PSE Circular for Brokers No. 1806-99

July 21, 1999 PSE CIRCULAR FOR BROKERS NO. 1806-99 SECURITIES AND EXCHANGE COMMISSION SEC FORM 11-C CURRENT REPORT UNDER SECTION 11 OF THE REVISED SECURITIES ACT (RSA) AND RSA RULE 11(a)-1(b)(3) THEREUNDER 1. July 20, 1999 Date of Report (Date of earliest event reported) 2. SEC Identification Number: 5223 3. BIR Tax Identification No.: 230-000-453-086 4. EQUITABLE BANKING CORPORATION (EBC) Exact name of registrant as specified in its charter 5. Metro Manila Province, country or other jurisdiction of incorporation 6. [ ] (SEC use Only) Industry Classification Code: 7. 262 Juan Luna Street, Binondo, Manila 1006 Address of principal office Postal Code 8. (632) 242-7101 Registrant's telephone number, including area code 9. Not applicable Former name or former address, if changed since last report 10. Securities registered pursuant to Sections 4 and 8 of the RSA Number of Shares of Common Stock Title of Each Class Outstanding and Amount of Debt Outstanding Common Shares 364,385,500 11. Indicate the item numbers reported herein: Item 9 In the special meeting of Stockholders of EBC held on July 20, 1999, the Stockholders approved the following: 1. Amendment of Article Seventh of the Articles of Incorporation of EBC for the purpose of: (a) increasing EBC's authorized capital stock from Five Billion Pesos (P5,000,000,000) divided into Five hundred Million (500,000,000) shares with par value of Ten Pesos (P10.00) per share, to Ten Billion Pesos divided into One Billion (1,000,000,000) shares with par value of Ten Pesos (P10.00) per share, and (b) removing the pre-emptive right of stockholders to subscribe to or acquire shares or any security issued or sold by the Corporation. 2. The final Plan of Merger between EBC and Philippine Commercial International Bank (PCIB), a copy of which is attached herewith; and 3. Amendment of Article XV, Section 4, first and second paragraphs, of the EBC By-Laws to delete the phrase "not exceeding 45 days" therein, thereby removing the said period as the required maximum interval (a) between the record date and the proposed date of any stockholders' meeting, payment of dividend, effectivity of any change, conversion or change of shares or allotment of rights of stockholders, or (b) between the date of closing of the books of the Corporation against transfer of the stock and the date of any of the aforesaid events. cdpr SIGNATURES Pursuant to the requirements of the Revised Securities Act, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized EQUITABLE BANKING CORPORATION Registrant By: (SGD.) ELMER B. SERRANO Officer-in-Charge Corporate Information Office July 20, 1999 PLAN OF MERGER between EQUITABLE BANKING CORPORATION and PHILIPPINE COMMERCIAL INTERNATIONAL BANK This Plan of Merger ("Plan") made and entered into this 15th day of July 1999 at Makati City, Metro Manila, by and between: EQUITABLE BANKING CORPORATION ("EBC"), an expanded commercial bank duly organized and existing under Philippine laws with office at EBC Building, 262 Juan Luna Street, Binondo, Manila represented by its President and Chief Executive Officer, Mr. Wilfrido V. Vergara; and PHILIPPINE COMMERCIAL INTERNATIONAL BANK ("PCIB"), an expanded commercial bank duly organized and existing under Philippines laws with offices at PCIBank Towers, Makati Avenue corner H.V. dela Costa Street, Makati City, Metro Manila, represented by its Chairman, President and Chief Executive Officer, Mr. George L. Go. WITNESSETH; That WHEREAS, the two banking institutions parties to this Plan have determined that it is to their best interest to merge into one corporation, and that such merger will redound to the advantage and welfare of EBC and PCIB and their respective shareholders; prcd NOW, THEREFORE, the parties agree as follows: I. AGREEMENT TO MERGE 1.1 Merger of PCIB into EBC PCIB shall be merged into EBC in accordance with the Corporation Code of the Philippines and the terms and conditions set forth under this Plan (the "Merger"). 1.2. Corporate Approvals This Plan has been approved by the respective Boards of Directors ("BOD") of EBC and PCIB, and shall be submitted to their respective stockholders for approval. After this Plan is approved by the stockholders, the parties shall cause the execution of the Articles of Merger. 1.3. Other Approvals After the shareholder approvals have been obtained, the Articles of Merger, the Certificate of Increase in Authorized Capital Stock, the Certificate of Amendment of Articles of Incorporation to reflect the increase in authorized capital stock of EBC from Five Billion Pesos (Php5,000,000,000) divided into Five Hundred Million (500,000,000) common shares with par value of Ten Pesos (Php10) per common share to Ten Billion Pesos (Php10,000,000,000) divided into One Billion (1,000,000,000) common shares with par value of Ten Pesos (Php10) per common share, and the Application for Listing of Additional EBC Shares to be issued as a result of the Merger, shall be respectively submitted for approval by the Monetary Board of the Bangko Sentral ng Pilipinas ("BSP"), the securities and exchange Commission ("SEC), the Philippine Stock Exchange ("PSE"), and other government or regulatory authorities, if necessary. Furthermore, the parties shall seek the approval of the Philippine Deposit Insurance Corporation ("PDIC") for the transfer to the Merged Bank (as such term is hereinafter defined) of the insurance policy covering deposits in PCIB. 1.4 Effects or Merger On the Effective Date of the Merger, as defined under Clause 6.5 hereof: 1.4.1 EBC shall be the surviving corporation and the separate corporate existence of PCIB shall cease. The name of the surviving corporation upon the effectivity of the Merger shall be "Equitable PCIBank" (hereinafter referred to as the "Merged Bank"). 