Document:

Exhibit

Exhibit 10.24

Indemnity Agreement

This Indemnity Agreement (this “Agreement”) is made as of the [  ] day of [  ], 20[  ], between Cronos Group Inc., a body corporate incorporated under the laws of Ontario (the “Corporation”), and [   ] (the “Indemnified Party”), an individual resident in the [Province/State] of [●].

RECITALS: 
		
	A.
	The Indemnified Party is or was a director and/or an officer of the Corporation or an Other Entity (as defined below), or serves or served in a capacity similar thereto for the Corporation or an Other Entity.  

		
	B.
	The Corporation considers it desirable and in its best interests to enter into this Agreement to set out the circumstances and manner in which the Indemnified Party may be indemnified in respect of liabilities or expenses which the Indemnified Party may incur as a result of the Indemnified Party serving or having served as a director or an officer of the Corporation or an Other Entity, or in a capacity similar thereto in respect of the Corporation or an Other Entity, or because of that association with the Corporation or other Entity.

NOW THEREFORE, in consideration of the Indemnified Party’s services as a director and/or officer of the Corporation or an Other Entity, or in a capacity similar thereto for the Corporation or an Other Entity, the parties hereto covenant and agree as follows:
		
	1.
	Definitions. In this Agreement: 

“Act” means the Business Corporations Act (Ontario), as the same exists on the date hereof or may hereafter be amended.
“Claim” includes any demand, suit, action, application, litigation, claim, charge, complaint, prosecution, assessment, reassessment, investigation, inquiry, hearing, arbitration, mediation or proceeding of any nature or kind whatsoever, whether threatened, anticipated, pending, commenced, continuing, completed, and any appeals thereof, and whether civil, criminal, administrative, investigative, arbitral or otherwise, in which the Indemnified Party is involved as a result of the Indemnified Party serving or having served as a director or officer of the Corporation or an Other Entity, or in a capacity similar thereto in respect of the Corporation or an Other Entity or because of that association, as well as any other circumstances or situation in respect of which an Indemnified Party reasonably requires legal advice or representation concerning actual, possible or anticipated Losses by reason of the Indemnified Party’s association with the Corporation or Other Entity. 
“Control Transaction” means any merger, amalgamation, take-over bid, arrangement, recapitalization, consolidation, liquidation, wind-up, dissolution, share exchange, material sale of assets or similar transaction in respect of the Corporation.
“Costs” includes any and all costs, charges and expenses actually and reasonably incurred by the Indemnified Party in respect of any Claim (including any and all costs, charges and expenses which the Indemnified Party may reasonably incur, suffer, sustain or be required to pay in connection with investigating, initiating, preparing for, defending, serving as or being a witness, providing evidence in connection with, attending any meeting, discovery, trial or hearing, instructing or receiving advice of the Indemnified Party’s own or other legal counsel or other professional advisors in relation to, preparing to prosecute, defend or settle, appealing or otherwise participating in or otherwise being involved in (including in each case, on appeal), any Claim, whether or not any suit, action, litigation, claim, prosecution, investigation, inquiry, hearing or other proceeding is commenced, including all legal and other professional fees, charges and disbursements and includes all costs, charges and expenses actually and reasonably incurred by the Indemnified Party in connection with the interpretation, enforcement or defence of the Indemnified Party’s rights under this Agreement).
“Cost Advance” means an advance of moneys to the Indemnified Party of Costs before the final disposition of any Claim.
“Policy” means the directors’ and officers’ insurance policy listed on Schedule A, which has been authorized by the board of directors of the Corporation and any successor to such policy entered into by the Corporation (and any renewals or replacements thereof).
“Losses” includes all actual costs, charges, expenses, losses, damages (including punitive and exemplary), fees (including any legal, professional or advisory fees or disbursements), liabilities, amounts paid to settle or dispose of any Claim or satisfy any judgment, fines, penalties or liabilities, whether domestic or foreign, including any interest thereon, and including any arising at common law or by operation of statute (including all statutory obligations to creditors, employees, suppliers, contractors, subcontractors and any governmental authority), and whether incurred alone or jointly with others, including any amounts which the Indemnified Party may suffer, sustain, incur or be required to pay as a result of, or in connection with the investigation, defence, settlement or appeal of or preparation for any Claim or in connection with any suit, action, litigation, claim, prosecution, investigation, inquiry, hearing or other proceeding to establish a right to indemnification or hold harmless obligations under this Agreement, including all costs, charges 

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and expenses incidental thereto, including  all taxes (including income taxes), interest, penalties and related outlays of the Indemnified Party therefrom, as well as all reasonable travel, lodging and accommodation expenses.
“Other Entity” means any corporation, partnership, joint venture, trust, unincorporated association, unincorporated organization, unincorporated syndicate or other enterprise or entity for which the Indemnified Party serves or served as a director or officer, or in a capacity similar thereto, at the request of the Corporation.
		
