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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 12, 1997
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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POPULAR, INC.
(Exact name of co-registrant as specified in its charter)
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PUERTO RICO 66-0416582
(State or other jurisdiction of (IRS employer
incorporation or organization) identification number)
209 MUNOZ RIVERA AVENUE HATO REY, PUERTO RICO 00918
(Address of principal executive offices) (Zip Code)
(809) 765-9800
(Co-registrant's telephone number, including area code)
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POPULAR INTERNATIONAL BANK, INC.
(Exact name of co-registrant as specified in its charter)
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PUERTO RICO N/A
(State or other jurisdiction of incorporation or (IRS employer
organization) identification number)
209 MUNOZ RIVERA AVENUE 00918
HATO REY, PUERTO RICO (Zip Code)
(Address of principal executive offices)
(809) 765-9800
(Co-registrant's telephone number, including area code)
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POPULAR NORTH AMERICA, INC.
(Exact name of co-registrant as specified in its charter)
DELAWARE 66-0476353
(State or other jurisdiction of (IRS employer
incorporation or organization) identification number)
521 FELLOWSHIP ROAD 08054
MT. LAUREL, NEW JERSEY (Zip Code)
(Address of principal executive office)
(809) 765-9800
(Co-registrant's telephone number, including area code)
JORGE A. JUNQUERA
209 MUNOZ RIVERA AVENUE
HATO REY, PUERTO RICO 00918
(809) 765-9800
(Name, address, and telephone number, including area code, of agent for service)
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COPIES TO:
DONALD J. TOUMEY, ESQ.
SULLIVAN & CROMWELL
125 BROAD STREET
NEW YORK, NEW YORK 10004
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to
time after the effective date of this Registration Statement as determined by
the Registrants on the basis of market conditions and other factors.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. []
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, please check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. []
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. []
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [X]
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CALCULATION OF REGISTRATION FEE
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PROPOSED PROPOSED
AMOUNT MAXIMUM MAXIMUM AMOUNT OF
TO BE OFFERING PRICE AGGREGATE OF REGISTRATION
TITLE OF EACH CLASS OF SECURITIES TO BE REGISTERED REGISTERED PER UNIT(1) OFFERING PRICE(1) FEE
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Debt Securities and Preferred Stock................. $1,000,000,000 100% $1,000,000,000 $303,031
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Guarantees.......................................... (2) (2) (2) (2)
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(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457.
(2) No additional consideration will be received for the Guarantees.
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The Co-registrants hereby amend this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Co-registrants
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY STATE.
SUBJECT TO COMPLETION, DATED MAY 12, 1997
PROSPECTUS
DEBT SECURITIES
OF
POPULAR, INC.
OR
POPULAR INTERNATIONAL BANK, INC.
(UNCONDITIONALLY GUARANTEED
BY POPULAR, INC.)
OR
POPULAR NORTH AMERICA, INC.
(UNCONDITIONALLY GUARANTEED
BY POPULAR, INC.)
PREFERRED STOCK
OF
POPULAR, INC.
OR
POPULAR INTERNATIONAL BANK, INC.
(UNCONDITIONALLY GUARANTEED
BY POPULAR, INC.)
OR
POPULAR NORTH AMERICA, INC.
(UNCONDITIONALLY GUARANTEED
BY POPULAR, INC.)
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Popular, Inc. (formerly BanPonce Corporation) (the "Corporation") intends to
issue from time to time in one or more series its (i) unsecured debt securities,
which may be either senior or subordinated, and (ii) shares of preferred stock.
Popular International Bank, Inc. ("PIB") intends to issue from time to time in
one or more series its (i) unsecured debt securities, which may be either senior
or subordinated, and (ii) shares of preferred stock. Popular North America, Inc.
(formerly BanPonce Financial Corp.) ("PNA") intends to issue from time to time
in one or more series its (i) unsecured debt securities, which may be either
senior or subordinated, and (ii) shares of preferred stock. Unsecured debt
securities issued by PIB or PNA will be fully and unconditionally guaranteed as
to the payment of principal, premium, if any, and interest by the Corporation.
Shares of preferred stock issued by PIB or PNA will be fully and unconditionally
guaranteed as to the payment of dividends, redemption price, if any, and
liquidation preference, if any, by the Corporation. The foregoing debt
securities and shares of preferred stock are collectively referred to herein as
the "Securities." The Corporation's guarantees of debt securities or preferred
stock issued by PIB or PNA are collectively referred to herein as the
"Guarantees." The Securities will be limited to an aggregate initial offering
price not to exceed $1,000,000,000 or, in the case of debt securities, the
equivalent thereof in one or more foreign currencies, including composite
currencies. The Securities offered may be offered, separately or together, in
separate series, in amounts, at prices and on terms to be determined at the time
of sale and to be set forth in a supplement to this Prospectus (a "Prospectus
Supplement").
The subordinated debt securities when issued will be subordinated as
described herein under "Description of Debt Securities and Guarantees." Unless
otherwise indicated in the Prospectus Supplement, payment of the principal of
the subordinated debt securities may be accelerated only in the case of certain
events involving the bankruptcy, insolvency or reorganization of the
Corporation, PIB or PNA, as the case may be. There is no right of acceleration
of payment of subordinated debt securities in the case of a default in the
performance of any covenant of the Corporation, PIB or PNA, including the
payment of principal or interest.
The specific terms of the Securities in respect of which this Prospectus is
being delivered, including (i) in the case of debt securities, the issuer, the
specific designation, aggregate principal amount, denominations, maturity,
premium, if any, rate (which may be fixed or variable) and time of payment of
interest, if any, terms for redemption at the option of the Corporation, PIB,
PNA or the holder, if any, currency or currencies of denomination and payment,
if other than U.S. dollars, the terms, if any, for conversion into other debt
securities or preferred stock and any other terms in connection with the
offering and sale of the debt securities in respect of which this Prospectus is
being delivered, as well as the initial public offering price, and the principal
amounts, if any, to be purchased by underwriters and (ii) in the case of
preferred stock, the issuer, the specific title and stated value, number of
shares or fractional interests therein, any dividend, liquidation, redemption,
voting and other rights, the terms, if any, for conversion into other preferred
stock, the securities exchanges, if any, on which the preferred stock is to be
listed, the initial public offering price, and the number of shares, if any, to
be purchased by the underwriters, will be as set forth in the accompanying
Prospectus Supplement. All or a portion of the debt securities may be issued in
permanent global form.
The Securities may be sold to underwriters for public offering pursuant to
terms of offering fixed at the time of sale. In addition, the Securities may be
sold by the Corporation, PIB or PNA directly or through dealers or agents
designated from time to time, which agents may be affiliates of the Corporation.
The Prospectus Supplement will also set forth with respect to the sale of the
Securities in respect of which this Prospectus is being delivered the names of
the underwriters, dealers or agents, if any, together with the terms of
offering, the compensation of such underwriters and the net proceeds to the
Corporation.
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THE SECURITIES WILL BE UNSECURED OBLIGATIONS OF THE CORPORATION, PIB OR PNA,
AS THE CASE MAY BE, AND WILL NOT BE SAVINGS ACCOUNTS, DEPOSITS OR OTHER
OBLIGATIONS OF ANY BANK OR SAVINGS ASSOCIATION AND ARE NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE BANK INSURANCE FUND OR ANY OTHER
GOVERNMENT AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, THE SECURITIES OFFICE OF THE OFFICE OF THE COMMISSIONER OF
FINANCIAL INSTITUTIONS OF THE COMMONWEALTH OF PUERTO RICO OR ANY STATE
SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION, SUCH
SECURITIES OFFICE OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
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The date of this Prospectus is , 1997
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AVAILABLE INFORMATION
The Corporation is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information concerning the Corporation can be inspected and
copied at the Commission's public reference room located at Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549, and the regional offices of the
Commission in New York (7 World Trade Center, New York, New York 10048) and
Chicago (Citicorp Center, 500 West Madison Street, Chicago, Illinois 60661).
Copies of such material can be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. Such material may also be accessed electronically by means of the
Commission's home page on the Internet at http://www.sec.gov. This Prospectus
does not contain all of the information set forth in the Registration Statement
on Form S-3 which the Corporation has filed with the Commission under the
Securities Act of 1933 (the "Act"), to which reference is hereby made.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Corporation hereby incorporates by reference into this Prospectus the
following documents filed by the Corporation with the Commission:
1. The Corporation's Annual Report on Form 10-K for the year ended
December 31, 1996, provided, however, that the information referred to in
Item 402(a)(8) of Regulation S-K promulgated by the Commission shall not be
deemed to be specifically incorporated by reference herein.
2. The Corporation's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1997.
3. The Corporation's Current Reports on Form 8-K, dated January 9,
1997, February 19, 1997, April 7, 1997, May 7, 1997 and May 8, 1997.
4. The Corporation's Registration Statement on Form 8-A, dated August
18, 1988, filed pursuant to Section 12(g) of the Exchange Act, pursuant to
which the Corporation registered its Series A Participating Cumulative
Preferred Stock Purchase Rights.
5. The Corporation's Registration Statement on Form 8-A, dated June
17, 1994, as amended by the Corporation's Amendment on Form 8-A/A, dated
June 21, 1994, filed pursuant to Section 12(g) of the Exchange Act,
pursuant to which the Corporation registered its 8.35% Non-Cumulative
Monthly Income Preferred Stock, 1994 Series A.
All documents filed by the Corporation subsequent to the date of this
Prospectus and prior to the termination of the offering of the Securities and
the Guarantees pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act
shall be deemed to be incorporated by reference into this Prospectus and to be a
part thereof from the date of filing of such documents. Any statement contained
in a document incorporated or deemed to be incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this Prospectus to
the extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
Any person receiving a copy of this Prospectus, including any beneficial
owner, may obtain without charge, upon oral or written request, a copy of any of
the documents incorporated by reference herein, except for the exhibits to such
documents. Written requests should be mailed to Amilcar Jordan, Senior Vice
President, Popular, Inc., P.O. Box 362708, San Juan, Puerto Rico 00936-2708.
Telephone requests may be directed to (787) 765-9800.
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RECENT DEVELOPMENTS
On December 30, 1996, the Corporation announced an agreement for the
acquisition of Roig Commercial Bank ("Roig Commercial"). Roig Commercial
operates twenty-five branches, mainly located in the eastern part of Puerto
Rico, with assets of approximately $900 million and deposits of $650 million.
Applications for prior approval have been filed with the Federal Reserve and
local banking authorities, and the transaction is subject to their approval.
On January 24, 1997, the Corporation signed a definitive agreement to
acquire CBC Bancorp, Ltd. ("CBC"), the parent company of Capital Bank & Trust
and Capitol Bank of Westmont, through an indirect wholly owned subsidiary of the
Corporation pursuant to an Agreement and Plan of Merger by and among the
Corporation, CBC Interim, Inc. and CBC. CBC, with assets of $315 million and
deposits of $280 million at June 30, 1996, operates three branches in Chicago
and Westmont, Illinois through its banking subsidiaries. The Federal Reserve
approved the application for the acquisition of CBC on April 25, 1997. The
acquisition is subject to the Corporation's receipt of all other required
regulatory approvals.
At the annual meeting of stockholders on April 25, 1997, the Corporation's
shareholders approved amendments to the Corporation's Restated Articles of
Incorporation to change the name of the Corporation to Popular, Inc. from
BanPonce Corporation, and to increase the total number of authorized shares of
capital stock to 190,000,000. The authorized capital stock of the Corporation
consists of 180,000,000 shares of Common Stock, par value of $6.00 per share,
and 10,000,000 shares of Preferred Stock without par value.
On April 30, 1997, Popular North America, Inc. acquired all of the shares
of Seminole National Bank, a national bank headquartered in Florida with assets
at March 31, 1997 of approximately $28 million. The bank will operate under the
name Banco Popular, N.A. (Florida).
On May 8, 1997, the Corporation announced that its Board of Directors had
authorized the repurchase of up to 3,000,000 shares of outstanding common stock
to offset the issuance of shares in connection with recent proposed
acquisitions.
POPULAR, INC.
The Corporation is a bank holding company registered under the Bank Holding
Company Act of 1956, as amended (the "BHC Act"), and incorporated in 1984 under
the laws of the Commonwealth of Puerto Rico ("Puerto Rico"). The Corporation is
the largest financial institution in Puerto Rico, with consolidated assets of
$17.4 billion, total deposits of $10.5 billion and stockholders' equity of $1.3
billion at March 31, 1997. Based on total assets at December 31, 1996, the
Corporation was the 42nd largest bank holding company in the United States. At
the Corporation's annual meeting of shareholders held on April 25, 1997, the
Corporation's shareholders approved a proposal made by the Board of Directors to
change the name of BanPonce Corporation to Popular, Inc. The Corporation's
principal executive offices are located at 209 Munoz Rivera Avenue, Hato Rey,
Puerto Rico 00918 and its telephone number is (787) 765-9800.
The Corporation's principal subsidiary, Banco Popular de Puerto Rico
("Banco Popular" or the "Bank"), was incorporated over 100 years ago in 1893 and
is Puerto Rico's largest bank with total assets of $14.8 billion, deposits of
$9.9 billion and stockholders' equity of $1.1 billion at March 31, 1997. The
Bank accounted for 85% of the total consolidated assets of the Corporation at
March 31, 1997. A consumer-oriented bank, Banco Popular has the largest retail
franchise in Puerto Rico, operating 179 branches and 330 automated teller
machines. The Bank also has the largest trust operation in Puerto Rico and is
the largest servicer of mortgage loans for investors. In addition, it operates
the largest Hispanic bank branch network in the mainland United States with 29
branches in New York and an agency in Chicago. As of March 31, 1997, these
branches had a total of approximately $1.5 billion in deposits. The Bank also
operates seven branches in the U.S. Virgin Islands and one branch in the British
Virgin Islands. Banco Popular has three subsidiaries, Popular Leasing & Rental
Inc., Puerto Rico's largest vehicle leasing and daily rental company, Popular
Finance Inc. (formerly Popular Consumer Services, Inc.), a small-loan and
secondary mortgage company with 35 offices in Puerto Rico operating under the
name of Best Finance and Popular Mortgage, Inc., a mortgage loan company with
four offices in Puerto Rico operating under the name of Popular Mortgage
(formerly Puerto Rico Home Mortgage).
The Corporation has two other principal subsidiaries: Popular Securities,
Inc. (formerly BP Capital Markets) and PIB, which in turn owns all of the
outstanding stock of PNA. For additional information regarding PNA or PIB, see
"Popular North America, Inc." and "Popular International Bank Inc.",
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respectively. Popular Securities, Inc. is a direct subsidiary of Popular, Inc.
and engages in the business of a securities broker-dealer in Puerto Rico, with
institutional brokerage, financial advisory, and investment and security
brokerage operations.
POPULAR INTERNATIONAL BANK INC.
Popular International Bank, Inc. ("PIB") is a wholly owned subsidiary of
the Corporation organized in 1992 under the laws of the Commonwealth of Puerto
Rico and operating as an "international banking entity" under the International
Banking Center Regulatory Act of Puerto Rico (the "IBC Act"). PIB owns all of
the outstanding capital stock of PNA. Summary consolidated financial statements
of PIB are included in the notes to the Corporation's consolidated financial
statements.
POPULAR NORTH AMERICA, INC.
Popular North America, Inc. ("PNA") (formerly BanPonce Financial Corp.), a
wholly owned subsidiary of PIB and an indirect, wholly owned subsidiary of the
Corporation, was organized in 1991 under the laws of the State of Delaware.
PNA owns all of the common stock of Pioneer Bancorp, Inc., a corporation
organized under the laws of the State of Delaware and headquartered in Chicago,
Illinois, and a registered bank holding company under the BHC Act, which,
through its wholly owned subsidiary River Associates Bancorp, Inc., a Delaware
corporation, owns Banco Popular, Illinois (formerly Pioneer Bank & Trust
Company), a bank organized under the laws of the State of Illinois with five
branches in that state. The deposits of Banco Popular, Illinois are
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insured by the Federal Deposit Insurance Corporation (the "FDIC"). As of March
31, 1997, the assets of Banco Popular, Illinois were $465.2 million and its
deposits were $371.8 million.
PNA owns all of the common stock of COMBANCORP, a corporation organized
under the laws of California and headquartered in Los Angeles, and a registered
bank holding company under the BHC Act. COMBANCORP owns Banco Popular, N.A.
(California) ("Banco Popular (California)"), a national bank with four branches
in California. The deposits of Banco Popular (California) are also insured by
the FDIC and it is subject to the supervision of the Office of the Comptroller
of the Currency. See "Certain Regulatory Matters". As of March 31, 1997, it had
assets of $136.4 million and deposits of $93.6 million.
As a result of the ownership of Banco Popular, Illinois and Banco Popular
(California), PNA and PIB are registered bank holding companies under the BHC
Act.
PNA is also the direct owner of all the common stock of Banco Popular, FSB,
a federal savings bank which acquired from the Resolution Trust Corporation
certain assets and all of the deposits of four New Jersey branches of the former
Carteret Federal Savings Bank, a federal savings bank under Resolution Trust
Corporation (the "RTC") conservatorship. The deposits of Banco Popular, FSB are
insured by the FDIC and it is subject to the supervision of the Office of Thrift
Supervision. See "Certain Regulatory Matters".
Banco Popular, FSB owns Equity One, a Delaware corporation (formerly Spring
Financial Services, Inc.) ("Equity One"). Equity One is a diversified consumer
finance company engaged in the business of making personal and mortgage loans
and providing dealer financing through 104 offices in 29 states with total
assets of $1.1 billion as of March 31, 1997. Equity One had initially been
acquired by PNA on September 30, 1991, prior to which time PNA had no
significant business operations.
Summary consolidated financial statements of PNA are included in the notes
to the Corporation's consolidated financial statements.
CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES
OF THE CORPORATION
YEAR ENDED DECEMBER 31,
QUARTER ENDED --------------------------------
MARCH 31, 1997 1996 1995 1994 1993 1992
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Ratio of Earnings to Fixed Charges:
Excluding Interest on Deposits.......................... 2.0 2.0 2.0 2.6 3.0 2.9
Including Interest on Deposits.......................... 1.4 1.4 1.4 1.5 1.5 1.3
Ratio of Earnings to Fixed Charges and Preferred Stock
Dividends:
Excluding Interest on Deposits.......................... 1.9 2.0 2.0 2.5 3.0 2.9
Including Interest on Deposits.......................... 1.4 1.4 1.4 1.5 1.5 1.3
For purposes of computing these consolidated ratios, earnings represent
income before income taxes, cumulative effect of a change in accounting
principles and equity in undistributed income of unconsolidated subsidiaries and
affiliates, plus fixed charges excluding capitalized interest. Fixed charges
represent all interest expense (ratios are presented both excluding and
including interest on deposits), the portion of net rental expense which is
deemed representative of the interest factor, the amortization of debt issuance
expense and capitalized interest.
USE OF PROCEEDS
The Corporation intends to use the net proceeds from the sale of the
Securities issued by the Corporation for general corporate purposes, including
investments in, or extensions of credit to, its existing and future
subsidiaries, for the acquisition of other banking and financial institutions
and repayment of outstanding borrowings. The Corporation does not at present
have any plans to use the proceeds from any offering for a material acquisition
or to repay outstanding borrowings. All or a substantial portion of the proceeds
from the sale of Securities issued by PNA will be loaned by PNA to its direct or
indirect subsidiaries, including Equity One, or used by PNA for general
corporate purposes. The net proceeds from the sale of Securities by PIB will be
loaned by PIB to its affiliates or used by PIB for general corporate purposes.
The precise amounts and timing of the application of proceeds will depend on
various factors existing at the time of offering of the Securities, including
the Corporation's subsidiaries' funding requirements and the availability of
other funds. Pending such use, the proceeds may be temporarily invested in
short-term obligations.
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CERTAIN REGULATORY MATTERS
GENERAL
Each of the Corporation, PIB and PNA are bank holding companies subject to
supervision and regulation by the Board of Governors of the Federal Reserve
System (the "Federal Reserve Board") under the BHC Act. As a bank holding
company, the Corporation's, PIB's and PNA's activities and those of their
banking and nonbanking subsidiaries are limited to the business of banking and
activities closely related or incidental to banking, and none of the
Corporation, PIB or PNA may directly or indirectly acquire the ownership or
control of more than 5% of any class of voting shares or substantially all of
the assets of any company in the United States, including a bank, without the
prior approval of the Federal Reserve Board. In addition, bank holding companies
are generally prohibited under the BHC Act from engaging in nonbanking
activities, subject to certain exceptions.
Banco Popular is considered a foreign bank for purposes of the
International Banking Act of 1978, as amended (the "IBA"). Under the IBA, Banco
Popular is not permitted to operate a branch or agency, that is located outside
of its "home state," except to the extent that a national bank with the same
home state is permitted to do so. See "-- Interstate Banking Legislation" below.
Puerto Rico is not considered a state for purposes of these geographic
limitations. Banco Popular has designated the state of New York as its home
state. In addition, some states have laws prohibiting or restricting foreign
banks from acquiring banks located in such states and treat Puerto Rico's banks
and bank holding companies as foreign banks for such purposes.
