Document:

<PAGE>   1
                                                                EXHIBIT-10.15(A)

                            CERTIFICATE OF RESOLUTION

         The undersigned, Assistant Secretary of the Board of Directors of Banco
Popular de Puerto Rico (the "Bank"), does hereby certify that at a meeting of
the Board of Directors of the Bank held on the 11th of October 2000, at which a
quorum was present and acting throughout, a resolution was duly and regularly
adopted, which is in full force and effect and unrescinded, and read as follows

         WHEREAS, Banco Popular de Puerto Rico (the "Bank") has established the
         Banco Popular de Puerto Rico Employees' Stock Plan (Puerto Rico) (the
         "Plan"); and

         WHEREAS, under Article X of the Plan the Bank has reserved the right to
         amend the Plan at any time and from time to time as the Board of
         Directors (the "Board") of the Bank may determine; and

         WHEREAS, the Bank has exercised its power to amend the Plan on various
         previous occasions; and

         WHEREAS, the Bank wishes to further amend the Plan to make it a more
         effective tool in the recruitment and maintenance of its personnel and
         to comply with all applicable laws and regulations.

         NOW, THEREFORE, BE IT

         RESOLVED, that the Board hereby authorizes the amendment of the Plan to
         provide for the following:

         (1)      provide for the contribution by participants in the Plan on an
         after tax basis of up to 10% of the such participant's compensation (as
         defined in the Plan for these purposes) and to allow quarterly
         withdrawals of such after tax contributions and the earnings thereon in
         amounts not less than $1,000;

         (2)      provide that all participant contributions to the Plan will be
         made on the basis of whole percentages of compensation (as defined in
         the Plan for these purposes) and that all participant contributions to
         the Plan currently made in fixed dollar amounts be converted to whole
         percentages of compensation;

         (3)      provide that, for the purpose of determining the amount of
         participant pre-tax and after-tax contributions, the definition of
         compensation in the Plan shall be the participant's total compensation
         received from the Bank, including, but no limited to, overtime pay,
         bonuses and incentive and profit sharing distributions paid in cash to
         the employee;

         (4)      effective December 31, 2000, provide for the diversification
         of participant contributions to the Plan made on or after December 31,
         2000 that have not been matched by allowing participants in the Plan to
         elect the investment of their contributions to the Plan among the
         following investment options:

         1.       Vanguard Total Bond Market Index.
         2.       Fidelity Advisor Equity growth Institutional.
         3.       Federated Equity-Income A.
         4.       Deutsche International Equity.
<PAGE>   2

         5.       Dreyfus Emerging Leaders.
         6.       Federated Government Obligations Fund.
         7.       Common Stock of Popular, Inc.

         (5)      provide that in the event a participant does not direct the
         investment of his Plan account, the Plan Administrator will determine
         and direct such contributions until such time as the participant
         assumes the direction of his contributions;

         (6)      provide that all of the Bank's contributions to the Plan will
         be invested exclusively in common stock of Popular, Inc. and may not be
         transferred therefrom by the participant until such time as the
         participant has attained 50 years of age and has accumulated 10 years
         of service;

         (7)      provide that upon the attainment of age 50 with 10 years of
         service the participant will be able to direct the investment of the
         complete balance of his Plan account;

         (8)      provide for the change of the Plan's vesting schedule to the
         following schedule:

<TABLE>
<CAPTION>
         YEARS OF SERVICE                   VESTING PERCENTAGE
         ----------------                   ------------------
         <S>                                <C>
         0 to 1 year                                0%
         1 to 2 years                              20%
         2 to 3 years                              40%
         3 to 4 years                              60%
         4 to 5 years                              80%
         Over 5 years                             100%
</TABLE>

         (9)      provide that upon a transfer of employment of an employee of
         the Bank who is a participant in the Plan from the Bank to a subsidiary
         or affiliate of the Popular, Inc., such employee's Plan account will be
         transferred in a direct trust to trust transfer to the employee's new
         employer's qualified plan and that if the transfer of employment is
         made at the Bank's initiative such employee will become fully vested,
         as of the effective date of the transfer of employment, in the Plan
         account transferred;

         (10)     provide that the Bank's discretionary matching contributions
         to the Plan will be determined by the Board, prior to the commencement
         of the Plan year for which it will be effective, and providing that for
         any Plan year in which the Board does not take action determining the
         amount of the discretionary profit sharing contribution, such
         contribution will be 2% of a participant's basic compensation which is
         contributed to the Plan on a pre-tax basis and invested in common stock
         of Popular, Inc.;

         (11)     provide that the Plan will be renamed the Banco Popular de
         Puerto Rico Savings and Stock Plan;

         (12)     provide for such other amendments as may be necessary for the
         Plan to be in agreement with the employment practices and policies of
         Popular, Inc., its subsidiaries and affiliates and to bring the Plan
         into compliance with applicable law and regulations.
<PAGE>   3

         RESOLVED, that Tere Loubriel as an authorized representative of the
         Bank be authorized and empowered to effectuate the foregoing resolution
         through an amendment and restatement of the Plan;

         RESOLVED, that Tere Loubriel be further authorized and empowered to
         take those steps which in her sole discretion are necessary to
         effectuate the foregoing resolutions including, but not limited to,
         execution of an amended and restated Plan document and the submission
         of the same to the applicable regulatory authorities for the issuance
         of rulings required to comply with applicable law;

         RESOLVED, that Tere Loubriel be further authorized and empowered to
         produce such other ancillary documents including, but not limited to, a
         summary plan description which in her sole discretion may be required
         to fully implement the amended and restated Plan and to communicate the
         actions of the Board to all employees of the Bank.

         IN WITNESS WHEREOF, I have hereunto set my hand and affixed the seal of
the Bank in San Juan, Puerto Rico, this 28th day of February 2001.

                                                  Brunilda Santos de Alvarez
                                                  Assistant Secretary<PAGE>   1
                                                                 EXHIBIT 10.16

                          Banco Popular de Puerto Rico
                               Bank Notes Due From
                      7 Days to 15 Years from Date of Issue

                             DISTRIBUTION AGREEMENT

                                                              September 24, 1996

MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
             INCORPORATED
World Financial Center
North Tower, 10th Floor
New York, New York 10281-1310

BEAR, STEARNS & CO. INC.
245 Park Avenue
New York, New York 10167

CS FIRST BOSTON CORPORATION
55 East 52nd Street
New York, New York 10055

Ladies and Gentlemen:

         Banco Popular de Puerto Rico, a banking corporation chartered under the
laws of the Commonwealth of Puerto Rico, confirms its agreement with Merrill
Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Bear, Stearns &
Co. Inc. and CS First Boston Corporation (each referred to as an "Agent" and
collectively referred to as the "Agents") with respect to (i) the issue and sale
by it of its senior unsecured debt obligations not insured by the Federal
Deposit Insurance Corporation (the "FDIC") with maturities from 7 days to one
year from date of issue ("Short-Term Bank Notes") and (ii) the issue and sale by
it of its senior unsecured debt obligations not insured by the FDIC with
maturities of greater than one year to 15 years from date of issue ("Medium-Term
Bank Notes," and together with the Short-Term Bank Notes, the "Bank Notes").
Banco Popular de Puerto Rico is referred to herein as the "Bank" with respect to
Bank Notes issued and sold by it hereunder. The Bank Notes are to be issued
pursuant to an Issuing and Paying Agency Agreement, dated as of September 24,
1996 (the "Issuing and Paying Agency Agreement"), between the Bank and The Chase
Manhattan

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Bank, as the Issuing and Paying Agent (the "Issuing and Paying Agent"). As of
the date hereof, the Bank has authorized the issuance of up to $600,000,000
aggregate principal amount of Bank Notes outstanding at any one time. It is
understood, however, that the Bank may from time to time authorize the issuance
of an additional amount of Bank Notes and that such Bank Notes may be
distributed through or sold to one or more of the Agents pursuant to the terms
of this Agreement, all as though the issuance of such Bank Notes were authorized
as of the date hereof. The Bank is a wholly owned subsidiary of BanPonce
Corporation (the "Parent").

         This Agreement provides both for the sale of Bank Notes by the Bank (i)
to the Agents as principal for resale to investors and other purchasers and for
the sale of Bank Notes by the Bank, (ii) directly to investors agented by the
Agents (as may from time to time be agreed to by the Bank and the Agents), in
which case the Agents will act as agents of the Bank in soliciting Bank Note
purchasers and (iii) directly to investors.

SECTION 1.  Appointment as Agents.

         (a) Appointment of Agents. Subject to the terms and conditions stated
herein, and subject to the reservation by the Bank of the right to sell Bank
Notes directly to investors on its own behalf in those jurisdictions where it is
authorized to do so, the Bank hereby agrees that Bank Notes will be sold
exclusively to or through the Agents. The Agents are authorized to engage the
services of any other broker or dealer in connection with the offer or sale of
the Bank Notes purchased by an Agent as principal for resale to others but are
not authorized to appoint sub-agents. In connection with sales by the Agents of
Bank Notes purchased by an Agent as principal to other brokers or dealers, an
Agent may allow any portion of the discount it has received in connection with
such purchase from the Bank to such brokers or dealers.

         (b) Sale of Bank Notes. The Bank shall not approve the solicitation of
purchases of Bank Notes in excess of the amount which shall be authorized to be
issued or outstanding, as the case may be, by the Bank from time to time or in
excess of the aggregate principal amount of Bank Notes specified in the Offering
Circular (as such term is hereinafter defined). The Agents will have no
responsibility for maintaining records with respect to the aggregate principal
amount of Bank Notes sold or outstanding, or of otherwise monitoring the
availability of Bank Notes for sale.

         (c) Purchases as Principal. The Agents shall not have any obligation to
purchase Bank Notes from the Bank as principal, but

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the Agents may agree from time to time to purchase Bank Notes as principal. Any
such purchase of Bank Notes by an Agent as principal shall be made in accordance
with Section 3(a) hereof.

         (d) Solicitations as Agent. If agreed upon by an Agent and the Bank,
the Agent acting solely as agent for the Bank and not as principal, will solicit
purchases of the Bank Notes. The Agent will communicate to the Bank, orally,
each offer to purchase Bank Notes solicited by such Agent on an agency basis,
other than those offers rejected by the Agent. The Agent shall have the right,
in its absolute discretion, to reject any proposed purchase of Bank Notes, as a
whole or in part, and any such rejection shall not be deemed a breach of any
Agent's agreement contained herein. The Bank may accept or reject any proposed
purchase of the Bank Notes, in its absolute discretion, in whole or in part and
any such rejection shall not be deemed a breach of the Bank's agreement
contained herein. The Agent shall make reasonable efforts to assist the Bank in
obtaining performance by each purchaser whose offer to purchase Bank Notes has
been solicited by the Agent and accepted by the Bank. The Agent shall not have
any liability to the Bank in the event any such agency purchase is not
consummated for any reason other than a breach by the Agent of its obligations
hereunder. If the Bank shall default on its obligation to deliver Bank Notes to
a purchaser whose offer it has accepted, the Bank shall (i) hold the Agent
harmless against any loss, claim or damage arising from or as a result of such
default by the Bank and (ii) notwithstanding such default, pay to the Agent any
commission to which it would be entitled in connection with such sale.

         (e) Additional Agents. The Bank may, from time to time, engage
additional agents either as principal or as an agent for the sale of the Bank
Notes. In the event that the Bank elects to engage such additional agents, the
Bank shall provide advance notice as soon as reasonably possible (which advance
notice may include notice via facsimile) to the Agents then parties to this
Agreement. The engagement of any additional agents shall be on terms and
conditions (including, without limitation, commission rates), substantially
similar to those set forth in this Agreement.

         (f) Reliance. The Bank and the Agents agree that any Bank Notes
purchased by the Agents shall be purchased, and any Bank Notes the placement of
which an Agent arranges shall be placed by such Agent, in reliance on the
representations, warranties, covenants and agreements of the Bank contained
herein and on the terms and conditions and in the manner provided herein.

SECTION 2.  Representations and Warranties.

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         (a) The Bank represents and warrants to each Agent as of the date
hereof, as of the date of each acceptance by the Bank of an offer for the
purchase of Bank Notes (whether to the Agent as principal or through the Agent
as agent), as of the date of each delivery of Bank Notes (whether to such Agent
as principal or through such Agent as agent) (the date of each such delivery to
an Agent as principal being hereafter referred to as a "Settlement Date"), and
as of the times the Offering Circular shall be amended or supplemented or there
is filed with the Securities and Exchange Commission (the "Commission") or any
bank regulatory agency any document incorporated by reference into the Offering
Circular (each of the times referenced above being referred to hereafter as a
"Representation Date"), as follows:

                  (i) Offering Circular. The Bank has prepared an offering
         circular, dated September 24, 1996, to be used by the Agents in
         connection with the Agents' solicitation of purchasers of or offering
         of the Bank Notes. Such offering circular is referred to herein as the
         "Offering Circular"; provided, however, that if any amendment or
         supplement shall be provided to the Agents for use in connection with
         the offering of the Bank Notes, the term "Offering Circular" shall be
         deemed to refer to and include such amendment or supplement from and
         after the time it is first provided to the Agents for use. Any
         reference to the Offering Circular shall be deemed to refer to and
         include all documents incorporated by reference therein including the
         Call Reports and the Periodic Reports (as such terms are hereinafter
         defined) incorporated by reference therein, and any reference herein to
         the terms "amend," "amendment" or "supplement" with respect to the
         Offering Circular shall be deemed to include the filing of any Call
         Report or Periodic Report with any bank regulatory agency or the
         Commission after the date of this Agreement or the Offering Circular,
         as the case may be. The Offering Circular, as of the date hereof, does
         not and, as of the applicable Representation Date, will not contain an
         untrue statement of a material fact or omit to state a material fact
         necessary in order to make the statements made therein, in the light of
         the circumstances under which they are made, not misleading; provided,
         however, that the representations and warranties in this subsection
         shall not apply to statements in the Offering Circular made in reliance
         upon and in conformity with information furnished to the Bank in
         writing by the Agents expressly for use therein.

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<PAGE>   5

                  (i) Offering Circular. The Bank has prepared an offering
         circular, dated September 24, 1996, to be used by the Agents in
         connection with the Agents' solicitation of purchasers of or offering
         of the Bank Notes. Such offering circular is referred to herein as the
         "Offering Circular"; provided, however, that if any amendment or
         supplement shall be provided to the Agents for use in connection with
         the offering of the Bank Notes, the term "Offering Circular" shall be
         deemed to refer to and include such amendment or supplement from and
         after the time it is first provided to the Agents for use. Any
         reference to the Offering Circular shall be deemed to refer to and
         include all documents incorporated by reference therein including the
         Call Reports and the Periodic Reports (as such terms are hereinafter
         defined) incorporated by reference therein, and any reference herein to
         the terms "amend," "amendment" or "supplement" with respect to the
         Offering Circular shall be deemed to include the filing of any Call
         Report or Periodic Report with any bank regulatory agency or the
         Commission after the date of this Agreement or the Offering Circular,
         as the case may be. The Offering Circular, as of the date hereof, does
         not and, as of the applicable Representation Date, will not contain an
         untrue statement of a material fact or omit to state a material fact
         necessary in order to make the statements made therein, in the light of
         the circumstances under which they are made, not misleading; provided,
         however, that the representations and warranties in this subsection
         shall not apply to statements in the Offering Circular made in reliance
         upon and in conformity with information furnished to the Bank in
         writing by the Agents expressly for use therein.

