EXHIBIT 1.1
6,500,000 Shares
POPULAR, INC.
6.375% Noncumulative Monthly Income Preferred Stock,
2003 Series A
UNDERWRITING AGREEMENT
February 21, 2003
POPULAR SECURITIES, INC.
As lead underwriter and representative
of the several Underwriters named in Schedule 1
Hato Rey, Puerto Rico 00918
Ladies and Gentlemen:
POPULAR, INC., a Puerto Rico corporation (the "Company"), proposes to
sell an aggregate of 6,500,000 shares (the "Firm Shares") of the Company's
6.375% Noncumulative Monthly Income Preferred Stock, Series A (the "Preferred
Stock"), which are to be issued and sold by the Company to you and the other
underwriters named in Schedule 1 hereto (collectively, the "Underwriters"), for
whom you are acting as the representative (the "Representative"). The Company
also has agreed to grant to you and the other Underwriters an option (the
"Option") to purchase up to an additional 975,000 shares of Preferred Stock (the
"Option Shares") on the terms and for the purposes set forth in Section 1(b)
hereto. The Firm Shares and the Option Shares are hereinafter collectively
referred to as the "Shares".
The Company hereby confirms as follows its agreements with the
Representative and the several other Underwriters.
1. Agreement to Sell and Purchase.
(a) On the basis of the representations, warranties and
agreements of the Company herein contained and subject to all the terms and
conditions of this Agreement, the Company agrees to sell to each Underwriter and
each Underwriter, severally and not jointly, agrees to purchase from the Company
at a purchase price of $24.2125 per share, the number of Firm Shares set forth
opposite the name of such Underwriter in Schedule 1 hereto, plus such additional
number of Firm Shares which such Underwriter may become obligated to purchase
pursuant to Section 9 hereof.
(b) Subject to all the terms and conditions of this
Agreement, the Company grants the Option to the several Underwriters to
purchase, severally, but not jointly, the Option Shares at the same price per
share as the Underwriters shall pay for the Firm Shares. The Option may be
exercised only to cover overallotments in the sale of the Firm Shares by the
Underwriters and may be exercised in whole or in part at any time and from time
to time on or before the 30th day after the date of this Agreement (or on the
next business day if the 30th day is not a business day), upon notice (the
"Option Shares Notice") in writing or by telephone (confirmed in writing) by the
Representative to the Company no later than 5:00 p.m., Atlantic Standard time,
at least two and no more than five business days before the date specified for
closing in the Option Shares Notice (the "Option Closing Date") setting forth
the aggregate number of Option Shares to be purchased and the time and date for
such purchase. On the Option Closing Date, the Company will issue and sell to
the Underwriters the number of Option Shares set forth in the Option Shares
Notice and each Underwriter will purchase such percentage of the Option Shares
as is equal to the percentage of Firm Shares that such Underwriter is purchasing
hereunder, as adjusted by the Representative in such manner as it deems
advisable to avoid fractional shares.
2. Delivery and Payment. Delivery of the Firm Shares shall be
made to the Representative for the accounts of the Underwriters at the office of
Xxxxxxxxxxx Xxxxxx & Xxxxxxx LLP, counsel to the Company, Banco Popular Center,
Suite 1900, Hato Rey, Puerto Rico, against payment of the purchase price by wire
transfer of immediately available funds to the bank account designated by the
Company. Such payment shall be made at 10:00 a.m., New York City time, on the
third full business day following the date of this Agreement, or such other time
on such other date, not later than seven business days after the date of this
Agreement, as may be agreed upon by the Company and the Representative (such
date is hereinafter referred to as the "Closing Date"). Time shall be of the
essence and delivery at the time and place specified pursuant to this Agreement
is a further condition of the obligation of each Underwriter hereunder.
To the extent the Option is exercised, delivery of the Option Shares
against payment by the Underwriters (in the manner specified above) will take
place at the offices specified above for the Closing Date at the time and date
(which may be the Closing Date) specified in the Option Shares Notice.
Certificates evidencing the Shares shall be in definitive form and
shall be registered in such names and in such denominations as the
Representative shall request at least two business days prior to the Closing
Date or the Option Closing Date, as the case may be, by written notice to the
Company. For the purpose of expediting the checking and packaging of
certificates for the Shares, the Company agrees to make such certificates
available for inspection at least 24 hours prior to the Closing Date or the
Option Closing Date, as the case may be.
Notwithstanding the other provisions of this Section 2, if transactions
in the Shares can be settled through the facilities of The Depository Trust
Company ("DTC"), payment for and delivery of the Shares on the Closing Date will
be made through the facilities of DTC if you are a member, unless you have
otherwise notified us prior to the date specified by you, or, if you are not a
member, settlement may be
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made through a correspondent who is a member pursuant to instruction you may
send to us prior to such specified date.
The cost of original issue tax stamps, if any, in connection with the
issuance, sale and delivery of the Firm Shares and Option Shares by the Company
to the respective Underwriters shall be borne by the Company. The Company will
pay and save each Underwriter and any subsequent holder of the Shares harmless
from any and all liabilities with respect to or resulting from any failure or
delay in paying Federal, state or Commonwealth of Puerto Rico stamp and other
transfer taxes, if any, which may be payable or determined to be payable in
connection with the original issuance, sale or delivery to such Underwriter of
the Firm Shares and Option Shares.
3. Representations and Warranties of the Company. The Company
represents, warrants and covenants to each Underwriter that:
(a) The Company meets the requirements for use of Form
S-3 and a registration statement (Registration No. 333-73242) on Form S-3, as
amended, with respect to the Shares, including a prospectus (the "Base
Prospectus"), has been prepared by the Company in conformity with the
requirements of the Securities Act of 1933, as amended (the "Act"), and the
rules and regulations (the "Rules and Regulations") of the Securities and
Exchange Commission (the "Commission") thereunder, and has been filed with the
Commission and has become effective. Such registration statement and the Base
Prospectus may have been amended or supplemented prior to the date of this
Agreement; any such amendment or supplement was so prepared and filed, and any
such amendment or supplement filed after the effective date of such registration
statement has become effective. No stop order suspending the effectiveness of
the registration statement has been issued, and, to the Company's knowledge, no
proceeding for that purpose has been instituted or threatened by the Commission.
A prospectus supplement relating to the Shares containing information permitted
to be omitted at the time of effectiveness by Rule 430A of the Rules and
Regulations has been or will be so prepared and filed with the Commission
pursuant to Rule 424(b) of the Rules and Regulations on or before the second
business day after the date hereof (or such earlier time as may be required by
the Rules and Regulations); and the Rules and Regulations do not require the
Company to, and, without the Representative's consent, the Company will not,
file a post-effective amendment after the time of execution of this Agreement
and prior to the filing of such final form of prospectus supplement. The
registration statement may be supplemented by one or more forms of preliminary
prospectus supplement, as contemplated by Rule 430 or Rule 430A of the Rules and
Regulations, to be used in connection with the offering and sale of the Shares
(each a "Preliminary Prospectus"). Copies of such registration statement, any
such amendments, and each related Preliminary Prospectus and all documents
incorporated by reference therein that were filed with the Commission on or
prior to the date of this Underwriting Agreement have been delivered to the
Representative and its counsel. The term "Registration Statement" means such
registration statement as amended at the time it becomes or became effective
(the "Effective Date"), including financial statements and all exhibits and any
information deemed by virtue of Rule 430A of the Rules and Regulations to be
included in such Registration Statement at the Effective Date and any prospectus
supplement filed thereafter with the Commission, and
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shall include the documents incorporated by reference therein pursuant to Item
12 of Form S-3 which were filed under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). The term "Prospectus" means, collectively, the
Base Prospectus together with any prospectus supplement, in the respective forms
they are filed with the Commission pursuant to Rule 424(b) of the Rules and
Regulations. Any reference herein to the terms "amend," "amendment" or
"supplement" with respect to the Registration Statement, the Base Prospectus,
any Preliminary Prospectus or the Prospectus shall be deemed to refer to and
include the filing of any document under the Exchange Act after the Effective
Date, or the date of any Preliminary Prospectus or the Prospectus, as the case
may be, that is incorporated therein by reference. For purposes of this
Underwriting Agreement, all references to the Registration Statement, the
Prospectus, any preliminary prospectus or any amendment or supplement thereto
shall be deemed to include any copy filed with the Commission pursuant to its
Electronic Data Gathering Analysis and Retrieval System (XXXXX), and such copy
shall be identical (except to the extent permitted by Regulation S-T) to any
Prospectus delivered to the Representative for use in connection with the
offering of the Shares by the Company.
