PROSPECTUS
POPULAR, INC.
OR
POPULAR INTERNATIONAL BANK, INC.
OR
POPULAR NORTH AMERICA, INC.
DEBT SECURITIES AND PREFERRED STOCK
- By this prospectus, we may offer from time to time up to
$2,000,000,000 of our:
- debt securities and
- preferred stock
- Popular, Inc. will unconditionally and absolutely guarantee all
debt securities and preferred stock offered by Popular
International Bank, Inc. or Popular North America, Inc.
- When we offer debt securities or preferred stock, we will provide you
with a prospectus supplement or a term sheet describing the terms of
the specific issue of debt securities or preferred stock, including
the offering price.
- You should read this prospectus and the prospectus supplement or the
term sheet relating to the specific issue of debt securities or
preferred stock carefully before you invest.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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We may sell the debt securities or preferred stock directly or through one or
more agents or dealers. The agents are not required to sell any specific number
or amount of the debt securities or preferred stock.
We may use this prospectus in the initial sale of any security. In addition, we
or affiliates may use this prospectus in a market-making transaction in any
security after its initial sale. UNLESS WE OR OUR AGENT INFORMS THE PURCHASER
OTHERWISE, THIS PROSPECTUS IS BEING USED IN A MARKET-MAKING TRANSACTION.
When we define a specialized term, it appears in BOLD, ITALICIZED type. We refer
to the debt securities and preferred stock issued under the terms of this
prospectus as the SECURITIES and to Popular, Inc.'s guarantee of securities
offered by Popular International Bank, Inc. or Popular North America, Inc. as
the GUARANTEES.
The date of this prospectus is November 19, 2001.
POPULAR, INC.
Popular, Inc. is a diversified, publicly owned bank holding company, registered
under the Bank Holding Company Act of 1956, as amended and, accordingly, subject
to the supervision and regulation of the Board of Governors of the Federal
Reserve System. Popular, Inc. was incorporated in 1984 under the laws of the
Commonwealth of Puerto Rico and is the largest financial institution in Puerto
Rico.
Popular, Inc.'s principal subsidiary, Banco Popular de Puerto Rico, was
incorporated in 1893 and is Puerto Rico's largest bank. A consumer-oriented
bank, Banco Popular de Puerto Rico has the largest retail franchise and the
largest trust operation in Puerto Rico. Banco Popular de Puerto Rico also
operates one or more branches in the U.S. Virgin Islands, the British Virgin
Islands and New York. Banco Popular de Puerto Rico's deposits are insured under
the Bank Insurance Fund of the Federal Deposit Insurance Corporation.
Banco Popular de Puerto Rico has three subsidiaries: Popular Auto, Inc., Puerto
Rico's largest vehicle financing, leasing and daily rental company; Popular
Finance, Inc., a small-loan and second mortgage company in Puerto Rico; and
Popular Mortgage, Inc., a mortgage loan company in Puerto Rico.
Popular, Inc. has three other principal subsidiaries: Popular Securities, Inc.,
Popular International Bank, Inc. and GM Group, Inc. Popular Securities, Inc. is
a securities broker-dealer in Puerto Rico with financial advisory, investment
and security brokerage operations for institutional and retail customers and may
be an underwriter of the securities. More information regarding Popular
International Bank, Inc. and its subsidiary Popular North America, Inc., Inc. is
presented below under "Popular International Bank, Inc." and "Popular North
America, Inc." GM Group, Inc. provides electronic data processing and consulting
services, sale and rental of electronic data processing equipment, and sale and
maintenance of computer software to clients in the United States, the Caribbean
and Latin America through offices in Puerto Rico, Miami, Venezuela and the
Dominican Republic.
In addition, Popular, Inc. has an 85% investment in Newco Mortgage Holding
Corporation, a mortgage banking organization with operations in Puerto Rico that
does business as Levitt Mortgage.
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 INTERNATIONAL BANK, INC.
Popular International Bank, Inc., a wholly owned subsidiary of Popular, Inc.,
was organized in 1992 under the laws of the Commonwealth of Puerto Rico. Popular
International Bank, Inc. operates as an "international banking entity" under the
International Banking Center Regulatory Act of Puerto Rico and is a registered
bank holding company under the Bank Holding Company Act. Popular International
Bank, Inc. owns the outstanding stock of Popular North America, Inc., ATH Costa
Rica and CreST, S.A. Effective May 30, 2001, Popular International Bank, Inc.
exercised its option to acquire 19.99% of Centro Financiero BHD, S.A., a
diversified financial company in the Dominican Republic. Popular International
Bank, Inc. is principally engaged in providing managerial services to its
subsidiaries.
Condensed consolidating financial information of Popular, Inc. with separate
columns for the parent company, Popular International Bank, Inc., other
subsidiaries of Popular, Inc. on a combined basis, consolidating adjustments and
the total consolidated amounts are included in the notes to Popular, Inc.'s
consolidated financial statements that are incorporated by reference.
Popular International Bank, 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 NORTH AMERICA, INC.
Popular North America, Inc., a wholly-owned subsidiary of Popular International
Bank, Inc. and an indirect wholly-owned subsidiary of Popular, Inc., was
organized in 1991 under the laws of the State of Delaware and is a registered
bank holding company under the Bank Holding Company Act. Popular North America,
Inc. functions as a holding company for Popular, Inc.'s mainland U.S.
operations. Popular North America, Inc. has five wholly owned direct
subsidiaries: Banco Popular North America, Inc., a full service commercial bank
incorporated in New York State; Equity One, Inc., a diversified consumer finance
company; Popular Cash Express, Inc., a retail financial services company;
BanPonce Trust I, a statutory business trust; and Banco Popular, National
Association, chartered in Orlando, Florida. Banco Popular, National Association
commenced operations as a full service commercial bank on July 1, 2000. Popular
Insurance, Inc., a wholly owned non-bank subsidiary of Banco Popular, National
Association and an indirect
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subsidiary of Popular North America, Inc., also commenced operations on July 1,
2000. Popular Insurance, Inc. is a general insurance agency that offers
insurance products in Puerto Rico.
Banco Popular North America, Inc. conducts banking operations in the mainland
United States. The deposits of Banco Popular North America, Inc. are insured
under the Bank Insurance Fund of the FDIC.
In addition, Banco Popular North America, Inc. owns all of the outstanding stock
of Popular Leasing, USA, a non-banking subsidiary that offers small ticket
equipment leasing in the mainland United States.
Equity One, Inc., a wholly owned subsidiary of Popular North America, Inc., is
engaged in the business of granting personal and mortgage loans and providing
dealer financing in the mainland United States. Popular Cash Express, Inc., a
wholly owned subsidiary of Popular North America, Inc., offers services such as
check cashing, money transfers to other countries, money order sales and
processing of payments through offices and mobile check cashing units in the
mainland United States.
Condensed consolidating financial information of Popular, Inc. with separate
columns for the parent company, Popular North America, Inc., other subsidiaries
of Popular, Inc. on a combined basis, consolidating adjustments and the total
consolidated amounts are included in the notes to Popular, Inc.'s consolidated
financial statements that are incorporated by reference.
Popular North America, Inc.'s principal executive offices are located at
Marlton Crossing Office Park, 400 Lippincott Drive, Marlton, New Jersey 08053,
and its telephone number is (787) 765-9800.
If you want to find more information about us, please see the sections entitled
"Where You Can Find More Information" and "Incorporation of Information We File
with the SEC" in this prospectus.
In this prospectus, references to "we", "us" and "our" refer to Popular, Inc.,
Popular International Bank, Inc. and Popular North America, Inc. collectively
and do not include any consolidated subsidiaries. When we refer to "your
security" and "your prospectus supplement", we mean the security you have
purchased and the prospectus supplement describing the specific terms of your
security. When we refer to the "issuers", we mean Popular, Inc., Popular
International Bank, Inc. and Popular North America, Inc.
CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES AND RATIO OF EARNINGS TO
FIXED CHARGES AND PREFERRED STOCK DIVIDENDS OF POPULAR, INC.
NINE MONTHS YEAR ENDED DECEMBER 31,
ENDED ---------------------------------------
SEPTEMBER 30,
2001 2000 1999 1998 1997 1996
------------ ---- ---- ---- ---- ----
Ratio of Earnings to Fixed Charges:
Excluding Interest on Deposits ............ 1.8 1.6 1.7 1.8 1.8 2.0
Including Interest on Deposits ............ 1.4 1.3 1.4 1.4 1.4 1.4
Ratio of Earnings to Fixed Charges
and
Preferred Stock Dividends:
Excluding Interest on Deposits ............ 1.7 1.6 1.7 1.8 1.8 2.0
Including Interest on Deposits ............ 1.4 1.3 1.4 1.4 1.4 1.4
For purposes of computing these consolidated ratios, earnings represents income
before income taxes plus fixed charges. Fixed charges represents all interest
expense (ratios are presented both excluding and including interest on
deposits), the portion of net rental expense which is deemed representative of
the interest factor, the amortization of debt issuance expense and capitalized
interest.
USE OF PROCEEDS
We may use the net proceeds from the sale of the securities for:
- general corporate purposes, including investments in, or extensions of
credit to, existing and future subsidiaries,
- the acquisition of other banking and financial institutions, and
- repayment of outstanding borrowings.
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We do not at present have any plans to use the proceeds from any offering for a
material acquisition or to repay outstanding borrowings. All or a substantial
portion of the proceeds from the sale of securities issued by Popular North
America, Inc. will be loaned by Popular North America, Inc. to its direct or
indirect subsidiaries, including Equity One, or used by Popular North America,
Inc. for general corporate purposes. The net proceeds from the sale of
securities by Popular International Bank, Inc. will be loaned by Popular
International Bank, Inc. to its affiliates or used by Popular International
Bank, Inc. for general corporate purposes. The precise amounts and timing of the
application of proceeds will depend on various factors existing at the time of
offering of the securities, including Popular, Inc.'s subsidiaries' funding
requirements and the availability of other funds. Until used, the proceeds may
be temporarily invested in short-term obligations.
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DESCRIPTION OF DEBT SECURITIES WE MAY OFFER
INFORMATION ABOUT OUR DEBT SECURITIES
Three different issuers may offer debt securities using this prospectus:
Popular, Inc., Popular International Bank, Inc. and Popular North America, Inc.
