exv4w2





Exhibit 4.2



BANCO POPULAR CASH-SETTLED VALUE APPRECIATION INSTRUMENT




Issue Date: April 30, 2010




1.
Defined Terms. When used in this Value Appreciation Instrument (“VAI”), the
following terms have the meanings indicated.





     “Bank” means Banco Popular de Puerto Rico.



     “Company” means Popular, Inc.



     “Determination Price” means the Company’s “average volume weighted price” (displayed under the
heading “Bloomberg VWAP” on the issuer’s Bloomberg page) over the two NASDAQ trading days
immediately prior to the Exercise Date.



     “Exercise Date” means (i) the date of exercise designated by the Holder in the Notice or (ii)
if the date is not so designated in the Notice, the date the Bank receives the Notice, which, in
either event, shall not be earlier than the date that the Notice is received by the Company and
shall not be later than the expiration of the Term.



     “Exercise Price” means $3.43, subject to adjustment pursuant to Section 13.



     “FDIC” means Federal Deposit Insurance Corporation.



     “Holder” means the FDIC or its assignee.



     “Initial Exercise Date” means May 7, 2010.



     “Notice” means written notice, in the form attached as Appendix A, executed by the
Holder.



     “Right” means the cash-settled value appreciation right granted pursuant to this VAI with
respect to 50,000,000 Units (such number of Units subject to adjustment pursuant to Section 13), at
the Exercise Price.



     “Term” means the period commencing on May 7, 2010 and expiring at 5 p.m. EST on May 7, 2011.



     “Unit” means an accounting device used to calculate the settlement amount of the Right granted
by this VAI, which mirrors one share of Company common stock.



     “VWAP” means the Volume Weighted Average Price for a trading day displayed under the heading
“Bloomberg VWAP” on the Bloomberg Page for the Company (or its equivalent successor page if such
page is not available) for such trading day. If the Bloomberg Page or the Bloomberg VWAP is not
available for a trading day, “VWAP” shall mean the volume weighted average price of Company common
stock for such trading day, as determined by a nationally



 









 





recognized investment banking firm retained by the Bank based on available trading information for
the Company’s common stock.




2. Grant of Value Appreciation Right. The Bank hereby grants to the FDIC, during the
Term, the Right.




3. Exercise. To the extent permitted by applicable laws and regulation, the Right is
exercisable in accordance with the following conditions:





	 	(a)	 	The Right may be exercised in whole or in part beginning on the Initial
Exercise Date and continuing, at any time, until expiration of the Term.
	 
	 	(b)	 	Notice designating the date of exercise must be delivered to the Bank prior to
expiration of the Term and the Right shall be deemed to be exercised on the Exercise
Date.





4. Settlement of Right; Payment by Bank. After receipt of the Notice, on the first business
day following the Exercise Date, the Bank shall deliver to the Holder an amount, in cash, equal to
the product of (i) the number of Units with respect to which the Right was exercised and (ii) the
difference between (A) the Determination Price and (B) the Exercise Price. Payment shall be made by
wire transfer of immediately available funds by the Bank to the account designated in the Notice.




5. No Rights as Shareholder. This VAI does not entitle the Holder to any voting rights or
other rights as a shareholder of the Bank or the Company.




6. Compliance with Law. Holder will not exercise the Right and the Bank will not be
obligated to deliver payment, if such exercise or payment would violate any applicable law or any
rule or regulation of any governmental authority or any rule or regulation of any securities
exchange or association.




7. Transfer/Assignment. This VAI is transferable, in whole or in part as set forth above
without the consent of the Bank. This VAI shall be binding upon any successors or assigns of the
Bank and the Holder.




8. Governing Law: Jurisdiction. This VAI shall be governed by and construed in accordance
with the federal law of the United States. Each of the Bank and the Holder agrees to submit to the
exclusive jurisdiction and venue of the federal courts located in the Southern District of New York
for any action, suit or proceeding arising out of or relating to this VAI or the transactions
contemplated hereby. To the extent permitted by applicable law, each of the Bank and the Holder
hereby unconditionally waives trial by jury in any legal action or proceeding relating to the VAI.




9. Amendments/Waivers. This VAI may be amended and the observance of any term of this Value
Appreciation Instrument may be waived only, in the case of an amendment, with the written consent
of the Bank and the Holder, or in the case of a waiver, in writing by the party against whom the
waiver is to be effective.




 









 








10. Notices. All notices hereunder shall be in writing and shall be effective (A) on the
day on
which delivered if delivered personally or transmitted by facsimile with evidence of receipt,
(B) one Business Day after the date on which the same is delivered to a nationally recognized
overnight courier service with evidence of receipt, or (C) five Business Days after the date on
which the same is deposited, postage prepaid, in the U.S. mail, sent by certified or registered
mail, return receipt requested, and addressed to the party to be notified at the address indicated
below, or at such other address and/or telecopy or telex number and/or to the attention of such
other person as the Company or the Holder may designate by ten-day advance written notice.