(b) Each part of the Registration Statement (excluding
any prospectus supplement with respect to an offering of securities other than
the offering of the Shares contemplated hereby), when such part became or
becomes effective, each Preliminary Prospectus, on the date of filing thereof
with the Commission, and the Prospectus and any amendments or supplement
thereto, on the date of filing thereof with the Commission and at the Closing
Date, conformed or will conform in all material respects with the requirements
of the Act and the Rules and Regulations; each part of the Registration
Statement (excluding any prospectus supplement with respect to an offering of
securities other than the offering of the Shares contemplated hereby), when such
part became or becomes effective, did not or will not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading; each
Preliminary Prospectus, on the date of filing thereof with the Commission, and
the Prospectus and any amendment or supplement thereto, on the date of filing
thereof with the Commission and at the Closing Date, did not or will not include
an untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; the foregoing shall not apply to the
statements in or omissions from any such document relating to any Underwriter in
reliance upon, and in conformity with, written information relating to such
Underwriter furnished to the Company by the Representative, or by any
Underwriter through the Representative, specifically for use in the preparation
thereof. The Company has not distributed any offering material in connection
with the offering or sale of the Shares other than the Registration Statement,
any Preliminary Prospectus, the Prospectus or any other materials, if any,
permitted by the Act.
(c) The documents incorporated by reference in the
Registration Statement, the Prospectus and any amendment or supplement to such
Registration Statement or such Prospectus, when they became or become effective
under the Act or were or are filed with the Commission under the Exchange Act,
as the case may be, conformed or will conform in all material respects with the
requirements of the Act, the Rules and Regulations, the Exchange Act and the
rules and regulations of the Commission
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thereunder (the "Exchange Act Rules and Regulations"), as applicable.
(d) The only direct or indirect subsidiaries of the
Company ("Subsidiaries") that are "significant subsidiaries," as defined in Rule
405 of Regulation C of the Rules and Regulations under the Act (each, a
"Significant Subsidiary") are Banco Popular de Puerto Rico, a Puerto Rico
corporation ("Banco Popular"), Popular International Bank, Inc., a Puerto Rico
corporation, Popular North America, Inc., a Delaware corporation, Banco Popular
North America, Inc., a New York corporation, and Equity One, Inc., a Delaware
corporation. The Company has been and, at the Closing Date and Option Closing
Date, will be duly organized and validly existing as a corporation under the
laws of the Commonwealth of Puerto Rico and is and, at the Closing Date and
Option Closing Date, will be in good standing with the Commonwealth of Puerto
Rico. The Company is and will be as of the Closing Date and the Option Closing
Date registered with the Board of Governors of the Federal Reserve System (the
"Federal Reserve") as a bank holding company under the Bank Holding Company Act
of 1956 (the "BHCA") and its election to be treated as a financial holding
company under the BHCA, as amended by the Xxxxx- Xxxxx-Xxxxxx Act, is and will
remain in full force and effect. Each of the Significant Subsidiaries is and, at
the Closing Date and Option Closing Date, will be a corporation duly organized,
validly existing and in good standing under the laws of its respective
jurisdiction of incorporation. Each of the Company and its Significant
Subsidiaries is and, at the Closing Date and the Option Closing Date, will be
duly qualified and in good standing as a foreign corporation in each
jurisdiction in which the character or location of its properties (owned, leased
or licensed) or the nature or conduct of its business or use of its property and
assets makes such qualification necessary, except where the failure to so
qualify would not have a material adverse effect on the condition, financial or
otherwise, or the earnings, prospects or business affairs of the Company and its
Subsidiaries considered as a single enterprise.
(e) The outstanding shares of capital stock of the
Company have been duly authorized and validly issued and are fully paid and
nonassessable and are not subject to any preemptive or similar rights. The
Shares to be issued and sold by the Company will be, upon such issuance and
payment therefor in accordance with the terms of this Agreement, duly
authorized, validly issued, fully paid and nonassessable and will not be subject
to any preemptive or similar rights. The Company has, and, upon completion of
the sale of the Shares, will have, an authorized, issued and outstanding
capitalization as set forth in the Registration Statement and the Prospectus.
The description of the securities of the company in the Registration Statement
and the Prospectus is, and at the Closing Date and, if later, the Option Closing
Date, will be, complete and accurate in all respects. No holders of securities
of the Company are entitled to have such securities registered under the
Registration Statement, except where such rights have been waived.
(f) The consolidated financial statements and the related
notes of the Company included in the Registration Statement or incorporated
therein by reference and the Prospectus present fairly the financial condition
of the Company and its Subsidiaries as of the dates indicated and the
consolidated results of operations and cash flows of the Company and its
Subsidiaries for the periods covered thereby, all in conformity with generally
accepted accounting principles ("GAAP") applied on a consistent basis throughout
the entire periods involved. PricewaterhouseCoopers LLP (the "Accountants"),
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who have reported on those of such financial statements and related notes which
are audited, are independent accountants with respect to the Company and its
Subsidiaries within the meaning of the Act and the applicable and published
rules and regulations.
(g) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurance that (i) transactions are
executed in accordance with management's general or specific authorization, (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with GAAP and to maintain accountability for assets,
(iii) access to assets is permitted only in accordance with management's general
or specific authorization, and (iv) the recorded accountability for assets is
compared with existing assets at reasonable intervals and appropriate action is
taken with respect to any differences.
(h) Except as set forth in the Registration Statement and
Prospectus, subsequent to the respective dates as of which information is given
in the Registration Statement and the Prospectus and prior to the Closing Date
and, if later, the Option Closing Date, (i) there has not been, and will not
have been, any material adverse change in the business, properties, financial
condition, net worth or results of operations of the Company and its
Subsidiaries considered as a single enterprise, (ii) neither the Company nor any
of its Significant Subsidiaries has entered into, or will have entered into any
transactions that would be considered material to the Company and its
Subsidiaries considered as a single enterprise, other than pursuant to this
Agreement, and (iii) the Company has not, and will not have, paid or declared
any dividends or other distributions of any kind on any class of its capital
stock, except for the payment or declaration of quarterly dividends on the
Company's common stock (the "Common Stock") in the ordinary course of its
business.
(i) The Company is not required to be registered under
the Investment Company Act of 1940, as amended (the "Investment Company Act").
(j) Except as set forth in the Registration Statement, or
incorporated therein by reference, and Prospectus, there are no actions, suits,
arbitrations, claims, governmental or other proceedings (formal or informal), or
investigations pending or threatened against or affecting the Company or any of
its Significant Subsidiaries, or any directors, officers or shareholders of the
Company or any of its Significant Subsidiaries in their respective capacities as
such, or any of the properties or assets owned or leased by the Company or any
of its Significant Subsidiaries, before or by any Federal, state or Commonwealth
of Puerto Rico court, commission, regulatory board, administrative agency or
other governmental body, domestic or foreign (collectively, a "Governmental
Body"), wherein an unfavorable ruling, decision or finding would adversely
affect the business, prospects, financial condition, net worth or results of
operations of the Company and its Subsidiaries considered as a single enterprise
and would be required to be disclosed in the Registration Statement and
Prospectus. Neither the Company nor any Significant Subsidiary is in violation
of, or in default with respect to, any law, rule, or regulation, or any order,
judgment, or decree, except as described in the Prospectus or such as in the
aggregate do not now have and can reasonably be expected in the future not to
have a material adverse effect upon the
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operations, business, properties, or assets of the Company and its Subsidiaries
considered as a single enterprise; nor is the Company or any Significant
Subsidiary presently required under any order, judgment or decree to take any
action in order to avoid any such violation or default, except as described in
the Prospectus.
(k) The Company and each of its Significant Subsidiaries
possess and, at the Closing Date and the Option Closing Date, will possess
adequate governmental permits, consents, orders, approvals, franchises,
certificates and other authorizations (collectively, "Licenses") necessary to
carry on their respective businesses and own or lease their respective
properties as contemplated in the Registration Statement and Prospectus. The
Company and each of its Significant Subsidiaries have and, at the Closing Date
and the Option Closing Date, will have complied in all material respects with
all laws, regulations and orders applicable to it or its business, assets and
properties. Neither the Company nor any of its Significant Subsidiaries is, nor,
at the Closing Date and the Option Closing Date, will be in default (nor has any
event occurred which, with notice or lapse of time or both, would constitute a
default) in the due performance and observation of any term, covenant or
condition of any indenture, mortgage, deed of trust, voting trust agreement,
loan agreement, bond, debenture, note agreement or other evidence of
indebtedness, lease, contract or other agreement or instrument (collectively, a
"contract or other agreement") to which they are a party or by which their
respective properties are bound or affected, the violation of which would
individually or in the aggregate have a material adverse effect on the
condition, financial or otherwise, or the earnings, prospects or business
affairs of the Company and its Subsidiaries considered as a single enterprise.
There are no governmental proceedings or actions pending or threatened for the
purpose of suspending, modifying or revoking any License held by the Company or
any of its Significant Subsidiaries, except where such suspension, modification
or revocation would not individually or in the aggregate have a material adverse
effect on the condition, financial or otherwise, or the earnings, prospects or
business affairs of the Company and its Subsidiaries considered as a single
enterprise.
(l) No consent, approval, authorization or order of, or
any filing or declaration with, any Governmental Body is required for the
consummation of the transactions contemplated by this Agreement or in connection
with the issuance and sale of the Shares by the Company, except such as have
been obtained and such as may be required under state or Commonwealth of Puerto
Rico securities or blue sky laws or the bylaws and rules of the National
Association of Securities Dealers, Inc. (the "NASD") in connection with the
purchase and distribution by the Underwriters of the Shares to be sold hereby.