In this section, we use "we" when referring to the issuers collectively and "the
issuer" when referring to the particular company that issues a particular debt
security or series of debt securities.
As required by U.S. federal law for all debt securities of companies that are
publicly offered, the debt securities issued under this prospectus are governed
by documents called indentures. The indentures are contracts between us and Bank
One, NA, which currently acts as trustee under each of the indentures. The
trustee has two main roles:
- First, the trustee can enforce your rights against us if we default.
There are some limitations on the extent to which the trustee acts on
your behalf, described later under "-- Default and Remedies"; and
- Second, the trustee performs administrative duties for us, such as
sending you interest payments, transferring your debt security to a new
buyer if you sell and sending you notices.
The indentures permit us to issue different series of debt securities from time
to time. We may issue debt securities in such amounts, at such times and on such
terms as we wish. The debt securities will differ from one another in their
terms.
Popular, Inc. may issue senior debt securities under an indenture dated as of
February 15, 1995, as supplemented by the First Supplemental Indenture dated as
of May 8, 1997 and as further supplemented by the Second Supplemental Indenture
dated as of August 5, 1999, in each case between Popular, Inc. and the trustee.
Popular, Inc. may issue subordinated debt securities under an indenture dated as
of November 30, 1995 between Popular, Inc. and the trustee. Popular North
America, Inc. may issue senior debt securities under an indenture dated as of
October 1, 1991, as supplemented by the First Supplemental Indenture dated as of
February 28, 1995, the Second Supplemental Indenture dated as of May 8, 1997 and
the Third Supplemental Indenture dated as of August 5, 1999, in each case among
Popular, Inc., Popular North America, Inc. and the trustee. If Popular
International Bank, Inc. issues either senior or subordinated debt securities or
if Popular North America, Inc. issues subordinated debt securities, it will
enter into an appropriate indenture with a trustee.
The indentures mentioned in the previous paragraph are referred to collectively
as the indentures. The debt securities issued under the indentures referred to
in the previous paragraph are referred to collectively as the debt securities.
The senior debt securities of Popular, Inc., Popular International Bank, Inc.
and Popular North America, Inc. are referred to collectively as the senior debt
securities and the subordinated debt securities of Popular, Inc., Popular
International Bank, Inc. and Popular North America, Inc. are referred to
collectively as the subordinated debt securities. A copy or form of each
indenture is filed as an exhibit to the registration statement relating to the
debt securities.
Unless otherwise indicated in the applicable prospectus supplement, the
covenants contained in the indentures and the debt securities will not afford
holders of the debt securities protection in the event of a sudden decline in
credit rating that might result from a recapitalization, restructuring or other
highly leveraged transaction.
This section summarizes the material terms that will apply generally to a series
of debt securities. Each particular debt security will have financial and other
terms specific to it, and the specific terms of each debt security will be
described in a prospectus supplement attached to the front of this prospectus.
Those terms may vary from the terms described here. As you read this section,
therefore, please remember that the specific terms of your debt security as
described in your prospectus supplement will supplement and, if applicable, may
modify or replace the general terms described in this section. The statements we
make in this section may not apply to your debt security.
AMOUNTS THAT WE MAY ISSUE
The indentures do not limit the aggregate amount of debt securities that we may
issue, nor do they limit the aggregate amount of any particular series. We have
initially authorized the issuance of debt securities and preferred stock having
an initial offering price no
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greater than $2,000,000,000, or an equivalent amount in any other currencies or
currency units. We may, however, increase this authorized amount at any time
without your consent.
The indentures and the debt securities do not limit our ability to incur other
indebtedness or to issue other securities. Also, we are not subject to financial
or similar restrictions by the terms of the debt securities, except as described
under "-- Restrictive Covenants" below.
HOW THE DEBT SECURITIES RANK AGAINST OTHER DEBT
Unless otherwise specified in the prospectus supplement, the debt securities
will not be secured by any property or assets of the issuers. Thus, by owning a
debt security, you are one of the unsecured creditors of the issuer of your debt
security. The senior debt securities will not be subordinated to any of our
other debt obligations. This means that, in a bankruptcy or liquidation
proceeding against the issuer the senior debt securities would rank equally in
right of payment with all other unsecured and unsubordinated indebtedness of the
issuer of the debt security. The subordinated debt securities may be
subordinated to any of our other debt obligations as described in "-- Special
Terms Relating to the Subordinated Debt Securities" below.
THIS SECTION IS ONLY A SUMMARY
The indentures and their associated documents, including your debt security,
contain the full legal text of the matters described in this section and your
prospectus supplement. The indentures and the debt securities are governed by
New York law. A copy of each indenture or form of indenture has been filed with
the SEC as part of our registration statement. See "-- Where You Can Find More
Information" below for information on how to obtain a copy.
Because this section and your prospectus supplement provide only a summary, they
do not describe every aspect of the indentures and your debt security. This
summary is subject to and qualified in its entirety by reference to all the
provisions of the indentures, including definitions of certain terms used in the
indentures. For example, in this section and your prospectus supplement, we use
terms that have been given special meaning in the indentures. In this section,
however, we describe the meaning for only the more important of those terms.
FEATURES COMMON TO ALL DEBT SECURITIES
STATED MATURITY AND MATURITY
The day on which the principal amount of your debt security is scheduled to
become due and payable is called the stated maturity of the principal and is
specified in your prospectus supplement. The principal may become due sooner, by
reason of redemption or acceleration after a default. The day on which the
principal actually becomes due, whether at the stated maturity or earlier, is
called the maturity of the principal.
We also use the terms "stated maturity" and "maturity" to refer to the dates
when other payments become due. For example, we may refer to a regular interest
payment date when an installment of interest is scheduled to become due as the
"stated maturity" of that installment. When we refer to the "stated maturity" or
the "maturity" of a debt security without specifying a particular payment, we
mean the stated maturity or maturity, as the case may be, of the principal.
CURRENCY OF DEBT SECURITIES
Amounts that become due and payable on your debt security will be payable in a
currency, composite currency or basket of currencies specified in your
prospectus supplement.
We call this currency, composite currency or basket of currencies a specified
currency. The specified currency for your debt security will be U.S. dollars
unless your prospectus supplement states otherwise. A specified currency may
include the euro. Some debt securities may have different specified currencies
for principal and interest.
You will have to pay for your debt securities by delivering the requisite amount
of the specified currency for the principal to the dealer or dealers that we
name in your prospectus supplement, unless other arrangements have been made
between you and us or between
6
you and that dealer or dealers. We will make payments on your debt securities in
the specified currency, except as otherwise described in your prospectus
supplement.
TYPES OF DEBT SECURITIES
We may issue the following types of debt securities:
- FIXED RATE DEBT SECURITIES. A debt security of this type will bear
interest at a fixed rate described in the applicable prospectus
supplement. This type includes zero coupon debt securities, which bear
no interest and are instead issued at a price lower than the principal
amount.
- FLOATING RATE DEBT SECURITIES. A debt security of this type will bear
interest at rates that are determined by reference to an interest rate
formula. In some cases, the rates may also be adjusted by adding or
subtracting a spread or multiplying by a spread multiplier and may be
subject to a minimum rate or a maximum rate. If your debt security is
a floating rate debt security, the formula and any adjustments that
apply to the interest rate will be described in your prospectus
supplement.
- INDEXED DEBT SECURITIES. A debt security of this type provides that
the principal amount payable at its maturity, and/or the amount of
interest payable on an interest payment date, will be determined by
reference to one or more currencies, commodities or stocks, including
baskets of stocks and stock indices, or to any other index described
in the applicable prospectus supplement. If you are a holder of an
indexed debt security, you may receive a principal amount at maturity
that is greater than or less than the face amount of your debt
security depending upon the value of the applicable index at maturity.
That value may fluctuate over time. Some indexed debt securities may
also be exchangeable, at the option of the holder or the applicable
issuer, into stock of an issuer other than the issuer of the indexed
debt securities. If you purchase an indexed debt security, your
prospectus supplement will include information about the relevant
index and about how amounts that are to become payable will be
determined by reference to that index. If you purchase a security
exchangeable into stock of an issuer other than the issuer of the
indexed debt securities, your prospectus supplement will include
information about the issuer and may also tell you where additional
information about the issuer is available. Before you purchase any
indexed debt security, you should read carefully the section of your
prospectus supplement entitled "Risks Relating to Indexed Debt
Securities".
A fixed rate debt security, a floating rate debt security or an indexed debt
security may be an original issue discount debt security. A debt security of
this type is issued at a price lower than its principal amount and provides
that, upon redemption or acceleration of its maturity, an amount less than its
principal amount will be payable. A debt security issued at a discount to its
principal may, for U.S. federal income tax purposes, be considered an original
issue discount debt security, regardless of the amount payable upon redemption
or acceleration of maturity.
INFORMATION IN THE PROSPECTUS SUPPLEMENT
Your prospectus supplement will describe one or more of the following terms of
your debt security:
- the issuer of the series of debt securities
- the title of the series of debt securities;
- the stated maturity;
- whether your debt security is a senior or subordinated debt security;
- the specified currency or currencies for principal and interest, if
not U.S. dollars;
- the price at which we originally issue your debt security, expressed
as a percentage of the principal amount, and the original issue date;
-- If you purchase your note in a market-making transaction, you
will receive information about the price you pay and your trade
and settlement dates in a separate confirmation of sale. A
MARKET-MAKING TRANSACTION is one in which
7
Popular Securities or another of our affiliates resells a note
that it has previously acquired from another holder. A
market-making transaction in a particular note occurs after the
original issuance and sale of the note.
- whether your debt security is a fixed rate debt security, a floating
rate debt security or an indexed debt security, and also whether it is
an original issue discount debt security;
- if your debt security is a fixed rate debt security, the rate at which
your debt security will bear interest, if any, the regular record
dates and the interest payment dates;
- if your debt security is a floating rate debt security, the interest
rate basis; any applicable index, currency or maturity, spread or
spread multiplier or initial, maximum or minimum rate; the interest
reset, determination, calculation and payment dates; and the
calculation agent;
- if your debt security is an original issue discount debt security, the
yield to maturity;
- if your debt security is an indexed debt security, the principal
amount the issuer will pay you at maturity, the amount of interest, if
any, the issuer will pay you on an interest payment date or the
formula the issuer will use to calculate these amounts, if any, and
whether your debt security will be exchangeable for or payable in
stock of an issuer other than the issuer of the indexed debt security
or other property;
- whether your debt security may be redeemed or repaid by the issuer at
our or the holder's option before the stated maturity and, if so,
other relevant terms such as the redemption commencement date,
repayment date(s), redemption price(s) and redemption period(s), all
of which we describe under "-- Redemption and Repayment" below;
- whether we will issue or make available your debt security in
non-book-entry form;
- the denominations in which securities will be issued (if other than
integral multiples of U.S. $1,000); and
- any other terms of your debt security that are consistent with the
provisions of the indentures.
