1
EXHIBIT 10.14
BanPonce Financial Corp.
(a Delaware Corporation)
6.75% Medium-Term Fixed Rate Notes, Series C due August 9, 2001
Unconditionally Guaranteed as to Payment of Principal, Premium,
if any, and Interest by BanPonce Corporation
TERMS AGREEMENT
August 6, 1996
BanPonce Financial Corp.,
000 Xxxxxxxxxx Xxxx,
Xx. Xxxxxx, Xxx Xxxxxx 00000
BanPonce Corporation,
000 Xxxxx Xxxxxx Xxxxxx,
Xxxx Xxx, Xxxxxx Xxxx 00000
Ladies and Gentlemen:
We understand that BanPonce Financial Corp., a Delaware corporation
(the "Company"), proposes to issue and sell $75,000,000 aggregate principal
amount of its 6.75% Medium-Term Fixed Rate Notes, Series C due August 9, 2001
(the "Notes"), unconditionally guaranteed as to payment of principal, premium
if any, and interest by BanPonce Corporation (the "Guarantees" and, together
with the Notes, the "Underwritten Securities") which are part of a series of
Medium-Term Notes of the Company. subject to the terms and conditions set
forth herein or incorporated by reference herein, the underwriters named below
(the "Underwriters") offer to purchase as principals pursuant to Section 3(b)
of the Distribution Agreement, dated October 11, 1991, as amended on December
2, 1993 and on October 6, 1995 among the Company, BanPonce Corporation and the
Agents listed therein (the "Distribution Agreement") severally and not jointly,
the principal amount of Underwritten Securities set forth below opposite their
respective names at 99.06% of the principal amount thereof, together with
accured interest, if any, from August 9, 1996.
Principal
Underwriter Amount
----------- ------
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated . . . . . . . . . . . . . . . . . . $ 52,500,000
CS First Boston Corporation . . . . . . . . . . . . . . . . . . . 22,500,000
-------------
Total . . . . . . . . . . . . . . . . . . . . . . . . . $ 75,000,000
=============
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EXHIBIT 10.14 (CONT.)
The Underwritten Securities shall have the following terms:
Title of Security: 6.75% Medium-Term Fixed Rate Notes,
Series C due August 9, 2001.
Principal Amount
to be issued: $75,000,000
Interest rate: 6.75%
Current ratings: Xxxxx'x Investors Service, Inc. A3;
Standard & Poor's Ratings Services BBB+
Interest payable: June 15 and December 15 of each year and at maturity (each, an
"Interest Payment Date"), commencing on December 15, 1996 to
the holder of record on the fifteenth calendar day (whether or not
a Business Day, as defined in the Prospectus Supplement, dated October
6, 1995, relating to the Company's Medium-Term Notes,
Series C Due Nine Months or More From Date of Issue) immediately
preceding such Interest Payment Date.
Started Maturity
Date: August 9, 2001
Purchase Price 99.06% ($74,295,000), plus accrued interest, if any, form August
9, 1996.
Settlement Date,
Time and Place: August 9, 1996, at 10:00 am New York City time at the offices of
Xxxxx & Xxxx, Xxx Xxxxx Xxxxx Xxxxxx, Xxx Xxxx, XX 00000
Redemption
provisions: None
Repayment
provisions: None
Specified
Currency: U.S. dollars
Authorized
Denominations: $1,000 and integral multiples thereof
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EXHIBIT 10.14 (CONT.)
Additional/Other
Terms: None
Unless inconsistent with this Terms Agreement, all provisions
contained in the Distribution Agreement, which is attached hereto as Annex A,
are hereby incorporated by reference in their entirety herein and shall be
deemed to be a part of this Terms Agreement to the same extent as if such
provisions had been set forth in full herein. Capitalized terms not defined
herein shall have the meanings assigned to them in the Distribution Agreement.
The following documents will be required on the Settlement Date:
Officer's Certificate pursuant to Section 7(b) of the Distribution Agreement;
and Legal Opinion pursuant to Section 7(c) of the Distribution Agreement.
Very truly yours,
XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX
INCORPORATED
By:
------------------------------------
Name:
Title:
CS FIRST BOSTON CORPORATION
By:
------------------------------------
Name:
Title:
Accepted:
BANPONCE FINANCIAL CORP.