Banco Popular, Banco Popular, Illinois, Banco Popular (California) and
Banco Popular, FSB are subject to supervision and examination by applicable
federal and state banking agencies including, in the case of Banco Popular, the
Federal Reserve Board and the Office of the Commissioner of Financial
Institutions of Puerto Rico, in the case of Banco Popular, Illinois, the FDIC
and the Illinois Commissioner of Banks and Trust Companies, in the case of Banco
Popular (California), the Office of the Comptroller of the Currency (the "OCC")
and in the case of Banco Popular, FSB, the Office of Thrift Supervision (the
"OTS") and the FDIC. Banco Popular, Banco Popular, Illinois, Banco Popular
(California) and Banco Popular, FSB are subject to requirements and restrictions
under federal and state law, including requirements to maintain reserves against
deposits, restrictions on the types and amounts of loans that may be granted and
the interest that may be charged thereon, and limitations on the types of other
investments that may be made and the types of services that may be offered.
Various consumer laws and regulations also affect the operations of Banco
Popular, Banco Popular, Illinois, Banco Popular (California) and Banco Popular,
FSB. In addition to the impact of regulation, commercial banks are affected
significantly by the actions of the Federal Reserve Board as it attempts to
control the money supply and credit availability in order to influence the
economy.
HOLDING COMPANY STRUCTURE
Banco Popular, Banco Popular, Illinois, Banco Popular (California) and
Banco Popular, FSB are subject to restrictions under federal law that limit the
transfer of funds between them and the Corporation, PNA, PIB and the
Corporation's other nonbanking subsidiaries, whether in the form of loans, other
extensions of credit, investments or asset purchases. Such transfers by Banco
Popular, Banco Popular, Illinois, Banco Popular (California) or Banco Popular,
FSB, respectively, to the Corporation, PNA or PIB, as the case may be, or to any
one nonbanking subsidiary, are limited in amount to 10% of the transferring
institution's capital stock and surplus and, with respect to the Corporation and
all of its nonbanking subsidiaries, to an aggregate of 20% of the transferring
institution's capital stock and surplus. Furthermore, such loans and extensions
of credit are required to be secured in specified amounts.
Under Federal Reserve Board policy, a bank holding company, such as the
Corporation, PIB or PNA, is expected to act as a source of financial strength to
each of its subsidiary banks and to commit resources to support each such
subsidiary bank. This support may be required at times when, absent such policy,
the bank holding company might not otherwise provide such support. In addition,
any capital loans by a bank holding company to any of its subsidiary depository
institutions are subordinate in right of payment to deposits and to certain
other indebtedness of such subsidiary depository institution. In the event of a
bank holding company's
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bankruptcy, any commitment by the bank holding company to a federal bank
regulatory agency to maintain the capital of a subsidiary depository institution
will be assumed by the bankruptcy trustee and entitled to a priority of payment.
Banco Popular, Banco Popular, Illinois, Banco Popular (California) and Banco
Popular, FSB are currently the only subsidiary depository institutions of the
Corporation, PIB and PNA.
Because the Corporation, PIB and PNA are holding companies, their right to
participate in the assets of any subsidiary upon the latter's liquidation or
reorganization will be subject to the prior claims of the subsidiary's creditors
(including depositors in the case of subsidiary depository institutions) except
to the extent that the Corporation, PIB or PNA, as the case may be, may itself
be a creditor with recognized claims against the subsidiary.
Under the Federal Deposit Insurance Act (the "FDIA"), a depository
institution (which term includes both banks and savings associations), the
deposits of which are insured by the FDIC, can be held liable for any loss
incurred by, or reasonably expected to be incurred by, the FDIC in connection
with (i) the default of a commonly controlled FDIC-insured depository
institution or (ii) any assistance provided by the FDIC to any commonly
controlled FDIC-insured depository institution "in danger of default." "Default"
is defined generally as the appointment of a conservator or a receiver and "in
danger of default" is defined generally as the existence of certain conditions
indicating that a default is likely to occur in the absence of regulatory
assistance. Banco Popular, Banco Popular, Illinois, Banco Popular (California)
and Banco Popular, FSB are currently the only controlled FDIC-insured depository
institutions of the Corporation. In some circumstances (depending upon the
amount of the loss or anticipated loss suffered by the FDIC), cross-guarantee
liability may result in the ultimate failure or insolvency of one or more
insured depository institutions in a holding company structure. Any obligation
or liability owed by a subsidiary depository institution to its parent company
is subordinated to the subsidiary bank's cross-guarantee liability with respect
to commonly controlled insured depository institutions.
CAPITAL ADEQUACY
Under the Federal Reserve Board's risk-based capital guidelines for bank
holding companies and member banks, the minimum guidelines for the ratio of
qualifying total capital ("Total capital") to risk-weighted assets (including
certain off-balance sheet items, such as standby letters of credit) is 8%. At
least half of the Total capital is to be comprised of common equity, retained
earnings, minority interests in unconsolidated subsidiaries, noncumulative
perpetual preferred stock and a limited amount of cumulative perpetual preferred
stock, less goodwill and certain other intangible assets discussed below ("Tier
1 capital"). The remainder may consist of a limited amount of subordinated debt,
other preferred stock, certain other instruments and a limited amount of loan
and lease loss reserves ("Tier 2 capital").
The Federal Reserve Board has adopted regulations that require most
intangibles, including core deposit intangibles, to be deducted from Tier 1
Capital. The regulations, however, permit the inclusion of a limited amount of
intangibles related to purchased mortgage servicing rights and purchased credit
card relationships and include a "grandfather" provision permitting the
continued inclusion of certain existing intangibles.
In addition, the Federal Reserve Board has established minimum leverage
ratio guidelines for bank holding companies and member banks. These guidelines
provide for a minimum ratio of Tier 1 capital to total assets, less goodwill and
certain other intangible assets discussed below (the "leverage ratio") of 3% for
bank holding companies and member banks that meet certain specified criteria,
including that they have the highest regulatory rating. All other bank holding
companies and member banks will be required to maintain a leverage ratio of 3%
plus an additional cushion of at least 100 to 200 basis points. The guidelines
also provide that banking organizations experiencing internal growth or making
acquisitions will be expected to maintain strong capital positions substantially
above the minimum supervisory levels, without significant reliance on intangible
assets. Furthermore, the guidelines indicate that the Federal Reserve Board will
continue to consider a "tangible Tier 1 leverage ratio" and other indicia of
capital strength in evaluating proposals for expansion or new activities. The
tangible Tier 1 leverage ratio is the ratio of a banking organization's Tier 1
capital, less all intangibles, to total assets, less all intangibles.
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Under the Federal Reserve Board's requirements, the Corporation's and Banco
Popular's capital ratios at March 31, 1997 are set forth below:
CORPORATION BANCO POPULAR
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Tier 1 capital.............................................. 13.35% 11.47%
Total capital............................................... 15.90% 12.73%
Leverage ratio.............................................. 7.71% 6.63%
Banco Popular, Illinois, Banco Popular (California) and Banco Popular, FSB
are subject to similar capital requirements adopted by the FDIC, the OCC and the
OTS, respectively.
Failure to meet capital guidelines could subject a bank to a variety of
enforcement remedies, including the termination of deposit insurance by the
FDIC, and to certain restrictions on its business. See "-- FDICIA" below.
Bank regulators have in the past indicated their desire to raise capital
requirements applicable to banking organizations beyond current levels. However,
management is unable to predict whether and when higher capital requirements
would be imposed and, if so, at what levels or on what schedule.
FDICIA
Under the Federal Deposit Insurance Corporation Improvement Act of 1991
("FDICIA") federal banking regulators must take prompt corrective action in
respect of depository institutions that do not meet minimum capital
requirements. FDICIA and regulations thereunder establish five capital tiers:
"well capitalized," "adequately capitalized," "undercapitalized," "significantly
undercapitalized," and "critically undercapitalized." A depository institution
is deemed well capitalized if it maintains a leverage ratio of at least 5%, a
risk-based Tier 1 capital ratio of at least 6% and a risk-based Total capital
ratio of at least 10% and is not subject to any written agreement or directive
to meet a specific capital level. A depository institution is deemed adequately
capitalized if it is not well capitalized but maintains a leverage ratio of at
least 4% (or at least 3% if given the highest regulatory rating and not
experiencing or anticipating significant growth), a risk-based Tier 1 capital
ratio of at least 4% and a risk-based Total capital ratio of at least 8%. A
depository institution is deemed undercapitalized if it fails to meet the
standards for adequately capitalized institutions (unless it is deemed
significantly or critically undercapitalized). An institution is deemed
significantly undercapitalized if it has a leverage ratio of less than 3%, a
risk-based Tier 1 capital ratio of less than 3% or a risk-based Total capital
ratio of less than 6%. An institution is deemed critically undercapitalized if
it has tangible equity equal to 2% or less of total assets. A depository
institution may be deemed to be in a capitalization category that is lower than
is indicated by its actual capital position if it receives a less than
satisfactory examination rating in any one of four categories.
At March 31, 1997, Banco Popular, Banco Popular, Illinois, Banco Popular
(California) and Banco Popular, FSB were each well capitalized. An institution's
capital category, as determined by applying the prompt corrective action
provisions of law, may not constitute an accurate representation of the overall
financial condition or prospects of the Corporation or its banking subsidiaries,
and should be considered in conjunction with other available information
regarding the Corporation's financial condition and results of operations.
FDICIA generally prohibits a depository institution from making any capital
distribution (including payment of a dividend) or paying any management fee to
its holding company if the depository institution would thereafter be
undercapitalized. Undercapitalized depository institutions are subject to
restrictions on borrowing from the Federal Reserve System. In addition,
undercapitalized depository institutions are subject to growth limitations and
are required to submit capital restoration plans. A depository institution's
holding company must guarantee the capital plan, up to an amount equal to the
lesser of 5% of the depository institution's assets at the time it becomes
undercapitalized or the amount of the capital deficiency when the institution
fails to comply with the plan. The federal banking agencies may not accept a
capital plan without determining, among other things, that the plan is based on
realistic assumptions and is likely to succeed in restoring the depository
institution's capital. If a depository institution fails to submit an acceptable
plan, it is
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treated as if it is significantly undercapitalized. Significantly
undercapitalized depository institutions may be subject to a number of
requirements and restrictions, including orders to sell sufficient voting stock
to become adequately capitalized, requirements to reduce total assets and
cessation of receipt of deposits from correspondent banks. Critically
undercapitalized depository institutions are subject to appointment of a
receiver or conservator.
The capital-based prompt corrective action provisions of FDICIA and their
implementing regulations apply to FDIC-insured depository institutions such as
the banking and savings association subsidiaries of the Corporation, PIB and
PNA, but they are not directly applicable to holding companies, such as the
Corporation, PIB or PNA which control such institutions. However, federal
banking agencies have indicated that, in regulating holding companies, they may
take appropriate action at the holding company level based on their assessment
of the effectiveness of supervisory actions imposed upon subsidiary insured
depository institutions pursuant to such provisions and regulations.
INTERSTATE BANKING LEGISLATION
The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994
permits bank holding companies, with Federal Reserve Board approval, to acquire
banks located in states other than the holding company's home state without
regard to whether the transaction is prohibited under state law. In addition,
commencing June 1, 1997, national and state banks with different home states
will be permitted to merge across state lines, with approval of the appropriate
federal banking agency, unless the home state of a participating bank passes
legislation prior to May 31, 1997 expressly prohibiting interstate mergers.
States may "opt in" to permit interstate branching by merger prior to June 1,
1997 and to permit de novo interstate branching. Once a bank has established
branches in a state through an interstate merger transaction, the bank may
establish and acquire additional branches at any location in the state where any
bank involved in the interstate merger transaction could have established or
acquired branches under applicable federal or state law. A bank that has
established a branch in a state through de novo branching may establish and
acquire additional branches in such state in the same manner and to the same
extent as a bank having a branch in such state as a result of an interstate
merger. If a state opts out of interstate branching within the specified time
period, no bank in any other state may establish a branch in the state which has
opted out, whether through an acquisition or de novo. A foreign bank, like Banco
Popular, may branch interstate by merger or de novo to the same extent as
domestic banks in the foreign bank's home state, which, in the case of Banco
Popular, is New York.
Various other legislation, including proposals to overhaul the bank
regulatory system, expand bank and bank holding company powers and limit the
investments that a depository institution may make with insured funds, is from
time to time introduced in Congress. The Corporation, PIB and PNA cannot
determine the ultimate effect that such potential legislation, if enacted, or
implementing regulations, would have upon their financial condition or results
of operations.
DIVIDEND RESTRICTIONS
The principal source of cash flow for the Corporation is dividends from
Banco Popular. Various statutory provisions limit the amount of dividends Banco
Popular can pay to the Corporation without regulatory approval. As a member bank
subject to the regulation of the Federal Reserve Board, Banco Popular must
obtain the approval of the Federal Reserve Board for any dividend if the total
of all dividends declared by the bank in any calendar year would exceed the
total of its net profits, as defined by the Federal Reserve Board, for that
year, combined with its retained net profits for the preceding two years. In
addition, a member bank may not pay a dividend in an amount greater than its
undivided profits then on hand after deducting its losses and bad debts. For
this purpose, bad debts are generally defined to include the principal amount of
loans that are in arrears with respect to interest by six months or more unless
such loans are fully secured and in the process of collection. Moreover, for
purposes of this limitation, a member bank is not permitted to add the balance
in its allowance for loan losses account to its undivided profits then on hand.
A member bank may, however, net the sum of its bad debts as so defined against
the balance in its allowance for loan losses account and deduct from undivided
profits only bad debts as so defined in excess of that account. At March 31,
1997, Banco Popular
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could have declared a dividend of approximately $169.6 million without the
approval of the Federal Reserve Board. Illinois law contains similar limitations
on the amount of dividends that Banco Popular, Illinois can pay and the National
Bank Act contains similar limitations on the amount of dividends that Banco
Popular (California) can pay. In addition, OTS regulations limit the amount of
capital distributions (whether by dividend or otherwise) that any savings
association may make without prior OTS approval, based upon the savings
association's regulatory capital levels. These limitations are applicable to
Banco Popular, FSB. Also, in connection with the acquisition by Banco Popular,
FSB, from the RTC of four New Jersey branches of the former Carteret Federal
Savings Bank, the RTC provided Banco Popular, FSB and the Corporation interim
financial assistance. Pursuant to the terms of such financing, evidenced by a
promissory note (which matures on January 20, 2000 but is prepayable any time
before then), Banco Popular, FSB may not, among other things, declare or pay any
stock dividends on its outstanding capital stock (unless such dividends are used
exclusively for payment of principal of or interest on such promissory note) or
make any distributions of its assets until payment in full of such promissory
note.
The payment of dividends by Banco Popular, Banco Popular, Illinois, Banco
Popular (California) or Banco Popular, FSB, may also be affected by other
regulatory requirements and policies, such as the maintenance of adequate
capital. If, in the opinion of the applicable regulatory authority, a depository
institution under its jurisdiction is engaged in, or is about to engage in, an
unsafe or unsound practice (that, depending on the financial condition of the
depository institution, could include the payment of dividends), such authority
may require, after notice and hearing, that such depository institution cease
and desist from such practice. The Federal Reserve Board has issued a policy
statement that provides that insured banks and bank holding companies should
generally pay dividends only out of current operating earnings. In addition, all
insured depository institutions are subject to the capital-based limitations
required by the FDICIA. See "FDICIA."
See "-- Puerto Rico Regulation" for a description of certain restrictions
on Banco Popular's ability to pay dividends under Puerto Rico law.
FDIC INSURANCE ASSESSMENTS
Banco Popular, Banco Popular, Illinois, Banco Popular (California) and
Banco Popular, FSB are subject to FDIC deposit insurance assessments.
Pursuant to FDICIA, the FDIC has adopted a risk-based assessment system,
under which the assessment rate for an insured depository institution varies
according to the level of risk incurred in its activities. An institution's risk
category is based partly upon whether the institution is well capitalized,
adequately capitalized or less than adequately capitalized. Each insured
depository institution is also assigned to one of the following "supervisory
subgroups": "A," "B" or "C". Group "A" institutions are financially sound
institutions with only a few minor weaknesses; group "B" institutions are
institutions that demonstrate weaknesses that, if not corrected, could result in
significant deterioration; and group "C" institutions are institutions for which
there is a substantial probability that the FDIC will suffer a loss in
connection with the institution unless effective action is taken to correct the
areas of weakness.
The FDIC reduced the insurance premiums it charges on bank deposits insured
by the Bank Insurance Fund ("BIF") to the statutory minimum of $2,000.00 for
"well capitalized" banks, effective January 1, 1996. On September 30, 1996, the
Deposit Insurance Funds Act of 1996 ("DIFA") was enacted and signed into law.
DIFA repealed the statutory minimum premium, and currently premiums related to
deposits assessed by both the BIF and the Savings Association Insurance Fund
("SAIF") are to be assessed at a rate of between 0 cents and 27 cents per
$100.00 of deposits. DIFA also provides for a special one-time assessment
imposed on deposits insured by the SAIF to recapitalize the SAIF to bring the
SAIF up to statutory required levels. The Corporation accrued for the one-time
assessment in the third quarter of 1996.
DIFA also separates, effective January 1, 1997, the Financing Corporation
("FICO") assessment to service the interest on its bond obligations from the BIF
and SAIF assessments. The amount assessed on individual institutions by the FICO
will be in addition to the amount, if any, paid for deposit insurance according
to the FDIC's risk-related assessment rate schedules. FICO assessment rates for
the first
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semiannual period of 1997 were set at 1.30 basis points annually for
BIF-assessable deposits and 6.48 basis points annually for SAIF-assessable
deposits. (These rates may be adjusted quarterly to reflect changes in
assessment bases for the BIF and the SAIF. By law, the FICO rate on
BIF-assessable deposits must be one-fifth the rate on SAIF-assessable deposits
until the insurance funds are merged or until January 1, 2000, whichever occurs
first.) As of March 31, 1997, the Corporation had a BIF deposit assessment base
of approximately $9.8 billion and a SAIF deposit assessment base of
approximately $209 million.
BROKERED DEPOSITS
FDIC regulations adopted under FDICIA govern the receipt of brokered
deposits. Under these regulations, a bank cannot accept, rollover or renew
brokered deposits (which term is defined also to include any deposit with an
interest rate more than 75 basis points above prevailing rates) unless (i) it is
well capitalized, or (ii) it is adequately capitalized and receives a waiver
from the FDIC. A bank that is adequately capitalized may not pay an interest
rate on any deposits in excess of 75 basis points over certain prevailing market
rates specified by regulation. There are no such restrictions on a bank that is
well capitalized. The Corporation does not believe the brokered deposits
regulation has had or will have a material effect on the funding or liquidity of
Banco Popular, Banco Popular, Illinois, Banco Popular (California) or Banco
Popular, FSB.
PUERTO RICO REGULATION
General
As a commercial bank organized under the laws of Puerto Rico, Banco Popular
is subject to supervision, examination and regulation by the Office of the
Commissioner of Financial Institutions of Puerto Rico (the "Office of the
Commissioner"), pursuant to the Puerto Rico Banking Act of 1933, as amended (the
"Banking Law").
Section 27 of the Banking Law requires that at least ten percent (10%) of
the yearly net income of the Bank be credited annually to a reserve fund. This
apportionment shall be done every year until the reserve fund shall be equal to
ten percent (10%) of the total deposits or the total paid-in capital, whichever
is greater. At the end of its most recent fiscal year, Banco Popular had an
adequate reserve fund established.
Section 27 of the Banking Law also provides that when the expenditures of a
bank are greater than the receipts, the excess of the former over the latter
shall be charged against the undistributed profits of the bank, and the balance,
if any, shall be charged against the reserve fund, as a reduction thereof. If
there is no reserve fund sufficient to cover such balance in whole or in part,
the outstanding amount shall be charged against the capital account and no
dividend shall be declared until said capital has been restored to its original
amount and the reserve fund to 20% of the original capital.
Section 16 of the Banking Law requires every bank to maintain a legal
reserve which shall not be less than 20% of its demand liabilities, except
government deposits (federal, state and municipal) which are secured by actual
collateral. However, if a bank becomes a member of the Federal Reserve System,
the 20% legal reserve shall not be effective and the reserve requirements
demanded by the Federal Reserve System shall be applicable. However, pursuant to
an order of the Federal Reserve Board dated November 24, 1982, Banco Popular has
been exempted from such reserve requirements with respect to deposits payable in
Puerto Rico. As to those deposits, the Section 16 reserve requirements are
applicable.
Section 17 of the Banking Law permits Banco Popular to make loans to any
one person, firm, partnership or corporation, up to an aggregate amount of
fifteen percent (15%) of the paid-in capital and reserve fund of Banco Popular.
As of March 31, 1997, the legal lending limit for the Bank under this provision
was approximately $93 million. If such loans are secured by collateral worth at
least twenty-five percent (25%) more than the amount of the loan, the aggregate
maximum amount may reach one third of the paid-in capital of the Bank, plus its
reserve fund. There are no restrictions under Section 17 on the amount of loans
that are wholly secured by bonds, securities and other evidences of indebtedness
of the Government of the United
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States or Puerto Rico, or by current debt bonds, not in default, of
municipalities or instrumentalities of Puerto Rico.
Section 14 of the Banking Law authorizes Banco Popular to conduct certain
financial and related activities directly or through subsidiaries, including
finance leasing of personal property, making and servicing mortgage loans and
operating a small-loan company. Banco Popular engages in these activities
through its wholly owned subsidiaries, Popular Leasing & Rental, Inc., Popular
Mortgage, Inc., and Popular Consumer Services, Inc., respectively, all of which
are organized and operate in Puerto Rico.