LEGAL OWNERSHIP OF SECURITIES
Please note that in this prospectus, the term "HOLDERS" means those who own
securities registered in their own names on the books that we or the trustee
maintain for this purpose and not those who own beneficial interests in
securities registered in "street name" or in securities issued in book-entry
form through The Depository Trust Company.
We refer to those who have securities registered in their own names, on the
books that we or the trustee maintain for this purpose, as the holders of those
securities. These persons are the legal holders of the securities. We refer to
those who, indirectly through others, own beneficial interests in securities
that are not registered in their own names as indirect owners of those
securities. As we discuss below, indirect owners are not legal holders, and
investors in securities issued in book-entry form, which we refer to as
book-entry securities, or in street name will be indirect owners.
BOOK-ENTRY OWNERS
Securities represented by one or more global securities are registered in the
name of a financial institution that holds them as depositary on behalf of other
financial institutions that participate in the depositary's book-entry system.
These participating institutions, in turn, hold beneficial interests in the
securities on behalf of themselves or their customers.
Under the indentures, only the person in whose name a security is registered is
recognized as the holder of that security. Consequently, for book-entry
securities, we will recognize only the depositary as the holder of the
securities, and we will make all payments on the securities to the depositary.
The depositary passes along the payments it receives to its participants, which
in turn pass the payments along to their customers who are the beneficial
owners. The depositary and its participants make these payments under agreements
they have made with one another or with their customers; they are not obligated
to do so under the terms of the securities.
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As a result, investors in global securities will not own debt securities
directly. Instead, they will own beneficial interests in a global security,
through a bank, broker or other financial institution that participates in the
depositary's book-entry system or holds an interest through a participant. As
long as debt securities are issued in global form, investors will be indirect
owners, and not holders, of the securities. More information regarding the
depositary, participants and indirect owners is described under "-- Special
Considerations for Global Debt Securities -- Information Relating to DTC".
STREET NAME OWNERS
We may terminate a global security or issue securities initially in non-global
form. In these cases, investors may choose to hold their securities in their own
names or in "street name". Securities held by an investor in street name would
be registered in the name of a bank, broker or other financial institution that
the investor chooses, and the investor would hold only a beneficial interest in
those securities through an account he or she maintains at that institution.
For securities held in street name, we will recognize only the intermediary
banks, brokers and other financial institutions in whose names the securities
are registered as the holders of those securities, and we will make all payments
on those securities to them. These institutions pass along the payments they
receive to their customers who are the beneficial owners, but only because they
agree to do so in their customer agreements or because they are legally required
to do so. Investors who hold securities in street name will be indirect owners,
not holders, of those securities.
If you hold debt securities through a bank, broker or other financial
institution, either in book-entry form or in street name, you should check with
your own institution to find out:
- how it handles securities payments and notices;
- whether it imposes fees or charges;
- how it would handle a request for the holder's consent, if ever
required;
- whether and how you can instruct it to send you debt securities
registered in your own name so you can be a holder, if that is
permitted in the future;
- how it would exercise rights under the debt securities if there were a
default or other event triggering the need for holders to act to
protect their interests; and
- if the debt securities are in book-entry form, how the depositary's
rules and procedures will affect these matters.
LEGAL HOLDERS
Our obligations, as well as the obligations of the trustee and those of any
third parties employed by us or the trustee, run only to the holders of
securities. We do not have obligations to investors who hold beneficial
interests in street name, in global securities or by any other indirect means.
This will be the case whether an investor chooses to be an indirect owner of a
security or has no choice because we issue the securities only in global form.
For example, once we make payment or give a notice to the holder, we have no
further responsibility for that payment or notice even if that holder is
required, under agreements with depositary participants or customers or by law,
to pass it along to the indirect owners but does not do so. Similarly, if we
want to obtain the approval of the holders for any purpose -- e.g., to amend the
indentures or to relieve us of the consequences of a default or of our
obligation to comply with a particular provision of the indenture -- we would
seek the approval only from the holders, and not the indirect owners, of the
securities. Whether and how the holders contact the indirect owners is up to the
holders.
WHAT IS A GLOBAL DEBT SECURITY?
We may issue each debt security only in book-entry form. Each debt security
issued in book-entry form will be represented by a global debt security that we
will deposit with and register in the name of a financial institution or its
nominee, that we select. The financial institution that we select for this
purpose is called the depositary. Unless we say otherwise in the applicable
prospectus
9
supplement, The Depository Trust Company, New York, New York, known as DTC, will
be the depositary for all debt securities issued in book-entry form.
A global debt security may represent one or any other number of individual debt
securities. Generally, all debt securities represented by the same global debt
security will have the same terms. We may, however, issue a global debt security
that represents multiple debt securities that have different terms and are
issued at different times. We call this kind of global debt security a master
global debt security.
A global debt security may not be transferred to or registered in the name of
anyone other than the depositary or its nominee, unless special termination
situations arise. We describe those situations below under "-- Special
Considerations for Global Debt Securities -- Special Situations When a Global
Debt Security Will Be Terminated". As a result of these arrangements, the
depositary, or its nominee, will be the sole registered owner and holder of all
debt securities represented by a global debt security, and investors will be
permitted to own only beneficial interests in a global debt security. Beneficial
interests must be held by means of an account with a broker, bank or other
financial institution that in turn has an account with the depositary or with
another institution that does. Thus, an investor whose debt security is
represented by a global debt security will not be a legal holder of the debt
security, but only an indirect owner of a beneficial interest in the global debt
security.
If the prospectus supplement for a particular debt security indicates that the
debt security will be issued in "global form only", then the debt security will
be represented by a global debt security at all times unless and until the
global debt security is terminated under one of the special situations described
below under "-- Special Considerations for Global Debt Securities -- Special
Situations When a Global Debt Security Will Be Terminated". The global debt
security may be a master global debt security, although your prospectus
supplement will not indicate whether it is a master global debt security.
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SPECIAL CONSIDERATIONS FOR
GLOBAL DEBT SECURITIES
As an indirect owner, an investor's rights relating to a global debt security
will be governed by the account rules of the investor's financial institution
and of the depositary, as well as general laws relating to securities transfers.
We do not recognize this type of investor as a legal holder of debt securities
and instead deal only with the depositary that holds the global debt security.
INFORMATION RELATING TO DTC
DTC will act as securities depository for the book-entry securities. The
book-entry securities will be issued as fully registered securities registered
in the name of Cede & Co. (DTC's partnership nominee). One fully registered
global debt security will be issued for each issue of book-entry securities,
each in the aggregate principal amount of that issue, and will be deposited with
DTC. If, however, the aggregate principal amount of any issue exceeds
$400,000,000, one global debt security will be issued with respect to each
$400,000,000 of principal amount and an additional global debt security will be
issued with respect to any remaining principal amount of that issue.
DTC is a limited-purpose trust company organized under the New York Banking Law,
a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered under the provisions of Section 17A of the Exchange Act. DTC holds
securities that its participants deposit with DTC. DTC also facilitates the
settlement among participants of securities transactions, such as transfers and
pledges, in deposited securities through electronic computerized book-entry
changes in participants' accounts, thereby eliminating the need for physical
movement of securities certificates. Direct participants of DTC include
securities brokers and dealers (including the agents), banks, trust companies,
clearing corporations and certain other organizations. DTC is owned by a number
of its direct participants and by the New York Stock Exchange, Inc., the
American Stock Exchange LLC, and the National Association of Securities Dealers,
Inc. Access to DTC's system is also available to others such as securities
brokers and dealers, banks and trust companies that clear through or maintain a
custodial relationship with a direct participant, either directly or indirectly.
The rules applicable to DTC and its participants are on file with the Securities
and Exchange Commission.
Purchases of book-entry securities under DTC's system must be made by or through
direct participants, which will receive a credit for the book-entry securities
on DTC's records. The ownership interest of each actual purchaser of each
book-entry note represented by a global debt security, which we refer to as an
indirect owner, is in turn to be recorded on the records of direct participants
and indirect participants. Indirect owners will not receive written confirmation
from DTC of their purchase, but they are expected to receive written
confirmations providing details of the transaction, as well as periodic
statements of their holdings, from the direct participants or indirect
participants through which such indirect owners entered into the transaction.
Transfers of ownership interests in a global debt security representing
book-entry securities are to be accomplished by entries made on the books of
participants acting on behalf of indirect owners. Indirect owners of a global
debt security representing book-entry securities will not receive non-global
certificates representing their ownership interests in the book-entry
securities, except if use of the book-entry system for the book-entry securities
is discontinued.
To facilitate subsequent transfers, all global debt securities representing
book-entry securities which are deposited with, or on behalf of, DTC are
registered in the name of DTC's nominee, Cede & Co. The deposit of global debt
securities with, or on behalf of, DTC and their registration in the name of Cede
& Co. effect no change in beneficial ownership. DTC has no knowledge of the
actual indirect owners of the global debt securities representing the book-entry
securities; DTC's records reflect only the identity of the direct participants
to whose accounts the book-entry securities are credited, which may or may not
be the indirect owners. The participants will remain responsible for keeping
account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to direct participants, by
direct participants to indirect participants, and by direct participants and
indirect participants to indirect owners will be governed by arrangements among
them, subject to any statutory or regulatory requirements as may be in effect
from time to time.
Neither DTC nor Cede & Co. will consent or vote with respect to the global debt
securities representing the book-entry securities. Under its usual procedures,
DTC mails an omnibus proxy to a company as soon as possible after the applicable
record date. The omnibus proxy assigns Cede & Co.'s consenting or voting rights
to those direct participants to whose accounts the book-entry securities are
credited on the applicable record date (identified in a listing attached to the
omnibus proxy).