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<PAGE>   6

                  The Bank will incorporate by reference in the Offering
         Circular the publicly available portions of each of its Consolidated
         Reports of Condition and Income (each, a "Call Report"), which the Bank
         has filed with the Federal Reserve Board (which forwards such filings
         to the FDIC), as well as any amendments or supplements thereto,
         beginning with and including the Call Report for the period ended
         December 31, of the third calendar year prior to the date of the
         Offering Circular to and including the most recent Call Report filed or
         published prior to an offering pursuant to the Offering Circular. The
         publicly available portions of any Call Reports filed by the Bank
         subsequent to the date of the Offering Circular and prior to the
         termination of the offering of the Bank Notes will be incorporated
         therein by reference.

                  In addition, the Bank has been authorized by the Parent to
         incorporate by reference in the Offering Circular, and will incorporate
         by reference into the Offering Circular, the Parent's annual reports on
         Form 10-K for its most recently ended fiscal year, quarterly reports on
         Form 10-Q since its most recently ended fiscal year, current reports on
         Form 8-K since its most recently ended fiscal year and any other
         document filed by the Parent with the Commission pursuant to Sections
         13 or 15(d) of the Securities Exchange Act of 1934, as amended (the
         "1934 Act"), and the rules and regulations thereunder (the "Periodic
         Reports").

                  The documents incorporated by reference into the Offering
         Circular, at the time they were or hereafter are filed with the
         applicable federal regulatory authorities, complied or when so filed
         will comply in all material respects with the 1934 Act or the rules and
         regulations otherwise applicable thereto, as the case may be and, when
         read together with the other information in the Offering Circular, did
         not and will not include an untrue statement of a material fact or omit
         to state a material fact required to be stated therein or necessary in
         order to make the statements therein, in light of the circumstances in
         which they were or are made, not misleading.

                  (ii) Due Organization, Valid Existence and Good Standing. The
         Bank is a banking corporation duly organized, validly existing and in
         good standing under the laws of the jurisdiction under which it is
         chartered and is licensed, registered or qualified to conduct the
         business in which it is engaged in each jurisdiction in which the
         conduct of its business or its ownership or leasing of property
         requires such

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<PAGE>   7

         license, registration or qualification, except to the extent that the
         failure to be so licensed, registered or qualified or to be in good
         standing would not have a material adverse effect on the Bank and its
         subsidiaries taken as a whole. The Bank is a wholly owned subsidiary of
         the Parent, a Puerto Rico corporation registered as a bank holding
         company under the Bank Holding Company Act of 1956 which has securities
         registered under the 1934 Act.

                  (iii) Due Authorization, Execution and Delivery of this
         Agreement, the Issuing and Paying Agency Agreement and the Interest
         Calculation Agreement. This Agreement, the Issuing and Paying Agency
         Agreement and the Interest Calculation Agreement dated as of September
         24, 1996 (the "Interest Calculation Agreement"), between the Bank and
         The Chase Manhattan Bank, as calculation agent (the "Calculation
         Agent"), and the Short-Term and Medium-Term Letters of Representations
         dated September 23, 1996 (the "Letters of Representations"), among the
         Bank, the Issuing and Paying Agent and The Depository Trust Company
         have been duly authorized, executed and delivered by the Bank and are
         valid and legally binding agreements of the Bank, enforceable against
         the Bank in accordance with their respective terms, subject to
         applicable bankruptcy, liquidation, insolvency, reorganization,
         moratorium and similar laws of general applicability relating to, or
         affecting, creditors' rights and to general equity principles.

                  (iv) Due Authorization, Execution and Delivery of the Bank
         Notes. The Bank Notes have been duly authorized and, when issued and
         authenticated against payment of the consideration therefor, the Bank
         Notes will be valid and legally binding obligations of the Bank,
         enforceable against the Bank in accordance with their respective terms,
         subject to applicable bankruptcy, liquidation, insolvency,
         reorganization, moratorium and similar laws of general applicability
         relating to, or affecting, creditors' rights and to general equity
         principles.

                  (v) Exemption from Registration. The Bank Notes are exempt
         from registration under Section 3(a)(2) of the Securities Act of 1933,
         as amended (the "1933 Act"), and neither registration of the Bank Notes
         under the 1933 Act nor qualification of an indenture under the Trust
         Indenture Act of 1939, as amended, will be required in connection with
         the offer, sale, issuance or delivery of the Bank Notes pursuant

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<PAGE>   8

         to this Agreement or any applicable Terms Agreement (as defined in
         Section 3(a) hereof).

                  (vi) Exemption from Investment Company Act. The Bank is not
         required to register under the provisions of the Investment Company Act
         of 1940, as amended (the "Investment Company Act"), or to take any
         other action with respect to or under the Investment Company Act.

                  (vii) No Other Approvals Required. No consent, approval or
         authorization of or filing with any governmental body or agency is
         required for the performance by the Bank of its obligations under this
         Agreement, the Bank Notes, the Issuing and Paying Agency Agreement, the
         Interest Calculation Agreement, the Letters of Representations and any
         applicable Terms Agreement, except such as may be required by the
         securities or Blue Sky laws of the various states in connection with
         the offer and sale of the Bank Notes and except for the waiver of the
         Commissioner of Financial Institutions of Puerto Rico pursuant to
         Section 14(d) of the Puerto Rico Banking Act, which waiver has been
         obtained.

                  (viii) Description of Bank Notes; Compliance with Law. The
         Bank Notes are substantially in the form heretofore delivered to the
         Agents and conform to the description thereof contained in the Offering
         Circular under the caption "Description of Notes." The form of the Bank
         Notes complies with all applicable provisions of law.

                  (ix) Priority of Bank Notes. The Bank Notes are unsecured and
         unsubordinated debt obligations of the Bank and rank pari passu among
         themselves and with all other unsecured and unsubordinated debt
         obligations of the Bank except, pursuant to Section 11(d)(11) of the
         Federal Deposit Insurance Act, the Bank's unsecured deposit
         liabilities.

                  (x) No Violation. Neither the Bank or any of its subsidiaries
         nor the Parent or any of its subsidiaries is in violation of its
         charter or in default in the performance or observance of any material
         obligation, agreement, covenant or condition contained in any contract,
         indenture, mortgage loan agreement, note, lease or other instrument to
         which it is a party or by which it or any of them or their properties
         may be bound. The execution, issuance and delivery by the Bank of the
         Bank Notes, and the execution, delivery and performance by the Bank of
         this Agreement, the Issuing and Paying Agency Agreement, the Interest
         Calculation Agreement, the Letters of

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<PAGE>   9

         Representations and any applicable Terms Agreement, will not violate
         any law, rule, regulation, order, judgment or decree applicable to the
         Parent and its subsidiaries or to the Bank and its subsidiaries or
         violate any provision of the Bank's charter or by-laws, or conflict
         with or result in a breach of or constitute a default under, or result
         in the creation or imposition of any lien, charge or encumbrance upon
         any property or assets of the Parent and its subsidiaries or the Bank
         and its subsidiaries (including, but not limited to, Section 14(d) of
         the Banking Act of Puerto Rico) pursuant to any material contract,
         indenture, mortgage loan agreement, note, lease or other instrument to
         which the Parent or any of its subsidiaries or the Bank or any of its
         subsidiaries, or the property of any of them, is bound or subject.

                  (xi) No Material Adverse Change. Since the respective dates as
         of which information is given in the Offering Circular, (a) there has
         not been any material adverse change in the condition, financial or
         otherwise, or business affairs or business prospects of the Bank and
         its subsidiaries or the Parent and its subsidiaries, as the case may
         be, on a consolidated basis, whether or not arising in the ordinary
         course of business, other than as set forth or contemplated in the
         Offering Circular (including the material incorporated by reference
         therein), and (b) there have been no material transactions entered into
         by the Bank or any of its subsidiaries or the Parent and any of its
         subsidiaries other than those in the ordinary course of business.

                  (xii) Rating. The Bank Notes of the Bank have been rated by a
         "nationally recognized statistical rating agency" (as that term is
         defined by the Commission for purposes of Rule 436(g)(2) under the 1933
         Act), in one of its four highest categories.

                  (xiii) Financial Statements and Financial Information. The
         consolidated financial statements and other financial information of
         the Parent and its consolidated subsidiaries included or incorporated
         by reference in the Offering Circular present fairly the consolidated
         financial position of the Parent and its consolidated subsidiaries as
         of the date indicated therein and the consolidated results of their
         operations for the periods specified therein; and except as stated
         therein, such financial statements have been prepared in conformity
         with generally accepted accounting principles in the United States
         applied on a consistent basis; the Call Reports and other financial
         information of the Bank included

                                      -8-
<PAGE>   10

         or incorporated by reference in the Offering Circular present fairly
         the financial position of the Bank and the results of operations for
         the periods specified therein, and except as stated therein, have been
         prepared in conformity with regulatory instructions issued by the
         Federal Financial Institution Examination Council applied on a
         consistent basis; financial information of certain financial
         institutions, if any, proposed to be acquired by the Parent and the
         Bank included or incorporated by reference in the Offering Circular
         present fairly the financial position of such financial institutions as
         of the dates indicated therein and the results of their operations for
         the periods specified therein.

                  (xiv) Legal Proceedings. Except as may be set forth in the
         Offering Circular, there is no action, suit or proceeding before or by
         any court or governmental agency or body, domestic or foreign, now
         pending, or, to the knowledge of the Bank, threatened against or
         affecting, the Parent or any of its subsidiaries or the Bank or any of
         its subsidiaries, which might, in the opinion of the Bank, result in
         any material adverse change in the condition, financial or otherwise,
         or in the earnings, business affairs or business prospects of the Bank
         and its subsidiaries on a consolidated basis, or might materially and
         adversely affect the properties or assets thereof or might materially
         and adversely affect the consummation of this Agreement, the Issuing
         and Paying Agency Agreement or the Interest Calculation Agreement or
         any transaction contemplated hereby or thereby.

                  (xv) Taxes. No taxes, withholdings or other charges are
         required to be withheld or deducted under the laws of the Commonwealth
         of Puerto Rico or any political subdivision thereof from any payment
         made by the Bank on the Bank Notes and the Bank Notes are not subject
         to any registration tax, stamp duty or similar tax or duty imposed by
         the Commonwealth of Puerto Rico or any political subdivision thereof.

                  (b) Additional Certifications. Any certificate signed by any
officer of the Bank and delivered to the Agents or to counsel for the Agents in
connection with an offering of Bank Notes, or the sale of Bank Notes to an Agent
as principal, contemplated by this Agreement shall be deemed a representation
and warranty by the Bank to the Agents as to the matters covered thereby on the
date of such certificate and at each Representation Date referred to in Section
2(a) hereof subsequent thereto.

SECTION 3.  Purchases as Principal; Solicitations as Agents.

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<PAGE>   11

         (a) Purchases as Principal. Unless otherwise agreed by an Agent and the
Bank, Bank Notes shall be purchased by the Agent as principal. Such purchases
shall be made in accordance with terms agreed upon by the Agent and the Bank
with respect to such information (as applicable) as is specified in Exhibit A
hereto (a "Terms Agreement") (which terms shall be agreed upon orally and which
may or may not be confirmed in a writing in the form of Exhibit A prepared by
the Agent and mailed or sent via facsimile transmission to the Bank). The
Agent's commitment to purchase Bank Notes as principal shall be deemed to have
been made on the basis of the representations and warranties of the Bank herein
contained and shall be subject to the terms and conditions herein set forth.
Unless otherwise negotiated, each purchase of Bank Notes shall be at a discount
from the principal amount of each such Bank Note with such discount being agreed
upon between the Bank and the applicable Agent at the time of trade. The Agent
may engage the services of any other broker or dealer in connection with the
resale of the Bank Notes purchased as principal and may allow any portion of the
discount received in connection with such purchases from the Bank to such
brokers and dealers. At the time of each purchase of Bank Notes by an Agent as
principal, the Agent shall specify whether the officers' certificates, opinions
of counsel are required to be delivered pursuant to Sections 8(b) and 8(c)
hereof.

         (b) Solicitations as Agents. On the basis of the representations and
warranties herein contained, but subject to the terms and conditions herein set
forth, when agreed upon by the Bank and an Agent, such Agent, as an agent of the
Bank, will use its reasonable efforts to solicit offers to purchase the Bank
Notes upon the terms and conditions set forth herein and in the Offering
Circular. All Bank Notes sold through an Agent as agent will be sold at 100% of
their principal amount unless otherwise agreed to by the Bank and the Agent.

         The Bank reserves the right, in its sole discretion, to suspend
solicitation of purchases of the Bank Notes through the Agents, as agents, or
any of them, commencing at any time for any period of time or permanently. Upon
receipt of instructions from the Bank, the Agents will forthwith suspend
solicitation of purchases from the Bank until such time as the Bank has advised
the Agents that such solicitation may be resumed.

         The Bank agrees to pay each Agent a commission, generally in the form
of a discount, equal to the applicable percentage of the principal amount of
each Bank Note sold by the Bank as a result of a solicitation made by such Agent
as set forth in Exhibit B hereto,

                                      -10-
<PAGE>   12

unless otherwise negotiated. The Agents may reallow any portion of the
commission payable pursuant hereto to dealers in connection with the offer and
sale of any Bank Notes.

         (c) Administrative Procedures. The purchase price, interest rate or
formula, maturity date and other terms of the Bank Notes (as applicable)
specified in Exhibit A hereto shall be agreed upon by the Bank and the
applicable Agent and set forth in a pricing supplement to the Offering Circular
to be prepared in connection with each sale of Bank Notes. Administrative
procedures with respect to the sale of Bank Notes shall be agreed upon from time
to time by the Agents and the Bank (the "Administrative Procedures"). The
initial Administrative Procedures, as agreed upon by the Agents and the Bank,
are attached hereto as Exhibit G. The Agents and the Bank agree to perform the
respective duties and obligations specifically provided to be performed by the
Agents and the Bank herein and in the Administrative Procedures.

         (d) Delivery. The documents required to be delivered by Section 6
hereof shall be delivered at the office of Brown & Wood LLP, on the date hereof,
or at such other time as the Agents and the Bank may agree upon in writing (the
"Closing Time").

SECTION 4.  Covenants of the Bank.

         The Bank covenants with the Agents as follows:

         (a) Amending Offering Circular. The Bank will give the Agents notice of
its intention to prepare any additional offering circular supplement with
respect to the sale of the Bank Notes or any amendment or supplement to the
Offering Circular and will furnish the Agents with copies of any such amendment
or supplement or other documents proposed to be distributed a reasonable time in
advance of such proposed distribution and will not distribute any such amendment
or supplement or other documents in a form to which the Agents or counsel for
the Agents shall reasonably object. The Bank will advise the Agents (i) of any
request by any bank regulatory agency or the Commission for any amendment of or
supplement to the Offering Circular (including, without limitation, the
documents incorporated by reference therein) or for any additional information;
(ii) of the institution or threat by any bank regulatory agency or the
Commission of any proceeding with respect to the Offering Circular (including,
without limitation, the documents incorporated by reference therein) or any
amendment or supplement thereto or the offering or sale of the Bank Notes, and
(iii) of the receipt by the Bank of any notification with respect to the
suspension of the qualification of the Bank Notes for sale in any jurisdiction
or the initiation or threatening of

                                      -11-
<PAGE>   13

any proceeding for such purpose. The Bank will use its reasonable best efforts
to prevent the issuance of any order or similar action interfering with the
offering or sale of the Bank Notes or the use of the Offering Circular, and, if
issued, to obtain as soon as possible the withdrawal thereof.

         (b) Copies of Offering Circular. The Bank will deliver to the Agents as
many copies of the Offering Circular (as amended or supplemented, including
documents incorporated by reference therein) as the Agents shall reasonably
request in connection with sales or solicitations of offers to purchase the Bank
Notes.