The Finance Board, which is a part of the Office of the Commissioner, but
also includes as its members the Secretary of the Treasury, the Secretary of
Commerce, the Secretary of Consumer Affairs, the President of the Planning
Board, and the President of the Government Development Bank for Puerto Rico, has
the authority to regulate the maximum interest rates and finance charges that
may be charged on loans to individuals and unincorporated businesses in Puerto
Rico. The current regulations of the Finance Board provide that the applicable
interest rate on loans to individuals and unincorporated businesses (including
real estate development loans but excluding certain other personal and
commercial loans secured by mortgages on real estate properties) is to be
determined by free competition. The Finance Board also has authority to regulate
the maximum finance charges on retail installment sales contracts, which are
currently set at 21%, and for credit card purchases, which are currently set at
26%. There is no maximum rate set for installment sales contracts involving
motor vehicles, commercial, agricultural and industrial equipment, commercial
electric appliances and insurance premiums.
IBC Act
Under the IBC Act, without the prior approval of the Office of the
Commissioner, PIB may not amend its articles of incorporation or issue
additional shares of capital stock or other securities convertible into
additional shares of capital stock unless such shares are issued directly to the
shareholders of PIB previously identified in the application to organize the
international banking entity, in which case notification to the Office of the
Commissioner must be given within ten business days following the date of the
issue. Pursuant to the IBC Act, without the prior approval of the Office of the
Commissioner, PIB may not initiate the sale, encumbrance, assignment, merger or
other transfer of shares if by such transaction a person or persons acting in
concert could acquire direct or indirect control of 10% or more of any class of
the Company's stock. Such authorization must be requested at least 30 days prior
to the transaction.
PIB must submit to the Office of the Commissioner a report of its condition
and results of operation on a quarterly basis and its annual audited financial
statement at the close of its fiscal year. Under the IBC Act, PIB may not deal
with "domestic persons" as such term is defined in the IBC Act. Also, it may
only engage in those activities authorized in the IBC Act, the regulations
adopted thereunder and its license.
The IBC Act empowers the Office of the Commissioner to revoke or suspend,
after a hearing, the license of an international banking entity if, among other
things, it fails to comply with the IBC Act, regulations issued by the Office of
the Commissioner or the terms of its license, or if the Office of the
Commissioner finds that the business of the international banking entity is
conducted in a manner not consistent with the public interest.
DESCRIPTION OF DEBT SECURITIES
The Corporation's senior debt securities (the "Senior Debt Securities"),
may be issued from time to time in one or more series under an Indenture, dated
as of February 15, 1995, as supplemented by the First Supplemental Indenture
thereto, dated as of May 8, 1997 (collectively, the "Senior Indenture"), each
between the Corporation and The First National Bank of Chicago, as trustee (the
"Senior Trustee"). The Corporation's subordinated debt securities (the
"Subordinated Debt Securities") may be issued from time to time in one or more
series under an Indenture, dated as of November 30, 1995 (the "Subordinated
Indenture"), between the Corporation and The First National Bank of Chicago, as
trustee (the "Subordinated Trustee").
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PIB's senior debt securities (the "PIB Senior Debt Securities") may be
issued from time to time in one or more series under an Indenture (the "PIB
Senior Indenture") among the Corporation, PIB and the trustee named in the
applicable Prospectus Supplement, as trustee (the "PIB Senior Trustee"). PIB's
subordinated debt securities ("PIB Subordinated Debt Securities") may be issued
from time to time in one or more series under an Indenture (the "PIB
Subordinated Indenture") among the Corporation, PIB and the trustee named in the
applicable Prospectus Supplement, as trustee (the "PIB Subordinated Trustee").
PNA's senior debt securities (the "PNA Senior Debt Securities") may be issued
from time to time in one or more series under an Indenture, dated as of October
1, 1991, as supplemented by the First Supplemental Indenture thereto, dated as
of February 28, 1995, and by the Second Supplemental Indenture thereto, dated as
of May 8, 1997 (collectively, the "PNA Senior Indenture"), each among the
Corporation, PNA and The First National Bank of Chicago (the successor trustee
to Citibank N.A.), as trustee (the "PNA Senior Trustee"). PNA's subordinated
debt securities (the "PNA Subordinated Debt Securities") may be issued from time
to time in one or more series under an Indenture (the "PNA Subordinated
Indenture") among the Corporation, PNA and the trustee named in the applicable
Prospectus Supplement, as trustee (the "PNA Subordinated Trustee"). The Senior
Debt Securities, the Subordinated Debt Securities, the PIB Senior Debt
Securities, the PIB Subordinated Debt Securities, the PNA Senior Debt Securities
and the PNA Subordinated Debt Securities are sometimes referred to collectively
as the "Debt Securities." The Senior Indenture, the Subordinated Indenture, the
PIB Senior Indenture, the PIB Subordinated Indenture, the PNA Senior Indenture
and the PNA Subordinated Indenture are sometimes referred to collectively as the
"Indentures," and the Senior Trustee, the Subordinated Trustee, the PIB Senior
Trustee, the PIB Subordinated Trustee, the PNA Senior Trustee and the PNA
Subordinated Trustee are sometimes referred to collectively as the "Trustees."
The statements under this caption are brief summaries of material provisions
contained in the Indentures and are qualified in their entirety by reference to
the Indentures, including the definition therein of certain terms, copies of
which are filed as exhibits to the Registration Statement of which this
Prospectus is a part.
GENERAL
Each Indenture provides for the issuance of debt securities in one or more
series, and does not limit the principal amount of debt securities which may be
issued thereunder.
Reference is made to the Prospectus Supplement for the following terms of
the Debt Securities being offered hereby: (1) the specific title of the Debt
Securities; (2) whether the Debt Securities are Senior Debt Securities,
Subordinated Debt Securities, PIB Senior Debt Securities, PIB Subordinated Debt
Securities, PNA Senior Debt Securities or PNA Subordinated Debt Securities; (3)
the aggregate principal amount of the Debt Securities; (4) the percentage of
their principal amount at which the Debt Securities will be issued; (5) the date
or dates on which the Debt Securities will mature; (6) the rate or rates (which
may be fixed or variable) per annum or the method for determining such rate or
rates, if any, at which the Debt Securities will bear interest; (7) the times,
if any, at which any such interest will be payable; (8) any provisions relating
to optional or mandatory redemption of the Debt Securities; (9) the
denominations in which the Debt Securities are authorized to be issued; (10) the
extent to which Debt Securities will be issuable in global form and, if so, the
identity of the Depositary for such global Debt Securities; (11) the currency or
units of two or more currencies in which the Debt Securities are denominated, if
other than United States dollars, and the currency in which interest is payable
if other than the currency in which the Debt Securities are denominated; (12)
the place or places at which the Corporation, PIB or PNA will make payments of
principal (and premium, if any) and interest, if any, and the method of such
payment; (13) the Person to whom any Debt Security of such series will be
payable, if other than the Person in whose name that Debt Security (or one or
more Predecessor Debt Securities) is registered at the close of business on the
Regular Record Date for such interest; (14) whether the Debt Securities may be
issued as Original Issue Discount Securities; (15) whether the amount of payment
of principal of or any premium or interest on any Debt Security may be
determined with reference to an index, formula or other method and the manner in
which such amount shall be determined; (16) any additional covenants and Events
of Default and the remedies with respect thereto not currently set forth in the
respective Indenture; and (17) any other specific terms of Debt Securities.
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One or more series of the Debt Securities may be issued as Discount
Securities. A "Discount Security" is a debt security, including any zero-coupon
security, which is issued at a price lower than the amount payable at the Stated
Maturity thereof and which provides that upon redemption or acceleration of the
Maturity thereof an amount less than the amount payable upon the Stated Maturity
thereof and determined in accordance with the terms thereof shall become due and
payable.
Unless otherwise indicated in the applicable Prospectus Supplement, the
covenants contained in the Indentures and the Debt Securities will not afford
holders of the Debt Securities protection in the event of a sudden decline in
credit rating that might result from a recapitalization, restructuring, or other
highly leveraged transaction.
FORM, EXCHANGE, REGISTRATION AND TRANSFER
Debt Securities of a series may be issuable in certificated or global form.
Debt Securities in certificated form may be presented for registration of
transfer (with the form of transfer endorsed thereon duly executed), at the
office of the Security Registrar or at the office of any transfer agent
designated by the Corporation, PIB or PNA, as the case may be, for such purpose
with respect to any series of Debt Securities and referred to in an applicable
Prospectus Supplement, without service charge and upon payment of any taxes and
other governmental charges as described in the relevant Indenture. Such transfer
or exchange will be effected upon the Security Registrar being satisfied with
the documents of title and identity of the Person making the request. The
Security Registrar with respect to the Debt Securities will be designated in the
applicable Prospectus Supplement. If a Prospectus Supplement refers to any
transfer agents (in addition to the Security Registrar) initially designated by
the Corporation, PIB or PNA with respect to any series of Debt Securities, the
Corporation, PIB or PNA, as the case may be, may at any time rescind the
designation of any such transfer agent or approve a change in the location
through which any such transfer agent acts, except that the Corporation, PIB or
PNA, as the case may be, will be required to maintain a transfer agent in each
Place of Payment for such series. The Corporation, PIB or PNA, as the case may
be, may at any time designate additional transfer agents with respect to any
series of Debt Securities.
In the event of any redemption in part, the Corporation, PIB or PNA, as the
case may be, shall not be required to (i) issue, register the transfer of or
exchange any Debt Security during a period beginning at the opening of business
15 days before the mailing of a notice of redemption of Debt Securities of like
tenor and of the series of which such Debt Security is a part and ending at the
close of business on the day of such mailing and (ii) register the transfer of
or exchange any Debt Security so selected for redemption, in whole or in part,
except the unredeemed portion of any Debt Security being redeemed in part.
PAYMENT AND PAYING AGENT
Unless otherwise indicated in an applicable Prospectus Supplement, payment
of principal of and premium (if any) on any Debt Security will be made only
against surrender to the Paying Agent of such Debt Security. Unless otherwise
indicated in an applicable Prospectus Supplement, principal of and any premium
and interest on the Debt Securities will be payable, subject to any applicable
laws and regulations, at the office of such Paying Agent or Paying Agents as the
Corporation, PIB or PNA, as the case may be, may designate from time to time,
except that at the option of the Corporation, PIB or PNA, as the case may be,
payment of any interest may be made by check mailed to the address of the person
entitled thereto as such address shall appear in the Security Register with
respect to such Debt Securities. Unless otherwise indicated in an applicable
Prospectus Supplement, payment of interest on a Debt Security on any Interest
Payment Date will be made to the Person in whose name such Debt Security (or
Predecessor Debt Security) is registered at the close of business on the Regular
Record Date for such interest.
The Paying Agent for payments with respect to Debt Securities of each
series will be specified in the applicable Prospectus Supplement. The
Corporation, PIB or PNA, as the case may be, may at any time designate
additional Paying Agents or rescind the designation of any Paying Agent or
approve a change in the office through which any Paying Agent acts, except that
the Corporation, PIB or PNA, as the case may be, will be required to maintain a
Paying Agent in each Place of Payment for each series of Debt Securities.
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All moneys paid by the Corporation, PIB or PNA, as the case may be, to a
Paying Agent for the payment of the principal of and any premium or interest on
any Debt Security which remain unclaimed at the end of two years after such
principal, premium or interest shall have become due and payable will be repaid
to the Corporation, PIB or PNA, as the case may be, and the Holder of such Debt
Security will thereafter look only to the Corporation, PIB or PNA, as the case
may be, for payment thereof.
CERTAIN COVENANTS
Each of the Senior Indenture, the PIB Senior Indenture and the PNA Senior
Indenture provides that the Corporation, subject to the provisions described
under "Consolidation, Merger, Sale or Conveyance," will not sell, assign,
transfer, or otherwise dispose of, or permit Banco Popular to issue, sell,
assign, transfer or otherwise dispose of any shares of, or securities
convertible into or options to subscribe for, Voting Stock of Banco Popular
unless Banco Popular remains a Controlled Subsidiary (as defined below) of the
Corporation, and will not permit Banco Popular to merge or consolidate or
convey, transfer, lease or sell its properties substantially as an entirety,
unless the surviving corporation or transferee, as the case may be, is a
Controlled Subsidiary of the Corporation. There is no similar restriction in the
Subordinated Indenture, the PIB Subordinated Indenture or the PNA Subordinated
Indenture.
Each of the Senior Indenture, the PIB Senior Indenture and the PNA Senior
Indenture also provides that the Corporation will not, and it will not permit
any Material Banking Subsidiary (as defined below) at any time directly or
indirectly to, create, assume, incur or permit to exist any indebtedness for
borrowed money secured by a pledge, lien or other encumbrance on the Voting
Stock of any Material Banking Subsidiary without making effective provision
whereby the Debt Securities and the Guarantees (and, if the Corporation so
elects, any other indebtedness ranking on a parity with the Debt Securities and
the Guarantees) shall be secured equally and ratably with such secured
indebtedness so long as such other indebtedness shall be so secured; provided,
however, that the foregoing covenant shall not be applicable to liens for taxes
or assessments or governmental charges or levies not then due and delinquent or
the validity of which is being contested in good faith or which are less than
$10,000,000 in amount, liens created by or resulting from any litigation or
legal proceeding which is currently being contested in good faith by appropriate
proceedings or which involve claims of less than $10,000,000, or deposits to
secure (or in lieu of) surety, stay, appeal or customs bonds. There is no
similar restriction in the Subordinated Indenture, the PIB Subordinated
Indenture or the PNA Subordinated Indenture.
For the purpose of the foregoing provisions, "Material Banking Subsidiary"
means any Controlled Subsidiary chartered as a banking corporation under
federal, state or Puerto Rican law that is a significant subsidiary of the
Corporation as defined in Rule 1-02 of Regulation S-X of the Rules and
Regulations of the Commission. "Controlled Subsidiary" means any corporation
more than 80% of the outstanding Voting Stock of which is owned by the
Corporation. As of the date of this Prospectus, Banco Popular is the only
"Material Banking Subsidiary" of the Corporation.
REDEMPTION
General
If the Debt Securities of a series provide for mandatory redemption by the
Corporation, PIB or PNA, as the case may be, or redemption at the election of
the Corporation, PIB or PNA, as the case may be, unless otherwise provided in
the applicable Prospectus Supplement, such redemption shall be on not less than
30 nor more than 60 days' notice and, in the event of redemption of Debt
Securities of a series of like tenor in part, the Debt Securities to be redeemed
will be selected by the Trustee in such usual manner as it shall deem fair and
appropriate. Notice of such redemption will be mailed to Holders of Debt
Securities of such series to their last addresses as they appear on the register
of the Debt Securities of such series.
For Taxation
Should the Corporation or PIB, on the occasion of the next payment in
respect of any series of the Debt Securities, be obliged to pay any Additional
Amounts as are referenced in "Taxation by the Commonwealth of
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Puerto Rico" below, due to a change in law, regulation or interpretation, the
Corporation, PIB or PNA, as the case may be, may, at its option, on the giving
of not less than 30 nor more than 60 days' notice to the Holders of the Debt
Securities of each series, redeem such series of the Debt Securities as a whole
at a redemption price of 100% of the principal amount thereof with the accrued
interest to the date fixed for redemption or such other redemption price as set
forth in the applicable Prospectus Supplement.
GLOBAL SECURITIES
The Debt Securities may be issued in whole or in part in the form of one or
more Global Securities that will be deposited with, or on behalf of, a
depositary (the "Depositary") identified in the Prospectus Supplement relating
to such Debt Securities. Unless and until it is exchangeable in whole or in part
for Debt Securities in definitive form, a Global Security may not be transferred
except as a whole by the Depositary for such Global Security to a nominee of
such Depositary or by a nominee of such Depositary to such Depositary or another
nominee of such Depositary or by such Depositary or any such nominee to a
successor of such Depositary or a nominee of such successor.
The specific terms of the depositary arrangement, if any, with respect to a
series of Debt Securities will be described in the Prospectus Supplement
relating to such series. The Corporation, PIB and PNA anticipate that the
following provisions will apply to all depositary arrangements.
Ownership of beneficial interests in a Global Security will be limited to
persons that have accounts with the Depositary for such Global Security or its
nominee ("Participant") or persons that may hold interests through Participants.
Such accounts shall be designated by the underwriters or agents with respect to
the Debt Securities underwritten or solicited by them or by the Corporation, PIB
or PNA in the case of Debt Securities offered and sold directly by the
Corporation, PIB or PNA, as the case may be. The Corporation, PIB or PNA, as the
case may be, will obtain confirmation from the Depositary that upon the issuance
of a Global Security the Depositary for such Global Security will credit, on its
book-entry registration and transfer system, the Participants' accounts with the
respective principal amounts of the Debt Securities represented by such Global
Security. Ownership of beneficial interests in such Global Security will be
shown on, and the transfer of such ownership interests will be effected only
through, records maintained by the Depositary (with respect to interests of
Participants) and on the records of Participants (with respect to interests of
persons held through Participants). The laws of some states may require that
certain purchasers of securities take physical delivery of such securities in
definitive form. Such limits and such laws may impair the ability to own,
transfer or pledge beneficial interests in a Global Security.
So long as the Depositary for a Global Security, or its nominee, is the
registered owner of such Global Security, such Depositary or such nominee, as
the case may be, will be considered the sole owner or Holder of the Debt
Securities represented by such Global Security for all purposes under the
Indentures. Except as provided below, owners of beneficial interests in a Global
Security will not be entitled to have the Debt Securities represented by such
Global Security registered in their names, will not receive or be entitled to
receive physical delivery of the Debt Securities in definitive form and will not
be considered the owners or Holders thereof under the Indentures. Accordingly,
each person owning a beneficial interest in such a Global Security must rely on
the procedures of the Depositary and, if such person is not a Participant, on
the procedures of the Participant through which such person owns its interests,
to exercise any rights of a Holder under the applicable Indenture. The
Corporation, PIB and PNA understand that under existing industry practices, in
the event that the Corporation, PIB or PNA, as the case may be, requests any
action of Holders or that an owner of a beneficial interest in such a Global
Security desires to give or take any action that a Holder is entitled to give or
take under the applicable Indenture, the Depositary would authorize the
Participants holding the relevant beneficial interests to give or take such
action, and such Participants would authorize beneficial owners owning through
such Participants to give or take such action or would otherwise act upon the
instructions of beneficial owners owning through them.
Payment of principal of, and premium and interest, if any, on Debt
Securities registered in the name of a Depositary or its nominee will be made to
the Depositary or its nominee, as the case may be, as the registered owner of
the Global Security representing such Debt Securities. None of the Corporation,
PIB, PNA, the
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Trustee, any Paying Agent or any other agent of the Corporation, PIB, PNA or the
Trustee will have any responsibility or liability for any aspect of the records
relating to payments made on account of beneficial ownership interests in the
Global Security for such Debt Securities or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests.
The Corporation, PIB or PNA, as the case may be, will obtain confirmation
from the Depositary that upon receipt of any payment of principal of, or premium
or interest on, a Global Security, the Depositary will immediately credit
Participants' accounts with payments in amounts proportionate to their
respective beneficial interests in the principal amount of such Global Security
as shown on the records of the Depositary. Payments by Participants to owners of
beneficial interests in such Global Security held through such Participants will
be the responsibility of such Participants, as is now the case with securities
held for the accounts of customers registered in "street names."
If the Depositary for any Debt Securities represented by a Global Security
notifies the Corporation, PIB or PNA, as the case may be, that it is unwilling
or unable to continue as Depositary or ceases to be a clearing agency registered
under the Exchange Act and a successor Depositary is not appointed by the
Corporation, PIB or PNA, as the case may be, then within ninety days after
receiving such notice or becoming aware that Depositary is no longer so
registered, the Corporation, PIB or PNA, as the case may be, will issue such
Debt Securities in definitive form in exchange for such Global Security. In
addition, if an event of default, or an event which with notice or the lapse of
time or both would become an event of default, with respect to the Debt
Securities of a series has occurred and is continuing or either the Corporation,
PIB or PNA, as the case may be, at any time and in its sole discretion
determines not to have the Debt Securities represented by one or more Global
Securities, the Corporation, PIB or PNA, as the case may be, will issue Debt
Securities in definitive form in exchange for all of the Global Securities
representing such Debt Securities.
TAXATION BY THE COMMONWEALTH OF PUERTO RICO
All payments of, or in respect of, principal of, and any premium or
interest on, the Debt Securities and all payments pursuant to the Guarantees
will be made without withholding or deduction for, or on account of, any present
or future taxes, duties, assessments or governmental charges of whatever nature
imposed or levied by or on behalf of Puerto Rico or by or with any district,
municipality or other political subdivision thereof or authority therein having
power to tax unless such taxes, duties, assessments or governmental charges are
required by law to be withheld or deducted.