Principal, premium, if any, and/or interest, if any, payments on the global debt
securities representing the book-entry securities will be made in immediately
available funds to DTC. DTC's practice is to credit direct participants'
accounts on the applicable payment date in accordance with their respective
holdings shown on DTC's records unless DTC has reason to believe that it will
not receive payment on that date. Payments by participants to indirect owners
will be governed by standing instructions and customary practices, as is the
case with securities held for the accounts of customers in bearer form or
registered in "street name", and will be the responsibility of those
participants and not of DTC, the trustee or us, subject to any statutory or
regulatory requirements as may be in effect from time to time. Payment of
principal, premium, if any, and/or interest, if any, to DTC is the
responsibility of the issuer and the trustee, disbursement of the payments to
direct participants will be the responsibility of DTC, and disbursement of such
payments to the indirect owners will be the responsibility of direct
participants and indirect participants.
If applicable, redemption notices will be sent to Cede & Co. If less than all of
the book-entry securities of like tenor and terms are being redeemed, DTC's
practice is to determine by lot the amount of the interest of each direct
participant in the issue to be redeemed.
An indirect owner will give notice of any option to elect to have its book-entry
securities repaid by us, through its participant, to the trustee, and will
effect delivery of the book-entry securities by causing the direct participant
to transfer the participant's interest in the global debt security or securities
representing the book-entry securities, on DTC's records, to the trustee. The
requirement for physical delivery of book-entry securities in connection with a
demand for repayment will be deemed satisfied when the ownership rights in the
global debt security or securities representing the book-entry securities are
transferred by direct participants on DTC's records.
DTC may discontinue providing its services as securities depository with respect
to the book-entry securities at any time by giving reasonable notice to us or
the trustee. Under these circumstances, if a successor securities depository is
not obtained, non-global certificates are required to be printed and delivered.
We may decide to discontinue use of the system of book-entry transfers through
DTC (or a successor securities depository). In that event, non-global
certificates will be printed and delivered.
The information in this section concerning DTC and DTC's system has been
obtained from sources that we believe to be reliable, but neither we nor any
agent takes any responsibility for the accuracy of this information.
If debt securities are issued only in the form of a global debt security, an
investor should be aware of the following:
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- An investor cannot get the debt securities registered in his or her
own name and cannot get non-global certificates for his or her
interest in the debt securities, except in the special situations we
describe below;
- An investor will be an indirect owner and must look to his or her own
bank or broker for payments on the debt securities and protection of
his or her legal rights relating to the debt securities, as we
describe under "-- Legal Ownership of Securities" above;
- An investor may not be able to sell interests in the debt securities
to some insurance companies and other institutions that are required
by law to own their securities in non-book-entry form;
- The depositary's policies, which may change from time to time, will
govern payments, transfers, exchanges and other matters relating to
the investor's interest in a global debt security. We and the trustee
have no responsibility for any aspect of the depositary's actions or
for its records of ownership interests in a global debt security. We
and the trustee also do not supervise the depositary in any way;
- The depositary may require that those who purchase and sell interests
in a global debt security within its book-entry system use immediately
available funds, and your broker or bank may require you to do so as
well; and
- Financial institutions that participate in the depositary's book-entry
system, and through which an investor holds its interest in the global
debt securities, may also have their own policies affecting payments,
notices and other matters relating to the debt securities. There may
be more than one financial intermediary in the chain of ownership for
an investor. We do not monitor and are not responsible for the actions
of any of those intermediaries.
SPECIAL SITUATIONS WHEN A GLOBAL DEBT SECURITY WILL BE TERMINATED
In a few special situations described below, a global debt security will be
terminated and interests in it will be exchanged for certificates in non-global
form representing the debt securities it represented. After that exchange, the
choice of whether to hold the debt securities directly or in street name will be
up to the investor. Investors must consult their own banks or brokers to find
out how to have their interests in a global debt security transferred on
termination to their own names, so that they will be legal holders. We have
described the rights of holders and street name investors above under "-- Legal
Ownership of Securities".
The special situations for termination of a global debt security are:
- when the depositary notifies us that it is unwilling, unable or no
longer qualified to continue as depositary for that global debt
security and we do not appoint another institution to act as
depositary within 60 days;
- when we notify the trustee that we wish to terminate that global debt
security; or
- when an event of default has occurred with regard to debt securities
represented by that global debt security and has not been cured or
waived; we discuss defaults below under "-- Default and Remedies".
When a global debt security is terminated, only the depositary, and not we or
the trustee, is responsible for deciding the names of the institutions in whose
names the debt securities represented by the global debt security will be
registered and, therefore, who will be the holders of those debt securities.
NOTICES
Notices to be given to holders of a global note will be given only to the
depositary, in accordance with its applicable policies as in effect from time to
time. Notices to be given to holders of notes not in global form will be sent by
mail to the respective addresses of the holders as they appear in the trustee's
records, and will be deemed given when mailed. Neither the failure to give any
notice to a particular holder, nor any defect in a notice given to a particular
holder, will affect the sufficiency of any notice given to another holder.
IN THE REMAINDER OF THIS DESCRIPTION "YOU" MEANS DIRECT HOLDERS AND NOT BOOK
ENTRY, STREET NAME OR OTHER INDIRECT OWNERS OF DEBT SECURITIES.
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FORM, EXCHANGE,
REGISTRATION AND TRANSFER
Debt securities may be issued:
- only in fully registered form; and
- without interest coupons.
Holders may exchange their non-global debt securities for debt securities of
smaller denominations or combined into fewer debt securities of larger
denominations, as long as the total principal amount is not changed. This is
called an "exchange".
Holders may exchange or transfer their certificated debt securities at the
office of the trustee. We will initially appoint the trustee to act as our agent
for registering debt securities in the names of holders and transferring debt
securities. We may appoint another entity to perform these functions or perform
them ourselves. The entity performing the role of maintaining the list of
registered holders is called the security registrar. It will also perform
transfers.
Holders will not be required to pay a service charge to transfer or exchange
their debt securities, but they may be required to pay for any tax or other
governmental charge associated with the exchange or transfer. The transfer or
exchange will be made only if our transfer agent is satisfied with the holder's
proof of legal ownership.
If we have designated additional transfer agents for your debt security, they
will be named in your prospectus supplement. We may appoint additional transfer
agents or cancel the appointment of any particular transfer agent. We may also
approve a change in the office through which any transfer agent acts.
If any debt securities are redeemable and we redeem less than all those debt
securities, we may prohibit the transfer or exchange of those debt securities
during the period beginning 15 days before the day we mail the notice of
redemption and ending on the day of that mailing, in order to freeze the list of
holders to prepare the mailing. We may also refuse to register transfers or
exchanges of any debt security selected for redemption, except that we will
continue to permit transfers and exchanges of the unredeemed portion of any debt
security being partially redeemed.
If a debt security is issued as a global debt security, only the depositary will
be entitled to transfer and exchange the debt security as described in this
subsection because it will be the sole holder of the debt security.
PAYMENT AND PAYING AGENT
The issuer will only be required to make payment of the principal on a debt
security if you surrender the debt security to the paying agent for that debt
security. The issuer will only be required to make payment of principal and
interest at the office of the paying agent, except that at its option, it may
pay interest by mailing a check to the holder. Unless we indicate otherwise in
the applicable prospectus supplement, the issuer will pay interest to the person
who is the holder at the close of business on the record date for that interest
payment, even if that person no longer owns the debt security on the interest
payment date.
We will specify in the applicable prospectus supplement the regular record date
relating to an interest payment date for any fixed rate debt security and for
any floating rate debt security.
PAYMENT WHEN OFFICES ARE CLOSED
If any payment is due on a debt security on a day that is not a business day, we
will make the payment on the next day that is a business day. Payments postponed
to the next business day in this situation will be treated under the indentures
as if they were made on the original due date. Postponement of this kind will
not result in a default under any debt security or indenture, and no interest
will accrue on the postponed amount from the original due date to the next day
that is a business day unless the applicable prospectus supplement specifies
otherwise.
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PAYING AGENT
We will specify the paying agent for payments with respect to debt securities of
each series of debt securities in the applicable prospectus supplement. We may
at any time designate additional paying agents, rescind the designation of any
paying agent or approve a change in the office through which any paying agent
acts, except that we must maintain a paying agent in each place of payment for
each series of debt securities.
UNCLAIMED PAYMENTS
Regardless of who acts as paying agent, all money paid by us to a paying agent
that remains unclaimed at the end of two years after the amount is due to a
holder will be repaid to us. After that two-year period, the holder may look
only to the issuer (or any guarantor) for payment and not to the trustee, any
other paying agent or anyone else.
REDEMPTION AND REPAYMENT
Unless otherwise indicated in your prospectus supplement, your debt security
will not be entitled to the benefit of any sinking fund -- that is, we will not
deposit money on a regular basis into any separate custodial account to repay
your debt securities. In addition, except as described below, we will not be
entitled to redeem your debt security before its stated maturity unless your
prospectus supplement specifies a redemption commencement date. You will not be
entitled to require us to buy your debt security from you, before its stated
maturity, unless your prospectus supplement specifies one or more repayment
dates.
If your prospectus supplement specifies a redemption commencement date or a
repayment date, it will also specify one or more redemption prices or repayment
prices, which will be expressed as a percentage of the principal amount of your
debt security. It may also specify one or more redemption periods during which
the redemption prices relating to a redemption of debt securities will apply.
If your prospectus supplement specifies a redemption commencement date, your
debt security will be redeemable at our option at any time on or after that
date. If we redeem your debt security, we will do so at the specified redemption
price, together with interest accrued to the redemption date. If different
prices are specified for different redemption periods, the price we pay will be
the price that applies to the redemption period during which your debt security
is redeemed.
If your prospectus supplement specifies a repayment date, your debt security
will be repayable at your option on the specified repayment date at the
specified repayment price, together with interest accrued to the repayment date.
In the event that we exercise an option to redeem any debt security, we will
give to the trustee and the holder written notice of the principal amount of the
debt security to be redeemed, not less than 30 days nor more than 60 days before
the applicable redemption date. Notice of this redemption will be mailed to
holders at the address that appears on the register of the redeemed debt
securities.
If a debt security represented by a global debt security is repayable at the
holder's option, the depositary or its nominee, as the holder, will be the only
person that can exercise the rights to repayment. Any indirect owners who own
beneficial interests in the global debt security and wish to exercise a
repayment right must give proper and timely instructions to their banks or
brokers through which they hold their interests, requesting that they notify the
depositary to exercise the repayment right on their behalf. Different firms have
different deadlines for accepting instructions from their customers, and you
should take care to act promptly enough to ensure that your request is given
effect by the depositary before the applicable deadline for exercise.
