<PAGE> 1
As filed with the Securities and Exchange Commission on June 10, 1997
Registration No. 333-23397
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------
POST-EFFECTIVE
AMENDMENT NO. 1 TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------
POPULAR, INC.
(Exact name of registrant as specified in its charter)
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PUERTO RICO 6711 66-0416582
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
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209 MUNOZ RIVERA AVENUE
HATO REY, PUERTO RICO 00918
(787) 765-9800
(Address, including zip code, and telephone number, including area code, or
registrant's principal executive offices)
BRUNILDA SANTOS DE ALVAREZ, ESQ.
POPULAR, INC.
209 MUNOZ RIVERA AVENUE
HATO REY, PUERTO RICO 00918
(787) 753-1017
(Name and address, including zip code, and telephone number, including area
code, of agent for service)
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COPIES TO:
DONALD J. TOUMEY JULIO PIETRANTONI
SULLIVAN & CROMWELL MCCONNELL VALDES
125 BROAD STREET 270 MUNOZ RIVERA AVENUE
NEW YORK, NEW YORK 10004 HATO REY, PUERTO RICO 00918
(212) 558-4000 (787) 250-5664
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Approximate date of commencement of proposed sale to the public:
At the Effective Time as described in the attached Prospectus Supplement.
------------------
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
------------------
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
===============================================================================
<PAGE> 2
POPULAR, INC.
CROSS-REFERENCE SHEET
PURSUANT TO ITEM 501(B) OF REGULATION S-K
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PART I OF FORM S-4 ITEM NUMBER AND HEADING LOCATION IN PROSPECTUS SUPPLEMENT
------------------------------------------ ---------------------------------
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1. Forepart of Registration Statement and Outside
Front Cover Page of Prospectus................... Facing Page of Registration Statement; Outside Front
Cover Page of Prospectus Supplement.
2. Inside Front and Outside Back Cover
Pages of Prospectus.............................. Available Information; Incorporation of Certain Documents
by Reference; Table of Contents
3. Risk Factors, Ratio of Earnings to Fixed
Charges, and Other Information................... Summary
4. Terms of the Transaction........................... Summary; The Merger; Incorporation of Certain Documents
by Reference; Description of Popular's Capital Stock
5. Pro Forma Financial Information ................... *
6. Material Contacts with the Company Being
Acquired......................................... The Merger
7. Additional Information Required for Reoffering
by Persons and Parties Deemed to be
Underwriters..................................... *
8. Interests of Named Experts and Counsel............. Experts
9. Disclosure of Commission Position on
Indemnification for Securities Act Liabilities... *
10. Information with Respect to S-3 Registrants........ Available Information; Incorporation of Certain Documents
by Reference
11. Incorporation of Certain Information
by Reference..................................... Available Information; Incorporation of Certain Documents
by Reference; Description of Popular's Capital Stock
12. Information with Respect to S-2 or S-3 Registrants. *
13. Incorporation of Certain Information
by Reference..................................... *
14. Information with Respect to Registrants Other
Than S-2 or S-3 Registrant....................... *
15. Information with Respect to S-3 Companies.......... *
16. Information with Respect to S-2 or
S-3 Companies.................................... *
17. Information with Respect to Companies Other
than S-2 or S-3 Companies........................ Summary; Certain Information Regarding RCB
18. Information if Proxies, Consents or Authorization
are to be Solicited.............................. *
19. Information if Proxies, Consents or Authorization
are not to be Solicited or in an Exchange Offer.. *
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*Indicates that Item is not applicable or answer is in the negative.
<PAGE> 3
[Popular, Inc. Letterhead]
June __, 1997
Dear RCB Shareholder:
On May 8, 1997, the shareholders of Roig Commercial Bank ("RCB") approved
an Agreement and Plan of Merger, dated as of December 30, 1996 and amended on
March 20, 1997 (as so amended, the "Merger Agreement"), which provides for the
merger of RCB with and into Banco Popular de Puerto Rico ("Banco Popular") (the
"Merger").
As described in the Prospectus/Proxy Statement referred to below, the
Merger Agreement provides that in the Merger each RCB shareholder will receive
either all cash or all shares of common stock of Popular, Inc. (formerly
BanPonce Corporation) or a combination of both in exchange for all his or her
shares of RCB common stock.
Accordingly, Popular, Inc. is now asking you to indicate whether you wish
to elect to receive either all cash or all Popular, Inc. common stock or a
combination of both in exchange for your shares of RCB common stock. To assist
you in making this election, enclosed are an Election Form and Letter of
Transmittal (the "Election Form") and a Prospectus Supplement to the original
Prospectus/Proxy Statement, dated April 7, 1997, which was sent to RCB
shareholders of record as of April 8, 1997. The Prospectus Supplement is
attached to this letter; for those of you who did not previously receive a copy
of the original Prospectus/Proxy Statement, a copy is also enclosed.
Each record holder's election to receive Popular, Inc. Common Stock shall
be honored by the Exchange Agent up to 50% of the RCB Common Stock owned by
such record holder (the "Protected Election Shares"). Except for these
Protected Election Shares, each election will be subject to the results of the
procedures set forth in the Merger Agreement for allocating the amounts
available for cash and Popular, Inc. common stock payments among RCB
shareholders. To the extent that shareholder elections exceed the total amounts
available for cash or Popular, Inc. common stock payments, the Exchange Agent
will be required to select certain shareholders whose shares will be converted
into Popular, Inc. common stock or cash, respectively, notwithstanding their
elections.
You will need to complete and return the accompanying Election Form to the
Exchange Agent, Banco Popular, in order to indicate whether you wish to receive
either all cash, all Popular, Inc. common stock or part cash and part shares.
You also may indicate on the Election Form that you do not have a preference as
to cash or Popular, Inc. common stock.
We urge you to consult your own financial advisor before making your
election. Moreover, although certain Puerto Rico and U.S. federal income tax
consequences of the Merger for RCB shareholders are described in the Prospectus
Supplement, you should consult your own tax advisor because of the complexities
of the Puerto Rico and U.S. Federal, state and local tax laws. We make no
recommendation as to whether you should elect cash or stock or indicate no
preference.
It is important that you read the accompanying documents carefully,
complete the enclosed Election Form, and ensure that it, together with all
stock certificates representing your RCB common stock to which the Election
Form relates, is actually received by the Exchange Agent at the Puerto Rico
location specified in the Election Form by 5:00 p.m., Puerto Rico Time, on June
30, 1997 or at the New York location specified in the Election Form by 5:00
p.m., New York Time, on June 30, 1997. If such materials are not actually
received by the Exchange Agent at one of the proper locations by the proper
time, you will be deemed to have expressed no preference and will receive
either cash or Popular, Inc. common stock, depending upon the choices made by
other RCB shareholders.
Sincerely,
Richard L. Carrion
Chairman of the Board, President
and Chief Executive Officer
<PAGE> 4
POPULAR, INC.
PROSPECTUS SUPPLEMENT
TO
PROSPECTUS/PROXY STATEMENT
DATED APRIL 7, 1997
------------------
This Prospectus Supplement ("Supplement") is being furnished to holders of
common stock, par value $10.00 per share ("RCB Common Stock") of Roig
Commercial Bank ("RCB"), as a supplement to the Prospectus/Proxy Statement,
dated April 7, 1997 (the "Prospectus/Proxy Statement") of RCB and Popular, Inc.
("Popular, Inc."), formerly BanPonce Corporation. The Prospectus/Proxy
Statement was previously sent to holders of record of RCB Common Stock as of
April 8, 1997 in connection with the Annual Meeting of Shareholders of RCB held
on May 8, 1997 (the "Annual Meeting"). A copy of the Prospectus/Proxy Statement
is enclosed herewith for shareholders to whom a Prospectus/Proxy Statement has
not previously been sent. At the Annual Meeting, RCB shareholders approved the
Agreement and Plan of Merger, dated as of December 30, 1996 and amended on
March 20, 1997 (as so amended, the "Merger Agreement"), by and among RCB,
Popular, Inc. and Banco Popular de Puerto Rico ("Banco Popular"), which
provides for the merger of RCB with and into Banco Popular (the "Merger").
The Supplement updates certain information contained in the
Prospectus/Proxy Statement and, together with the Prospectus/Proxy Statement,
is for the use of RCB shareholders of record in determining whether they would
elect to receive all cash or all shares of common stock, par value $6.00 per
share (including the attached rights to purchase Series A Participating
Cumulative Preferred Stock, "Popular, Inc. Common Stock") of Popular, Inc. or a
combination of cash and Popular, Inc. Common Stock or would have no preference
as between cash and Popular, Inc. Common Stock for their shares of RCB Common
Stock. An RCB shareholder should consider current price information prior to
making an election, but, because the market price of Popular, Inc. Common Stock
fluctuates, the market price of Popular, Inc. Common Stock (and, therefore, the
relative values of the cash and stock consideration) may vary from the price
(and relative values ) on the date hereof. Under the terms of the Merger
Agreement, no consideration will be paid to holders of RCB Common Stock until
the completion of the election and allocation procedures described herein,
which will not occur until June 30, 1997 at the earliest. Furthermore, as
discussed under "THE MERGER -- Election Procedures; Allocation Procedures",
each record holder's election to receive Popular, Inc. Common Stock shall be
honored by the Exchange Agent up to 50% of the RCB Common Stock owned by such
record holder (the "Protected Election Shares"). Except for this election, no
guarantee can be given that any other election by any given RCB shareholder
will be honored.
Please read this Supplement and the Prospectus/Proxy Statement carefully.
Failure of a holder of RCB Common Stock to properly complete and deliver the
accompanying Election Form and Letter of Transmittal (the "Election Form"),
together with the certificates representing shares of RCB Common Stock to which
the Election Form relates, to the Puerto Rico location specified in the
Election Form by 5:00 p.m., Puerto Rico Time, on June 30, 1997 or to the New
York location specified in the Election Form by 5:00 p.m., New York Time, on
June 30, 1997 (the "Election Deadline") and to comply with the procedures
described in this Supplement will cause such holder to be deemed to have
expressed no preference and to receive either all cash or all Popular, Inc.
Common Stock or a combination thereof, depending upon the elections made by
other RCB shareholders. If your stock certificate(s) is lost, stolen or
destroyed, you are urged to refer to Instruction 12 set forth in the
accompanying Election Form.
This Supplement and the Prospectus/Proxy Statement constitute prospectuses
of Popular, Inc. with respect to the shares of Popular, Inc. Common Stock
issuable pursuant to the Merger. This Supplement shall not constitute an offer
to sell or solicitation of an offer to purchase unless accompanied or preceded
by the Prospectus/Proxy Statement.
The Popular, Inc. Common Stock is listed on the Nasdaq National Market
(the "NASDAQ"). The last reported sale price of Popular, Inc. Common Stock
(NASDAQ Symbol: "BPOP") on the NASDAQ on June 6, 1997 was $37.125 per share.
Based on such sale price of the Popular, Inc. Common Stock, the Exchange Ratio
(as defined herein) would result in an implied market value per share for the
RCB Common Stock of $200.00. THERE CAN BE NO ASSURANCE AS TO THE MARKET PRICE
PER SHARE OF THE POPULAR, INC. COMMON STOCK AT ANY TIME PRIOR TO, AT OR AFTER
THE EFFECTIVE TIME. Shareholders are urged to obtain current market quotations.
------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION (THE "COMMISSION"), THE OFFICE OF THE COMMISSIONER
OF FINANCIAL INSTITUTIONS OF PUERTO RICO (THE "OFFICE OF THE COMMISSIONER") OR
ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION, THE OFFICE OF THE
COMMISSIONER OR ANY STATE SECURITIES COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS SUPPLEMENT OR THE
PROSPECTUS/PROXY STATEMENT.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE SECURITIES OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS, DEPOSITS OR OTHER
OBLIGATIONS OF ANY BANK OR SAVINGS ASSOCIATION AND ARE NOT INSURED
BY THE FDIC, THE BANK INSURANCE FUND, THE SAVINGS ASSOCIATION
FUND OR ANY OTHER GOVERNMENTAL AGENCY.
The date of this Supplement is June ___, 1997.
<PAGE> 5
AVAILABLE INFORMATION
Popular, Inc. is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, files reports, proxy statements and other information
with the Securities and Exchange Commission (the "Commission"). The reports,
proxy statements and other information filed by Popular, Inc. with the
Commission may be inspected and copied at the Commission's public reference
room located at Judiciary Plaza, 450 Fifth Street, N.W., Room 1024, Washington,
D.C. 20549, and at the public reference facilities in the Commission's regional
offices located at: 7 World Trade Center, 13th Floor, New York, New York 10048;
and Citicorp Center, 500 West Madison Street, Suite 400, Chicago, Illinois
60661. Copies of such material may be obtained at prescribed rates by writing
to the Securities and Exchange Commission, Public Reference Section, 450 Fifth
Street, N.W., Washington, D.C. 20549. Such material may also be accessed
electronically, by means of the Commission's home page on the Internet at
http://www.sec.gov.
Popular, Inc. has filed with the Commission a Registration Statement on
Form S-4 (together with any amendments thereto, the "Registration Statement")
under the Securities Act of 1933, as amended (the "Securities Act"), with
respect to the securities to be issued pursuant to the Merger Agreement. This
Supplement does not contain all the information set forth in the Registration
Statement. Such additional information may be obtained from the Commission's
principal office in Washington, D.C. Statements contained in this Supplement or
in any document incorporated by reference in this Supplement as to the contents
of any contract or other document referred to herein or therein are not
necessarily complete and in each instance reference is made to the copy of such
contract or other document filed as an exhibit to the Registration Statement or
such other document, each such statement being qualified in all respects by
such reference.
AS INDICATED BELOW, THIS SUPPLEMENT INCORPORATES DOCUMENTS BY REFERENCE
WHICH ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. DOCUMENTS RELATING TO
POPULAR, INC. EXCLUDING EXHIBITS UNLESS SPECIFICALLY INCORPORATED THEREIN, ARE
AVAILABLE WITHOUT CHARGE UPON WRITTEN OR ORAL REQUEST TO AMILCAR JORDAN, SENIOR
VICE PRESIDENT, POPULAR, INC., 209 MUNOZ RIVERA AVENUE, HATO REY, PUERTO RICO
00918, (787) 765-9800. IN ORDER TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY
REQUEST SHOULD BE MADE BY JUNE 20, 1997.
i
<PAGE> 6
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by Popular, Inc. with the Commission are
incorporated into this Supplement by reference:
1. Annual Report on Form 10-K for the year ended December 31, 1996.
2. Description of the Common Stock set forth in Popular, Inc.'s
Registration Statements filed pursuant to Section 12 of the Exchange Act and
any amendment or report filed for the purpose of updating that description.
3. The Prospectus/Proxy Statement.
4. Quarterly Report on Form 10-Q for the quarter ended March 31, 1997.
5. Current Reports on Form 8-K, dated January 14, 1997, February 19, 1997,
April 10, 1997, May 8, 1997 and May 9, 1997.
6. Registration Statement on Form 8-A, dated August 18, 1988, filed
pursuant to Section 12(g) of the Exchange Act, pursuant to which Popular, Inc.
registered its Series A Participating Cumulative Preferred Stock Purchase
Rights.
7. Registration Statement on Form 8-A, dated June 17, 1994, as amended by
Popular, Inc.'s Amendment on Form 8-A/A, dated June 21, 1994, filed pursuant to
Section 12(g) of the Exchange Act, pursuant to which Popular, Inc. registered
its 8.35% Non-Cumulative Monthly Income Preferred Stock, 1994 Series A.
All documents filed by Popular, Inc. pursuant to Section 13(a), 13(c), 14
or 15(d) of the Exchange Act subsequent to the date of this Supplement shall be
deemed to be incorporated herein by reference and to be part hereof from the
date of such filing. Any statement contained in a document incorporated or
deemed to be incorporated herein by reference shall be deemed to be modified or
superseded for purposes hereof to the extent that a statement contained herein
or in any other subsequently filed document which also is, or is deemed to be,
incorporated herein by reference modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part hereof.
RCB is not subject to periodic reporting requirements under the Exchange
Act, and, accordingly, no information or documents relating to RCB are
incorporated herein by reference. All information contained herein relating to
RCB and its business was provided by RCB specifically for inclusion herein and
has been included in reliance on RCB's representations as to the truth and
accuracy thereof.
ii
<PAGE> 7
TABLE OF CONTENTS
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Page
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AVAILABLE INFORMATION.............................................................................................i
INCORPORATION OF CERTAIN DOCUMENTS
BY REFERENCE................................................................................................ii
SUMMARY...........................................................................................................1
The Parties ................................................................................................1
The Merger ................................................................................................2
Certain Tax Consequences of the Merger.......................................................................7
Appraisal Rights.............................................................................................8
Resale of Popular, Inc. Common Shares........................................................................8
Selected Historical Financial Information....................................................................9
Comparison of Certain Unaudited
Per Share Data...........................................................................................11
Historical Market Price and
Dividends Declared.......................................................................................13
INTRODUCTION.....................................................................................................15
THE MERGER.......................................................................................................16
Effects of the Merger.......................................................................................16
Effective Time; Effective Date..............................................................................16
Merger Consideration........................................................................................16
Election Procedures; Allocation Procedures..................................................................18
Additional Exchange Procedures..............................................................................20
Conditions to the Consummation
of the Merger...........................................................................................21
Rights of Dissenting RCB Shareholders.......................................................................22
Resale of Popular, Inc. Common Shares.......................................................................22
Certain Tax Consequences of the Merger......................................................................23
CERTAIN INFORMATION
REGARDING RCB.................................................................................................25
DESCRIPTION OF POPULAR'S CAPITAL
STOCK.........................................................................................................29
SUPERVISION AND REGULATION.......................................................................................29
EXPERTS..........................................................................................................29
APPENDIX: FIRST QUARTER 1997
FINANCIAL INFORMATION FOR RCB
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NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS SUPPLEMENT AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION SHOULD NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. THIS SUPPLEMENT DOES NOT CONSTITUTE AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO PURCHASE, POPULAR, INC. COMMON STOCK OFFERED BY
THIS SUPPLEMENT, OR THE SOLICITATION OF A PROXY, IN ANY JURISDICTION TO OR FROM
ANY PERSON TO WHOM OR FROM WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION. NEITHER THE DELIVERY OF THIS SUPPLEMENT NOR ANY DISTRIBUTION OF
SECURITIES MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF POPULAR, INC. OR
RCB SINCE THE DATE OF THIS SUPPLEMENT.
iii
<PAGE> 8
SUMMARY
The following is a summary of certain information relating to Popular,
Inc. and RCB, the Merger and the related shareholder election and allocation
procedures contained elsewhere in this Supplement, the Prospectus/Proxy
Statement and the documents incorporated herein and therein by reference.
Reference is made to, and this summary is qualified in its entirety by, the
more detailed information contained elsewhere in this Supplement and the
Prospectus/Proxy Statement, contained in the accompanying Appendix hereto and
Appendices thereto and the documents incorporated by reference in this
Supplement and the Prospectus/Proxy Statement and contained in the documents
referred to herein and therein. Shareholders are urged to read this Supplement
and the Prospectus/Proxy Statement, the documents incorporated herein and
therein by reference and the accompanying Appendices hereto and thereto in
their entirety. As used in this Supplement, the terms "Popular, Inc.", "Banco
Popular" and "RCB" refer to such corporations, respectively, and, where the
context requires, such entities and their respective subsidiaries.
THE PARTIES
POPULAR, INC.
Popular, Inc., formerly BanPonce Corporation, is a bank holding company
registered under the Bank Holding Company Act of 1956, as amended (the "BHC
Act"), and incorporated in 1984 under the laws of the Commonwealth of Puerto
Rico ("Puerto Rico"). Popular, Inc. is the largest financial institution in
Puerto Rico, with consolidated assets of $17.4 billion, total deposits of $10.5
billion and shareholders' equity of $1.3 billion at March 31, 1997. Based on
total assets at December 31, 1996, Popular, Inc. was the 42nd largest bank
holding company in the United States. At Popular, Inc.'s annual meeting of
shareholders held on April 25, 1997, Popular, Inc.'s shareholders approved a
proposal made by the Board of Directors to change the name of BanPonce
Corporation to Popular, Inc. Popular, Inc.'s principal executive offices are
located at 209 Munoz Rivera Avenue, Hato Rey, Puerto Rico 00918 and its
telephone number is (787) 765-9800.
Popular, Inc.'s principal subsidiary, Banco Popular de Puerto Rico ("Banco
Popular" or the "Bank"), was incorporated over 100 years ago in 1893 and is
Puerto Rico's largest bank with total assets of $14.8 billion, deposits of $9.9
billion and shareholders' equity of $1.1 billion at March 31, 1997. The Bank
accounted for 85% of the total consolidated assets of Popular, Inc. at March
31, 1997. A consumer-oriented bank, Banco Popular has the largest retail
franchise in Puerto Rico, operating 179 branches and 330 automated teller
machines. The Bank also has the largest trust operation in Puerto Rico and is
the largest servicer of mortgage loans for investors. In addition, it operates
the largest Hispanic bank branch network in the mainland United States with 29
branches in New York and an agency in Chicago. As of March 31, 1997, these
branches had a total of approximately $1.5 billion in deposits. The Bank also
operates seven branches in the U.S. Virgin Islands and one branch in the
British Virgin Islands. Banco Popular has three subsidiaries, Popular Leasing &
Rental Inc., Puerto Rico's largest vehicle leasing and daily rental company,
Popular Finance Inc. (formerly Popular Consumer Services, Inc.), a small-loan
and secondary mortgage company with 35 offices in Puerto Rico operating under
the name of Best Finance and Popular Mortgage, Inc., a mortgage loan company
with four offices in Puerto Rico operating under the name of Popular Mortgage
(formerly Puerto Rico Home Mortgage).