In the event that the Corporation or PIB is required by law to deduct or
withhold any amounts in respect of taxes, duties, assessments or governmental
charges, the Corporation or PIB, as the case may be, will pay such additional
amounts of, or in respect of, principal, premium and interest as will result
(after deduction of the said taxes, duties, assessments or governmental charges)
in the payment to the Holders of the Debt Securities, of the amounts which would
otherwise have been payable in respect to the Debt Securities in the absence of
such deduction or withholding ("Additional Amounts"), except that no such
Additional Amounts shall be payable:
(i) to any Holder of a Debt Security or any interest therein or rights
in respect thereof where such deduction or withholding is required by
reason of such Holder having some connection with Puerto Rico or any
political subdivision or taxing authority thereof or therein other than the
mere holding of and payment in respect of such Debt Security;
(ii) in respect of any deduction or withholding that would not have
been required but for the presentation by the Holder of a Debt Security for
payment on a date more than 30 days after Maturity or the date on which
payment thereof is duly provided for, whichever occurs later; or
(iii) in respect of any deduction or withholding that would not have
been required but for the failure to comply with any certification,
identification or other reporting requirements concerning the nationality,
residence, identity or connection with Puerto Rico, or any political
subdivision or taxing authority thereof or therein, of the Holder of a Debt
Security or any interest therein or rights in respect thereof, if
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compliance is required by Puerto Rico, or any political subdivision or
taxing authority thereof or therein, as a precondition to exemption from
such deduction or withholding.
GOVERNING LAW
The Indentures, the Debt Securities and the Guarantees of the Debt
Securities of PIB and PNA will be governed by, and construed in accordance with,
the laws of the State of New York.
TERMS APPLICABLE TO THE SENIOR DEBT SECURITIES OR
SUBORDINATED DEBT SECURITIES
MODIFICATION OF THE SENIOR AND SUBORDINATED INDENTURES
The Senior and Subordinated Indentures contain provisions permitting the
Corporation and the respective Trustees, with the consent of Holders of not less
than a majority in principal amount of the Senior Debt Securities or
Subordinated Debt Securities which are affected by the modification, to modify
the particular Indenture or any supplemental indenture or the rights of the
Holders of the Senior Debt Securities or Subordinated Debt Securities issued
under such Indenture; provided that no such modification may, without the
consent of the Holder of each Outstanding Senior Debt Security or Subordinated
Debt Security affected thereby, (a) change the stated maturity date of the
principal of, or any installment of principal of or interest, if any, on, any
Senior Debt Security or Subordinated Debt Security, (b) reduce the principal
amount of, or premium or rate of interest, if any, on, any Senior Debt Security
or Subordinated Debt Security, (c) reduce the amount of principal of an Original
Issue Discount Security payable upon acceleration of the maturity thereof, (d)
change the place or coin or currency of payment of principal of, or premium or
interest, if any, on, any Senior Debt Security or Subordinated Debt Security,
(e) impair the right to institute suit for the enforcement of any payment on or
with respect to any Senior Debt Security or Subordinated Debt Security, (f)
reduce the percentage in principal amount of Outstanding Senior Debt Securities
or Subordinated Debt Securities of any series, the consent of whose Holders is
required for modification or amendment of the Indenture or for waiver of
compliance with certain provisions of the Indenture or for waiver of certain
defaults, (g) modify (with certain exceptions) any provision of the Indenture
which requires the consent of the Holder of each Outstanding Senior Debt
Security or Subordinated Debt Security affected thereby or (h) with respect to
the Subordinated Indenture, modify the subordination provisions in a manner
adverse to Holders of Outstanding Subordinated Debt Securities.
SUBORDINATION
Unless otherwise indicated in the applicable Prospectus Supplement, the
following provisions shall apply to the Subordinated Debt Securities.
The payment of the principal of, premium, if any, and interest on the
Subordinated Debt Securities will, to the extent set forth in the Subordinated
Indenture, be subordinated in right of payment to the prior payment in full of
all Senior Indebtedness (as defined below) of the Corporation. In certain events
of insolvency, the payment of the principal of, premium, if any, and interest on
the Subordinated Debt Securities will, to the extent set forth in the
Subordinated Indenture, also be effectively subordinated in right of payment to
the prior payment in full of all Other Financial Obligations (as defined below)
of the Corporation. As of March 31, 1997, $1,827 million aggregate principal
amount of Senior Indebtedness and $65 million of Other Financial Obligations of
the Corporation were outstanding. Upon any payment or distribution of assets to
creditors upon any liquidation, dissolution, winding up, reorganization,
assignment for the benefit of creditors, marshalling of assets or any
bankruptcy, insolvency or similar proceedings of the Corporation, the holders of
all Senior Indebtedness of the Corporation will first be entitled to receive
payment in full of all amounts due or to become due thereon before the Holders
of the Subordinated Debt Securities will be entitled to receive any payment in
respect of the principal of, premium, if any, or interest on the Subordinated
Debt Securities. If, upon any such payment or distribution of assets to
creditors, there remain, after giving effect to such subordination provisions in
favor of the holders of Senior Indebtedness of the Corporation, any amounts of
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cash, property or securities available for payment or distribution in respect of
Subordinated Debt Securities (as defined in the Subordinated Indenture,
"Corporation Excess Proceeds") and if, at such time, any person entitled to
payment pursuant to the terms of Other Financial Obligations of the Corporation
has not received payment in full of all amounts due or to become due on or in
respect of such Other Financial Obligations of the Corporation, then such
Corporation Excess Proceeds shall first be applied to pay or provide for the
payment in full of such Other Financial Obligations of the Corporation before
any payment or distribution may be made in respect of the Subordinated Debt
Securities. In the event of the acceleration of the maturity of any Subordinated
Debt Securities, the holders of all Senior Indebtedness of the Corporation will
first be entitled to receive payment in full of all amounts due or to become due
thereon before the Holders of the Subordinated Debt Securities will be entitled
to receive any payment of the principal of, premium, if any, or interest on the
Subordinated Debt Securities. Accordingly, in case of such an acceleration, all
Senior Indebtedness of the Corporation would have to be repaid before any
payment could be made in respect of the Subordinated Debt Securities. No
payments on account of principal, premium, if any, or interest in respect of the
Subordinated Debt Securities may be made if there shall have occurred and be
continuing a default in any payment with respect to any Senior Indebtedness of
the Corporation, or an event of default with respect to any Senior Indebtedness
of the Corporation permitting the holders thereof to accelerate the maturity
thereof, or if any judicial proceeding shall be pending with respect to any such
default.
By reason of such subordination, in the event of the insolvency of the
Corporation, creditors of the Corporation who are not holders of Senior
Indebtedness of the Corporation or the Subordinated Debt Securities may recover
less, ratably, than holders of Senior Indebtedness of the Corporation and may
recover more, ratably, than Holders of the Subordinated Debt Securities.
"Senior Indebtedness" of the Corporation is defined in the Subordinated
Indenture to mean the principal of, premium, if any, and interest on (i) all
indebtedness of the Corporation for money borrowed (including indebtedness of
others guaranteed by the Corporation) other than the Subordinated Debt
Securities, whether outstanding on the date of the Subordinated Indenture or
thereafter created, assumed or incurred and (ii) any amendments, renewals,
extensions, modifications and refundings of any such indebtedness, unless in
either case in the instrument creating or evidencing any such indebtedness or
pursuant to which it is outstanding it is provided that such indebtedness is not
superior in right of payment to the Subordinated Debt Securities. For the
purposes of this definition, "indebtedness for money borrowed" is defined as (i)
any obligation of, or any obligation guaranteed by, the Corporation for the
repayment of borrowed money, whether or not evidenced by bonds, debentures,
notes or other written instruments, (ii) any deferred payment obligation of, or
any such obligation guaranteed by, the Corporation for the payment of the
purchase price of property or assets evidenced by a note or similar instrument
and (iii) any obligation of, or any such obligation guaranteed by, the
Corporation for the payment of rent or other amounts under a lease of property
or assets which obligation is required to be classified and accounted for as a
capitalized lease on the balance sheet of the Corporation under generally
accepted accounting principles.
"Other Financial Obligations" of the Corporation is defined in the
Subordinated Indenture to mean all obligations of the Corporation to make
payment pursuant to the terms of financial instruments, such as (i) securities
contracts and foreign currency exchange contracts, (ii) derivative instruments,
such as swap agreements (including interest rate and currency and foreign
exchange rate swap agreements), cap agreements, floor agreements, collar
agreements, interest rate agreements, foreign exchange agreements, options,
commodity futures contracts, commodity options contracts and (iii) similar
financial instruments; provided that the term Other Financial Obligations shall
not include (x) obligations on account of Senior Indebtedness of the Corporation
and (y) obligations on account of indebtedness for money borrowed ranking pari
passu with or subordinate to the Subordinated Debt Securities.
EVENTS OF DEFAULT
Senior Indenture
An Event of Default with respect to Senior Debt Securities of any series is
defined in the Senior Indenture as being: default for 30 days in payment of any
interest on Senior Debt Securities of such series;
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default in payment of principal of, or premium, if any, on any Senior Debt
Securities of such series; default in deposit of any mandatory sinking fund
payment required by the Senior Debt Securities of such series; default for 60
days after notice, in performance or breach of any other covenant or warranty in
the Senior Indenture (except for a covenant expressly relating to a series of
Senior Debt Securities other than that series of Senior Debt Securities) or in
the Senior Debt Securities of such series; acceleration of the Senior Debt
Securities of any other series or any other indebtedness for borrowed money of
the Corporation or any Material Banking Subsidiary, in each case exceeding
$10,000,000 in an aggregate principal amount, as a result of a default under the
terms of the instrument or instruments under which such indebtedness is issued
or secured, unless such acceleration is annulled within 30 days after written
notice as provided in the Indenture, provided that if such default is remedied
or cured by the Corporation or any Material Banking Subsidiary or waived by
holders of such indebtedness, the Event of Default by reason thereof shall be
deemed to have been thereupon remedied, cured or waived; certain events of
bankruptcy, insolvency or reorganization with respect to the Corporation or any
Material Banking Subsidiary; or any other Event of Default specified in the
applicable Prospectus Supplement. In case an Event of Default with respect to
Senior Debt Securities of any series shall occur and be continuing, the Senior
Trustee or the Holders of not less than 25% in principal amount of the Senior
Debt Securities of such series then outstanding may declare the principal of all
such Senior Debt Securities of such series to be due and payable. The
Corporation is required to furnish to the Senior Trustee annually a statement as
to the performance by the Corporation of its obligations under the Senior
Indenture and as to any default in such performance. Under certain circumstances
any declaration of acceleration with respect to Senior Debt Securities of any
series may be rescinded and past defaults (except a default in the payment of
principal of or interest on the Senior Debt Securities) may be waived by the
Holders of a majority in aggregate principal amount of the Senior Debt
Securities of such series then outstanding. The Senior Indenture provides that
the Senior Trustee may withhold notice to the Holders of Senior Debt Securities
of any series of any continuing default (except in the payment of the principal
of (or premium, if any) or interest on any Senior Debt Securities of such
series) if such Senior Trustee considers it in the interest of Holders of such
series of Senior Debt Securities to do so.
Subordinated Indenture
An Event of Default with respect to the Subordinated Debt Securities of any
series is defined in the Subordinated Indenture as being certain events
involving a bankruptcy, insolvency or reorganization of the Corporation. If an
Event of Default with respect to Subordinated Debt Securities of any series
shall have occurred and be continuing, either the Subordinated Trustee or the
Holders of not less than 25% in aggregate principal amount of the Subordinated
Debt Securities of such series then outstanding may declare the principal of the
Subordinated Debt Securities of such series to be due and payable immediately.
The Corporation is required to furnish to the Subordinated Trustee annually a
statement as to the performance by the Corporation of its obligations under the
Subordinated Indenture and as to any default in such performance. Under certain
circumstances, any declaration of acceleration with respect to Subordinated Debt
Securities of any series may be rescinded and past defaults (except a default in
the payment of principal of or interest on the Subordinated Debt Securities) may
be waived by the Holders of a majority in aggregate principal amount of the
Subordinated Debt Securities of such series then outstanding. The Subordinated
Indenture provides that the Subordinated Trustee may withhold notice to the
Holders of the Subordinated Debt Securities of any series of any continuing
default (except in the payment of the principal of (or premium, if any) or
interest on any Subordinated Debt Securities of such series) if the Subordinated
Trustee considers it in the interest of the Holders of such series of
Subordinated Debt Securities to do so.
The Subordinated Indenture does not provide for any right of acceleration
of the payment of principal of a series of Subordinated Debt Securities upon a
default in the payment of principal or interest or in the performance of any
covenant or agreement in the Subordinated Debt Securities of the particular
series or in the Subordinated Indenture.
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CONSOLIDATION, MERGER, SALE OR CONVEYANCE
The Corporation has covenanted in the Senior and Subordinated Indentures
that it will not merge or consolidate with any other corporation or sell,
convey, transfer or lease all or substantially all of its assets to any person,
firm or corporation unless the Corporation is the continuing corporation or the
successor corporation expressly assumes the obligations under any outstanding
Senior Debt Securities and Subordinated Debt Securities and the respective
Senior and Subordinated Indentures and the Corporation or such successor
corporation is not, immediately after such merger, consolidation, sale or
conveyance, in default in the performance of any of the covenants or conditions
of the respective Indenture. The Indentures do not contain any other covenant
which restricts the Corporation's ability to merge or consolidate with any other
corporation, sell, convey, transfer or lease all or substantially all of its
assets to any persons, firm or corporation or otherwise engage in restructuring
transactions.
TERMS APPLICABLE TO THE PNA SENIOR DEBT SECURITIES OR PNA
SUBORDINATED DEBT SECURITIES
MODIFICATION OF THE PNA SENIOR AND PNA SUBORDINATED INDENTURES
The PNA Senior and PNA Subordinated Indentures contain provisions
permitting the Corporation, PNA and the respective PNA Trustees, with the
consent of Holders of not less than a majority in principal amount of the PNA
Senior Debt Securities or PNA Subordinated Debt Securities that are affected by
the modification, to modify the particular Indenture or any supplemental
indenture or the rights of the Holders of the PNA Senior Debt Securities or PNA
Subordinated Debt Securities issued under such Indenture, provided that no such
modification may, without the consent of the Holder of each Outstanding PNA
Senior Debt Security or PNA Subordinated Debt Security affected thereby, (a)
change the stated maturity date of the principal of, or any installment of
principal of or interest, if any, on, any PNA Senior Debt Security or PNA
Subordinated Debt Security, (b) reduce the principal amount of, or premium or
rate of interest, if any, on, any PNA Senior Debt Security or PNA Subordinated
Debt Security, (c) reduce the amount of principal of an Original Issue Discount
PNA Senior Debt Security or PNA Subordinated Debt Security payable upon
acceleration of the maturity thereof, (d) change the place or coin or currency
of payment of principal of, or premium or interest, if any, on, any PNA Senior
Debt Security or PNA Subordinated Debt Security, (e) impair the right to
institute suit for the enforcement of any payment on or with respect to any PNA
Senior Debt Security or PNA Subordinated Debt Security, (f) modify or affect in
any manner adverse to Holders the terms and conditions of the obligations of the
Guarantor in respect of the due and punctual payment of principal or any premium
and interest, sinking fund payment or Additional Amounts in respect of the PNA
Senior Debt Securities or PNA Subordinated Debt Securities, (g) reduce the
percentage in principal amount of Outstanding PNA Senior Debt Securities or PNA
Subordinated Debt Securities of any series, the consent of whose Holders is
required for modification or amendment of the Indenture or for waiver of
compliance with certain provisions of the Indenture or for waiver of certain
defaults, (h) modify (with certain exceptions) any provision of the Indenture
that requires the consent of the Holder of each Outstanding PNA Senior Debt
Security or PNA Subordinated Debt Security affected thereby or (i) with respect
to the PNA Subordinated Indenture, modify the subordination provisions in a
manner adverse to Holders of Outstanding PNA Subordinated Debt Securities.
SUBORDINATION
Unless otherwise indicated in the applicable Prospectus Supplement, the
following provisions shall apply to the PNA Subordinated Debt Securities and the
guarantee of them by the Corporation.
The payment of the principal of, premium, if any, and interest on the PNA
Subordinated Debt Securities and the Corporation's Guarantees thereof (the "PNA
Subordinated Guarantees") will, to the extent set forth in the PNA Subordinated
Indenture, be subordinated in right of payment to the prior payment in full of
all Senior Indebtedness (as defined below) of PNA or the Corporation, as the
case may be. In certain events of insolvency, the payment of the principal of,
premium, if any, and interest on the PNA Subordinated Debt
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Securities and any payments with respect to the PNA Subordinated Guarantees
will, to the extent set forth in the PNA Subordinated Indenture, also be
effectively subordinated in right of payment to the prior payment in full of all
Other Financial Obligations (as defined below) of PNA or the Corporation, as the
case may be. As of March 31, 1997, $1,058 million aggregate principal amount of
Senior Indebtedness and $25 million of Other Financial Obligations of PNA were
outstanding. Upon any payment or distribution of assets to creditors upon any
liquidation, dissolution, winding up, reorganization, assignment for the benefit
of creditors, marshalling of assets or any bankruptcy, insolvency or similar
proceedings of PNA or the Corporation, the holders of all Senior Indebtedness
thereof will first be entitled to receive payment in full of all amounts due or
to become due thereon before the Holders of the PNA Subordinated Debt Securities
or the PNA Subordinated Guarantees will be entitled to receive any payment in
respect of the principal of, premium, if any, or interest on the PNA
Subordinated Debt Securities or the PNA Subordinated Guarantees, as the case may
be. If, upon any such payment or distribution of assets to creditors, there
remain, after giving effect to such subordination provisions in favor of the
holders of Senior Indebtedness of PNA and the Corporation, any amounts of cash,
property or securities available for payment or distribution in respect of PNA
Subordinated Debt Securities or the PNA Subordinated Guarantees (as defined in
the PNA Subordinated Indenture, "PNA Excess Proceeds") and if, at such time, any
person entitled to payment pursuant to the terms of Other Financial Obligations
of PNA or the Corporation has not received payment in full of all amounts due or
to become due on or in respect of such Other Financial Obligations of PNA or the
Corporation, then such PNA Excess Proceeds shall first be applied to pay or
provide for the payment in full of such Other Financial Obligations of PNA or
the Corporation, as the case may be, before any payment or distribution may be
made in respect of the PNA Subordinated Debt Securities or the PNA Subordinated
Guarantees. In the event of the acceleration of the maturity of any PNA
Subordinated Debt Securities, the holders of all Senior Indebtedness of PNA or
the Corporation, as the case may be, will first be entitled to receive payment
in full of all amounts due or to become due thereon before the Holders of the
PNA Subordinated Debt Securities or the PNA Subordinated Guarantees will be
entitled to receive any payment of the principal of, premium, if any, or
interest on the PNA Subordinated Debt Securities or the PNA Subordinated
Guarantees, as the case may be. Accordingly, in case of such an acceleration,
all Senior Indebtedness of PNA or the Corporation would have to be repaid before
any payment could be made in respect of the PNA Subordinated Debt Securities or
the PNA Subordinated Guarantees, as the case may be. No payments on account of
principal, premium, if any, or interest in respect of the PNA Subordinated Debt
Securities or the PNA Subordinated Guarantees may be made if there shall have
occurred and be continuing a default in any payment with respect to any Senior
Indebtedness of PNA or the Corporation, an event of default with respect to any
Senior Indebtedness of PNA or the Corporation permitting the holders thereof to
accelerate the maturity thereof, or if any judicial proceeding shall be pending
with respect to any such default.
By reason of such subordination, in the event of the insolvency of PNA or
the Corporation, creditors of PNA or the Corporation who are not holders of
Senior Indebtedness, the PNA Subordinated Debt Securities or the PNA
Subordinated Guarantees may recover less, ratably, than holders of Senior
Indebtedness of PNA or the Corporation, as the case may be, and may recover
more, ratably, than Holders of the PNA Subordinated Debt Securities or the PNA
Subordinated Guarantees.
"Senior Indebtedness" of PNA is defined in the PNA Subordinated Indenture
to mean the principal of, premium, if any, and interest on (i) all indebtedness
of PNA for money borrowed (including indebtedness of others guaranteed by PNA)
other than the PNA Subordinated Debt Securities, whether outstanding on the date
of the PNA Subordinated Indenture or thereafter created, assumed or incurred and
(ii) any amendments, renewals, extensions, modifications and refundings of any
such indebtedness, unless in either case in the instrument creating or
evidencing any such indebtedness or pursuant to which it is outstanding it is
provided that such indebtedness is not superior in right of payment to the PNA
Subordinated Debt Securities. For the purposes of this definition, "indebtedness
for money borrowed" is defined as (i) any obligation of, or any obligation
guaranteed by, PNA for the repayment of borrowed money, whether or not evidenced
by bonds, debentures, notes or other written instruments, (ii) any deferred
payment obligation of, or any such obligation guaranteed by, PNA for the payment
of the purchase price of property or assets evidenced by a note or similar
instrument, and (iii) any obligation of, or any such obligation guaranteed by,
PNA for the payment of rent or
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other amounts under a lease of property or assets which obligation is required
to be classified and accounted for as a capitalized lease on the balance sheet
of PNA under generally accepted accounting principles.
"Other Financial Obligations" of PNA is defined in the PNA Subordinated
Indenture to mean all obligations of PNA to make payment pursuant to the terms
of financial instruments, such as (i) securities contracts and foreign currency
exchange contracts, (ii) derivative instruments, such as swap agreements
(including interest rate and currency and foreign exchange rate swap
agreements), cap agreements, floor agreements, collar agreements, interest rate
agreements, foreign exchange agreements, options, commodity futures contracts,
commodity options contracts and (iii) similar financial instruments; provided
that the term Other Financial Obligations shall not include (x) obligations on
account of Senior Indebtedness of PNA and (y) obligations on account of
indebtedness for money borrowed ranking pari passu with or subordinate to the
PNA Subordinated Debt Securities.