By:
----------------------------------------
Name:
Title:
BANPONCE CORPORATION
By:
----------------------------------------
Name:
Title:
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EXHIBIT 10.14 (CONT.)
Cross-Receipt
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated and CS First Boston
Corporation, as the underwriters (the "Underwriters") named in the Terms
Agreement, dated August 6, 1996 (the "Underwriting Agreement"), between
BanPonce Financial Corp. (the "Company"), a Delaware corporation, BanPonce
Corporation, a Puerto Rico corporation (the "Guarantor"), and the Underwriters,
hereby acknowledge receipt of $75,000,000 aggregate principal amount of the
Company's 6.75% Medium-Term Fixed Rate Notes, Series C due August 9, 2001 (the
"Notes"), unconditionally guaranteed as to payment of principal, premium if
any, and interest by the Guarantor, in the denominations and registered in the
names requested.
The Company hereby acknowledges from the Underwriters of a wire
transfer of immediately available funds in the aggregate amount of $74,295,000,
representing payment for the above-mentioned Notes at 99.06% of their principal
amount.
August 9, 1996
New York, New York
XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX
INCORPORATED
By:
-----------------------------------
Name:
Title:
CS FIRST BOSTON CORPORATION
By:
-----------------------------------
Name: Xxxxxxx Xxxxxx
Title: Managing Director
BANPONCE FINANCIAL CORP.
By:
------------------------------------
Name: Xxxx Xxxx Xxxxx-Xxxxxxxx
Title: Senior Vice President
BANPONCE CORPORATION
By:
------------------------------------
Name: Xxxx Xxxx Xxxxx-Xxxxxxxx
Title: Senior Vice President
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EXHIBIT 10.14 (CONT.)
BANPONCE CORPORATION
BANPONCE FINANCIAL CORPORATION
Officer's Certificate
I, Xxxx Xxxx Xxxxx-Xxxxxxxx, Senior Vice President of BanPonce
Financial Corp., a Delaware corporation (the "Company"), and Senior Vice
President of BanPonce Corporation, a Puerto Rico corporation (the
"Corporation"), pursuant to the Terms Agreement, dated August 6, 1996, among
the Company, the Corporation, Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated and CS First Boston Corporation, hereby certify that, to the best
of my knowledge, after reasonable investigation:
1. The representations and warranties of the Company and the
Corporation contained in Section 2 of the Distribution Agreement,
dated October 11, 1991, as amended on December 2, 1993 and October 6,
1995 and as supplemented on June 16, 1993 and August 1, 1994 (as so
amended and supplemented, the "Distribution Agreement"), among the
Company, the Corporation, Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated, CS First Boston Corporation and First Chicago Capital
Markets, Inc. are true and correct as of the date hereof with the same
force and effect as though made at and as of this date;
2. The Company and the Corporation have performed or complied
with all agreements and satisfied all conditions on their respective
parts to be performed or satisfied pursuant to the Distribution
Agreement, as applicable, at or prior to the date hereof;
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EXHIBIT 10.14 (CONT.)
3. No stop order suspending the effectiveness of the
Registration Statement on Form S-3 (No. 33-61601) of the Company,
the Corporation and Popular International Bank, Inc. (the
"Registration Statement") under the Securities Act of 1933 has been
issued and no proceedings for that purpose have been initiated or
threatened by the Securities and Exchange Commission; and
4. Since the respective dates as of which information is
given in each part of such Registration Statement and the prospectus
contained therein, as supplemented by the prospectus supplement dated
October 6, 1995 and the pricing supplement dated August 6, 1996 (as so
supplemented, the "Prospectus"), there has been no material adverse
change in the condition, financial or otherwise, or in the earnings
business affairs or business prospects of the Company or the
Corporation and its subsidiaries considered as one enterprise, whether
or not arising in the ordinary course of business, other than as may
have already been disclosed in the Registration Statement and the
Prospectus.
IN WITNESS WHEREOF, I have hereunto signed my name.
Dated: August 9, 1996
-----------------------------
Xxxx Xxxx Xxxxx-Xxxxxxxx
Senior Vice President
BanPonce Financial Corp.
-----------------------------
Xxxx Xxxx Xxxxx-Xxxxxxxx
Senior Vice President
BanPonce Corporation
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EXHIBIT 10.14 (CONT.)