(m) The Company has full power (corporate and other) and
authority to enter into this Agreement and to carry out all the terms and
provisions hereof to be carried out by it. This Agreement has been duly
authorized, executed and delivered by the Company and constitutes a valid and
binding agreement of the Company and is enforceable against the Company in
accordance with the terms hereof, except as rights to indemnity and contribution
may be limited by federal, state or Commonwealth of Puerto Rico securities laws
or the public policy underlying such laws. Except as disclosed in the
Registration Statement and the Prospectus, the execution, delivery and the
performance of this Agreement and the consummation of the transactions
contemplated hereby will not result in the creation or imposition of any
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Encumbrance upon any of the properties or assets of the Company or any of the
Significant Subsidiaries pursuant to the terms or provisions of, or result in a
breach or violation of or conflict with any of the terms or provisions of, or
constitute a default under, or give any other party a right to terminate any of
its obligations under, or result in the acceleration of any obligation under,
(i) the Certificate of Incorporation or By-laws of the Company, in each case as
amended, or (ii) any contract or other agreement to which the Company or any of
the Significant Subsidiaries is a party or by which it or any of their
respective assets or properties are bound or affected, the violation of which
would individually or in the aggregate have a material adverse effect on the
condition, financial or otherwise, or the earnings, prospects or business
affairs of the Company and its Subsidiaries considered as a single enterprise,
or (iii) any judgment, ruling, decree, order, law, statute, rule or regulation
of any Governmental Body applicable to the Company or any of the Significant
Subsidiaries or their respective businesses or properties, the violation of
which would individually or in the aggregate have a material adverse effect on
the financial condition, or the earnings, prospects or business affairs of the
Company and its Subsidiaries considered as a single enterprise.
(n) No statement, representation, or warranty made by the
Company in this Agreement or made in any certificate or document required by
this Agreement to be delivered to the Representative was or will be, when made,
inaccurate, untrue or incorrect in any material respect. Each certificate signed
by an officer of the Company and delivered to the Representative or counsel for
the Underwriters shall be deemed to be a representation and warranty by the
Company to each Underwriter as to the matters covered thereby.
(o) Neither the Company nor any of its directors,
officers or affiliates has taken, nor will he, she or it take, directly or
indirectly, any action designed, or which might reasonably be expected in the
future, to cause or result in, under the Act or otherwise, or which has
constituted, stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Shares or otherwise.
(p) The Shares have been approved for listing on the
Nasdaq National Market ("Nasdaq"), subject to notice of issuance.
(q) Neither the Company nor any of its Significant
Subsidiaries is involved in any collective labor dispute with its employees nor
is any such dispute threatened or imminent.
(r) Neither the Company nor any of its Significant
Subsidiaries nor, to the Company's best knowledge, any employee or agent of the
Company or any Significant Subsidiary has made any payment of funds of the
Company or any Significant Subsidiary or received or retained any funds of the
Company or any Significant Subsidiary in violation of any law, rule or
regulation, which payment, receipt or retention of funds is of a character
required to be disclosed in the Prospectus.
(s) The business, operations and facilities of the
Company and its Significant Subsidiaries have been and are being conducted in
compliance with all applicable laws, ordinances, rules,
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regulations, licenses, permits, approvals, plans, authorizations or requirements
relating to occupational safety and health, or pollution, or protection of
health or the environment (including, without limitation, those relating to
emissions, discharges, releases or threatened releases of pollutants,
contaminants or hazardous or toxic substances, materials or wastes into ambient
air, surface water, groundwater or land, or relating to the manufacture,
processing, distribution, use, treatment storage, disposal, transport or
handling of chemical substances, pollutants, contaminants or hazardous or toxic
substances, materials or wastes, whether solid, gaseous or liquid in nature) of
any governmental department, commission, board, bureau, agency or
instrumentality of the United States, any state, or the Commonwealth of Puerto
Rico or any political subdivision thereof, and all applicable judicial or
administrative agency or regulatory decrees, awards, judgments and orders
relating thereto, except where failure to so comply would not have a material
adverse effect on the financial condition, or the earnings or business affairs
of the Company and its Subsidiaries considered as a single enterprise; and
neither the Company nor any of its Significant Subsidiaries has received any
notice from any governmental instrumentality or any third party alleging any
violation thereof or liability thereunder (including, without limitation,
liability for costs of investigating or remediating sites containing hazardous
substances or damages to natural resources, except where failure to so comply
would not have a material adverse effect on the financial condition, or the
earnings or business affairs of the Company and its Subsidiaries considered as a
single enterprise.
(t) The Company and each of its Significant Subsidiaries
has filed all foreign, federal, state and local tax returns that are required to
be filed or has requested extensions thereof and has paid all taxes required to
be paid by it and any other assessment, fine or penalty levied against it, to
the extent that any of the foregoing is due and payable, except for any failure
to file that would not have a material adverse effect on the financial
condition, or the earnings or business affairs of the Company and its
Subsidiaries considered as a single enterprise.
(u) The Company meets the requirements for use of Form
S-3 under the Rules and Regulations and the use of Rule 415 under the Rules and
Regulations.
(v) The deposit accounts of Banco Popular, and of each of
the other Significant Subsidiaries of the Company that are depository
institutions, are insured by the Bank Insurance Fund (the "BIF") of the Federal
Deposit Insurance Corporation ("FDIC") to the legal maximum, and no proceeding
for the termination or revocation of such insurance is pending or threatened.
Banco Popular is a member in good standing of the Federal Reserve Bank of New
York and of the Federal Home Loan Bank of New York.
(w) None of the Company nor any of its Significant
Subsidiaries or any of their respective directors or officers is subject to any
order or directive of, or party to any agreement with, any regulatory agency
having jurisdiction with respect to its business or operations, except as
disclosed in the Prospectus and except for any such order, directive or
agreement that is not material to the Company and its Subsidiaries considered as
a single enterprise.
(x) The Company has derived more than 20% of its gross
income from Puerto Rico
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sources on an annual basis since its incorporation in accordance with the
applicable sourcing rules under the Puerto Rico Internal Revenue Code of 1994,
as amended.
(y) The Company is not a party to any agreement or order
of any governmental entity or court that, as of the date hereof, and assuming no
material adverse change to the Company's financial condition, restricts its
ability to pay dividends on the Shares. Banco Popular is not a party to any
agreement or order of any governmental entity or court that, as of the date
hereof, and assuming no material adverse change to the Company's financial
condition, restricts its ability to pay dividends to the Company sufficient to
allow the Company to pay dividends on the Shares.
4. Agreements of the Company. The Company covenants and agrees
with each of the several Underwriters as follows:
(a) The Company will cause the Prospectus Supplement to
be filed as contemplated by Section 3(a) hereof (but only if the Representative
has not reasonably objected thereto by notice to the Company after having been
furnished a copy within a reasonable time prior to filing) and will notify the
Representative promptly of such filing. The Company will not during such period
as the Prospectus is required by law to be delivered in connection with sales of
the Shares by any Underwriter or dealer (the "Prospectus Delivery Period"), file
any amendment or supplement to the Registration Statement or the Prospectus,
unless a copy thereof shall first have been submitted to the Representative
within a reasonable period of time prior to the filing thereof and the
Representative shall not have objected thereto in good faith.
(b) The Company will use its best efforts to cause the
Registration Statement to remain effective through the completion of the
Underwriters' distribution of the Shares, and will notify the Representative
promptly, and will confirm such advice in writing, (i) of the preparation and
filing (subject to Section 4(a)) of any post-effective amendment and when any
such post-effective amendment to the Registration Statement becomes effective,
(ii) of any request by the Commission for amendments or supplements to the
Registration Statement or the Prospectus or for additional information, (iii) of
the issuance by the Commission of any stop order suspending the effectiveness of
the Registration Statement or the initiation of any proceedings for that purpose
or the threat thereof, (iv) of the suspension of the qualification or
registration of the Shares for offering or sale in any jurisdiction, or of the
initiation or threat of any proceeding for any such purpose; (v) of the
happening of any event during the Prospectus Delivery Period that in the
judgment of the Company makes any statement made in the Registration Statement
or the Prospectus untrue or that requires the making of any changes in the
Registration Statement or the Prospectus in order to make the statements
therein, in light of the circumstances in which they are made, not misleading
and (vi) of receipt by the Company or any representative or attorney of the
Company of any other communication from the Commission relating to the Company,
the Registration Statement, any preliminary prospectus or the Prospectus. If at
any time the Commission or any jurisdiction shall threaten to issue, or shall
issue, any order suspending the effectiveness of the Registration Statement or
suspending the qualification or registration of the Shares for sale in any
jurisdiction, the Company will make every reasonable effort to prevent the
issuance of such order and, if such an order should be issued, to obtain the
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withdrawal of such order at the earliest possible moment. The Company will use
its best efforts to comply with the provisions of and make all requisite filings
with the Commission pursuant to Rule 430A and to notify the Representative
promptly of all such filings.