         (c) Revisions of Offering Circular -- Material Changes. Except as
otherwise provided in Subsection (d) of this Section 4, if any event shall occur
or condition exist as a result of which it is necessary, in the reasonable
opinion of counsel for the Agents or counsel for the Bank, to amend or
supplement the Offering Circular in order that the Offering Circular will not
include any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements made therein not misleading in the
light of the circumstances existing at the time it is delivered to a purchaser,
immediate notice shall be given, and confirmed in writing, to the Agents to
cease the solicitation of offers to purchase the Bank Notes in their capacity as
agents and to cease sales of any Bank Notes the Agents may then own as
principal, and the Bank will promptly prepare such amendment or supplement as
may be necessary to correct such untrue statement or omission. The Agents shall,
at such time as the Bank shall have furnished to the Agents an amended or
supplemented Offering Circular in form satisfactory to the Agents and their
counsel, resume solicitation of offers to purchase Bank Notes using the Offering
Circular so amended and supplemented.

         (d) Suspension of Certain Obligations. The Bank shall not be required
to comply with the provisions of Subsection (c) of this Section 4 during any
period from the later of the time (i) the Agents shall have suspended
solicitation of purchases of the Bank Notes in their capacity as agents pursuant
to a request from the Bank and (ii) no Agent shall then hold any Bank Notes
purchased as principal pursuant hereto, until the time the Bank shall determine
that solicitation of purchases of the Bank Notes should be resumed or the Agent
shall subsequently purchase Bank Notes from the Bank as principal.

         (e) Regulatory Reports. The Bank shall provide the Agents with copies
of any publicly available reports (financial or otherwise) furnished to or filed
by either the Bank or the Parent

                                      -12-
<PAGE>   14

with any United States or State supervisory or regulatory authority as promptly
as practicable after such reports become publicly available.

         (f) Preparation of Pricing Supplements. The Bank will prepare, with
respect to any Bank Notes to be sold through or to the Agents pursuant to this
Agreement, a pricing supplement with respect to such Bank Notes in a form
previously approved by the Agents.

         (g) Blue Sky Qualifications. The Bank will endeavor, in cooperation
with the Agents, to qualify the Bank Notes for offering and sale under the
applicable securities laws of such States and other jurisdictions of the United
States as the Agents and the Bank may designate, and will maintain such
qualifications in effect for as long as may be required for the distribution of
the Bank Notes; provided, however, that the Bank shall not be obligated to file
any general consent to service of process or to qualify as a foreign corporation
in any jurisdiction in which it is not so qualified. The Bank will file such
statements and reports as may be required by the laws of each jurisdiction in
which the Bank Notes have been qualified as above provided. The Bank will
promptly advise the Agents of the receipt by the Bank of any notification with
respect to the suspension of the qualification of the Bank Notes for sale in any
such State or jurisdiction or the initiating or threatening of any proceeding
for such purpose.

         (h) Stand-Off Agreement. In connection with a purchase by an Agent of
Bank Notes as principal, between the date of the agreement to purchase such Bank
Notes and the Settlement Date with respect to such purchase, the Bank will not,
without the prior consent of the Agent who is party to such agreement, offer or
sell in the United States, or enter into any agreement to sell in the United
States, any debt securities or deposit obligations of the Bank (other than the
Bank Notes that are to be sold pursuant to such agreement and deposit and other
bank obligations issued and sold directly by the Bank in the ordinary course of
its business).

SECTION 5.  Payment of Expenses.

         Whether or not the transactions contemplated hereunder are consummated
or this Agreement or any agreement by an Agent to purchase Bank Notes as
principal is terminated, the Bank will pay all reasonable expenses incident to
the performance of their obligations under this Agreement including: (a) the
preparation, printing and delivery of the Offering Circular and all amendments
and supplements thereto; (b) the preparation of this Agreement; (c)

                                      -13-
<PAGE>   15

the preparation, issuance and delivery of the Bank Notes, including fees and
expenses related to the use of book-entry notes; (d) the reasonable fees and
disbursements of the Bank's counsel, of the Issuing and Paying Agent and of any
calculation agents or exchange rate agents; (e) the reasonable fees and
disbursements of counsel to the Agents incurred in connection with the
establishment of the program relating to the Bank Notes and incurred from time
to time in connection with the transactions contemplated thereby; (f) any fees
charged by rating agencies for rating of the Bank Notes; (g) any advertising and
other actual, out-of-pocket expenses of the Agents incurred with the approval of
the Bank; (h) the qualification of the Bank Notes under State securities laws in
accordance with the provisions of Section 4(g) hereof, including the filing fees
and the reasonable fees and disbursements of counsel for the Agents in
connection therewith and in connection with the preparation of any Blue Sky
Survey and any Legal Investment Survey; (i) the cost of preparing and providing
any CUSIP or other identification numbers for the Bank Notes; and (j) any filing
fee payable to the National Association of Securities Dealers, Inc.

SECTION 6.  Conditions of Agents' Obligations.

         The obligations of the Agents to solicit offers to purchase the Bank
Notes as agents of the Bank, the obligations of any purchasers of Bank Notes
sold through an Agent as agent, and any obligation of an Agent to purchase Bank
Notes pursuant to any agreement by such Agent to purchase Bank Notes as
principal (or otherwise), will be subject at all times to the accuracy of the
representations and warranties on the part of the Bank herein and to the
accuracy of the statements of the Bank's and the Parent's officers made in any
certificate furnished pursuant to the provisions hereof, to the performance and
observance by the Bank of all covenants and agreements herein contained and to
the following additional conditions precedent:

         (a)      Legal  Opinions.  On the date  hereof,  the Agents  shall have
received the following legal opinions, dated as of the date hereof and in form
and substance satisfactory to the Agents:

                  (i) Opinion of Counsel to the Bank and the Parent. The opinion
         of Brunilda Santos de Alvarez, Counsel to the Bank and the Parent,
         substantially in the form of Exhibit C-1 hereto.

                  (ii) Opinion of Special Counsel to the Bank and the Parent.
         The opinion of Pietrantoni Mendez & Alvarez, Special

                                      -14-
<PAGE>   16

         Counsel to the Bank and the Parent, substantially in the form of
         Exhibit C-2 hereto.

                  (iii) Opinion of Counsel to the Agents. The opinion of Brown &
         Wood LLP, counsel to the Agents, covering such matters as they may
         reasonably request.

         (b) Officers' Certificates. On the date hereof and on each Settlement
Date, the Agents shall have received a certificate of (i) the Bank, signed by
the President, Senior Executive Vice President, Executive Vice President, Senior
Vice President or Vice President, and the Chief Financial Officer, Chief
Accounting Officer, Treasurer or Head of Corporate Finance of the Bank
satisfactory to the Agents, substantially in the form of Exhibit D hereto, and
(ii) the Parent, signed by the President, Senior Executive Vice President,
Executive Vice President, Senior Vice President or Vice President, and the Chief
Financial Officer, Chief Accounting Officer, Treasurer or Head of Corporate
Finance of the Parent satisfactory to the Agents, substantially in the form of
Exhibit E hereto, each dated the date hereof or such Settlement Date, as the
case may be.

         (c) Representations  Certificate.  On the date  hereof, the Agents
shall have received a certificate of the Parent, substantially in the form of
Exhibit F hereto.

         (d) Other Documents. On the date hereof and on each Settlement Date,
counsel to the Agents shall have been furnished with such documents and opinions
as such counsel may reasonably request for the purpose of enabling such counsel
to pass upon the issuance and sale of the Bank Notes as herein contemplated and
related proceedings, or in order to evidence the accuracy and completeness of
any of the representations and warranties, or the fulfillment of any of the
conditions, herein contained; and all proceedings taken by the Bank in
connection with the issuance and sale of Bank Notes as herein contemplated shall
be satisfactory in form and substance to the Agents and to counsel to the
Agents.

         If any condition specified in this Section 6 shall not have been
fulfilled when and as required to be fulfilled, this Agreement (or, at the
option of the Agent, any applicable agreement by such Agent to purchase Bank
Notes as principal) may be terminated by the Agents by notice to the Bank at any
time at or prior to the Closing Time and any such termination shall be without
liability of any party to any other party, except that the provisions of Section
5 hereof, the indemnity and contribution agreement set forth in Sections 9 and
10 hereof, and the provisions of Sections 11, 14 and 15 hereof shall remain in
effect.

                                      -15-
<PAGE>   17

SECTION 7.  Delivery of and Payment for Bank Notes Sold through an Agent.

         Delivery of Bank Notes sold through an Agent as agent shall be made by
the Bank to such Agent for the account of any purchaser only against payment
therefor in immediately available funds. In the event that a purchaser shall
fail either to accept delivery of or to make payment for a Bank Note on the date
fixed for settlement, the Agent shall promptly notify the Bank and deliver the
Bank Note to the Bank, and, if the Agent has theretofore paid the Bank for such
Bank Note, the Bank will promptly return such funds to the Agent. If such
failure shall have occurred for any reason other than default by the applicable
Agent to perform its obligations hereunder, the Bank will reimburse such Agent
on an equitable basis for its loss of the use of funds during the period when
the funds were credited to the account of the Bank.

SECTION 8.  Additional Covenants of the Bank.

         The Bank covenants and agrees with each Agent that:

         (a) Reaffirmation of Representations and Warranties. Each acceptance by
the Bank of an offer for the purchase of Bank Notes (whether to an Agent as
principal or through the Agent as agent), and each delivery of Bank Notes to the
Agents, shall be deemed to be an affirmation that the representations and
warranties of the Bank contained in this Agreement and in any certificate
theretofore delivered to the Agents pursuant hereto are true and correct at the
time of such acceptance or sale, as the case may be, and an undertaking that
such representations and warranties will be true and correct at the time of
delivery to the purchaser or his agent, or to the applicable Agent, of the Bank
Note or Bank Notes relating to such acceptance or sale, as the case may be, as
though made at and as of each such time (and it is understood that such
representations and warranties shall relate to the Offering Circular as amended
and supplemented to each such time, including any amendment resulting from the
incorporation by reference of documents filed by the Bank or the Parent).

         (b) Subsequent Delivery of Certificates. Each time that (i) the
Offering Circular shall be amended or supplemented (other than by an amendment
or supplement providing solely for a change in the interest rates of Bank Notes
or similar changes), (ii) (if required by an Agent) there is filed with the
Commission or any bank regulatory agency any document incorporated by reference
into the Offering Circular, (iii) (if required by an Agent) the Bank sells Bank
Notes to such Agent as principal or (iv) the Bank issues and

                                      -16-
<PAGE>   18

sells Bank Notes in a form not previously certified to the Agents by the Bank,
the Bank shall furnish or cause to be furnished forthwith to the Agents
certificates from the Bank and the Parent dated the date of such amendment or
supplement, the date of such filing, or the Settlement Date, as the case may be,
to the effect that the statements contained in the certificates which were last
furnished to the Agents by the Bank and the Parent pursuant to Section 6(b)
hereof are true and correct at the time of such amendment, supplement or sale,
as the case may be, as though made at and as of such time (except that such
statements shall be deemed to relate to the Offering Circular as amended and
supplemented to such time, including any amendment resulting from incorporation
by reference of documents filed by the Bank and the Parent) or, in lieu of such
certificates, certificates of the same form as the certificates referred to in
said Section 6(b), modified as necessary to relate to the Offering Circular as
amended and supplemented to the time of delivery of such certificates.

         (c) Subsequent Delivery of Legal Opinions. Each time that (i) the
Offering Circular shall be amended or supplemented with respect to the Bank
Notes (other than by an amendment or supplement (x) providing solely for a
change in interest rates of the Bank Notes or similar changes, or (y) setting
forth financial statements or other information as of and for a fiscal period
(unless, in the reasonable judgment of the Agents, an opinion of counsel should
be furnished in light of such an amendment)), (ii) (if required by an Agent)
there is filed with the Commission or any bank regulatory agency any document
incorporated by reference into the Offering Circular, (iii) (if required by an
Agent) the Bank sells Bank Notes to such Agent as principal or (iv) the Bank
issues and sells Bank Notes in a form not previously certified to the Agents by
the Bank, the Bank shall furnish or cause to be furnished forthwith to the
Agents and the Agents' counsel a letter from each counsel last furnishing an
opinion referred to in Sections 6(a)(i) hereof to the effect that the Agents may
rely on such last opinion to the same extent as though it were dated the date of
such letter authorizing reliance (except that statements in such last opinion
shall be deemed to relate to the Offering Circular as amended and supplemented
at the time of delivery of such letter authorizing reliance) or in lieu of such
letter, each such counsel may deliver a letter in the same form as its letter
referred to in Sections 6(a)(i), but modified as necessary to relate to the
Offering Circular as amended and supplemented at the time of delivery of such
letter.

SECTION 9.  Indemnification.

                                      -17-
<PAGE>   19

         (a) Indemnification of Agents. The Bank agrees to indemnify and hold
harmless each Agent and each person, if any, who controls each Agent within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act as follows:

                  (i) against any and all loss, liability, claim, damage and
         expense whatsoever, as incurred, arising out of any untrue statement or
         alleged untrue statement of a material fact contained in the Offering
         Circular (or any amendment or supplement thereto), or the omission or
         alleged omission therefrom of a material fact necessary to make the
         statements therein, in the light of the circumstances under which they
         were made, not misleading;

                  (ii) against any and all loss, liability, claim, damage and
         expense whatsoever, as incurred, to the extent of the aggregate amount
         paid in settlement of any litigation, or investigation or proceeding by
         any governmental agency or body, commenced or threatened, or of any
         claim whatsoever based upon any such untrue statement or omission, or
         any such alleged untrue statement or omission, if such settlement is
         effected with the written consent of the Bank; and

                  (iii) against any and all expense whatsoever (including the
         reasonable fees and disbursements of counsel chosen by the Agents), as
         reasonably incurred in investigating, preparing or defending against
         any litigation, or investigation or proceeding by any governmental
         agency or body, commenced or threatened, or any claim whatsoever based
         upon any such untrue statement or omission, or any such alleged untrue
         statement or omission, to the extent that any such expense is not paid
         under (i) or (ii) above;

provided, however, that (A) the Bank will not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or is based
upon any such untrue statement or alleged untrue statement made therein in
reliance upon and in conformity with written information furnished to the Bank
by such Agent specifically for use in connection with the preparation thereof,
and (B) such indemnity with respect to the Offering Circular (or any amendment
or supplement thereto) shall not inure to the benefit of any Agent (or any
person controlling any Agent) from whom the person asserting any such loss,
claim, damage or liability purchased the Bank Notes which are the subject
thereof if such Agent did not send a copy of the Offering Circular (or any
amendment or supplement thereto) excluding documents incorporated therein by
reference to such person at or prior to the confirmation

                                      -18-
<PAGE>   20

of the sale of such Notes to such person and the untrue statement or omission of
a material fact contained in the Offering Circular (or any amendment or
supplement thereto) was corrected in the Offering Circular (or any amendment or
supplement thereto).

                  (b) Indemnification of Bank. Each Agent agrees, severally and
not jointly, to indemnify and hold harmless the Bank and each person, if any,
who controls the Bank within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act against any and all loss, liability, claim, damage
and expense described in the indemnity contained in Subsection (a) of this
Section, as incurred, but only with respect to untrue statements, or alleged
untrue statements, made in the Offering Circular (or any amendment or supplement
thereto) in reliance upon and in conformity with written information furnished
to the Bank by such Agent expressly for use in the Offering Circular (or any
amendment or supplement thereto).

