<PAGE>
Exhibit 4.4
EXECUTION COPY
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SANTANDER BANCORP
US$50,000,000
6.10% Subordinated Notes due June 2032
----------
NOTE PURCHASE AGREEMENT
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Dated October 26, 2005
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TABLE OF CONTENTS
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Section
Page
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1.
AUTHORIZATION OF
NOTES...................................................
1
2. SALE
AND PURCHASE OF
NOTES............................................... 1
3.
CLOSING..................................................................
1
4.
CONDITIONS TO
CLOSING....................................................
2
4.1.
Representations and Warranties..................................
2
4.2.
Compliance Certificates.........................................
2
4.3.
Opinions of Counsel.............................................
2
4.4.
Purchase Permitted by Applicable Law, etc.......................
2
4.5.
Proceedings and Documents; Good Standing Certificates...........
3
5.
REPRESENTATIONS AND WARRANTIES OF THE
COMPANY............................ 3
5.1.
Organization; Power and Authority...............................
3
5.2.
Authorization, etc..............................................
3
5.3.
Financial Statements............................................
4
5.4.
No
Legal or Contractual Bar.....................................
4
5.5.
No
Registration Under the Securities Act........................
4
5.6.
No
Material Litigation..........................................
4
5.7.
Taxes...........................................................
5
5.8.
Compliance with ERISA...........................................
5
5.9.
Use
of Proceeds.................................................
6
5.10.
Investment
Company Act.......................................... 6
5.11.
Changes in
Condition............................................ 6
6.
REPRESENTATIONS OF THE
PURCHASER......................................... 6
6.1.
Purchase for Investment; Qualified Institutional Buyer..........
6
6.2.
Source of Funds.................................................
9
6.3.
Anti-Money Laundering...........................................
10
6.4.
Transferee......................................................
10
7. PAYMENT
OF INTEREST......................................................
11
8.
REDEMPTION OF THE NOTES PRIOR TO
MATURITY................................ 11
8.1.
Optional Redemption.............................................
11
8.2.
Allocation of Partial Redemptions...............................
11
8.3.
Maturity; Surrender, etc........................................
11
8.4.
Purchase of Notes...............................................
12
9.
DELIVERY OF
REPORTS......................................................
12
9.1.
SEC
Reports.....................................................
12
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9.2.
Officer's Certificate...........................................
12
10.
CONSOLIDATION, MERGER AND SALE OF
ASSETS................................. 12
11. EVENTS OF
DEFAULT........................................................
13
12. REMEDIES ON
DEFAULT, ETC.................................................
14
12.1.
Acceleration....................................................
14
12.2.
Other
Remedies..................................................
14
12.3.
Rescission......................................................
14
12.4.
No Waivers
or Election of Remedies, Expenses, etc............... 14
12.5.
Limitation
on Suits............................................. 15
13.
REGISTRATION; EXCHANGE; SUBSTITUTION OF
NOTES............................ 15
13.1.
Registration of Notes...........................................
15
13.2.
Transfer
and Exchange of Notes..................................
15
13.3.
Replacement of Notes............................................
16
14. PAYMENTS ON
NOTES........................................................
16
14.1.
Place of
Payment................................................
16
14.2.
Home
Office Payment.............................................
16
15.
SUBORDINATION............................................................
17
15.1.
Agreement
to Subordinate........................................ 17
15.2.
Liquidation, Dissolution, Bankruptcy, Etc.......................
17
15.3.
Prior
Payment of Senior Debt Upon Acceleration of Notes.........
18
15.4.
No Payment
When Senior Debt Default............................. 18
15.5.
When
Distribution Must Be Paid Over.............................
19
15.6.
Subrogation.....................................................
19
15.7.
Relative
Rights.................................................
20
15.8.
Reliance
by Holders of Senior Debt on Subordination Provisions..
20
15.9.
No Waiver
of Subordination Provisions........................... 20
15.10.
Reliance on
Judicial Order or Certificate of Liquidating Agent.. 21
16. SURVIVAL OF
REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.............
21
17. AMENDMENT
AND WAIVER.....................................................
21
17.1.
Requirements....................................................
21
17.2.
Solicitation of Holders of Notes................................
21
17.3.
Binding
Effect, etc.............................................
22
17.4.
Notes held
by Company, etc...................................... 22
18.
NOTICES..................................................................
22
19.
MISCELLANEOUS............................................................
23
19.1.
Successors
and Assigns.......................................... 23
19.2.
Payments
Due on Non-Business Days...............................
23
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19.3.
Severability....................................................
23
19.4.
Construction....................................................
23
19.5.
Counterparts....................................................
24
19.6.