	2.
	Indemnity.  Except as prohibited by applicable law, including the Act, and subject to Section 4 of this Agreement, the Corporation hereby agrees to indemnify and hold harmless the Indemnified Party, as well as his or her heirs and legal representatives, to the fullest extent permitted by applicable law, including the Act, from and against any and all Losses which the Indemnified Party may suffer, sustain, incur or be required to pay as a result of, or in connection with any Claim, provided that:

		
	a)
	the Indemnified Party acted honestly and in good faith with a view to the best interests of the Corporation or Other Entity, as the case may be; 

		
	b)
	in the case of a Claim that involves a criminal or administrative suit, action, litigation, claim, prosecution, investigation, inquiry, hearing or other proceeding that is enforced by monetary penalty, the Indemnified Party had reasonable grounds for believing that the Indemnified Party’s conduct was lawful; and

		
	c)
	if the Claim involves a suit, action, litigation, claim, prosecution, investigation, inquiry, hearing or other proceeding by or on behalf of the Corporation or Other Entity, as the case may be, to procure a judgment in its favour against the Indemnified Party, a court of competent jurisdiction shall have approved the Indemnified Party’s indemnification or hold harmless obligations, the application for such approval to be made by the Corporation at its expense and as soon as reasonably practicable (or, following any delay (as determined by the Indemnified Party), by the Indemnified Party, at the expense of the Corporation).

It is the intent of the parties hereto that (i) in the event of any change, after the date of this Agreement, in any applicable law which expands the right of the Corporation to indemnify, hold harmless or make Cost Advances to a director or officer to a greater degree than would be afforded currently under this Agreement, the Indemnified Party shall receive the greater benefits afforded by such change, and (ii) this Agreement shall be interpreted and enforced so as to provide obligatory indemnification, hold harmless obligations and Cost Advances under such circumstances as set forth in this Agreement, if any, in which the providing of indemnification, hold harmless obligations or Cost Advances would otherwise be discretionary. It is acknowledged that the Corporation may enter into indemnity agreements with other directors and officers of the Corporation. In the event that the terms or conditions of any other indemnity agreement include or are amended to include protections which are not provided under this Agreement, the Indemnified Party shall be notified promptly of such change and he/she shall have at his/her option, the opportunity to have this Agreement amended so as to ensure that this Agreement, as amended, includes such broader protections, in each case to the extent permitted by applicable law. 
		
	3.
	Indemnity for Costs in Enforcing Rights.  To the fullest extent allowable under applicable law, the Corporation shall also indemnify against, and shall make any Cost Advance requested by the Indemnified Party subject to and in accordance with Section 5 of this Agreement, any Costs actually and reasonably paid or incurred by the Indemnified Party in connection with any action or proceeding by the Indemnified Party for (i) indemnification or reimbursement of any Costs, or payment of any Cost Advance, by the Corporation under any provision of this Agreement, or under any other agreement or provision of the Corporation’s constating documents now or hereafter in effect relating to or in connection with a Claim or other matter for which the Indemnified Party may be entitled to indemnification or hold harmless obligations hereunder and (ii) recovery under any directors’ and officers’ liability insurance policies maintained by the Corporation (including the Policy), regardless of whether the Indemnified Party ultimately is determined to be entitled to such indemnification or insurance recovery, as the case may be. The Indemnified Party shall be required to reimburse the Corporation if a court of competent jurisdiction determines that such action brought by the Indemnified Party was frivolous or not made in good faith. For the avoidance of doubt, the Indemnified Party shall be required to reimburse the Corporation for any amounts received under this Section 3 related to the matters contemplated by Section 4 of this Agreement or any Claim that is not entitled to indemnification under Section 2 of this Agreement. 