1.4.2 EBC shall continue to possess all the rights, privileges, immunities and powers and shall be subject to all the duties and liabilities of a corporation organized under the Corporation Code. 1.4.3. EBC shall thereupon the thereafter possess all the rights, privileges, properties, branches, offices, and franchises of PCIB, and all property, real or personal, and all receivables due on whatever account, including subscriptions to shares and other choses in action, and all and every other interest of, or belonging to, or due to PCIB, shall be taken by and deemed transferred to and vested in EBC by operation of law by virtue of and as provided in Section 80(4) of the Corporation Code, without further act or deed. 1.4.4. EBC shall be responsible and liable for all the liabilities and obligations of PCIB in the same manner as if EBC had itself incurred such liabilities or obligations, and any pending claim, action or proceeding brought by or against PCIB may be prosecuted by or against EBC. The rights of creditors or liens upon the property of PCIB shall not be impaired by the merger, provided that EBC shall have the right to exercise all defenses, rights, privileges; set-offs and counterclaims of every kind and nature which PCIB may have, or which EBC may invoke under existing laws. cdlex 1.4.5. PCIB shall surrender its expanded commercial bank license to the BSP. 1.4.6. PCIB shall surrender its listing license to the PSE. Thereafter, PCIB shares shall be delisted. II. CONVERSION OF PCIB SHARES INTO EBC SHARES 2.1. Exchange Ratio The Merger under this Plan shall be affected based on the comparative market values of PCIB common shares and EBC common shares. After consultation with SyCip, Gorres, Velayo & Company as an independent third party, the respective BOD of EBC and PCIB have determined that the exchange ratio to be applied in the Merger is 3:1, or three (3) EBC common shares for every one (1) PCIB common share. 2.2. Capital Structure of PCIB As of the date hereof, PCIB has an outstanding capital stock consisting of the following: Common Shares 152,246,200 * Preferred Shares 53,284 all with par value of Php10.00 per share. The outstanding preferred shares have under the PCIB Articles of Incorporation, the following features: (i) cumulative; (ii) non-voting; (iii) convertible into one (1) PCIB common shares; (iv) redeemable; and (v) non-participating. 2.3. Capital Structure of EBC As of the date hereof, EBC has an outstanding capital stock consisting of Three Hundred Sixty Four Million Three Hundred Eighty Five Hundred (364,385.500) Common Shares with a par value of P10.00 per share. Pursuant to the Merger, EBC shall increase its authorized capital stock from Five Billion Pesos (Php5,000,000,000) divided into Five Hundred Million (500,000,000) common shares with par value of Ten Pesos (Php10) per common share to Ten Billion Pesos (Php10,000,000,000) divided into One Billion (1,000,000,000) common shares with par value of Ten Pesos (Php10) per common shares. 2.4. Exchange of PCIB Shares for EBC Shares 2.4.1. Exchange of PCIB Common Shares Pursuant to the Merger, EBC shall issue to the PCIB common shareholder three (3) EBC common shares for each PCIB common share. 2.4.2 Exchange of PCIB Preferred Shares Pursuant to the Merger, if on the Effective Date, there remain outstanding PCIB preferred shares, EBC shall issue to the PCIB preferred shareholders three (3) EBC common shares for each PCIB preferred share. 2.5. Issuance of EBC Shares EBC shall issue shares to PCIB stockholders on or after the Effective Date after complying with requirements of the BSP, the SEC and the PSE, including approval of the increase in authorized capital stock of EBC and the listing of the new EBC common shares to be issued to PCIB stockholders as a result of the Merger. III. UNDERTAKINGS OF PARTIES 3.1. Common Undertakings Each of EBC and PCIB undertake: 3.1.1. to secure the conformity to and approval of this Plan by their respective stockholders representing at least two-thirds (2/3) of their respective outstanding capital stock at their respective special stockholders meetings duly called for the said purposes; 3.1.3. to obtain any and all required consent, approvals, or waivers of other parties, including their respective creditors, to this Plan; and 3.1.3. to jointly exert their best efforts to secure the approval of the Merger and its release transactions from the government authorities as provided for in Cause 1.3 hereof. 3.2. Additional Undertaking of EBC EBC additionally undertakes to exert its best efforts to obtain a ruling from the Bureau of Internal Revenue ("BIR") for the purpose of confirming the tax-free status of the acquisition of assets and assumption of liabilities by the Merged Bank from PCIB as a result of the Merger. 3.3. Additional Undertaking of PCIB PCIB additionally undertakes to exert its best efforts to have its preferred shareholders convert their respective PCIB preferred shares to PCIB common shares prior to the Effective Date. 3.4. Conduct of Business prior to Merger Prior to the Effective Date, each of EBC and PCIB shall preserve their respective business as an ongoing concern. 