the last twenty (20)
reported trading days immediately preceding the date of such purchase.
-5-
6
EXHIBIT 10.9 (CONT.)
ARTICLE V
MISCELLANEOUS
5.1 This Agreement shall be binding upon the heirs,
administrators, executors and the successors and assigns of the Director, and
the successors and assigns of the Corporation. This Agreement shall not be
modified or amended except by an instrument in writing signed by both parties.
5.2 Nothing contained in this Agreement and no action taken
pursuant to the provisions of this Agreement shall create or be construed to
create a trust of any kind, or impose any fiduciary duties on the Corporation
in favor of the Director, his designated beneficiary(ies) or any other person.
5.3 All costs and expenses incurred in the administration of the
Plan shall be paid by the Corporation.
5.4 If any provision of this Agreement shall be held invalid or
unenforceable, such provision shall be deemed deleted from this Agreement and
replaced by a valid and enforceable provision which, so far as possible,
achieves the same economic and other benefits for the parties as the severed
provision was intended to achieve, and the remaining provisions of the
Agreement shall continue in full force and effect.
5.5 This Agreement shall be construed in accordance with and
governed by the laws of the Commonwealth of Puerto Rico.
IN WITNESS WHEREOF, AND INTENDING TO BE LEGALLY BOUND, the parties hereto
have each caused this Agreement to be executed in San Juan, Puerto Rico as of
the date first above written.
BANCO POPULAR DE PUERTO RICO DIRECTOR
By:
----------------------------------- ------------------------------
Name:
Title:
-6-
7
EXHIBIT 10.9(CONT.)
ELECTION STATEMENT
This election statement is delivered pursuant to, is made a part of
and is subject to all of the terms and conditions of the Agreement by and
between the Corporation and the undersigned dated as of August 15, 1996 related
to the Stock Deferment Plan (the "Agreement").
The undersigned hereby elects to defer the amount of $_________ from
his annual retainer, which amount shall be used to purchase on the
undersigned's behalf shares of common stock of BanPonce Corporation subject to
the terms and conditions of the Agreement.
In San Juan, Puerto Rico this __ day of ______________, 199_.
--------------------------------
DIRECTOR
Accepted:
BANCO POPULAR DE PUERTO RICO
- ----------------------------
Name:
Title:
-7-
8
EXHIBIT 10.9 (CONT.)
AGREEMENT
(STOCK DEFERMENT PLAN)
AGREEMENT made as of August 15, 1996 by and between BANPONCE CORPORATION,
a banking corporation organized under the laws of the Commonwealth of Puerto
Rico (hereafter the "Corporation"), and FRANCISCO PEREZ, JR., a director of the
Corporation (hereinafter the "Director").
WITNESSETH
WHEREAS, the Director has served as a director of the Corporation and
the Corporation has derived substantial benefits as a result of his work;
WHEREAS, the Corporation has adopted a compensation program for its
outside directors pursuant to which, among other things, its outside directors
will be paid an annual retainer on a quarterly basis (the "Annual Retainer"),
and the directors have the option on a yearly basis to elect to defer all or
part of the Annual Retainer for the purchase of shares of common stock of
BanPonce Corporation ("Shares");
WHEREAS, the Corporation has established the "Stock Deferment Plan"
(the "Plan") in order to implement the stock deferment option under its
compensation program;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, and intending to be legally bound hereby, the parties hereby
agree as follows:
ARTICLE I
PARTICIPATION IN THE PLAN
1.1 The Director must execute and deliver an election statement
(a "Statement") on a yearly basis to the Corporation, substantially in the
form of Exhibit A hereto or in such form acceptable to the Corporation,
pursuant to which the Director shall designate the amount of the Annual
Retainer which shall be deferred for the purchase of Shares. Said Statement
must be received by the Corporation no later than April 15 of each year (the
"Election Deadline") and shall remain in effect until April 30 of the following
year (each such period, a "Plan Year"); provided, however, that for the current
Plan Year 1996-97, the Statement must be received by the Corporation on or
prior to August 15, 1996, and will be applicable for the portion of the Annual
Retainer which as of such date shall not have been paid or disbursed in favor
of the Director.