"Senior Indebtedness" of the Corporation is defined in the PNA Subordinated
Indenture to mean the principal of, premium, if any, and interest on (i) all
indebtedness of the Corporation for money borrowed (including indebtedness of
others guaranteed by the Corporation other than the PNA Subordinated
Guarantees), whether outstanding on the date of the PNA Subordinated Indenture
or thereafter created, assumed or incurred and (ii) any amendments, renewals,
extensions, modifications and refundings of any such indebtedness, unless in
either case in the instrument creating or evidencing any such indebtedness or
pursuant to which it is outstanding it is provided that such indebtedness is not
superior in right of payment to the PNA Subordinated Guarantees. For the
purposes of this definition, "indebtedness for money borrowed" is defined as (i)
any obligation of, or any obligation guaranteed by, the Corporation for the
repayment of borrowed money, whether or not evidenced by bonds, debentures,
notes or other written instruments, (ii) any deferred payment obligation of, or
any such obligation guaranteed by, the Corporation for the payment of the
purchase price of property or assets evidenced by a note or similar instrument,
and (iii) any obligation of, or any such obligation guaranteed by, the
Corporation for the payment of rent or other amounts under a lease of property
or assets which obligation is required to be classified and accounted for as a
capitalized lease on the balance sheet of the Corporation under generally
accepted accounting principles.
"Other Financial Obligations" of the Corporation is defined in the PNA
Subordinated Indenture to mean all obligations of the Corporation to make
payment pursuant to the terms of financial instruments, such as (i) securities
contracts and foreign currency exchange contracts, (ii) derivative instruments,
such as swap agreements (including interest rate and currency and foreign
exchange rate swap agreements), cap agreements, floor agreements, collar
agreements, interest rate agreements, foreign exchange agreements, options,
commodity futures contracts, commodity options contracts and (iii) similar
financial instruments; provided that the term Other Financial Obligations shall
not include (x) obligations on account of Senior Indebtedness and (y)
obligations on account of indebtedness for money borrowed ranking pari passu
with or subordinate to the PNA Subordinated Guarantees.
EVENTS OF DEFAULT
PNA Senior Indenture
An Event of Default with respect to PNA Senior Debt Securities of any
series is defined in the PNA Senior Indenture as being: default for 30 days in
payment of any interest on PNA Senior Debt Securities of such series; default in
payment of principal of (or premium, if any) on any PNA Senior Debt Securities
of such series; default in deposit of any mandatory sinking fund payment
required by the PNA Senior Debt Securities of such series; default for 60 days,
after notice, in performance or breach of any other covenant or warranty in the
PNA Senior Indenture (except for a covenant expressly relating to a series of
PNA Senior Debt Securities other than that series of PNA Senior Debt Securities)
or in the PNA Senior Debt Securities of such series; acceleration of the PNA
Senior Debt Securities of any other series or any other indebtedness for
borrowed money of the Corporation, PNA or any Material Banking Subsidiary, in
each case exceeding $10,000,000 in an aggregate principal amount, as a result of
a default under the terms of the instrument or instruments under which such
indebtedness is issued or secured, unless such acceleration is annulled within
30 days after written notice as provided in the Indenture, provided that if such
default is remedied or cured by
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the Corporation, PNA or any Material Banking Subsidiary or waived by the holders
of such indebtedness, the Event of Default by reason thereof shall be deemed to
have been thereupon remedied, cured or waived; certain events of bankruptcy,
insolvency or reorganization of the Corporation, any Material Banking Subsidiary
or PNA; or any other Event of Default specified in the applicable Prospectus
Supplement. In case an Event of Default with respect to PNA Senior Debt
Securities of any series shall occur and be continuing, the PNA Senior Trustee
or the Holders of not less than 25% in principal amount of the PNA Senior Debt
Securities of such series then outstanding may declare the principal of all the
PNA Senior Debt Securities of such series to be due and payable. The Corporation
and PNA are required to furnish to the PNA Senior Trustee annually a statement
or statements as to the performance by the Corporation and PNA of their
respective obligations under the PNA Senior Indenture of such series and as to
any default in such performance. Under certain circumstances any declaration of
acceleration with respect to PNA Senior Debt Securities of any series may be
rescinded and past defaults (except a default in the payment of principal of or
interest on the PNA Senior Debt Securities) may be waived by the Holders of a
majority in aggregate principal amount of the PNA Senior Debt Securities of such
series then outstanding. The PNA Senior Indenture provides that the PNA Senior
Trustee may withhold notice to the Holders of PNA Senior Debt Securities of any
series of any continuing default (except in the payment of the principal of (or
premium, if any) or interest on any PNA Senior Debt Securities of such series)
if such PNA Senior Trustee considers it in the interest of Holders of such
series of PNA Senior Debt Securities to do so.
PNA Subordinated Indenture
An Event of Default with respect to the PNA Subordinated Debt Securities of
any series is defined in the PNA Subordinated Indenture as being certain events
involving a bankruptcy, insolvency or reorganization of the Corporation or PNA.
If an Event of Default with respect to PNA Subordinated Debt Securities of any
series shall have occurred and be continuing, either the PNA Subordinated
Trustee or the Holders of not less than 25% in aggregate principal amount of the
PNA Subordinated Debt Securities of such series then outstanding may declare the
principal of the PNA Subordinated Debt Securities of such series to be due and
payable immediately. The Corporation and PNA are required to furnish to the PNA
Subordinated Trustee annually a statement as to the performance by the
Corporation and PNA of their respective obligations under the PNA Subordinated
Indenture and as to any default in such performance. Under certain
circumstances, any declaration of acceleration with respect to PNA Subordinated
Debt Securities of any series may be rescinded and past defaults (except a
default in the payment of principal of or interest on the PNA Subordinated Debt
Securities) may be waived by the Holders of a majority in aggregate principal
amount of the PNA Subordinated Debt Securities of such series then outstanding.
The PNA Subordinated Indenture provides that the PNA Subordinated Trustee may
withhold notice to the Holders of the PNA Subordinated Debt Securities of any
series of any continuing default (except in the payment of the principal of (or
premium, if any) or interest on any PNA Subordinated Debt Securities of such
series) if the PNA Subordinated Trustee considers it in the interest of the
Holders of such series of PNA Subordinated Debt Securities to do so.
The PNA Subordinated Indenture does not provide for any right of
acceleration of the payment of principal of a series of PNA Subordinated Debt
Securities upon a default in the payment of principal or interest or in the
performance of any covenant or agreement in the PNA Subordinated Debt Securities
of the particular series, in the PNA Subordinated Indenture or in the PNA
Subordinated Guarantees.
CONSOLIDATION, MERGER, SALE OR CONVEYANCE
Each of the Corporation and PNA has covenanted in the PNA Senior and PNA
Subordinated Indentures that it will not merge or consolidate with any other
corporation or sell, convey, transfer or lease all or substantially all of its
assets to any person, firm or corporation unless the Corporation or PNA, as the
case may be, is the continuing corporation or the successor corporation
expressly assumes the obligations under any outstanding PNA Senior Debt
Securities and PNA Subordinated Debt Securities and the PNA Subordinated
Guarantees and the respective PNA Senior and PNA Subordinated Indentures and the
Corporation or PNA, as the case may be, or such successor corporation is not,
immediately after such merger, consolidation, sale or
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conveyance, in default in the performance of any of the covenants or conditions
of the respective Indenture. The Indentures do not contain any other covenant
that restricts the Corporation's or PNA's ability to merge or consolidate with
any other corporation, sell, convey, transfer or lease all or substantially all
of its assets to any person, firm or corporation or otherwise engage in
restructuring transactions.
GUARANTEE
PNA Senior Debt Securities
The Corporation will guarantee the punctual payment of the principal of,
premium, if any, and interest on the PNA Senior Debt Securities, when and as the
same are due and payable. The guarantee is absolute and unconditional,
irrespective of any circumstance that might otherwise constitute a legal or
equitable discharge of a surety or guarantor. To evidence the guarantee, a
Guarantee, executed by the Corporation, will be endorsed on each PNA Senior Debt
Security. Holders of the PNA Senior Debt Securities may proceed directly against
the Corporation in the event of default under the PNA Senior Debt Securities
without first proceeding against PNA. The Guarantees will rank pari passu with
all other unsecured and unsubordinated obligations of the Corporation.
PNA Subordinated Debt Securities
The Corporation will guarantee, on a subordinated basis, the punctual
payment of the principal of, premium, if any, and interest on the PNA
Subordinated Debt Securities, when and as the same are due and payable. The
guarantee is absolute and unconditional, irrespective of any circumstance that
might otherwise constitute a legal or equitable discharge of a surety or
guarantor. To evidence the guarantee, a Guarantee, executed by the Corporation,
will be endorsed on each PNA Subordinated Debt Security. Holders of the PNA
Subordinated Debt Securities may proceed directly against the Corporation in the
event of default under the PNA Subordinated Debt Securities without first
proceeding against PNA. The PNA Subordinated Guarantees will rank pari passu
with all other unsecured and subordinated obligations of the Corporation. See
"Subordination."
TERMS APPLICABLE TO THE PIB SENIOR DEBT SECURITIES
OR PIB SUBORDINATED DEBT SECURITIES
MODIFICATION OF THE PIB SENIOR AND PIB SUBORDINATED INDENTURES
The PIB Senior and PIB Subordinated Indentures contain provisions
permitting the Corporation, PIB and the respective PIB Trustees, with the
consent of Holders of not less than a majority in principal amount of the PIB
Senior Debt Securities or PIB Subordinated Debt Securities that are affected by
the modification, to modify the particular Indenture or any supplemental
indenture or the rights of the Holders of the PIB Senior Debt Securities or PIB
Subordinated Debt Securities issued under such Indenture; provided that no such
modification may, without the consent of the Holder of each outstanding PIB
Senior Debt Security or PIB Subordinated Debt Security affected thereby, (a)
change the stated maturity date of the principal of, or any installment of
principal of or interest, if any, on, any PIB Senior Debt Security or PIB
Subordinated Debt Security, (b) reduce the principal amount of, or premium or
rate of interest, if any, on, any PIB Senior Debt Security or PIB Subordinated
Debt Security, (c) reduce the amount of principal of an Original Issue Discount
Security payable upon acceleration of the maturity thereof, (d) change the place
or coin or currency of payment of principal of, or premium or interest, if any,
on, any PIB Senior Debt Security or PIB Subordinated Debt Security, (e) impair
the right to institute suit for the enforcement of any payment on or with
respect to any PIB Senior Debt Security or PIB Subordinated Debt Security, (f)
modify or affect in any manner adverse to Holders the terms and conditions of
the obligations of the Guarantor in respect of the due and punctual payment of
principal or any premium and interest, sinking fund payment or Additional
Amounts in respect of the PIB Senior Debt Securities or PIB Subordinated Debt
Securities, (g) reduce the percentage in principal amount of Outstanding PIB
Senior Debt Securities or PIB Subordinated Debt Securities of any series, the
consent of whose Holders is required for modification or amendment of the
Indenture or for waiver
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of compliance with certain provisions of the Indenture or for waiver of certain
defaults, (h) modify (with certain exceptions) any provision of the Indenture
that requires the consent of the Holder of each Outstanding PIB Senior Debt
Security or PIB Subordinated Debt Security affected thereby or (i) with respect
to the PIB Subordinated Indenture, modify the subordination provisions in a
manner adverse to Holders of Outstanding PIB Subordinated Debt Securities.
SUBORDINATION
Unless otherwise indicated in the applicable Prospectus Supplement, the
following provisions shall apply to the PIB Subordinated Debt Securities and the
guarantee of them by the Corporation.
The payment of the principal of, premium, if any, and interest on the PIB
Subordinated Debt Securities and the Corporation's Guarantees thereof (the "PIB
Subordinated Guarantees") will, to the extent set forth in the PIB Subordinated
Indenture, be subordinated in right of payment to the prior payment in full of
all Senior Indebtedness (as defined below) of PIB or the Corporation, as the
case may be. In certain events of insolvency, the payment of the principal of,
premium, if any, and interest on the PIB Subordinated Debt Securities and any
payments with respect to the PIB Subordinated Guarantees will, to the extent set
forth in the PIB Subordinated Indenture, also be effectively subordinated in
right of payment to the prior payment in full of all Other Financial Obligations
(as defined below) of PIB or the Corporation, as the case may be. As of March
31, 1997, no Senior Indebtedness and no Other Financial Obligations of PIB were
outstanding. Upon any payment or distribution of assets to creditors upon any
liquidation, dissolution, winding up, reorganization, assignment for the benefit
of creditors, marshalling of assets or any bankruptcy, insolvency or similar
proceedings of PIB or the Corporation, the holders of all Senior Indebtedness
thereof will first be entitled to receive payment in full of all amounts due or
to become due thereon before the Holders of the PIB Subordinated Debt Securities
or the PIB Subordinated Guarantees will be entitled to receive any payment in
respect of the principal of, premium, if any, or interest on the PIB
Subordinated Debt Securities or the PIB Subordinated Guarantees, as the case may
be. If, upon any such payment or distribution of assets to creditors, there
remain, after giving effect to such subordination provisions in favor of the
holders of Senior Indebtedness of PIB and the Corporation, any amounts of cash,
property or securities available for payment or distribution in respect of PIB
Subordinated Debt Securities or the PIB Subordinated Guarantees (as defined in
the PIB Subordinated Indenture, "PIB Excess Proceeds") and if, at such time, any
person entitled to payment pursuant to the terms of Other Financial Obligations
of PIB or the Corporation has not received payment in full of all amounts due or
to become due on or in respect of such Other Financial Obligations of PIB or the
Corporation, then such PIB Excess Proceeds shall first be applied to pay or
provide for the payment in full of such Other Financial Obligations of PIB or
the Corporation, as the case may be, before any payment or distribution may be
made in respect of the PIB Subordinated Debt Securities or the PIB Subordinated
Guarantees. In the event of the acceleration of the maturity of any PIB
Subordinated Debt Securities, the holders of all Senior Indebtedness of PIB or
the Corporation, as the case may be, will first be entitled to receive payment
in full of all amounts due or to become due thereon before the Holders of the
PIB Subordinated Debt Securities or the PIB Subordinated Guarantees will be
entitled to receive any payment of the principal of, premium, if any, or
interest on the PIB Subordinated Debt Securities or the PIB Subordinated
Guarantees, as the case may be. Accordingly, in case of such an acceleration,
all Senior Indebtedness of PIB or the Corporation would have to be repaid before
any payment could be made in respect of the PIB Subordinated Debt Securities or
the PIB Subordinated Guarantees, as the case may be. No payments on account of
principal, premium, if any, or interest in respect of the PIB Subordinated Debt
Securities or the PIB Subordinated Guarantees may be made if there shall have
occurred and be continuing a default in any payment with respect to any Senior
Indebtedness of PIB or the Corporation, an event of default with respect to any
Senior Indebtedness of PIB or the Corporation permitting the holders thereof to
accelerate the maturity thereof, or if any judicial proceeding shall be pending
with respect to any such default.
By reason of such subordination, in the event of the insolvency of PIB or
the Corporation, creditors of PIB or the Corporation who are not holders of
Senior Indebtedness, the PIB Subordinated Debt Securities or the PIB
Subordinated Guarantees may recover less, ratably, than holders of Senior
Indebtedness of PIB or the
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Corporation, as the case may be, and may recover more, ratably, than Holders of
the PIB Subordinated Debt Securities or the PIB Subordinated Guarantees.
"Senior Indebtedness" of PIB is defined in the PIB Subordinated Indenture
to mean the principal of, premium, if any, and interest on (i) all indebtedness
of PIB for money borrowed (including indebtedness of others guaranteed by PIB)
other than the PIB Subordinated Debt Securities, whether outstanding on the date
of the PIB Subordinated Indenture or thereafter created, assumed or incurred and
(ii) any amendments, renewals, extensions, modifications and refundings of any
such indebtedness, unless in either case in the instrument creating or
evidencing any such indebtedness or pursuant to which it is outstanding it is
provided that such indebtedness is not superior in right of payment to the PIB
Subordinated Debt Securities. For the purposes of this definition, "indebtedness
for money borrowed" is defined as (i) any obligation of, or any obligation
guaranteed by, PIB for the repayment of borrowed money, whether or not evidenced
by bonds, debentures, notes or other written instruments, (ii) any deferred
payment obligation of, or any such obligation guaranteed by, PIB for the payment
of the purchase price of property or assets evidenced by a note or similar
instrument, and (iii) any obligation of, or any such obligation guaranteed by,
PIB for the payment of rent or other amounts under a lease of property or assets
which obligation is required to be classified and accounted for as a capitalized
lease on the balance sheet of PIB under generally accepted accounting
principles.
"Other Financial Obligations" of PIB is defined in the PIB Subordinated
Indenture to mean all obligations of PIB to make payment pursuant to the terms
of financial instruments, such as (i) securities contracts and foreign currency
exchange contracts, (ii) derivative instruments, such as swap agreements
(including interest rate and currency and foreign exchange rate swap
agreements), cap agreements, floor agreements, collar agreements, interest rate
agreements, foreign exchange agreements, options, commodity futures contracts,
commodity options contracts and (iii) similar financial instruments; provided
that the term Other Financial Obligations shall not include (x) obligations on
account of Senior Indebtedness of PIB and (y) obligations on account of
indebtedness for money borrowed ranking pari passu with or subordinate to the
PIB Subordinated Debt Securities.
"Senior Indebtedness" of the Corporation is defined in the PIB Subordinated
Indenture to mean the principal of, premium, if any, and interest on (i) all
indebtedness of the Corporation for money borrowed (including indebtedness of
others guaranteed by the Corporation other than the PIB Subordinated
Guarantees), whether outstanding on the date of the PIB Subordinated Indenture
or thereafter created, assumed or incurred and (ii) any amendments, renewals,
extensions, modifications and refundings of any such indebtedness, unless in
either case in the instrument creating or evidencing any such indebtedness or
pursuant to which it is outstanding it is provided that such indebtedness is not
superior in right of payment to the PIB Subordinated Guarantees. For the
purposes of this definition, "indebtedness for money borrowed" is defined as (i)
any obligation of, or any obligation guaranteed by, the Corporation for the
repayment of borrowed money, whether or not evidenced by bonds, debentures,
notes or other written instruments, (ii) any deferred payment obligation of, or
any such obligation guaranteed by, the Corporation for the payment of the
purchase price of property or assets evidenced by a note or similar instrument,
and (iii) any obligation of, or any such obligation guaranteed by, the
Corporation for the payment of rent or other amounts under a lease of property
or assets which obligation is required to be classified and accounted for as a
capitalized lease on the balance sheet of the Corporation under generally
accepted accounting principles.
"Other Financial Obligations" of the Corporation is defined in the PIB
Subordinated Indenture to mean all obligations of the Corporation to make
payment pursuant to the terms of financial instruments, such as (i) securities
contracts and foreign currency exchange contracts, (ii) derivative instruments,
such as swap agreements (including interest rate and currency and foreign
exchange rate swap agreements), cap agreements, floor agreements, collar
agreements, interest rate agreements, foreign exchange agreements, options,
commodity futures contracts, commodity options contracts and (iii) similar
financial instruments; provided that the term Other Financial Obligations shall
not include (x) obligations on account of Senior Indebtedness and (y)
obligations on account of indebtedness for money borrowed ranking pari passu
with or subordinate to the PIB Subordinated Guarantees.
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EVENTS OF DEFAULT
PIB Senior Indenture
An Event of Default with respect to PIB Senior Debt Securities of any
series is defined in the PIB Senior Indenture as being: default for 30 days in
payment of any interest on PIB Senior Debt Securities of such series; default in
payment of principal of (or premium on, if any) any PIB Senior Debt Securities
of such series; default in deposit of any mandatory sinking fund payment
required by the PIB Senior Debt Securities of such series; default for 60 days,
after notice, in performance or breach of any other covenant or warranty in the
PIB Senior Indenture (except for a covenant expressly relating to a series of
PIB Senior Debt Securities other than that series of PIB Senior Debt Securities)
or in the PIB Senior Debt Securities of such series; acceleration of the PIB
Senior Debt Securities of any other series or any other indebtedness for
borrowed money, of the Corporation, PIB or any Material Banking Subsidiary, in
each case in an aggregate principal amount exceeding $10,000,000, as a result of
a default under the terms of the instrument or instruments under which such
indebtedness is issued or secured, unless such acceleration is annulled within
30 days after written notice as provided in the Indenture, provided that if such
default is remedied or cured by the Corporation, PIB or any Material Banking
Subsidiary or waived by holders of such indebtedness, the Event of Default by
reason thereof shall be deemed to have been thereupon remedied, cured or waived;
certain events of bankruptcy, insolvency or reorganization with respect to the
Corporation, PIB or any Material Banking Subsidiary; or any other Event of
Default specified in the applicable Prospectus Supplement. In case an Event of
Default with respect to PIB Senior Debt Securities of any series shall occur and
be continuing, the PIB Senior Trustee or the Holders of not less than 25% in
principal amount of the PIB Senior Debt Securities of such series then
outstanding may declare the principal of all the PIB Senior Debt Securities of
such series to be due and payable. The Corporation and PIB are required to
furnish to the PIB Senior Trustee annually a statement as to the performance by
the Corporation and PIB of their respective obligations under the PIB Senior
Indenture and as to any default in such performance. Under certain circumstances
any declaration of acceleration with respect to PIB Senior Debt Securities of
any series may be rescinded and past defaults (except a default in the payment
of principal of or interest on the PIB Senior Debt Securities) may be waived by
the Holders of a majority in aggregate principal amount of the PIB Senior Debt
Securities of such series then outstanding. The PIB Senior Indenture provides
that the PIB Senior Trustee may withhold notice to the Holders of PIB Senior
Debt Securities of any series of any continuing default (except in the payment
of the principal of (or premium, if any) or interest on any PIB Senior Debt
Securities of such series) if such PIB Senior Trustee considers it in the
interest of Holders of such series of PIB Senior Debt Securities to do so.