                  (c) General. Each indemnified party shall give prompt notice
to each indemnifying party of any action commenced against it in respect of
which indemnity may be sought hereunder, but failure to so notify an
indemnifying party shall not relieve such indemnifying party from any liability
which it may have otherwise than on account of this indemnity agreement. An
indemnifying party may participate at its own expense in the defense of such
action. In no event shall the indemnifying parties be liable for the fees and
expenses of more than one counsel (in addition to any local counsel) for all
indemnified parties in connection with any one action or separate but similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances unless (i) the indemnifying party and the
indemnified party shall have mutually agreed to the retention of such counsel or
(ii) the same counsel would be inappropriate due to actual or potential
differing interests between the indemnified parties.

SECTION 10.  Contribution.

         In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in Section 9 hereof
is for any reason held to be unavailable to or insufficient to hold harmless the
indemnified parties although applicable in accordance with its terms, the Bank,
on the one hand, and the Agents, on the other hand, shall contribute to the
aggregate losses, liabilities, claims, damages and expenses of the nature
contemplated by said indemnity agreement incurred by the Bank, on the one hand,
and the Agents, on the other hand, as incurred, in such proportions that each
Agent is responsible for

                                      -19-
<PAGE>   21

that portion represented by the percentage that the total commissions and
underwriting discounts received by such Agent with respect to the Notes giving
rise to the liability with respect to which indemnity is sought to the date of
such liability bears to the total sales price received by the Bank from the sale
of Bank Notes giving rise to such liability to the date of such liability, and
the Bank is responsible for the balance; provided, however, that no person
guilty of fraudulent misrepresentation (within the meaning of section 11(f) of
the 1933 Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. For purposes of this Section, each
person, if any, who controls the Agents within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act shall have the same rights to
contribution as the Agents, and each person, if any, who controls the Bank
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act
shall have the same rights to contribution as the Bank. The obligations of each
of the Agents and of the Bank under this Section to contribute are several in
proportion to the respective purchases or sales made by or through it to which
such loss, claim, damage or liability (or action in respect thereof) relates and
are not joint.

SECTION 11.  Representations, Warranties and Agreements to Survive Delivery.

         All representations, warranties and agreements contained in this
Agreement or contained in certificates of officers of the Bank pursuant hereto,
shall remain operative and in full force and effect, regardless of any
investigation made by or on behalf of the Agents or any controlling person of an
Agent, or by or on behalf of the Bank, and shall survive each delivery of and
payment for any of the Bank Notes.

SECTION 12.  Termination.

         (a) Termination of this Agreement. This Agreement (excluding any
agreement hereunder by an Agent to purchase Bank Notes as principal) may be
terminated for any reason, at any time by either the Bank or any of the Agents
as to itself, immediately upon the giving of 30 days' written notice of such
termination to the other party hereto in accordance with the provisions of
Section 13 hereof.

         (b) Termination of an Agreement to Purchase Bank Notes as Principal. An
Agent may terminate an agreement hereunder by such Agent to purchase Bank Notes
as principal, immediately upon notice to the Bank, at any time prior to the
Settlement Date relating

                                      -20-
<PAGE>   22

thereto (i) if there has been, since the date of such agreement or since the
respective dates as of which information is given in the Offering Circular, any
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Bank and its
subsidiaries, or of the Parent and its subsidiaries, as the case may be, on a
consolidated basis, whether or not arising in the ordinary course of business,
or (ii) if there shall have occurred any material adverse change in the
financial markets in the United States or any outbreak or escalation of
hostilities or other national or international calamity or crisis the effect of
which is such as to make it, in the judgment of such Agent, impracticable to
market the Bank Notes or enforce contracts for the sale of the Bank Notes, or
(iii) if trading in any securities of the Bank or the Parent shall have been
suspended by the Commission or a national securities exchange, or if trading
generally on the New York Stock Exchange, the American Stock Exchange, or
Chicago Board of Trade shall have been suspended, or minimum or maximum prices
for trading shall have been fixed, or maximum ranges for prices for securities
shall have been required, by either of said exchanges or by order of the
Commission or any other governmental authority, or if a banking moratorium shall
have been declared by either federal, New York State or Puerto Rico authorities,
as the case may be, or (iv) if the rating assigned by any nationally recognized
securities rating agency to any debt securities of the Bank as of the date of
any agreement by an Agent to purchase the Bank Notes as principal shall have
been lowered since that date or if any such rating agency shall have publicly
announced that it has placed under surveillance or review, other than with
positive implications, its rating of any debt securities or deposits of the
Bank, or (v) if there shall have come to such Agent's attention any facts that
would cause such Agent to believe that the Offering Circular or any amendments
thereto or supplements thereof, at the time it was required to be delivered to a
purchaser of Bank Notes, contained an untrue statement of a material fact or
omitted to state a material fact necessary in order to make the statements
therein, in light of the circumstances existing at the time of such delivery,
not misleading.

         (c) General. In the event of any such termination, none of the parties
will have any liability to the other parties hereto, except that (i) the Agents
shall be entitled to any commissions earned in accordance with the third
paragraph of Section 3(b) hereof, (ii) if at the time of termination (a) an
Agent shall own any Bank Notes purchased with the intention of reselling them or
(b) an offer to purchase any of the Bank Notes has been accepted by the Bank but
the time of delivery to the purchaser or his agent of the Bank Note or Bank
Notes relating thereto has not occurred, the

                                      -21-
<PAGE>   23

covenants set forth in Sections 4 and 8 hereof shall remain in effect until such
Bank Notes are so resold or delivered, as the case may be, and (iii) the
provisions of Section 5 hereof, the indemnity and contribution agreements set
forth in Sections 9 and 10 hereof, and the provisions of Sections 11, 14 and 15
hereof shall remain in effect.

SECTION 13.  Notices.

         Unless otherwise provided herein, all notices required under the terms
and provisions hereof shall be in writing, either delivered by hand, by mail or
by telex, telecopier or telegram, and any such notice shall be effective when
received at the address specified below.

         If to the Bank:

                  Banco Popular de Puerto Rico
                  209 Munoz Rivera Avenue, Suite 913
                  Hato Rey, Puerto Rico 00918
                  Attention:  Richard Barrios
                  Facsimile Number:  (787) 754-9290

         If to the Parent:

                  BanPonce Corporation
                  209 Munoz Rivera Avenue, Suite 1112
                  Hato Rey, Puerto Rico 00918
                  Attention:  Jose L. Lopez
                  Facsimile Number:  (787) 751-2137

         If to Merrill Lynch & Co.:

                  Merrill Lynch & Co.
                  Merrill Lynch, Pierce, Fenner & Smith Incorporated
                  World Financial Center
                  North Tower, 10th Floor
                  New York, New York 10281-1310
                  Attention:  Product Management-Bank Notes
                  Facsimile Number:  (212) 449-2234

         If to Bear, Stearns & Co. Inc.:

                  Bear, Stearns & Co. Inc.
                  245 Park Avenue
                  New York, New York 10167
                  Attention:  Medium-Term Notes Department
                  Facsimile Number:  (212) 272-6227

                                      -22-
<PAGE>   24

         If to CS First Boston Corporation:

                  CS First Boston Corporation
                  55 East 52nd Street
                  New York, New York 10055
                  Attention:  Short-Medium Term Finance Group
                  Facsimile Number:  (212) 318-1498

or at such other address as such party may designate from time to time by notice
duly given in accordance with the terms of this Section 13.

SECTION 14.  Parties.

         This Agreement shall inure to the benefit of and be binding upon the
Agents, the Bank and its respective successors. Nothing expressed or mentioned
in this Agreement is intended or shall be construed to give any person, firm or
corporation, other than the parties hereto and their respective successors and
the controlling persons and officers and directors referred to in Sections 9 and
10 and their heirs and legal representatives, any legal or equitable right,
remedy or claim under or in respect of this Agreement or any provision herein or
therein contained. This Agreement and all conditions and provisions hereof and
thereof are intended to be for the sole and exclusive benefit of the parties
hereto and respective successors and said controlling persons and officers and
directors and their heirs and legal representatives, and for the benefit of no
other person, firm or corporation. No purchaser of Bank Notes shall be deemed to
be a successor by reason merely of such purchase.

SECTION 15.  Governing Law.

         This Agreement and all the rights and obligations of the parties shall
be governed by and construed in accordance with the laws of New York applicable
to agreements made and to be performed in such State.

SECTION 16.  Counterparts.

         This Agreement may be executed by any one or more of the parties hereto
in any number of counterparts, each of which shall be deemed to be an original,
but all such counterparts shall together constitute one and the same instrument.

                                      -23-
<PAGE>   25

         If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Bank a counterpart hereof, whereupon
this instrument along with all counterparts will become a binding agreement
between each of the Agents and the Bank in accordance with its terms.

                                    Very truly yours,

                                    BANCO POPULAR DE PUERTO RICO

                                    By:
                                       --------------------------------------
                                       Name:  Jose L. Lopez
                                       Title: Senior Vice President

                                    By:
                                       --------------------------------------
                                       Name:  Richard Barrios
                                       Title:  Senior Vice President

CONFIRMED AND ACCEPTED,
as of the date first above written:

MERRILL LYNCH, PIERCE, FENNER & SMITH
           INCORPORATED

By:
   ------------------------------
   Name:
   Title:

BEAR, STEARNS & CO. INC.

By:
   ------------------------------
   Name:
   Title:

CS FIRST BOSTON CORPORATION

By:
   ------------------------------
   Name:
   Title:

                                      -24-
<PAGE>   26

         If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Bank a counterpart hereof, whereupon
this instrument along with all counterparts will become a binding agreement
between each of the Agents and the Bank in accordance with its terms.

                                       Very truly yours,

                                       BANCO POPULAR DE PUERTO RICO

                                       By:
                                          ------------------------------
                                          Name:
                                          Title:

                                       By:
                                          ------------------------------
                                          Name:
                                          Title:

CONFIRMED AND ACCEPTED,
as of the date first above written:

MERRILL LYNCH, PIERCE, FENNER & SMITH
             INCORPORATED

By:
   -----------------------------
   Name:
   Title:

BEAR, STEARNS & CO. INC.

By:
   -----------------------------
   Name:
   Title:

CS FIRST BOSTON CORPORATION

By:
   -----------------------------
   Name:
   Title:

                                      -25-
<PAGE>   27

         If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Bank a counterpart hereof, whereupon
this instrument along with all counterparts will become a binding agreement
between each of the Agents and the Bank in accordance with its terms.

                                         Very truly yours,

                                         BANCO POPULAR DE PUERTO RICO

                                         By:
                                            -----------------------------
                                            Name:
                                            Title:

                                         By:
                                            -----------------------------
                                            Name:
                                            Title:

CONFIRMED AND ACCEPTED,
as of the date first above written:

MERRILL LYNCH, PIERCE, FENNER & SMITH
             INCORPORATED

By:
   ----------------------------
   Name:
   Title:

BEAR, STEARNS & CO. INC.

By:
   ----------------------------
   Name:
   Title:

CS FIRST BOSTON CORPORATION

By:
   ----------------------------
   Name:
   Title:

                                      -26-
<PAGE>   28

         If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Bank a counterpart hereof, whereupon
this instrument along with all counterparts will become a binding agreement
between each of the Agents and the Bank in accordance with its terms.

                                           Very truly yours,

                                           BANCO POPULAR DE PUERTO RICO

                                           By:
                                              ---------------------------
                                              Name:
                                              Title:

                                           By:
                                              ---------------------------
                                              Name:
                                              Title:

CONFIRMED AND ACCEPTED,
as of the date first above written:

MERRILL LYNCH, PIERCE, FENNER & SMITH
             INCORPORATED

By:
   ------------------------------
   Name:
   Title:

BEAR, STEARNS & CO. INC.

By:
   ------------------------------
   Name:
   Title:

CS FIRST BOSTON CORPORATION

By:
   ------------------------------
   Name:
   Title:

                                      -27-
<PAGE>   29

                                                                       EXHIBIT A

         The following terms, if applicable, shall be agreed to by the Agent and
the Bank in connection with each sale of Bank Notes to the Agent as principal:

         Principal Amount: $______

         Choose One:
         [ ] Medium-Term Bank Note
         [ ] Short-Term Bank Note

         Interest Rate:
                  If Fixed Rate Note, Interest Rate:

                  If Floating Rate Note:

                           Interest Rate Basis:
                           Initial Interest Rate:
                           Spread or Spread Multiplier, if any:
                           Interest Reset Date(s):
                           Interest Payment Date(s):
                           Index Maturity:
                           Maximum Interest Rate, if any:
                           Minimum Interest Rate, if any:
                           Interest Reset Period:
                           Interest Payment Period:
                           Calculation Agent:

                  If Redeemable:

                           Initial Redemption Date:
                           Additional Redemption Dates:
                           Initial Redemption Percentage:
                           Annual Redemption Percentage Reduction:

                  If Repayable:

                           Optional Repayment Date(s):

         Date of Maturity:
         Purchase Price: ________%
         Settlement Date and Time:
         Additional Terms:
Also, in connection with the purchase of Bank Notes by the Agent as principal,
agreement as to whether the following will be required:

                                      A-1
<PAGE>   30

         (a)      Officers' Certificates pursuant to Section 8(b) of the
                  Distribution Agreement.

         (b)      Legal Opinions pursuant to Section 8(c) of the Distribution
                  Agreement.

                                      A-2
<PAGE>   31

                                                                       EXHIBIT B

         Unless otherwise negotiated, compensation for the services of the
Agents when acting as agents hereunder, the Bank shall pay the applicable Agent,
on a discount basis, a commission for the sale of each Bank Note equal to the
principal amount of such Bank Note multiplied by the appropriate percentage set
forth below:

<TABLE>
<CAPTION>
                                                                                      PERCENT OF
MATURITY RANGES                                                                    PRINCIPAL AMOUNT
---------------                                                                    ----------------
<S>                                                                                <C>
From 7 days to less than 9 months............................................            .050%

From 9 months to less than 1 year............................................            .125

From 1 year to less than 18 months...........................................            .150

From 18 months to less than 2 years..........................................            .200

From 2 years to less than 3 years............................................            .250

From 3 years to less than 4 years............................................            .350

From 4 years to less than 5 years............................................            .450

From 5 years to less than 6 years............................................            .500

From 6 years to less than 7 years............................................            .550

From 7 years to less than 10 years...........................................            .600

From 10 years to less than 15 years..........................................            .625

15 years.....................................................................            .700
</TABLE>

                                      B-1
<PAGE>   32
                                                                     EXHIBIT C-1

             [FORM OF OPINION OF COUNSEL TO THE BANK AND THE PARENT]

                                                                __________,199__

MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
                  INCORPORATED
World Financial Center
North Tower, 10th Floor
New York, New York 10281-1310

BEAR, STEARNS & CO. INC.
245 Park Avenue
New York, New York 10167

CS FIRST BOSTON CORPORATION
55 East 52nd Street
New York, New York 10055

Ladies and Gentlemen:

         In connection with the execution today (i) by you and Banco Popular de
Puerto Rico (the "Bank") of the Distribution Agreement (the "Distribution
Agreement"), (ii) by BanPonce Corporation (the "Parent") of the Representations
Certificate pursuant to Section 6(c) of the Distribution Agreement (the
"Representations Certificate"), (iii) by the Bank and The Chase Manhattan Bank
(in such capacity, the "Issuing and Paying Agent") of the Issuing and Paying
Agency Agreement (the "Issuing and Paying Agency Agreement"), (iv) by the Bank
and The Chase Manhattan Bank (in such capacity, the "Calculation Agent") of the
Interest Calculation Agreement (the "Interest Calculation Agreement") and (v) by
the Bank, the Issuing and Paying Agent and The Depository Trust Company of the
Short-Term and Medium-Term Letters of Representations (the "Letters of
Representations"), all of which are dated September 23, 1996, relating to the
issuance and sale by the Bank of its Bank Notes due from 7 days to 15 years from
the date of issue (the "Bank Notes"), I, as counsel for the Bank and the Parent,
the parent corporation and the bank holding company of the Bank, have examined
such corporate records, certificates and other documents, and such questions of
law, as I have considered necessary or appropriate for

                                     C-1-1
<PAGE>   33
the purposes of this opinion. Upon the basis of such examination, it is my
opinion that:

                  (i)      The Bank is a banking corporation duly organized,
         validly existing and in good standing under the laws of the
         jurisdiction of its incorporation, the Parent is a corporation duly
         organized, validly existing, and in good standing under the laws of the
         Commonwealth of Puerto Rico and each of the Bank and the Parent is
         licensed, registered or qualified to conduct the business in which it
         is engaged in each jurisdiction in which the conduct of its business or
         its ownership or leasing of property requires such license,
         registration or qualification, except to the extent that the failure to
         be so licensed, registered or qualified or to be in good standing would
         not have a material adverse effect on it and its subsidiaries and the
         Parent and its subsidiaries taken as a whole. The Bank is a wholly
         owned subsidiary of the Parent, a bank holding company which has
         securities registered under the Securities Exchange Act of 1934, as
         amended (the "1934 Act").