Popular, Inc. has two other principal subsidiaries: Popular Securities,
Inc. (formerly BP Capital Markets) and Popular International Bank, Inc.
("PIB"), which in turn owns all of the outstanding stock of Popular North
America, Inc. ("PNA"). Popular Securities, Inc. is a direct subsidiary of
Popular, Inc. and engages in the business of a securities broker-dealer in
Puerto Rico, with institutional brokerage, financial advisory, and investment
and security brokerage operations.
1
<PAGE> 9
RECENT DEVELOPMENTS
On May 31, 1997, Popular, Inc. acquired National Bancorp, Inc. ("NBI"),
the parent of American Midwest Bank, through an indirect wholly owned
subsidiary of Popular, Inc. American Midwest Bank operates two branches in
Melrose Park, Illinois and had assets of $171 million and deposits of $157
million as of March 31, 1997.
On May 31, 1997, Popular, Inc. acquired CBC Bancorp, Ltd. ("CBC"), the
parent company of Capital Bank & Trust and Capitol Bank of Westmont, through an
indirect wholly owned subsidiary of Popular, Inc. CBC, with assets of $315
million and deposits of $280 million at June 30, 1996, operates three branches
in Chicago and Westmont, Illinois through its banking subsidiaries.
At the annual meeting of shareholders on April 25, 1997, Popular, Inc.'s
shareholders approved amendments to the Restated Articles of Incorporation to
change the name of the corporation to Popular, Inc. from BanPonce Corporation,
and to increase the total number of authorized shares of capital stock to
190,000,000. The authorized capital stock of Popular, Inc. consists of
180,000,000 shares of Common Stock, par value of $6.00 per share, and
10,000,000 shares of Preferred Stock without par value.
On April 30, 1997, Popular North America, Inc. acquired all of the shares
of Seminole National Bank, a national bank headquartered in Florida with assets
at March 31, 1997 of approximately $28 million. The bank now operates under the
name Banco Popular, N.A. (Florida).
On May 8, 1997, Popular, Inc. announced that its Board of Directors had
authorized the repurchase of up to 3,000,000 shares of outstanding common stock
to offset the issuance of shares in connection with the Merger and another
recent proposed acquisition.
RCB
RCB is a full-service commercial bank which provides a wide range of
financial services principally in the eastern and San Juan metropolitan regions
of Puerto Rico. RCB was founded in 1922 and does business under the Puerto Rico
Banking Act of 1933, as amended (the "Banking Law"). As of March 31, 1997, RCB
had total assets of $849 million, deposits of $602 million and shareholders'
equity of $66 million. RCB's principal executive offices are located at 63
Carreras Street, Humacao, Puerto Rico 00979 and its telephone number is (787)
852-1010.
RCB operates 25 branches located in Humacao, San Juan, Bayamon, Caguas,
Carolina, Fajardo, Rio Piedras, Rio Grande, Yabucoa, Las Piedras, Loiza,
Luquillo, Maunabo, Naguabo, Juncos and Culebra. Its deposits are insured by the
Federal Deposit Insurance Corporation (the "FDIC") and it is subject to the
supervision of the FDIC and of the Office of the Commissioner of Financial
Institutions of Puerto Rico.
THE MERGER
EFFECTS OF THE MERGER
At the Effective Time (as hereinafter defined), RCB shall merge with and
into Banco Popular, and the separate existence of RCB shall cease. Banco
Popular shall be the surviving bank in the Merger, and the separate corporate
existence of Banco Popular, with all its rights, privileges and franchises,
shall continue unaffected by the Merger. The Merger shall be pursuant to and
have the effects specified in the Banking Law. The Charter and Bylaws of Banco
Popular, as in effect immediately prior to the Effective Date, shall be the
Charter and the Bylaws of the Surviving Bank until further amended as provided
therein.
2
<PAGE> 10
EFFECTIVE TIME; EFFECTIVE DATE
On June 30, 1997, assuming the satisfaction or waiver of the conditions
set forth in Article 8 of the Merger Agreement, the parties expect to cause the
Merger Agreement to be properly filed in the office of the Secretary of State
of Puerto Rico in accordance with the Banking Law. The date on which the filing
actually occurs is herein sometimes referred to as the "Effective Date" and the
time at which the Merger Agreement will be filed the "Effective Time". If the
conditions have not been satisfied as of June 30, 1997 but are satisfied by
July 31, 1997, the parties expect to cause the Merger Agreement to be properly
filed on July 31, 1997. In that event, the parties will advise RCB shareholders
and distribute a new election form to them. If this occurs, RCB shareholders
will be permitted to make new elections, if they so choose, by July 31, 1997.
See " -- Conditions to the Consummation of the Merger".
MERGER CONSIDERATION
The Merger Agreement provides that (subject to the election and allocation
procedures provided for therein), at the Effective Time, each share of RCB
Common Stock issued and outstanding immediately prior to the Effective Time
(other than shares held as treasury stock of RCB and shares held directly or
indirectly by Popular, Inc., except shares ("Excluded Shares") held by Popular,
Inc. in a fiduciary capacity or in satisfaction of a debt previously
contracted) (the "Outstanding Shares") will be converted into the right to
receive, at the election of the holders thereof and subject to the election and
allocation procedures set forth below, either
(i) a number of shares of Popular, Inc. Common Stock equal to the sum
of (a) one-half of the Exchange Ratio (as defined below) and (b) the ratio
of $100 to the Popular, Inc. Average Stock Price (as defined below) (the
"Per Share Stock Consideration"), or
(ii) cash equal to the sum of (a) $100 and (b) the product of (I)
one-half of the Exchange Ratio and (II) the Popular, Inc. Average Stock
Price (the "Per Share Cash Consideration");
provided, that if RCB declares an extraordinary dividend as described below
(the "Extraordinary Dividend") and/or if RCB's shareholders' equity (adjusted
as provided below) is less than $66,100,000 (less the amount of the
Extraordinary Dividend, if any) as of the close of business on the date that is
15 calendar days preceding the Effective Date (the amount, if any, by which
RCB's shareholders' equity is less than $66,100,000 (less the amount of the
Extraordinary Dividend, if any), the "Equity Shortfall"), the Per Share Stock
Consideration and the Per Share Cash Consideration shall be reduced as follows:
(X) the Per Share Cash Consideration shall be reduced by an amount
equal to (I) the sum of the Extraordinary Dividend (if any) and the Equity
Shortfall (if any), divided by (II) the number of Outstanding Shares (the
"Per Share Cash Reduction"); and
(Y) the Per Share Stock Consideration shall be reduced by an amount
equal to the Per Share Cash Reduction divided by the Popular, Inc. Average
Stock Price; and
provided, further, that 50% of the Outstanding Shares shall be converted into
the right to receive cash (the "Cash Number") and 50% of the Outstanding Shares
shall be converted into the right to receive Popular, Inc. Common Stock (the
"Stock Number").
The "Exchange Ratio" means $200 divided by the "Popular, Inc. Average
Stock Price," subject to the Collar described below. The "Popular, Inc. Average
Stock Price" is the average of the last sale price for Popular, Inc. Common
Stock quoted on the Nasdaq National Market as reported in the Wall Street
Journal (or, in the absence thereof, as reported in such other source upon
which Popular, Inc. and RCB shall agree) for each of the ten
3
<PAGE> 11
consecutive trading days on which Popular, Inc. Common Stock is traded on the
Nasdaq National Market ending on, and including, the trading day which is two
Business Days prior to the Election Deadline (as defined below).
In order to provide some protection to holders of shares of RCB Common
Stock against fluctuation in the price of Popular, Inc. Common Stock, the
Merger Agreement provides that the Exchange Ratio will be $200 divided by the
Popular, Inc. Average Stock Price so long as that price falls within a
specified range. This range is between $37.40 and $30.60 per share of Popular,
Inc. Common Stock, inclusive (the "Collar"). If the Popular, Inc. Average Stock
Price is above the Collar, the Exchange Ratio shall be 5.348. If the Popular,
Inc. Average Stock Price is below the Collar, the Exchange Ratio shall be
6.536.
On or prior to the Effective Date, and subject to compliance with all
laws, regulations and regulatory policies, RCB may declare and pay an
extraordinary cash dividend not exceeding $20,000,000 (the "Extraordinary
Dividend"); provided, however, that RCB shall not pay an Extraordinary Dividend
unless RCB shall have received a ruling from the Puerto Rico Treasury
Department to the effect that payment of such dividend in the amount proposed
shall not disqualify the Merger as a "reorganization" within the meaning of
Section 1112(g)(1) of the Puerto Rico Internal Revenue Code of 1994, as amended
(the "Puerto Rico Code").
If any Extraordinary Dividend is paid, the Stock Number and the Cash
Number shall be adjusted upward and downward, respectively, by the same amount
to the extent necessary so that the sum of (i) the Extraordinary Dividend and
(ii) the product of the Cash Number and the Per Share Cash Consideration is not
greater than the product of (x) the Stock Number, (y) the Popular, Inc. Average
Stock Price and (z) the Per Share Stock Consideration.
In computing RCB's shareholders' equity for purposes of calculating the
Per Share Cash Consideration and the Per Share Stock Consideration: (1) such
equity shall be defined as the sum of RCB's common stock, surplus and undivided
profits, but excluding any unrealized gain or loss on securities available for
sale, (2) such equity shall reflect any adjustments required as a result of the
Price Waterhouse audit referred to in Section 1.4 of the Merger Agreement, (3)
computations shall be made in accordance with Generally Accepted Accounting
Principles consistently applied and (4) any dividend declared between the month
end preceding the Election Deadline and the Effective Date shall be deducted
from such equity and any reduction in such equity resulting from any reduction
after December 30, 1996 in the value of RCB's securities portfolio due to an
increase in the general level of interest rates shall be excluded; provided,
however, that, to the extent gains are taken on the sale of securities in RCB's
securities portfolio after December 30, 1996, RCB's shareholders' equity shall
be reduced to reflect unrealized losses in its securities portfolio that exceed
the amount of such unrealized losses as of December 30, 1996.
ADDITIONAL AUDIT
Pursuant to the Merger Agreement, Price Waterhouse will conduct an audit
in accordance with generally accepted auditing standards of the statement of
condition of RCB as of the month end immediately preceding the Election
Deadline that is at least 30 days prior to the Election Deadline. Any
adjustment to shareholders' equity as a result of this audit could affect the
Per Share Stock Consideration and Per Share Cash Consideration if shareholders'
equity is less than $66,100,000 (less the amount of any Extraordinary
Dividend). See "--Conversion of RCB Common Stock".
ELECTION AND ALLOCATION OF RCB COMMON STOCK
Each shareholder of RCB is now being asked to indicate on the enclosed
Election Form the kind of consideration sought to be received in exchange for
her shares of RCB Common Stock. As described below, such election may not
necessarily be honored. See "THE MERGER -- Election and Allocation Procedures".
It is essential that you complete your Election Form promptly and that the
Exchange Agent actually receive it, together with the certificates representing
your shares of RCB Common Stock to which your Election Form relates, at one of
the proper locations specified in the Election Form by the Election Deadline,
which is expected to be 5:00 p.m., Puerto Rico Time, on
4
<PAGE> 12
June 30, 1997, if delivered to the Exchange Agent in Puerto Rico and 5:00 p.m.,
New York Time, on June 30, 1997, if delivered to the Exchange Agent in New
York.
Each RCB shareholder of record immediately prior to the Effective Time is
entitled to make an election and submit an Election Form covering all shares of
RCB Common Stock actually held of record by such holder. Nominee record
holders, which include any nominee, any trustee or any other person that holds
shares of RCB Common Stock in any capacity whatsoever on behalf of another
person or entity, are entitled to make an election for such nominee record
holder as well as an election on behalf of each beneficial owner of shares of
RCB Common Stock held through such nominee record holder, but such elections
must be made on a single Election Form. Such Election Form must set forth the
election of each beneficial owner separately. Beneficial owners who are not
record holders are not entitled to submit Election Forms.
A record holder of RCB Common Stock who does not, by the Election
Deadline, properly complete, sign and deliver the enclosed Election Form along
with such holder's certificates will be deemed to have indicated no preference
for cash or Popular, Inc. Common Stock and will be allocated cash or Popular,
Inc. Common Stock depending upon the elections made by other RCB shareholders.
Any election may be revoked, but only by written notice actually received by
the Exchange Agent at one of the proper locations specified in the Election
Form by the Election Deadline. NEITHER POPULAR, INC. NOR THE EXCHANGE AGENT
WILL BE UNDER ANY OBLIGATION TO NOTIFY ANY PERSON OF ANY DEFECT IN ANY ELECTION
FORM OR NOTICE OF REVOCATION SUBMITTED TO THE EXCHANGE AGENT. See "THE MERGER
- -- Election and Allocation Procedures" in this Supplement.
Subject to the allocation procedures described below, each record holder
of RCB Common Stock immediately prior to the Effective Time will be entitled
(i) to elect to receive Popular, Inc. Common Stock for all or some of the
shares of RCB Common Stock ("Stock Election Shares") held by such record
holder, (ii) to elect to receive cash for all or some of the shares of RCB
Common Stock ("Cash Election Shares") held by such record holder or (iii) to
indicate that such holder makes no such election for all or some of the shares
of RCB Common Stock held by such record holder ("No-Election Shares"). Each
record holder's election to receive Popular, Inc. Common Stock shall be honored
by the Exchange Agent, which shall be Banco Popular, up to 50% of the RCB
Common Stock owned by such record holder (the "Protected Election Shares").
Protected Election Shares shall not be subject to the allocation procedures set
forth below, shall be deducted from the Stock Number and shall not be deemed
Stock Election Shares.
Any shares of RCB Common Stock with respect to which the record holder
thereof shall not, as of the Election Deadline, have properly submitted to the
Exchange Agent a properly completed Election Form shall be deemed to be
No-Election Shares. A record holder acting in different capacities shall be
entitled to submit an Election Form for each capacity in which such record
holder so acts with respect to each person for which it so acts.
Not later than the 10th day after the Election Deadline, Popular, Inc.
shall cause the Exchange Agent to effect the allocation among the holders of
RCB Common Stock of rights to receive the Per Share Stock Consideration or the
Per Share Cash Consideration in the Merger as follows:
If the number of Stock Election Shares is less than the Stock Number, then
(i) all Stock Election Shares shall be converted into the right to receive
the Per Share Stock Consideration, and (ii) the Exchange Agent shall
select (by random selection or by lot) from among the No-Election Shares a
sufficient number of No-Election Shares such that the sum of such number
and the number of Stock Election Shares shall equal as closely as
practicable the Stock Number, and all such selected shares
("Stock-Selected No-Election Shares") shall be converted into the right to
receive the Per Share Stock Consideration, provided that if the sum of all
No-Election Shares and Stock Election Shares is less than the Stock
Number, all No-Election Shares shall be converted into the right to
receive the Per Share Stock Consideration and thereby become
Stock-Selected No-Election Shares.
If the sum of Stock Election Shares and No-Election Shares is less than
the Stock Number, the Exchange Agent shall convert (by the method of pro
rata conversion described below), a sufficient number of Cash Election
Shares
5
<PAGE> 13
into Stock Election Shares ("Converted Cash Election Shares") such that
the sum of Stock Election Shares, No- Election Shares and Converted Cash
Election Shares equals as closely as practicable the Stock Number, and all
Converted Cash Election Shares shall be converted into the right to
receive the Per Share Stock Consideration, and any No-Election Shares and
the Cash Election Shares that are not Stock-Selected No-Election Shares or
Converted Cash Election Shares (as the case may be) shall be converted
into the right to receive the Per Share Cash Consideration.
If the number of Stock Election Shares is greater than the Stock Number,
then all Cash Election Shares and No-Election Shares shall be converted
into the right to receive the Per Share Cash Consideration, and the
Exchange Agent shall convert (by the method of pro rata conversion
described below) a sufficient number of Stock Election Shares into Cash
Election Shares ("Converted Stock Election Shares") such that the
remainder of Stock Election Shares (before such conversion) less Converted
Stock Election Shares equals as closely as practicable the Stock Number,
and all Converted Stock Election Shares shall be converted into the right
to receive the Per Share Cash Consideration, and the Stock Election Shares
which are not Converted Stock Election Shares shall be converted into the
right to receive the Per Share Stock Consideration.
If the number of Stock Election Shares equals the Stock Number, then all
Stock Election Shares shall be converted into the right to receive the Per
Share Stock Consideration and all Cash Election Shares and No-Election
Shares shall be converted into the right to receive the Per Share Cash
Consideration.
In the event the Exchange Agent is required to convert Cash Election
Shares into Stock Election Shares, the election by each holder of Cash
Election Shares shall be converted on a pro rata basis into Cash Election
Shares and Stock Election Shares, with the Stock Election Shares to be
equal to the product of (x) the number of such holder's Cash Election
Shares before such conversion and (y) the fraction in which the total
number of Converted Cash Election Shares comprises the numerator and the
total number of Cash Election Shares before such conversion comprises the
denominator. In the event the Exchange Agent is required to convert Stock
Election Shares into Cash Election Shares, the election by each holder of
Stock Election Shares shall be converted on a pro rata basis into Stock
Election Shares and Cash Election Shares, with the Cash Election Shares to
be equal to the product of (x) the number of such holder's Stock Election
Shares before such conversion and (y) the fraction in which the total
number of Converted Stock Election Shares comprises the numerator and the
total number of Stock Election Shares before such conversion comprises the
denominator.
Notwithstanding the foregoing, a person who immediately prior to the
Effective Time, owned (for purposes of the Puerto Rico Code) 1% or more of
the outstanding shares of RCB Common Stock and who does not elect to
receive Per Share Cash Consideration for all his shares, shall deliver a
written agreement, in a form reasonably acceptable to Popular, Inc.,
containing customary representations to the effect that such holder has no
present intention to sell, exchange or otherwise dispose of such shares of
Popular, Inc. Common Stock to be received in exchange for such shares of
RCB Common Stock, and if such holder shall not deliver such written
agreement, in a form reasonably acceptable to Popular, Inc., at the
election of Popular, Inc. such person shall instead receive the Per Share
Cash Consideration with respect to such shares, regardless of the election
(or lack thereof) made by such person in its Election Form, and, if
Popular, Inc. exercises such election, the Cash Number shall be reduced by
the number of shares of RCB Common Stock that were owned by such person
immediately prior to the Effective Time.
To be effective, an Election Form must be properly completed, signed and
actually received by the Exchange Agent in Puerto Rico not later than 5:00
p.m., Puerto Rico Time, on June 30, 1997, or by the Exchange Agent in New York
not later than 5:00 p.m., New York Time, on June 30, 1997, and accompanied by
the certificates representing all the shares of RCB Common Stock as to which
the Election is being made (or an appropriate guarantee of delivery by an
eligible organization).
6
<PAGE> 14
CONDITIONS TO THE CONSUMMATION OF THE MERGER
Consummation of the Merger is subject, among other things, to (i) the
Registration Statement not being subject to a stop order of the Commission,
(ii) no law, statute, rule or regulation, domestic or foreign, having been
enacted or promulgated which would prohibit the consummation of the
transactions contemplated by the Merger Agreement, (iii) receipt by Popular,
Inc., Banco Popular and RCB of a ruling from the Puerto Rico Treasury
Department or opinions of their respective counsel as to the tax-free nature of
the Merger for Puerto Rico income tax purposes, and (iv) certain other closing
conditions. Although the parties expect to receive the ruling from the Puerto
Rico Treasury Department on or before June 30, 1997 and that all other
conditions to consummation will be satisfied by that date, in which case the
Effective Date will be June 30, 1997, in the event that the ruling from the
Puerto Rico Treasury Department is issued after June 30, 1997 but before July
31, 1997, or that some other condition to consummation is not satisifed by June
30, 1997 but is satisfied by July 31, 1997, the Effective Date will be July 31,
1997 and shareholders of RCB will be so advised and will receive new election
forms, allowing them to make new elections by July 31, 1997, if they so choose.
Otherwise, elections made as of June 30, 1997 will be valid as if made as of
July 31, 1997. See "THE MERGER--Conditions to the Consummation of the Merger".
CERTAIN TAX CONSEQUENCES OF THE MERGER
The summary set forth below of certain Puerto Rico and United States
Federal income tax consequences of the Merger is qualified in its entirety by
the complete discussion under "THE MERGER--Certain Tax Consequences of the
Merger". Because the tax consequences of the Merger may vary depending on an
individual taxpayer's particular situation, shareholders are urged to consult
their own tax advisors to determine the particular tax consequences to them of
these transactions.