Pricing Supplement, dated August 6, 1996
to Prospectus dated September 27, 1995 and
Prospectus Supplement dated October 6, 1995
BANPONCE FINANCIAL CORPORATION
MEDIUM-TERM NOTES, SERIES C
DUE FROM NINE MONTHS TO 30 YEARS FROM DATE OF ISSUE
Unconditionally Guaranteed as to Payment of Principal, Premium, if any, and
Interest by
BANPONCE CORPORATION
PRINCIPAL AMOUNT . . . . . . . . . . . . . . . . . . . . U.S. $75,000,000.00
ORIGINAL ISSUE DATE . . . . . . . . . . . . . . . . . . . August 9, 1996
MATURITY DATE . . . . . . . . . . . . . . . . . . . . . August 9, 2001
GLOBAL SECURITY . . . . . . . . . . . . . . . . . . . . . Yes
INTEREST RATE PER ANNUM . . . . . . . . . . . . . . . . . 6.75%
INTEREST RATE BASIS . . . . . . . . . . . . . . . . . . . Fixed
INTEREST PAYMENT DATES . . . . . . . . . . . . . . . . . June 15 and December 15 of each
year and at Maturity, commencing on
December 15, 1996.
Price to Underwriting Proceeds
Public (1) Discount (2) to Company (1)(3)
---------- ------------ -----------------
Per Note . . . . . . . . . . . . . . . . . . . . 99.56% 0.50% 99.06%
Total . . . . . . . . . . . . . . . . . . . . $74,670,000 $375,000 $74,295,000
---------
(1) Plus accrued interest form August 9, 1996, if any.
(2) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of
1933.
(3) Before deducting expenses payable by the Company.
-------------
The Notes offered hereby are offered by the several Underwriters, as
specified herein, subject to receipt and acceptance by them and subject to
their right to reject any order in whole or in part. It is expected that the
Notes will be ready for delivery in New York, New York on or about August 9,
1996, against payment therefor in immediately available funds.
XXXXXXX XXXXX & CO. CS FIRST BOSTON
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EXHIBIT 10.14 (CONT.)
RECENT DEVELOPMENTS
The U.S. Congress has approved legislation (the "Legislation") that
would, among other things, repeal Section 936 of the U.S. Internal Revenue Code
("Section 936"). The Legislation has not yet been signed into law by the
President of the United States. In general terms, Section 936 provides U.S.
corporations operating in Puerto Rico ("936 Corporations") with a tax credit
against U. S. federal tax liability on income derived from business operations
and certain investments in Puerto Rico. The Legislation phases out the Section
936 tax credit for income derived from Puerto Rican business operations of a
936 Corporation over a 10-year period. The Legislation would repeal,
retroactively as of July 1, 1996, the credit against U.S. federal tax liability
for investments made by 936 Corporations in Puerto Rico ("936 Funds"). This
credit has created a local money market (the "936 funds market") whose cost is
usually below that of the U.S. mainland or the Eurodollar market. The volume
of the 936 funds market could be reduced substantially during BanPonce
Corporation's (the "Corporation") current fiscal year, if the Legislation
becomes law. As of June 30, 1996, the Corporation was a recipient of and had a
balance of $2.9 billion in 936 Funds. representing 19.15% of the Corporation's
total liabilities. Management believes that the main impact of the
Legislation, if signed into law, would be a moderate net increase in the
Corporation's cost of funds. The anticipated rise in the cost of funds is
expected to be partially offset by a decrease in the cost of complying with
various investment requirements mandated by local regulations that are
applicable to all recipients of 936 Funds. The repeal of Section 936 could
have an adverse effect on the general economic condition of Puerto Rico, the
Corporation's predominant service area.
USE OF PROCEEDS
The proceeds from the issuance of the Notes to which this Pricing
Supplement relates will be used to finance the Corporation's subsidiaries.
CERTAIN ADDITIONAL FEDERAL TAX CONSEQUENCES
Recently proposed U.S. Treasury regulations (the "Proposed
Regulations") would establish alternative methods for providing the
certification that is required, as described in the Prospectus Supplement under
the caption "United States Taxation--United States Alien Holders", for payments
on the Notes to be free from United States withholding tax, information
reporting requirements and backup withholding tax. The Proposed Regulations
also would require, in the case of Notes held by foreign partnerships, that (x)
the certification described above be provided by the partners rather than by
the foreign partnership and (y) the partnership provide certain information,
including a United States taxpayer identification number. A look-through rule
would apply in the case of certain tiered partnerships. The Proposed
Regulations are proposed to be effective for payments made after December 31,
1997. There can be no assurance that the Proposed Regulations will be adopted
or as to the provisions that they will include if and when adopted in temporary
or final form.