                  (ii)     Neither the Bank or any of its subsidiaries nor the
         Parent or any of its subsidiaries is in violation of its charter or in
         default in the performance or observance of any material obligation,
         agreement, covenant or condition contained in any material contract,
         indenture, mortgage, loan agreement, note, lease or other instrument to
         which it is a party or by which it or any of them or their properties
         may be bound. The execution, issuance and delivery by the Bank of the
         Bank Notes, the execution, delivery and performance by the Bank of the
         Distribution Agreement, the Issuing and Paying Agency Agreement, the
         Interest Calculation Agreement, the Letters of Representations and any
         agreement by an agent party to the Distribution Agreement to purchase
         the Bank Notes as principal, and the execution, delivery and
         performance by the Parent of the Representations Certificate, will not
         violate any law, rule, regulation, order, judgment or decree applicable
         to the Parent and its subsidiaries or to the Bank and any of its
         subsidiaries or violate any provision of the Bank's or the Parent's
         Charter, Bylaws, Articles of Incorporation or Articles of Association,
         as the case may be, or conflict with or result in a breach of or
         constitute a default under, or result in the creation or imposition of
         any lien, charge or encumbrance upon any property or assets of the
         Parent and its subsidiaries or the Bank and its subsidiaries pursuant
         to any material contract, indenture, mortgage loan agreement, note,
         lease or other instrument to which the Parent or any of its
         subsidiaries or the Bank or any of its subsidiaries, or the property of
         any of them, is bound or

                                     C-1-2
<PAGE>   34
         subject, except for any conflict, breach or violation that would,
         individually or in the aggregate, not have a material adverse effect on
         the financial condition, business or results of operations of the
         Parent or its subsidiaries (including the Bank); provided, however,
         that, for purposes of this paragraph (ii), I express no opinion with
         respect to federal or state securities laws, antifraud laws, fraudulent
         transfer laws, the Employee Retirement Income Security Act of 1974 and
         related laws or laws that restrict transactions between United States
         persons and citizens or residents of certain foreign countries;
         provided, further, that insofar as performance by the Bank or the
         Parent of its obligations under the Distribution Agreement, the Issuing
         and Paying Agency Agreement, the Interest Calculation Agreement, the
         Bank Notes, the Letters of Representations and any other related
         agreement is concerned, I express no opinion as to bankruptcy,
         liquidation, insolvency, reorganization, moratorium, receivership and
         similar laws of general applicability relating to, or affecting,
         creditors' rights generally and specifically the rights of creditors of
         the FDIC-insured institutions and to general equity principles.

                  (iii)    Except as may be set forth in the Offering Circular,
         there is no action, suit or proceeding before or by any court or
         governmental agency or body, domestic or foreign, now pending, or, to
         my knowledge, threatened against or affecting, the Parent or any of its
         subsidiaries or the Bank or any of its subsidiaries, which might result
         in any material adverse change in the condition, financial or
         otherwise, or in the earnings, business affairs or business prospects
         of the Bank and its subsidiaries, on a consolidated basis, or might
         materially and adversely affect the properties or assets thereof or
         would reasonably be expected to materially and adversely affect the
         consummation of this Agreement, the Issuing and Paying Agency
         Agreement, the Interest Calculation Agreement, the Letters of
         Representations or any transaction contemplated hereby or thereby.

                  (iv)     The Representations Certificate has been duly
         authorized, executed and delivered by a duly authorized officer of the
         Parent and is a valid and legally binding agreement of the Parent
         enforceable in accordance with its terms, subject to applicable
         bankruptcy, liquidation, insolvency, reorganization, moratorium,
         receivership and similar laws of general applicability relating to, or
         affecting, creditors' rights and to general equity principles.

                                     C-1-3
<PAGE>   35

                  (v)      I have no knowledge of any facts that would lead me
         to believe that the Offering Circular (other than financial statements
         and other financial data included therein, as to which I express no
         opinion) as of its date contained any untrue statement of a material
         fact or omitted to state any material fact necessary in order to make
         the statements made therein, in light of the circumstances under which
         they were made, not misleading.

         The foregoing opinion is limited to the federal laws of the United
States and the laws of the Commonwealth of Puerto Rico, and I am expressing no
opinion as to the effect of the laws of any other jurisdiction. Capitalized
terms used herein and not otherwise defined have the meanings set forth in the
Distribution Agreement.

         This opinion letter is solely for the benefit of the parties to whom it
is addressed. It may be relied upon by Brown & Wood LLP as to matters of the
laws of the Commonwealth of Puerto Rico but it may not be relied upon, nor may
copies be delivered to, any other parties or persons without my prior written
consent.

                                                     Very truly yours,

                                     C-1-4
<PAGE>   36
                                                                     EXHIBIT C-2

             [FORM OF OPINION OF COUNSEL TO THE BANK AND THE PARENT]

                                                                _________, 199__

MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
          INCORPORATED
World Financial Center
North Tower, 10th Floor
New York, New York 10281-1310

BEAR, STEARNS & CO. INC.
245 Park Avenue
New York, New York 10167

CS FIRST BOSTON CORPORATION
55 East 52nd Street
New York, New York 10055

Ladies and Gentlemen:

         In connection with the execution today (i) by you and Banco Popular de
Puerto Rico (the "Bank"), of the Distribution Agreement (the "Distribution
Agreement"), (ii) by BanPonce Corporation (the "Parent") of the Representations
Certificate pursuant to Section 6(c) of the Distribution Agreement (the
"Representations Certificate"), (iii) by the Bank and The Chase Manhattan Bank
(in such capacity, the "Issuing and Paying Agent") of the Issuing and Paying
Agency Agreement (the "Issuing and Paying Agency Agreement"), (iv) by the Bank
and The Chase Manhattan Bank (in such capacity, the "Calculation Agent") of the
Interest Calculation Agreement (the "Interest Calculation Agreement") and (v) by
the Bank, the Issuing and Paying Agent and The Depository Trust Company of the
Short-Term and Medium-Term Letters of Representations (the "Letters of
Representations"), all of which are dated September 23, 1996, relating to the
issuance and sale by the Bank of its Bank Notes due from 7 days to 15 years from
the date of issue (the "Bank Notes"), I, as counsel for the Bank and the Parent,
the parent corporation and the bank holding company of the Bank, have examined
such corporate records, certificates and other documents, and such questions of
law, as I have considered necessary or appropriate for the purposes of this
opinion. Upon the basis of such examination, it is my opinion that:

                                     C-2-1
<PAGE>   37

                  (vi)     The Distribution Agreement, the Issuing and Paying
         Agency Agreement, the Interest Calculation Agreement and the Letters of
         Representations have been duly authorized, executed and delivered by
         the Bank and are valid and legally binding agreements of the Bank,
         [enforceable in accordance with their respective terms,] subject to
         applicable bankruptcy, liquidation, insolvency, reorganization,
         moratorium, receivership and similar laws of general applicability
         relating to, or affecting, creditors' rights generally and specifically
         the rights of creditors of the FDIC-insured institutions and to general
         equity principles or by safety and soundness concerns raised by the
         applicable banking regulators.

                  (vii)    The Bank Notes of the Bank have been duly authorized
         and, when issued and authenticated against payment of the consideration
         therefor, the Bank Notes will be valid and binding obligations of the
         Bank, enforceable in accordance with their respective terms, subject to
         applicable bankruptcy, fraudulent transfer, liquidation, insolvency,
         reorganization, moratorium, receivership and similar laws of general
         applicability relating to, or affecting, creditors' rights generally
         and specifically the rights of creditors of the FDIC-insured
         institutions and to general equity principles or by safety and
         soundness concerns raised by the applicable banking regulators.

                  (viii)   The Bank Notes of the Bank are exempt from
         registration under Section 3(a)(2) of the Securities Act of 1933, as
         amended (the "1933 Act"). Neither registration of the Bank Notes under
         the 1933 Act nor qualification of an indenture under the Trust
         Indenture Act of 1939, as amended, will be required in connection with
         the offer, sale, issuance or delivery of such Bank Notes pursuant to
         the Distribution Agreement or any applicable agreement by an agent
         party to the Distribution Agreement.

                  (ix)     The Bank is not required to register under the
         provisions of the Investment Company Act of 1940, as amended (the
         "Investment Company Act"), or to take any other action with respect to
         or under the Investment Company Act.

                  (x)      No consent, approval or authorization of or filing
         with any governmental body or agency is required for the performance by
         the Bank of any obligation under the Distribution Agreement, the Bank
         Notes, the Issuing and Paying Agency Agreement, the Interest
         Calculation Agreement, the Letters of Representations and any
         applicable agreement by an

                                     C-2-2
<PAGE>   38
         Agent party to the Distribution Agreement to purchase the Bank Notes as
         principal, except such as may be required by the securities or Blue Sky
         laws of the various states in connection with the offer and sale of the
         Bank Notes, the rules of the National Association of Securities Dealers
         in connection with the sale and distribution of the Notes by the Agents
         and except for the waiver of the Commissioner of Financial Institutions
         of Puerto Rico pursuant to Section 14(d) of the Puerto Rico Banking
         Act, which waiver has been obtained.

                  (xi)     The Bank Notes are substantially in the form
         delivered to the Agents and conform to the description thereof
         contained in the Offering Circular under the caption "Description of
         Notes."

                  (xii)    The Bank Notes are unsecured and unsubordinated debt
         obligations of the Bank and rank pari passu with all other unsecured
         and unsubordinated debt obligations of the Bank except, pursuant to
         Section 11(d)(ll) of the Federal Deposit Insurance Act, the Bank's
         unsecured deposit liabilities.

                  [(xiii)  No taxes, withholdings or other charges imposed by
         the Commonwealth of Puerto Rico or any political subdivision thereof,
         the United States, the State of New York or the City of New York are
         required to be withheld or charged in respect of any payment by the
         Bank on the Bank Notes and the Bank Notes are not subject to any
         registration tax, stamp duty or similar tax or duty imposed by the
         Commonwealth of Puerto Rico or any political subdivision thereof.]

         The foregoing opinion is limited to the federal laws of the United
States and the laws of the Commonwealth of Puerto Rico, and I am expressing no
opinion as to the effect of the laws of any other jurisdiction. Capitalized
terms used herein and not otherwise defined have the meanings set forth in the
Distribution Agreement.

         This opinion letter is solely for the benefit of the parties to whom it
is addressed. It may be relied upon by Brown & Wood LLP as to matters of the
laws of the Commonwealth of Puerto Rico but it may not be relied upon, nor may
copies be delivered to, any other parties or persons without our prior written
consent.

                                                     Very truly yours,

                                     C-2-3
<PAGE>   39
                                                                       EXHIBIT D

                          BANCO POPULAR DE PUERTO RICO

                              OFFICERS' CERTIFICATE

         We, [Officers' Names], [Officers' Titles], respectively, of Banco
Popular de Puerto Rico, a banking corporation chartered under the laws of the
Commonwealth of Puerto Rico (the "Bank"), pursuant to Section 6(b)(i) of the
Distribution Agreement, dated September __, 1996 (the "Distribution Agreement"),
among the Bank, Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Bear, Stearns & Co. Inc. and CS First Boston Corporation hereby
certify on behalf of the Bank that [to the best of our knowledge]:

         (i)      Since ________, 19__, there has been no material adverse
change in the condition, financial or otherwise, of the Bank and its
subsidiaries, on a consolidated basis, or in the earnings, business affairs or
business prospects of the Bank and its subsidiaries, on a consolidated basis,
whether or not arising in the ordinary course of business other than as set
forth or contemplated in the Offering Circular, dated September 24, 1996, as
amended or supplemented to the date hereof, relating to the Bank's Bank Notes;

         (ii)     The other representations and warranties of the Bank contained
in Section 2 of the Distribution Agreement are true and correct with the same
force and effect as though expressly made at and as of the date hereof; and

         (iii)    The Bank has performed or complied with the Distribution
Agreement and with all agreements and documentation executed in connection
therewith and satisfied all conditions on its part to be performed or satisfied
at or prior to the date hereof.

                                      D-1
<PAGE>   40
         IN WITNESS WHEREOF, we have hereunto signed our names and affixed the
seal of the Bank this ___ day of _________, 19 __.

                                     BANCO POPULAR DE PUERTO RICO

                                     By:
                                        ---------------------------------------
                                        Name:
                                        Title:
[SEAL]

                                     By:
                                        ---------------------------------------
                                        Name:
                                        Title:

                                      D-2
<PAGE>   41
                                                                       EXHIBIT E

                              BANPONCE CORPORATION

                              OFFICERS' CERTIFICATE

         We, [Officers' Names], [Officers' Titles], respectively, of BanPonce
Corporation, a corporation organized under the laws of the Commonwealth of
Puerto Rico (the "Parent"), pursuant to Section 6(b)(ii) of the Distribution
Agreement, dated September __, 1996 (the "Distribution Agreement"), among the
Bank, Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated,
Bear, Stearns & Co. Inc. and CS First Boston Corporation hereby certify on
behalf of the Bank that [to the best of our knowledge]:

         1        Since _______, 19__, there has been no material adverse change
in the condition, financial or otherwise, of the Bank and its subsidiaries or
the Parent and its subsidiaries, as the case may be, on a consolidated basis, or
in the earning, business affairs or business prospects of the Bank and its
subsidiaries or the Parent and its subsidiaries, as the case may be, on a
consolidated basis, whether or not arising in the ordinary course of business
other than as set forth or contemplated in the Offering Circular, dated
September 24, 1996, as amended or supplemented to the date hereof, relating to
the Bank's Bank Notes;

         2        The representations and warranties of the Parent contained in
the Representations Certificate dated September __, 1996, furnished by the
Parent to the Agents pursuant to Section 6(c) of the Distribution Agreement, are
true and correct with the same force and effect as though expressly made at and
as of the date hereof; and

         3        The Parent has performed or complied with the Distribution
Agreement and with all agreements and documentation executed in connection
therewith and satisfied all conditions on its part to be performed or satisfied
at or prior to the date hereof.

                                      E-1
<PAGE>   42
         IN WITNESS WHEREOF, we have hereunto signed our names and affixed the
seal of the Parent the ___ day of _______, 19__.