3.5. Disclosure to SEC and PSE Immediately after the approval of this Plan by the respective Boards of Directors of EBC and PCIB, EBC and PCIB shall (and the parties shall cause their respective stockholders with registered/listed securities to) file written notices about the Merger with the SEC and the PSE. prcd IV. ARTICLES AND BY-LAWS OF MERGED BANK 4.1. Articles of Incorporation The Articles of Incorporation of the Merged Bank shall be the Articles of Incorporation of EBC, as amended in order to: (a) increase its authorized capital stock to Ten Billion Pesos (Php10,000,000,000) the particulars of which are provided under Clause 2.3 above, and (b) deny pre-emptive rights of its shareholders 4.2. By-Laws The By-Laws of the Merged Bank shall be the By-Laws of EBC. V. BOARD OF DIRECTORS AND OFFICERS OF MERGED BANK 5.1. Directors On effective Date, the Merged bank shall have Fifteen (15) directors. The major stockholders of the Merged bank shall be entitled to representation in the Board of Directors of the Merged Bank in proportion to their respective shareholdings in the Merged Bank on Effective Date. The Merged Bank shall not enforce Section 13(ii), Article IV of its By-laws in respect of the cases filed by Trans Middle East (Phils.) Equities, Inc. ("TMEE") against PCIB prior to June 16, 1999 for the purpose of disqualifying any nominee of TMEE from being eligible for nomination as director of the Merged Bank. 5.2. Key Officers A process will be instituted by the Board of Directors of the Merged Bank to select, appoint and/or retain the most qualified officers for the various positions required. VI. MISCELLANEOUS 6.1. Minor Amendments The stockholders of EBC and PCIB, by approving this Plan, hereby authorize the amendment of, or modification or supplement to this Plan prior to effectivity of the Merger, by majority vote of their respective Board of Directors; provided that such amendment, modification of supplement is minor in charter and shall substantially change the terms of the Merger. 5.2. Other Deeds and Instruments EBC and/or PCIB shall execute and deliver, or cause to be executed and delivered, all deeds and other instruments and shall take, or cause to be taken, all such other and further acts desirable in order to more fully carry out the intent and purpose of this Plan. 6.3. Confidentiality Unless otherwise required by law or regulation or as may be agreed upon by the parties, each of EBC and PCIB will use its best efforts to keep confidential any information obtained from the other party in connection herewith, and in the event the Merger is abandoned or not consummated, EBC and PCIB shall, each upon the request of the other, return all statements, documents and other written information and material obtained connection herewith and all copies thereof. 6.4. Expenses of Merger EBC and PCIB shall each bear fifty percent (50%) of all common stocks and expenses of the Merger, including but not limited to the fees and expenses related to financial and legal fees for counseling on matters affecting both parties, as well as documentation of this Merger. All other fees, costs and expenses on matters affecting only one party, shall be borne exclusively by the party incurring the same. 6.5. Effective Date The Effective Date of the merger shall be on the date when the SEC issues the Certificate of Merger (or such later date as may be agreed upon in writing by both banks with the approval of their respective BOD). IN WITNESS WHEREOF, the parties have caused their duly authorized officers to sign this Plan of Merger on this 15th day of July 1999, at Makati City, Metro Manila. EQUITABLE BANKING PHILIPPINE COMMERCIAL CORPORATION INTERNATIONAL BANK By: By: (SGD.) WILFREDO V. VERGARA (SGD.) GEORGE L. GO President & Chief Executive Officer Chairman, President & Chief Executive Officer Signed in the Presence of: ______________________________ ________________________________ ACKNOWLEDGEMENT REPUBLIC OF THE PHILIPPINES ) MAKATI CITY ) SS. BEFORE ME, a Notary Public for and in Makati City, this 15th day of July 1999, personally appeared the following: Community Tax Name Certificate No. Date/Place of Issue Equitable Banking Corporation represented by: Wilfrido V. Vergara 8979951 03-05-99/Manila Philippine Commercial International Bank represented by: George L. Go 8229968 02-26-99/Manila who are known to me and to me known to be the persons who executed the foregoing Plan of Merger and they acknowledged to me that the same is their free and voluntary act and deed. WITNESS MY HAND AND SEAL (SGD.) LUIS MANUEL L. GATMAITAN Notary Public Until December 31, 1998 IBP No. 476-76/Quezon City PTR No. 0455003/Makati City/1-11-99 Doc. No. 90; Page No. 38; Book No. II; Series of 1999 Footnotes * This figure is subject to an increase of up to 3,993,970 shares once Trans Middle East (Phils.) Equities, Inc. (TMEE) is allowed to exercise its pre-emptive right from the funds held in escrow with the Trust Department of PCIB at the original offering price of P180.00 per share relative to the Supreme Court case G.R. No. 121235 (subject) to adjustments for costs of money on the escrow funds and the subscription payments, as determined by Management in consultation with TMEE and approved by the Board).