PUERTO RICO
It is intended that, under the income tax laws of Puerto Rico, the Merger
will be, with respect to Popular, Inc., Banco Popular and RCB, a tax-free
reorganization, with the consequence that (i) shareholders of RCB that exchange
RCB Common Stock solely for Popular, Inc. Common Stock will not recognize gain
or loss as a result of the exchange, (ii) shareholders of RCB that exchange RCB
Common Stock solely for cash will be required to recognize the total amount of
gain realized on the exchange and (iii) the gain realized by shareholders of
RCB that exchange RCB Common Stock for cash and Popular, Inc. Common Stock will
generally be required to be recognized in an amount that does not exceed the
cash received. To confirm the Puerto Rico income tax consequences of these
transactions, a ruling request (the "Ruling Request") was filed on March 3,
1997 with the Puerto Rico Department of the Treasury. Although the parties
expect the Puerto Rico Department of the Treasury to issue its ruling on or
before June 30, 1997, no assurance can be given as to when it will be issued.
For a complete description of the Ruling Request and the possible tax effects
if the Ruling Request is denied, see "THE MERGER--Certain Tax Consequences of
the Merger--Puerto Rico Income Tax Consequences".
UNITED STATES
The conversion of RCB Common Stock pursuant to the Merger generally will
be a taxable transaction for United States Federal income tax purposes and may
also be taxable under applicable state, local and other tax laws. In general,
for United States Federal income tax purposes, a shareholder of RCB that is a
U.S. Holder (other than certain bona fide residents of Puerto Rico), as defined
below under "Certain Tax Consequences of the Merger--United States Federal
Income Tax Consequences", that exchanges RCB Common Stock for Popular, Inc.
Common Stock or cash will recognize gain or loss for United States Federal
income tax purposes in an amount equal to the difference between the sum of the
cash and fair market value of the shares of Popular, Inc. Common Stock received
and the shareholder's basis in the shares of RCB Common Stock surrendered. See
"Certain Tax Consequences of the Merger -- United States Federal Income Tax
Consequences".
7
<PAGE> 15
APPRAISAL RIGHTS
Each holder of RCB Common Stock who dissented from the Merger and has
neither effectively withdrawn nor lost his right to the appraisal of his shares
may be entitled to the appraisal rights of dissenting shareholders under
Section 15(d) of the Banking Law. A copy of Section 15(d) of the Banking Law is
attached to the Prospectus/Proxy Statement as Appendix C, and a summary of such
section is included in this Supplement under "THE MERGER--Rights of Dissenting
RCB Shareholders".
RESALE OF POPULAR, INC. COMMON SHARES
The Popular, Inc. Common Shares have been registered under the Securities
Act, thereby allowing such shares to be traded freely and without restriction
by those holders of RCB Common Stock who receive such shares following
consummation of the Merger and who are not deemed to be "affiliates" (as
defined under the Securities Act) of RCB or Popular, Inc. It is a condition to
consummation of the Merger that each holder of RCB Common Stock who is deemed
by RCB to be an "affiliate" of RCB shall enter into an agreement with Popular,
Inc. (an "Affiliate's Agreement") providing, among other things, that such
affiliate will not transfer any Popular, Inc. Common Shares received by such
affiliate in the Merger, except in compliance with the Securities Act. This
Supplement does not cover any resales of Popular, Inc. Common Shares received
by "affiliates" of RCB.
8
<PAGE> 16
SELECTED HISTORICAL FINANCIAL INFORMATION
POPULAR, INC.
The following table sets forth selected historical financial information for
Popular, Inc. This information should be read in conjunction with the
historical financial statements of Popular, Inc. including the notes thereto,
incorporated herein by reference. See "INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE".
<TABLE>
<CAPTION>
Three Months
Ended March 31 Year Ended December 31,
-------------------------- -------------------------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
SUMMARY INCOME STATEMENT
(in thousands except per
share amounts)
Interest income $ 334,265 $ 302,927 $ 1,272,853 $ 1,105,807 $ 887,141 $ 772,136 $ 740,354
Interest expense 153,621 140,467 591,540 521,624 351,633 280,008 300,135
Net interest income 180,644 162,460 681,313 584,183 535,508 492,128 440,219
Provision for credit losses 23,687 21,273 88,839 64,558 53,788 72,892 97,633
Net interest income after
provision for credit losses 156,957 141,187 592,474 519,625 481,720 419,236 342,586
Noninterest income 54,255 51,992 205,472 173,338 141,303 125,180 124,504
Noninterest expense 142,125 130,699 541,919 486,833 448,231 413,046 367,715
Income before income taxes 69,087 62,480 256,027 206,130 174,792 131,370 99,375
Applicable income taxes 19,548 17,338 70,877 59,769 50,043 28,151 14,259
Cumulative effect of accounting
changes -- -- -- -- -- 6,185 --
Net income 49,539 45,142 $ 185,150 $ 146,361 $ 124,749 $ 109,404 $ 85,116
Net income per common share(1) 0.72 0.65 $ 2.68 $ 2.10 $ 1.84 $ 1.67 $ 1.40
Cash dividends per common
share(1) 0.18 0.15 $ 0.69 $ 0.58 $ 0.50 $ 0.45 $ 0.40
SELECTED PERIOD-END BALANCES
(in thousands except per
share amounts)
Total assets $17,401,45 $15,805,083 $16,764,103 $15,675,451 $12,778,358 $11,513,368 $10,002,327
Total loans and loans held-for-
sale 9,889,254 8,850,078 9,779,028 8,677,484 7,781,329 6,346,922 5,252,053
Investment and trading securities 5,657,293 5,289,849 4,905,150 5,191,992 3,796,807 4,048,380 3,698,850
Earning assets 16,336,734 14,801,284 15,484,454 14,668,195 11,843,806 10,657,994 9,236,024
Deposits 10,465,153 10,183,082 10,763,275 9,876,662 9,012,435 8,522,658 8,038,711
Term borrowings(2) 2,964,383 1,629,679 2,545,719 1,390,135 1,113,365 1,010,028 400,944
Shareholders' equity 1,287,515 1,159,570 1,262,532 1,141,697 1,002,423 834,195 752,119
Book value per share 17.96 16.07 17.59 15.81 13.74 12.75 11.52
SELECTED FINANCIAL RATIOS
Return on average common equity -- -- 16.15% 14.22% 13.80% 13.80% 12.72%
Return on average assets 1.19% 1.17% 1.14 1.04 1.02 1.02 0.89
Net interest margin(3) 4.90 4.78 4.77 4.74 5.06 5.50 6.11
Allowance for credit losses to
period-end loans and loans
held-for-sale 1.94 1.97 1.90 1.94 1.98 2.10 2.11
Nonperforming assets as a
percentage of period-end
loans and loans held-for-sale 1.76 1.70 1.58 1.79 1.38 1.75 2.52
Net charge-offs to average loans
and loans held-for-sale 0.73 0.68 0.78 0.61 0.52 0.91 1.58
Average equity to average assets 7.56 7.44 7.33 7.58 7.57 7.42 7.02
</TABLE>
- ----------------------
(1) Adjusted to reflect the stock split effected in the form of a dividend on
July 1, 1996.
(2) Excludes Federal Funds that must be repaid in one day.
(3) On a taxable equivalent basis.
9
<PAGE> 17
ROIG COMMERCIAL BANK
The following table sets forth selected historical financial information for
RCB. This information should be read in conjunction with the historical
financial statements of RCB, including the notes thereto, attached to the
Prospectus/Proxy Statement as Appendix D. See Appendix for first quarter 1997
financial statements.
<TABLE>
<CAPTION>
Three Months
Ended March 31, Year Ended December 31,
-------- -------- ----------------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
-------- -------- --------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
SUMMARY INCOME STATEMENT
(in thousands except per share amounts)
Interest income 17,099 16,101 $ 66,962 $ 62,758 $ 55,681 $ 53,534 $ 55,656
Interest expense 8,058 7,872 32,675 31,009 24,148 22,458 25,910
Net interest income 9,041 8,229 34,287 31,749 31,533 31,076 29,746
Provision for credit losses 1,200 600 3,180 1,006 1,437 3,769 6,026
Net interest income after provision for credit
losses 7,841 7,629 31,107 30,743 30,096 27,307 23,720
Noninterest income 971 1,626 6,592 5,812 4,295 5,457 5,752
Noninterest expense 8,495 7,538 31,369 28,855 26,776 24,411 23,307
Income before income taxes 317 1,717 6,330 7,701 7,616 8,354 6,165
Income taxes -- 86 (702) 426 359 1,150 1,094
Cumulative effect of accounting changes -- -- -- -- -- 818 --
Net income (loss) 317 1,631 7,032 7,275 7,256 8,022 5,071
Net income per common share 0.53 2.72 11.72 12.12 12.09 13.37 8.45
Cash dividends per common share -- -- 3.50 3.25 3.10 3.20 2.40
SELECTED PERIOD-END BALANCES
(in thousands except per share amounts)
Total assets $847,858 $850,935 $ 888,443 $814,522 $759,742 $716,468 $672,197
Total loans and loans held-for-sale 353,401 318,341 349,115 301,378 282,262 242,019 260,192
Investment and trading securities 407,276 468,503 459,076 453,031 418,587 402,315 333,089
Earning assets 805,396 807,854 841,401 764,619 709,649 676,384 629,581
Deposits 602,382 648,708 656,291 642,360 623,859 609,500 605,476
Term borrowings 171,530 132,282 156,850 97,000 78,926 52,000 18,000
Shareholders' equity 65,642 64,058 66,493 64,497 51,666 50,470 44,368
Book value per share 109.40 106.76 110.82 107.50 86.11 84.12 73.95
SELECTED FINANCIAL RATIOS
Return on average common equity 1.91% 9.95% 10.48% 12.46% 13.99% 15.07% 11.96%
Return on average assets 0.14 0.77 0.81 0.92 0.99 1.04 0.79
Net interest margin 4.13 3.89 3.92 3.97 4.29 4.51 4.53
Allowance for credit losses to period end
loans and loans held-for-sale 1.64 1.66 1.62 1.70 2.05 2.04 1.47
Nonperforming assets as a percentage of
average assets 1.32 1.48 1.38 1.47 .87 1.35 1.44
Net charge-offs to average loans and leases 1.17 0.54 0.80 0.57 0.34 1.02 2.10
Average equity to average assets 7.59 7.75 7.67 7.31 7.07 6.93 6.46
Dividend payout -- -- 29.90 26.80 25.60 23.90 28.40
</TABLE>
10
<PAGE> 18
COMPARISON OF CERTAIN UNAUDITED PER SHARE DATA
The following unaudited information, adjusted for any stock dividends and
stock splits, reflects, where applicable, certain comparative per share data
related to book value, cash dividends paid, income and market value: (i) on a
historical basis for Popular, Inc. and RCB; (ii) on a pro forma combined basis
per share of Popular, Inc. Common Stock; and (iii) on an equivalent pro forma
basis per share of RCB Common Stock. Such pro forma information has been
prepared assuming (a) a 5.92593 Exchange Ratio for the book value per share,
cash dividends per share and net income per share amounts as of December 31,
1996 or for the year ended December 31, 1996 and a 5.63380 Exchange Ratio
for the book value per share, cash dividends per share and net income per share
amounts as of March 31, 1997 or for the three months ended March 31, 1997; (b)
a 5.92593 Exchange Ratio for the market value per share amount on December 30,
1996, (c) a 5.38721 Exchange Ratio for the market value per share amount on
June 6, 1997 and (d) consummation of the Merger on a purchase accounting basis
as of January 1, 1996.
The 5.92593 Exchange Ratio used in the pro forma information for book
value per share, cash dividends per share and net income per share is based on
$33.75, the last reported sale price per share of Popular, Inc. Common Stock on
the Nasdaq National Market on December 31, 1996. The 5.92593 Exchange Ratio
used in the pro forma information for market value per share on December 30,
1996 is based on $33.75, the last reported sale price per share of Popular,
Inc. Common Stock on the Nasdaq National Market on December 30, 1996, the date
preceding the public announcement of the Merger Agreement. The 5.38721 Exchange
Ratio used in the pro forma information for market value per share on June 6,
1997 is based on the last reported sale price per share of Popular, Inc. Common
Stock on the Nasdaq National Market on June 6, 1997. The actual Exchange Ratio
will depend on the Popular, Inc. Average Stock Price (which will not be known
until shortly before the Effective Date) and may be higher or lower than
$33.75 or $37.125. The pro forma information would be different if the Popular,
Inc. Average Stock Price results in a different Exchange Ratio. Shareholders
are urged to obtain current quotations of the market price per share of
Popular, Inc. Common Stock.
Since purchase accounting does not require restatement of results for
prior periods following consummation of the Merger, consummation of the Merger
will not affect Popular, Inc.'s historical results for the periods indicated.
Pro forma financial information is intended to show how the Merger might have
affected historical financial statements if the Merger had been consummated at
an earlier time. The pro forma financial information does not purport to be
indicative of the results that actually would have been realized had the Merger
taken place at the beginning of the applicable periods indicated, nor is it
indicative of the combined financial position or results of operations for any
future periods.
The information shown below should be read in conjunction with the
historical financial statements of Popular, Inc. and RCB, including the
respective notes thereto, and the documents incorporated herein by reference.
See
"AVAILABLE INFORMATION", "INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE", and
Appendix.
<TABLE>
<CAPTION>
DECEMBER 31, 1996 MARCH 31, 1997
----------------- --------------
BOOK VALUE PER SHARE:
Historical per share of:
<S> <C> <C>
Popular, Inc. Common Stock.................................. $ 17.59 $ 17.96
RCB Common Stock............................................ 110.82 109.40
Pro forma combined per share of Popular, Inc. Common 19.48 18.38
Stock (1)...................................................
Equivalent pro forma per share of RCB Common Stock (2).......... 115.44 103.57
</TABLE>
- -----------
(1) The pro forma combined book value per share of Popular, Inc. Common Stock
amount represents the sum of the pro forma combined shareholders' equity
amounts, divided by pro forma combined period-end number of shares
outstanding.
11
<PAGE> 19
(2) The equivalent pro forma book value per share of RCB Common Stock amount
represents the pro forma combined book value per share of Popular, Inc.
Common Stock amounts multiplied by a 5.92593 Exchange Ratio for December
31, 1996 and a 5.63380 Exchange Ratio for March 31, 1997.
---------------------------
<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS ENDED
DECEMBER 31, 1996 MARCH 31, 1997
----------------- ---------------
<S> <C> <C>
CASH DIVIDENDS PAID PER SHARE:
Historical per share of:
Popular, Inc. Common Stock............................ $ .69 $ .18
RCB Common Stock...................................... 3.50 --
Pro forma combined per share of Popular, Inc.
Common Stock (3)...................................... .70 .1754
Equivalent pro forma per share of RCB Common
Stock (4)............................................. 4.15 .99
</TABLE>
- ------------
(3) The pro forma combined cash dividends paid per share of Popular, Inc.
Common Stock amount represents pro forma combined cash dividends paid on
common stock outstanding, divided by pro forma combined average number of
common shares outstanding, rounded to the nearest cent.
(4) The equivalent pro forma cash dividends paid per share of RCB Common Stock
amount represents pro forma combined per share of Popular, Inc. Common
Stock amounts multiplied by a 5.92593 Exchange Ratio, rounded up to the
nearest cent, for the year ended December 31, 1996 and multiplied by a
5.63380 Exchange Ratio, rounded up to the nearest cent, for the three
months ended March 31, 1997. The current annualized dividend rate per share
of Popular, Inc. Common Stock, based upon the most recent quarterly
dividend rate of $.18 per share payable on April 1, 1997, would be $.72. On
an equivalent pro forma basis, such current annualized Popular, Inc.
dividend per share of RCB Common Stock would be $4.27, based on a 5.92593
Exchange Ratio, rounded to the nearest cent. Any future Popular, Inc. and
RCB dividends are dependent upon their respective earnings and financial
conditions, government regulations and policies and other factors.
---------------------------
<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS ENDED
DECEMBER 31, 1996 MARCH 31, 1997
----------------- -------------------
<S> <C> <C>
NET INCOME APPLICABLE TO COMMON SHAREHOLDERS:
Historical per share of:
Popular, Inc. Common Stock............................ $ 2.68 $ .72
RCB Common Stock...................................... 11.72 .53
Pro forma combined per share of Popular, Inc. 2.75 .69
Common Stock (5)......................................
Equivalent pro forma per share of RCB Common 16.30 3.87
Stock (6).............................................
- ------------
</TABLE>
(5) The pro forma combined income per share of Popular, Inc. Common Stock
amount represents pro forma combined net income applicable to holders of
Popular, Inc. Common Stock, divided by pro forma combined average number
of shares of Popular, Inc. Common Stock outstanding.
(6) The equivalent pro forma income per share of RCB Common Stock amount
represents pro forma combined income per share of Popular, Inc. Common
Stock amounts multiplied by a 5.92593 Exchange Ratio for the year ended
December 31, 1996 and a 5.63380 Exchange Ratio for the three months ended
March 31, 1997.
------------------
12
<PAGE> 20
<TABLE>
<CAPTION>
MARKET VALUE PER SHARE(7): DECEMBER 30, 1996 JUNE 6, 1997
----------------- ------------
<S> <C> <C>
Historical per share of:
Popular, Inc. Common Stock........................... $33.75 $37.125
Equivalent pro forma per share of RCB Common
Stock............................................... 200.00 200.00
</TABLE>
- ------------
(7) The equivalent pro forma market value per share of RCB Common Stock on
December 30, 1996 represents the historical market value per share of
Popular, Inc. Common Stock multiplied by a 5.92593 Exchange Ratio, rounded
down to the nearest one-eighth. The equivalent pro forma market value per
share of RCB Common Stock on June 6, 1997 represents the historical market
value per share of Popular, Inc. Common Stock multiplied by a 5.38721
Exchange Ratio, rounded down to the nearest one-eighth. The Popular, Inc.
historical market values per share represent the last reported sales price
per share of Popular, Inc. Common Stock on the Nasdaq National Market: (i)
on December 30, 1996, the last business day preceding public announcement
of the execution of the Merger Agreement; and (ii) on June 6, 1997. There
is no established trading market for RCB Common Stock.
Because the market price of Popular, Inc. Common Stock is subject to
fluctuation, the market value of the Popular, Inc. Common Shares that holders
of RCB Common Stock will receive upon consummation of the Merger may increase
or decrease prior to and after the receipt of such shares. RCB shareholders are
urged to obtain current market quotations for Popular, Inc. Common Stock.
HISTORICAL MARKET PRICE AND DIVIDENDS DECLARED
ROIG COMMERCIAL BANK
On May 30, 1997, RCB had approximately 264 shareholders of record. There
is no established trading market for RCB Common Stock and it has been subject
to only limited trading. The shares are not listed on any exchange or quoted on
any automated quotation system and no institution makes a market in the stock.
The only sources of information available to RCB management relating to sales
of RCB Common Stock are (i) requests for registration of transfers of shares of
RCB Common Stock on the RCB stock register (which does not provide any
information as to the price at which the shares were sold); and (ii) statements
made by RCB shareholders to members of RCB's management (which by their nature
cannot be independently corroborated). During the period from January 1, 1995
to May 30, 1997, there were 10 transfers of RCB Common Stock on the stock
registry books of RCB (other than transfers which RCB management knows to be
the result of gifts or inheritance), as follows:
<TABLE>
<CAPTION>
Number of
Date Shares Transferred
---- ------------------
<S> <C>
January 26, 1995 1,000
June 12, 1995 3,960
November 8, 1995 200
December 26, 1995 37
December 26, 1996 6,401
January 10, 1996 3
March 28, 1996 39
May 2, 1996 119
May 16, 1996 80
February 3, 1997 164
</TABLE>
This table may not reflect all trades. Based on statements made by RCB
shareholders to members of RCB management relating to some of these transfers,
RCB management believes that the price range at which some of these
13
<PAGE> 21
transfers took place is between $45 and $60 per share. These prices are not
necessarily indicative of the fair market value of the stock of the time of the
trade.
The Merger Agreement was publicly announced on December 31, 1996. The most
recent sale of RCB Common Stock prior to the announcement of the Merger
Agreement occurred on May 16, 1996 for 80 shares. Subsequent to the
announcement of the Merger Agreement, there was one sale of RCB Common Stock on
February 3, 1997, wherein 164 shares were sold.
RCB normally pays dividends on its common stock in June and December of
each year. The amount of the cash dividends paid during the two fiscal years
ended December 31, 1995 and 1996, was as follows:
<TABLE>
<CAPTION>
DIVIDEND AGGREGATE
DATE PER SHARE AMOUNT OF DIVIDEND
---- ---------- ------------------
<S> <C> <C>
June 1995 $1.25 $ 750,000
December 1995 2.00 1,200,000
June 1996 1.25 750,000
December 1996 2.25 1,350,000
</TABLE>
14
<PAGE> 22
INTRODUCTION
This Supplement contains important information for the holders of record
of RCB Common Stock as of June 30, 1997 concerning the elections to be made in
connection with the Merger.
PLEASE READ THIS SUPPLEMENT AND THE PROSPECTUS/PROXY STATEMENT CAREFULLY.