Governing
Law................................................... 24
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SCHEDULE A -- DEFINED TERMS
EXHIBIT 1 -- Form of
6.10% Subordinated Note due June 2032
EXHIBIT 2 -- Opinions
of Pietrantoni Mendez & Alvarez LLP
iii
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SANTANDER BANCORP
6.10% Subordinated Notes due June 2032
October 26, 2005
PUERTO RICO CONSERVATION
TRUST FUND
San Juan, Puerto Rico
Ladies and Gentlemen:
Santander BanCorp (the "COMPANY"), a corporation organized under
the laws
of the Commonwealth of Puerto Rico (the "COMMONWEALTH"), agrees
with you as
follows:
1. AUTHORIZATION
OF NOTES.
The
Company has authorized the issuance and sale of an aggregate
principal
amount of Fifty Million United States Dollars (US$50,000,000) of
its 6.10%
Subordinated Notes due June 2032 (the "NOTES," such term to include
the Note
delivered pursuant to this Agreement on the Closing Date to the
Purchaser and
each Note delivered in substitution or exchange for such Note
pursuant to
Section 13 of this Agreement). The Notes shall be substantially in
the form of
Exhibit 1 hereto and shall have the terms as herein and therein
provided.
Certain capitalized terms used in this Agreement are defined in
Schedule A
hereto; references to a "SCHEDULE" or an "EXHIBIT" are, unless
otherwise
specified, to a Schedule or an Exhibit attached to this Agreement
and all
Schedules and Exhibits are deemed to be a part of this Agreement.
References
herein to this "AGREEMENT" mean this Agreement as from time to time
amended or
supplemented or as the terms hereof may be waived, in accordance
with Section 17
hereof.
2. SALE AND
PURCHASE OF NOTES.
Subject to the terms and conditions of this Agreement, the Company
agrees
to issue and sell to you and you agree to purchase from the
Company, at the
Closing provided for in Section 3, a Note in the aggregate
principal amount of
Fifty Million United States Dollars (US$50,000,000) at the purchase
price of
one-hundred percent (100%) of the principal amount thereof.
3. CLOSING.
The
closing (the "CLOSING") of the sale and purchase of the Notes to
be
purchased by you shall occur at the offices of Pietrantoni Mendez
& Alvarez LLP,
209 Munoz Rivera Avenue, 19th Floor, Hato Rey, Puerto Rico 00918,
at 10:00 a.m.,
local time, on October 27, 2005 (the "CLOSING DATE"). At the
Closing, the
Company will deliver to you the Note to be purchased by you and
registered in
your name dated the Closing Date, against delivery by you to the
Company
<PAGE>
of immediately available funds in the amount of the purchase price
therefor by
wire transfer to the account number 04-201-408 maintained at
Deutsche Bank New
York, ABA Number 021 0010 33 (Beneficiary: Banco Santander Puerto
Rico) for the
further credit of Account Number 300 349 2809 of the Company.
4. CONDITIONS TO
CLOSING.
Your
obligation to purchase and pay for the Notes to be delivered to you
at
the Closing is subject to the fulfillment, prior to or at the
Closing, of the
following conditions:
4.1.
REPRESENTATIONS AND WARRANTIES.
The representations and warranties of the Company contained in
Section
4 of this Agreement shall have been true and correct as of the date
of this
Agreement and be true and correct at the time of the Closing as if
made on and
as of such time.
4.2.
COMPLIANCE CERTIFICATES.
(a) Officer's
Certificate. The Company shall have delivered to you an
Officer's Certificate, dated as of the Closing Date, certifying
on behalf of the Company, that the conditions specified in
Sections 4.1 have been fulfilled.
(b) Secretary's
Certificates. The Company shall have delivered to you
a certificate in form and substance reasonably satisfactory to
you executed on behalf of the Company by its Secretary or
Assistant Secretary certifying as to the resolutions attached
thereto and other corporate proceedings relating to the
authorization, execution, delivery and performance of this
Agreement and the Notes. Such certificate shall state that the
resolutions thereby certified have not been amended, modified,
revoked or rescinded. The Secretary's certificate also shall
confirm the incumbency and signature of the officers of the
Company executing this Agreement and the Note, and any
certificate or document to be delivered to you pursuant hereto,
together with evidence of the incumbency of such Secretary or
Assistant Secretary.
4.3.
OPINIONS OF COUNSEL.
You shall have received opinions from Pietrantoni Mendez &
Alvarez
LLP, as counsel for the Company, dated as of the Closing Date, on
the matters
described in Exhibit 2. This Section 4.3 shall constitute direction
by the
Company to such counsel to deliver the opinions specified to you at
the Closing.
4.4.