Street name and other indirect owners should contact their banks or brokers for
information about how to exercise a repayment right in a timely manner.
If the option of the holder to elect repayment as described above is deemed to
be a "tender offer" within the meaning of Rule 14e-1 under the Securities
Exchange Act of 1934, we will comply with Rule 14e-1 as then in effect to the
extent applicable.
We or our affiliates may purchase debt securities from investors who are willing
to sell from time to time, either in the open market at prevailing prices or in
private transactions at negotiated prices. Debt securities that we or they
purchase may, at our discretion, be held, resold or canceled.
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A change in law, regulation or interpretation could oblige Popular, Inc. or
Popular International Bank, Inc. to pay the additional amounts that are
discussed in "-- Taxation by the Commonwealth of Puerto Rico" below. If this
happens, we will have the option of redeeming or repaying an entire series of
the debt securities at our discretion after giving between 30 and 60 days'
notice to the holders at a redemption price of 100% of the principal amount of
the notes with the accrued interest to the redemption date, or another
redemption price specified in the applicable prospectus supplement.
MERGERS AND SIMILAR TRANSACTIONS
Each issuer is generally permitted to merge or consolidate with another entity.
Each issuer is also permitted to sell its assets substantially as an entirety to
another firm. An issuer may not take any of these actions, however, unless all
the following conditions are met:
- If the successor firm in the transaction is not the applicable issuer,
the successor firm must expressly assume that issuer's obligations
under the debt securities, the guarantees and the indentures.
- Immediately after the transaction, no default under the indentures or
debt securities of that issuer has occurred and is continuing. For
this purpose, "default under the indentures or debt securities" means
an event of default or any event that would be an event of default if
the requirements for giving us default notice and for the issuer's
default having to continue for a specific period of time were
disregarded. We describe these matters below under "-- Default and
Remedies".
These conditions will apply only if an issuer wishes to merge, consolidate or
sell its assets substantially as an entirety. An issuer will not need to satisfy
these conditions if it enters into other types of transactions, including any
transaction in which it acquires the stock or assets of another firm, any
transaction that involves a change of control of it but in which it does not
merge or consolidate and any asset sale that does not constitute a sale of its
assets substantially as an entirety.
The meaning of the phrase "substantially as an entirety" as used above will be
interpreted in connection with the facts and circumstances of the subject
transaction and is subject to judicial interpretation. Accordingly, in certain
circumstances, there may be a degree of uncertainty in ascertaining whether a
particular transaction would involve a disposition of the assets of the issuer
substantially as an entirety.
RESTRICTIVE COVENANTS
In the senior indentures, Popular, Inc. promises not to sell, transfer or
otherwise dispose of any voting stock of Banco Popular or permit Banco Popular
to issue, sell or otherwise dispose of any of its voting stock, unless, after
giving effect to the transaction, Banco Popular, Inc. remains a controlled
subsidiary (as defined below), except as provided above under "-- Mergers and
Similar Transactions".
In addition, Popular, Inc. may not permit Banco Popular to:
- merge or consolidate, unless the survivor is a controlled subsidiary,
or
- convey or transfer its properties and assets substantially as an
entirety, except to a controlled subsidiary.
The senior indentures define "voting stock" as the stock of the class or classes
having general voting power under ordinary circumstances to elect a majority of
the board of directors, managers or trustees of a corporation. Stock that may
vote only if an event occurs that is beyond the control of its holders is not
considered voting stock under the senior indentures, whether or not the event
has happened. "Controlled subsidiary" means any corporation of which an issuer
owns more than 80% of the outstanding voting stock.
Popular, Inc. also promises in the senior indentures not to, nor to permit any
material banking subsidiary to, create, incur or permit to exist any
indebtedness for borrowed money secured by a lien or other encumbrance on the
voting stock of any material banking subsidiary unless Popular, Inc.'s senior
debt securities, Popular, Inc.'s guarantees of Popular North America, Inc.'s
senior debt securities and, at Popular, Inc.'s discretion, any other
indebtedness with a right of payment equal to Popular, Inc.'s senior debt
securities and Popular, Inc.'s guarantees of Popular North America, Inc.'s
senior debt securities are secured on an equal basis. "Material banking
subsidiary" means any controlled subsidiary chartered as a banking corporation
under federal, state or Puerto Rico
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law that is a significant subsidiary of Popular, Inc. as defined in Rule 1-02 of
Regulation S-X of the SEC. As of the date of this prospectus, Banco Popular,
Inc. and Banco Popular North America, Inc. are the only material banking
subsidiaries of Popular, Inc..
Liens imposed to secure taxes, assessments or governmental charges or levies are
not restricted, however, provided they are:
- not then due or delinquent;
- being contested in good faith;
- are less than $10,000,000 in amount;
- the result of any litigation or legal proceeding which is currently
being contested in good faith or which involves claims of less than
$10,000,000; or
- deposits to secure surety, stay, appeal or customs bonds.
The subordinated indentures do not contain similar restrictions.
DEFAULT AND REMEDIES
Every year each issuer is required to send the trustee for its debt securities a
report on its performance of its obligations under the senior indentures and the
subordinated indentures and on any default. You will have special rights if an
event of default with respect to your senior debt security occurs and is not
cured, as described in this subsection.
EVENTS OF DEFAULT
SENIOR INDENTURES. With respect to your senior debt security, the term "event of
default" means any of the following:
- The issuer does not pay the principal or any premium, if any, on any
senior debt security of that issuer on its due date;
- The issuer does not pay interest on any senior debt security of that
issuer within 30 days after its due date;
- The issuer does not deposit a sinking fund payment with regard to any
senior debt security of that issuer on its due date, but only if the
payment is required in the applicable prospectus supplement;
- The issuer remains in breach of its covenants described under "--
Restrictive Covenants" above, or any other covenant it makes in the
senior indentures for the benefit of the debt securities of that
issuer, for 60 days after it receives a notice of default stating that
it is in breach. However, the breach of a covenant that the senior
indentures expressly impose only on a different series of senior debt
securities than the series of which your senior debt security is a
part will not be an event of default with respect to your senior debt
security;
- The issuer, the guarantor (when other than the issuer) or any material
banking subsidiary of the issuer defaults under borrowed money debt
(see below) totaling in excess of $10,000,000, its obligation to repay
that debt is accelerated by our lenders and its repayment obligation
remains accelerated, unless the debt is paid, the default is cured or
waived or the acceleration is rescinded within 30 days after it
receives a notice of default;
- The issuer, the guarantor (when other than the issuer) or any material
banking subsidiary of the issuer files for bankruptcy, or other events
of bankruptcy, insolvency or reorganization relating to an issuer, the
guarantor (when other than the issuer) or material banking subsidiary
of the issuer occur; or
- If your prospectus supplement states that any additional event of
default applies to your senior debt security, that event of default
occurs.
However, a notice of default as described in the fourth and fifth bullet points
above must be sent by the trustee or the holders of at least 25% of the
principal amount of senior debt securities of the series for those events to be
events of default.
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"Borrowed money debt" means any of the issuer's indebtedness for borrowed money
or the indebtedness of a material banking subsidiary of the issuer, other than
the series of which your senior debt security is a part.
The trustee shall give notice of any default, but notice of a default with
respect to a covenant as described in the fourth bullet point above will not be
given until at least 30 days after it occurs.
SUBORDINATED INDENTURES. With respect to your subordinated debt security, the
term "event of default" means that a filing for bankruptcy or other events of
bankruptcy, insolvency or reorganization relating to the issuer occurs. The
subordinated indentures do not provide for any right of acceleration of the
payment of principal upon a default in the payment of principal or interest or
in the performance of any covenant or agreement on a series of subordinated debt
securities or on the subordinated indentures.
REMEDIES IF AN EVENT OF DEFAULT OCCURS
Under certain circumstances, the holders of not less than a majority in
principal amount of the debt securities of any series may waive a default for
all the debt securities of that series. If this happens, the default will be
treated as if it had not occurred.
SENIOR INDENTURES. If an event of default on the senior debt securities of any
series has occurred and has not been cured or waived, the trustee or the holders
of at least 25% in principal amount of the outstanding senior debt securities of
that series may declare the entire principal amount of the senior debt
securities of that series to be due immediately.
This situation is called an "acceleration of the maturity" of the senior debt
securities. If the maturity of any senior debt securities of any series is
accelerated, the holders of a majority in principal amount of the senior debt
securities of that series affected by the acceleration may cancel the
acceleration for all of those senior debt securities if the issuer has paid all
amounts due with respect to those securities, other than amounts due because of
the acceleration of the maturity, and all events of default, other than
nonpayment of their accelerated principal, have been cured or waived.
SUBORDINATED INDENTURES. If an event of default on the subordinated debt
securities of any series has occurred and has not been cured or waived, the
trustee or the holders of at least 25% in principal amount of the outstanding
subordinated debt securities of that series may declare the entire principal
amount of that series of subordinated debt securities to be due immediately.
This situation is called an acceleration of the maturity of those subordinated
debt securities. If the maturity of any subordinated debt securities of any
series is accelerated, the holders of at least a majority in principal amount of
the subordinated debt securities of that series affected by the acceleration may
cancel the acceleration for all the affected subordinated debt securities.
TRUSTEE'S INDEMNITY
If an event of default on any series of debt securities occurs, the trustee for
those securities will have special duties. In that situation, the trustee will
be obligated to use those of its rights and powers under the indenture, and to
use the same degree of care and skill in doing so, that a prudent person would
use in that situation in conducting his or her own affairs.
Except as described in the prior paragraph, the trustee is not required to take
any action under any of the indentures at the request of any holders unless the
holders of that series offer the trustee reasonable protection from expenses and
liability. This is called an "indemnity". If reasonable indemnity is provided,
the holders of a majority in principal amount of all of the outstanding debt
securities of that series may direct the time, method and place of conducting
any lawsuit or other formal legal action seeking any remedy available to the
trustee. These majority holders of that series may also direct the trustee in
performing any other action under the indenture with respect to the debt
securities of that series.