(c) If, at any time when a Prospectus relating to the
Shares is required to be delivered under the Act, any event occurs as a result
of which, in the judgment of the Company or in the opinion of counsel for the
Underwriters, the Prospectus, as then amended or supplemented, would include any
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, or the Registration Statement, as then
amended or supplemented, would include any untrue statement of a material fact
or omit to state a material fact necessary to make the statements therein not
misleading, or if for any other reason it is necessary at any time to amend or
supplement the Prospectus or the Registration Statement to comply with the Act
or the Rules and Regulations, the Company will promptly notify the
Representative thereof and, subject to Section 4(b) hereof, will prepare and
file with the Commission, at the Company's expense, an amendment to the
Registration Statement or an amendment or supplement to the Prospectus that
corrects such statement or omission or effets such compliance.
(d) The Company will furnish to the Representative,
without charge, two signed copies of the Registration Statement and of any
post-effective amendment thereto, including financial statements and schedules,
and all exhibits thereto and will furnish to the Representative, without charge,
for transmittal to each of the other Underwriters, copies of the Registration
Statement and any post-effective amendment thereto, including financial
statements and schedules but without exhibits.
(e) The Company will comply with all the provisions of
all undertakings contained in the Registration Statement.
(f) During the Prospectus Delivery Period, the Company
will promptly furnish to the Underwriters, without charge, as many copies of
each preliminary prospectus, the Prospectus (containing the Prospectus
Supplement) and any amendment or supplement thereto as the Underwriters may from
time to time reasonably request. The Company consents to the use of the
Prospectus, as amended or supplemented from time to time, by the Underwriters
and by all dealers to whom the Shares may be sold, both in connection with the
offering or sale of the Shares and, thereafter, during the Prospectus Delivery
Period. If during the Prospectus Delivery Period any event shall occur which in
the judgment of the Company or counsel to the Underwriters should be set forth
in the Prospectus in order to make any statement therein, in the light of the
circumstances under which it was made, not misleading, or if, in the reasonable
opinion of counsel to the Underwriters, it is necessary to supplement or amend
the Prospectus to comply with law, the Company will forthwith prepare and duly
file with the Commission an appropriate supplement or amendment thereto. Except
as required by the Exchange Act or the Exchange Act Rules and Regulations, the
Company shall not file any document under the Exchange Act before the
termination of the Prospectus Delivery Period if such document would be deemed
to be incorporated by reference into the Prospectus to which the Representative
reasonably objects.
11
(g) Prior to any public offering of the Shares by the
Underwriters, the Company will cooperate with the Representative and its counsel
in connection with the registration or qualification of the Shares for offer and
sale under the securities or blue sky laws of such jurisdictions as the
Representative may reasonably request; provided, that in no event shall the
Company be obligated to quality to do business in any jurisdiction where it is
not now so qualified or to take any action which would subject it to general
service of process in any jurisdiction where it is not now so subject.
(h) The Company will make generally available to its
security holders as soon as practicable, but not later than ninety (90) days
after the close of the period covered thereby, an earnings statement (in form
complying with the provisions of Section 11(a) of the Act and Rule 158 of the
Rules and Regulations) covering a twelve-month period beginning not later than
the first day of the Company's fiscal quarter next following the "effective
date" (as defined in said Rule 158) of the Registration Statement.
(i) The Company will apply the net proceeds from the
offering and sale of the Shares in the manner set forth in the Prospectus under
"Use of Proceeds".
(j) The Company will not at any time, directly or
indirectly, take any action intended, or which might reasonably be expected, to
cause or result in, or which will constitute, stabilization of the price of the
shares of Preferred Stock to facilitate the sale or resale of any of the Shares.
5. Expenses.
(a) Whether or not the transactions contemplated by this
Agreement are consummated or this Agreement is terminated, the Company will pay,
or reimburse if paid by the Representative, all costs and expenses incidental to
the performance of the obligations of the Company under this Agreement,
including, but not limited to, costs and expenses of or relating to (i) the
preparation, printing and filing by the Company of the Registration Statement
and exhibits thereto, each Preliminary Prospectus prior to or during the period
specified in the first sentence of Section 4(f) but not exceeding nine (9)
months after the Effective Date, the Prospectus and any amendment or supplement
to the Registration Statement or the Prospectus, (ii) the preparation and
delivery of certificates representing the Shares, (iii) furnishing (including
costs of shipping and mailing) such copies of the Registration Statement, the
Prospectus and any Preliminary Prospectus, and all amendments and supplements
thereto, as may be requested for use in connection with the offering and sale of
the Shares by the Underwriters or by dealers to whom Shares may be sold, (iv)
the listing of the Shares on the Nasdaq, (v) the filing fees and out-of-pocket
expenses relating to such filings for any filings required to be made by the
Underwriters with the NASD, (vi) the registration or qualification of the Shares
for offer and sale under the securities or blue sky laws of such jurisdictions
designated pursuant to Section 4(g) and the preparation and printing of
preliminary, supplemental and final blue sky memoranda, (vii) counsel and
accountants to the Company, and (viii) the transfer agent for the Shares.
(b) If the transactions contemplated by this Agreement
are not consummated or if this
12
Agreement is terminated by the Company pursuant to any of the provisions hereof,
the Company will reimburse the Representative for all of their accountable
out-of-pocket fees and expenses (including the fees, disbursements and other
charges of their counsel) incurred by them in connection herewith.
6. Conditions of the Obligations of the Underwriters. The
obligations of each Underwriter hereunder are subject to the following
conditions:
(a) All filings required under Rule 424 and 430A of the
Rules and Regulations to be made by the Company prior to the Closing shall have
been made by the Company.
(b) No stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall be pending or threatened by the Commission, (ii) no order
suspending the effectiveness of the Registration Statement or the qualification
or registration of the Shares under the securities or blue sky laws of any
jurisdiction shall be in effect, and no proceeding for such purpose shall be
pending before or threatened or contemplated by the Commission or the
authorities of any such jurisdiction, (iii) any request for additional
information on the part of the staff of the Commission or any such authorities
shall have been complied with to the satisfaction of the staff of the Commission
or such authorities, and (iv) after the date hereof no amendment or supplement
to the Registration Statement or the Prospectus shall have been filed unless a
copy thereof was first submitted to the Representative and the Representative
did not object thereto in good faith, and the Representative shall have received
certificates, dated the Closing Date and the Option Closing Date and signed by
the Chief Executive Officer, the President or any Senior Executive Vice
President of the Company and the Chief Financial Officer, the Treasurer or the
Chief Accounting Officer of the Company (who may, as to proceedings threatened,
rely upon the best of their information and belief), to the effect of the
foregoing clauses (i), (ii) and (iii).
(c) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, (i) there shall not have
been a material adverse change in the general affairs, business, properties,
management, financial condition or results of operations of the Company whether
or not arising from transactions in the ordinary course of business, and (ii)
the Company shall not have sustained any material loss or interference with its
business, assets or properties from fire, explosion, flood or other casualty, or
from any labor dispute or any court or legislative or other governmental action,
order or decree, which is not set forth in the Registration Statement and the
Prospectus.
(d) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, there shall have been no
litigation or other proceeding instituted against the Company or any of its
officers, directors or shareholders in their capacities as such, or any of its
assets or properties, before or by any Governmental Body in which litigation or
proceeding an unfavorable ruling, decision or finding would materially and
adversely affect the business, properties, financial condition, net worth or
results of operations of the Company.
(e) Each of the representations and warranties of the
Company contained herein shall
13
be true and correct at the Closing Date and, with respect to the Option Shares,
at the Option Closing Date, as if made on such date, and all covenants and
agreements herein contained to be performed on the part of the Company and all
conditions herein contained to be fulfilled or complied with by the Company at
or prior to the Closing Date and, with respect to the Option Closing Date, shall
have been fully performed, fulfilled or complied with.