1.2 The Statement made for any Plan Year may not revoked during
such Plan Year, and shall also govern the deferral of all or any designated
portion of the Annual Retainer during the following Plan Year unless
the Director delivers a Statement to the Corporation before the Election
Deadline for the next Plan Year.
-8-
9
EXHIBIT 10.9 (CONT.)
ARTICLE II
PURCHASE OF COMMON SHARES AND CONDITIONS AFFECTING SUCH SHARES
2.1 On a quarterly basis the Corporation will apply the portion
of the Annual Retainer that the Director has elected to have deferred under the
Plan (the "Deferred Contribution") towards the purchase of Shares on
behalf of the Director (the "Retainer Shares").
2.2 On a quarterly basis the Corporation will also contribute and
apply an additional amount equal to 25 cents for every dollar of the Deferred
Contribution (the "Additional Contribution"), which shall also be applied
towards the purchase of Shares on behalf of the Director (the "Additional
Shares").
2.3 (a) The Shares will be purchased in the open market or
in negotiated transactions by an agent designated by the Corporation for all
of the directors participating in the Plan (the "Agent"). Purchase of Shares
in the open market by the Agent may be made in the over-the-counter market or
on any securities exchange where the Shares may be traded.
(b) Purchases of Shares on the open market or in
negotiated transactions shall be made by the Agent during the period from and
including the fifteenth day of the month until the last day of the month in
which the funds are made available to the Agent in accordance with Sections 2.1
and 2.2 hereto (the "Investment Period"), subject to any applicable
requirements of federal or state securities laws affecting the timing and
manner of purchases of Shares under the Plan.
(c) Subject to any limitations imposed by federal or
state securities laws, the Agent will have full discretion as to all matters
relating to open market purchases during each Investment Period, including the
number of Shares, if any, to be purchased on any given day or at any time of
day, the price paid for such Shares, the markets on which such Shares are to be
purchased (including on any securities exchange, in the over-the-counter market
or in negotiated transactions) and the persons (including other brokers and
dealers) from or through whom such purchases are made.
(d) The Director's account under the Plan will be
credited on a quarterly basis with the number of Shares equal to the amount of
the Deferred Contribution and Additional Contribution divided by the purchase
price per Share. The "purchase price per Share" will be the weighted average
paid for all Shares purchased for all directors under the Plan during such
Investment Period.
2.4 All certificates representing Shares purchased on behalf of
the Director pursuant to the Plan (the "Certificates") shall be held in custody
by Banco Popular de Puerto Rico on behalf of the Director and will not be
delivered to the Director until his participation in the Plan terminates as
described in Section 3.1 hereto.
2.5 The Director will be entitled to receive all dividends
payable with respect to Shares held on his behalf under the Plan, and will be
entitled to all voting rights associated with Shares held on his behalf
under the Plan.
-9-
10
EXHIBIT 10.9 (CONT.)
2.6 The Director understands and agrees that until his
participation in the Plan terminates as described in Section 3.1 hereto and the
Certificates are delivered to the Director, the Director will not sell,
transfer, assign, pledge or in any way encumber Shares held on his behalf under
the Plan.
2.7 The Corporation will prepare and deliver to the Director
periodic statements showing the number of Shares being held on the Director's
behalf under the Plan. Such statements will separately itemize (i) the number
of Retainer Shares purchased during the preceding reporting period and the
aggregate number of Retainer Shares purchased to date and (ii) the number of
Additional Shares purchased during the preceding reporting period and the
aggregate number of Additional Shares purchased to date.