		
	4.
	Indemnity Limitations. Notwithstanding anything to the contrary set forth in this Agreement, under no circumstances shall the Corporation be liable or have an obligation to indemnify or hold harmless the Indemnified Party under this Agreement: (a) if and to the extent applicable, for the Indemnified Party’s reimbursement to the Corporation of any bonus or other incentive-based or equity-based compensation previously received by the Indemnified Party or payment of any profits realized by the Indemnified Party from the sale of securities of the Corporation, as required in each case under the Securities Exchange Act of 1934 (as amended) (the “Exchange Act”) (including any such reimbursements under Section 304 of the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”) (as amended) in connection with an accounting restatement of the Corporation or the payment to the Corporation of profits arising from the purchase or sale by the Indemnified Party of securities in violation of Section 306 of Sarbanes-Oxley); (b) for any amounts 

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paid in settlement of any threatened or pending Claim effected by the Indemnified Party without the Corporation’s prior written consent, which shall not be unreasonably withheld; or (c) if and to the extent applicable, with respect to the disgorgement of any profits arising from the purchase or sale of securities of the Corporation by any Indemnified Party in violation of Section 16(b) of the Exchange Act.
		
	5.
	Cost Advances. The Corporation shall at the request of the Indemnified Party make all Cost Advances to the Indemnified Party promptly following receipt of such request, to the fullest extent permitted by applicable law. Each such request for Cost Advances by the Indemnified Party shall be in writing and shall include: (i) a written affirmation of the Indemnified Party’s good faith belief that the Indemnified Party is entitled to indemnification or hold harmless obligations hereunder, together with particulars of the Costs to be covered by the proposed Cost Advance (for greater certainty, the Indemnified Party shall not be required to provide any documentation or information to the extent that the provision thereof would undermine or otherwise jeopardize solicitor-client or litigation privilege, provided that the Indemnified Party shall cooperate with the Corporation in good faith to facilitate the sharing of such information and/or documentation that would not jeopardize solicitor-client and/or litigation privilege); and (ii) a written undertaking by the Indemnified Party to repay all Cost Advances if and to the extent that it is determined by a court of competent jurisdiction that the Indemnified Party is not entitled to indemnification or hold harmless obligations hereunder or that the payment of such Costs is prohibited by applicable law. Such written undertaking to repay Cost Advances shall be accepted without reference to the Indemnified Party’s ability to repay the Cost Advances, shall be unsecured and no interest shall be charged thereon. For the avoidance of doubt, the Indemnified Party shall be required to repay all Cost Advances to the extent any are made in connection with any Claim related to the matters contemplated by Section 4 of this Agreement.

Notwithstanding any other provision of this Agreement, to the extent that the Indemnified Party is, by reason of the fact that the Indemnified Party is or was a director or officer of the Corporation or of an Other Entity, or serves or served in a similar capacity thereto at the Corporation’s request, a witness or participant, other than as a named party, in an investigation or proceeding, the Corporation shall pay to the Indemnified Party on behalf of the Corporation all out-of-pocket expenses actually and reasonably incurred by the Indemnified Party or on the Indemnified Party’s behalf in connection therewith.  
		
	6.
	Taxes. For greater certainty, a Claim subject to indemnification or hold harmless obligations hereunder shall include any taxes, including any assessment, reassessment, claim or other amount for taxes, charges, duties, levies, imposts or similar amounts, including any interest and penalties in respect thereof, to which the Indemnified Party may be subject or which the Indemnified Party may suffer or incur as a result of, in respect of, arising out of or referable to any indemnification or hold harmless obligations of the Indemnified Party by the Corporation pursuant to this Agreement, including, if applicable, the payment of insurance premiums or any payment made by an insurer under an insurance policy, if such payment is deemed to constitute a taxable benefit or otherwise be or become subject to any tax or levy.

		
	7.
	Partial Indemnification. If the Indemnified Party is entitled to indemnification or hold harmless obligations by the Corporation under the provisions of this Agreement or as determined by a court of competent jurisdiction for a portion of the Losses incurred in respect of a Claim but not for the total amount thereof, the Corporation shall indemnify and hold harmless the Indemnified Party for the portion thereof to which the Indemnified Party is so entitled.