PURCHASE PERMITTED BY APPLICABLE LAW, ETC.
On the Closing Date, the consummation of the transactions
contemplated
hereby shall (i) be permitted by the laws and regulations of each
jurisdiction
to which you are subject, (ii) not violate any applicable law or
regulation,
(iii) not subject you to any tax, penalty or
2
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liability under or pursuant to any applicable law or regulation,
which law or
regulation was not in effect on the date hereof, and (iv) all
necessary
consents, approvals and authorizations of any Governmental
Authority or any
Person to or of such consummation, including any authorizations
required to be
obtained from the Puerto Rico Treasury Department under that
certain ruling
issued to you initially on January 22, 2001 (as amended on March 2,
2001), shall
have been obtained and shall be in full force and effect.
4.5.
PROCEEDINGS AND DOCUMENTS; GOOD STANDING CERTIFICATES.
All corporate and other proceedings in connection with the
transactions contemplated by this Agreement and all documents and
instruments
incident to such transactions, including, but not limited to, the
articles of
incorporation and by-laws of the Company, shall be reasonably
satisfactory to
you and your special counsel, and you and your special counsel
shall have
received all such counterpart originals or certified or other
copies of such
documents as you or they may reasonably request. You shall have
received also,
copies of certificates dated as of a recent date from the Secretary
of State of
Puerto Rico and the Commissioner of Financial Institutions, as
applicable,
evidencing the good standing of the Company and its Subsidiaries,
in Puerto
Rico.
5.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The
Company represents and warrants to you as follows:
5.1.
ORGANIZATION; POWER AND AUTHORITY.
The Company is a corporation duly organized, validly existing and
in
good standing under the laws of the Commonwealth of Puerto Rico,
and is duly
qualified as a foreign corporation and is in good standing in each
jurisdiction
in which such qualification is required by law, except where the
failure to be
so qualified or in good standing would not, individually or in the
aggregate,
reasonably be expected to have a Material Adverse Effect. The
Company has all
requisite corporate power and authority to own, lease and operate
its properties
and conduct its business as described on its filings with the SEC
under the
Exchange Act and to execute, deliver and perform its obligations
under this
Agreement and the Notes.
5.2.
AUTHORIZATION, ETC.
The execution, delivery and performance of this Agreement and
the
Notes have been duly authorized by all necessary corporate action
on the part of
the Company. This Agreement and the Notes, when issued, constitute
or will
constitute, a legal, valid and binding obligation of the Company,
enforceable
against the Company in accordance with their respective terms,
except as such
enforceability may be limited by (i) applicable bankruptcy,
insolvency,
reorganization, moratorium or other similar laws affecting the
enforcement of
creditors' rights generally from time to time in effect and (ii)
the application
of equitable principles and the availability of equitable
remedies.
3
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5.3.
FINANCIAL STATEMENTS.
(a) The consolidated
balance sheet of the Company and its
consolidated Subsidiaries as at December 31, 2004 and the
related
consolidated statements of income, retained earnings and cash
flows for the fiscal year then ended, including in each case
the
related schedules and notes, fairly present in all material
respects the consolidated financial condition of the Company
and
its consolidated Subsidiaries as at the date thereof and the
consolidated results of operations and cash flows for such
period, in accordance with GAAP consistently applied.
(b) The unaudited
consolidated balance sheet of the Company and its
consolidated Subsidiaries as at June 30, 2005 and the related
unaudited consolidated statements of income, retained earnings
and cash flows for the three-month and six-month periods then
ended, including in each case the related schedules and notes,
fairly present in all material respects the unaudited
consolidated financial condition of the Company and its
consolidated Subsidiaries as at the date thereof and the
unaudited consolidated results of operations and cash flows for
such periods, in accordance with GAAP applied on a basis
consistent with the financial statements referred to in
subsection (a) of this Section, subject to normal year-end
adjustments.
5.4.
NO LEGAL OR CONTRACTUAL BAR.
The execution, delivery and performance by the Company of this
Agreement and the Notes, do not and will not (i) violate any
Requirement of Law
or any Contractual Obligation of the Company or any of its
Significant
Subsidiaries, (ii) require any license, consent, authorization,
approval or any
other action by, or any notice to or filing or registration with,
any
Governmental Authority or any other Person, except for such
licenses, consents,
authorizations or approvals that have been obtained or made, or
(iii) result in
the creation or imposition of any Lien on any asset of the Company
or any of its
Significant Subsidiaries.
5.5.
NO REGISTRATION UNDER THE SECURITIES ACT.
Assuming compliance by
you with your representations hereunder, it is
not necessary in connection with the sale of the Notes to you to
register the
Notes under the Securities Act.