PIB Subordinated Indenture
An Event of Default with respect to the PIB Subordinated Debt Securities of
any series is defined in the PIB Subordinated Indenture as being certain events
involving a bankruptcy, insolvency or reorganization of the Corporation or PIB.
If an Event of Default with respect to PIB Subordinated Debt Securities of any
series shall have occurred and be continuing, either the PIB Subordinated
Trustee or the Holders of not less than 25% in aggregate principal amount of the
PIB Subordinated Debt Securities of such series then outstanding may declare the
principal of the PIB Subordinated Debt Securities of such series to be due and
payable immediately. The Corporation and PIB are required to furnish to the PIB
Subordinated Trustee annually a statement as to the performance by the
Corporation and PIB of their respective obligations under the PIB Subordinated
Indenture and as to any default in such performance. Under certain
circumstances, any declaration of acceleration with respect to PIB Subordinated
Debt Securities of any series may be rescinded and past defaults (except a
default in the payment of principal of or interest on the PIB Subordinated Debt
Securities) may be waived by the Holders of a majority in aggregate principal
amount of the PIB Subordinated Debt Securities of such series then outstanding.
The PIB Subordinated Indenture provides that the PIB Subordinated Trustee may
withhold notice to the Holders of the PIB Subordinated Debt Securities of any
series of any continuing default (except in the payment of the principal of (or
premium, if any) or interest on any PIB Subordinated Debt Securities of such
series) if the PIB Subordinated Trustee considers it in the interest of the
Holders of such series of PIB Subordinated Debt Securities to do so.
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The PIB Subordinated Indenture does not provide for any right of
acceleration of the payment of principal of a series of PIB Subordinated Debt
Securities upon a default in the payment of principal or interest or in the
performance of any covenant or agreement in the PIB Subordinated Debt Securities
of the particular series, in the PIB Subordinated Indenture or in the PIB
Subordinated Guarantees.
CONSOLIDATION, MERGER, SALE OR CONVEYANCE
Each of the Corporation and PIB has covenanted in the PIB Senior and PIB
Subordinated Indentures that it will not merge or consolidate with any other
corporation or sell, convey, transfer or lease all or substantially all of its
assets to any person, firm or corporation unless the Corporation or PIB, as the
case may be, is the continuing corporation or the successor corporation
expressly assumes the obligations under any outstanding PIB Senior Debt
Securities and Subordinated Debt Securities and the PIB Subordinated Guarantees
and the respective PIB Senior and PIB Subordinated Indentures and the
Corporation, or PIB, as the case may be, or such successor corporation is not,
immediately after such merger, consolidation, sale or conveyance, in default in
the performance of any of the covenants or conditions of the respective
Indenture. The Indentures do not contain any other covenant that restricts the
Corporation's or PIB's ability to merge or consolidate with any other
corporation, sell, convey, transfer or lease all or substantially all of its
assets to any persons, firm or corporation or otherwise engage in restructuring
transactions.
GUARANTEE
PIB Senior Debt Securities
The Corporation will guarantee the punctual payment of the principal of,
premium, if any, and interest on the PIB Senior Debt Securities, when and as the
same are due and payable. The guarantee is absolute and unconditional,
irrespective of any circumstance that might otherwise constitute a legal or
equitable discharge of a surety or guarantor. To evidence the guarantee, a
Guarantee, executed by the Corporation, will be endorsed on each PIB Senior Debt
Security. Holders of the PIB Senior Debt Securities may proceed directly against
the Corporation in the event of default under the PIB Senior Debt Securities
without first proceeding against PIB. The Guarantees will rank pari passu with
all other unsecured and unsubordinated obligations of the Corporation.
PIB Subordinated Debt Securities
The Corporation will guarantee, on a subordinated basis, the punctual
payment of the principal of, premium, if any, and interest on the PIB
Subordinated Debt Securities, when and as the same are due and payable. The
guarantee is absolute and unconditional, irrespective of any circumstance that
might otherwise constitute a legal or equitable discharge of a surety or
guarantor. To evidence the guarantee, a Guarantee, executed by the Corporation,
will be endorsed on each PIB Subordinated Debt Security. Holders of the PIB
Subordinated Debt Securities may proceed directly against the Corporation in the
event of default under the PIB Subordinated Debt Securities without first
proceeding against PIB. The PIB Subordinated Guarantees will rank pari passu
with all other unsecured and subordinated obligations of the Corporation. See
"Subordination."
DESCRIPTION OF PREFERRED STOCK OF THE CORPORATION
The following summary contains a description of certain general terms of
the Corporation's preferred stock (the "Preferred Stock") to which any
Prospectus Supplement may relate. Certain terms of any series of the Preferred
Stock offered by any Prospectus Supplement will be described in the Prospectus
Supplement relating thereto. If so indicated in the Prospectus Supplement, the
terms of any series may differ from the terms set forth below. The following
summary description of certain provisions of the Preferred Stock is subject to
and qualified in its entirety by reference to the provisions of the
Corporation's Restated Certificate of Incorporation, as amended, the
Certificates of Designation describing the Corporation's 8.35% Non-Cumulative
Monthly Income Preferred Stock, 1994 Series A (the "Series A Preferred Stock")
and the Corporation's Series A Participating Preferred Stock (the "Series A
Participating Preferred Stock"),
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respectively, and the Certificate of Resolution (the "Certificate of
Resolution") relating to each particular series of the Preferred Stock, each of
which will be filed or incorporated by reference, as the case may be, as an
exhibit to the Registration Statement of which this Prospectus is a part at or
prior to the time of the issuance of such Preferred Stock.
GENERAL
Under the Corporation's Restated Certificate of Incorporation, the Board of
Directors of the Corporation is authorized, without further stockholder action,
to provide for the issuance of up to 10,000,000 shares of preferred stock (of
which 4,000,000 shares have been designated and issued as Series A Preferred
Stock and 350,000 shares have been authorized and designated but not issued for
the Series A Participating Preferred Stock), without par value, in one or more
series, with such designations of titles; dividend rates; special or relative
rights in the event of a liquidation, distribution or sale of assets or
dissolution or winding up of the Corporation; sinking fund provisions;
redemption or purchase account provisions; conversion provisions; and voting
rights, as shall be set forth as and when established by the Board of Directors
of the Corporation. The shares of any series of Preferred Stock will be, when
issued, fully paid and non-assessable and holders thereof shall have no
preemptive rights in connection therewith.
The liquidation preference of any series of the Preferred Stock is not
necessarily indicative of the price at which shares of such series of Preferred
Stock will actually trade at or after the time of their issuance. The market
price of any series of Preferred Stock can be expected to fluctuate with changes
in market and economic conditions, the financial condition and prospects of the
Corporation and other factors that generally influence the market prices of
securities.
RANK
Any series of Preferred Stock will, with respect to dividend rights and
rights on liquidation, winding up and dissolution, rank (i) senior to all
classes of common stock of the Corporation and to all equity securities issued
by the Corporation the terms of which specifically provide that such equity
securities will rank junior to the Preferred Stock (collectively referred to as
the "Junior Securities"); (ii) on a parity with all equity securities issued by
the Corporation the terms of which specifically provide that such equity
securities will rank on a parity with the Preferred Stock (collectively referred
to as the "Parity Securities"); and (iii) junior to all equity securities issued
by the Corporation the terms of which specifically provide that such equity
securities will rank senior to the Preferred Stock. As used in any Certificate
of Resolution for these purposes, the term "equity securities" will not include
debt securities convertible into or exchangeable for equity securities.
DIVIDENDS
Holders of each series of Preferred Stock will be entitled to receive,
when, as and if declared by the Board of Directors of the Corporation out of
funds legally available therefor, cash dividends at such rates and on such dates
as are set forth in the Prospectus Supplement relating to such series of
Preferred Stock. Dividends will be payable to holders of record of the Preferred
Stock as they appear on the books of the Corporation on such record dates as
shall be fixed by the Board of Directors. Dividends on any series of Preferred
Stock may be cumulative or non-cumulative. The Corporation's ability to pay
dividends on its Preferred Stock is subject to policies established by the
Federal Reserve Board. See "Certain Regulatory Matters -- Dividend
Restrictions."
No full dividends may be declared or paid or funds set apart for the
payment of dividends on any Parity Securities unless dividends shall have been
paid or set apart for such payment on the Preferred Stock. If full dividends are
not so paid, the Preferred Stock shall share dividends pro rata with the Parity
Securities.
The holders of any series of shares of Preferred Stock at the close of
business on a dividend payment record date will be entitled to receive the
dividend payable on such shares (except that holders of shares called for
redemption on a redemption date occurring between such record date and the
dividend payment date shall not be entitled to receive such dividend on such
dividend payment date but instead will receive accrued and
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unpaid dividends to such redemption date) on the corresponding dividend payment
date notwithstanding the conversion thereof or the Corporation's default in
payment of the dividend due. Except as provided above, the Corporation will make
no payment or allowance for unpaid dividends, whether or not in arrears, on
converted shares or for dividends on the shares of preferred stock or issued
upon conversion.
CONVERSION
The Prospectus Supplement for any series of Preferred Stock will state the
terms, if any, on which shares of that series are convertible into shares of
another series of preferred stock of the Corporation.
For any series of Preferred Stock which is convertible, the Corporation
shall at all times reserve and keep available, out of the aggregate of its
authorized but unissued preferred stock or preferred stock held in its treasury
or both, for the purpose of effecting the conversion of the shares of such
series of Preferred Stock, the full number of shares of preferred stock then
deliverable upon the conversion of all outstanding shares of such series.
No fractional shares or scrip representing fractional shares of preferred
stock will be issued upon the conversion of shares of any series of convertible
Preferred Stock. Each holder to whom fractional shares would otherwise be issued
will instead be entitled to receive, at the Corporation's election, either (a) a
cash payment equal to the current market price of such holder's fractional
interest or (b) a cash payment equal to such holder's proportionate interest in
the net proceeds (following the deduction of applicable transaction costs) from
the sale promptly by an agent, on behalf of such holders, of shares of preferred
stock representing the aggregate of such fractional shares.
EXCHANGEABILITY
If so determined by the Board of Directors of the Corporation, the holders
of shares of Preferred Stock of any series may be obligated at any time or at
maturity to exchange such shares for preferred stock or debt securities of the
Corporation. The terms of any such exchange and any such preferred stock or debt
securities will be described in the Prospectus Supplement relating to such
series of Preferred Stock.
REDEMPTION
A series of Preferred Stock may be redeemable at any time, in whole or in
part, at the option of the Corporation or the holder thereof upon terms and at
the redemption prices set forth in the Prospectus Supplement relating to such
series.
In the event of partial redemptions of Preferred Stock, whether by
mandatory or optional redemption, the shares to be redeemed will be determined
by lot or pro rata, as may be determined by the Board of Directors of the
Corporation or by any other method determined to be equitable by the Board of
Directors.
On or after a redemption date, unless the Corporation defaults in the
payment of the redemption price, dividends will cease to accrue on shares of
Preferred Stock called for redemption and all rights of holders of such shares
will terminate except for the right to receive the redemption price.
Under current regulations, bank holding companies may not exercise any
option to redeem shares of preferred stock included as Tier 1 capital, or
exchange such preferred stock for debt securities, without the prior approval of
the Federal Reserve Board. Ordinarily, the Federal Reserve Board would not
permit such a redemption unless (1) the shares are redeemed with the proceeds of
a sale by the bank holding company of common stock or perpetual preferred stock
or (2) the Federal Reserve Board determines that the bank holding company's
condition and circumstances warrant the reduction of a source of permanent
capital.
LIQUIDATION PREFERENCE
Upon any voluntary or involuntary liquidation, dissolution or winding up of
the Corporation, holders of each series of Preferred Stock that ranks senior to
the Junior Securities will be entitled to receive out of assets of the
Corporation available for distribution to shareholders, before any distribution
is made on any Junior
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Securities, including Common Stock, distributions upon liquidation in the amount
set forth in the Prospectus Supplement relating to such series of Preferred
Stock, plus an amount equal to any declared and unpaid dividends. If upon any
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation, the amounts payable with respect to the Preferred Stock of any
series and any other Parity Securities are not paid in full, the holders of the
Preferred Stock of such series and the Parity Securities will share ratably in
any such distribution of assets of the Corporation in proportion to the full
liquidation preferences to which each is entitled. After payment of the full
amount of the liquidation preference to which they are entitled, the holders of
such series of Preferred Stock will not be entitled to any further participation
in any distribution of assets of the Corporation.
VOTING RIGHTS
Except as indicated in the Prospectus Supplement relating to a particular
series of Preferred Stock, or except as expressly required by applicable law,
the holders of the Preferred Stock will have no voting rights.
Under regulations adopted by the Federal Reserve Board, if the holders of
shares of any series of Preferred Stock of the Corporation become entitled to
vote for the election of directors, such series may then be deemed a "class of
voting securities" and a holder of 25% or more of such series (or a holder of 5%
if it otherwise exercises a "controlling influence" over the Corporation) may
then be subject to regulation as a bank holding company in accordance with the
BHC Act. In addition, at such time as such series is deemed a class of voting
securities, (i) any other bank holding company may be required to obtain the
approval of the Federal Reserve Board to acquire or retain 5% or more of such
series, and (ii) any person other than a bank holding company may be required to
file with the Federal Reserve Board under the Change in Bank Control Act to
acquire or retain 10% or more of such series.
Section 12 of the Banking Law requires the prior approval of the Office of
the Commissioner to obtain control of any bank organized under the Banking Law.
The Banking Law requires that in any transfer of voting and outstanding capital
stock of any bank organized under the laws of Puerto Rico to any person or
entity that, upon consummation of the transfer, will become the owner, directly
or indirectly, of more than 5% of the voting and outstanding capital stock of
said bank, the parties to the transfer shall inform the Office of the
Commissioner of the proposed transfer at least 60 days prior to the date such
transfer is to be effected. The Banking Law does not contain any provision
allowing for the extension of such 60-day time period. The transfer requires the
approval of the Office of the Commissioner if it results in a change of control
of the bank. For the purposes of Section 12 of the Banking Law, the term
"control" means the power to, directly or indirectly, direct or influence
decisively the administration or the norms of the bank. The Department of the
Treasury (predecessor to the Office of the Commissioner) made a determination
that the foregoing provisions of the Banking Law are applicable to a change in
control of the Corporation in a letter dated April 9, 1985.
Pursuant to Section 12(d) of the Banking Law, as soon as the Office of the
Commissioner receives notice of a proposed transaction that may result in the
control or in a change of control of a bank, the Office of the Commissioner
shall have the duty to make the necessary investigations. The Office of the
Commissioner shall issue authorization for the transfer of control of the bank
if the results of his investigations are in his judgment satisfactory. The
decision of the Office of the Commissioner is final and unreviewable.
DESCRIPTION OF PREFERRED STOCK OF PIB
The following summary contains a description of certain general terms of
PIB's preferred stock (the "PIB Preferred Stock") to which any Prospectus
Supplement may relate. Certain terms of any series of the Preferred Stock
offered by any Prospectus Supplement will be described in the Prospectus
Supplement relating thereto. If so indicated in the Prospectus Supplement, the
terms of any series may differ from the terms set forth below. The following
summary description of certain provisions of the PIB Preferred Stock is subject
to and qualified in its entirety by reference to the provisions of PIB's
Certificate of Incorporation, as amended, and the Certificate of Amendment
relating to each particular series of the PIB Preferred Stock, each of which
will be filed or incorporated by reference, as the case may be, as an exhibit to
the Registration
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Statement of which this Prospectus is a part at or prior to the time of the
issuance of such PIB Preferred Stock.
The authorized capital stock of PIB consists of 1,000,000 shares of Common
Stock, par value $5.00 per share, and 25,000,000 shares of preferred stock, par
value $25.00 per share. The preferred stock is issuable in one or more series,
with such terms, and at such times and for such consideration as the Board of
Directors of PIB determines. As of the date of this Prospectus, no shares of
preferred stock of PIB were issued and outstanding. All of the common stock of
PIB is owned by the Corporation.
GENERAL
Under PIB's Certificate of Incorporation, the Board of Directors of the
Corporation is authorized, without further stockholder action, to provide for
the issuance of up to 25,000,000 shares of preferred stock, par value $25.00 per
share, in one or more series, with such designations of titles; dividend rates;
special or relative rights in the event of a liquidation, distribution or sale
of assets or dissolution or winding up of PIB; sinking fund provisions; any
redemption or purchase account provisions; conversion provisions; and voting
rights, as shall be set forth as and when established by the Board of Directors
of PIB. The shares of any series of PIB Preferred Stock will be, when issued,
fully paid and nonassessable and holders thereof shall have no preemptive rights
in connection therewith.
The liquidation preference of any series of the PIB Preferred Stock is not
necessarily indicative of the price at which shares of such series of PIB
Preferred Stock will actually trade at or after the time of their issuance. The
market price of any series of PIB Preferred Stock can be expected to fluctuate
with changes in market and economic conditions, the financial condition and
prospects of the Corporation and PIB and other factors that generally influence
the market prices of securities.
RANK
Any series of PIB Preferred Stock will, with respect to dividend rights and
rights on liquidation, winding up and dissolution, rank (i) senior to all
classes of common stock of PIB and to all equity securities issued by PIB the
terms of which specifically provide that such equity securities will rank junior
to the PIB Preferred Stock (collectively referred to as the "PIB Junior
Securities"); (ii) on a parity with all equity securities issued by PIB, the
terms of which specifically provide that such equity securities will rank on a
parity with the PIB Preferred Stock (collectively referred to as the "PIB Parity
Securities"); and (iii) junior to all equity securities issued by PIB, the terms
of which specifically provide that such equity securities will rank senior to
the PIB Preferred Stock (collectively referred to as the "PIB Senior
Securities"). As used in any Certificate of Amendment for these purposes, the
term "equity securities" will not include debt securities convertible into or
exchangeable for equity securities.
DIVIDENDS
Holders of each series of PIB Preferred Stock will be entitled to receive,
when, as and if declared by the Board of Directors of PIB out of funds legally
available therefor, cash dividends at such rates and on such dates as are set
forth in the Prospectus Supplement relating to such series of the PIB Preferred
Stock. Dividends will be payable to holders of record of the PIB Preferred Stock
as they appear on the books of PIB on such record dates as shall be fixed by the
Board of Directors. Dividends on any series of PIB Preferred Stock may be
cumulative or non-cumulative. PIB's ability to pay dividends on its Preferred
Stock is subject to policies established by the Federal Reserve Board. See
"Certain Regulatory Matters -- Dividend Restrictions."
No full dividends may be declared or paid or funds set apart for the
payment of dividends on any PIB Parity Securities unless dividends shall have
been paid or set apart for such payment on the PIB Preferred Stock. If full
dividends are not so paid, the PIB Preferred Stock shall share dividends pro
rata with the PIB Parity Securities.
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The holders of any series of shares of PIB Preferred Stock at the close of
business on a dividend payment record date will be entitled to receive the
dividend payable on such shares (except that holders of shares called for
redemption on a redemption date occurring between such record date and the
dividend payment date shall not be entitled to receive such dividend on such
dividend payment date but instead will receive accrued and unpaid dividends to
such redemption date) on the corresponding dividend payment date notwithstanding
the conversion thereof or PIB's default in payment of the dividend due. Except
as provided above, PIB will make no payment or allowance for unpaid dividends,
whether or not in arrears, on converted shares or for dividends on the shares of
preferred stock issued upon conversion.
CONVERSION
The Prospectus Supplement for any series of the PIB Preferred Stock will
state the terms, if any, on which shares of that series are convertible into
shares of another series of preferred stock of PIB.
For any series of PIB Preferred Stock which is convertible, PIB shall at
all times reserve and keep available, free from preemptive rights, out of the
aggregate of its authorized but unissued preferred stock or shares of preferred
stock held in its treasury or both, for the purpose of effecting the conversion
of the shares of such series of PIB Preferred Stock, the full number of shares
of preferred stock then deliverable upon the conversion of all outstanding
shares of such series.
No fractional shares or scrip representing fractional shares of preferred
stock will be issued upon the conversion of shares of any series of convertible
PIB Preferred Stock. Each holder to whom fractional shares would otherwise be
issued will instead be entitled to receive, at PIB's election, either (a) a cash
payment equal to the current market price of such holder's fractional interest
or (b) a cash payment equal to such holder's proportionate interest in the net
proceeds (following the deduction of applicable transaction costs) from the sale
promptly by an agent, on behalf of such holders, of shares of preferred stock
representing the aggregate of such fractional shares.
EXCHANGEABILITY
If so determined by the Board of Directors of PIB, the holders of shares of
PIB Preferred Stock of any series may be obligated at any time or at maturity to
exchange such shares for preferred stock or debt securities of PIB. The terms of
any such exchange and any such preferred stock or debt securities will be
described in the Prospectus Supplement relating to such series of PIB Preferred
Stock.
REDEMPTION
A series of PIB Preferred Stock may be redeemable at any time, in whole or
in part, at the option of PIB or the holder thereof upon terms and at the
redemption prices set forth in the Prospectus Supplement relating to such
series.