	 	 	 	 	 

	 

	 	If to the Bank, to:
	 	Richard L. Carrion
	 

	 	 	 	CEO and Chairman of the Board
	 

	 	 	 	 Banco Popular de Puerto Rico
	 

	 	 	 	rcarrion@bppr.com
	 

	 	 	 	(787) 763-0277 (tel)
	 

	 	 	 	(787) 756-0277 (fax)
	 
	 	 	 	 
	 

	 	If to the Holder, to:
	 	Federal Deposit Insurance Corporation
	 

	 	 	 	Receiver of Westernbank Puerto Rico
	 

	 	 	 	1601 Bryan Street, Suite 1700
	 

	 	 	 	Dallas, Texas 75201
	 

	 	 	 	Attn: [Settlement Manager]
	 

	 	 	 	Facsimile: [(703) 465-4324]






11. Entire Agreement. This VAI and the appendices attached hereto contain the entire
agreement between the parties with respect to the subject matter hereof and supersede all prior
and contemporaneous arrangements or undertakings with respect thereto.




12. Acceptance. The recipient of this Right shall signify acceptance of the terms and
conditions of this Value Appreciation Instrument by signing in the space provided below and
returning a signed copy to the Bank.




13. Adjustments; Anti-Dilution. In the event of any subdivision, reclassification or
consolidation of outstanding shares of common stock of the Company, declaration of a dividend
payable in shares of common stock of the Company or common stock split of the Company, then (i) the
number of Units and (ii) the Exercise Price shall each be proportionately adjusted by the Board of
Directors of the Bank to reflect such transaction; provided, however, that any adjustment shall
only be such as is necessary to maintain the proportionate interest of the Holder and preserve,
without exceeding, the value of this Right. There will be no anti-dilution adjustment with respect
to the conversion of the preferred stock of the Company (represented by depository shares) issued
in the April 2010 offering which are expected to convert into shares of common stock after the
shareholder meeting in May 2010. The existence of this Right shall not affect in any manner the
right or power of the Bank or the Company or their respective shareholders to make or authorize any
or all adjustments, recapitalizations, reorganizations or other changes in the capital stock of the
Bank or the Company or its business or any merger or consolidation of the Bank or the Company, or
any issuance of bonds, debentures or preferred




 









 








stock, or dissolution or liquidation, or any sale or transfer of all or any part of its assets or
business, or any other corporate act or proceeding of any kind.




IN WITNESS WHEREOF, the Bank has caused this VAI to be executed by a duly authorized officer as of
the Issue Date written above.




Banco Popular de Puerto Rico




	 	 	 	 	 

	By:

	 	/s/ Richard Carrión
 

	 	 
	 

	 	Name: Richard Carrión	 	 
	 

	 	Title: Chairman and CEO	 	 








ACCEPTED:

FEDERAL DEPOSIT INSURANCE CORPORATION




	 	 	 	 	 

	By:

	 	/s/ Victor Robert
 

	 	 
	 

	 	Name: Victor Robert	 	 
	 

	 	Title: Attorney-in-Fact	 	 






 









 






FORM OF NOTICE OF EXERCISE




TO: Banco Popular de Puerto Rico




RE:Election to Exercise Value Appreciation Instrument




The undersigned, pursuant to the provisions set forth in the attached Value Appreciation
Instrument, hereby irrevocably exercises its Right under such Value Appreciation Instrument with
respect to the Units set forth below.




	 	 	 	 	 	 	 	 	 

	 	 	Number of Units:	 	                   
                   	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	Exercise Date:	 	                                                            ,
201
     
	 	 	 	 	 	 	(if a date is not designated, the
Exercise Date is date the Bank receives this
Notice)
	 
	 	 	 	 	 	 	 	 
	 	 	Wire Transfer Instructions:	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	Bank Name:
	 	 
 

	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	ABA Routing#:
	 	 
 

	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	Beneficiary Name:
	 	 
 

	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	Beneficiary Account #:
	 	 
 

	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	Bank Contact:
	 	 
 

	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	Phone:
	 	 
 

	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	Beneficiary Contact:
	 	 
 

	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	Beneficiary Phone:
	 	 
 

	 	 






HOLDER:




                                                            




	 	 	 	 	 

	By:

	 	 
 

	 	 
	 
	 	 	 	 
	Name:

	 	 
 

	 	 
	 
	 	 	 	 
	Title:

	 	 
 

	 	 
	 
	 	 	 	 
	Date:

	 	                                                            , 201         	 	 






Appendix A -Form of Notice of Exercise of Value Appreciation Instrument