5.6.
NO MATERIAL LITIGATION.
No actions, suits or proceedings of or before any arbitrator or
Governmental Authority is pending or, to the knowledge of the
Company,
threatened against or affecting the Company or any of its
Significant
Subsidiaries, or against any property of the Company or of any such
Significant
Subsidiary that, if determined adversely to the Company and its
Subsidiaries,
taken as a whole, would reasonably be expected to have a Material
Adverse
Effect.
4
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5.7.
TAXES.
The Company has filed or caused to be filed all tax returns that
are
required to have been filed, and have paid all taxes shown to be
due and payable
on such returns and all other taxes payable by it, except for any
taxes (i) the
amount of which would not individually or in the aggregate
reasonably be
expected to have a Material Adverse Effect or (ii) the amount,
applicability or
validity of which is currently being contested in good faith by
appropriate
proceedings and with respect to which the Company or each
Subsidiary, has
established adequate reserves in accordance with GAAP.
5.8.
COMPLIANCE WITH ERISA.
(a) Each of the
Company and its ERISA Affiliates has operated and
administered each Plan in material compliance with all
applicable
laws except for such instances of noncompliance as have not
resulted in and would not reasonably be expected to result in a
Material Adverse Effect. None of the Company or any of its
ERISA
Affiliates has incurred any liability pursuant to Title I or IV
of ERISA or applicable penalty or excise tax provisions of the
Code and the PRIRC relating to employee benefit plans (as
defined
in section 3 of ERISA), and no event, transaction or condition
has occurred or exists that would reasonably be expected to
result in the incurrence of any such liability by the Company
or
any of its ERISA Affiliates, or in the imposition of any Lien
on
any of the rights, properties or assets of the Company or any
of
its ERISA Affiliates, in either case pursuant to Title I or IV
of
ERISA or to such penalty or excise tax provisions or to section
401(a)(29) or 412 of the Code or to any comparable provisions
of
the PRIRC, other than in any of such cases, such liabilities or
Liens as would not reasonably be expected to result,
individually
or in the aggregate, in a Material Adverse Effect.
(b) None of the
Company or any of its ERISA Affiliates has incurred
withdrawal liabilities (and are not subject to contingent
withdrawal liabilities) under section 4201 or 4204 of ERISA in
respect of Multiemployer Plans that individually or in the
aggregate would reasonably be expected to result in a Material
Adverse Effect.
(c) The execution and
delivery of this Agreement and the issuance and
sale of the Notes hereunder will not involve any transaction
that
is subject to the prohibitions of section 406 of ERISA or in
connection with which a tax could be imposed pursuant to
section
4975(c)(1)(A)-(D) of the Code or comparable provisions of the
PRIRC. The representation by the Company in the first sentence
of
this Section 5.9(c) is made in reliance upon and subject to (i)
the accuracy of your representation in Section 6.2 as to the
sources of the funds to be used to pay the purchase price of
the
Notes to be purchased by you and (ii) the assumption, made
solely
for the purpose of making such representation, that Department
of
Labor Interpretive
5
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Bulletin 75-2 with respect to prohibited transactions remains
valid in the circumstances of the transactions contemplated
herein.
5.9.
USE OF PROCEEDS.
The Company will apply the proceeds from the sale of the Notes
exclusively in its Commonwealth trade or business within a period
no longer than
twenty four (24) months from the date of the issuance of the Notes
and will
notify the Puerto Rico Treasury Department of such use as required
by the PRIRC
so that the interest in the Notes will be qualified interest for
purposes of the
preferential 10% income tax rate provided for under Section 1013A
of the PRIRC.
5.10. INVESTMENT COMPANY ACT.
The Company is not an "investment company" under the Investment
Company Act of 1940, as amended, and is not controlled by any
"investment
company."
5.11. CHANGES IN CONDITION.
Since June 30, 2005, no material adverse change has occurred in
the
business, financial condition or results of operations of the
Company and its
Subsidiaries, taken as a whole.
6.
REPRESENTATIONS OF THE PURCHASER.
You hereby represent
and warrant to the Company as follows:
6.1.
PURCHASE FOR INVESTMENT; QUALIFIED INSTITUTIONAL BUYER.
(a) You are purchasing
the Notes for your own account and not with a
view to, or for sale in connection with, the distribution
thereof
within the meaning of the Securities Act, provided that you
have
the right to dispose of the Notes, or any part thereof, if you
deem it advisable to do so, either pursuant to a registration
of
the Notes under the Securities Act or pursuant to an applicable
exemption from the registration requirements of the Securities
Act. You understand that the Notes have not been registered
under
the Securities Act or the Puerto Rico Uniform Securities Act
("PRUSA") and you understand and agree that the Notes may be
resold only if registered pursuant to the provisions of the
Securities Act or if an exemption from registration is
available
thereunder.