In the event of partial redemptions of PIB Preferred Stock, whether by
mandatory or optional redemption, the shares to be redeemed will be determined
by lot or pro rata, as may be determined by the Board of Directors of PIB or by
any other method determined to be equitable by the Board of Directors.
On or after a redemption date, unless PIB defaults in the payment of the
redemption price, dividends will cease to accrue on shares of PIB Preferred
Stock called for redemption and all rights of holders of such shares will
terminate except for the right to receive the redemption price.
Under current regulations, bank holding companies may not exercise any
option to redeem shares of preferred stock included as Tier 1 capital, or
exchange such preferred stock for debt securities, without the prior approval of
the Federal Reserve Board. Ordinarily, the Federal Reserve Board would not
permit such a redemption unless (1) the shares are redeemed with the proceeds of
a sale by the bank holding company of common stock or perpetual preferred stock
or (2) the Federal Reserve Board determines that the bank holding company's
condition and circumstances warrant the reduction of a source of permanent
capital.
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LIQUIDATION PREFERENCE
Upon any voluntary or involuntary liquidation, dissolution or winding up of
PIB, holders of each series of PIB Preferred Stock that ranks senior to the PIB
Junior Securities will be entitled to receive out of assets of PIB available for
distribution to shareholders, before any distribution is made on any PIB Junior
Securities, including common stock, distributions upon liquidation in the amount
set forth in the Prospectus Supplement relating to such series of Preferred
Stock, plus an amount equal to any accrued and unpaid dividends. If upon any
voluntary or involuntary liquidation, dissolution or winding up of PIB the
amounts payable with respect to the PIB Preferred Stock of any series and any
other PIB Parity Securities are not paid in full, the holders of the PIB
Preferred Stock of such series and the PIB Parity Securities will share ratably
in any such distribution of assets of PIB in proportion to the full liquidation
preferences to which each is entitled. After payment of the full amount of the
liquidation preference to which they are entitled, the holders of such series of
PIB Preferred Stock will not be entitled to any further participation in any
distribution of assets of PIB.
VOTING RIGHTS
Except as indicated in the Prospectus Supplement relating to a particular
series of PIB Preferred Stock, or except as expressly required by applicable
law, the holders of the PIB Preferred Stock will have no voting rights.
Under regulations adopted by the Federal Reserve Board, if the holders of
shares of any series of PIB Preferred Stock become entitled to vote for the
election of directors, such series may then be deemed a "class of voting
securities" and a holder of 25% or more of such series (or a holder of 5% if it
otherwise exercises a "controlling influence" over PIB) may then be subject to
regulation as a bank holding company in accordance with the BHC Act. In
addition, at such time as such series is deemed a class of voting securities,
(i) any other bank holding company may be required to obtain the approval of the
Federal Reserve Board to acquire or retain 5% or more of such series, and (ii)
any person other than a bank holding company may be required to file with the
Federal Reserve Board under the Change in Bank Control Act to acquire or retain
10% or more of such series.
GUARANTEE
The Corporation will fully and unconditionally guarantee the punctual
payment of (i) any accrued and unpaid dividends, whether or not declared, on the
PIB Preferred Stock of any series, (ii) the redemption price for any shares of
PIB Preferred Stock called or redemption at the option of PIB or the holder
thereof in accordance with the terms of such series of PIB Preferred Stock,
(iii) the liquidation preference of PIB Preferred Stock and (iv) any additional
amounts with respect to a series of PIB Preferred Stock.
The Guarantee of the PIB Preferred Stock shall constitute an unsecured
obligation of the Corporation and will rank junior to all liabilities of the
Corporation. The Guarantee will rank senior to the Corporation's common stock
and shall have such rank relative to the preferred stock of the Corporation as
shall be specified in the applicable Prospectus Supplement.
DESCRIPTION OF PREFERRED STOCK OF PNA
The following summary contains a description of certain general terms of
PNA's preferred stock (the "PNA Preferred Stock") to which any Prospectus
Supplement may relate. Certain terms of any series of the PNA Preferred Stock
offered by any Prospectus Supplement will be described in the Prospectus
Supplement relating thereto. If so indicated in the Prospectus Supplement, the
terms of any series may differ from the terms set forth below. The following
summary description of certain provisions of the PNA Preferred Stock is subject
to and qualified in its entirety by reference to the provisions of PNA's
Certificate of Incorporation, as amended, and the Certificate of Designation
relating to each particular series of the PNA Preferred Stock, each of which
will be filed or incorporated by reference, as the case may be, as an exhibit to
the Registration Statement of which this Prospectus is a part at or prior to the
time of the issuance of such PNA Preferred Stock.
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The authorized capital stock of PNA consists of 10,000 shares of Common
Stock, par value $1.00 per share, and 1,000 shares of preferred stock, par value
$.01 per share. The preferred stock is issuable in one or more series, with such
terms, and at such times and for such consideration as the Board of Directors of
PNA determines. As of the date of this Prospectus, no shares of preferred stock
of PNA were issued and outstanding. All of the common stock of PNA is owned by
PIB.
GENERAL
Under PNA's Certificate of Incorporation, the Board of Directors of the
Corporation is authorized, without further stockholder action, to provide for
the issuance of up to 1,000 shares of preferred stock, par value $.01 per share,
in one or more series, with such designations of titles; dividend rates; special
or relative rights in the event of a liquidation, distribution or sale of assets
or dissolution or winding up of PNA; sinking fund provisions; any redemption or
purchase account provisions; conversion provisions; and voting rights, as shall
be set forth as and when established by the Board of Directors of PNA. The
shares of any series of PNA Preferred Stock will be, when issued, fully paid and
nonassessable and holders thereof shall have no preemptive rights in connection
therewith.
The liquidation preference of any series of the PNA Preferred Stock is not
necessarily indicative of the price at which shares of such series of PNA
Preferred Stock will actually trade at or after the time of their issuance. The
market price of any series of PNA Preferred Stock can be expected to fluctuate
with changes in market and economic conditions, the financial condition and
prospects of the Corporation and PNA and other factors that generally influence
the market prices of securities.
RANK
Any series of PNA Preferred Stock will, with respect to dividend rights and
rights on liquidation, winding up and dissolution, rank (i) senior to all
classes of common stock of PNA and to all equity securities issued by PNA the
terms of which specifically provide that such equity securities will rank junior
to the PNA Preferred Stock (collectively referred to as the "PNA Junior
Securities"); (ii) on a parity with all equity securities issued by PNA, the
terms of which specifically provide that such equity securities will rank on a
parity with the PNA Preferred Stock (collectively referred to as the "PNA Parity
Securities"); and (iii) junior to all equity securities issued by PNA, the terms
of which specifically provide that such equity securities will rank senior to
the PNA Preferred Stock (collectively referred to as the "PNA Senior
Securities"). As used in any Certificate of Designation for these purposes, the
term "equity securities" will not include debt securities convertible into or
exchangeable for equity securities.
DIVIDENDS
Holders of each series of PNA Preferred Stock will be entitled to receive,
when, as and if declared by the Board of Directors of PNA out of funds legally
available therefor, cash dividends at such rates and on such dates as are set
forth in the Prospectus Supplement relating to such series of the PNA Preferred
Stock. Dividends will be payable to holders of record of the PNA Preferred Stock
as they appear on the books of PNA on such record dates as shall be fixed by the
Board of Directors. Dividends on any series of PNA Preferred Stock may be
cumulative or non cumulative. PNA's ability to pay dividends on its Preferred
Stock is subject to policies established by the Federal Reserve Board. See
"Certain Regulatory Matters -- Dividend Restrictions."
No full dividends may be declared or paid or funds set apart for the
payment of dividends on any PNA Parity Securities unless dividends shall have
been paid or set apart for such payment on the PNA Preferred Stock. If full
dividends are not so paid, the PNA Preferred Stock shall share dividends pro
rata with the PNA Parity Securities.
The holders of any series of shares of PNA Preferred Stock at the close of
business on a dividend payment record date will be entitled to receive the
dividend payable on such shares (except that holders of shares called for
redemption on a redemption date occurring between such record date and the
dividend payment date shall not be entitled to receive such dividend on such
dividend payment date but instead will
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receive accrued and unpaid dividends to such redemption date) on the
corresponding dividend payment date notwithstanding the conversion thereof or
PNA's default in payment of the dividend due. Except as provided above, PNA will
make no payment or allowance for unpaid dividends, whether or not in arrears, on
converted shares or for dividends on the shares of preferred stock issued upon
conversion.
CONVERSION
The Prospectus Supplement for any series of the PNA Preferred Stock will
state the terms, if any, on which shares of that series are convertible into
shares of another series of preferred stock of PNA.
For any series of PNA Preferred Stock which is convertible, PNA shall at
all times reserve and keep available, free from preemptive rights, out of the
aggregate of its authorized but unissued preferred stock or shares of preferred
stock held in its treasury or both, for the purpose of effecting the conversion
of the shares of such series of PNA Preferred Stock, the full number of shares
of preferred stock then deliverable upon the conversion of all outstanding
shares of such series.
No fractional shares or scrip representing fractional shares of preferred
stock will be issued upon the conversion of shares of any series of convertible
PNA Preferred Stock. Each holder to whom fractional shares would otherwise be
issued will instead be entitled to receive, at PNA's election, either (a) a cash
payment equal to the current market price of such holder's fractional interest
or (b) a cash payment equal to such holder's proportionate interest in the net
proceeds (following the deduction of applicable transaction costs) from the sale
promptly by an agent, on behalf of such holders, of shares of preferred stock
representing the aggregate of such fractional shares.
EXCHANGEABILITY
If so determined by the Board of Directors of PNA, the holders of shares of
PNA Preferred Stock of any series may be obligated at any time or at maturity to
exchange such shares for preferred stock or debt securities of PNA. The terms of
any such exchange and any such preferred stock or debt securities will be
described in the Prospectus Supplement relating to such series of PNA Preferred
Stock.
REDEMPTION
A series of PNA Preferred Stock may be redeemable at any time, in whole or
in part, at the option of PNA or the holder thereof upon terms and at the
redemption prices set forth in the Prospectus Supplement relating to such
series.
In the event of partial redemptions of PNA Preferred Stock, whether by
mandatory or optional redemption, the shares to be redeemed will be determined
by lot or pro rata, as may be determined by the Board of Directors of PNA or by
any other method determined to be equitable by the Board of Directors.
On or after a redemption date, unless PNA defaults in the payment of the
redemption price, dividends will cease to accrue on shares of PNA Preferred
Stock called for redemption and all rights of holders of such shares will
terminate except for the right to receive the redemption price.
Under current regulations, bank holding companies may not exercise any
option to redeem shares of preferred stock included as Tier 1 capital, or
exchange such preferred stock for debt securities, without the prior approval of
the Federal Reserve Board. Ordinarily, the Federal Reserve Board would not
permit such a redemption unless (1) the shares are redeemed with the proceeds of
a sale by the bank holding company of common stock or perpetual preferred stock
or (2) the Federal Reserve Board determines that the bank holding company's
condition and circumstances warrant the reduction of a source of permanent
capital.
LIQUIDATION PREFERENCE
Upon any voluntary or involuntary liquidation, dissolution or winding up of
PNA, holders of each series of PNA Preferred Stock that ranks senior to the PNA
Junior Securities will be entitled to receive out of assets of PNA available for
distribution to shareholders, before any distribution is made on any PNA Junior
Securities,
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including common stock, distributions upon liquidation in the amount set forth
in the Prospectus Supplement relating to such series of Preferred Stock, plus an
amount equal to any accrued and unpaid dividends. If upon any voluntary or
involuntary liquidation, dissolution or winding up of PNA the amounts payable
with respect to the PNA Preferred Stock of any series and any other PNA Parity
Securities are not paid in full, the holders of the PNA Preferred Stock of such
series and the PNA Parity Securities will share ratably in any such distribution
of assets of PNA in proportion to the full liquidation preferences to which each
is entitled. After payment of the full amount of the liquidation preference to
which they are entitled, the holders of such series of PNA Preferred Stock will
not be entitled to any further participation in any distribution of assets of
PNA.
VOTING RIGHTS
Except as indicated in the Prospectus Supplement relating to a particular
series of PNA Preferred Stock, or except as expressly required by applicable
law, the holders of the PNA Preferred Stock will have no voting rights.
Under regulations adopted by the Federal Reserve Board, if the holders of
shares of any series of PNA Preferred Stock become entitled to vote for the
election of directors, such series may then be deemed a "class of voting
securities" and a holder of 25% or more of such series (or a holder of 5% if it
otherwise exercises a "controlling influence" over PNA) may then be subject to
regulation as a bank holding company in accordance with the BHC Act. In
addition, at such time as such series is deemed a class of voting securities,
(i) any other bank holding company may be required to obtain the approval of the
Federal Reserve Board to acquire or retain 5% or more of such series, and (ii)
any person other than a bank holding company may be required to file with the
Federal Reserve Board under the Change in Bank Control Act to acquire or retain
10% or more of such series.
GUARANTEE
The Corporation will fully and unconditionally guarantee the punctual
payment of (i) any accrued and unpaid dividends, whether or not declared, on the
PNA Preferred Stock of any series, (ii) the redemption price for any shares of
PNA Preferred Stock called for redemption at the option of PNA or the holder
thereof in accordance with the terms of such series of PNA Preferred Stock,
(iii) the liquidation preference of PNA Preferred Stock and (iv) any additional
amounts with respect to a series of PNA Preferred Stock.
The Guarantee of the PNA Preferred Stock shall constitute an unsecured
obligation of the Corporation and will rank junior to all liabilities of the
Corporation. The Guarantee will rank senior to the Corporation's common stock
and shall have such rank relative to the preferred stock of the Corporation as
shall be specified in the applicable Prospectus Supplement.
VALIDITY OF OFFERED SECURITIES
The validity of the Preferred Stock and the PIB Preferred Stock will be
passed upon for the Corporation and PIB by Brunilda Santos de Alvarez, counsel
to the Corporation. The validity of the Senior Debt Securities, the Subordinated
Debt Securities, the PIB Senior Debt Securities, the PIB Subordinated Debt
Securities and the Guarantees will be passed upon for the Corporation and PIB by
Ms. Alvarez as to matters of the laws of the Commonwealth of Puerto Rico and by
Sullivan & Cromwell as to matters of New York law. The validity of the PNA
Preferred Stock, the PNA Senior Debt Securities and the PNA Subordinated Debt
Securities will be passed upon for PNA by Sullivan & Cromwell. The validity of
the Securities will be passed upon for any underwriters or agents by counsel
named in the Prospectus Supplement.
EXPERTS
The financial statements incorporated in this Prospectus by reference from
the Corporation's Annual Report on Form 10-K for the year ended December 31,
1996 have been so incorporated in reliance on the report of Price Waterhouse,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
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PLAN OF DISTRIBUTION
The Corporation, PIB or PNA, as the case may be, may sell Securities to or
through underwriting syndicates represented by managing underwriters, or through
one or more underwriters without a syndicate for public offering and sale by
them, or may sell Securities to investors directly or through agents. Any such
underwriter or agent involved in the offer and sale of the Securities will be
named in the Prospectus Supplement.
Underwriters may offer and sell the Securities at a fixed price or prices,
which may be changed, or from time to time at market prices prevailing at the
time of sale, at prices related to such prevailing market prices or at
negotiated prices. In connection with the sale of the Securities, underwriters
may be deemed to have received compensation from the Corporation, PIB or PNA, as
the case may be, in the form of underwriting discounts or commissions and may
also receive commissions from purchasers of the Securities for whom they may act
as agent. Underwriters may sell the Securities to or through dealers, and such
dealers may receive compensation in the form of discounts, concessions or
commissions from the underwriters and/or commissions from the purchasers for
whom they may act as agent.
Any compensation paid by the Corporation, PIB or PNA, as the case may be,
to underwriters or agents in connection with the offering of the Securities, and
any discounts, concessions or commissions allowed by underwriters to
participating dealers, will be set forth in the Prospectus Supplement.
Underwriters, dealers and agents participating in the distribution of the
Securities may be deemed to be underwriters, and any discounts and commissions
received by them and any profit realized by them on resale of the Securities may
be deemed to be underwriting discounts and commissions under the Act.
Underwriters, dealers and agents may be entitled, under agreements entered into
with Corporation, PIB or PNA, as the case may be, to indemnification against
certain civil liabilities, including liabilities under the Act.
All Securities will be a new issue of securities with no established
trading market. Any underwriters to whom Securities are sold by the Corporation,
PIB or PNA, as the case may be, for public offering and sale may make a market
in such Securities, but such underwriters will not be obligated to do so and may
discontinue any market making at any time without notice. No assurance can be
given as to the liquidity of the trading market for any Securities.
Certain of the underwriters and their associates may be customers of,
lenders to, engage in transactions with, and perform services for, the
Corporation or its subsidiaries in the ordinary course of business.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses in connection with the issuance and distribution of
the securities being registered are:
Registration Fee............................................ $303,031
Fees and Expenses of Accountants............................ 30,000
Fees and Expenses of Counsel................................ 150,000
Blue Sky Fees and Expenses.................................. 25,000
Printing and Engraving Expenses............................. 25,000
Rating Agency Fees.......................................... 135,000
Trustee's Fees.............................................. 10,000
Miscellaneous............................................... 21,969
--------
Total............................................. $693,031
========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
(a) The Corporation and PIB are Puerto Rico corporations.
(i) Article ELEVENTH of the Restated Certificate of Incorporation of
the Corporation provides the following:
(1) The Corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right
of the Corporation) by reason of the fact that he is or was a director,
officer, employee or agent of the Corporation, or is or was serving at
the written request of the Corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or
other enterprise, against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he
acted in good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the Corporation, and, with respect
to any criminal action or proceeding, had no reasonable cause to believe
his conduct was unlawful. The termination of any action, suit or
proceeding by judgment, order, settlement, conviction, or upon a plea of
nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner
which he reasonably believed to be in or not opposed to the best
interests of the Corporation and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was
unlawful.
(2) The Corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the Corporation to
procure a judgment in its favor by reason of the fact that he is or was
a director, officer, employee or agent of the Corporation, or is or was
serving at the written request of the Corporation as a director,
officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including
attorney's fees) actually and reasonably incurred by him in connection
with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Corporation, except that no
indemnification shall be made in respect of any claim, issue or matter
as to which such person shall have been adjudged to be liable for
negligence or misconduct in the performance of his duty to the
Corporation unless and only to the extent that the court in which such
action or suit was brought shall determine upon application that,
despite the adjudication of liability
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but in view of all the circumstances of the case, such person is fairly
and reasonably entitled to indemnity for such expenses which such court
shall deem proper.
(3) To the extent that a director, officer, employee or agent of
the Corporation has been successful on the merits or otherwise in
defense of any action, suit or proceeding referred to in paragraph 1 or
2 of this Article ELEVENTH, or in defense of any claim, issue or matter
therein, he shall be indemnified against expenses (including attorneys'
fees) actually and reasonably incurred by him in connection therewith.
(4) Any indemnification under paragraph 1 or 2 of this Article
ELEVENTH (unless ordered by a court) shall be made by the Corporation
only as authorized in the specific case upon a determination that
indemnification of the director, officer, employee or agent is proper in
the circumstances because he has met the applicable standard of conduct
set forth therein. Such determination shall be made (a) by the Board of
Directors by a majority vote of a quorum consisting of directors who
were not parties to such action, suit or proceeding, or (b) if such a
quorum is not obtainable, or, even if obtainable, a quorum of
disinterested directors so directs, by independent legal counsel in a
written opinion, or (c) by the stockholders.
(5) Expenses incurred in defending a civil or criminal action, suit
or proceeding may be paid by the Corporation in advance of the final
disposition of such action, suit or proceeding as authorized by the
Board of Directors in the specific case upon receipt of an undertaking
by or on behalf of the director, officer, employee or agent to repay
such amount unless it shall ultimately be determined that he is entitled
to be indemnified by the Corporation as authorized in this Article
ELEVENTH.
(6) The indemnification provided by this Article ELEVENTH shall not
be deemed exclusive of any other rights to which those seeking
indemnification may be entitled under any statute, by-law, agreement,
vote of stockholders or disinterested directors or otherwise, both as to
action in his official capacity and as to action in another capacity
while holding such office, and shall continue as to a person who has
ceased to be a director, officer, employee or agent and shall inure to
the benefit of the heirs, executors and administrators of such a person.
(7) By action of its Board of Directors, notwithstanding any
interest of the directors in the action, the Corporation may purchase
and maintain insurance, in such amounts as the Board of Directors deems
appropriate, on behalf of any person who is or was a director, officer,
employee or agent of the Corporation, or is or was serving at the
written request of the Corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, against any liability asserted against him and incurred by
him in any such capacity, or arising out of his status as such, whether
or not the Corporation would have the power or would be required to
indemnify him against such liability under the provisions of this
Article ELEVENTH or of the General Corporation Law of the Commonwealth
of Puerto Rico or of any other state of the United States or foreign
country as may be applicable.
(ii) Article ELEVENTH of the Certificate of Incorporation of PIB
provides the following:
(1) PIB shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of PIB) by reason
of the fact that he is or was a director, officer, employee or agent of
PIB, or is or was serving at the written request of PIB as a director,
officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action,
suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of
PIB, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of
any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall
not, of itself, create a presumption that the person did not act in good
faith and in a manner which he
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reasonably believed to be in or not opposed to the best interests of PIB
and, with respect to any criminal action or proceeding, had reasonable
cause to believe that his conduct was unlawful.