(f) The Representative shall have received opinions,
dated the Closing Date and the Option Closing Date, from Xxxxxxxxxxx Xxxxxx &
Xxxxxxx, LLP, counsel for the Company, and Xxxxxxxx Xxxxxx xx Xxxxxxx, General
Counsel of the Company, to the following effect:
(A) in the case of the opinion from Xxxxxxxxxxx
Xxxxxx & Xxxxxxx, LLP:
(i) The Company has been duly organized and is
validly existing as a corporation under the laws of the Commonwealth of
Puerto Rico and is in good standing with the Commonwealth of Puerto
Rico; Banco Popular is a corporation duly organized, validly existing
and in good standing under the laws of the Commonwealth of Puerto Rico
and is in good standing with the Commonwealth of Puerto Rico;
(ii) The Company has duly authorized the issuance
and sale of the Shares to be sold by it hereunder; such Shares, when
issued by the Company and paid for in accordance with the terms hereof,
will be validly issued, fully paid and nonassessable and will conform
in all material respects to the description thereof contained in the
Prospectus and will not be subject to any preemptive, subscription or
other similar rights; the Shares have been duly authorized for listing
on the Nasdaq, subject only to official notice of issuance; and no
holders of securities of the Company are entitled to have such
securities registered under the Registration Statement, except for
holders who have waived any such registration rights;
(iii) The Registration Statement is effective
under the Act; any required filing of the Prospectus Supplement
pursuant to Rule 424(b) has been made in the manner and within the time
period required by Rule 424(b); and to the best knowledge of such
counsel, no stop order suspending the effectiveness of the Registration
Statement or any amendment thereto and no order directed at any
document incorporated by reference in the Registration Statement or any
amendment thereto has been issued, and, no proceedings for that purpose
have been instituted or are pending or are threatened or contemplated
under the Act;
(iv) The Registration Statement and the
Prospectus as of its date, appeared on their face to be appropriately
responsive, in all material respects (other than the documents
incorporated therein by reference and not including the financial
statements, schedules and other financial data contained therein, as to
which such counsel need not express any opinion), with the requirements
of the Act and the related rules and regulations thereunder;
14
(v) The descriptions contained and summarized in
the Registration Statement, or incorporated therein by reference, and
the Prospectus are accurate and fairly represent in all material
respects the information required to be shown in the Registration
Statement and Prospectus by the Act and the Rules and Regulations; and
the statements set forth under the headings "Risk Factors - Banking
regulations may restrict Popular, Inc.'s ability to pay dividends,"
"Summary of Certain Terms of the 2003 Series A Preferred Stock," and
"Taxation" (including "Puerto Rico taxation" and "United States
taxation") in the Prospectus Supplement, under the heading "Description
of Preferred Stock" in the Prospectus, and under the headings
"Regulation and Supervision" in the Company's Annual report on Form
10-K, incorporated by reference in the Prospectus, insofar as such
statements constitute a summary of the legal matters, documents or
proceedings referred to therein, provide an accurate summary of such
legal matters, documents and proceedings;
(vi) The Company has full legal right, power, and
authority to enter into this Agreement and to consummate the
transactions provided for herein; and this Agreement has been duly
authorized, executed and delivered by the Company;
(vii) None of the Company's execution or delivery
of this Agreement, its performance hereof, its consummation of the
transactions contemplated herein or its application of the net proceeds
of the offering in the manner set forth under the caption "Use of
Proceeds," conflicts or will conflict with or results or will result in
any breach or violation of any of the terms or provisions of, or
constitute a default under, or result in the creation or imposition of
any Encumbrance upon, any property or assets of the Company pursuant to
(A) the terms of the Certificate of Incorporation or By-laws of the
Company, in each case as amended; or (B) any statute, rule or
regulation of any Governmental Body having jurisdiction over the
Company or any of its activities or properties; and no consent,
approval, authorization or order of any Governmental Body has been or
is required for the Company's performance of this Agreement or the
consummation of the transactions contemplated hereby, except such as
have been obtained under the Act or may be required under state or
Commonwealth of Puerto Rico securities or blue sky laws in connection
with the purchase and distribution by the Underwriters of the Shares;
(viii) The Company is not required to be registered
as an investment company under the Investment Company Act; and
(ix) The deposit accounts of Banco Popular are
insured by the BIF of the FDIC to the legal maximum, and to such
counsel's knowledge no proceeding for the termination or revocation of
such insurance is pending or threatened. Banco Popular is a member of
the Federal Reserve Bank of New York and of the Federal Home Loan Bank
of New York.
(B) in the case of the opinion from Xxxxxxxx
Xxxxxx xx Xxxxxxx:
15
(i) The Company has been duly organized and is
validly existing as a corporation under the laws of the Commonwealth of
Puerto Rico and is in good standing with the Commonwealth of Puerto
Rico. Each of Banco Popular and each of the other Significant
Subsidiaries is a corporation duly organized, validly existing and in
good standing under the laws of its respective jurisdiction of
incorporation. Each of the Company, Banco Popular, and each of the
other Significant Subsidiaries is duly qualified and in good standing
as a foreign corporation in each jurisdiction in which the character or
location of its properties (owned, leased or licensed) or the nature or
conduct of its business or use of its property and assets makes such
qualification necessary, except where the failure to so qualify would
not have a material adverse effect on the financial condition, or the
earnings or business affairs of the Company and its Subsidiaries
considered as a single enterprise;
(ii) The Company has an authorized capitalization
as set forth in the Prospectus; the Company has duly authorized the
issuance and sale of the Shares to be sold by it hereunder; such
Shares, when issued by the Company and paid for in accordance with the
terms hereof, will be validly issued, fully paid and nonassessable and
will conform in all material respects to the description thereof
contained in the Prospectus and will not be subject to any preemptive,
subscription or other similar rights; the Shares have been duly
authorized for listing on the Nasdaq, subject only to official notice
of issuance; and no holders of securities of the Company are entitled
to have such securities registered under the Registration Statement,
except for holders who have waived any such registration rights;
(iii) To the knowledge of such counsel, there are
no contracts or documents which are required by the Act to be described
in the Registration Statement or the Prospectus or to be filed as
exhibits to the Registration Statement which are not filed or
incorporated therein by reference as required by the Act and the Rules
and Regulations;
(iv) To the knowledge of such counsel, there is
not pending or threatened against the Company or any of the Significant
Subsidiaries any legal action or proceeding, suit, arbitration, claim,
or governmental or other proceeding (informal or formal) or
investigation before or by any Governmental Body, of a character
required to be disclosed in the Registration Statement or the
Prospectus which is not so disclosed therein or in the materials
incorporated by reference therein, and to the knowledge of such
counsel, no such proceedings have been threatened against the Company
or any of its Significant Subsidiaries or any of their respective
assets or properties. To the knowledge of such counsel, neither the
Company nor any Significant Subsidiary is in violation of, or in
default with respect to, any law, rule, or regulation, or any order,
judgment or decree, except as described in the Registration Statement
or Prospectus or in the materials incorporated by reference therein, or
such as in the aggregate do not now have and can reasonably be expected
in the future not to have a material adverse effect upon the
operations, business, properties, or assets of the Company and its
Subsidiaries considered as a single enterprise; nor is the Company or
any Significant Subsidiary presently required under any order,
16
judgment or decree to take any action in order to avoid any such
violation or default;
(v) The Company has full legal right, power, and
authority to enter into this Agreement and to consummate the
transactions provided for herein; and this Agreement has been duly
authorized, executed and delivered by the Company;
(vi) None of the Company's execution or delivery
of this Agreement, its performance hereof, its consummation of the
transactions contemplated herein or its application of the net proceeds
of the offering in the manner set forth under the caption "Use of
Proceeds," conflicts or will conflict with or results or will result in
any breach or violation of any of the terms or provisions of, or
constitute a default under, or result in the creation or imposition of
any Encumbrance upon, any property or assets of the Company pursuant to
(A) the terms of the Certificate of Incorporation or By-laws of the
Company, in each case as amended; (B) the terms of any contract or
other agreement to which the Company is a party or by which it is or
may be bound or to which any of its properties is or may be subject and
of which such counsel has knowledge; (C) any statute, rule or
regulation of any Governmental Body having jurisdiction over the
Company or any of its activities or properties; or (D) the terms of any
judgment, decree or order of any arbitrator or Governmental Body having
such jurisdiction and of which such counsel has knowledge; and no
consent, approval, authorization or order of any Governmental Body has
been or is required for the Company's performance of this Agreement or
the consummation of the transactions contemplated hereby, except such
as have been obtained under the Act or may be required under state or
Commonwealth of Puerto Rico securities or blue sky laws in connection
with the purchase and distribution by the Underwriters of the Shares;
(vii) To such counsel's knowledge, the conduct of
the respective businesses of the Company and its Significant
Subsidiaries is not in violation of any federal, state or local
statute, administrative regulation or other law, which violation is
likely to have a material adverse effect on the Company and its
Subsidiaries considered as a single enterprise; and the Company and its
Significant Subsidiaries have obtained all material licenses as are
necessary or required for the conduct of their businesses as presently
conducted;
(viii) The Company is not required to be registered
as an investment company under the Investment Company Act;
(ix) To the knowledge of such counsel, the
Company is not in any breach or violation of any of the terms or
provisions of, or in default under (nor has an event occurred which
with notice or lapse of time or both would constitute a default or
acceleration under), (A) the terms of its Certificate of Incorporation
or By-laws, in each case as amended; (B) the terms of any contract or
other agreement known to such counsel to which the Company is a party
or by which the Company is or may be bound or to which any of its
properties or assets is or may be subject, which breach, violation or
default could have a material adverse effect on the Company and its
17
Subsidiaries considered as a single enterprise; (C) any statute, rule
or regulation of any Government Body having jurisdiction over the
Company or any of its activities, assets or properties, which breach,
violation or default could have a material adverse effect on the
Company and its Subsidiaries considered as a single enterprise; or (D)
the terms of any judgment, decree or order, known to such counsel, of
any arbitrator or Governmental Body having such jurisdiction, which
breach, violation or default could have a material adverse effect on
the Company and its Subsidiaries considered as a single enterprise;
(x) The deposit accounts of Banco Popular and of
each other Significant Subsidiary of the Company that is a depository
institution are insured by the BIF of the FDIC to the legal maximum,
and to such counsel's knowledge no proceeding for the termination or
revocation of such insurance is pending or threatened. Banco Popular is
a member of the Federal Reserve Bank of New York and of the Federal
Home Loan Bank of New York; and
(xi) To the knowledge of such counsel, none of
the Company or any of its Significant Subsidiaries, or any of their
respective directors or officers is subject to any order or directive
of, or party to any agreement with, any regulatory agency having
jurisdiction with respect to the business or operations of the Company
or any of its Significant Subsidiaries, except as disclosed in the
Registration Statement or the Prospectus or in the materials
incorporated by reference therein, and except for any such order,
directive or agreement that is not material to the Company and its
Subsidiaries considered as a single enterprise.