(b) You are a
"QUALIFIED INSTITUTIONAL BUYER" as defined in Rule 144A
under the Securities Act.
(c) You acknowledge
that the Notes have not been registered under the
Securities Act and may not be sold except as permitted below.
6
<PAGE>
(d) You understand and
agree that the Notes are being offered only in
a transaction not involving any public offering within the
meaning of the Securities Act, and that (A) if you decide to
resell, pledge or otherwise transfer any Notes on which the
legend set forth below appears, such Notes may be resold,
pledged
or transferred only (i) to the Company, (ii) in a transaction
entitled to an exemption from registration provided by Rule 144
under the Securities Act (if available), (iii) so long as the
Notes are eligible for resale pursuant to Rule 144A, to a
person
whom you reasonably believe is a qualified institutional buyer
that purchases for its own account or for the account of a
qualified institutional buyer to whom notice is given that the
resale, pledge or transfer is being made in reliance on Rule
144A
(as indicated by the box checked by the transferor on the
Certificate of Transfer on the reverse of the Note), (iv)
pursuant to another available exemption from registration under
the Securities Act, subject, in the case of clauses (ii) or
(iv),
to the receipt by the Company of an opinion of counsel or such
other evidence acceptable to the Company that such resale,
pledge
or transfer is exempt from the registration requirements of the
Securities Act, or (v) pursuant to an effective registration
statement, and that (B) you will, and each subsequent purchaser
of the Notes is required to, notify any purchaser of any Notes
of
the resale restrictions referred to in (c) above and to deliver
to the transferee (other than a qualified institutional buyer)
prior to sale a copy of the transfer restrictions hereinafter
set
forth (copies of which may be obtained from the Company). You
understand that transfers of the Notes will be registered only
if
the Notes are transferred in accordance with such transfer
restrictions;
(e) You understand
that the certificates evidencing Notes sold in
reliance on Rule 144A will, unless otherwise agreed by the
Company, bear a legend substantially to the following effect:
"THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR UNDER THE PUERTO
RICO
UNIFORM SECURITIES ACT OR ANY OTHER STATE SECURITIES LAWS.
NEITHER THIS NOTE NOR ANY INTEREST OR PARTICIPATION HEREIN MAY
BE
REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR
UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO,
REGISTRATION.
THE HOLDER HEREOF, BY PURCHASING THIS NOTE, AGREES FOR THE
BENEFIT OF SANTANDER BANCORP THAT (a) THIS NOTE MAY NOT BE
RESOLD, PLEDGED OR OTHERWISE TRANSFERRED OTHER THAN (1) TO
SANTANDER BANCORP OR A SUBSIDIARY THEREOF, (2) IN A TRANSACTION
ENTITLED TO AN EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144
7
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UNDER THE SECURITIES ACT (IF AVAILABLE), (3) SO LONG AS THIS
NOTE
IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE
SECURITIES
ACT ("RULE 144A"), TO A PERSON WHOM THE SELLER REASONABLY
BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING
OF
RULE 144A PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF
A
QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE
RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A (AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON
THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS NOTE), (4)
PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT, SUBJECT, IN THE CASE OF CLAUSES (2) OR (4),
TO THE RECEIPT BY SANTANDER BANCORP OF AN OPINION OF COUNSEL OR
SUCH OTHER EVIDENCE ACCEPTABLE TO SANTANDER BANCORP THAT SUCH
RESALE, PLEDGE OR TRANSFER IS EXEMPT FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT OR (5) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT AND THAT (b) THE HOLDER WILL,
AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER
OF THIS NOTE OF THE RESALE RESTRICTIONS REFERRED TO HEREIN AND
DELIVER TO THE TRANSFEREE (OTHER THAN A QUALIFIED INSTITUTIONAL
BUYER) PRIOR TO THE SALE A COPY OF THE TRANSFER RESTRICTIONS
APPLICABLE HERETO (COPIES OF WHICH MAY BE OBTAINED FROM
SANTANDER
BANCORP)."
(f) You (i) are able
to fend for yourself in the transactions
contemplated by this Agreement; (ii) have such knowledge and
experience in financial and business matters as to be capable
of
evaluating the merits and risks of its prospective investment
in
the Notes; (iii) have the ability to bear the economic risks of
its prospective investment and can afford the complete loss of
such investment; and (iv) may be required to bear the financial
risks of this investment for an indefinite period of time; and
(g) It is understood
that, in making the representations set out in
Sections 5.4, 5.5 and 5.10 hereof, the Company is relying, to
the
extent applicable, upon your representations set forth in this
Section 6.1.