ARTICLE III
TERMINATION OF PARTICIPATION IN THE PLAN
3.1 The Director's participation in the Plan pursuant to this
Agreement will terminate when his membership in the Board of Directors of the
Corporation terminates (for reasons other than removal from office for cause
by appropriate corporate action or under authority of law). At such time, all
of the Certificates representing Shares held in custody by Banco Popular
de Puerto Rico on behalf of the Director under the Plan will be delivered to
the Director; provided, however, that Certificates representing Shares that
have been held under the Plan for less than six months from their date of
purchase will be delivered to the Director once the six-month holding period
has been met.
3.2 It is agreed by the parties that once the Director's
participation in the Plan terminates and the delivery of the Certificates to
the Director has taken place, all restrictions under the Plan described in
Section 2.6 hereto above relating to the non-transferability of such Shares
will terminate.
ARTICLE IV
PENALTIES FOR REMOVAL FOR CAUSE
4.1 In the event that the Director is removed from office for
cause by appropriate corporate action or under authority of law:
(a) all Additional Shares held on behalf of the Director under
the Plan will be forfeited to the Corporation at no cost; and
(b) the Director must sell to the Corporation all of the Retainer
Shares purchased in his name under the Plan at the lower of:
(i) the purchase price per Share at the time each such
Retainer Share was purchased on behalf of the Director, and
-10-
11
EXHIBIT 10.9 (CONT.)
(ii) the Average Market Price (as defined below) of the
Shares as of the date the Director was removed from office
for cause. The "Average Market Price" shall be equal to the
average of the last reported sales price of Shares on the
NASDAQ National Market System (or the principal exchange on
which Shares may be listed) during the last twenty (20)
reported trading days preceding the date of such removal from
office.
4.2 In the event that the Corporation is not permitted, pursuant
to applicable law, contract provisions or otherwise, to purchase the Retainer
Shares on the date of removal from office as provided in Section 4.1(b) above,
the Corporation shall be entitled to purchase the Retainer Shares within
thirty (30) days after the lapse of such restrictions, in which case the
"Average Market Price" shall be based upon the last twenty (20) reported
trading days immediately preceding the date of such purchase.
ARTICLE V
MISCELLANEOUS
5.1 This Agreement shall be binding upon the heirs,
administrators, executors and the successors and assigns of the Director, and
the successors and assigns of the Corporation. This Agreement shall not be
modified or Amended except by an instrument in writing signed by both parties.
5.2 Nothing contained in this Agreement and no action taken
pursuant to the provisions of this Agreement shall create or be construed to
create a trust of any kind, or impose any fiduciary duties on the Corporation
in favor of the Director, his designated beneficiary(ies) or any other person.
5.3 All costs and expenses incurred in the administration of the
Plan shall be paid by the Corporation.
5.4 If any provision of this Agreement shall be held invalid or
unenforceable, such provision shall be deemed deleted from this Agreement and
replaced by a valid and enforceable provision which, so far as possible,
achieves the same economic and other benefits for the parties as the severed
provision was intended to achieve, and the remaining provisions of the
Agreement shall continue in full force and effect.
5.5 This Agreement shall be construed in accordance with and
governed by the laws of the Commonwealth of Puerto Rico.
IN WITNESS WHEREOF, AND INTENDING TO BE LEGALLY BOUND, the parties hereto
have each caused this Agreement to be executed in San Juan, Puerto Rico as of
the date first above written.
BANPONCE CORPORATION DIRECTOR
By:
-------------------------------- ---------------------------------
Name:
Title:
-11-
12
EXHIBIT 10.9 (CONT.)
ELECTION STATEMENT
This election statement is delivered pursuant to, is made a part of
and is subject to all of the terms and conditions of the Agreement by and
between the Corporation and the undersigned dated as of August 15, 1996 related
to the Stock Deferment Plan (the "Agreement").
The undersigned hereby elects to defer the amount of $_________ from
his annual retainer, which amount shall be used to purchase on the
undersigned's behalf shares of common stock of BanPonce Corporation subject
to the terms and conditions of the Agreement.
In San Juan, Puerto Rico this __ day of ______________, 199_.
--------------------------------
DIRECTOR
Accepted:
BANPONCE CORPORATION
- --------------------
Name:
Title:
-12-