		
	8.
	Notice of Claim. The Indemnified Party shall notify the Corporation, and likewise the Corporation shall notify the Indemnified Party, in writing as soon as practicable upon receiving or being served with any demand, statement of claim, writ, assessment, reassessment, notice of motion, application, information, charges, indictment, subpoena, summons, investigation order or other document or communication commencing, threatening or continuing any Claim against which the Indemnified Party may be indemnified and held harmless or seek Cost Advances under this Agreement. Such notice shall include a copy of the document or communication initiating or threatening the Claim, a description of the Claim or threatened Claim, a summary of the facts giving rise to the Claim or threatened Claim and, if possible, an estimate of any potential liability arising under the Claim or threatened Claim. Failure by the Indemnified Party to so notify the Corporation shall not relieve the Corporation from liability under this Agreement except and only to the extent that such failure actually prejudices the Corporation.

		
	9.
	Legal Counsel. Except in respect of an suit, action, litigation, claim, investigation, inquiry, hearing or proceeding by or on behalf of the Corporation or Other Entity, as the case may be, to procure a judgment in its favour against the Indemnified Party, the Corporation may, and upon the written request of the Indemnified Party shall, promptly after receiving from or delivering to the Indemnified Party written notice of any Claim or threatened Claim as required by Section 8 of this Agreement, assume conduct of the defence thereof in a timely manner and retain legal counsel on behalf of the Indemnified Party, provided that such legal counsel is satisfactory to the Indemnified Party, acting reasonably, to represent the Indemnified Party in respect of the Claim. In the event the Corporation assumes conduct of the defence on behalf of the Indemnified Party as contemplated by this Section 9, the Indemnified Party hereby 

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consents to the conduct thereof and to any action taken by the Corporation, in good faith, in connection therewith, and the Indemnified Party shall fully cooperate in such defence including the provision of documents, attending examinations for discovery, making affidavits, meeting with counsel, testifying and divulging to the Corporation and, where applicable, to its insurers, all information reasonably required to investigate, defend or prosecute the Claim. 
		
	10.
	Additional Legal Counsel. The Indemnified Party shall have the right to employ separate legal counsel of the Indemnified Party’s choosing in addition to or instead of, as the case may be, the legal counsel retained by the Corporation as provided by Section 9 of this Agreement in connection with any Claim or other matter for which the Indemnified Party may be entitled to indemnification or hold harmless obligations hereunder and to participate in the defence thereof provided the fees and disbursements of such additional counsel shall be at the Indemnified Party’s expense unless, in respect of such Claim or other matter, any of the following applies, in which case the legal fees and disbursements of such additional counsel shall be paid by the Corporation on behalf of the Indemnified Party: (i) the Corporation has agreed in writing to pay the fees for such additional counsel; (ii) the Corporation has not appointed counsel to assume the conduct of the defence of such Claim or other matter in a timely manner; (iii) the Corporation has appointed counsel that is not satisfactory to the Indemnified Party, acting reasonably; or (iv) the Indemnified Party has reasonably determined that there may be a conflict of interest between the Indemnified Party and the Corporation in the defence of such Claim or other matter.  

		
	11.
	No Presumption as to Absence of Good Faith. Unless a court of competent jurisdiction otherwise decided that the Indemnified Party is not entitled to be fully or partially indemnified or held harmless hereunder, the determination of any Claim by judgment, order, settlement or conviction (whether with or without court approval), or upon a plea of nolo contendere or its equivalent, shall not, in and of itself, create any presumption for the purposes of this Agreement that the Indemnified Party is not entitled to indemnity hereunder.

		
	12.
	Settlement of Claim. No admission of liability and no settlement of any Claim in a manner adverse to the Indemnified Party shall be made without the consent of the Indemnified Party, unless, in the case of a settlement by the Corporation, such settlement: (i) includes an unconditional release of the Indemnified Party from all liability arising out of such Claim; and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act, by or on behalf of the Indemnified Party. 

		
	13.
	Other Rights and Remedies Unaffected. The rights to indemnification or hold harmless obligations and payment provided in this Agreement shall not derogate from or exclude or be diminished by any other rights to which the Indemnified Party may be entitled under any provision of the Act or otherwise under applicable law, the articles of the Corporation (as amended or otherwise modified from time to time pursuant to its terms and applicable law) or the by-laws of the Corporation (as amended or otherwise modified from time to time pursuant to its terms and applicable law), the constating documents of an Other Entity, any applicable policy of insurance (including but not limited to any directors’ and officers’ liability insurance policy, including the Policy), guarantee or third-party indemnity, any vote of securityholders of the Corporation or an Other Entity, or otherwise, both as to matters arising out of the Indemnified Party’s capacity as a director or officer of the Corporation or Other Entity, or in a capacity similar thereto for the Corporation or an Other Entity, or as to matters arising out of any other capacity in which the Indemnified Party may act for or on behalf of the Corporation; provided, however, that, notwithstanding anything to the contrary set forth in this Agreement, the Corporation shall not be liable or have any obligation under this Agreement to the Indemnified Party in respect of any Losses or Cost Advances to the extent the Indemnified Party has otherwise received any payments under any insurance policy (including the Policy), the articles of the Corporation (as amended or otherwise modified from time to time pursuant to its terms and applicable law) or the by-laws of the Corporation (as amended or otherwise modified from time to time pursuant to its terms and applicable law), pursuant to any other contractual or legal indemnification or similar rights the Indemnified Party may be entitled to or otherwise of the amounts otherwise indemnifiable by the Corporation under this Agreement.