(h) (a) You have
consulted with your own legal, regulatory, tax,
business, investment, financial and accounting advisers in
connection herewith to the extent you have deemed necessary,
(b)
you have had a reasonable opportunity to ask questions of and
receive answers from officers and representatives of the
Company
concerning its financial condition and results of operations
and
any other matter relevant to the purchase of the Notes, and any
such questions have been answered to your satisfaction,
8
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(c)
you have had the opportunity to review all publicly available
records and filings concerning the Company and its Subsidiaries
and you have carefully reviewed such records and filings as you
considered relevant to making an investment decision, and (d)
you
have made your own investment decisions based upon your own
judgment, due diligence and advice from such advisers as you
have
deemed necessary and not upon any view expressed by the
Company.
6.2.
SOURCE OF FUNDS.
At least one of the following statements is an accurate
representation
as to each source of funds (a "SOURCE") to be used by you to pay
the purchase
price of the Notes to be purchased by you hereunder:
(a) all or part of the
Source constitutes assets of a bank collective
investment fund, as contemplated by PTE 91-38, maintained by
you,
and you have disclosed to the Company the names of such
employee
benefit plans whose assets in such bank collective investment
fund exceed ten percent (10%) of the total assets or are
expected
to exceed ten percent (10%) of the total assets of such fund as
of the
date of such purchase (for the purpose of this clause (a),
all employee benefit plans maintained by the same employer or
employee organization are deemed to be a single plan); or
(b) all or part of the
Source constitutes assets of one or more
employee benefit plans, each of which has been identified to
the
Company in writing; or
(c) you are acquiring
the Notes for the account of one or more
pension funds, trust funds or agency accounts, each of which is
a
"GOVERNMENTAL PLAN" (as defined in section 3(32) of ERISA) and
the investment does not give rise to any violation of any
federal, state or local law which is substantially similar to
Title I of ERISA, section 4975 of the Code or comparable
provisions of the PRIRC; or
(d) the Source is an
"INVESTMENT FUND" managed by a "QUALIFIED
PROFESSIONAL ASSET MANAGER" or "QPAM" (as defined in Part V of
PTE 84-14, issued March 13, 1984), provided that (i) no other
party to the transaction described in this Agreement and no
"AFFILIATE" of such party (as defined in Part V(c) of PTE
84-14)
has at this time, and during the immediately preceding one year
none has exercised, the authority to appoint or terminate said
QPAM as manager of the assets of any plan identified in writing
pursuant to this clause (f) or to negotiate the terms of said
QPAM's management agreement on behalf of any such identified
plans, (ii) the conditions set forth in paragraphs (c), (d),
(e),
(f) and (g) of Part I of PTE 84-14 are satisfied; and (iii) you
have disclosed to the Company the name of the QPAM and of all
employee benefit plans whose assets are included in such
investment fund;
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(e) the Source is a
"PLAN" managed by an "IN-HOUSE ASSET MANAGER" or
"INHAM" (as defined in Part IV of PTE 96-23, issued April 10,
1996), provided that the conditions set forth in paragraphs
(a),
(c), (d), (e), (f), (g) and (h) of Part I of PTE 96-23 are
satisfied; or
(f) none of such funds
consists of assets of any "EMPLOYEE BENEFIT
PLAN" as defined in ERISA or any "PLAN" as defined in section
4975 of the Code or comparable provisions of the PRIRC, other
than an employee benefit plan or plan exempt from the coverage
of
ERISA and section 4975 of the Code.
As used in this Section 6.2, the terms "EMPLOYEE BENEFIT PLAN,"
"GOVERNMENTAL PLAN," "PARTY IN INTEREST" and "SEPARATE ACCOUNT"
shall have the
respective meanings assigned to such terms in section 3 of ERISA.
If you breach
any representation made by you under this Section 6.2, your
purchase of the
Notes shall be void ab initio.
6.3.
ANTI-MONEY LAUNDERING.
(a) to the best of
your knowledge, the funds that you are using to
purchase the Notes were not directly or indirectly derived from
activities that may contravene federal, state and international
laws and regulations, including Anti-Money Laundering Laws; and
(b) to the best of
your knowledge, neither:
(i) you, nor
(ii) any person controlling, controlled by, or under common
control with, you,
(1) is a country, territory, individual or entity named on an
Office
of Foreign Assets Control ("OFAC") list, or is an individual or
entity
that resides or has a place of business in a country or
territory
named on such lists, (2) is a "senior foreign political figure,"
or
any "immediate family member" or "close associate" (as such terms
are
defined in the Patriot Act) of a senior foreign political figure
or
(3) is a "foreign shell bank" (as defined in the Patriot Act)
or
transacts business with a foreign shell bank.