Before you can bypass the trustee and bring your own lawsuit or other formal
legal action or take other steps to enforce your rights or protect your
interests relating to your debt securities, the following must occur:
- You must give the trustee written notice that an event of default has
occurred, and the event of default must not have been cured or waived;
- The holders of not less than 25% in principal amount of all debt
securities of that series must make a written request that the trustee
take action because of the default, and they or you must offer
reasonable indemnity to the trustee against the cost and other
liabilities of taking that action;
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- The trustee must not have taken action for 60 days after receipt of
the above notice and offer of indemnity; and
- During those 60 days, the holders of a majority in principal amount of
the debt securities of that series must not have given the trustee
directions that are inconsistent with the written request of the
holders of not less than 25% in principal amount of the debt
securities of that series.
You are, however, entitled at any time to bring a lawsuit for the payment of
money due on your debt security on or after its due date.
Book-entry, street name and other indirect owners should consult their banks or
brokers for information on how to give notice or direction to or make a request
of the trustee and how to declare or cancel an acceleration of the maturity.
MODIFICATION AND WAIVER
OF THE INDENTURES
There are three types of changes we can make to the indentures and the debt
securities.
CHANGES REQUIRING YOUR APPROVAL
First, there are changes that cannot be made without the approval of each holder
of a debt security affected by the change. Here is a list of this type of
change:
- change the stated maturity for any principal or interest on a debt
security;
- reduce the principal amount, the amount of principal of an original
issue discount security payable on acceleration of the maturity after
a default, the interest rate or the redemption price of a debt
security;
- change the currency of any payment on a debt security;
- change the place of payment on a debt security;
- impair a holder's right to sue for payment of any amount due on its
debt security;
- reduce the percentage in principal amount of the debt securities of
any series of debt securities, the approval of whose holders is needed
to change the indentures;
- reduce the percentage in principal amount of the debt securities of
any series, the consent of whose holders is needed to modify or amend
the indenture or waive an issuer's compliance with the indenture or to
waive defaults;
- modify the subordination provision of the subordinated indentures,
unless the change would not adversely affect the interests of the
holders of that series of debt securities; and
- in the case of Popular North America, Inc.'s and Popular International
Bank's indentures, modify the terms and conditions of the guarantor's
obligations regarding the due and punctual payment of principal or any
premium, interest, additional amounts we describe below under "--
Taxation by the Commonwealth of Puerto Rico" or sinking fund payment.
CHANGES NOT REQUIRING APPROVAL
The second type of change does not require any approval by holders of debt
securities. This type is limited to clarifications and changes that would not
adversely affect the interests of the holders of the debt securities in any
material respect, nor do we need your consent to make changes that affect only
other debt securities to be issued after the changes take effect.
We may also make changes or obtain waivers that do not adversely affect a
particular debt security, even if they affect other debt securities or series of
debt securities. In those cases, we do not need to obtain the approval of the
holder of that debt security; we need only obtain any required approvals from
the holders of the affected debt securities or other debt securities.
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CHANGES REQUIRING MAJORITY APPROVAL
Any other changes to the indentures and the debt securities would require the
following approval:
- If the change affects only one series of debt securities, it must be
approved by the holders of at least a majority in principal amount of
that series.
- If the change affects more than one series of debt securities, it must
be approved by the holders of at least a majority in principal amount
of each series of the particular issuer's debt securities affected by
the change.
In each case, the required approval must be given by written consent.
The approval of at least a majority in principal amount of the debt securities
of each affected series of an issuer would be required for the issuer to obtain
a waiver of any of its covenants in the indentures. The covenants include the
promises about merging and putting liens on the issuer's interests, which we
describe above under "-- Mergers and Similar Transactions" and "-- Restrictive
Covenants". If the required holders approve a waiver of a covenant, we will not
have to comply with it. The holders, however, cannot approve a waiver of any
provision in a particular debt security, or in the indenture as it affects that
debt security, that we cannot change without the approval of the holder of that
debt security as described above in "-- Changes Requiring Your Approval", unless
that holder approves the waiver.
Book-entry, street name and other indirect owners should consult their banks or
brokers for information on how approval may be granted or denied if we seek to
change the indentures or the debt securities or request a waiver.
FURTHER DETAILS CONCERNING VOTING
When taking a vote, we will use the following rules to decide how much principal
amount to attribute to a debt security:
- For original issue discount securities, we will use the principal
amount that would be due and payable on the voting date if the
maturity of those debt securities were accelerated to that date
because of a default.
- For debt securities whose principal amount is not known, for example,
because it is based on an index, we will use a special rule for that
debt security determined by our board of directors or described in the
prospectus supplement.
- For debt securities denominated in one or more foreign currencies or
currency units, we will use the U.S. dollar equivalent.
Debt securities will not be considered outstanding, and therefore will not be
eligible to vote, if we have deposited or set aside in trust for you money for
their payment or redemption.
We will generally be entitled to set any day as a record date for the purpose of
determining the holders of outstanding debt securities that are entitled to vote
or take other action under the indenture.
TAXATION BY THE COMMONWEALTH
OF PUERTO RICO
We will not withhold or deduct any present or future taxes, duties, assessments
or governmental charges that are imposed or levied by or on behalf of Puerto
Rico or by or with any district, municipality or other political subdivision of
Puerto Rico from payments to holders of the debt securities and all payments
made under the guarantees unless the law requires us to withhold or deduct these
taxes, duties, assessments or governmental charges.
In the event that law requires the issuer to deduct or withhold any amounts in
respect of taxes, duties, assessments or governmental charges, the issuer will
pay these additional amounts of principal, premium and interest (after deduction
of these taxes, duties, assessments or governmental charges) in the payment to
the holders of the debt securities, of the amounts which we would otherwise have
paid in respect to the debt securities in the absence of deductions or
withholding, which we refer to as additional amounts, except that we will not
pay any additional amounts:
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- to a holder of a debt security or an interest in or rights in a debt
security where deduction or withholding is required because the holder
has some connection with Puerto Rico or any political subdivision or
taxing authority of Puerto Rico or any political subdivision other
than the mere holding of and payment in respect of the debt security;
- to a holder of a debt security when any deduction or withholding would
not have been required but for the holder's presentation for payment
on a date more than 30 days after maturity or the date on which
payment is duly provided for, whichever occurs later; or
- to a holder when any deduction or withholding would not have been
required but for the holder's failure to comply with any
certification, identification or other reporting requirements
concerning the nationality, residence, identity or connection with
Puerto Rico, or any political subdivision or taxing authority of
Puerto Rico if law requires compliance as a precondition to exemption
from deduction or withholding.
SPECIAL TERMS RELATING TO THE
SUBORDINATED DEBT SECURITIES
Unless otherwise indicated in the applicable prospectus supplement, the
following provisions apply to the subordinated debt securities and Popular,
Inc.'s guarantees of the subordinated debt securities of Popular International
Bank, Inc. and Popular North America, Inc.
The right of a holder of subordinated debt securities to payment from any
distribution of an issuer's assets resulting from any dissolution, winding up,
liquidation, bankruptcy or reorganization of the issuer are subordinated to the
prior right to payment in full of all of that issuer's senior indebtedness (as
defined below). The issuer's obligation to make payments on the subordinated
debt securities will not otherwise be affected. No payment on the issuer's
subordinated debt securities may be made during a default on any senior
indebtedness of the issuer. Because the subordinated debt securities are
subordinated in right of payment to any senior indebtedness of the issuer, in
the event of a distribution of assets upon insolvency, some of the issuer's
creditors may recover more, ratably, than holders of subordinated debt
securities of the issuer.
In addition, any amounts of cash, property or securities available after
satisfaction of the rights to payment of senior indebtedness will be applied
first to pay for the full payment of the issuer's other financial obligations
(as defined below) before any payment will be made to holders of the
subordinated debt securities. If the maturity of any subordinated debt
securities is accelerated, all senior indebtedness of the issuer would have to
be repaid before any payment could be made to holders of the issuer's
subordinated debt securities. Because of this subordination, if an issuer
becomes insolvent, its creditors who are not holders of senior indebtedness or
subordinated debt securities may recover ratably less than holders of its senior
indebtedness and may recover ratably more than holders of its subordinated debt
securities.
"Senior indebtedness" of an issuer means an issuer's indebtedness for money
borrowed, except indebtedness that by its terms is not superior in right of
payment to the subordinated debt securities.
"Other financial obligations" of an issuer are defined in the subordinated
indenture of that issuer to mean obligations of that issuer to make payment
pursuant to the terms of financial instruments, such as:
- securities contracts and foreign currency exchange contracts,
- derivative instruments or
- similar financial instruments.
Other financial obligations shall not include:
- obligations on account of an issuer's senior indebtedness and
- obligations on account of indebtedness for money borrowed ranking
equally in their priority of claim to payment with or subordinate to
the claim of subordinated debt securities.
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As of September 30, 2001, Popular, Inc. (on a consolidated basis) had $2.6
billion principal amount of senior indebtedness, which includes $759 million in
senior indebtedness of Popular North America, Inc. that is guaranteed by
Popular, Inc. and no senior indebtedness of Popular International Bank, Inc. and
$7.1 billion of other financial obligations. Popular International Bank, Inc.
had no senior indebtedness and had $4 million in other financial obligations,
and Popular North America, Inc. had $918 million principal amount of senior
indebtedness and $1.8 billion of other financial obligations.
POPULAR, INC.'S GUARANTEE
Popular, Inc. will guarantee punctual payment on the Popular International Bank,
Inc. and Popular North America, Inc. senior debt securities, when and as
payments are due and payable. Popular, Inc.'s guarantee is absolute and
unconditional, without regard for any circumstance that might otherwise
constitute a legal or equitable discharge of a surety or guarantor. A guarantee
executed by Popular, Inc. will evidence the guarantee and will appear on each
Popular International Bank, Inc. and Popular North America senior debt security.
Holders of the Popular International Bank, Inc. and Popular North America senior
debt securities may proceed directly against Popular, Inc. in the event of
default under the Popular International Bank, Inc. and Popular North America
senior debt securities without first proceeding against Popular International
Bank, Inc. or Popular North America, Inc. The guarantees will rank equally in
right of payment with all other unsecured and unsubordinated obligations of
Popular, Inc.
Popular, Inc. will guarantee the punctual payment of rights of payment under the
Popular International Bank, Inc. and Popular North America subordinated debt
securities on a subordinated basis and otherwise on the same terms as the
Popular International Bank, Inc. and Popular North America senior debt
securities.