THE FAILURE OF A RCB SHAREHOLDER OF RECORD TO PROPERLY COMPLETE AND DELIVER THE
ACCOMPANYING ELECTION FORM, TOGETHER WITH CERTIFICATES REPRESENTING THE SHARES
OF RCB COMMON STOCK TO WHICH THAT ELECTION FORM RELATES, TO ONE OF THE
LOCATIONS SPECIFIED BELOW PRIOR TO THE ELECTION DEADLINE, WHICH IS EXPECTED TO
BE 5:00 P.M., PUERTO RICO TIME, ON JUNE 30, 1997 OR 5:00 P.M., NEW YORK TIME,
ON JUNE 30, 1997 (THE "ELECTION DEADLINE") AND TO COMPLY WITH THE PROCEDURES
DESCRIBED IN THIS SUPPLEMENT AND THE INSTRUCTIONS TO THE ELECTION FORM WILL
CAUSE SUCH SHAREHOLDER TO BE DEEMED TO HAVE EXPRESSED NO PREFERENCE AND TO
RECEIVE EITHER CASH OR POPULAR, INC. COMMON STOCK, DEPENDING UPON THE ELECTIONS
MADE BY OTHER RCB SHAREHOLDERS. IN THE EVENT THAT THE ELECTION DEADLINE IS
LATER, YOU WILL BE ADVISED AND GIVEN THE OPPORTUNITY TO CHANGE YOUR ELECTION.
IMPORTANT: To make a valid election, record holders of RCB Common Stock as
of June 30, 1997 must complete and return the accompanying Election Form and
the certificates with respect to all of the shares of RCB Common Stock to which
the Election Form relates, in accordance with the instructions on the Election
Form. A properly completed Election Form must be received by the Exchange Agent
at one of the proper locations specified in the Election Form by the Election
Deadline (5:00 p.m. Puerto Rico Time if in Puerto Rico or 5:00 p.m., New York
Time if in New York) together with certificate(s) representing all of the RCB
Common Stock to which the Election Form
ALL ELECTION FORMS MUST BE ACTUALLY RECEIVED BY THE EXCHANGE AGENT AT ONE
OF THE PROPER LOCATIONS LISTED BELOW BY THE ELECTION DEADLINE. THE EXCHANGE
AGENT AND THE PROPER LOCATIONS ARE:
BANCO POPULAR DE PUERTO RICO
IN PUERTO RICO:
By Hand/Overnight Delivery: By Mail:
209 Munoz Rivera Avenue P.O. Box 362708
5th Floor San Juan, P.R. 00936-2708
Hato Rey, P.R. 00918
IN THE MAINLAND UNITED STATES:
By Hand/Overnight Delivery: By Mail:
7 W. 51st Street 7 W. 51st Street
9th Floor 9th Floor
New York, NY 10019 New York, NY 10019
It is recommended that certificates be sent via certified mail and
appropriately insured.
If you have any questions, you should contact the Exchange Agent at (787)
764-1893.
15
<PAGE> 23
THE MERGER
The following information relating to the Merger is qualified in its
entirety by reference to the Merger Agreement, which is incorporated herein by
reference. A more detailed discussion of the terms and conditions of the Merger
is contained in the Prospectus/Proxy Statement.
EFFECTS OF THE MERGER
Subject to the terms and conditions of the Merger Agreement, at the
Effective Time, RCB shall merge with and into Banco Popular, and the separate
existence of RCB shall cease. Banco Popular shall be the surviving bank in the
Merger (sometimes hereinafter referred to as the "Surviving Bank"), and the
separate corporate existence of Banco Popular, with all its rights, privileges
and franchises, shall continue unaffected by the Merger. The Merger shall be
pursuant to and have the effects specified in the Banking Law. The Charter and
Bylaws of Banco Popular, as in effect immediately prior to the Effective Date,
shall be the Charter and the Bylaws of the Surviving Bank until further amended
as provided therein.
EFFECTIVE TIME; EFFECTIVE DATE
On June 30, 1997, assuming the satisfaction or waiver of the conditions
set forth in Article 8 of the Merger Agreement, the parties expect to cause the
Merger Agreement to be properly filed in the office of the Secretary of State
of Puerto Rico in accordance with the Banking Law. The date on which the filing
actually occurs is herein sometimes referred to as the "Effective Date" and the
time at which the Merger Agreement will be filed the "Effective Time". If the
conditions have not been satisfied as of June 30, 1997 but are satisfied by
July 31, 1997, the parties expect to cause the Merger Agreement to be properly
filed on July 31, 1997. In that event, the parties will advise RCB shareholders
and distribute a new election form to them. If this occurs, RCB shareholders
will be permitted to make new elections, if they so choose, by July 31, 1997.
See " -- Conditions to the Consummation of the Merger".
MERGER CONSIDERATION
At the Effective Time, each share of RCB Common Stock issued and
outstanding immediately prior to the Effective Time (other than shares held as
treasury stock of RCB and shares held directly or indirectly by Popular, Inc.,
except shares ("Excluded Shares") held by Popular, Inc. in a fiduciary capacity
or in satisfaction of a debt previously contracted) ("Outstanding Shares")
shall become and be converted into the right to receive, at the election of
each holder thereof, but subject to the election and allocation procedures
described below, either:
(A) a number of shares of Popular, Inc. Common Stock equal to the sum
of (x) one-half of the Exchange Ratio (as defined below) and (y) the ratio
of $100 to the Popular, Inc. Average Stock Price (as defined below) (the
"Per Share Stock Consideration"), or
(B) cash equal to the sum of (x) $100 and (y) the product of (I)
one-half of the Exchange Ratio and (II) the Popular, Inc. Average Stock
Price (the "Per Share Cash Consideration" and, together with the Per Share
Stock Consideration, the "Consideration"),
provided that if RCB declares an "Extraordinary Dividend" (as defined below)
and/or if RCB's shareholders' equity (adjusted as provided below) is less than
$66,100,000 (less the amount of the Extraordinary Dividend, if any) as of the
close of business on the date that is 15 calendar days preceding the Effective
Date (the amount, if any, by which RCB's shareholders' equity is less than
$66,100,000 (less the amount of the Extraordinary Dividend, if any), the
"Equity Shortfall"), the Per Share Stock Consideration and the Per Share Cash
Consideration shall be reduced as follows:
16
<PAGE> 24
(X) the Per Share Cash Consideration shall be reduced by an amount
equal to (I) the sum of the Extraordinary Dividend (if any) and the Equity
Shortfall (if any), divided by (II) the number of Outstanding Shares (the
"Per Share Cash Reduction"); and
(Y) the Per Share Stock Consideration shall be reduced by an amount
equal to the Per Share Cash Reduction divided by the Popular, Inc. Average
Stock Price.
All of the foregoing is subject to the proviso that (X) 50% of the
Outstanding Shares shall be converted into the right to receive the Per Share
Cash Consideration (such number of shares of RCB Common Stock, the "Cash
Number"); and (Y) 50% of the Outstanding Shares shall be converted into the
right to receive the Per Share Stock Consideration (such number of shares of
RCB Common Stock, the "Stock Number"). At the Effective Time, each share of RCB
Common Stock that, immediately prior to the Effective Time, is held as treasury
stock of RCB or held directly or indirectly by Popular, Inc., other than
Excluded Shares, shall by virtue of the Merger be canceled and retired and
shall cease to exist, and no exchange or payment shall be made therefor.
The term "Exchange Ratio" means $200 divided by the Popular, Inc. Average
Stock Price provided that (x) if the Popular, Inc. Average Stock Price is
greater than $37.40, the Exchange Ratio shall be 5.348 and (y) if the Popular,
Inc. Average Stock Price is less than $30.60, the Exchange Ratio shall be
6.536. If Popular, Inc. effects a stock dividend, extraordinary dividend,
reclassification, recapitalization, split-up, combination, exchange of shares
or similar transaction, after the date hereof and before the Effective Time,
the Exchange Ratio shall be appropriately adjusted.
The term "Popular, Inc. Average Stock Price" means the average of the last
sale price for Popular, Inc. Common Stock quoted on the Nasdaq National Market
as reported in the Wall Street Journal (or, in the absence thereof, as reported
in such other source upon which Popular, Inc. and RCB shall agree) for each of
the ten consecutive trading days on which Popular, Inc. Common Stock is traded
on the Nasdaq National Market ending on, and including, the trading day which
is two Business Days prior to the Election Deadline (as defined below). The
term "Business Day" means any day on which depository institutions are
generally open for business in Puerto Rico and the Nasdaq National Market is
generally open for business.
EXTRAORDINARY DIVIDEND
On or prior to the Effective Date, and subject to compliance with all
laws, regulations and regulatory policies, RCB may declare and pay an
extraordinary cash dividend not exceeding $20,000,000 (the "Extraordinary
Dividend"); provided, however, that RCB shall not pay an Extraordinary Dividend
unless RCB shall have received a ruling from the Puerto Rico Treasury
Department to the effect that payment of such dividend in the amount proposed
shall not disqualify the Merger as a "reorganization" within the meaning of
Section 1112(g)(1) of the Puerto Rico Internal Revenue Code of 1944, as amended
(the "Puerto Rico Code").
If any Extraordinary Dividend is paid, the Stock Number and the Cash
Number shall be adjusted upward and downward, respectively, by the same amount
to the extent necessary so that the sum of (i) the Extraordinary Dividend and
(ii) the product of the Cash Number and the Per Share Cash Consideration is not
greater than the product of (x) the Stock Number, (y) the Popular, Inc. Average
Stock Price and (z) the Per Share Stock Consideration.
SHAREHOLDERS' EQUITY
In computing RCB's shareholders' equity for purposes of conversion, (a)
RCB's shareholders' equity shall be defined as the sum of its common stock,
surplus and undivided profits, but excluding any unrealized gain or loss on
securities available for sale, (b) RCB's shareholders' equity shall reflect any
adjustments required as a result of the Price Waterhouse audit referred to in
Section 1.4 of the Merger Agreement, (c) computations shall be made in
accordance with Generally Accepted Accounting Principles as consistently
applied, (d) any dividend declared between the month end preceding the Election
Deadline and the Effective Date shall be deducted from RCB's shareholders'
17
<PAGE> 25
equity and (e) any reduction in RCB's shareholders' equity resulting from any
reduction after December 30, 1996 in the value of RCB's securities portfolio
due to an increase in the general level of interest rates shall be excluded;
provided, however, that, to the extent that gains are taken on the sale of
securities in RCB's securities portfolio after December 30, 1996, RCB's
shareholders' equity shall be reduced to reflect unrealized losses in its
securities portfolio that exceed the amount of such unrealized losses as of
December 30, 1996.
ADDITIONAL AUDIT
Pursuant to the Merger Agreement, Price Waterhouse will conduct an audit
in accordance with generally accepted auditing standards of the statement of
condition of RCB as of the month end immediately preceding the Election
Deadline that is at least 30 days prior to the Election Deadline. Any
adjustment to shareholders' equity as a result of this audit could affect the
Per Share Stock Consideration and Per Share Cash Consideration if shareholders'
equity is less than $66,100,000 (less the amount of any Extraordinary
Dividend). See "--Conversion of RCB Common Stock".
FRACTIONAL SHARES
No fractional interests in shares of Popular, Inc. Common Stock, and no
certificates representing such fractional interests, shall be issued upon the
surrender for exchange of certificates representing RCB Common Stock. In lieu
of any fractional share, Popular, Inc. shall pay to each former holder of RCB
Common Stock who otherwise would be entitled to receive a fractional interest
in a share of Popular, Inc. Common Stock an amount of cash (without interest)
determined by multiplying (i) the last sale price per share of Popular, Inc.
Common Stock on the date of the Effective Time quoted on the Nasdaq National
Market as reported in the Wall Street Journal multiplied by (ii) the fractional
interest to which such holder would otherwise be entitled.
DISSENTING SHARES
Each holder of RCB Common Stock who dissented from the Merger and has
neither effectively withdrawn nor lost his right to the appraisal of his shares
(the "Dissenting Shares") may be entitled to the appraisal rights of dissenting
shareholders under Section 15(d) of the Banking Law, and such Dissenting Shares
shall not be converted in the manner set forth in "-- Merger Consideration".
If after the Effective Date any holder of Dissenting Shares shall
effectively withdraw or lose (through failure to perfect or otherwise) his or
her right to appraisal, then 50% of such Dissenting Shares shall be converted
into the Per Share Stock Consideration and 50% of such Dissenting Shares shall
be converted into the Per Share Cash Consideration.
ELECTION PROCEDURES; ALLOCATION PROCEDURES
Subject to the allocation procedures described below, each record
holder of RCB Common Stock immediately prior to the Effective Time will be
entitled (i) to elect to receive Popular, Inc. Common Stock for all or some of
the shares of RCB Common Stock ("Stock Election Shares") held by such record
holder, (ii) to elect to receive cash for all or some of the shares of RCB
Common Stock ("Cash Election Shares") held by such record holder or (iii) to
indicate that such holder makes no such election for all or some of the shares
of RCB Common Stock ("No-Election Shares") held by such record holder;
provided, that each record holder's election to receive Popular, Inc. Common
Stock shall be honored by the Exchange Agent, which shall be Banco Popular, up
to 50% of the RCB Common Stock owned by such record holder (such number of
shares for which the election is so honored are referred to as "Protected
Election Shares"). Protected Election Shares shall not be subject to the
allocation procedures set forth below, shall be deducted from the Stock Number
and shall not be deemed Stock Election Shares. All such elections shall be made
on the Election Form. Any shares of RCB Common Stock with respect to which the
record holder thereof shall not, as of the Election Deadline, have properly
submitted to the Exchange Agent a properly completed Election Form shall
18
<PAGE> 26
be deemed to be No-Election Shares. A record holder acting in different
capacities shall be entitled to submit an Election Form for each capacity in
which such record holder so acts with respect to each person for which it so
acts.
Not later than the 10th day after the Election Deadline, Popular, Inc.
shall cause the Exchange Agent to effect the allocation among the holders of
RCB Common Stock of rights to receive the Per Share Stock Consideration or the
Per Share Cash Consideration in the Merger as follows:
If the number of Stock Election Shares is less than the Stock Number,
then (i) all Stock Election Shares shall be converted into the right
to receive the Per Share Stock Consideration, and (ii) the Exchange
Agent shall select (by random selection or by lot) from among the
No-Election Shares a sufficient number of No-Election Shares such that
the sum of such number and the number of Stock Election Shares shall
equal as closely as practicable the Stock Number, and all such
selected shares ("Stock-Selected No-Election Shares") shall be
converted into the right to receive the Per Share Stock Consideration,
provided that if the sum of all No-Elec tion Shares and Stock Election
Shares is less than the Stock Number, all No-Election Shares shall be
converted into the right to receive the Per Share Stock Consideration
and thereby become Stock-Selected No- Election Shares.
If the sum of Stock Election Shares and No-Election Shares is less
than the Stock Number, the Exchange Agent shall convert (by the method
of pro rata conversion described below), a sufficient number of Cash
Election Shares into Stock Election Shares ("Converted Cash Election
Shares") such that the sum of Stock Election Shares, No-Election
Shares and Converted Cash Election Shares equals as closely as
practicable the Stock Number, and all Converted Cash Election Shares
shall be converted into the right to receive the Per Share Stock
Consideration, and any No-Election Shares and the Cash Election Shares
that are not Stock-Selected No-Election Shares or Converted Cash
Election Shares (as the case may be) shall be converted into the right
to receive the Per Share Cash Consideration.
If the number of Stock Election Shares is greater than the Stock
Number, then all Cash Election Shares and No-Election Shares shall be
converted into the right to receive the Per Share Cash Consideration,
and the Exchange Agent shall convert (by the method of pro rata
conversion described below) a sufficient number of Stock Election
Shares into Cash Election Shares ("Converted Stock Election Shares")
such that the remainder of Stock Election Shares (before such
conversion) less Converted Stock Election Shares equals as closely as
practicable the Stock Number, and all Converted Stock Election Shares
shall be converted into the right to receive the Per Share Cash
Consideration, and the Stock Election Shares which are not Converted
Stock Election Shares shall be converted into the right to receive the
Per Share Stock Consideration.
If the number of Stock Election Shares equals the Stock Number, then
all Stock Election Shares shall be converted into the right to receive
the Per Share Stock Consideration and all Cash Election Shares and
No-Election Shares shall be converted into the right to receive the
Per Share Cash Consideration.
In the event the Exchange Agent is required to convert Cash Election
Shares into Stock Election Shares, the election by each holder of Cash
Election Shares shall be converted on a pro rata basis into Cash
Election Shares and Stock Election Shares, with the Stock Election
Shares to be equal to the product of (x) the number of such holder's
Cash Election Shares before such conversion and (y) the fraction in
which the total number of Converted Cash Election Shares comprises the
numerator and the total number of Cash Election Shares before such
conversion comprises the denominator. In the event the Exchange Agent
is required to convert Stock Election Shares into Cash Election
Shares, the election by each holder of Stock Election Shares shall be
converted on a pro rata basis into Stock Election Shares and Cash
Election Shares, with the Cash Election Shares to be equal to the
product of (x) the number of such holder's Stock Election Shares
before such conversion and (y) the fraction in which the total number
of Converted Stock Election Shares comprises the numerator and the
total number of Stock Election Shares before such conversion comprises
the denominator.
19
<PAGE> 27
Notwithstanding the foregoing, a person who immediately prior to the
Effective Time, owned (for purposes of the Puerto Rico Code), 1% or
more of the outstanding shares of RCB Common Stock and who does not
elect to receive Per Share Cash Consideration for all his shares,
shall deliver a written agreement, in a form reasonably acceptable to
Popular, Inc., containing customary representations to the effect that
such holder has no present intention to sell, exchange or otherwise
dispose of such shares of Popular, Inc. Common Stock to be received in
exchange for such shares of RCB Common Stock, and if such holder shall
not deliver such a written agreement, in a form reasonably acceptable
to Popular, Inc., at the election of Popular, Inc. such person shall
instead receive the Per Share Cash Consideration with respect to such
shares, regardless of the election (or lack thereof) made by such
person in its Election Form, and, if Popular, Inc. exercises such
election, the Cash Number shall be reduced by the number of shares of
RCB Common Stock that were owned by such person immediately prior to
the Effective Time.
To be effective, the Election Form must be properly completed, signed
and actually received by the Exchange Agent in Puerto Rico not later than 5:00
p.m., Puerto Rico Time, on June 30, 1997 or by the Exchange Agent in New York
not later than 5:00 p.m., New York Time, on June 30, 1997 and accompanied by
the certificates formerly repre senting all the shares of RCB Common Stock
("Old Certificates") as to which the Election is being made (or an appropriate
guarantee of delivery by an eligible organization). Popular, Inc. shall have
reasonable discretion, which it may delegate in whole or in part to the
Exchange Agent, to determine whether Election Forms have been properly
completed, signed and timely submitted or to disregard defects in Election
Forms; such decisions of Popular, Inc. (or of the Exchange Agent) shall be
conclusive and binding. Neither Popular, Inc. nor the Exchange Agent shall be
under any obligation to notify any person of any defect in an Election Form
submitted to the Exchange Agent. The Exchange Agent and Popular, Inc. shall
also make all conversion election and allocation computations.
ADDITIONAL EXCHANGE PROCEDURES
An "Affiliate" of RCB (as that term is used in Rule 145 under the
Securities Act of 1933, as amended) shall not be entitled to receive any
consideration until such Affiliate shall have duly executed and delivered an
appropriate agreement described in Section 7.10 of the Merger Agreement.
At and after the Effective Time, each Old Certificate, and each share
of RCB Common Stock represented thereby, shall represent for all purposes only
the right to receive consideration as provided in the Merger Agreement, and
nothing else. If any consideration is to be issued to a person other than the
registered holder of the shares of RCB Common Stock formerly represented by the
Old Certificate or Certificates surrendered with respect thereto, it shall be a
condition to such issuance that the Old Certificate or Certificates so
surrendered shall be properly endorsed or otherwise be in proper form for
transfer and that the person requesting such issuance shall pay to the Exchange
Agent any transfer or other taxes required as a result of such issuance to a
person other than the registered holder of such shares of RCB Common Stock or
shall establish to the satisfaction of the Exchange Agent that such tax has
been paid or is not payable.
At and after the Effective Time, there shall be no further
registration or transfers of shares of RCB Common Stock, and the stock ledgers
of RCB shall be closed. After the Effective Time, Old Certificates presented to
the Surviving Bank for transfer shall be canceled and exchanged for the
consideration provided for, and in accordance with the procedures set forth, in
Article 1 of the Merger Agreement.
After the first anniversary of the date of the Effective Time, any
former holders of RCB Common Stock who have not delivered Old Certificates to
the Exchange Agent prior to that time shall thereafter look only to Popular,
Inc. for the consideration in respect of any shares of RCB Common Stock
formerly represented by such Old Certificates.
None of the Surviving Bank, Popular, Inc. and the Exchange Agent shall
be liable to any former holder of RCB Common Stock for any securities delivered
or any cash paid to a public official pursuant to applicable escheat or
abandoned property laws or for any securities or cash retained by any of them
as permitted by any such law.
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No dividends or other distributions with respect to consideration
shall be paid to the holder of any unsurrendered Old Certificates until such
Old Certificates are surrendered. Upon such surrender, there shall be paid,
without interest, to the person in whose name any Per Share Stock Consideration
is registered, all dividends and other distributions payable in respect of such
securities on a date subsequent to, and in respect of a record date after, the
Effective Time. No interest will be paid or accrued on the Per Share Cash
Consideration or the cash paid in lieu of fractional shares.