In rendering any such opinion, such counsel may rely, as to matters of
fact, to the extent such counsel deems proper, on certificates of responsible
officers of the Company and public officials and, as to matters involving the
application of laws of any jurisdiction other than the Commonwealth of Puerto
Rico and the United States (to the extent satisfactory in form and scope to
counsel for the Underwriters) such counsel may rely upon the opinion of local
(including in-house) counsel to the Company. The foregoing opinion shall also
state that such counsel has no reason to believe that the Underwriters are not
justified in relying upon such opinion of local counsel, and copies of such
opinion shall be delivered to the Representative and its counsel.
In addition, such counsel shall state that in the course of the
preparation of the Prospectus, such counsel has participated in conferences with
officers and representatives of the Company and with the Accountants, at which
conferences such counsel made inquiries of such officers, representatives and
Accountants and discussed the contents of the Prospectus and, on the basis of
the foregoing and of the experience such counsel has gained through its practice
under the Act, nothing has come to such counsel's attention that causes such
counsel to believe that the Registration Statement as of the date it became
effective or the Prospectus as of its date and as of the Closing Date contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading or that the Prospectus as of the date hereof and as of the Closing
Date, contained any untrue statement of a material fact or omitted or omits to
state a material fact required to be
18
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading (it being understood
that such counsel need not express any opinion with respect to the financial
statements, schedules and other financial data included in the Prospectus). Such
counsel may state that they make no representation that they have independently
verified the accuracy or completeness of the statements contained in the
Registration Statement and Prospectus.
References to the Registration Statement and the Prospectus in this
paragraph (f) shall include any amendment or supplement thereto at the date of
such option.
(g) The Representative shall have received an opinion,
dated the Closing Date and the Option Closing Date, from X'Xxxxx & Xxxxxx,
counsel to the Underwriters, which opinion shall be satisfactory in all respects
to the Representative.
(h) Concurrently with the execution and delivery of this
Agreement, the Accountants shall have furnished to the Representative a letter,
dated the date of its delivery (the "Accountants Letter"), addressed to the
Representative and in form and substance satisfactory to the Representative, to
the effect that:
(i) they are independent accountants within the
meaning of the Act and the applicable published rules and
regulations thereunder;
(ii) in their opinion, the consolidated financial
statements of the Company and its Subsidiaries audited by them
and incorporated by reference in the Prospectus comply as to
form in all material respects with the applicable accounting
requirements of the Act, the Exchange Act and the published
rules and regulations thereunder with respect to registration
statements on Form S-3;
(iii) on the basis of procedures (but not an audit
in accordance with generally accepted auditing standards)
consisting of (a) reading the minutes of meetings of the
stockholders and the Board of Directors of the Company and its
Subsidiaries since December 31, 2001 as set forth in the
minute books through February 12, 2003 (the 135th day after
the date of the last unaudited consolidated interim financial
statements described below); (b) performing the procedures
specified by the American Institute of Certified Public
Accountants for a review of interim financial information as
described in SAS No. 71, "Interim Financial Information," on
the unaudited consolidated interim financial statements of the
Company and its Subsidiaries included in the Prospectus and
reading the unaudited interim financial data for the period
from the date of the latest audited balance sheet incorporated
by reference in the Prospectus to the date of the latest
available interim financial data; and (c) making inquiries of
certain officials of the Company who have responsibility for
financial and accounting matters regarding the specific items
for which representations are requested below; nothing has
come to their attention (as of a date not
19
earlier than February 12, 2003) as a result of the foregoing
procedures that caused them to believe that: (1) the unaudited
consolidated interim financial statements incorporated by
reference in the Registration Statement or in the Prospectus,
do not comply as to form in all material respects with the
applicable accounting requirements of the Exchange Act and the
published rules and regulations thereunder; (2) any material
modifications should be made to the unaudited consolidated
interim financial statements, if any, incorporated by
reference in the Registration Statement or in the Prospectus,
for them to be in conformity with generally accepted
accounting principles; (3)(i) at the date of the latest
available interim financial data and at a specified date not
earlier than February 12, 2003, there was any decrease in the
total assets or consolidated stockholders' equity, any
increase in long term debt, or any change in capital stock of
the Company and its Subsidiaries as compared with amounts
shown in the September 30, 2002 balance sheet incorporated by
reference in the Prospectus and (ii) for the period from
October 1, 2002 to the latest interim financial data
available, there were any decreases, as compared with the
corresponding period in the preceding year, in consolidated
net interest income, non-interest income, or in the total or
per share amounts of net income, except in all instances for
changes or decreases which the Registration Statement
discloses have occurred or may occur, or they shall state any
specific changes or decreases; and
(iv) the information set forth under the captions
"Prospectus Summary - Consolidated Ratio of Earnings to
Combined Fixed Charges and Preferred Stock Dividends," "Recent
Development," "Capitalization," and "Selected Consolidated
Financial and Other Data," in the Prospectus Supplement, under
the caption "Consolidated Ratio of Earnings to Fixed Charges
and Ratio of Earnings to Fixed Charges and Preferred Stock
Dividends of Popular, Inc.," and under the headings
"Management's Discussion and Analysis of Financial Condition
and Results of Operations" and "Statistical Summaries" in the
Company's Annual Report, incorporated by reference in the
Prospectus, which is expressed in dollars (or percentages
derived from such dollar amounts) and has been obtained from
accounting records which are subject to the internal controls
of the Company's accounting system or which has been derived
directly from such accounting records and analysis or
computations, is in agreement with such records or
computations made therefrom; provided that the Accountants
Letter need not cover the fourth quarter of 2002 and the full
year 2002 to the extent that the Accountants national policy
prevents them from giving comfort as to such quarter and year
during pendency of their audit.
In the event that the Accountants Letter sets forth any such changes,
decreases or increases, it shall be a further condition to the obligations of
the Underwriters that (A) such letter shall be accompanied by a written
explanation of the Company as to the significance thereof, unless the
Representative deems such explanation unnecessary, and (B) such changes,
decreases or increases do not, in the sole judgment of the Representative, make
it impractical or inadvisable to proceed with the purchase and delivery of the
Shares as contemplated by the Registration Statement and the Prospectus, as
amended as of the date hereof.
20
(i) At the Closing Date and, as to the Option Shares, the
Option Closing Date, there shall be furnished to the Representative an accurate
certificate, dated the date of its delivery, signed by each of the Chief
Executive Officer, or any Senior Executive Vice President and the Chief
Financial Officer, the Treasurer or the Chief Accounting Officer of the Company,
in form and substance satisfactory to the Representative, to the effect that to
the best of their knowledge:
(i) Each signer of such certificate has
carefully examined the Registration Statement and the
Prospectus and (A) as of the date of such certificate, (x) the
Registration Statement does not contain any untrue statement
of a material fact or omit to state a material fact required
to be stated therein or necessary in order to make the
statements therein not misleading and (y) the Prospectus does
not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading
and (B) since the Effective Date no event has occurred as a
result of which it is necessary to amend or supplement the
Prospectus in order to make the statements therein not untrue
or misleading in any material respect;
(ii) Each of the representations and warranties
of the Company contained in this Agreement were, when
originally made, and are, at the time such certificate is
delivered, true and correct in all respects; each of the
covenants required herein to be performed by the Company on or
prior to the date of such certificate has been duly, timely
and fully performed and each condition herein required to be
complied with by the Company on or prior to the delivery of
such certificate has been duly, timely and fully complied
with; and
(iii) No stop order suspending the effectiveness
of the Registration Statement or any post-effective amendment
thereto and no order directed at any document incorporated by
reference in the Registration Statement or any amendment
thereto or the Prospectus has been issued, and no proceedings
for that purpose have been instituted or threatened by the
Commission.
(j) The Shares shall be qualified for sale in such states
and possessions as the Representative may reasonably request, each such
qualification shall be in effect and not subject to any stop order or other
proceeding on the Closing Date and the Option Closing Date.
(k) Prior to the Closing Date, the Shares shall have been
accepted for listing on the Nasdaq, subject only to official notice of issuance.