You understand that the Company may not accept any payments for
the
Notes from you if you cannot make the representations set forth
above.
6.4.
TRANSFEREE.
Any transferee of a Note shall, by its acceptance of such Note,
be
deemed to have made the same representations regarding the purchase
of the Notes
as the original holder thereof made pursuant to Sections 6.1, 6.2
and 6.3,
above.
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7. PAYMENT OF
INTEREST
The
Company shall pay interest (computed on the basis of a 360-day year
of
twelve 30-day months) (a) on the unpaid balance of the Notes at the
rate of six
and one-tenth percent (6.10%) per annum from the date of the Notes,
payable
semiannually, on the first (1st) day of June and the first (1st)
day of December
of each year (the "INTEREST PAYMENT DATE"), commencing on December
1, 2005,
until the principal hereof shall have become due and payable.
8. REDEMPTION OF
THE NOTES PRIOR TO MATURITY.
8.1.
OPTIONAL REDEMPTION.
The Company may, at its option, upon notice as provided below,
redeem
and prepay prior to maturity, all or any part of the Notes on
December 1 or June
1 of each year; provided, however, that the Company may not redeem
and prepay
all or any part of the Notes pursuant to this Section 8.1 prior to
December 1,
2010. On and after December 1, 2010, the Notes shall be redeemable
at a price
equal to 100% of the principal amount of the Notes to be redeemed
(the
"REDEMPTION PRICE"), together with accrued and unpaid interest, if
any, to the
date of redemption specified by the Company (the "REDEMPTION
DATE").
The Company will give each holder of Notes written notice of
any
redemption under this Section 8.1 not less than forty-five (45)
days and not
more than sixty (60) days prior to any Redemption Date. Each such
notice shall
specify the Redemption Date, the aggregate principal amount of the
Notes to be
redeemed on such Redemption Date, which shall not be in an amount
less than One
Million United States Dollars (US$1,000,000) and increments of
US$500,000, the
principal amount of each Note held by such holder to be redeemed
(determined in
accordance with Section 8.2), and the interest to be paid on such
Redemption
Date with respect to such principal amount being redeemed.
8.2.
ALLOCATION OF PARTIAL REDEMPTIONS.
In the case of each partial redemption of the Notes, the
principal
amount of the Notes to be redeemed shall be allocated among all of
the Notes at
the time outstanding in proportion, as nearly as practicable, to
the respective
unpaid principal amounts thereof not theretofore called for
redemption.
8.3.
MATURITY; SURRENDER, ETC.
In the case of each redemption of Notes pursuant to this Section
8,
the principal amount of each Note to be redeemed shall mature and
become due and
payable on the respective Redemption Date, together with interest
on such
principal amount accrued to such date. From and after such date,
unless the
Company shall fail to pay such principal amount when so due and
payable,
together with the interest thereon, interest on such principal
amount shall
cease to accrue. Any Note paid or redeemed in full shall be
surrendered to the
Company and cancelled and shall not be reissued, and no Note shall
be issued in
lieu of any prepaid principal amount of any Note.
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8.4.
PURCHASE OF NOTES.
The Company will not, and will not permit any of its Affiliates
to,
purchase, redeem, prepay or otherwise acquire, directly or
indirectly, any of
the outstanding Notes except upon the payment or redemption of the
Notes in
accordance with the terms of this Agreement and the Notes. The
Company will
promptly cancel all Notes acquired by it or any of its Affiliates
pursuant to
any payment, redemption or purchase of Notes pursuant to any
provision of this
Agreement and no Notes may be issued in substitution or exchange
for any such
Notes.
9. DELIVERY OF
REPORTS.
The
Company covenants that so long as the Notes are outstanding:
9.1.
SEC REPORTS.
The Company shall deliver to you and to any subsequent holder of
Notes
that is an Institutional Investor for so long as the Company is
subject to
reporting obligations under the Exchange Act with respect to any of
its
securities, promptly, and in any event within ten (10) days upon
their becoming
available, one copy of its annual report and of the information,
documents and
other reports which the Company is required to file with the SEC
pursuant to
Section 13 or 15(d) of the Exchange Act; provided, however, that no
such
delivery shall be required as to any of such reports which have
been required to
be filed and are available in electronic format from the EDGAR
database of the
SEC.
9.2.
OFFICER'S CERTIFICATE.
Within one hundred twenty (120) days after the end of each fiscal
year
of the Company, the Company shall deliver to the holders an
Officers'
Certificate stating whether interest paid on the Notes constitutes
income from
sources within the Commonwealth under the Code.