In the event that any Old Certificate shall have been lost, stolen or
destroyed, the Exchange Agent shall pay in respect of such lost, stolen or
destroyed certificate, upon the making of an affidavit of that fact by the
holder thereof, the consideration as may be provided pursuant to this
Agreement; provided, however, that Popular, Inc. may, in its discretion and as
a condition precedent to the payment thereof, require the owner of such lost,
stolen or destroyed certificate to deliver a bond in such sum as it may direct
as indemnity against any claim that may be made against Popular, Inc., Banco
Popular, RCB, the Exchange Agent or any other party with respect to the
certificate alleged to have been lost, stolen or destroyed.
CONDITIONS TO THE CONSUMMATION OF THE MERGER
Each party's obligation to effect the Merger is subject, among other
things, to the satisfaction, at or prior to the Effective Date of the following
conditions: (i) no injunction or other order entered by a Puerto Rico or U.S.
federal court of competent jurisdiction shall have been issued and remain in
effect which would prohibit the consummation of the transactions contemplated
in the Merger Agreement; (ii) there shall have been no law, statute, rule or
regulation, domestic or foreign, enacted or promulgated which would prohibit
the consummation of the transactions contemplated in the Merger Agreement;
(iii) the Registration Statement shall not be subject to a stop order of the
Commission, and, if the offer and sale of Popular, Inc. Common Stock in the
Merger pursuant to the Merger Agreement is required to be registered under any
Puerto Rico or state Blue Sky laws, the Registration Statement shall not be
subject to a stop order of a securities commission in any relevant
jurisdiction.
RCB's obligation to effect the Merger is also subject to the following
conditions: (i) the representations and warranties of Popular, Inc. set forth
in Articles 2 and 4 of the Merger Agreement shall have been true and correct as
of the date of the Merger Agreement, and shall be true and correct as of the
Effective Date as if made at and as of the Effective Date, subject to Article 5
of the Merger Agreement; and Popular, Inc. shall in all material respects have
performed each obligation and agreement and complied with each covenant to be
performed and complied with by it hereunder at or prior to the Effective Time;
(ii) Popular, Inc. shall have furnished to RCB a certificate of the Chief
Executive Officer and Chief Financial Officer of Popular, Inc., dated as of the
Effective Date, certifying the truth and correctness of Popular, Inc.'s
representations and warranties set forth in Articles 2 and 4 of the Merger
Agreement; (iii) RCB shall have received either (a) a ruling from the Puerto
Rico Treasury Department or (b) the opinion of McConnell Valdes, dated the
Effective Date, to the effect that the Merger will be treated for Puerto Rican
income tax purposes as a reorganization within the meaning of Section
1112(g)(1) of the Puerto Rico Code, and that each of Popular, Inc., Banco
Popular and RCB will be a party to that reorganization within the meaning of
Section 1112(g)(3) of the Puerto Rico Code; and (iv) RCB shall have received an
opinion letter, dated as of the Effective Date, addressed to RCB from counsel
to Popular, Inc., in customary form and subject to customary qualifications, as
to the validity of the Popular, Inc. Common Stock being issued in the Merger.
The obligation of Popular, Inc. and Banco Popular to effect the Merger
is also subject to the following conditions: (i) the representations and
warranties of RCB set forth in Articles 3 and 4 of the Merger Agreement shall
have been true and correct as of the date of the Merger Agreement, and such
representations and warranties shall be true and correct as of the Effective
Date as if made at and as of the Effective Date, subject to Article 5 of the
Merger Agreement, and RCB shall in all material respects have performed each
obligation and agreement and complied with each covenant to be performed and
complied with by it under the Merger Agreement at or prior to the Effective
Date; (ii) RCB shall have furnished to Popular, Inc. a certificate of the Chief
Executive Officer and Chief Financial Officer of RCB, dated as of the Effective
Date, certifying the truth and correctness of RCB's representations and
warranties set forth in Articles 3 and 4 of the Merger Agreement; (iii) RCB
shall have furnished to Popular, Inc. certain
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corporate documents as set forth in Article 8.3(c) of the Merger Agreement;
(iv) Popular, Inc. shall have received an opinion letter, dated as of the
Effective Date, addressed to Popular, Inc. from McConnell Valdes, counsel to
RCB, in customary form and subject to customary qualifications, to the effect
that, among other things, RCB has the corporate power to consummate the
transactions on its part contemplated by, and has taken all requisite corporate
action to authorize, the Merger Agreement; and (v) Popular, Inc. shall have
received either (a) a ruling from the Puerto Rico Treasury Department or (b)
the opinion of Pietrantoni, Mendez & Alvarez, dated the Effective Date, to the
effect that the Merger will be treated for Puerto Rican income tax purposes as
a reorganization within the meaning of Section 1112(g)(1) of the Puerto Rico
Code, and that each of Popular, Inc., Banco Popular and RCB will be a party to
that reorganization within the meaning of Section 1112(g)(3) of the Puerto Rico
Code.
Although the parties expect to receive the ruling from the Puerto Rico
Treasury Department on or before June 30, 1997 and that all other conditions to
consummation will be satisfied by that date, in which case the Effective Date
will be June 30, 1997, in the event that the ruling from the Puerto Rico
Treasury Department is issued after June 30, 1997 but before July 31, 1997, or
that some other condition to consummation is not satisifed by June 30, 1997 but
is satisfied by July 31, 1997, the Effective Date will be July 31, 1997 and
shareholders of RCB will be so advised and will receive new election forms,
allowing them to make new elections by July 31, 1997, if they so choose.
Otherwise, elections made as of June 30, 1997 will be valid as if made as of
July 31, 1997.
RIGHTS OF DISSENTING RCB SHAREHOLDERS
Pursuant to the Banking Law, holders of shares of RCB Common Stock may
demand payment from the Surviving Bank of the value of their shares instead of
receiving shares of Popular, Inc. Common Stock. The appraisal rights of
dissenting shareholders are contained in Section 15(d) of the Banking Law,
which is attached to the Prospectus/Proxy Statement as Appendix C. A
shareholder electing to make such a demand must (i) not vote in favor of the
Merger Agreement; (ii) record his opposition to the Merger at the time of the
Meeting or within twenty days thereafter; and (iii) demand payment of the value
of his shares. Such written objection or written demand may be filed with the
Secretary of RCB.
If the Merger is carried out, each dissenting shareholder of RCB will
be notified by mail of the Effective Date of the Merger Agreement. Such
shareholder shall, within 60 days after the Effective Date and upon ten days'
written notice to RCB, petition the Superior Court of the Commonwealth of
Puerto Rico for the appointment of three appraisers who shall estimate and
determine the value of the shareholder's shares. Upon due appointment and the
completion of their valuation, the appraisers shall deliver to RCB and to such
shareholder if he demands it, a copy of their report. RCB shall pay the
determined value and the shareholder shall cease to be a shareholder of RCB, or
to have any interest therein. RCB will establish with its own funds an escrow
account (the "Escrow Account") with an amount sufficient to pay all claims of
dissenting holders of RCB Common Stock. Upon satisfaction of all claims of
dissenting holders of RCB Common Stock, any remaining amount held in escrow,
together with any investment income thereon and reduced by the amount of fees
and expenses, if any, will be transferred to the Surviving Bank. Expenses
incurred in determining the value of the shares of RCB Common Stock under these
procedures will be paid from the Escrow Account.
RESALE OF POPULAR, INC. COMMON SHARES
The Popular, Inc. Common Shares have been registered under the
Securities Act, thereby allowing such shares to be traded freely and without
restriction by those holders of RCB Common Stock who receive such shares
following consummation of the Merger and who are not deemed to be "affiliates"
(as defined under the Securities Act) of RCB or Popular, Inc. It is a condition
to consummation of the Merger that each holder of RCB Common Stock who is
deemed by RCB to be an "affiliate" of RCB shall enter into an agreement with
Popular, Inc. (an "Affiliate's Agreement") providing, among other things, that
such affiliate will not transfer any Popular, Inc. Common Shares received by
such affiliate in the Merger, except in compliance with the Securities Act.
This Supplement does not cover any resales of Popular, Inc. Common Shares
received by "affiliates" of RCB.
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CERTAIN TAX CONSEQUENCES OF THE MERGER
The following is a general summary of certain Puerto Rico and United
States Federal income tax consequences of the Merger and does not discuss all
possible tax consequences that may be relevant to the shareholders of RCB in
light of each shareholder's particular circumstances and the special rules that
may be applicable to such shareholders. All shareholders should consult their
own tax advisors to determine the particular tax consequences to them of these
transactions.
In general (except as set forth below), individuals who are bona fide
residents of Puerto Rico during the entire taxable year in which the Merger
occurs and Puerto Rico corporations, partnerships, trusts and estates will not
be subject to U.S. Federal income tax on income or gain, if any, realized as a
result of the Merger and should therefore consult the discussion below under
"Puerto Rico Income Tax Consequences". Except as set forth in the next
sentence, U.S. citizens (other than bona fide residents of Puerto Rico during
the entire taxable year in which the Merger occurs) and U.S. corporations,
partnerships, trusts and estates generally will not be subject to Puerto Rico
income tax on income or gain, if any, realized as a result of the Merger and
should therefore consult the discussion below under "United States Federal
Income Tax Consequences". Aliens residing in Puerto Rico, as well as Puerto
Rico corporations, partnerships, trusts or estates, that hold shares of RCB in
connection with a U.S. trade or business should also consult the discussion
below under "United States Federal Income Tax Consequences", and aliens not
resident in Puerto Rico, U.S. corporations, partnerships, trusts or estates
engaged in a trade or business in Puerto Rico should also consult the
discussion below under "Puerto Rico Income Tax Consequences". All shareholders
should consult the discussions below under "U.S. Backup Withholding
Requirements".
The discussion below is based, in the case of Puerto Rico income tax
consequences, on the Puerto Rico Internal Revenue Code of 1994, as amended (the
"Puerto Rico Code"), as interpreted by regulations and rulings issued by the
Puerto Rico Department of the Treasury and by judicial decisions, and, in the
case of United States Federal income tax consequences, on the Internal Revenue
Code of 1986, as amended (the "Code"), Treasury Regulations, Internal Revenue
Service rulings and judicial decisions now in effect, all of which are subject
to change at any time by legislative, judicial or administrative action. Any
such changes may be retroactively applied in a manner that could adversely
affect holders of RCB Common Stock. The discussion may not be applicable to RCB
Common Stock acquired as compensation (including stock acquired upon the
exercise of options to acquire such stock). As discussed under "Puerto Rico
Income Tax Consequences" below, a ruling request was filed on March 3, 1997
with the Puerto Rico Department of the Treasury relating to the Puerto Rico
income tax consequences of the Merger. With respect to the discussion under
"U.S. Federal Income Tax Consequences" below, shareholders should note that
this summary is not binding on the Internal Revenue Service or the courts and
that no ruling has been or will be sought from the Internal Revenue Service as
to the U.S. Federal income tax consequences of the Merger.
PUERTO RICO INCOME TAX CONSEQUENCES
It is intended that, under the income tax laws of Puerto Rico, the
Merger will be, with respect to Popular, Inc., Banco Popular and RCB, a
tax-free reorganization. To confirm the Puerto Rico income tax consequences of
this transaction, a ruling request was filed with the Puerto Rico Department of
the Treasury on March 3, 1997 (the "Ruling Request"). The Ruling Request
requests a ruling that Popular, Inc., Banco Popular and RCB will not recognize
gain or loss as a result of the Merger. With respect to the RCB shareholders
that exchange RCB Common Stock for Popular, Inc. Common Stock and cash, the
Ruling Request also requests, among other things, rulings that:
a. No gain or loss will be recognized by the RCB shareholders
upon the transfer of their shares of RCB Common Stock in
exchange for shares of Popular, Inc. Common Stock.
b. Except as noted below, the RCB shareholders who receive cash
and Popular, Inc. Common Stock in exchange for shares of RCB
Common Stock will recognize any gain realized in the
exchange, but not in excess of the amount of the cash
received. Unless the shares of RCB Common Stock were held
primarily for sale to customers in the ordinary course of the
RCB shareholder's trade or
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business, the gain recognized will constitute a capital gain.
In such case, if the shares of RCB Common Stock were held by
the RCB shareholder for more than six months prior to the
effective date of the Merger, the gain recognized will be
subject to a maximum tax of 20% in cases of RCB shareholders
who are individuals, estates or trusts, or of 25% if the RCB
shareholder is a corporation or partnership.
c. RCB shareholders who are individuals, estates or trusts, not
residents of Puerto Rico, or that are non-Puerto Rico
corporations or partnerships, will not be subject to Puerto
Rico taxes on any gain realized on the transfer of their
shares of RCB Common Stock provided they deliver their RCB
stock certificates to a New York office of Banco Popular,
unless the shareholder is an alien or a non-Puerto Rico
corporation or partnership and the gain is effectively
connected with the conduct of a Puerto Rico trade or business
by such shareholder.
d. The shares of Popular, Inc. Common Stock received by the RCB
shareholders in connection with the Merger will have a tax
basis in the hands of each such shareholder equal to his or
her tax basis in the shares of RCB Common Stock exchanged
therefor, reduced by the amount of cash received and
increased by the amount of gain recognized in the exchange.
e. The holding period of the RCB shareholders in the shares of
Popular, Inc. Common Stock received in connection with the
Merger will include the period during which they held their
shares of RCB Common Stock exchanged therefor.
Except as provided above, RCB shareholders that exchange RCB Common Stock
solely for cash will recognize the total amount of gain realized in the
exchange.
No assurance can be given that the Ruling Request will be granted by
the Puerto Rico Department of the Treasury. If the Ruling Request is granted,
it will be subject to the fulfillment of various representations made, such as
that the shareholders of RCB receive RCB Common Stock representing in value at
least 50% of the value of all the outstanding stock of RCB on the date the
reorganization takes place. If the Ruling Request were to be denied by the
Puerto Rico Department of the Treasury, among other consequences, the Merger
may fail to qualify as a tax-free reorganization under Puerto Rico income tax
laws. If the Merger fails to qualify as a tax-free reorganization, a
shareholder of RCB would recognize gain or loss for Puerto Rico tax purposes
equal to the difference between the sum of the cash and the fair market value
of the shares of Popular, Inc. Common Stock received and the basis of the
shares of RCB Common Stock surrendered. Such gain or loss would be a capital
gain or loss if the shares of RCB Common Stock were held as a capital asset. In
addition, if the Merger fails to qualify as a tax-free reorganization, RCB
would be subject to Puerto Rico income tax on any appreciation in the value of
its assets.
In addition to the above, the Puerto Rico Department of the Treasury
has the prerogative of granting the rulings sought in the Ruling Request
relating to the qualification of the transaction contemplated by the Merger
Agreement as a tax-free reorganization but denying other related rulings
requested in the Ruling Request.
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of certain United States Federal income tax
consequences of the conversion of RCB Common Stock pursuant to the Merger. The
summary does not address the United States Federal income tax consequences of
the Merger to individuals who hold RCB Common Stock who are bona fide residents
of Puerto Rico during the entire taxable year in which the Merger occurs. Such
holders should consult the discussion above under "-Puerto Rico Income Tax
Consequences".
The conversion of RCB Common Stock pursuant to the Merger generally
will be a taxable transaction for United States Federal income tax purposes and
may also be taxable under applicable state, local and other tax laws. In
general, for United States Federal income tax purposes, a shareholder of RCB
that is a U.S. Holder, as defined
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below, that exchanges RCB Common Stock for Popular, Inc. Common Stock or cash
(or a combination thereof) will recognize gain or loss for United States
Federal income tax purposes in an amount equal to the difference between the
sum of the cash and fair market value of the shares of Popular, Inc. Common
Stock received and the shareholder's basis in the shares of RCB Common Stock
surrendered. Generally such gain or loss will be long-term capital gain or loss
if the U.S. Holder's holding period for the shares of RCB Common Stock
surrendered exceeds one year and the U.S. Holder holds such shares as a capital
asset. For purposes of this discussion, a "U.S. Holder" is any beneficial owner
of RCB Common Stock that is (i) a citizen or resident of the United States,
(ii) a corporation organized under the laws of the United States or any State
or (iii) otherwise subject to United States Federal income taxation on a net
income basis in respect of a share of RCB Common Stock, and a "Non-U.S. Holder"
is any beneficial owner of RCB Common Stock that is not a United States person
for United States Federal income tax purposes.
A Non-U.S. Holder will generally not be subject to United States
Federal income tax in respect of gain recognized on the conversion of RCB
Common Stock pursuant to the Merger unless, in the case of a Non-U.S. Holder
who is an individual, such holder is present in the United States for 183 or
more days in the taxable year of the conversion and certain other conditions
apply.
UNITED STATES BACKUP WITHHOLDING AND INFORMATION REPORTING
The exchange of RCB Common Stock for Popular, Inc. Common Stock or
cash pursuant to the Merger by a New York office of Banco Popular may be
subject to both United States backup withholding at a 31% rate and information
reporting unless the holder or beneficial owner certifies its non-United States
status under penalties of perjury, provides his taxpayer identification number
in the manner required by United States law and applicable regulations or
otherwise establishes an exemption. United States information reporting and
backup withholding generally will not apply to the exchange of RCB Common Stock
for RCB Common Stock or cash pursuant to the Merger outside the United States.
CERTAIN INFORMATION REGARDING RCB
RCB MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1997 COMPARED TO THE THREE
MONTHS ENDED MARCH 31, 1996
Net Income
RCB reported net income of $317,000 for the first quarter of 1997,
compared with $1.63 million for the first quarter of 1996. Earnings per common
share ("EPS") for the quarter were $0.53 for 1997, compared with $2.72 for
1996, based on 600,000 average shares issued and outstanding. Accordingly,
return on assets and return on equity for the first quarter of 1997 were 0.14%
and 1.91%, compared with 0.77% and 9.95% in 1996, respectively.
As discussed in further detail in the following paragraphs, the major
reasons for the decrease of $1.3 million in net income in the first quarter of
1997 as compared to the same period for 1996 are (i) an increase in the
provision for loan losses of $600,000, (ii) a reduction in the gain on trading
activities of $406,000, (iii) the accrual of professional fees of $562,000
associated with the sale of RCB, and (iv) the accrual of an additional
non-recurring $715,000 related to post-retirement compensation. An increase in
net interest income of $812,000 offset the negative impact of the
above-mentioned factors.
Net Interest Income
Net interest income for the first quarter of 1997 reached $9.04
million, compared to $8.23 million in 1996. The improvement of $812,000 over
the same quarter in 1996 is mainly due to an increase in average earning assets
of $28.4 million. Average loans increased by $41.3 million ($359.5 million in
the first quarter of 1997 compared with $318.2 million in the first quarter of
1996), while average investments decreased by $21.6 million (from $460.8
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million in the first quarter of 1996 to $439.2 million in the first quarter of
1997). This shift in asset structure resulted in higher interest income since
the average loan yield was 11.0% in the first quarter of 1997 while investments
yielded only 6.56% (10.89% and 6.45%, respectively, in the first quarter of
1996).
Out of the $41.3 million increase in loans, RCB increased its loans
secured by real estate by $27.1 million (with an average yield of 9.63% for its
first quarter 1997) and consumer loans by $19.6 million (yielding 13.67% for
the first quarter of 1997), while commercial loans and credit lines (with an
average yield of 9.75% for the first quarter of 1997) decreased by $5.0
million.
Money market interest income increased from $369,000 for the first
quarter of 1996 to $476,000 for the quarter ended March 31, 1997. As discussed
in further detail in this report, in August 1996 the U.S. Congress repealed
Section 936 of the Internal Revenue Code. As a result of the possible
repatriation of 936 funds to the mainland United States, RCB decided to
maintain higher balances of these short term accounts. For this reason, average
money market balances for the first quarter of 1997 increased by $9.4 million
($38.0 million in the first quarter of 1997 compared to $28.6 million in the
first quarter of 1996).
Interest income on investments remained at the same level for the
first quarter of 1997 as in the first quarter of 1996 ($7.2 million in 1997 and
$7.4 million in 1996). The yield on investments for the first quarter of 1997
improved to 6.56% (6.45% in 1996) as a result of maturing lower-yield
investments. Average investment balances declined from $460.8 million in the
first quarter of 1996 to $439.2 for the first quarter of 1997.
On the liabilities side, average interest-bearing liabilities of RCB
were $733.7 million for the three month period ended March 31, 1997 compared
with $715.8 million for the same period of 1996.
Average interest-bearing deposits decreased by $22.7 million, driven
by a decrease of $25.2 million in 936 deposits, net of an increase in regular
core deposits of $2.5 million. The average cost of interest-bearing deposits
for the quarters ended March 31, 1997 and 1996 were 4.18% and 4.29%
respectively. The average rate on savings accounts remained steady (3.34% for
the first quarter of 1997 and 3.37% for 1996). NOW accounts reflected a
decrease in cost of funds from 4.05% for the first quarter of 1996 to 3.95% in
1997. This reduction in cost of funds was partially offset by an increase in
money market deposit costs, which rose from 3.57% in the first quarter of 1996
to 3.99% in 1997. The increase in the money market interest rate was due to a
marketing strategy to attract this type of deposit for which RCB is well known
in its market area.
Average repurchase agreements and promissory notes increased to $162.8
million in the first quarter of 1997 from $122.3 million in the first quarter
of 1996. This increase of $40.5 million in borrowings contributed to the
increase in interest expense of $600,000 (from $1.5 million to $2.1 million in
1997). This increase was part of a strategy to acquire long-term funds at
prudent levels before 936 funds would become scarce. The cost of funds also
increased for this type of financing, from 4.91% for the first quarter of 1996
to 5.15% in 1997. This increase was mainly due to general conditions in the
market associated with the anticipated scarcity of 936 funds.