(l) The Company shall have furnished to the Representative such officers'
certificates, certificates of government officials, letters and other documents,
in addition to those specifically mentioned herein, as the Representative may
have reasonably requested as to the accuracy and completeness at the
21
Closing Date and the Option Closing Date of any statement in the Registration
Statement or the Prospectus, as to the accuracy at the Closing Date and the
Option Closing Date of the representations and warranties of the Company, as to
the performance by the Company of its obligations hereunder, and as to the
fulfillment of the conditions concurrent and precedent to the obligations
hereunder of the Underwriters.
All such opinions, certificates, letters and other documents will be in
compliance with the provisions hereof only if they are satisfactory in form and
substance to you. The Company will furnish you with such conformed copies of
such opinions, certificates, letters and other documents as you shall reasonably
request.
7. Indemnification and Contribution.
(a) The Company agrees to indemnify and hold harmless
each Underwriter, the directors, officers, employees and agents of each
Underwriter and each person, if any, who controls each Underwriter within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act, from and
against any and all losses, claims, damages or liabilities, joint or several
(and actions in respect thereof), to which they, or any of them, may become
subject under the Act or other Federal, state or Commonwealth of Puerto Rico
statutory law or regulation, at common law or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon (i) any untrue statement or alleged untrue statement made by the
Company in Section 3 of this Agreement, (ii) any untrue statement or alleged
untrue statement of any material fact contained in (A) any Preliminary
Prospectus, the Registration Statement or the Prospectus or any amendment or
supplement to the Registration Statement or the Prospectus or (B) any
application or other document, or any amendment or supplement thereto, executed
by the Company or based upon written information furnished by or on behalf of
the Company filed in any jurisdiction in order to qualify the Shares under the
securities or blue sky laws thereof or filed with the Commission or any
securities association or securities exchange (each, an "Application"), or (iii)
the omission or alleged omission to state in any Preliminary Prospectus, the
Registration Statement or the Prospectus or any amendment or supplement to the
Registration Statement or the Prospectus or any Application a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and will reimburse, as incurred, each Underwriter and each such
other person for any legal or other expenses reasonably incurred by such
Underwriter or such other person in connection with investigating, defending or
appearing as a third-party witness in connection with any such loss, claim,
damage, liability or action; provided, however, that the Company will not be
liable in any such case to the extent that any such loss, claim, damage or
liability is based solely upon an untrue statement or omission or alleged untrue
statement or omission in any of such documents made in reliance upon and in
conformity with information relating to any Underwriter furnished in writing to
the Company by the Representative on behalf of any Underwriter expressly for
inclusion therein; provided, further that such indemnity with respect to any
Preliminary Prospectus shall not inure to the benefit of any Underwriter (or any
such other person) from whom the person asserting any such loss, claim, damage,
liability or action purchased Shares which are the subject thereof to the extent
that any such loss, claim, damage or liability (i) results from the fact that
such Underwriter failed to send or give a copy of the Prospectus (as amended or
supplemented) to such
22
person at or prior to the confirmation of the sale of such Shares to such person
in any case where such delivery is required by the Act and (ii) arises out of or
is based upon an untrue statement or omission of a material fact contained in
such Preliminary Prospectus that was corrected in the Prospectus (or any
amendment or supplement thereto), unless such failure to deliver the Prospectus
(as amended or supplemented) was the result of noncompliance by the Company with
Section 4(f). This indemnity agreement will be in addition to any liability that
the Company might otherwise have. The Company will not, without the prior
written consent of each Underwriter, settle or compromise or consent to the
entry of any judgment in any pending or threatened claim, action, suit or
proceeding in respect of which indemnification may be sought hereunder (whether
or not such Underwriter or any person who controls such Underwriter within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act is a party to
each claim, action, suit or proceeding), unless such settlement, compromise or
consent includes an unconditional release of each Underwriter and each such
other person from all liability arising out of such claim, action, suit or
proceeding.
(b) Each Underwriter will indemnify and hold harmless the
Company, its employees, officers and directors and each person, if any, who
controls the Company within the meaning of Section 15 of the Act or Section 20
of the Exchange Act, against all losses, claims, damages or liabilities (or
actions in respect thereof) to which the Company and any such director, officer
or controlling person may become subject under the Act or other federal, state
or Commonwealth of Puerto Rico statutory law or regulation, at common law or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon (i) any untrue statement or
alleged untrue statement of a material fact contained in any Preliminary
Prospectus, the Registration Statement or the Prospectus or any amendment or
supplement to the Registration Statement or the Prospectus or any Application,
or (ii) the omission or the alleged omission to state in the Registration
Statement, any Preliminary Prospectus or the Prospectus or any amendment or
supplement to the Registration Statement or the Prospectus, or any Application,
a material fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or omission or
alleged omission was made in reliance upon and in conformity with written
information furnished to the Company by such Underwriter through the
Representative expressly for use therein; and, subject to the limitation set
forth immediately preceding this clause, will reimburse, as incurred, any legal
or other expenses reasonably incurred by the Company and any such director,
officer or controlling person in connection with investigating or defending any
such loss, claim, damage, liability or any action in respect thereof. The
Company acknowledges that, for all purposes under this Agreement, the statements
relating to the Underwriters set forth under the heading "Underwriting" (which
does not include information on the Company's expenses and the listing of the
Shares) constitute the only information furnished in writing to the Company by
the Representative on behalf of the Underwriters expressly for inclusion in the
Registration Statement, any Preliminary Prospectus or the Prospectus. This
indemnity agreement will be in addition to any liability that each Underwriter
might otherwise have.
(c) Promptly after receipt by an indemnified party under
this Section 7 of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against
23
an indemnifying party or parties under this Section 7, notify the indemnifying
party or parties of the commencement thereof, but the omission so to notify the
indemnifying party or parties will not relieve it or them from any liability
which it or they may have to any indemnified party under the foregoing
provisions of this Section 7 or otherwise unless, and only to the extent that,
such omission results in the forfeiture of substantive rights or defenses by the
indemnifying party. If any such action is brought against an indemnified party
and it notifies an indemnifying party or parties of its commencement, the
indemnifying party or parties against which a claim is made will be entitled to
participate therein and, to the extent that it or they may wish, to assume the
defense thereof with counsel reasonably satisfactory to such indemnified party;
provided, however, that if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be one or more legal defenses available
to it or other indemnified parties which are different from or additional to
those available to the indemnifying party, the indemnifying party shall not have
the right to direct the defense of such action on behalf of such indemnified
party or parties and such indemnified party or parties shall have the right to
select separate counsel to defend such action on behalf of such indemnified
party or parties. After notice from the indemnifying party to such indemnified
party of its election so to assume the defense thereof and approval by such
indemnified party of counsel appointed to defend such action, the indemnifying
party will not be liable to such indemnified party under this Section 7 for any
legal or other expenses other than reasonable costs of investigation
subsequently incurred by such indemnified party in connection with the defense
thereof, unless (i) the indemnified party shall have employed separate counsel
in accordance with the proviso to the next preceding sentence (it being
understood that, in connection with such action, the indemnifying party shall
not be liable for the reasonable fees and expenses of more than one separate
counsel (in addition to the fees and expenses of local counsel necessary in
connection with any such proceedings) in any one action or separate but
substantially similar actions in the same jurisdiction arising out of the same
general allegations or circumstances, designated by the Representative in the
case of paragraph (a) of this Section 7, representing the indemnified parties
under paragraph (a) who are parties to such action or actions), or (ii) the
indemnifying party has authorized in writing the employment of counsel for the
indemnified party at the expense of the indemnifying party. After such notice
from the indemnifying party to such indemnified party, the indemnifying party
will not be liable for the costs and expenses of any settlement of such action
effected by such indemnified party without the written consent of the
indemnifying party, unless such indemnified party waived its right under this
Section 7 in which case the indemnified party may effect such a settlement
without such consent.