10. CONSOLIDATION,
MERGER AND SALE OF ASSETS.
The
Company shall not consolidate with or merge into, or convey,
transfer
or lease its properties and assets substantially as an entirety to,
any Person,
unless:
(a) the Company is the
surviving or continuing entity, or the entity
formed by such consolidation or into which the Company is
merged
or to which the Company has conveyed, transferred or leased its
properties and assets substantially as an entirety is an entity
organized and validly existing under the laws of the United
States of America, any province or state thereof or the
District
of Columbia or the Commonwealth, and such entity expressly
assumes the Company's obligations under the Notes and this
Agreement;
(b) immediately after
giving effect to the transaction, no Event of
Default shall have occurred and be continuing; and
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(c) the Company has
delivered to each holder an Officer's Certificate
and an opinion of counsel, each stating that such
consolidation,
merger, conveyance, transfer or lease, comply with this
Agreement.
11. EVENTS OF
DEFAULT.
An
"EVENT OF DEFAULT" wherever used herein with respect to the Notes
means
any of the following events (whatever the reason for such Event of
Default and
whether it shall be voluntary or involuntary or be effected by
operation of law,
pursuant to any judgment, decree or order of any court or any
order, rule or
regulation of any administrative or governmental body):
(a) the entry by a
court of (1) a decree or order for relief in
respect of the Company in an involuntary case or proceeding
under
any applicable federal, state or Commonwealth bankruptcy,
insolvency, reorganization or other similar law or (2) a decree
or order adjudging the Company a bankrupt or insolvent, or
approving as properly filed a petition seeking reorganization,
arrangement, adjustment or composition of or in respect of the
Company under any applicable federal, state or Commonwealth
law,
or appointing a custodian, receiver, liquidator, assignee,
trustee, sequestrator or other similar official of the Company
or
of any substantial part of its property, or ordering the
winding
up or liquidation of its affairs, and the continuance of any
such
decree or order for relief or any such other decree or order
unstayed and in effect for a period of 60 consecutive days; or
(b) (2) the
commencement by the Company of a voluntary case or
proceeding under any applicable federal, state or Commonwealth
bankruptcy, insolvency, reorganization or other similar law or
of
any other case or proceeding to be adjudicated a bankrupt or
insolvent, or the consent by it to the entry of a decree or
order
for relief in respect of the Company in an involuntary case or
proceeding under any applicable federal, state or Commonwealth
bankruptcy, insolvency, reorganization or other similar law or
to
the commencement of any bankruptcy or insolvency case or
proceeding against it, or the filing by it of a petition or
answer or consent seeking reorganization or relief under any
applicable federal, state or Commonwealth law, or the consent
by
it to the filing of such petition or to the appointment of or
taking possession by a custodian, receiver, liquidator,
assignee,
trustee, sequestrator or other similar official of the Company
or
of any substantial part of its property, or the making by it of
an assignment for the benefit of creditors, or the admission by
it in writing of its inability to pay its debts generally as
they
become due, or the taking of corporate action by the Company in
furtherance of any such action.
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12. REMEDIES ON
DEFAULT, ETC.
12.1. ACCELERATION.
If an Event of Default described in Section 11 has occurred and
is
continuing, then in every such case the holders of not less than
25% in
principal amount of outstanding Notes may, at their option, by
notice given to
the Company as provided for herein, declare the principal amount of
the Notes to
be immediately due and payable.
Upon any Notes becoming due and payable under this Section 12.1,
such
Notes will forthwith mature and the entire unpaid principal amount
of such
Notes, plus all accrued and unpaid interest thereon (to the full
extent
permitted by applicable law), shall all be immediately due and
payable, in each
and every case without presentment, demand, protest or further
notice, all of
which are hereby waived.
12.2. OTHER REMEDIES.
If a default is made by the Company in the payment of any
installment
of interest, or principal of (or premium, if any, on) any Notes and
such default
is continuing, and irrespective of whether the Notes have been
declared
immediately due and payable under Section 12.1, each holder may
proceed to
protect and enforce its rights by an action at law, suit in equity
or other
appropriate proceeding, whether for the specific performance of any
agreement
contained herein or in the Notes, or for an injunction against a
violation of
any of the terms hereof or thereof, or in aid of the exercise of
any power
granted hereby or thereby or by law or otherwise.
Notwithstanding any other provision in this Agreement, the right
of
any holder to receive payment of principal of and interest on the
Notes, on or
after the respective due dates expressed in such Notes, or to
institute suit for
enforcement of any such payment on or after such respective dates,
shall not be
impaired or affected without the cons