                                     BANCO CORPORATION

                                     By:
                                        ---------------------------------------
                                        Name:
                                        Title:
[SEAL]

                                     By:
                                        ---------------------------------------
                                        Name:
                                        Title:

                                      E-2
<PAGE>   43
                                                                       EXHIBIT F

                      REPRESENTATIONS CERTIFICATE OF PARENT

         To induce Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Bear, Stearns & Co. Inc. and CS First Boston Corporation (each
referred to as an "Agent" and collectively referred to as the "Agents") to enter
into the Distribution Agreement of even date herewith (the "Distribution
Agreement") among Banco Popular de Puerto Rico (the "Bank") and the Agents, to
induce The Chase Manhattan Bank to enter into the Issuing and Paying Agency
Agreement (the "Issuing and Paying Agency Agreement") between the Bank and The
Chase Manhattan Bank and to induce The Chase Manhattan Bank to enter into the
Interest Calculation Agreement (the "Interest Calculation Agreement") between
the Bank and The Chase Manhattan Bank, each with respect to the issue and sale
by the Bank of its Bank Notes (the "Bank Notes"), the undersigned, [Officers'
Names], [Officers' Titles in accordance with Section 6(c) of the Distribution
Agreement] of BanPonce Corporation (the "Parent"), hereby represent and warrant
on behalf of the Parent to each Agent and to The Chase Manhattan Bank as of the
date hereof, as of each time that there is filed with the Securities and
Exchange Commission (the "Commission") any document relating to the Parent
incorporated by reference in the Offering Circular, dated September __, 1996, as
of the date of each acceptance by the Bank of an offer for the purchase of Bank
Notes (whether by an Agent as principal or through such Agent as agent), as of
each applicable Settlement Date and as of each applicable Representation Date,
as follows:

                  (i)      Authorization to Incorporate by Reference. The Parent
         has authorized the Bank to incorporate by reference in the Offering
         Circular its annual reports on Form 10-K for its most recently ended
         fiscal year, quarterly reports on Form 10-Q since its most recently
         ended fiscal year, current reports on Form 8-K since its most recently
         ended fiscal year and any other document filed by the Parent with the
         Commission pursuant to Section 13 or 15(d) of the Securities Exchange
         Act of 1934, as amended (the "1934 Act") and the rules and regulations
         thereunder (the "Incorporated Documents").

                  (ii)     Incorporated Documents. The Incorporated Documents,
         at the time they were or hereafter are filed with the applicable
         federal regulatory authorities, complied or when so filed will comply,
         as the case may be, in all material respects with the requirements of
         the 1934 Act and the rules and regulations promulgated thereunder or
         the rules and

                                      F-1
<PAGE>   44

         regulations otherwise applicable thereto, as the case may be, and, when
         read together with the other information in the Offering Circular, did
         not and will not contain an untrue statement of a material fact or omit
         to state a material fact required to be stated therein or necessary in
         order to make the statements therein, in the light of the circumstances
         under which they were or are made, not misleading.

                  (iii)    Due Organization, Valid Existence and Good Standing.
         The Parent is a corporation duly organized, validly existing and in
         good standing under the laws of the Commonwealth of Puerto Rico, and is
         licensed, registered or qualified to conduct the business in which it
         is engaged in each jurisdiction in which the conduct of its business or
         its ownership or leasing of property requires such license,
         registration or qualification, except to the extent that the failure to
         be so licensed, registered or qualified or to be in good standing would
         not have a material adverse effect on the Parent and its subsidiaries
         taken as a whole.

                  (iv)     No Material Adverse Change. Since the respective
         dates as of which information is given in the Offering Circular, there
         has not been any material adverse change, or any development which
         could be expected to result in a material adverse change, in the
         condition, financial or otherwise, or in the earnings, business affairs
         or business prospects of the Bank and its subsidiaries or the Parent
         and its subsidiaries, as the case may be, on a consolidated basis,
         whether or not arising in the ordinary course of business, other than
         as set forth or contemplated in the Offering Circular.

         In addition, to induce the Agents to enter into the Distribution
Agreement, the Parent agrees to indemnify and hold harmless each Agent and each
person, if any, who controls each Agent within the meaning of Section 15 of the
Securities Act of 1933, as amended, or Section 20 of the 1934 Act (each, a
"Controlling Person") to the same extent and upon the same terms that the Bank
agrees to indemnify and hold harmless each Agent and each such Controlling
Person in Section 9 of the Distribution Agreement and to contribute to the
payment of any losses, liabilities, claims, damages or expenses incurred by each
Agent or each such Controlling Person to the same extent and upon the same terms
that the Bank agrees to contribute in Section 10 of the Distribution Agreement;
provided, however, that such indemnification or contribution granted by the
Parent shall be an obligation of the Parent if and only to the extent that such
indemnification or contribution granted by the Bank is unavailable

                                      F-2
<PAGE>   45
to or insufficient to hold such Agent or Controlling Person harmless with
respect to any losses, liabilities, claims, damages or expenses (or actions in
respect thereof) referred to above.

         All representations and warranties contained in this certificate shall
remain operative and in full force and effect, regardless of any investigation
made by or on behalf of the Agents or any Controlling Person of the Agents, or
by or on behalf of the Parent and shall survive each delivery of and payment for
any of the Bank Notes.

         All terms used herein but not otherwise defined shall have the meanings
assigned to such terms in the Distribution Agreement.

         IN WITNESS WHEREOF, I have hereunto signed my name on behalf of the
Parent the _____ day of __________ , 19___.

                                     BANPONCE CORPORATION

                                     By:
                                        ---------------------------------------
                                        Name:
                                        Title:
[SEAL]

                                     By:
                                        ---------------------------------------
                                        Name:
                                        Title:

                                      F-3
<PAGE>   46
                                                                       EXHIBIT G

                            ADMINISTRATIVE PROCEDURES
                   FOR FIXED RATE AND FLOATING RATE BANK NOTES
                      With maturities of 7 days to 15 years
                        (Dated as of September 24, 1996)

         The Short-Term Bank Notes ("Short-Term Notes"), Medium-Term Bank Notes
("Medium-Term Notes," and together with the Short-Term Senior Notes, the
"Notes") are to be offered on a continuous basis for sale by Banco Popular de
Puerto Rico (the "Bank") through each of Merrill Lynch & Co., Merrill Lynch,
Pierce, Fenner & Smith Incorporated, Bear, Stearns & Co. Inc. and CS First
Boston Corporation who, as agents (each, an "Agent" and collectively, the
"Agents"), will purchase the Notes, as principal from the Bank for resale to
investors and other purchasers at varying prices relating to prevailing market
prices at the time of resale as determined by the applicable Agent or, if so
specified in the applicable Pricing Supplement, for resale at a fixed public
offering price. If agreed to by the Bank and the applicable Agent, such Agent
may utilize its reasonable efforts on an agency basis to solicit offers to
purchase the Notes at 100% of the principal amount thereof. Only those
provisions in these Administrative procedures that are applicable to the
particular role that an Agent will perform shall apply.

         The Notes are being sold pursuant to a Distribution Agreement dated
September 24, 1996 (the "Distribution Agreement") between the Bank and the
Agents. The Distribution Agreement provides both for the sale of Notes by the
Bank to the Agents as principal for resale to investors and other purchasers and
for the sale of Notes by the Bank through the Agents as agents and not as
principal in which case the Agents will act as agents of the Bank in soliciting
Note purchases. The Notes will be issued pursuant to an issuing and paying
agency agreement dated as of September 24, 1996 (the "Issuing and Paying Agency
Agreement") between the Bank and The Chase Manhattan Bank, as issuing and paying
agent (the "Issuing and Paying Agent"). As used herein, the term "Offering
Circular" refers to the most recent offering circular, as such document may be
amended or supplemented, which has been prepared by the Bank for use by the
Agents in connection with the offering of the Notes.

         The Notes will be issued in book-entry form (each beneficial interest
in a global Note, a "Book-Entry Note" and collectively, the "Book-Entry Notes")
and represented by one or more fully registered global Notes (each, a "Global
Note" and collectively,

                                      G-1
<PAGE>   47
the "Global Notes") delivered to the Issuing and Paying Agent, as agent for The
Depository Trust Company, as depositary ("DTC," which term includes any
successor thereof), and recorded in the book-entry system maintained by DTC.
Book-Entry Notes represented by a Global Note are exchangeable for definitive
Notes in registered form, of like tenor and of an equal aggregate principal
amount, by the owners of such Book-Entry Notes only upon certain limited
circumstances described in the Offering Circular and the applicable Global Note.

         In connection with the qualification of Book-Entry Notes for
eligibility in the book-entry system maintained by DTC, the Issuing and Paying
Agent will perform the custodial, document control and administrative functions
described below, in accordance with its respective obligations under the
Short-Term and Medium-Term Letters of Representations from the Bank and the
Issuing and Paying Agent to DTC, dated September 23, 1996, and a Certificate
Agreement, dated December 2, 1988, as amended September 24, 1996, between the
Issuing and Paying Agent and DTC (the "Certificate Agreement"), and its
obligations as a participant in DTC, including DTC's Same-Day Funds Settlement
System ("SDFS").

         Capitalized terms used herein that are not otherwise defined shall have
the meanings ascribed thereto in the Notes.

Date of Issuance/          Each Note will be dated as of the date of its
Authentication:            authentication by the Issuing and Paying Agent. Each
                           Note shall also bear an original issue date (the
                           "Original Issue Date") which shall be the settlement
                           date for such Note. The Original Issue Date shall
                           remain the same for all Notes subsequently issued
                           upon transfer, exchange or substitution of an
                           original Note regardless of their dates of
                           authentication.

Maturities:                Each Short-Term Note will mature on a date (the
                           "Maturity Date") selected by the purchaser and agreed
                           to by the Bank which is not less than seven days and
                           not more than one year from its Original Issue Date,
                           as selected by the initial purchaser and agreed to by
                           the Bank; and each Medium-Term Note will have a
                           Maturity Date selected by

                                      G-2
<PAGE>   48
                           the purchaser and agreed to by the Bank which is from
                           more than one year to not more than 15 years from its
                           Original Issue Date; provided, however, that Floating
                           Rate Notes will mature on an Interest Payment Date.

Registration:              Notes will be issued only in fully registered form.

Calculation of             Unless otherwise specified therein and in the
Interest:                  applicable Pricing Supplement,  interest (including
                           payments for partial periods) on Fixed Rate Notes
                           having maturities of more than one year will be
                           computed and paid on the basis of a 360-day year of
                           twelve 30-day months. Unless otherwise specified
                           therein and in the applicable Pricing Supplement,
                           interest on Fixed Rate Notes having maturities of one
                           year or less will be computed on the basis of the
                           actual number of days of the year divided by 360 and
                           will be payable only at maturity. Unless otherwise
                           specified therein and in the applicable Pricing
                           Supplement, interest on Floating Rate Notes will be
                           calculated and paid on the basis of the actual number
                           of days in the year divided by 360 in the case of
                           Commercial Paper Rate Notes, LIBOR Notes, Federal
                           Funds Rate Notes, Prime Rate Notes and Eleventh
                           District Cost of Funds Rate Notes, and by the actual
                           number of days in the year divided by 365 or 366, as
                           the case may be, in the case of Treasury Rate Notes.

Redemption/Repayment       The Notes will be subject to redemption by the Bank
                           on and after their respective Initial Redemption
                           Dates, if any, Initial Redemption Dates, if any, will
                           be fixed at the time of sale and set forth in the
                           applicable Pricing Supplement and in the applicable
                           Note. If no Initial Redemption Dates are indicated
                           with

                                      G-3
<PAGE>   49
                           respect to a Note, such Note will not be redeemable
                           prior to its Maturity Date.

                           The Notes will be subject to repayment at the option
                           of the holders thereof in accordance with the terms
                           of the Notes on their respective Holder's Optional
                           Repayment Dates, if any, Holder's Optional Repayment
                           Dates, if any, will be fixed at the time of sale and
                           set forth in the applicable Pricing Supplement and in
                           the applicable Note. If no Holder's Optional
                           Repayment Dates are indicated with respect to a Note,
                           such Note will not be repayable at the option of the
                           holder prior to its Maturity Date.

Acceptance and             When the Agent is soliciting offers to purchase the
Rejection of Offers:       Notes, the Bank shall have the sole right to accept
                           offers to purchase Notes and may reject any such
                           offer, in whole or in part. Each Agent shall promptly
                           communicate to the Bank, orally, each offer to
                           purchase Notes solicited by such Agent on an agency
                           basis, other than those offers rejected by the Agent.
                           Each Agent shall have the right, without notice to
                           the Bank, to reject any proposed purchase of Notes
                           through it, in whole or in part.

Preparation of             If any offer to purchase a Note is accepted by the
Pricing Supplement:        Bank, the Bank, with the approval of the Agent which
                           presented such offer (the "Presenting Agent"), will
                           prepare a Pricing Supplement reflecting the terms of
                           such Note.

Procedure for Changing     When the Agents are soliciting offers to purchase the
Rates or Other             Notes from the Bank and a decision has been reached
Variable Terms:            to change the interest rate or any other variable
                           term on any Notes being sold by the Bank, the Bank
                           will promptly

                                      G-4
<PAGE>   50
                           advise the Agents and the Agents will forthwith
                           suspend solicitation of offers to purchase such
                           Notes. The Agents will telephone the Bank with
                           recommendations as to the changed interest rates or
                           other variable terms. At such time as the Bank
                           advises the Agents of the new interest rates or other
                           variable terms, the Agents may resume solicitation of
                           offers to purchase such Notes. Until such time, only
                           "indications of interest" may be recorded.
                           Immediately after acceptance by the Bank of an offer
                           to purchase at a new interest rate or new variable
                           term, the Bank and the Presenting Agent shall follow
                           the procedures set forth under the applicable
                           "Settlement Procedures."

Suspension of              While the Agents are soliciting offers to purchase
Solicitation; Amendment    Notes from the Bank, the Bank may instruct the
or Supplement:             Agents to suspend solicitation of offers  to purchase
                           Notes at any time. Upon receipt of such instructions,
                           the Agents will forthwith suspend solicitation of
                           offers to purchase Notes from the Bank until such
                           time as the Bank has advised them that solicitation
                           of offers to purchase may be resumed. If the Bank
                           decides to amend the Offering Circular (including
                           incorporating any documents by reference therein) or
                           supplement any of such documents (other than to
                           change rates or other variable terms), it will
                           immediately notify, with confirmation in writing to
                           follow, the Agents and will furnish the Agents and
                           their counsel with copies of the proposed amendment
                           (including any document proposed to be incorporated
                           by reference therein) or supplement; provided,
                           however, that the Bank shall be required to provide
                           such notice and copies only to the extent that it is

                                      G-5
<PAGE>   51
                           required to do so pursuant to the terms of the
                           Distribution Agreement. One copy of such proposed
                           amendment or supplement will be delivered or mailed
                           to the Agents at the following respective addresses:
                           Merrill Lynch & Co., World Financial Center, North
                           Tower, 10th Floor, New York, New York 10281-1310,
                           (212) 449-0393, telecopier: (212) 449-2234,
                           Attention: Product Management -- Medium-Term Notes;
                           Bear, Stearns & Co. Inc., 245 Park Avenue, New York,
                           New York 10167, (212) 272-6227, telecopier: (212)
                           272-5371, Attention: Medium-Term Notes Department;
                           and CS First Boston Corporation, 55 East 52nd Street,
                           New York, New York 10038, (212) 909-7198, telecopier:
                           (212) 318-1498, Attention: Short-Medium Term Finance
                           Group.

                           In the event that at the time the solicitation of
                           offers to purchase from the Bank is suspended (other
                           than to change interest rates, maturities, prices or
                           other similar variable terms with respect to the
                           Notes) there shall be any offers to purchase Notes
                           that have been accepted by the Bank which have not
                           been settled, the Bank will promptly advise the
                           Agents whether such offers may be settled and whether
                           copies of the Offering Circular, as theretofore
                           amended and/or supplemented may be delivered in
                           connection with the settlement of such orders. The
                           Bank will have the sole responsibility for such
                           decision and for any arrangements which may be made
                           in the event that the Bank determines that such
                           orders may not be settled or that copies of such
                           Offering Circular may not be so delivered.