The net effect of the reduction in cost of interest-bearing deposits
and the increase in cost of repurchase agreements and promissory notes resulted
in similar cost for total interest-bearing liabilities for the two periods,
4.39% for 1997 and 4.40% in 1996. With a similar cost of funds, and better
yielding assets, RCB was able to increase its net interest margin by 24 basis
points, from 3.89% for the quarter ended March 31, 1996 to 4.13% for 1997.
In August 1996, the U.S. Congress approved legislation that repealed
Section 936 of the Internal Revenue Code. The bill approved repealed the
Qualified Possession Source Investment Income (QPSII) provision for taxable
years beginning after December 31, 1995. As expected, RCB has experienced a
reduction in the volume of 936 funds and their substitution by conventional
higher-cost funds. Factors such as a higher rate charged on loans previously
funded by 936 funds have helped mitigate the impact of the higher cost of
funds. Also, some 936 corporations have chosen not to withdraw all their funds
from financial institutions and have, instead, invested those funds at a longer
term to reduce the tollgate taxes applicable upon repatriating those funds. As
a result, the cost of those funds has
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remained below that of the U.S. or Eurodollar market. At March 31, 1997 RCB
maintained $181.9 million in 936 funds, representing 23.5% of its liabilities,
compared with $212.3 million, or 27.2%, at the same date in 1996.
Provision and Allowance for Loan Losses
The provision for loan losses for the first quarter of 1997 totaled
$1.2 million, or an increase of $600,000, when compared to the same quarter of
1996. Net charge-offs for the quarter ended March 31, 1997 reached $1.05
million, or 1.17% of average loans, compared with $426,000, or 0.54% of average
loans, for the same quarter in 1996.
Consumer loan net charge-offs increased $474,000, which represents 76%
of the total increase in net charge-offs. Consumer loan net charge-offs totaled
$942,000, or 2.78% of average consumer loans, for the quarter ended March 31,
1997, while commercial and real estate loan net charge-offs amounted to
$129,000, representing 0.23% of the average commercial and real estate loans.
For the same quarter last year, consumer loan net charge-offs represented 1.63%
and commercial and real estate loan net recoveries reflected 0.05%,
respectively, of their average portfolio. Most of the increase in net credit
charge-offs in the consumer category is due to a higher number of bankruptcies
in Puerto Rico during 1997.
Non-performing assets as of March 31, 1997 totaled $11.6 million, or
1.32% of total average assets, compared with $12.5 million, or 1.48% of total
average assets, at March 31, 1996. Non-performing loans totaled $9.6 million as
of March 31, 1997 and $10.0 million at the same date last year.
The allowance for loan losses at March 31, 1997 amounted to $5.9
million, representing 1.64% of total loans, compared with $5.4 million, or
1.66% of total loans, at the same date last year. Management considers that the
allowance for loan loses is adequate to absorb potential write-offs of the loan
portfolio based on the process established to assess its adequacy. This process
incorporates portfolio risk characteristics, results of periodic credit
reviews, prior loss experience and current and anticipated economic conditions.
RCB's policy is to place commercial loans on non-accrual status if
payments of principal or interest are delinquent 90 days, following the
standard industry practice. Conventional mortgages and close-end consumer loans
are also placed on non-accrual status if payments are delinquent 90 days.
Close-end consumer loans are charged-off against the allowance when delinquent
for 120 days. Open-end (revolving credit) consumer loans are charged-off when
payments are delinquent 180 days. Certain loans which would be treated as
non-accrual loans pursuant to the foregoing policy are treated as accruing
loans if they are considered well-secured and in the process of collection.
Other Operating Income
Other operating income, excluding securities and trading transactions,
amounted to $1.3 million for the first quarter of 1997, compared with $1.5
million for the same quarter in 1996, a decrease of $249,000, or 16.6%. The
main reason for the fluctuation is a decrease in overdraft charges of $333,100,
mitigated by increased savings cycle charges of $91,000. Overdraft charges
decreased because RCB changed its method of determinating customer available
balance to a way more beneficial to the customer since the second half of 1996.
Saving cycle charges increased as a result of a restructuring of RCB's savings
products during the second half of 1996.
RCB also experienced a net loss on its trading securities of $305,000
during the first quarter of 1997, while a net gain of $102,000 was obtained for
the same period the year before.
Operating Expenses
Operating expenses for the first quarter of 1997 were $8.5 million,
compared with $7.5 million for the same quarter in 1996, an increase of $1.0
million principally related to professional fees and post retirement
compensation expenses.
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During the second quarter of 1996, RCB experienced a significant
reduction of its labor force as a result of a major reengineering of its
operations. As a result of the reengineering, the number of full time
equivalent employees decreased from 447 as of March 31, 1996 to 388 as of March
31, 1997. Expenses related to this reengineering were recorded mainly during
the last three quarters of 1996.
As a result of this reengineering, RCB's salary expense decreased by
$193,000 during the quarter ended March 31, 1997 when compared with the same
period in 1996 (from $2,393,000 in the first quarter of 1996 to $2,200,000 in
the first quarter of 1997), or an 8.0% reduction. On the other hand, the "Other
fringe benefits" expense did not decrease because during the first quarter of
1997 RCB had $985,000 in post-retirement compensation expenses, including a
non-recurring expense of $715,000.
Another significant category of other expenses was professional fees,
which amounted to $849,000 for the first quarter of 1997, an increase of
$265,000 over the previous year. The main reason for the increase is the use of
outside consultants related to the proposed merger with Banco Popular.
The "Other operating expenses" category amounted to $1.34 million for
the first quarter of 1997, or $190,000 more than the $1.15 million for the
first quarter of the preceding year. The increase includes $101,000 related to
expenses associated with the proposed merger with Banco Popular.
The lack of a provision for income taxes for the three-month period
ended March 31, 1997 is the result of low pre-tax earnings and RCB's
substantial level of tax-exempt income.
Other expense categories in 1997 remained at similar levels as in
1996.
Balance Sheet Comments
Total assets as of March 31, 1997 were $847.8 million, compared with
$888.4 million as of December 31, 1996, a decrease of $40.6 million, or 4.57%.
For the first quarter of 1997 and for the year ended December 31, 1996, average
assets remained at the same level of $875 million.
Earning assets at March 31, 1997 amounted to $805 million, compared
with $841 million as of December 31, 1996, or a $36 million decrease. The
decrease was a result of the use of investments proceeds to repay 936 deposits
that were not renewed.
At March 31, 1997, money market investments amounted to $45 million,
compared to $33 million at December 31, 1996. Investment securities as of March
31, 1997 totaled $407 million, compared with $459 million as of December 31,
1996. These figures include $219 million in available for sale securities as of
March 31, 1997, and $256 million at December 31, 1996.
Total deposits decreased by $54 million, from $656 million at December
31, 1996 to $602 million at March 31, 1997, mainly as the result of the
maturities of $50 million of 936 certificates of deposit.
Borrowings, represented by repurchase agreements and promissory notes,
amounted to $172 million as of March 31, 1997, and $157 million as of December
31, 1996. The increase of $15 million was due to a short-term repurchase
agreement maturing on April 2, 1997. Out of these funds, $147 million were 936
funds at both March 31, 1997 and December 31, 1996.
Shareholders' equity totaled $65.6 million as of March 31, 1997,
compared to $66.5 million as of December 31, 1996. The fluctuation in this
account is the net effect of a decrease in the net unrealized gain on
securities by $1.2 million (from an unrealized gain of $370,000 at December 31,
1996 to an unrealized loss of $797,000 as of March 31, 1997) offset by the net
income for the quarter totaling $317,000.
28
<PAGE> 36
For RCB management's discussion and analysis of financial condition
and results of operations for 1994, 1995 and 1996, see the Prospectus/Proxy
Statement.
DESCRIPTION OF POPULAR'S CAPITAL STOCK
See "SUMMARY--Recent Developments" in this Supplement and "DESCRIPTION
OF BANPONCE'S CAPITAL STOCK" in the Prospectus/Proxy Statement.
SUPERVISION AND REGULATION
See "SUPERVISION AND REGULATION" in the Prospectus/Proxy Statement.
EXPERTS
The consolidated financial statements of Popular, Inc. incorporated by
reference to the 1996 Form 10-K, which have been audited by Price Waterhouse,
independent accountants, to the extent and for the periods indicated in their
report thereon, have been so incorporated in reliance on the report of Price
Waterhouse, given on the authority of said firm as experts in accounting and
auditing.
The consolidated financial statements of RCB included in the
Prospectus/Proxy Statement, which have been audited by Price Waterhouse,
independent accountants, to the extent and for the periods indicated in their
report thereon, have been so included in reliance on the report of Price
Waterhouse, given on the authority of said firm as experts in accounting and
auditing.
29
<PAGE> 37
APPENDIX: FIRST QUARTER 1997 FINANCIAL INFORMATION FOR RCB
ROIG COMMERCIAL BANK
STATEMENT OF CONDITION
<TABLE>
<CAPTION>
31-MAR-97 31-DEC-96
---------------------------
<S> <C> <C>
Assets
Cash and due from banks $ 14,667,528 $ 18,652,734
---------------------------
Money market investments:
Securities purchased under agreements to resell 43,209,409 31,700,000
Time deposits with other banks 1,510,000 1,510,000
---------------------------
44,719,409 33,210,000
---------------------------
Investment securities available-for-sale, at market value:
US Treasury securities 119,249,466 120,192,969
Obligations of US Government and political subdivisions 86,199,692 121,790,761
Other securities 13,877,190 14,090,942
---------------------------
219,326,348 256,074,672
---------------------------
Investment securities held-to-maturity, at market value:
US Treasury securities 40,002,504 40,003,271
Obligations of US Government and political subdivisions 130,000,957 142,875,816
Obligations of Puerto Rico Government agencies and instrumentalities 8,854,218 8,919,672
Mortgage-backed securities 1,103,448 1,206,661
Other securities 5,518,188 7,525,610
---------------------------
185,479,315 200,531,030
---------------------------
Investment in Federal Home Loan Bank stock, at redemption value 2,470,400 2,470,400
---------------------------
Loans 397,230,233 393,322,796
Less:
Unearned income 37,940,517 38,465,667
Allowance for loan losses 5,888,935 5,742,153
---------------------------
353,400,781 349,114,976
---------------------------
Bank premises and equipment 12,098,931 12,033,057
Customers' liability on letters of credit and guarantee 114,539 133,396
Accrued interest receivable 6,483,257 6,687,448
Other assets 9,097,389 9,535,645
---------------------------
$847,857,897 $888,443,358
===========================
Liabilities and Capital
Liabilities:
Deposits $602,382,404 $656,291,063
Securities sold under agreements to repurchase 62,530,000 47,850,000
Notes Payable 109,000,000 109,000,000
Letter of credit and guarantee outstanding 114,539 133,396
Accrued interest payable 2,924,807 3,348,914
Other accrued expenses 5,263,648 3,976,965
Dividends payable - 1,350,000
---------------------------
782,215,398 821,950,338
---------------------------
Capital:
Common stock 6,000,000 6,000,000
Surplus 40,000,000 40,000,000
Undivided profits 20,439,728 20,123,216
Net unrealized (loss) gain on securities available for sale (797,229) 369,804
---------------------------
65,642,499 66,493,020
---------------------------
$847,857,897 $888,443,358
===========================
</TABLE>
<PAGE> 38
ROIG COMMERCIAL BANK
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE QUARTER ENDED
MARCH 31,
--------------------------
1997 1996
--------------------------
<S> <C> <C>
Cash flows from operating activities:
Net Income $ 316,510 $ 1,630,807
--------------------------
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 416,787 542,356
Provision for loan losses 1,200,000 600,000
Amortization of deferred loan fees and cost (208,869) (191,701)
Amortization of premium and discounts on securities 119,159 109,005
Decrease in interest receivable 204,191 531,289
Decrease in other assets 438,256 83,613
Increase in other liabilities 862,576 346,110
--------------------------
Total adjustments 3,032,100 2,020,673
--------------------------
Net cash provided by operating activities 3,348,610 3,651,480
--------------------------
Cash flows from investing activities:
Net increase in money market investments (11,509,409) (10,800,000)
Proceeds from maturity and redemption of investments
securities available-for-sale 105,537,155 11,006,639
Purchase of investment securities available-for-sale (70,000,000) (15,361,201)
Proceeds from maturity and redemption of investments
securities held-to-maturity 14,976,695 52,411,718
Purchase of investments securities held-to-maturity - (65,707,809)
Net increase in loans (5,276,936) (17,371,913)
Acquisition of bank premises and equipment (482,661) (543,827)
--------------------------
Net cash used in investing activities 33,244,845 (46,366,393)
--------------------------
Cash flows from financing activities:
Net (decrease) increase in demand and savings deposits (4,289,951) 3,815,406
Net (decrease) increase in time deposits (49,618,709) 2,533,385
Increase in securities sold under agreements to repurchase 14,680,000 35,281,941
Dividends paid (1,350,000) (1,200,000)
--------------------------
Net cash provided by financing activities (40,578,660) 40,430,732
--------------------------
Net increase (decrease) in cash and due from banks (3,985,206) (2,284,181)
Cash and due from banks at beginning of year 18,652,734 18,282,700
--------------------------
Cash and due from banks at end of period $14,667,528 $15,998,519
==========================
15,998,519
</TABLE>
<PAGE> 39
ROIG COMMERCIAL BANK
STATEMENT OF INCOME
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED MARCH 31,
-------------------------
1997 1996
-------------------------
<S> <C> <C>
Interest income:-
Interest and fees on loans $9,890,685 $8,665,873
Money market investments 476,380 369,313
U.S. Treasury and Government obligations 2,238,247 2,892,614
States and U.S. Government political
subdivisions obligations 3,892,699 3,411,690
Puerto Rico Government and political
subdivisions obligations 170,686 180,813
Other securities 360,718 570,970
Trading account 69,647 10,096
-------------------------
17,099,062 16,101,369
Less - Interest expense 8,057,840 7,872,393
-------------------------
Net interest income 9,041,222 8,228,976
Provision for loan losses 1,200,000 600,000
-------------------------
Net interest income after provision
for loan losses 7,841,222 7,628,976
(Loss) gain on trading securities (304,328) 102,169
Sevice charges on deposits 917,622 1,137,121
Other 357,359 386,723
-------------------------
8,811,875 9,254,989
-------------------------
Operating expenses:-
Personnel costs:
Salaries 2,200,510 2,392,684
Payroll taxes 270,632 287,445
Other fringe benefits 1,576,973 893,596
Net occupancy expenses 701,729 691,449
Equipment rentals and other expenses 645,147 635,732
Taxes other than income 299,509 308,654
FDIC insurance 20,102 500
Professional fees 848,868 584,180
Advertising and promotion 261,550 287,325
Communication 333,756 305,845
Other operating expenses 1,336,589 1,150,940
-------------------------
8,495,365 7,538,350
-------------------------
Income before income tax 316,510 1,716,639
Income tax - 85,832
-------------------------
Net income $ 316,510 $1,630,807
=========================
Earnings per common share $ 0.53 $ 2.72
=========================
</TABLE>
<PAGE> 40
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Popular, Inc. is a Puerto Rico corporation.
Article ELEVENTH of the Restated Certificate of
Incorporation of Popular, Inc. provides the following:
(1) The Corporation shall indemnify any
person who was or is a party or is threatened to be
made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an
action by or in the right of the Corporation) by
reason of the fact that he is or was a director,
officer, employee or agent of the Corporation, or is
or was serving at the written request of the
Corporation as a director, officer, employee or
agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses
(including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit
or proceeding if he acted in good faith and in a
manner he reasonably believed to be in or not
opposed to the best interests of the Corporation,
and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his
conduct was unlawful. The termination of any action,
suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendre or its
equivalent, shall not, of itself, create a
presumption that the person did not act in good
faith and in a manner which he reasonably believed
to be in or not opposed to the best interests of the
Corporation and, with respect to any criminal action
or proceeding, had reasonable cause to believe that
his conduct was unlawful.
(2) The Corporation shall indemnify any
person who was or is a party or is threatened to be
made a party to any threatened, pending or completed
action or suit by or in the right of the Corporation
to procure a judgment in its favor by reason of the
fact that he is or was a director, officer, employee
or agent of the Corporation, or is or was serving at
the written request of the Corporation as a
director, officer, employee or agent of another
corporation, partnership, joint venture, trust or
other enterprise, against expenses (including
attorneys' fees) actually and reasonably incurred by
him in connection with the defense or settlement of
such action or suit if he acted in good faith and in
a manner he reasonably believed to be in or not
opposed to the best interests of the Corporation,
except that no indemnification shall be made in
respect of any claim, issue or matter as to which
such person shall have been adjudged to be liable
for negligence or misconduct in the performance of
his duty to the Corporation unless and only to the
extent that the court in which such action or suit
was brought shall determine upon application that,
despite the adjudication of liability but in view of
all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such
expenses which such court shall deem proper.
(3) To the extent that a director, officer,
employee or agent of the Corporation has been
successful on the merits or otherwise in defense of
any action, suit or proceeding referred to in
paragraph 1 or 2 of this Article ELEVENTH, or in
defense of any claim, issue or matter therein, he
shall be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred by
him in connection therewith.
II-1
<PAGE> 41
(4) Any indemnification under paragraph 1
or 2 of this Article ELEVENTH (unless ordered by a
court) shall be made by the Corporation only as
authorized in the specific case upon a determination
that indemnification of the director, officer,
employee or agent is proper in the circumstances
because he has met the applicable standard of
conduct set forth therein. Such determination shall
be made (a) by the Board of Directors by a majority
vote of a quorum consisting of directors who were
not parties to such action, suit or proceeding, or
(b) if such a quorum is not obtainable, or, even if
obtainable, a quorum of disinterested directors so
directs, by independent legal counsel in a written
opinion, or (c) by the shareholders.
(5) Expenses incurred in defending a civil
or criminal action, suit or proceeding may be paid
by the Corporation in advance of the final
disposition of such action, suit or proceeding as
authorized by the Board of Directors in the specific
case upon receipt of an undertaking by or on behalf
of the director, officer, employee or agent to repay
such amount unless it shall untimely be determined
that he is entitled to be indemnified by the
Corporation as authorized in this Article ELEVENTH.
(6) The indemnification provided by this
Article ELEVENTH shall not be deemed exclusive of
any other rights to which those seeking
indemnification may be entitled under any statute,
by-law, agreement, vote of shareholders or
disinterested directors or otherwise, both as to
action in his official capacity and as to action in
another capacity while holding such office, and
shall continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure
to the benefit of the heirs, executors and
administrators of such a person.
(7) By action of its Board of Directors,
notwithstanding any interest of the directors in the
action, the Corporation may purchase and maintain
insurance, in such amounts as the Board of Directors
deems appropriate, on behalf of any person who is or
was a director, officer, employee or agent of the
Corporation, or is or was serving at the written
request of the Corporation as a director, officer,
employee or agent of another corporation,
partnership, joint venture, trust or other
enterprise, against any liability asserted against
him and incurred by him in any such capacity, or
arising out of his status as such, whether or not
the Corporation would have the power or would be
required to indemnify him against such liability
under the provisions of this Article ELEVENTH or of
the General Corporation Law of the Commonwealth of
Puerto Rico or of any other state of the United
States or foreign country as may be applicable.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(2) -- Agreement and Plan of Merger.*
(3)(i) -- Articles of Incorporation of Popular, Inc. (incorporated by
reference to Exhibit (4)(a) of Registration Statement No. 333-26941)
(3)(ii) -- Bylaws of Popular, Inc. (incorporated by reference to Exhibit 4.1
of Registration Statement No. 33-39028)
(4)(a) -- Form of certificate for common stock. (incorporated by reference to
Exhibit 4.1 of Popular, Inc.'s Annual Report on Form 10-K for the
year ended December 31, 1990 (the "1990 Form 10-K"))
(4)(b) -- Certificates of Resolutions of the Board of Directors of Popular,
Inc. dated August 11, 1988 creating a series of Preferred Stock of
Popular, Inc. designated as Series A Participating Cumulative
Preferred Stock Purchase rights and the designation and amount of
such series, the
II-2
<PAGE> 42
voting power preferences, and relative, participating,
optional, or other special rights of the shares of such
series, and the qualifications, limitations or restrictions
thereof. Rights Agreement dated as of August 11, 1988 by and
between Popular, Inc. and Manufacturers Hanover Trust Company
regarding the issuance of certain Rights to Popular, Inc.'s
shareholders. (incorporated by reference to Exhibit 4.3 of
Registration Statement No. 33-39028)
(4)(c) -- Amendment to Rights Agreement dated as of December 11, 1990.