(d) If the indemnification provided for in the foregoing
paragraphs of this Section 7 is unavailable or insufficient to hold harmless an
indemnified party under paragraph (a) or (b) above in respect of any losses,
claims, damages or liabilities (or actions in respect thereof) referred to
therein, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages or
liabilities (or actions in respect thereof) (i) in such proportion s is
appropriate to reflect the relative benefits received by the indemnifying party
or parties, on the one hand, and the indemnified party, on the other, from the
offering of the Shares or (ii) if, but only if, the allocation provided by the
foregoing clause (i) is not permitted by applicable law, in such proportion as
is appropriate to reflect not only the relative benefits referred to in clause
(i) above but also the relative fault of the
24
indemnifying party or parties on the one hand, and the indemnified party, on the
other, in connection with the statements or omissions or alleged statements or
omissions that resulted in such losses, claims, damages or liabilities (or
actions in respect thereof), as well as any other relevant equitable
considerations. The relative benefits received by the Company, on the one hand,
and the Underwriters, on the other, shall be deemed to be in the same proportion
as the total proceeds from the offering of the Shares (before deducting
expenses) received by the Company bear to the total underwriting discounts and
commissions received by the Underwriters, in each case as set forth in the table
on the cover page of the Prospectus. Relative fault shall be determined by
reference to whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company or the Representative on behalf of the
Underwriters, and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The Company
and the Underwriters agree that it would not be just and equitable if
contributions pursuant to this Section 7(d) were to be determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take into account
the equitable considerations referred to herein. The amount paid or payable by
an indemnified party as a result of the losses, claims, damages, liabilities (or
actions in respect thereof) referred to above in this Section 7(d) shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this Section 7(d), no Underwriter
shall be required to contribute any amount in excess of the total underwriting
discounts received by it with respect to the Shares purchased by such
Underwriter under this Agreement, less the aggregate amount of any damages that
such Underwriter has otherwise been required to pay in respect of the same or
any substantially similar claim. No person found guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) will be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute as provided in
this Section 7(d) are several in proportion to their respective underwriting
obligations and not joint. For purposes of this Section 7(d), each person, if
any, who controls an Underwriter within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act will have the same rights to contribution as such
Underwriter, and each director or officer of the Company and each person, if
any, who controls the Company within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act, will have the same rights to contribution as the
Company, subject in each case to the provisions of this paragraph (d). The
provisions of section 7(c) shall be applicable to any claim for contribution
under this Section 7(d). The contribution agreement set forth above shall be in
addition to any liabilities which any indemnifying party may otherwise have. No
party will be liable for contribution with respect to any action or claim
settled without its written consent (which consent will not be unreasonably
withheld).
(e) The indemnity and contribution agreements contained
in this Section 7 and the representations and warranties of the Company
contained in this Agreement shall remain operative and in full force and effect
regardless of (i) any investigation made by or on behalf of the Underwriters,
(ii) acceptance of any of the Shares and payment therefor or (iii) any
termination of this Agreement.
25
8. Termination. The obligations of the several Underwriters under
this Agreement may be terminated at any time prior to the Closing Date (or, with
respect to the Option Shares, on or prior to the Option Closing Date), by notice
to the Company from the Representative, without liability on the part of any
Underwriter to the Company if, prior to delivery and payment for the Firm Shares
(or the Option Shares, as the case may be), in the sole judgment of the
Representative, (i) trading in the Common Stock or the Preferred Stock of the
Company or in securities generally shall have been suspended by the Commission
or by the Nasdaq, (ii) minimum or maximum prices shall have been established for
the Common Stock or the Preferred Stock of the Company or for securities
generally on either the Nasdaq or the NYSE, or additional material governmental
restrictions, not in force on the date of this Agreement, shall have been
imposed upon trading in securities generally by any of such market or exchange
or by order of the Commission or any court or other Governmental Authority,
(iii) a general banking moratorium shall have been declared by the United
States, New York State, or Commonwealth of Puerto Rico authorities, or (iv) any
material adverse change in the financial or securities markets in the United
States or any outbreak or material escalation of hostilities or declaration by
the United States of war or other calamity or crisis shall have occurred, the
effect of any of which is such as to make it, in the sole judgment of the
Representative, impracticable or inadvisable to market the Shares on the terms
and in the manner contemplated by the Prospectus. Any termination pursuant to
Section 8 shall be without liability of any party to any other party except as
provided in Sections 5(a) and 7.
9. Default of Underwriters. If one or more Underwriters default
in their obligations to purchase Firm Shares or Option Shares hereunder and the
aggregate number of such Shares that such defaulting Underwriter or Underwriters
agreed but failed to purchase is ten percent or less of the aggregate number of
Firm Shares or Option Shares to be purchased by all of the Underwriters at such
time hereunder, the other Underwriters may make arrangements satisfactory to the
Representative for the purchase of such Shares by other persons (who may include
one or more of the nondefaulting Underwriters, including the Representative),
but if no such arrangements are made by the Closing Date or the related Option
Closing Date, as the case may be, the other Underwriters shall be obligated
severally in proportion to their respective commitments hereunder to purchase
the Firm Shares or Option Shares that such defaulting Underwriter or
Underwriters agreed but failed to purchase. If one or more Underwriters so
default with respect to an aggregate number of Shares that is more than ten
percent of the aggregate number of Firm Shares or Option shares, as the case may
be, to be purchased by all of the Underwriters at such time hereunder, and if
arrangements satisfactory to the Representative are not made within 36 hours
after such default for the purchase by other persons (who may include one or
more of the nondefaulting Underwriters, including the Representative) of the
Shares with respect to which such default occurs, this Agreement will terminate
without liability on the part of any nondefaulting Underwriter and the Company
other than as provided in Section 10 hereof. In the event of any default by one
or more Underwriters as described in this Section 9, the Representative shall
have the right to postpone the Closing Date or the Option Closing Date, as the
case may be, established as provided in Section 9 hereof for not more than seven
business days in order that any necessary changes may be made in the
arrangements or documents for the purchase and delivery of the Firm Shares or
Option Shares, as the case may be. As used in this Agreement, the term
"Underwriter" includes any person substituted for an Underwriter under this
Section
26
9. Nothing herein shall relieve any defaulting Underwriter from
liability for its default.
10. Survival. The respective representations, warranties,
agreements, covenants, indemnities and other statements of the Company, its
officers, and the several Underwriters set forth in this Agreement or made by or
on behalf of them, respectively, pursuant to this Agreement shall remain in full
force and effet, regardless of (i) any investigation made by or on behalf of the
Company, any of its officers or directors, any Underwriter or any controlling
person referred to in Section 7 hereof and (ii) delivery of and payment for the
Shares. The respective agreements, covenants, indemnities and other statements
set forth in Sections 5 and 7 hereof shall remain in full force and effect,
regardless of any termination or cancellation of this Agreement.
11. Notices. Notice given pursuant to any of the provisions of
this Agreement shall be in writing and, unless otherwise specified, shall be
mailed or delivered (a) if to the Company, at the office of the Company, Banco
Popular Center, 000 Xxxxx Xxxxxx Xxxxxx, Xxxx Xxx, XX 00000, Attention: Xxxxx
Xxxxxxxxx, or (b) if to the Underwriters, to the office of the Representative,
Banco Popular Center, Suite 0000, 000 Xxxxx Xxxxxx Xxxxxx, Xxxx Xxx, XX 00000,
Attention: Xxxxxx Xxxxx, Managing Director. Any such notice shall be effective
only upon receipt. Any notice under Section 7 or 8 may be made by telex or
telephone, but if so made shall be subsequently confirmed in writing.
12. Successors. This Agreement shall inure to the benefit of and
shall be binding upon the several Underwriters, the Company, and their
respective successors and legal representatives, and nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any other
person any legal or equitable right, remedy or claim under or in respect of this
Agreement, or any provisions herein contained, this Agreement and all conditions
and provisions hereof being intended to be and being for the sole and exclusive
benefit of such persons and for the benefit of no other person except that (i)
the indemnities of the Company contained in Section 7 of this Agreement shall
also be for the benefit of any person or persons who control any Underwriter
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act
and (ii) the indemnities of the Underwriters, contained in Section 7 of this
Agreement shall also be for the benefit of the directors , employees and
officers of the Company and any person or persons who control the Company within
the meaning of Section 15 of the Act or Section 20 of the Exchange Act. No
purchaser of Shares from any Underwriter shall be deemed a successor because of
such purchase. This Agreement shall not be assignable by any party hereto
without the prior written consent of the other party.
13. APPLICABLE LAW. THE VALIDITY AND INTERPRETATION OF THIS
AGREEMENT, AND THE TERMS AND CONDITIONS SET FORTH HEREIN, SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF PUERTO RICO,
WITHOUT GIVING EFFECT TO ANY PROVISIONS RELATING TO CONFLICTS OF LAWS.
14. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
27
Please confirm that the foregoing correctly sets forth the agreement
among the Company and the several Underwriters.
Very truly yours,
POPULAR, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Chairman of the Board
President
Chief Executive Officer
Confirmed as of the date first above mentioned:
POPULAR SECURITIES, INC.
By: /s/ Xxxxxx X. Xxxxx
------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Managing Director
Acting on its behalf and as lead underwriter
of the several Underwriters named
in Schedule 1 hereof.
28
SCHEDULE I
UNDERWRITERS
Aggregate Number
of Shares to be
Purchased*
---------------
Popular Securities, Inc. 2,643,000
UBS PaineWebber Incorporated of Puerto Rico 1,200,000
Xxxxxxx Xxxxx Xxxxxx Inc. 1,080,000
Santander Securities Corporation 400,000
Oriental Financial Services Corporation 400,000
R-G Investments Corporation 400,000
BBVA Capital Markets of Puerto Rico, Inc. 312,000
Xxxxx, Xxxxxxxx & Xxxxx, Inc. 65,000
---------
Total: 6,500,000*
=========
* Excluding 975,000 shares constituting the over-allotment option Stock,
allocated pro rata among the Underwriters on the basis of the number of shares
of shares to be purchased by each Underwriter, as set forth above.
29