Delivery of                A copy of the most recent Offering Circular and
Offering Circular:         Pricing Supplement must accompany or precede the
                           earlier of

                                      G-6
<PAGE>   52
                           (a) the written confirmation of a sale sent to a
                           customer or his agent and (b) the delivery of Notes
                           to a customer or his agent.

Authenticity of            The Agents will have no obligations or liability to
Signatures:                the Bank or the Issuing and Paying Agent in respect
                           of the authenticity of the signature of any officer,
                           employee or agent of the Bank or the Issuing and
                           Paying Agent on any Note.

Documents Incorporated     The Bank shall supply the Agents with an adequate
by Reference:              supply of all documents incorporated by reference in
                           the Offering Circular.

Business Day:              "Business Day" means, with respect to any  Note, any
                           day that is not a Saturday or Sunday and that is not
                           a day which is a bank holiday in Puerto Rico or a day
                           on which banking institutions in The City of New York
                           or in the city in which the Bank is headquartered are
                           authorized or required by law, regulation or
                           executive order to close, and with respect to LIBOR
                           Notes only, any day that is also a London Business
                           Day. "London Business Day" means any day on which
                           dealings in deposits in U.S. dollars are transacted
                           in the London interbank market.

Issuance:                  All Fixed Rate Notes of the Bank issued in book-entry
                           form having the same Original Issue Date, Interest
                           Rate, Interest Payment Dates, Regular Record Dates,
                           Default Rate, Maturity Date, redemption and/or
                           repayment terms, if any, original issue discount
                           terms, if any, and otherwise having identical terms
                           and provisions (collectively, the "Fixed Rate Terms")
                           will be represented initially by a single Global Note
                           in fully registered form; and all Floating Rate Notes
                           of the Bank issued in book-entry form having the same
                           Original Issue Date, interest rate basis upon which
                           interest may be determined (each, an "Interest Rate
                           Basis"), which may be the Commercial Paper Rate,
                           LIBOR, the Treasury Rate, the Federal Funds Rate, the
                           Prime Rate, the Eleventh District Cost of Funds Rate
                           and any other rate set forth by the Bank in a
                           Floating Rate Note, Initial Interest Rate, Index
                           Maturity, Spread and/or Spread Multiplier, if any,
                           Regular Record Dates, Maximum Interest Rate, if any,
                           Minimum Interest Rate, if any,

                                      G-7
<PAGE>   53

                           Interest Payment Dates, Interest Payment Period,
                           Interest Reset Dates, Interest Reset Period,
                           Alternate Rate Event Spread, LIBOR Screen, if any,
                           Calculation Agent, Default Rate, Maturity Date,
                           redemption or repayment terms, if any, original issue
                           discount terms, if any, and otherwise having
                           identical terms and provisions (collectively, the
                           "Floating Rate Terms"), will be represented initially
                           by a single Global Note.

Identification:            The Bank has arranged with the CUSIP Service Bureau
                           of Standard & Poor's Ratings Group (the "CUSIP
                           Service Bureau") for the reservation of one series of
                           CUSIP numbers assignable to Notes with maturities
                           more than one year and one series of CUSIP numbers
                           assignable to Notes with maturities of 7 days or more
                           up to and including one year, each of which series
                           consists of approximately 900 CUSIP numbers which
                           have been reserved for and relating to Global Notes,
                           and the Bank has delivered to DTC such list of such
                           CUSIP numbers. The Issuing and Paying Agent will
                           assign CUSIP numbers to Global Notes as described
                           below under Settlement Procedure C. DTC will notify
                           the CUSIP Service Bureau periodically of the CUSIP
                           numbers that the Issuing and Paying Agent has
                           assigned to the Global Notes. The Issuing and Paying
                           Agent will notify the Bank at any time when fewer
                           than 100 of the reserved CUSIP numbers of any series
                           remain unassigned to Global Notes and, if it deems it
                           necessary, the Bank will reserve additional CUSIP
                           numbers of such series for assignment to Global
                           Notes. Upon obtaining such additional CUSIP numbers,
                           the Bank will deliver a list of such additional
                           numbers to the Issuing and Paying Agent and DTC.
                           Book-Entry Notes having an aggregate principal amount

                                      G-8
<PAGE>   54

                           in excess of $200,000,000 and otherwise required to
                           be represented by the same Global Note will instead
                           be represented by two or more Global Notes which
                           shall all be assigned the same CUSIP number.

Registration:              Unless otherwise specified by DTC, each Global Note
                           will be registered in the name of Cede & Co., as
                           nominee for DTC, on the register maintained by the
                           Issuing and Paying Agent. The owner of a Book-Entry
                           Note (i.e., an owner of a beneficial interest in a
                           Global Note) (or one or more indirect participant&in
                           DTC designated by such owner) will designate one or
                           more participants in DTC (with respect to such
                           Book-Entry Note, the "Participants") to act as agent
                           for such beneficial owner in connection with the
                           book-entry system maintained by DTC, and DTC will
                           record in book-entry form, in accordance with
                           instructions provided by such Participants, a credit
                           balance with respect to such Book-Entry Notes in the
                           account of such Participants. The ownership interest
                           of such beneficial owner in such Global Note will be
                           recorded through the records of such Participants or
                           through the separate records of such Participants and
                           one or more indirect participants in DTC.

Transfers:                 Transfers of a beneficial interest in a Global Note
                           will be accomplished by book entries made by DTC and,
                           in turn, by Participants (and in certain cases, one
                           or more indirect participants in DTC) acting on
                           behalf of beneficial transferors and transferees of
                           such Global Note.

Exchanges:                 The Issuing and Paying Agent may deliver to DTC and
                           the CUSIP Service Bureau at any time a written notice
                           specifying (a) the CUSIP numbers of

                                      G-9
<PAGE>   55
                           two or more Global Notes outstanding on such date
                           that represent Notes having the same Fixed Rate Terms
                           or Floating Rate Terms, as the case may be (other
                           than Original Issue Dates), and for which interest
                           has been paid to the same date; (b) a date, occurring
                           at least 30 days after such written notice is
                           delivered and at least 30 days before the next
                           Interest Payment Date for the related Book-Entry
                           Notes, on which such Global Notes shall be exchanged
                           for one or more replacement Global Notes; and (c) a
                           new CUSIP number, obtained from the Issuing and
                           Paying Agent, to be assigned to such replacement
                           Global Note. Upon receipt of such notice, DTC will
                           send to its Participants a written reorganization
                           notice to the effect that such exchange will occur on
                           such date. Prior to the specified exchange date, the
                           Issuing and Paying Agent will deliver to the CUSIP
                           Service Bureau written notice setting forth such
                           exchange date and the new CUSIP number and stating
                           that, as of such exchange date, the CUSIP numbers of
                           the Global Notes to be exchanged will no longer be
                           valid. On the specified exchange date, the Issuing
                           and Paying Agent will exchange such Global Notes for
                           a single Global Note bearing the new CUSIP number,
                           and the CUSIP numbers of the exchanged Global Notes
                           will, in accordance with CUSIP Service Bureau
                           procedures, be cancelled and not immediately
                           reassigned. Notwithstanding the foregoing, if the
                           Global Notes to be exchanged exceed $200,000,000 in
                           aggregate principal amount, one replacement Global
                           Note will be authenticated and issued to represent
                           each $200,000,000 of principal amount of the
                           exchanged Global Notes and an additional Global Note
                           or Global Notes will be authenticated and issued in

                                      G-10
<PAGE>   56
                           exchange for any remaining principal amount of such
                           exchanged Global Notes representing such Book-Entry
                           Notes (see "Denominations" below).

Denominations:             All Book-Entry Notes will be denominated in U.S.
                           dollars. Book-Entry Notes will be issued in minimum
                           denominations of $250,000 and integral multiples of
                           $1,000 in excess thereof. Global Notes representing
                           Book-Entry Notes will be denominated in principal
                           amounts not in excess of $200,000,000. If one or more
                           Book-Entry Notes having an aggregate principal amount
                           in excess of $200,000,000 would, but for the
                           preceding sentence, be represented by a single Global
                           Note, then one Global Note will be issued to
                           represent each $200,000,000 principal amount of such
                           Book-Entry Note or Notes and an additional Global
                           Note or Global Notes will be issued to represent any
                           remaining principal amount of such Book-Entry Notes.
                           In such case, each of the Global Notes representing
                           such Book-Entry Notes shall be assigned the same
                           CUSIP number. Each owner of a beneficial interest in
                           one or more Book-Entry Notes is required to hold that
                           beneficial interest in denominations of $250,000
                           principal amount or any integral multiple of $1,000
                           in excess thereof of each such Book-Entry Note at all
                           times.

Interest:                  General. Interest on each Book-Entry Note will accrue
                           from the Original Issue Date or the most recent
                           Interest Payment Date for which interest has been
                           paid. Each payment of interest on a Book-Entry Note
                           shall include interest accrued through the day
                           preceding, as the case may be, the Interest Payment
                           Date, Maturity Date or date of earlier redemption or
                           repayment. Interest payable on the

                                      G-11
<PAGE>   57
                           Maturity Date or date of earlier redemption or
                           repayment of a Book-Entry Note will be payable to the
                           holder to whom the principal of such Book-Entry Note
                           is payable. DTC will arrange for each pending deposit
                           message described under Settlement Procedure D below
                           to be transmitted to Standard & Poor's Ratings Group,
                           which will use the information in the message to
                           include certain terms of the related Book-Entry Note
                           in the appropriate daily bond report published by
                           Standard & Poor's Ratings Group.

                           Regular Record Dates. Unless otherwise specified in
                           the applicable Pricing Supplement, the Regular Record
                           Date with respect to any Interest Payment Date for a
                           Fixed Rate Book-Entry Note with a maturity of more
                           than one year shall be the June 1 or December 1 next
                           preceding the applicable Interest Payment Date. The
                           Regular Record Date with respect to any Interest
                           Payment Date for a Floating Rate Book-Entry Note
                           shall be the date 15 calendar days (whether or not a
                           Business Day) prior to such Interest Payment Date.
                           Unless otherwise specified in the applicable Pricing
                           Supplement, interest on a Fixed Rate Book-Entry Note
                           with a maturity of one year or less will be payable
                           only at maturity to the person to whom principal
                           shall be payable.

                           Interest Payment Dates. Interest payments will be
                           made on each Interest Payment Date commencing with
                           the first Interest Payment Date following the
                           Original Issue Date; provided, however, that the
                           first payment of interest on any Note originally
                           issued between a Regular Record Date and an Interest
                           Payment Date will be made on the second Interest
                           Payment Date

                                      G-12
<PAGE>   58
                           following the Original Issue Date. If any Interest
                           Payment Date of a Fixed Rate Book-Entry Note falls on
                           a day which is not a Business Day, the related
                           payment of interest on such Fixed Rate Book-Entry
                           Note shall be made on the next succeeding Business
                           Day with the same force and effect as if made on the
                           date such payment was due, and no interest shall
                           accrue on the amount so payable for the period from
                           and after such Interest Payment Date. If any Interest
                           Payment Date with respect to any Floating Rate
                           Book-Entry Note would otherwise be a day that is not
                           a Business Day, such Interest Payment Date will be
                           the next succeeding Business Day, except that in the
                           case of a LIBOR Book-Entry Note, if such Business Day
                           is in the next succeeding calendar month, such
                           Interest Payment Date will be the immediately
                           preceding Business Day.

                           Fixed Rate Book-Entry Notes. Unless otherwise
                           specified in the applicable Pricing Supplement,
                           interest payments on Fixed Rate Book-Entry Notes
                           having maturities of more than one year will be
                           payable semi-annually on June 15 and December 15 of
                           each year and on the Maturity Date. Unless otherwise
                           specified in the applicable Pricing Supplement,
                           interest on Fixed Rate Book-Entry Notes having
                           maturities of one year or less will be payable only
                           at maturity.

                           Floating Rate Notes. Unless otherwise specified in
                           the applicable Pricing Supplement, interest payments
                           on Floating Rate Book-Entry Notes will be made as
                           specified in the Floating Rate Book-Entry Note.

                           Notice of Interest Payments and Regular Record Dates.
                           On the first Business Day after any Regular Record

                                      G-13
<PAGE>   59
                           Date, the Issuing and Paying Agent will deliver to
                           DTC a written list of Regular Record Dates and
                           Interest Payment Dates that will occur during the
                           six-month period beginning on such first Business Day
                           with respect to Floating Rate Book-Entry Notes.
                           Promptly after each Interest Determination Date for
                           Floating Rate Book-Entry Notes, the Issuing and
                           Paying Agent will notify Standard & Poor's Ratings
                           Group of the interest rates determined on such
                           Interest Determination Date.

Payments of Principal      Payments of Interest Only. Promptly after each
and Interest:              Regular Record Date, the Issuing and Paying Agent
                           will deliver to the Bank and DTC a written notice
                           specifying by CUSIP number the amount of interest to
                           be paid on each Book-Entry Note on the following
                           Interest Payment Date (other than an Interest Payment
                           Date coinciding with the Maturity Date) and the total
                           of such amounts. DTC will confirm the amount payable
                           on each Book-Entry Note on such Interest Payment Date
                           by reference to the daily bond reports published by
                           Standard & Poor's Ratings Group. On such Interest
                           Payment Date, the Bank will pay to the Issuing and
                           Paying Agent, and the Issuing and Paying Agent in
                           turn will pay to DTC, an amount sufficient to pay the
                           total amount of interest then due and owing (other
                           than on the Maturity Date), at the times and in the
                           manner set forth below under "Manner of Payment."

                           Payments on the Maturity Date. On or about the first
                           Business Day of each month, the Issuing and Paying
                           Agent will deliver to DTC a written list of principal
                           of, premium, if any, and interest on, each Book-Entry
                           Note maturing on any Maturity Date, date of earlier
                           redemption or Holder's

                                      G-14
<PAGE>   60
                           Optional Repayment Date in the following month. The
                           Issuing and Paying Agent and DTC will confirm the
                           amounts of such principal of, premium, if any, and
                           interest on, a Book-Entry Note on or about the fifth
                           Business Day preceding the Maturity Date of such
                           Book-Entry Note. On such Maturity Date, the Bank will
                           pay to the Issuing and Paying Agent, and the Issuing
                           and Paying Agent in turn will pay to DTC, the
                           principal amount of such Book-Entry Note, together
                           with interest and premium, if any, due on such
                           Maturity Date, at the times and in the manner set
                           forth below under "Manner of Payment." If any
                           Maturity Date or date of earlier redemption or
                           repayment of a Fixed Rate Book-Entry Note falls on a
                           day which is not a Business Day, the related payment
                           of principal of, premium, if any, or interest on,
                           such Fixed Rate Book-Entry Note shall be made on the
                           next succeeding Business Day with the same force and
                           effect as if made on the date such payment were due,
                           and no interest shall accrue on the amount so payable
                           for the period from and after such Maturity Date or
                           date of earlier redemption or repayment, as the case
                           may be. Floating Rate Book-Entry Notes will mature on
                           an Interest Payment Date. If any Interest Payment
                           Date or date of earlier redemption or repayment with
                           respect to any Floating Rate Book-Entry Note would
                           otherwise be a day that is not a Business Day, such
                           Interest Payment Date or date of earlier redemption
                           or repayment will be the next succeeding Business
                           Day, except that in the case of a LIBOR Note, if such
                           Business Day is in the next succeeding calendar
                           month, such Interest Payment Date or date of earlier
                           redemption or repayment will be the immediately
                           preceding Business Day. Promptly after payment to DTC
                           of

                                      G-15
<PAGE>   61
                           the principal of, premium, if any, and interest due
                           on, the Maturity Date or Interest Payment Date of all
                           Book-Entry Notes represented by a Global Note, the
                           Issuing and Paying Agent will cancel such Global Note
                           and deliver such Global Note to the Bank with an
                           appropriate debit advice. On the first Business Day
                           of each month, the Issuing and Paying Agent will
                           deliver to the Bank a written statement indicating
                           the total principal amount of outstanding Global
                           Notes as of the close of business on the immediately
                           preceding Business Day.