OUR RELATIONSHIP WITH THE TRUSTEE
Bank One, NA is the trustee under all of the indentures that have been signed,
and we currently expect it will be the trustee under the indentures that have
not been signed. In addition, it is the trustee for Popular North America,
Inc.'s February 5, 1997 junior subordinated indenture.
If an event of default (or an event that would be an event of default if the
requirements for giving the issuer default notice or the default having to exist
for a specific period of time were disregarded) occurs under any of the debt
securities of an issuer, the trustee may be considered to have a conflicting
interest in respect to the debt securities or one of the other indentures for
purposes of the Trust Indenture Act of 1939. In that case the trustee may be
required to resign under one or more indentures and we would be required to
appoint a successor trustee. The trustee provides us with banking and other
services in the normal course of business.
DESCRIPTION OF PREFERRED STOCK
This section summarizes the material terms that will apply generally to the
preferred stock we may issue under this prospectus, which is referred to as the
"preferred stock".
Each series of preferred stock will have financial and other terms specific to
it, and the specific terms of each preferred stock will be described in a
prospectus supplement attached to the front of this prospectus. Those terms may
vary from the terms described here. As you read this section, therefore, please
remember that the specific terms of your preferred stock as described in your
prospectus supplement will supplement and, if applicable, may modify or replace
the general terms described in this section. The statements we make in this
section may not apply to your preferred stock.
The description of the preferred stock that is set forth below and in any
prospectus supplement is only a summary and is qualified by reference to the
documents that govern each issuer's preferred stock, which include:
For Popular, Inc.:
- Restated Certificate of Incorporation, as amended;
- Certificates of Designation describing Popular, Inc.'s 8.35%
Non-Cumulative Monthly Income Preferred Stock;
- 1994 Series A Preferred Stock;
- Series A Participating Preferred Stock; and
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- Certificate of Designation relating to each series of Popular, Inc.'s
preferred stock to which this prospectus relates.
For Popular International Bank, Inc. and Popular North America, Inc.--
- Certificate of Incorporation, as amended; and
- Certificate of Designation relating to each series of preferred stock
to which this prospectus relates.
These documents will be filed as exhibits to the registration statement relating
to the preferred stock at or prior to the time of issuance of preferred stock.
AUTHORITY TO ISSUE PREFERRED STOCK
The Articles of Incorporation of Popular, Inc. authorizes its board of directors
to issue without the approval of the stockholders up to 10,000,000 shares of
authorized preferred stock with no par value. Popular, Inc. has designated and
issued 4,000,000 shares of 8.35% Non-Cumulative Monthly Income Preferred Stock,
1994 Series A, has designated 1,400,000 shares of Series A Participating
Cumulative Preferred Stock and has 4,600,000 shares of Preferred Stock available
to issue.
Popular International Bank, Inc.'s Certificate of Incorporation authorizes its
board of directors to issue 25,000,000 shares of preferred stock with a par
value of $25.00 per share. Popular North America, Inc.'s Certificate of
Incorporation authorizes its board of directors to issue 1,000 shares of
preferred stock with a par value of $.01 per share.
As of the date of this prospectus, Popular International Bank, Inc. and Popular
North America, Inc. had no shares of preferred stock outstanding; Popular, Inc.
owned all of Popular International Bank, Inc.'s common stock; and Popular
International Bank, Inc. owned all of Popular North America, Inc.'s common
stock.
Each issuer's board of directors has the right to designate, for each series of
preferred stock:
- the title;
- dividend rates;
- special or relative rights in the event of a liquidation, distribution
or sale of assets or dissolution or winding up;
- provisions for a sinking fund;
- provisions for redemption or purchase;
- provisions for conversion;
- voting rights;
- the offering price or prices;
- whether the preferred stock will be in certificated or book-entry
form;
- whether the preferred stock will be listed on a national securities
exchange; and
- any rights, preferences, privileges, limitations and restrictions
which are not inconsistent with the provisions of Popular, Inc.'s
Restated Certificate of Incorporation or Popular International Bank,
Inc.'s or Popular North America, Inc.'s Certificate of Incorporation.
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GENERAL TERMS OF THE PREFERRED STOCK
Banco Popular's Trust Division will be the transfer agent, dividend disbursing
agent and registrar for the preferred stock unless otherwise specified in the
applicable prospectus supplement. The issuers are holding companies, so their
rights and the rights of holders of preferred stock to participate in the
distribution of assets of any of their subsidiaries upon their liquidation or
recapitalization separately or together will be subject to the prior claims of
the subsidiary's creditors and preferred stockholders, except to the extent the
issuers may be creditors with recognized claims against the subsidiary or
holders of preferred stock of the subsidiary.
The preferred stock will be fully paid and non-assessable when issued and will
provide holders with no rights to acquire securities, including preferred stock,
that may be issued after you purchase preferred stock. The shares of any series
of preferred stock may not trade at the liquidation preference for that series.
With regard to payment of dividends, except for the cumulation of dividends, and
rights on liquidation, dissolution or winding up of the issuer, the preferred
stock will rank senior to the equity securities of the issuer expressly made
junior to it and the issuers' common stock, equally with other outstanding
series of preferred stock expressly made equal to the preferred stock and junior
to all equity securities expressly made senior to the preferred stock of the
issuer. The term "equity securities" in a certificate of amendment will not
include debt securities convertible into or exchangeable for equity securities.
DIVIDENDS AND DISTRIBUTIONS
At their discretion, the board of directors of each issuer may declare cash
dividends on the preferred stock of the issuer that are payable out of funds
legally available for that purpose. The rate or formula to determine the rate
used to calculate the dividends is set forth in the prospectus supplement for
each series of preferred stock. The dividends may be cumulative or
non-cumulative as provided in the applicable prospectus supplement and will be
payable to the holders of record on the record dates fixed by the board of
directors. The issuers' ability to pay dividends is subject to policies of the
Federal Reserve Board.
No dividends may be declared or paid or funds set apart for the payment of
dividends on any equity securities of an issuer with equal or lesser rights to
the payment of dividends unless dividends are paid or set apart for such payment
on the preferred stock of the issuer. If an issuer does not fully pay dividends
on its preferred stock, holders of the preferred stock of that issuer will share
dividends pro rata with equity securities of the issuer with equal rights to the
payment of dividends.
CONVERSION
The prospectus supplement for any series of preferred stock will state any terms
on which shares of that series are convertible into shares of another series of
preferred stock.
We will reserve and keep available the full number of shares of the additional
preferred stock deliverable upon the conversion of all outstanding shares of any
convertible series of preferred stock. The issuer will keep these reserved
shares of preferred stock free from preemptive rights.
No fractional shares or scrip representing fractional shares of preferred stock
will be issued on the conversion of any convertible preferred stock. At our
election, each holder who would otherwise receive fractional shares will instead
be entitled to receive a cash payment equal to either the current market price
of the fractional interest or the proportionate interest in the net proceeds
from the sale of shares of preferred stock representing the aggregate of such
fractional shares.
EXCHANGE
If so determined by the board of directors of an issuer, the holders of
preferred stock of any series may be obligated to exchange their shares for
other preferred stock or debt securities. The terms of any exchange and any
replacement preferred stock or debt securities will be described in the
applicable prospectus supplement.
REDEMPTION
We may issue a series of preferred stock of which we can redeem all or part at
any time upon terms and at the redemption prices set forth in the applicable
prospectus supplement.
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If any issuer redeems part of a series of preferred stock, that issuer will
determine which shares to redeem by lot or pro rata or by any other method
determined to be equitable by each issuer's board of directors.
Unless we fail to pay the redemption price, dividends will cease to accrue on
preferred stock called for redemption on or after a redemption date, and the
holders' rights will terminate, except for the right to receive the redemption
price.
Under current regulations, bank holding companies may not exercise any option to
redeem shares of preferred stock included as Tier 1 capital, or exchange such
preferred stock for debt securities, without the prior approval of the Federal
Reserve Board. Ordinarily, the Federal Reserve Board would not permit such a
redemption unless
- the shares are redeemed with the proceeds of a sale by the bank
holding company of common stock or perpetual preferred stock; or
- the Federal Reserve Board determines that the bank holding company's
condition and circumstances warrant the reduction of a source of
permanent capital.
PREFERENCES IN LIQUIDATION
In the event of any voluntary or involuntary liquidation, dissolution or winding
up of an issuer, the holders of preferred stock of that issuer will have
preference and priority over any class of equity securities that ranks junior to
their preferred stock upon liquidation, dissolution or winding up. This priority
will extend to payments in the amount set forth in the applicable prospectus
supplement plus all accrued and unpaid dividends to the date of final
distribution to the holders. These payments may be made from capital or surplus
using the assets of the relevant issuer or proceeds from any liquidation. If
these assets or proceeds are insufficient to satisfy fully all claims with an
equal priority of payment, then the assets and proceeds will be distributed
ratably among the holders of preferred stock of that issuer. If you own
non-cumulative preferred stock, you will not be entitled to receive payment for
unpaid dividends from prior dividend periods. After you are paid the full amount
of the liquidation preference to which you are entitled, you will not be
entitled to participate in any further distribution of assets of the issuer of
your preferred stock.
VOTING RIGHTS
The term "Banking Law" refers to a Puerto Rico law and the term "Office of the
Commissioner" refers to the Puerto Rico Office of Financial Institutions, a
regulator. The definitions of these terms are incorporated in this subsection by
reference to the Annual Report on Form 10-K of Popular, Inc. for the year ended
December 31, 2000.
Except as indicated in the applicable prospectus supplement or as expressly
required by applicable law, you will have no voting rights.
Under regulations adopted by the Federal Reserve Board, any series of preferred
stock whose holders become entitled to vote for the election of directors may be
deemed a "class of voting securities". A holder of 25% or more of such series
(or a holder of 5% if it otherwise exercises a "controlling influence" over the
relevant issuer) may then be subject to regulation as a bank holding company in
accordance with the Bank Holding Company Act. In addition, when a series is
deemed a class of voting securities,
- any other bank holding company may be required to obtain the approval
of the Federal Reserve Board to acquire or retain 5% or more of that
series, and
- any person other than a bank holding company may be required to file
with the Federal Reserve Board under the Change in Bank Control Act to
acquire or retain 10% or more of that series.