(incorporated by reference to Exhibit 4.4 of Registration Statement
No. 33-39028)
(4)(d) -- Indenture, dated as of October 1, 1991, as amended, among Popular,
Inc. Financial Corp., Popular, Inc. and The First National Bank of
Chicago, relating to the debt securities of Popular, Inc. Financial
Corp. guaranteed by Popular, Inc. (incorporated by reference to
Exhibit 4(c) to Registration Statement No. 33-41686 and to Exhibit
4(a) on Form 8-K filed on February 28, 1995)
(4)(e) -- Form of medium-term fixed rate note of Popular, Inc. Financial
Corp. guaranteed by Popular, Inc. (incorporated by reference to
Exhibit 2 on Form 8-K filed on October 8, 1991)
(4)(f) -- Form of medium-term floating rate note of Popular, Inc. Financial
Corp. guaranteed by Popular, Inc. (incorporated by reference to
Exhibit 3 on Form 8-K filed on October 8, 1991)
(4)(g) -- Form of Certificate of 8.35% Non-cumulative Monthly Income
Preferred Stock, 1994 Series A (Liquidation Preference $25.00 per
share). (incorporated by reference to Exhibit 4.7 of the 1994 Form
10-K)
(4)(h) -- Subordinated indenture of Popular, Inc., dated November 30, 1995,
between Popular, Inc. and The First National Bank of Chicago, as
trustee. (incorporated by reference to Exhibit 4(e) on Form 8-K
filed on December 13, 1995)
(4)(i) -- Form of subordinated note of Popular, Inc. (incorporated by
reference to Exhibit 4(p) on Form 8-K filed on December 13, 1995)
(4)(j) -- Indenture, dated as of February 15, 1995, between Popular, Inc. and
The First National Bank of Chicago, as trustee. (incorporated by
reference to Exhibit 4(c) on Form 8-K filed on April 13, 1995)
(4)(k) -- Form of medium-term fixed rate note of Popular, Inc. (incorporated
by reference to Exhibit 4(a) on Form 8-K filed on April 13, 1995)
(4)(l) -- Form of medium-term floating rate note of Popular, Inc.
(incorporated by reference to Exhibit 4(b) on Form 8-K filed on
April 13, 1995)
(5) -- Opinion of Brunilda Santos de Alvarez, Esq.*
(8)(a) -- Opinion of McConnell Valdes as to certain Puerto Rico income tax
matters.*
(8)(b) -- Opinion of Sullivan & Cromwell as to certain U.S. income tax
matters.*
(10) -- Shareholder Agreement.*
(23)(a) -- Consent of Price Waterhouse.*
(23)(b) -- Consent of Price Waterhouse.*
(23)(c) -- Consent of Brunilda Santos de Alvarez, Esq. (included in Exhibit
(5))
(23)(d) -- Consent of McConnell Valdes. (included in Exhibit (8)(a))
(23)(e) -- Consent of Sullivan & Cromwell. (included in Exhibit (8)(b))
(23)(f) -- Consent of Alex Sheshunoff & Co. Investment Banking*
(23)(g) -- Consent of Price Waterhouse
(23)(h) -- Consent of Price Waterhouse
(24) -- Powers of Attorney.*
(27) -- Financial Data Schedule.*
(99)(a) -- Opinion of Alex Sheshunoff & Co. Investment Banking.*
(99)(b) -- Form of Proxy for RCB Common Stock*
(99)(c) -- Election Form and Letter of Transmittal
* Previously filed.
ITEM 22. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
II-3
<PAGE> 43
(a)(1) To file, during any period in which offers or sales
are being made, a post-effective amendment to this Registration
Statement:
(i) To include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of this Registration Statement (or the most
recent post-effective amendment thereto) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in this Registration Statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than
a 20% change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration
statement; and
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the Registrants pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the Registration
Statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall
be deemed to be a new registration statement relating to the
securities offered therein, and then offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold
at the termination of the offering.
(b) That, for the purposes of determining any liability under the
Securities Act of 1933, each filing of the Registrant's annual report pursuant
to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 that is
incorporated by reference in this Registration Statement shall be deemed to be
a new registration statement relating to the securities offered therein and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) To respond to requests for information that is incorporated by
reference into the prospectus pursuant to Item 4, 10(b), 11, or 13 of this
form, within one business day of receipt of such request, and to send the
incorporated documents by first class mail or other equally prompt means. This
includes information contained in documents filed subsequent to the effective
date of the registration statement through the date of responding to the
request.
(d) To supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein, that
was not the subject of and included in this Registration Statement when it
became effective.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the provisions referred to in Item 20 of
this Registration Statement, or otherwise, the Registrant has been advised that
in the opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification by the Registrant
against such liabilities (other than the
II-4
<PAGE> 44
payment by the Registrant of expenses incurred or paid by a director, officer
or controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
II-5
<PAGE> 45
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Post-Effective Amendment No. 1 to the
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of San Juan, Commonwealth of Puerto Rico, on the
10th day of June, 1997.
POPULAR, INC.
(Registrant)
By: /s/ Richard L. Carrion
---------------------------------
Name: Richard L. Carrion
Title: Chairman, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 1 to the Registration Statement has been signed by
the following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Richard L. Carrion Chairman, President and Chief June 10, 1997
- ----------------------------------------- Executive Officer (Chief Executive Officer)
Richard L. Carrion
/s/ Alfonso F. Ballester Director June 10, 1997
- -----------------------------------------
Alfonso F. Ballester
/s/ Juan J. Bermudez Director June 10, 1997
- -----------------------------------------
Juan J. Bermudez
/s/ Francisco J. Carreras Director June 10, 1997
- -----------------------------------------
Francisco J. Carreras
/s/ David H. Chafey, Jr. Senior Executive Vice President June 10, 1997
- ----------------------------------------- and Director
David H. Chafey, Jr.
/s/ Luis E. Dubon, Jr. Director June 10, 1997
- -----------------------------------------
Luis E. Dubon, Jr.
/s/ Antonio Luis Ferre Director June 10, 1997
- -----------------------------------------
Antonio Luis Ferre
</TABLE>
II-6
<PAGE> 46
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- -----
<S> <C> <C>
/s/ Hector R. Gonzalez Director June 10, 1997
--------------------------------------------------
Hector R. Gonzalez
/s/ Jorge A. Junquera Senior Executive Vice President June 10, 1997
-------------------------------------------------- (Chief Financial Officer)
Jorge A. Junquera
/s/ Manual Morales, Jr. Director June 10, 1997
--------------------------------------------------
Manuel Morales, Jr.
* Director
- ---------------------------------------------------
Alberto M. Paracchini
/s/ Francisco M. Rexach, Jr. Director June 10, 1997
- ---------------------------------------------------
Francisco M. Rexach, Jr.
/s/ Felix J. Serralles Nevares Director June 10, 1997
- ---------------------------------------------------
Felix J. Serralles Nevares
/s/ Salustiano Alvarez Director June 10, 1997
- ---------------------------------------------------
Salustiano Alvarez
/s/ Julio E. Vizcarrondo, Jr. Director June 10, 1997
- ---------------------------------------------------
Julio E. Vizcarrondo, Jr.
/s/ Amilcar Jordan Senior Vice President June 10, 1997
- --------------------------------------------------- (Principal Accounting Officer)
Amilcar Jordan
*By Richard L. Carrion, Attorney-in-Fact
/s/ Richard L. Carrion June 10, 1997
- ---------------------------------------------------
</TABLE>
II-7
<PAGE> 1
EXHIBIT (23)(G)
CONSENT OF INDEPENDENT ACCOUNTANTS
June 10, 1997
To the Board of Directors
Popular, Inc.
(formerly BanPonce Corporation)
We hereby consent to the incorporation by reference in the Prospectus
constituting part of the Post-Effective Amendment No. 1 to the Registration
Statement on Form S-4 No. 333-23397 of Popular, Inc. (formerly BanPonce
Corporation) of our report dated February 21, 1997, appearing on page F-35 of
BanPonce Corporation's Annual Report on Form 10-K for the year ended December
31, 1996. We also consent to the reference to us under the heading "Experts"
and "Selected Financial Data" in such Prospectus. However, it should be noted
that Price Waterhouse has not prepared or certified such "Selected Financial
Data".
PRICE WATERHOUSE
<PAGE> 1
EXHIBIT (23)(H)
CONSENT OF INDEPENDENT ACCOUNTANTS
June 10, 1997
To the Board of Directors of
Roig Commercial Bank
We hereby consent to the incorporation by reference in the Prospectus
constituting part of the Post-Effective Amendment No. 1 to the Registration
Statement on Form S-4 (No. 333-23397) of Popular, Inc. (formerly BanPonce
Corporation) of our report dated January 31, 1997 relating to the financial
statements of Roig Commercial Bank, which appears in such Registration
Statement. We also consent to the references to us under the headings
"Experts" and "Selected Financial Data" in such Prospectus. However, it should
be noted that Price Waterhouse has not prepared or certified such "Selected
Financial Data."
PRICE WATERHOUSE
<PAGE> 1
EXHIBIT (99)(C)
ROIG COMMERCIAL BANK
ELECTION FORM AND LETTER OF TRANSMITTAL
(THE "ELECTION FORM")
TO ACCOMPANY CERTIFICATES REPRESENTING SHARES OF COMMON STOCK, PAR
VALUE $10.00, OF ROIG COMMERCIAL BANK ("ROIG") (THE "ROIG COMMON STOCK") WHEN
SUBMITTED PURSUANT TO AN ELECTION (AN "ELECTION" OR "ELECTION") IN CONNECTION
WITH THE MERGER OF ROIG WITH AND INTO BANCO POPULAR DE PUERTO RICO ("BANCO
POPULAR"), A WHOLLY OWNED SUBSIDIARY OF POPULAR, INC.
Nominee record holders, which includes any nominee, any trustee or any
other person that holds shares of Roig Common Stock in any capacity whatsoever
on behalf of another person or entity ("Nominees"), are directed to Instruction
13 and, if submitting more than one election, must complete Box A below.
Each record holder, unless such record holder is a Nominee submitting
more than one election, should indicate such holder's election in one of the
boxes immediately under "ELECTION" below.
THE INSTRUCTIONS ACCOMPANYING THIS ELECTION FORM AND LETTER OF
TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THIS ELECTION FORM AND LETTER OF
TRANSMITTAL IS COMPLETED.
ELECTION
TO MAKE A VALID ELECTION AS DESCRIBED HEREIN, THIS ELECTION FORM,
PROPERLY COMPLETED AS DESCRIBED HEREIN, MUST ACTUALLY BE RECEIVED BY THE
EXCHANGE AGENT IN PUERTO RICO BY 5:00 P.M., PUERTO RICO TIME, ON JUNE 30, 1997
OR BY THE EXCHANGE AGENT IN NEW YORK BY 5:00 P.M., NEW YORK TIME, ON JUNE 30,
1997.
Check the appropriate box below to make an election (i) to have all of
your shares of Roig Common Stock converted into the right to receive in the
Merger shares of common stock, par value $6.00 per share, of Popular, Inc.
("Popular, Inc. Common Stock") (the "Stock Election"), or (ii) to have all of
your shares of Roig Common Stock converted into the right to receive in the
Merger cash (the "Cash Election"), or (iii) to have some of your shares of Roig
Common Stock converted into the right to receive stock and to have your other
shares of Roig Common Stock converted into the right to receive cash (the "Part
Stock/Part Cash Election") (if you make this election, please specify the
number of shares of Roig Common Stock you wish to have converted into stock and
the number of shares of Roig Common Stock you wish to have converted into cash,
the total being the total number of shares of which you are the owner or
nominee record holder), or (iv) to indicate no election:
<TABLE>
<S> <C> <C>
[ ] STOCK ELECTION
TO BE COMPLETED BY ALL HOLDERS EXCEPT
NOMINEES SUBMITTING MORE THAN ONE CHECK ONLY [ ] CASH ELECTION
ELECTION. NOMINEES SUBMITTING MULTIPLE ONE BOX
ELECTIONS MUST USE BOX A BELOW TO MAKE [ ] PART STOCK/PART CASH ELECTION,
VALID ELECTIONS. CONSISTING OF:
* SHARES/STOCK ELECTION
* SHARES/CASH ELECTION
[ ] NO ELECTION
[ ] CHECK THIS
BOX IF THIS ELECTION *IF YOU CHOOSE THE PART STOCK/PART CASH
REPRESENTS A ELECTION, SPECIFY THE NUMBER OF SHARES FOR STOCK
REVOCATION OF ANY AND THE NUMBER OF SHARES FOR CASH IN THE
EARLIER BOXES PROVIDED.
ELECTION.
</TABLE>
POPULAR, INC. RESERVES THE RIGHT TO DEEM THAT YOU HAVE CHECKED THE
"NO ELECTION" BOX IF:
(A) NO CHOICE IS INDICATED ABOVE;
(B) YOU FAIL TO FOLLOW THE INSTRUCTIONS ON THIS ELECTION FORM
(INCLUDING SUBMISSION OF YOUR ROIG STOCK CERTIFICATES*) OR OTHERWISE FAIL TO
PROPERLY MAKE AN ELECTION; OR
(C) A COMPLETED ELECTION FORM (INCLUDING SUBMISSION OF YOUR ROIG
STOCK CERTIFICATES) IS NOT ACTUALLY RECEIVED BY THE ELECTION DEADLINE.
<PAGE> 2
*If your certificate(s) has been either lost, stolen or
destroyed, see Instruction 12 below. You cannot submit an effective election
without your Roig stock certificates attached hereto.
The tax consequences to a holder of Roig Common Stock will vary
depending upon, among other things, whether a Stock Election or Cash Election
or Part Stock/Part Cash Election is made. For information as to the U.S.
Federal and Puerto Rico income tax consequences of receiving shares of Popular,
Inc. Common Stock or cash in exchange for your shares of Roig Common Stock, see
"CERTAIN TAX CONSEQUENCES OF THE MERGER" in the Prospectus Supplement delivered
herewith. You are urged, in addition, to consult with your tax advisor.
This Election Form and Letter of Transmittal should be promptly (i)
completed and signed in the space provided below, and on the Substitute Form
W-9, if applicable, and (ii) mailed or delivered with your certificates
representing shares of Roig Common Stock to Banco Popular, acting as exchange
agent (the "Exchange Agent") at either of the following addresses:
BANCO POPULAR DE PUERTO RICO
<TABLE>
<CAPTION>
IN PUERTO RICO:
<S> <C> <C>
BY MAIL: FOR INFORMATION CALL: BY HAND/OVERNIGHT COURIER:
P.O. Box 362708 (787) 764-1893 209 Munoz Rivera Avenue
San Juan, P.R. 00936-2708 5th Floor
Hato Rey, P.R. 00918
IN THE MAINLAND UNITED STATES:
BY MAIL: FOR INFORMATION CALL: BY HAND/OVERNIGHT COURIER:
7 W. 51st Street (787) 764-1893 7 W. 51st Street
9th Floor 9th Floor
New York, NY 10019 New York, NY 10019
</TABLE>
It is recommended that certificates and Election Forms be sent via
certified mail and appropriately insured.
<TABLE>
<CAPTION>
DESCRIPTION OF SHARES OF ROIG COMMON STOCK ENCLOSED
<S> <C>
Name Exactly as It Appears on Your Stock Certificate(s) Certificate(s) Enclosed
and Address of Registered Holder (Please list below --
(Please fill in, if blank) attach additional list if necessary)
Certificate Number of
Number(s) Shares
Total Number of Shares:
</TABLE>
IF YOUR STOCK CERTIFICATE(S) HAS BEEN EITHER LOST, STOLEN OR DESTROYED AND YOU
REQUIRE ASSISTANCE IN REPLACING IT/THEM, CALL ROIG AT (787) 852-7241
IMMEDIATELY TO RECEIVE INSTRUCTIONS REGARDING REPLACEMENT. SEE ALSO INSTRUCTION
12 BELOW. YOU CANNOT SUBMIT AN EFFECTIVE ELECTION FORM WITHOUT YOUR ROIG STOCK
CERTIFICATES ATTACHED HERETO.
To Banco Popular:
In connection with the merger (the "Merger") of Roig with and into
Banco Popular and pursuant to an Agreement and Plan of Merger, dated as of
December 30, 1996 and as amended on March 20, 1997 (as so amended, the "Merger
Agreement"), by and among Popular, Inc., a Puerto Rico corporation, Banco
Popular and Roig, the undersigned hereby makes the election or elections set
forth herein and surrenders to you for cancellation, as Exchange Agent,
certificates representing all of the undersigned's shares of Roig Common Stock
(the "Shares") listed above in exchange for either (i) the right to receive
shares of Popular, Inc. Common Stock (the "Stock Consideration"), or (ii) the
right to receive cash (the "Cash Consideration") or (iii) the right to receive
a combination of Stock Consideration and Cash Consideration. In addition, it is
understood that Popular, Inc. will pay cash in lieu of any fractional shares of
the Stock Consideration in connection with the Merger.
The undersigned understands that the election referred to above is
subject to certain terms, conditions and limitations that have been set out in
the following documents: the Merger Agreement; the Prospectus/Proxy Statement,
dated April 7, 1997 (the "Prospectus/Proxy Settlement"); and the Prospectus
Supplement (the "Supplement") which accompanies this Election Form and Letter
of Transmittal. The Merger Agreement is included
-2-
<PAGE> 3
as Appendix A to the Prospectus/Proxy Statement. Extra copies of the Election
Form, Supplement or Prospectus/Proxy Statement may be requested from Banco
Popular, as Exchange Agent, at the addresses or phone number shown above. The
undersigned hereby acknowledges the receipt of the Prospectus/Proxy Statement
and the Supplement.
The undersigned hereby represents and warrants that the undersigned is
the registered holder of the above- described Shares with good title to the
above-described Shares and full power and authority to sell, assign and
transfer the above-described Shares represented by the enclosed certificates,
free and clear of all liens, claims and encumbrances, and not subject to any
adverse claims. The undersigned will, upon request, execute any additional
documents necessary or desirable to complete the surrender and exchange of such
Shares. The undersigned hereby irrevocably appoints the Exchange Agent, as
agent of the undersigned, to effect the exchange. All authority conferred or
agreed to be conferred in this Election Form shall be binding upon the
successors, assigns, heirs, executors, administrators and legal representatives
of the undersigned and shall not be affected by, and shall survive, the death
or incapacity of the undersigned.
Unless otherwise indicated below under Special Issuance and Payment
Instructions, in exchange for the enclosed certificates, the undersigned
requests issuance of a certificate representing the appropriate number of
shares of the Stock Consideration (which shall include a check for cash in lieu
of fractional shares, if any), or a check for the Cash Consideration, or both,
as the case may be, in the name of the undersigned. Similarly, unless
otherwise indicated under Special Delivery Instructions, please mail such
certificate and check to the undersigned at the address shown above. In the
event that both the Special Delivery Instructions and the Special Issuance and
Payment Instructions are completed, please issue such certificate or check, as
the case may be, in the name of, and mail such certificate or check to, the
person or entity so indicated at the address so indicated. Appropriate
signature guarantees have been included with respect to Shares for which
Special Delivery Instructions and/or Special Issuance and Payment Instructions
have been given.
<TABLE>
<S> <C>
SPECIAL ISSUANCE AND PAYMENT SPECIAL DELIVERY INSTRUCTIONS
INSTRUCTIONS (SEE INSTRUCTIONS 5 AND 10)
(SEE INSTRUCTIONS 5 AND 10)
To be completed ONLY if the certificate representing the Stock To be completed ONLY if the certificate representing the Stock
Consideration and/or the check representing the Cash Consideration and/or the check representing the Cash
Consideration and cash in lieu of fractional case may Consideration and cash in lieu of fractional shares, as the
be, are to be issued in the name of someone other than case may be, are to sent to someone other than the
the undersigned. undersigned or to the undersigned at an address other than
that shown above.
ISSUE THE CERTIFICATE REPRESENTING THE STOCK CONSIDERATION A SEND THE CERTIFICATE REPRESENTING THE STOCK CONSIDERATION
ND/OR THE CHECK REPRESENTING THE CASH CONSIDERATION AND AND/OR THE CHECK REPRESENTING THE CASH CONSIDERATION AND
CASH IN LIEU OF FRACTIONAL SHARES TO: CASH IN LIEU OF FRACTIONAL SHARES TO:
Name______________________________________________ Name____________________________________________
(Please Print) (Please Print)
Address___________________________________________ Address_________________________________________
_________________________________________________ ________________________________________________
(Include Zip Code) (Include Zip Code)
_________________________________________________ ________________________________________________
(Tax Identification or Social Security No.) (Tax Identification or Social Security No.)
</TABLE>
-3-
<PAGE> 4
SIGN HERE
_______________________________________________________________________________
_______________________________________________________________________________
(Signature(s) of Owner(s))
(Must be signed by registered holder(s) as name(s) appear(s) on stock
certificates(s). If signed by an attorney, trustee, executor,
administrator, guardian, officer, custodian or other person acting in a
representative capacity and the shares submitted herewith are registered
in the name of such signatory expressly in such capacity (e.g., John Doe,
as Trustee), such capacity should be indicated.) (See Instruction 8)
Dated: _________________________________________________, 1997
Name(s):_________________________________________________________________
_________________________________________________________________________
(Please Print)
Capacity, if
applicable:______________________________________________________________
Area Code and
Telephone
Number:__________________________________________________________________
SIGNATURE GUARANTEE
(REQUIRED ONLY IF EITHER "SPECIAL ISSUANCE AND PAYMENT INSTRUCTIONS"
OR "SPECIAL DELIVERY INSTRUCTIONS" ARE PROVIDED ABOVE.)