(2) PIB shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of PIB to procure a judgment in its
favor by reason of the fact that he is or was a director, officer,
employee or agent of PIB, or is or was serving at the written request of
PIB as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he
acted in good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of PIB, except that no indemnification
shall be made in respect of any claim, issue or matter as to which such
person shall have been adjudged to be liable for negligence or
misconduct in the performance of his duty to PIB unless and only to the
extent that the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability
but in view of all the circumstances of the case, such person is fairly
and reasonably entitled to indemnity for such expenses which such court
shall deem proper.
(3) To the extent that a director, officer, employee or agent of
PIB has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in paragraph 1 or 2 of this
Article ELEVENTH, or in defense of any claim, issue or matter therein,
he shall be indemnified against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection therewith.
(4) Any indemnification under paragraph 1 or 2 of this Article
ELEVENTH (unless ordered by a court) shall be made by PIB only as
authorized in the specific case upon a determination that
indemnification of the director, officer, employee or agent is proper in
the circumstances because he has met the applicable standard of conduct
set forth therein. Such determination shall be made (a) by the Board of
Directors by a majority vote of a quorum consisting of directors who
were not parties to such action, suit or proceeding, or (b) if such a
quorum is not obtainable, or, even if obtainable, a quorum of
disinterested directors so directs, by independent legal counsel in a
written opinion, or (c) by the stockholders.
(5) Expenses incurred in defending a civil or criminal action, suit
or proceeding may be paid by PIB in advance of the final disposition of
such action, suit or proceeding as authorized by the Board of Directors
in the specific case upon receipt of an undertaking by or on behalf of
the director, officer, employee or agent to repay such amount unless it
shall ultimately be determined that he is entitled to be indemnified by
PIB as authorized in this Article ELEVENTH.
(6) The indemnification provided by this Article ELEVENTH shall not
be deemed exclusive of any other rights to which those seeking
indemnification may be entitled under any statute, by-law, agreement,
vote of stockholders or disinterested directors or otherwise, both as to
action in his official capacity and as to action in another capacity
while holding such office, and shall continue as to a person who has
ceased to be a director, officer, employee or agent and shall inure to
the benefit of the heirs, executors and administrators of such a person.
(7) By action of its Board of Directors, notwithstanding any
interest of the directors in the action, PIB may purchase and maintain
insurance, in such amounts as the Board of Directors deems appropriate,
on behalf of any person who is or was a director, officer, employee or
agent of PIB, or is or was serving at the written request of PIB as a
director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against any
liability asserted against him and incurred by him in any such capacity,
or arising out of his status as such, whether or not PIB would have the
power or would be required to indemnify him against such liability under
the provisions of this Article ELEVENTH or of the General Corporation
Law of the Commonwealth of Puerto Rico or of any other state of the
United States or foreign country as may be applicable.
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(b) PNA is a Delaware corporation.
(i) Section 102 of the Delaware General Corporation Law allows a
corporation to eliminate the personal liability of a director to the corporation
or its stockholders for monetary damages for breach of fiduciary duty as a
director, except in cases where the director breached his duty of loyalty,
failed to act in good faith, engaged in intentional misconduct or knowing
violation of law, authorized the unlawful payment of a dividend or approved an
unlawful stock repurchase or obtained an improper personal benefit. Section 145
of the Delaware General Corporation Law, as amended, provides that a corporation
may indemnify any person who was or is a party or is threatened to be a party to
any threatened, pending or completed action, suit, or proceeding, whether civil,
criminal, administrative or investigative, other than an action by or in right
of the Corporation, by reason of the fact that he is or was a director, officer,
employee or agent of the corporation or is or was serving at its request in such
capacity in another corporation or business association against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement,
actually and reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the corporation and, with respect
to any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful.
(ii) Section 6.4 of the By-laws of PNA provides the following:
Section 6.4. Indemnification of Directors, Officers and
Employees. The Corporation shall indemnify to the full extent permitted by
law any person made or threatened to be made a party to any action, suit or
proceeding, whether civil, criminal, administrative or investigative, by
reason of the fact that such person or such person's testator or intestate
is or was a director, officer or employee of the Corporation or serves or
served at the request of the Corporation any other enterprise as a
director, officer or employee. Expenses, including attorneys' fees,
incurred by any such person in defending any such action, suit or
proceeding shall be paid or reimbursed by the Corporation promptly upon
receipt by it of an undertaking of such person to repay such expenses if it
shall ultimately be determined that such person is not entitled to be
indemnified by the Corporation. The rights provided to any person by this
by-law shall be enforceable against the Corporation by such person who
shall be presumed to have relied upon it in serving or continuing to serve
as a director, officer or employee as provided above. No amendment of this
by-law shall impair the rights of any person arising at any time with
respect to events occurring prior to such amendment. For purposes of this
by-law, the term "Corporation" shall include any predecessor of the
Corporation and any constituent corporation (including any constituent of a
constituent) absorbed by the Corporation in a consolidation or merger; the
term "other enterprise" shall include any corporation, partnership, joint
venture, trust or employee benefit plan; service "at the request of the
Corporation" shall include service as a director, officer or employee of
the Corporation which imposes duties on, or involves services by, such
director, officer or employee with respect to an employee benefit plan, its
participants or beneficiaries; any excise taxes assessed on a person with
respect to an employee benefit plan shall be deemed to be indemnifiable
expenses; and action by a person with respect to an employee benefit plan
which such person reasonably believes to be in the interest of the
participants and beneficiaries of such plan shall be deemed to be action
not opposed to the best interests of the Corporation.
(c) The Corporation, PIB and PNA maintain directors' and officers'
liability insurance policies.
(d) Reference is made to the indemnity provisions in the Underwriting
Agreement, which is incorporated by reference as Exhibit 1 to this Registration
Statement from Registration Statement No. 33-57038.
ITEM 16. EXHIBITS
(1)(a) -- Form of Underwriting Agreement. (Incorporated by reference
from Registration Statement No. 33-57038)
(4)(a) -- Restated Certificate of Incorporation of Popular, Inc., as
amended (English translation).
(4)(b) -- Certificate of Incorporation of Popular International Bank,
Inc. (English translation). (Incorporated by Reference from
Registration Statement No. 33-54299)
(4)(c) -- Certificate of Incorporation of Popular North America, Inc.,
as amended.
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(4)(d) -- Copy of Senior Indenture of Popular, Inc., dated as of
February 15, 1995, as supplemented by the First Supplemental
Indenture thereto, dated as of May 8, 1997, each between
Popular, Inc. and The First National Bank of Chicago, as
trustee.
(4)(e) -- Copy of Subordinated Indenture of Popular, Inc., dated as of
November 30, 1995, between Popular, Inc. and The First
National Bank of Chicago, as trustee.
(4)(f) -- Copy of Senior Indenture of Popular North America, Inc.,
dated as of October 1, 1991, as supplemented by the First
Supplemental Indenture thereto, dated as of February 28,
1995, and by the Second Supplemental Indenture thereto,
dated as of May 8, 1997, each among Popular North America,
Inc., Popular, Inc., as Guarantor, and The First National
Bank of Chicago, as trustee.
(4)(g) -- Form of Subordinated Indenture of Popular North America,
Inc. (Incorporated by reference from Registration Statement
No. 33-61601)
(4)(h) -- Form of Senior Indenture of Popular International Bank, Inc.
(4)(i) -- Form of Subordinated Indenture of Popular International
Bank, Inc. (Incorporated by reference from Registration
Statement No. 33-57038)
(4)(j) -- Rights Agreement, dated as of August 11, 1988, between
Popular, Inc. and Chemical Bank (as successor to
Manufacturers Hanover Trust Company). (Incorporated by
reference from Registration Statement No. 33-39028)
(4)(k) -- Amendment to Rights Agreement, dated as of December 11,
1990, between Popular, Inc. and Chemical Bank (as successor
to Manufacturers Hanover Trust Company). (Incorporated by
reference from Registration Statement No. 33-39028)
(5)(a) -- Opinion of Brunilda Santos de Alvarez, Esq.
(5)(b) -- Opinion of Sullivan & Cromwell.
(12) -- Computation of Consolidated Ratios of Earnings to Fixed
Charges and Earnings to Fixed Charges and Preferred Stock
Dividends.
(23)(a) -- Consent of Independent Auditors.
(23)(b) -- Consent of Brunilda Santos de Alvarez, Esq. (included in
Exhibit (5)(a))
(23)(c) -- Consent of Sullivan & Cromwell. (included in Exhibit (5)(b))
(24) -- Powers of attorney (included on pages II-7 through II-11).
(25) -- Form T-1 Statement of Eligibility under the Trust Indenture
Act of 1939 of The First National Bank of Chicago, as
Trustee under the Senior Indenture of Popular, Inc., the
Senior Indenture of Popular North America, Inc. and the
Subordinated Indenture of Popular, Inc.
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ITEM 17. UNDERTAKINGS
The undersigned Co-registrants hereby undertake:
(a)(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high and of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in
the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement; and
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(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the Registration Statement
or any material change to such information in the Registration
Statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply
if the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed by the
Coregistrants pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 that are incorporated by reference in the Registration
Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the Corporation's annual report
pursuant to section 13(a) or 15(d) of the Securities Exchange Act of 1934
that is incorporated by reference in this Registration Statement shall be
deemed to be a new registration statement relating to the securities
offered therein and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(c) That, for purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form of prospectus
filed as part of this Registration Statement in reliance upon Rule 430A and
contained in a form of prospectus filed by any Co-registrant pursuant to
Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to
be part of this Registration Statement as of the time it was declared
effective.
(d) That, for purposes of determining any liability under the
Securities Act of 1933, each posteffective amendment that contains a form
of prospectus shall be deemed to be a new Registration Statement relating
to the securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering thereof.
The undersigned Co-registrants hereby undertake to file an application for
the purpose of determining the eligibility of the Subordinated Trustee, PNA
Subordinated Trustee, PIB Senior Trustee and PIB Subordinated Trustee to act
under Subsection (a) of Section 310 of the Trust Indenture Act in accordance
with the rules and regulations prescribed by the Commission under Section
305(b)(2) of such Act.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Co-registrants pursuant to the provisions referred to in Item 15 of this
Registration Statement, or otherwise, the Co-registrants have been advised that
in the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification by the Co-registrants against such
liabilities (other than the payment by the Co-registrants of expenses incurred
or paid by a director, officer or controlling person of the Coregistrants in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Co-registrants will, unless in the opinion of their counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by them is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
II-6
47
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the undersigned
Co-registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned thereunto
duly authorized, in the City of San Juan, Commonwealth of Puerto Rico, on the
12th day of May, 1997.
POPULAR, INC.
(Co-registrant)
By /s/ JORGE A. JUNQUERA
------------------------------------
JORGE A. JUNQUERA
Senior Executive Vice President and
Director
(Principal Financial Officer)
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned directors
and/or officers of POPULAR, INC. (the "Corporation") hereby constitutes and
appoints Richard L. Carrion, David H. Chafey, Jr., Jorge A. Junquera, Orlando
Berges, Amilcar Jordan and Roberto R. Herencia, and each of them singly, the
true and lawful agents and attorneys-in-fact of the undersigned with full power
of substitution and resubstitution and with full power and authority in said
agents and attorneys-in-fact, and in any one of them, to sign for each of the
undersigned and in his name, place or stead in any and all capacities indicated
below, a Registration Statement on Form S-3 to be filed with the Securities and
Exchange Commission under the Securities Act of 1933, as amended, relating to
the registration of up to $1,000,000,000 aggregate initial offering price of
debt, securities, preferred stock and guarantees, and to sign any and all
pre-effective amendments or post-effective amendments to such Registration
Statement and to file the same, with all exhibits thereto and other documents in
connection therewith with the Securities and Exchange Commission, granting unto
said agents and attorneys-in-fact, and each of them, full power and authority to
do and perform each and every act and thing requisite or necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said agents and
attorneys-in-fact or any of them, or their or his substitutes or substitute, may
lawfully do or cause to be done by virtue thereof.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ RICHARD L. CARRION Chairman, President and Chief May 12, 1997
- ----------------------------------------------------- Executive Officer (Principal
Richard L. Carrion Executive Officer)
/s/ ALFONSO F. BALLESTER Director May 12, 1997
- -----------------------------------------------------
Alfonso F. Ballester
/s/ JUAN J. BERMUDEZ Director May 12, 1997
- -----------------------------------------------------
Juan J. Bermudez
/s/ FRANCISCO J. CARRERAS Director May 12, 1997
- -----------------------------------------------------
Francisco J. Carreras
II-7
48
SIGNATURE TITLE DATE
--------- ----- ----
/s/ DAVID H. CHAFEY, JR. Senior Executive Vice President May 12, 1997
- ----------------------------------------------------- and Director
David H. Chafey, Jr.
/s/ LUIS E. DUBON, JR. Director May 12, 1997
- -----------------------------------------------------
Luis E. Dubon, Jr.
/s/ ANTONIO LUIS FERRE Director May 12, 1997
- -----------------------------------------------------
Antonio Luis Ferre
/s/ HECTOR R. GONZALEZ Director May 12, 1997
- -----------------------------------------------------
Hector R. Gonzalez
/s/ JORGE A. JUNQUERA Senior Executive Vice President May 12, 1997
- ----------------------------------------------------- and Director (Principal
Jorge A. Junquera Financial Officer)
/s/ MANUEL MORALES, JR. Director May 12, 1997
- -----------------------------------------------------
Manuel Morales, Jr.
Director
- -----------------------------------------------------
Alberto M. Paracchini
Director
- -----------------------------------------------------
Francisco M. Rexach, Jr.
/s/ FELIX J. SERRALLES NEVARES Director May 12, 1997
- -----------------------------------------------------
Felix J. Serralles Nevares
/s/ SALUSTIANO ALVAREZ MENDEZ Director May 12, 1997
- -----------------------------------------------------
Salustiano Alvarez Mendez
/s/ JULIO E. VIZCARRONDO, JR. Director May 12, 1997
- -----------------------------------------------------
Julio E. Vizcarrondo, Jr.
/s/ AMILCAR JORDAN Senior Vice President (Principal May 12, 1997
- ----------------------------------------------------- Accounting Officer)
Amilcar Jordan
II-8
49
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the undersigned
Co-registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned thereunto
duly authorized, in the City of San Juan, Commonwealth of Puerto Rico, on the
12th day of May, 1997.
POPULAR INTERNATIONAL BANK, INC.
(Co-registrant)
By /s/ JORGE A. JUNQUERA
------------------------------------
Jorge A. Junquera
Chairman of the Board
(Principal Executive Officer)
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned directors
and/or officers of POPULAR INTERNATIONAL BANK, INC. (the "Corporation") hereby
constitutes and appoints Richard L. Carrion, David H. Chafey, Jr., Jorge A.
Junquera, Orlando Berges, Amilcar Jordan and Roberto R. Herencia, and each of
them singly, the true and lawful agents and attorneys-in-fact of the undersigned
with full power of substitution and resubstitution and with full power and
authority in said agents and attorneys-in-fact, and in any one of them, to sign
for each of the undersigned and in his name, place or stead in any and all
capacities indicated below, a Registration Statement on Form S-3 to be filed
with the Securities and Exchange Commission under the Securities Act of 1933, as
amended, relating to the registration of up to $1,000,000,000 aggregate initial
offering price of debt, securities, preferred stock and guarantees, and to sign
any and all preeffective amendments or post-effective amendments to such
Registration Statement and to file the same, with all exhibits thereto and other
documents in connection therewith with the Securities and Exchange Commission,
granting unto said agents and attorneys-in-fact, and each of them, full power
and authority to do and perform each and every act and thing requisite or
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said agents and attorneys-in-fact or any of them, or their or his
substitutes or substitute, may lawfully do or cause to be done by virtue
thereof.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ JORGE A. JUNQUERA Chairman of the Board May 12, 1997
- ----------------------------------------------------- (Principal Executive
Jorge A. Junquera Officer)
/s/ ALFONSO F. BALLESTER Director May 12, 1997
- -----------------------------------------------------
Alfonso F. Ballester
/s/ RICHARD L. CARRION President and Director May 12, 1997
- -----------------------------------------------------
Richard L. Carrion
Director
- -----------------------------------------------------
Manuel L. del Valle
/s/ DAVID H. CHAFEY, JR. Executive Vice President and May 12, 1997
- ----------------------------------------------------- Director
David H. Chafey, Jr.
/s/ AMILCAR JORDAN Senior Vice President and May 12, 1997
- ----------------------------------------------------- Treasurer (Principal
Amilcar Jordan Financial and Accounting
Officer)
II-9
50
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Co-registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned thereunto
duly authorized, in the City of San Juan, Commonwealth of Puerto Rico, on the
12th day of May, 1997.
POPULAR NORTH AMERICA, INC.
(Co-registrant)
BY: /s/ JORGE A. JUNQUERA
------------------------------------
Jorge A. Junquera
President and Director
(Principal Financial Officer)
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned directors
and/or officers of POPULAR NORTH AMERICA, INC. (the "Corporation") hereby
constitutes and appoints Richard L. Carrion, David H. Chafey, Jr., Jorge A.
Junquera, Orlando Berges, Amilcar Jordan and Roberto R. Herencia, and each of
them singly, the true and lawful agents and attorneys-in-fact of the undersigned
with full power of substitution and resubstitution and with full power and
authority in said agents and attorneys-in-fact, and in any one of them, to sign
for each of the undersigned and in his name, place or stead in any and all
capacities indicated below, a Registration Statement on Form S-3 to be filed
with the Securities and Exchange Commission under the Securities Act of 1933, as
amended, relating to the registration of up to $1,000,000,000 aggregate initial
offering price of debt, securities, preferred stock and guarantees, and to sign
any and all pre-effective amendments or post-effective amendments to such
Registration Statement and to file the same, with all exhibits thereto and other
documents in connection therewith with the Securities and Exchange Commission,
granting unto said agents and attorneys-in-fact, and each of them, full power
and authority to do and perform each and every act and thing requisite or
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said agents and attorneys-in-fact or any of them, or their or his
substitutes or substitute, may lawfully do or cause to be done by virtue
thereof.
SIGNATURES TITLE DATE
---------- ----- ----
/s/ JORGE A. JUNQUERA President and Director May 12, 1997
- ----------------------------------------------------- (Principal Financial Officer)
Jorge A. Junquera
/s/ DAVID H. CHAFEY, JR. Senior Executive Vice President May 12, 1997
- ----------------------------------------------------- and Director
David H. Chafey, Jr.
/s/ ALFONSO F. BALLESTER Director May 12, 1997
- -----------------------------------------------------
Alfonso F. Ballester
/s/ RICHARD L. CARRION Chairman (Principal Executive May 12, 1997
- ----------------------------------------------------- Officer)
Richard L. Carrion
II-10
51
- ------------------------------------------------------ Director
Manuel L. del Valle
/s/ ROBERTO R. HERENCIA Senior Vice President and Director May 12, 1997
- ------------------------------------------------------
Roberto R. Herencia
/s/ AMILCAR JORDAN Senior Vice President and Treasurer May 12, 1997
- ------------------------------------------------------ (Principal Accounting Officer)
Amilcar Jordan
II-11
52
EXHIBIT INDEX
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- ------- ----------- ------------
(4)(a) -- Restated Certificate of Incorporation of Popular, Inc., as
amended (English translation)...............................
(4)(c) -- Certificate of Incorporation of Popular North America, Inc.,
as amended..................................................
(4)(d) -- Copy of Senior Indenture of Popular, Inc., dated as of
February 15, 1995, as supplemented by the First Supplemental
Indenture thereto, dated as of May 8, 1997, each between
Popular, Inc. and The First National Bank of Chicago, as
trustee.....................................................
(4)(e) -- Copy of Subordinated Indenture of Popular, Inc., dated as of
November 30, 1995, between Popular, Inc. and The First
National Bank of Chicago, as trustee........................
(4)(f) -- Copy of Senior Indenture of Popular North America, Inc.,
dated as of October 1, 1991, as supplemented by the First
Supplemental Indenture thereto, dated as of February 28,
1995, and by the Second Supplemental Indenture thereto,
dated as of May 8, 1997, each among Popular North America,
Inc., Popular, Inc., as Guarantor, and The First National
Bank of Chicago, as trustee.................................
(4)(h) -- Form of Senior Indenture of Popular International Bank,
Inc.........................................................
(5)(a) -- Opinion of Brunilda Santos de Alvarez, Esq..................
(5)(b) -- Opinion of Sullivan & Cromwell..............................
(12) -- Computation of Consolidated Ratios of Earnings to Fixed
Charges and Earnings to Fixed Charges and Preferred Stock
Dividends...................................................
(23)(a) -- Consent of Independent Auditors.............................
(23)(b) -- Consent of Brunilda Santos de Alvarez, Esq. (included in
Exhibit (5)(a)).............................................
(23)(c) -- Consent of Sullivan & Cromwell (included in Exhibit 5(b)).
(24) -- Powers of attorney (included on pages II-7 through II-11)...
(25) -- Form T-1 Statement of Eligibility under the Trust Indenture
Act of 1939 of The First National Bank of Chicago, as
Trustee under the Senior Indenture of Popular, Inc., the
Senior Indenture of Popular North America, Inc. and the
Subordinated Indenture of Popular Inc. .....................
- ---------------