Section 12 of the Banking Law requires prior approval of the Office of the
Commissioner to obtain control of any bank organized under the Banking Law. The
Banking Law requires that both parties involved in a transfer of voting and
outstanding capital stock of any bank organized under the laws of Puerto Rico to
any person or entity that will become directly or indirectly the owner after the
transfer of more than 5% of the voting and outstanding capital stock of that
bank shall inform the Office of the Commissioner of the proposed transfer at
least 60 days prior to the date the transfer is to be effected. The Banking Law
does not contain any provision allowing for the extension of such 60-day time
period. The transfer requires the approval of the Office of the Commissioner if
it results in a change of control of the bank. For the purposes of Section 12 of
the Banking Law, the term "control" means the power to, directly or indirectly,
direct or influence decisively the administration or the normal operation of the
bank. The Department of the
24
Treasury (predecessor to the Office of the Commissioner) made a determination
that the foregoing provisions of the Banking Law are applicable to a change in
control of Popular, Inc. in a letter dated April 9, 1985.
Pursuant to Section 12(d) of the Banking Law, as soon as the Office of the
Commissioner receives notice of a proposed transaction that may result in the
control or in a change of control of a bank, the Office of the Commissioner
shall have the duty to make the necessary investigations. The Office of the
Commissioner shall issue authorization for the transfer of control of the bank
if the results of his investigations are in his judgment satisfactory. The
decision of the Office of the Commissioner is final and unreviewable.
POPULAR, INC.'S GUARANTEE
Popular, Inc. will fully and unconditionally guarantee the punctual payment of:
- any accrued and unpaid dividends, whether or not declared, on any
series of Popular International Bank, Inc. and Popular North America
preferred stock;
- the redemption price for any shares of Popular International Bank,
Inc. and Popular North America preferred stock called or redeemed at
the option of Popular International Bank, Inc. and Popular North
America, Inc. or the holder;
- the liquidation preference of Popular International Bank, Inc. and
Popular North America preferred stock; and
- any additional amounts with respect to a series of Popular
International Bank, Inc. and Popular North America preferred stock.
The guarantee of the Popular International Bank, Inc. and Popular North America
preferred stock shall constitute an unsecured obligation of Popular, Inc. and
will rank junior to all of its liabilities. The guarantee will rank senior to
Popular, Inc.'s common stock. The guarantee's rank relative to the preferred
stock of Popular, Inc. will be specified in the applicable prospectus
supplement.
VALIDITY OF OFFERED SECURITIES
Brunilda Santos de Alvarez, Esq., counsel to Popular, Inc., will pass upon the
validity of the preferred stock of Popular, Inc. and Popular International Bank,
Inc. for Popular, Inc. and Popular International Bank, Inc. The validity of the
senior debt securities and subordinated debt securities of Popular, Inc. and
Popular International Bank, Inc. and the guarantees by Popular, Inc. of the
senior debt securities and subordinated debt securities of Popular International
Bank, Inc. and Popular North America, Inc. will be passed upon for Popular, Inc.
and Popular International Bank, Inc. by Brunilda Santos de Alvarez, Esq., as to
matters of the laws of the Commonwealth of Puerto Rico and by Sullivan &
Cromwell as to matters of New York law. Sullivan & Cromwell will pass upon the
validity of the securities of Popular North America, Inc. The validity of the
securities will be passed upon for any underwriters or agents by counsel named
in the applicable prospectus supplement. Brunilda Santos de Alvarez, Esq. owns,
directly or indirectly, 5,325 shares of common stock of Popular, Inc. pursuant
to Popular, Inc.'s employee stock ownership plan and otherwise. The employee
stock ownership plan is open to all employees of Popular, Inc.
EXPERTS
The financial statements incorporated in this prospectus by reference to
Popular, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2000
have been so incorporated in reliance on the report of PricewaterhouseCoopers
LLP, independent accountants, given on the authority of said firm as experts in
auditing and accounting.
PLAN OF DISTRIBUTION
PLAN OF DISTRIBUTION FOR THE INITIAL OFFERING AND SALE OF SECURITIES
We may sell securities:
- to or through underwriting syndicates represented by managing
underwriters;
- through one or more underwriters without a syndicate for them to sell
to the public; and
25
- to investors directly or through agents.
Any underwriter or agent involved in the sale of any series of the securities
will be named in the applicable prospectus supplement.
The prospectus supplement for each series of securities will describe:
- the terms of the offering of these securities, including the name of
the agent or the name or names of any underwriters;
- the public offering or purchase price;
- any discounts and commissions to be allowed or paid to the agent or
underwriters and all other items constituting underwriting
compensation;
- any discounts and commissions to be allowed or paid to dealers; and
- any exchanges on which the securities will be listed.
Only the agents or underwriters named in a prospectus supplement are agents or
underwriters in connection with the securities being offered by that prospectus
supplement. Under certain circumstances, we may repurchase securities and
reoffer them to the public as set forth above and arrange for repurchases and
resales of the securities by dealers as described below.
We may agree to indemnify the agents and the several underwriters against
certain civil liabilities, including liabilities under the Securities Act or
contribute to payments the agents or the underwriters may be required to make.
All securities will be a new issue of securities with no established trading
market. Any underwriters to whom securities are sold by us for public offering
and sale may make a market in such securities, but they will not be obligated to
do so and may discontinue any market making at any time without notice. No one
associated with any offering of securities can assure the liquidity of the
trading market for any securities.
The underwriters and their associates may be customers of, lenders to, engage in
transactions with, and perform services for, Popular, Inc. or its subsidiaries
in the ordinary course of business.
Popular Securities, Inc. may participate as an agent or an underwriter in
offerings of securities. Popular Securities is a wholly owned subsidiary of
Popular, Inc. and a member of the NASD. Because of the relationship between
Popular Securities and Popular, Inc., Popular North America, Inc. and Popular
International Bank, Inc., offerings of securities in which Popular Securities
participates will be conducted in accordance with NASD Rule 2720.
PLAN OF DISTRIBUTION FOR MARKET-MAKING
RESALES BY AFFILIATES
This prospectus may be used by the agents or underwriters named in the
applicable prospectus supplement which are affiliates of the issuer in
connection with offers and sales of the securities in market-making
transactions. In a market-making transaction, the affiliated agents or
underwriters may resell a security they acquire from other holders after the
original offering and sale of the securities. Resales of this kind may occur in
the open market or may be privately negotiated, at prices related to prevailing
market prices at the time of resale or at negotiated prices. In these
transactions, the affiliated agents or underwriters may act as principal or
agent, including as agent for the counterparty in a transaction in which the
agents or underwriters act as principal or as agent for both counterparties in a
transaction in which the agents or underwriters do not act as principal. The
agents or underwriters may receive compensation in the form of discounts and
commissions, including from both counterparties in some cases. Other affiliates
of Popular, Inc. may also engage in transactions of this kind and may use this
prospectus for this purpose.
Popular, Inc. does not expect to receive any proceeds from market-making
transactions. Popular, Inc. does not expect that the agents or underwriters or
any other affiliates that engage in these transactions will pay any proceeds
from its making resales to Popular, Inc.
26
A market-making transaction will have a settlement date later than the original
issue date of the securities. Information about the trade and settlement dates,
as well as the purchase price, for a market-making transaction will be provided
to the purchaser in a separate confirmation of sale.
The agents or underwriters do not expect the amount of the securities held as a
result of market-making resales by accounts over which it exercises
discretionary authority to exceed, at any time, five percent of the aggregate
initial offering price of the securities.
WHERE YOU CAN FIND MORE INFORMATION
We file reports, proxy statements and other information with the SEC. Our SEC
filings are also available over the Internet at the SEC's web site at
http://www.sec.gov or at our web site at http://www.bancopopular.com. You may
also read and copy any document we file by visiting the SEC's public reference
rooms. Please call the SEC at 1-800-SEC-0330 for further information about the
public reference rooms. We filed a registration statement on Form S-3 with the
SEC relating to the securities. This prospectus is a part of the registration
statement and does not contain all of the information in the registration
statement. Whenever a reference is made in this prospectus to a contract or
other document, please be aware that the reference is only a summary and that
you should refer to the exhibits that are part of the registration statement
for a copy of the contract or other document.
INCORPORATION OF INFORMATION WE FILE WITH THE SEC
The SEC allows us to incorporate by reference the information we file with them,
which means:
- incorporated documents are considered part of the prospectus;
- we can disclose important information to you by referring you to those
documents; and
- information that we file with the SEC will automatically update and
supersede this incorporated information.
We incorporate by reference the documents listed below which Popular, Inc.
filed with the SEC under the Securities Exchange Act:
1. The Annual Report on Form 10-K for the year ended December 31, 2000,
provided, however, that the information referred to in Item 402(a)(8) of
Regulation S-K promulgated by the SEC shall not be deemed to be specifically
incorporated by reference in this prospectus.
2. The Quarterly Reports on Form 10-Q for the quarters ended March 31, 2001 and
June 30, 2001.
3. The Current Reports on Form 8-K dated January 16, 2001, April 12, 2001, July
13, 2001 and October 10, 2001.
We also incorporate by reference each of the following documents that Popular,
Inc. will file with the SEC after the date of this prospectus until this
offering is completed or after the date of the initial registration statement
and before effectiveness of the registration statement:
- reports filed under Sections 13(a) and (c) of the Exchange Act;
- definitive proxy or information statements filed under Section 14 of
the Exchange Act in connection with any subsequent stockholders'
meeting; and
- any reports filed under Section 15(d) of the Exchange Act.
You should rely only on information contained or incorporated by reference in
this prospectus. We have not, and the agents and dealers have not, authorized
any other person to provide you with different information. If anyone provides
you with different or inconsistent information, you should not rely on it. We
are not, and the agents and dealers are not, making an offer to sell these
securities in any jurisdiction where the offer or sale is not permitted.
You should assume that the information appearing in this prospectus is accurate
as of the date of this prospectus only. Our business, financial condition and
results of operations may have changed since that date.
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You may request a copy of any filings referred to above (excluding exhibits,
other than exhibits that are specifically incorporated by reference in those
filings), at no cost, by contacting us at the following address: Amilcar Jordan,
Senior Vice President, Popular, Inc., P.O. Box 362708, San Juan, Puerto Rico
00936-2708. Telephone requests may be directed to (787) 765-9800. You may also
access this information at our website at http://www.bancopopular.com.
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