(SEE INSTRUCTION 5)
Signature(s)
Guaranteed:______________________________________________________________
_________________________________________________________________________
(Name of Firm Providing Signature
Guarantee -- Please Print)
_________________________________________________________________________
(Authorized Signature)
Dated: _________________________________________________, 1997
BOX A: TO BE COMPLETED ONLY BY NOMINEES SUBMITTING MULTIPLE ELECTIONS.
FOR SUCH PURPOSES, A NOMINEE INCLUDES ANY NOMINEE, ANY TRUSTEE OR ANY OTHER
PERSON THAT HOLDS SHARES OF ROIG COMMON STOCK IN ANY CAPACITY WHATSOEVER ON
BEHALF OF ANOTHER PERSON OR ENTITY.
If this Box A is completed, the undersigned, acting for itself and as
nominee, trustee or in another representative capacity on behalf of another
person or entity, hereby submits the following elections and attaches share
certificates for all Shares held of record by the undersigned (attach
additional sheets, if necessary, numbering each additional election with
consecutive numbers starting with "7").
<TABLE>
<CAPTION>
CHECK ONE; OR, IF YOU ARE MAKING A PART STOCK/PART CASH ELECTION,
INDICATE THE NUMBER OF SHARES FOR WHICH YOU ARE ELECTING STOCK AND THE
NUMBER OF SHARES FOR WHICH YOU ARE ELECTING CASH:
PART STOCK/PART CASH ELECTION
-----------------------------
INDICATE NUMBER OF SHARES
-----------------------------
TOTAL NUMBER
NUMBER OF ELECTION OF SHARES SUBJECT TO CASH STOCK STOCK CASH NO
ELECTION ELECTION ELECTION ELECTION ELECTION ELECTION
<S> <C> <C> <C> <C> <C> <C>
1
2
3
4
5
6
</TABLE>
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<PAGE> 5
INSTRUCTIONS
Shareholders of Roig will not receive any certificates representing
shares of the Stock Consideration and/or the check representing the Cash
Consideration and cash in lieu of fractional shares (if any) in exchange for
their certificates representing Shares ("Certificates"), or any dividends
payable on such shares of Popular, Inc. Common Stock comprising the Stock
Consideration, until the Certificates owned by such shareholders are received
by the Exchange Agent at the address set forth below, together with such
documents as the Exchange Agent may require and until the same are processed
for exchange by the Exchange Agent. No interest will accrue on such dividends.
If your stock certificate(s) is lost, stolen or destroyed, refer to Instruction
12 below.
UNLESS THE SPECIAL CIRCUMSTANCES DESCRIBED BELOW IN INSTRUCTION 13
("HOLDERS WHO ARE NOMINEES, TRUSTEES OR OTHER REPRESENTATIVES") APPLY, A HOLDER
OF ROIG COMMON STOCK MUST MAKE HIS ELECTION ON THE REVERSE HEREOF IMMEDIATELY
UNDER THE CAPTION "ELECTION" TO MAKE AN EFFECTIVE ELECTION.
You should understand that your election is subject to certain terms,
conditions and limitations that have been set out in the following documents:
the Merger Agreement; the Prospectus/Proxy Statement, dated April 7, 1997,
previously sent to you or which is enclosed herewith; and the Prospectus
Supplement which accompanies this Election Form (the "Supplement"). The Merger
Agreement was included as Appendix A to the Prospectus/Proxy Statement. Extra
copies of the Supplement or Prospectus/Proxy Statement may be requested from
Banco Popular, as Exchange Agent, at the addresses or phone number shown on the
reverse of these Instructions. The delivery of this Election Form is
acknowledgment that you have received, read and understood the Prospectus/Proxy
Statement and the Supplement.
1. ELECTION DEADLINE. For any election contained herein to be
considered, this Election Form, properly completed, and the related Roig Common
Stock Certificates must actually be received by the Exchange Agent at the
address on the front of this Election Form no later than 5:00 p.m., Puerto Rico
Time, ON JUNE 30, 1997 if delivered to the Exchange Agent in Puerto Rico, and
no later than 5:00 p.m., New York Time, ON JUNE 30, 1997 if delivered to the
Exchange Agent in New York. The Exchange Agent will determine whether any
Election Form is received on a timely basis and whether an Election Form has
been properly completed.
2. REVOCATION OR CHANGE OF ELECTION FORM. Any Election Form may
be revoked or changed by written notice from the person submitting such
Election Form to the Exchange Agent, but to be effective such notice must
actually be received by the Exchange Agent at or prior to the Election
Deadline. The Exchange Agent will have reasonable discretion to determine
whether any revocation or change is received on a timely basis and whether any
such revocation or change has been properly made.
3. ELECTION PROCEDURES. As set forth in the Supplement and the
Prospectus/Proxy Statement previously delivered to you or enclosed herewith,
approximately 50% of the shares of Roig Common Stock outstanding on June 30,
1997 (the "Effective Time") will be converted into the right to receive cash
and approximately 50% of the shares of Roig Common Stock outstanding at the
Effective Time will be converted into the right to receive shares of Popular,
Inc. Common Stock (and/or cash in lieu of fractional shares). The extent to
which elections will be accommodated will depend upon the respective numbers of
shares of Roig Common Stock with respect to which Roig shareholders elect cash
or stock (or make no election). A Roig shareholder who elects to receive cash
with respect to some or all of his shares of Roig Common Stock may instead
receive shares of Popular, Inc. Common Stock with respect to some of such
shares of Roig Common Stock, and a Roig shareholder who elects to receive
shares of Popular, Inc. Common Stock with respect to some or all of his shares
of Roig Common Stock may instead receive cash with respect to some of such
shares of Roig Common Stock. To the extent that all elections cannot be
accommodated, the consideration to be issued in the Merger will be allocated
pursuant to the procedures set forth in the Merger Agreement and described in
the Supplement under the caption "THE MERGER -- Election Procedures;
Allocation Procedures". Thus, an election made by you may not be honored in
certain circumstances.
4. NO FRACTIONAL INTERESTS. No Certificate representing a
fraction of a full share of Popular, Inc. Common Stock will be issued and, in
lieu thereof, the Exchange Agent will remit on Popular, Inc.'s behalf cash
(without interest) in an amount equal to the product of (i) the fraction of a
share of Popular, Inc. Common Stock, if any, to which any Roig shareholder
would otherwise be entitled and (ii) the last sale price of a share of Popular,
Inc. Common Stock quoted on June 30, 1997 on the NASDAQ National Market as
reported in The Wall Street Journal. No such holder shall be entitled to
dividends, voting rights or any other rights in respect to any fractional
share.
5. GUARANTEE OF SIGNATURES. A signature guarantee on this
Election Form is required if the holder has completed either the box entitled
"Special Delivery Instructions" or the box entitled "Special Issuance and
Payment Instructions" on the Election Form or both. Such guarantee must be
made by an Eligible Institution.
Eligible Institutions include: (i) a bank (as that term is defined in
Section 3(a) of the Federal Deposit Insurance Act); (ii) a broker, dealer,
municipal securities dealer, municipal securities broker, government securities
dealer, or government securities broker, as those terms are defined under the
Securities Exchange Act of 1934, as amended (the "Act"); (iii) a credit union
(as that term is defined in Section 19(b)(1)(A) of the Federal Reserve Act);
(iv) a national securities exchange, registered securities association, or
clearing agency, as those terms are used under the Act; or (v) a savings
association (as that term is defined in Section 3(b) of the Federal Deposit
Insurance Act). Public notaries cannot execute acceptable guarantees of
signatures.
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<PAGE> 6
6. DELIVERY OF ELECTION FORM AND CERTIFICATES. This Election
Form, properly completed and duly executed, together with the Certificate(s),
should be delivered to the Exchange Agent at the addresses set forth in this
Election Form.
The method of delivery of Certificate(s) and all other required
documents is at the election and risk of the owner. However, if Certificates
are sent by mail, it is recommended that they be sent by certified mail,
appropriately insured, with return receipt requested.
7. INADEQUATE SPACE. If the space provided herein is inadequate,
the Certificate numbers and the numbers of Shares represented thereby should be
listed on additional sheets attached hereto.
8. SIGNATURES ON ELECTION FORM; REQUIREMENT TO BE A RECORD
HOLDER. All signatures must correspond exactly with the name written on the
face of the Certificate(s) without alteration, variation or any change
whatsoever.
If the Certificate(s) surrendered hereby is owned of record by two or
more joint owners, all such owners must sign this Election Form.
If any surrendered Shares are registered in different names on several
Certificates, it will be necessary to complete, sign and submit as many
separate Election Forms as there are different registrations of Certificates.
If you hold share Certificates for which you are not the record
holder, you may not submit an election. You may, however, want to request the
record holder to make an election on your behalf.
9. STOCK TRANSFER TAXES. In the event that any transfer or other
taxes become payable by reason of the issuance or payment of Stock
Consideration or Cash Consideration in any name other than that of the record
holder, such transferee or assignee must pay such tax to Popular, Inc. or must
establish to the satisfaction of Popular, Inc. that such tax has been paid.
10. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS. Indicate the name
and/or address of the person(s) to whom the Stock Consideration or the check
representing the Cash Consideration and cash in lieu of fractional shares (if
any) are to be issued or sent, if different from the name and/or address of the
person(s) signing this Election Form.
11. SUBSTITUTE FORM W-9. Each surrendering shareholder tendering
shares to the New York address of the Exchange Agent is required to provide the
Exchange Agent with such holder's correct Taxpayer Identification Number
("TIN") on the Substitute Form W-9 which is a part of this Election Form and to
certify whether the shareholder is subject to backup withholding. Failure to
provide the information on the form may subject the surrendering shareholder to
31% U.S. federal income tax withholding on payments made to such surrendering
shareholder with respect to the Shares and on future dividends paid by Popular,
Inc. A holder must cross out item (2) in the Certification box of Substitute
Form W-9 if such holder has been notified by the U.S. Internal Revenue Service
that such holder is currently subject to backup withholding. The box in Part 3
of the form should be checked if the surrendering holder has not been issued a
TIN and has applied for a TIN or intends to apply for a TIN in the near future.
If the box in Part 3 is checked and the Exchange Agent is not provided with a
TIN within 60 days thereafter, Popular, Inc. will withhold 31% of all such
payments and dividends until a TIN is provided to the Exchange Agent.
12. LOST, STOLEN OR DESTROYED CERTIFICATES. If your stock
Certificate(s) has been either lost, stolen or destroyed, unless you take
certain actions as advised by the Exchange Agent, you may not make a valid
election. You are urged to call Roig at (787) 852-7241 immediately to receive
instructions regarding replacement.
13. HOLDERS WHO ARE NOMINEES, TRUSTEES OR OTHER REPRESENTATIVES.
Each holder of record is entitled to make an election and submit an Election
Form covering all shares of Roig Common Stock actually held of record by such
holder. Nominee record holders, which includes any nominee, any trustee or any
other person that holds shares of Roig Common Stock in any capacity whatsoever
on behalf of another person or entity, are entitled to make an election for
such nominee record holder as well as an election on behalf of each beneficial
owner of shares of Roig Common Stock held through such nominee record holder,
but such elections must be made on one Election Form. Beneficial owners who
are not record holders are not entitled to submit Election Forms.
14. INFORMATION AND ADDITIONAL COPIES. Information and additional
copies of this Election Form may be obtained by writing to: Banco Popular de
Puerto Rico, P.O. Box 362708, San Juan, P.R. 00936-2708, Attention: Amilcar
Jordan, or by telephoning (787) 764-1893.
IMPORTANT TAX INFORMATION
Under Puerto Rico income tax laws, a holder that is an individual
resident of Puerto Rico or a corporation or partnership organized under the
laws of Puerto Rico (each, a "Puerto Rico Holder") is not required to provide
the Exchange Agent any form, statement or other report in connection with the
merger other than this Election Form. Under Puerto Rico income tax laws, a
non-Puerto Rico Holder that tenders his or her shares to the Puerto Rico
address of the Exchange Agent may be subject to Puerto Rico income tax on the
gain to be recognized on the
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<PAGE> 7
exchange. In addition, the Exchange Agent would be required to withhold Puerto
Rico income tax from the amounts transferred to such holder unless the holder
presents to the Exchange Agent a withholding tax exemption certificate issued
by the Puerto Rico Secretary of the Treasury. For these reasons, a non-Puerto
Rico Holder should consider tendering his or her shares to the New York address
of the Exchange Agent.
Under U.S. Federal income tax laws, a holder tendering shares to the
New York address of the Exchange Agent who receives payment (whether in stock
or cash) pursuant to the merger of Roig with and into Banco Popular is required
by law to provide the Exchange Agent (as payer) with such holder's correct TIN
on Substitute Form W-9 below. If such holder is an individual, the TIN is his
or her social security number. If the holder is a business or other entity,
such holder's TIN number will be the same as such holder's employer
identification number. If the Exchange Agent is not provided with the correct
TIN, a $50 penalty may be imposed by the U.S. Internal Revenue Service, and
payments made with respect to the Roig Common Stock and payments of dividends
on Popular, Inc. Common Stock received by such holder in the merger of Roig
into Banco Popular may be subject to backup withholding.
Certain holders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. Exempt holders should indicate their exempt status on Substitute
Form W-9. In order for a foreign individual to qualify as an exempt recipient,
such individual must submit a statement, signed under penalties of perjury,
attesting to such individual's exempt status. Forms of such statements can be
obtained from the Exchange Agent. See the enclosed "Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9" for
additional instructions.
If backup withholding applies, the Exchange Agent is required to
withhold 31% of any payments made to the holder or other payee. Backup
withholding is not an additional tax. Rather, the U.S. federal income tax
liability of persons subject to backup withholding will be reduced by the
amount of tax withheld. If withholding results in an overpayment of taxes, a
refund may be obtained from the U.S. Internal Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments made with respect to Shares,
the holder is required to notify the Exchange Agent of such holder's correct
TIN by completing the form below, certifying that the TIN provided on the
Substitute Form W-9 is correct (or that such holder is awaiting a TIN) and that
(a) such holder is exempt from backup withholding, (b) such holder has not been
notified by the U.S. Internal Revenue Service that he is subject to backup
withholding as a result of a failure to report all interest or dividends or (c)
the U.S. Internal Revenue Service has notified such holder that such holder is
no longer subject to backup withholding.
WHAT NUMBER TO GIVE THE EXCHANGE AGENT
The holder is required to give the Exchange Agent the TIN (i.e.,
social security number or employee identification number) of the holder of the
Shares tendered hereby. If the Shares are held in more than one name or are
not held in the name of the actual owner, consult the enclosed "Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9" for
additional guidance on which number to report.
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<PAGE> 8
PAYER'S NAME: BANCO POPULAR DE PUERTO RICO
<TABLE>
<CAPTION>
<S> <C> <C>
SUBSTITUTE PART 1 - PLEASE PROVIDE YOUR TIN ____________________
FORM W-9 IN THE BOX AT RIGHT AND CERTIFY BY Social Security Number
(SEE INSTRUCTION 11) SIGNING AND DATING BELOW OR
__________________________
Employee Identification Number
PLEASE FILL IN YOUR NAME AND
ADDRESS BELOW (PLEASE PRINT)
_______________________________ ____________________________________________
Name
(If joint names, list first and circle the PART 2 -- CERTIFICATION -- UNDER PENALTIES OF
the name of the person or entity PERJURY, I CERTIFY THAT: PART 3--
whose name is entered in Part 1)
(1) The number shown on this form is my Awaiting TIN [ ]
correct Taxpayer Identification Number
_______________________________ (or I am waiting for a number to be
Address (number and street) issued to me) and
__________________________
_______________________________ (2) I am not subject to backup withholding PART 4 --
City, State and Zip Code because (a) I am exempt from backup
withholding or (b) I have not been
notified by the U.S. Internal Revenue Exempt [ ]
Service ("IRS") that I am subject to
backup withholding as a result of failure
to report all interest or dividends, or (c)
the IRS has notified me that I am no
longer subject to backup withholding.
U.S. DEPARTMENT OF THE TREASURY CERTIFICATION INSTRUCTIONS -- You must cross out item (2) in Part 2 above if
INTERNAL REVENUE SERVICE have been notified by the IRS that you are subject to backup withholding because
of underreporting interest or dividends on your tax return. However, if after
being notified by the IRS that you are no longer subject to backup withholding
you received another notification from the IRS stating that you are no longer
cross out item (2). If you are exempt from backup withholding, check the box
in Part 4 above.
PAYER'S REQUEST FOR TAXPAYER SIGNATURE____________________________DATE_______________, 1997
IDENTIFICATION NUMBER (TIN)
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS ELECTION FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE MERGER
OF ROIG WITH AND INTO BANCO POPULAR. PLEASE REVIEW THE ENCLOSED
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON
SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF
YOU CHECKED THE BOX IN PART 3 OF THE
SUBSTITUTE FORM W-9
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification
number has not been issued to me, and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
U.S. Internal Revenue Service Center or Social Security Administration Office
or (b) I intend to mail or deliver an application in the near future. I
understand that if I do not provide a taxpayer identification number within 60
days, 31% of all reportable payments made to me thereafter will be withheld
until I provide a number.
_______________________________________ _____________________, 1997
Signature Date
-8-
<PAGE> 9
GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON
SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER.--Social Security numbers have nine digits separated by two hyphens:
i.e., 000-00-0000. Employer identification numbers have nine digits separated
by only one hyphen: i.e., 00-0000000. The table below will help determine the
number to give the payer.
<TABLE>
<CAPTION>
- --------------------------------------------------------------- -------------------------------------------------
Give the Give the EMPLOYER
SOCIAL SECURITY IDENTIFICATION
For this type of account: number of-- For this type of account: number of--
- --------------------------------------------------------------- -------------------------------------------------
<S> <C> <C> <C>
1. An individual's The individual 7. Corporate account The corporation
account
2. Two or more (joint The actual owner of the 8. Religious, charitable, or The organization
individuals account or, if combined educational organization
account) funds, any one of the account
individuals(1)
3. Custodian account of The minor(2) 9. Partnership The partnership
Gift to Minors Act)
4.a. The usual revocable The grantor-trustee(1) 10. Association, club or The organization
savings trust account other tax-exempt
(grantor is also organization
trustee)
b. So-called trust The actual owner(1) 11. A broker or registered The broker or nominee
account that is not a nominee
legal or valid trust
under State law
5. Sole proprietorship The owner(3) 12. Account with the The public entity
account Department of
Agriculture in the name of a
public entity (such as a
State or local government,
school district, or prison)
that receives agricultural
program payments
6. A valid trust, estate, or The legal entity (Do
pension trust not furnish the identifying
number of the personal
representative or trustee
unless the legal entity
itself is not designated in
the account title.)(4)
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security
number.
(3) Show the name of the owner. You may also enter your business name.
You may use your Social Security Number or Employer Identification
Number.
(4) List first and circle the name of the legal trust, estate, or pension
trust.
Note: If no name is circled when there is more than one name, the number
will be considered to be that of the first name listed.
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<PAGE> 10
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or Form
SS-4, Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service and apply for a
number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include the
following:
- - A corporation.
- - A financial institution.
- - An organization exempt from tax under section 501(a), or an individual
retirement plan.
- - The United States or any agency or instrumentality thereof.
- - A State, the District of Columbia, a possession of the United States,
or any subdivision or instrumentality thereof.
- - A foreign government, a political subdivision of a foreign government,
or any agency or instrumentality thereof.
- - An international organization or any agency, or instrumentality
thereof.
- - A registered dealer in securities or commodities registered in the U.S.
or a possession of the U.S.
- - A real estate investment trust.
- - A common trust fund operated by a bank under section 584(a).
- - An exempt charitable remainder trust, or a non-exempt trust described
in section 4947(a)(1).
- - An entity registered at all times under the Investment Company Act of
1940.
- - A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to
backup withholding include the following:
- - Payments to nonresident aliens subject to withholding under section
1441.
- - Payments to partnerships not engaged in a trade or business in the U.S.
and which have at least one nonresident partner.
- - Payments of patronage dividends where the amount received is not paid
in money.
- - Payments made by certain foreign organizations.
Payments of interest not generally subject to backup withholding
include the following:
- - Payments of interest on obligations issued by individuals. Note: You
may be subject to backup withholding if this interest is $600 or more
and is paid in the course of the payer's trade or business and you have
not provided your correct taxpayer identification number to the payer.
- - Payments of tax-exempt interest (including exempt-interest dividends
under section 852).
- - Payments described in section 6049(b)(5) to non-resident aliens.
- - Payments on tax-free covenant bonds under section 1451.
- - Payments made by certain foreign organizations.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT TO
THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS, ALSO
SIGN AND DATE THE FORM.
Certain payments, other than interest, dividends and patronage
dividends, that are not subject to information reporting are also not subject to
backup withholding. For details, see the regulations under sections 6041,
6041A(a), 6045, and 6050A.
PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividend,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to IRS. IRS uses the numbers for identification
purposes. Payers must be given the numbers whether or not recipients are
required to file tax returns. Payers must generally withhold 31% of taxable
interest, dividend, and certain other payments to a payee who does not furnish a
taxpayer identification number to a payer. Certain penalties may also apply.
PENALTIES
(1) Penalty For Failure To Furnish Taxpayer Identification Number.-- If you fail
to furnish your taxpayer identification number to a payer, you are subject to a
penalty of $50 for each such failure unless your failure is due to reasonable
cause and not to willful neglect.
(2) Civil Penalty For False Information With Respect To Withholding.-- If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) Criminal Penalty For Falsifying Information.-- Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
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