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EXHIBIT 10.14 (CONT.)
UNDERWRITING
Subject to the terms and conditions set forth in a terms agreement
(the "Terms Agreement") among BanPonce Financial Corporation (the "Company"),
the Corporation and Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated and CS
First Boston Corporation (the "Underwriters"), the Company has agreed to sell
to the Underwriters, and the Underwriters have severally agreed to purchase the
respective principal amount of Notes set forth after their names below. The
Terms Agreement provides that the obligations of the Underwriters are subject
to certain conditions precedent and that the Underwriters will be obligated to
purchase all of the Notes if any are purchased.
Principal
Underwriter Amount
----------- ------
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated . . . . . . . . . . . $52,500,000
CS First Boston Corporation . . . . . . . . . . . 22,500,000
Total . . . . . . . . . . . . . . $75,000,000
The Underwriters have advised the Company that they propose initially
to offer the Notes to the public at the public offering price set forth on the
cover page of this Pricing Supplement, and to certain dealers at such price
less a concession not in excess of .3% of the principal amount. The
Underwriters may allow, and such dealers may reallow, a discount not in excess
of .25% of the principal amount of the Notes to certain other dealers. After
the initial public offering, the public offering price, concession and discount
may be changed.
The Company has agreed to indemnify the several Underwriters against
certain liabilities, including liabilities under the Securities Act of 1933.
The Underwriters and certain of their affiliates and associates are
customers of, including borrowers from, engage in transactions with, and/or
perform services for, the Corporation and its subsidiaries, in the ordinary
course of business. Also, in the ordinary course of their respective
businesses, affiliates of the Underwriters engage, and may in the future
engage, in commercial banking and investment banking transactions with the
Corporation and its subsidiaries. The Underwriters have performed investment
banking services for the Corporation in the last two years and have received
fees in connection therewith.
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EXHIBIT 10.14 (CONT.)
August 9, 1996
Xxxxxxx Xxxxx & Co.
Xxxxxxx Lynch, Pierce, Xxxxxx
& Xxxxx Incorporated
World Financial Center
Xxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
CS First Boston Corporation
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Dear Ladies and Gentlemen:
In connection with the several purchases today by you pursuant to the
Terms Agreement, dated August 6, 1996, among BanPonce Financial Corp., a
Delaware corporation (the "Company"), BanPonce Corporation, a Puerto Rico
corporation (the "Guarantor"), and you, of $75,000,000 principal amount of the
Company's Medium-Term Notes, Series C, endorsed with the guarantees of the
Guarantor, to be issued pursuant to the Indenture, dated as of October 1, 1991,
as supplemented by the First Supplemental Indenture, dated as of February 28,
1995, among the Company, the Guarantor and The First National Bank of Chicago,
as successor trustee to Citibank, N.A., I, as Counsel to the Company and the
Guarantor, refer to my opinion of October 6, 1995, addressed to you and to
First Chicago Capital Markets, Inc. (the "Opinion Letter"), relating to an
offering, at an aggregate initial offering price not to exceed $1,000,000,000,
of the Company's Medium-Term Notes, Series C, endorsed with the guarantees of
the Guarantor. Capitalized terms not defined herein shall have the meanings
assigned to them in the Opinion Letter.
I reaffirm as of the date hereof (and as though made on the date
hereof) all of the opinions made in the Opinion Letter except that, for
purposes of this opinion letter, (i) all references to the Registration
Statement shall be deemed to be a reference to each part of the Registration
statement filed with the Commission through the date hereof, as of the date
such part became effective, and (ii) all references to the Basic Prospectus
shall be deemed to be a reference to the Basic Prospectus as the same has been
amended and supplemented by the Prospectus Supplement and the pricing
supplement, dated August 6, 1996 (the "Pricing Supplement"), as of the date of
the Pricing Supplement.
Very truly yours,
Xxxxxxxx Xxxxxx xx Xxxxxxx
Legal Counsel
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