                           Manner of Payment. The total amount of any principal
                           of, premium, if any, and interest on, Book-Entry
                           Notes due on any Interest Payment Date or Maturity
                           Date shall be paid by the Bank to the Issuing and
                           Paying Agent in immediately available funds available
                           for use by the Issuing and Paying Agent no later than
                           10:00 A.M., New York City time, on such date. The
                           Bank will make such payment on such Book-Entry Notes
                           by instructing the Issuing and Paying Agent to
                           withdraw funds from an account maintained by the Bank
                           at the Issuing and Paying Agent. The Bank will
                           confirm such instructions in writing to the Issuing
                           and Paying Agent. Upon receipt of such funds, the
                           Issuing and Paying Agent will pay by separate wire
                           transfer (using message entry instructions in a form
                           previously specified by DTC) to an account previously
                           specified by DTC, in funds available for immediate
                           use by DTC, each payment of principal of, premium, if
                           any, and interest on, a Book-Entry Note on such date.
                           Thereafter on such date, DTC will pay, in accordance
                           with its SDFS operating procedures then in effect,
                           such amounts in funds

                                     G-16
<PAGE>   62

                           available for immediate use to the respective
                           Participants in whose names Book-Entry Notes are
                           recorded in the book-entry system maintained by DTC.
                           Neither the Bank nor the Issuing and Paying Agent
                           will have any responsibility or liability for the
                           payment by DTC of the principal of, premium, if any,
                           or interest on, the Book-Entry Notes to such
                           Participants.

                           Withholding Taxes. The amount of any taxes required
                           under applicable law to be withheld from any interest
                           payment on a Book-Entry Note will be determined and
                           withheld by the Participant, indirect participant in
                           DTC or other person responsible for forwarding
                           payments and materials directly to the beneficial
                           owner of such Book-Entry Note.

Settlement Procedures:     Settlement procedures with regard to Book-Entry Notes
                           purchased by each Agent as principal or sold by each
                           Agent, as agent of the Bank, will be as follows:

                           A.       The Presenting Agent will advise the Bank by
                                    telephone, confirmed by facsimile, of the
                                    following settlement information:

                                    1.       Taxpayer identification number of
                                             the purchaser.

                                    2.       Principal amount of such Book-Entry
                                             Notes.

                                    3.       (a) Fixed Rate Book-Entry Notes:

                                             (i)      Interest Rate;
                                             (ii)     Interest Payment Dates for
                                                      Fixed Rate Book-Entry
                                                      Notes; and
                                             (iii)    Regular Record

                                      G-17
<PAGE>   63
                                              Dates for Fixed Rate
                                              Book-Entry Notes with
                                              maturities of more than
                                              one year (if other than
                                              the June 1 or December 1
                                              prior to each Interest
                                              Payment Date).

                                     (b)      Floating Rate Book-
                                              Entry Notes:

                                        (i)    Initial Interest Rate;
                                       (ii)    Interest Rate Basis;
                                      (iii)    Index Maturity;
                                       (iv)    Spread and/or Spread
                                               Multiplier, if any;
                                        (v)    Regular Record Dates
                                               (if other than the 15th
                                               day prior to each
                                               Interest Payment Date);
                                       (vi)    Maximum Interest Rate, if
                                               any;
                                      (vii)    Minimum Interest Rate, if
                                               any;
                                     (viii)    Interest Payment Dates;
                                       (ix)    Interest Payment Period;
                                        (x)    Interest Reset Dates;
                                       (xi)    Calculation Agent;
                                      (xii)    Interest Reset Period;
                                     (xiii)    Alternate Rate Event
                                               Spread;
                                      (xiv)    LIBOR Screen, if any;

                            4.       Price to public, if any, of such
                                     Book-Entry Notes (if such
                                     Book-Entry Notes are not being

                                      G-18
<PAGE>   64

                                             offered "at the market").

                                    5.       Trade Date.

                                    6.       Settlement Date (Original Issue
                                             Date).

                                    7.       Maturity Date.

                                    8.       Redemption provisions, if any,
                                             including: Initial Redemption Date,
                                             Initial Redemption Percentage and
                                             Annual Redemption Percentage
                                             Reduction.

                                             Repayment provisions, if any,
                                             including: Holder's Optional
                                             Repayment Date(s).

                                    9.       Net proceeds to the Bank.

                                    10.      Whether such Book-Entry Notes are
                                             being sold to the Presenting Agent
                                             as principal or to an investor or
                                             other purchaser through the
                                             Presenting Agent acting as agent
                                             for the Bank.

                                    11.      The presenting Agent's commission
                                             or discount, as applicable.

                                    12.      Whether such Book-Entry Notes are
                                             being issued with Original Issue
                                             Discount and the terms thereof.

                                    13.      Default Rate.

                                    14.      Such other information specified
                                             with respect to such Book-Entry
                                             Notes.

                           B.       If any offer to purchase a Note is accepted
                                    by the Bank, the Bank, with the approval of
                                    the Presenting Agent, will prepare a Pricing
                                    Supplement reflecting the

                                      G-19
<PAGE>   65

                                    information set forth in Settlement
                                    Procedure A above, and will transmit the
                                    Pricing Supplement to the Presenting Agent
                                    by electronic or facsimile transmission.

                           C.       The Bank will advise the Issuing and Paying
                                    Agent by electronic means, telephone
                                    (confirmed in writing at any time on the
                                    same date), facsimile transmission or by
                                    other acceptable means of the information
                                    set forth in Settlement Procedure A above,
                                    and the name of the Presenting Agent. The
                                    Issuing and Paying Agent, on behalf of the
                                    Bank, will assign a CUSIP number of the
                                    appropriate series to the Global Note
                                    representing such Book-Entry Notes and will
                                    notify the Bank by facsimile transmission or
                                    other electronic transmission of such CUSIP
                                    number as soon as practicable, and as soon
                                    thereafter as practicable, the Bank will
                                    notify the Presenting Agent by telephone of
                                    such CUSIP number. Each such instruction
                                    given by the Bank to the Issuing and Paying
                                    Agent will constitute a representation and
                                    warranty by the Bank to the Issuing and
                                    Paying Agent and the Agents that (i) the
                                    issuance and delivery of such Global Note
                                    has been duly and validly authorized by the
                                    Bank and (ii) that such Global Note, when
                                    completed, authenticated and delivered
                                    pursuant to the Issuing and Paying Agency
                                    Agreement, will constitute the valid and
                                    legally binding obligation of the Bank.

                           D.       The Issuing and Paying Agent will
                                    communicate to DTC and the Presenting Agent
                                    through DTC's

                                      G-20
<PAGE>   66

                                    Participant Terminal System a pending
                                    deposit message specifying the following
                                    settlement information:

                                    1.       The information set forth in
                                             Settlement Procedure A.

                                    2.       The identification numbers of the
                                             participant accounts maintained by
                                             DTC on behalf of the Issuing and
                                             Paying Agent and the Presenting
                                             Agent.

                                    3.       Identification as a Fixed Rate
                                             Book-Entry Note or Floating Rate
                                             Book-Entry Note.

                                    4.       The initial Interest Payment Date
                                             for each Global Note representing
                                             such Book-Entry Notes, the number
                                             of days by which such date succeeds
                                             the related Regular Record Date for
                                             DTC purposes and, if then
                                             calculable, the amount of interest
                                             payable on such Interest Payment
                                             Date (which amount shall have been
                                             confirmed by the Issuing and Paying
                                             Agent).

                                    5.       The CUSIP number of each Global
                                             Note representing such Book-Entry
                                             Notes.

                                    6.       Whether such Global Note represents
                                             any other Notes issued or to be
                                             issued in book-entry form.

                           E.       The Issuing and Paying Agent will complete,
                                    authenticate and deliver to DTC by retention
                                    as custodian for DTC the Global Note
                                    representing such Book-Entry Notes in a form
                                    that has been approved by the Bank, the
                                    Issuing and Paying Agent

                                      G-21
<PAGE>   67
                                    and the Agents.

                           F.       DTC will credit the Book-Entry Notes
                                    represented by such Global Note to the
                                    participant account of the Issuing and
                                    Paying Agent maintained by DTC except as
                                    provided in Settlement Procedure H below.

                           G.       The Issuing and Paying Agent will enter an
                                    SDFS deliver order through DTC's Participant
                                    Terminal System instructing DTC (i) to debit
                                    such Book-Entry Notes to the Issuing and
                                    Paying Agent's participant account and
                                    credit such Book-Entry Notes to the
                                    participant account of the Presenting Agent
                                    maintained by DTC and (ii) to debit the
                                    settlement account of the Presenting Agent
                                    and credit the settlement account of the
                                    Issuing and Paying Agent maintained by DTC,
                                    in an amount equal to the price of such
                                    Book-Entry Notes less such Agent's
                                    commission. Any entry of such deliver order
                                    shall be deemed to constitute a
                                    representation and warranty by the Issuing
                                    and Paying Agent to DTC that (i) the Global
                                    Note representing such Book-Entry Notes has
                                    been issued and authenticated and (ii) the
                                    Issuing and Paying Agent is holding such
                                    Global Note pursuant to the Certificate
                                    Agreement.

                           H.       In the case of Book-Entry Notes sold through
                                    an Agent acting as agent, the Presenting
                                    Agent will enter an SDFS deliver order
                                    through DTC's Participant Terminal System
                                    instructing DTC (i) to debit such Book-Entry
                                    Notes to the Presenting Agent's participant
                                    account and credit such Book-Entry Notes to
                                    the participant account

                                      G-22
<PAGE>   68

                                    of the Participants maintained by DTC and
                                    (ii) to debit the settlement accounts of
                                    such Participants and credit the settlement
                                    account of the Presenting Agent maintained
                                    by DTC in an amount equal to the initial
                                    public offering price of such Book-Entry
                                    Notes.

                           I.       Transfers of funds in accordance with SDFS
                                    deliver orders described in Settlement
                                    Procedures G and H will be settled in
                                    accordance with SDFS operating procedures in
                                    effect on the Settlement Date.

                           J.       The Issuing and Paying Agent will credit to
                                    an account of the Bank maintained at the
                                    Issuing and Paying Agent funds available for
                                    immediate use in the amount transferred to
                                    the Issuing and Paying Agent in accordance
                                    with Settlement Procedure G.

                           K.       In the case of Book-Entry Notes sold through
                                    an Agent acting as agent, the Presenting
                                    Agent will confirm the purchase of such
                                    Book-Entry Notes to the purchaser either by
                                    transmitting to the Participant with respect
                                    to such Book-Entry Notes a confirmation
                                    order through DTC's Participant Terminal
                                    System or by mailing a written confirmation
                                    to such purchaser.

Settlement Procedures      For offers to purchase Book-Entry Notes accepted by
Timetable:                 the Bank, Settlement Procedures A through K set forth
                           above shall be completed as soon as possible.
                           However, all information on sales settling one day or
                           more after the Trade Date will be transmitted to DTC
                           no later than 10:00 a.m. on the Settlement Date.

                                      G-23
<PAGE>   69

                           If a sale is to be settled on the same Business Day
                           as the Trade Date, Settlement Procedure A shall be
                           completed no later than 11:00 a.m. on such Business
                           Day, Settlement Procedure C shall be completed no
                           later than 12:00 p.m. on such Business Day, and
                           Settlement Procedure D shall be completed no later
                           than 1:00 p.m. on such Business Day.

                           If a sale is to be settled more than one Business Day
                           after the Trade Date, Settlement Procedures A and B
                           must be completed no later than 4:00 p.m. on the
                           Trade Date and Settlement Procedures C and D may, if
                           necessary, be completed at any time on the first
                           Business Day after such Trade Date. Settlement
                           Procedure I is subject to extension in accordance
                           with any extension of Fedwire closing deadlines and
                           in the other events specified in the SDFS operating
                           procedures in effect on the Settlement Date.

                           If settlement of a Book-Entry Note is rescheduled or
                           cancelled, the Issuing and Paying Agent will deliver
                           to DTC, through DTC's Participant Terminal System, a
                           cancellation message to such effect by no later than
                           2:00 p.m., New York City time, on the Business Day
                           immediately preceding the scheduled Settlement Date.

Failure to Settle:         If the Issuing and Paying Agent fails to enter an
                           SDFS deliver order with respect to a Book-Entry Note
                           pursuant to Settlement Procedure G, then the Issuing
                           and Paying Agent may deliver to DTC, through DTC's
                           Participant Terminal System, as soon as practicable a
                           withdrawal message instructing DTC to debit such
                           Book-Entry Note to the participant account of the
                           Issuing and Paying Agent

                                      G-24
<PAGE>   70
                           maintained at DTC. DTC will process the withdrawal
                           message, provided that such participant account
                           contains a principal amount of the Global Note
                           representing such Book-Entry Note that is at least
                           equal to the principal amount to be debited. If
                           withdrawal messages are processed with respect to all
                           Book-Entry Notes represented by a Global Note, the
                           Issuing and Paying Agent will mark such Global Note
                           "cancelled," make appropriate entries in its records
                           and return such Global Note to the Bank. The CUSIP
                           number assigned to such Global Note shall, in
                           accordance with CUSIP Service Bureau procedures, be
                           cancelled and not immediately reassigned. If
                           withdrawal messages are processed with respect to
                           some of the Book-Entry Notes represented by a Global
                           Note, the Issuing and Paying Agent will exchange such
                           Global Note for two Global Notes, one of which shall
                           represent the Book-Entry Notes for which such
                           withdrawal messages are processed and shall be
                           cancelled immediately after issuance, and the other
                           of which shall represent the other Book-Entry Notes
                           previously represented by the surrendered Global Note
                           and shall bear the CUSIP number of the surrendered
                           Global Note.

                           In the case of any Book-Entry Note sold through an
                           Agent, acting as agent, if the purchase price for any
                           Book-Entry Note is not timely paid to the
                           Participants with respect to such Book-Entry Note by
                           the beneficial purchaser thereof (or a person,
                           including an indirect participant in DTC, acting on
                           behalf of such purchaser), such Participants and, in
                           turn, the applicable Agent may enter SDFS deliver
                           orders through DTC's Participant Terminal System
                           reversing the orders entered pursuant to Settlement
                           Procedures G and H,

                                      G-25
<PAGE>   71

                           respectively. Thereafter, the Issuing and Paying
                           Agent will deliver the withdrawal message and take
                           the related actions described in the preceding
                           paragraph. If such failure shall have occurred for
                           any reason other than default by the applicable Agent
                           to perform its obligations hereunder or under the
                           Distribution Agreement, the Bank will reimburse such
                           Agent on an equitable basis for its loss of the use
                           of funds during the period when the funds were
                           credited to the account of the Bank.

                           Notwithstanding the foregoing, upon any failure to
                           settle with respect to a Book-Entry Note, DTC may
                           take any actions in accordance with its SDFS
                           operating procedures then in effect. In the event of
                           a failure to settle with respect to a Book-Entry Note
                           that was to have been represented by a Global Note
                           also representing other Book-Entry Notes, the Issuing
                           and Paying Agent will provide, in accordance with
                           Settlement Procedure E, for the authentication and
                           issuance of a Global Note representing such remaining
                           Book-Entry Notes and will make appropriate entries in
                           its records.

                                      G-26

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