		
	14.
	Insurance Policy.  

a) The Policy.  The Corporation will ensure that its liabilities under this Agreement, and the potential liabilities of the Indemnified Party that are subject to indemnification by the Corporation pursuant to this Agreement, are at all times supported by the Policy. The Corporation shall pay all premiums payable under the Policy and, provided that such insurance is, in the Corporation’s reasonable and good faith opinion, available on commercially reasonable terms, take all steps necessary to maintain the coverage provided under the Policy. As may be required by the Policy, the Corporation will immediately notify the Policy’s insurers of any occurrences or situations that could potentially trigger a claim under the Policy and will promptly advise the Indemnified Party that the insurers have been notified of the potential claim. If, for any reason whatsoever, any directors’, and officers’ liability insurer asserts that the Indemnified Party is subject to a deductible under any existing or future directors’ and officers’ liability insurance purchased and maintained by the Corporation for the benefit of the Indemnified Party and the Indemnified Party’s heirs and legal representatives, the Corporation shall pay the deductible for and on behalf of the Indemnified Party.  If any payments made by an insurer under a 

4

Policy are deemed to constitute a taxable benefit or otherwise become subject to any tax payable by the Indemnified Party, the Corporation agrees to pay any amount as may be necessary to ensure that the amount received by or on behalf of the Indemnified Party after the payment of, or withholding for, such tax, fully reimburses the Indemnified Party for the actual cost, expense or liability incurred by or on behalf of the Indemnified Party.
b) Variation of Policies. So long as the Indemnified Party is a director, advisor or officer or holder of a similar office of the Corporation or an Other Entity and provided that such insurance is, in the Corporation’s reasonable and good faith opinion, available on commercially reasonable terms, the Corporation shall not seek to amend adversely or discontinue the Policy or allow the Policy to lapse (without entering into a renewal or replacement thereof on similar terms) without the Indemnified Party’s prior written consent, acting reasonably. Should the Indemnified Party cease being a director, officer or advisor of the Corporation, for any reason whatsoever, the Corporation shall continue to purchase and maintain directors’ and officers’ liability insurance for the benefit of the Indemnified Party and the Indemnified Party’s heirs and legal representatives, such that the Indemnified Party’s insurance coverage is, at all times, the same as any insurance coverage the Corporation purchases and maintains for the benefit of its then current directors, officers and advisors, from time to time. 
c) Run-Off Coverage. In the event the Policy is discontinued for any reason, or in the event of a consummation of a Control Transaction, the Corporation shall purchase, maintain and administer, or cause to be purchased, maintained and administered for a period of six years after such discontinuance or the effective time of the Control Transaction, insurance for the benefit of the Indemnified Party (the “Run-Off Coverage”), on similar terms to the extent permitted by law and provided such Run-Off Coverage is available on commercially acceptable terms and premiums (as determined by the board of directors in its reasonable and good faith opinion), provided that the premiums for the Run-Off Coverage will be deemed to be commercially acceptable if the total premiums for such Run-Off Coverage do not exceed 300% of annual premiums under the Policy at the time they are discontinued). The Run-Off Coverage shall provide coverage only in respect of events occurring prior to the discontinuance of the Policy or the effective time of the Control Transaction. The Corporation will provide to the Indemnified Party a copy of each policy of insurance providing the coverages contemplated by this subsection 14(c) promptly after coverage is obtained and evidence of each annual renewal thereof and will promptly notify the Indemnified Party if the insurer cancels, makes material changes to coverage, or refuses to renew coverage (or any part of the coverage).
		
	15.
	Retroactive Effect. The right to be indemnified and held harmless or to the reimbursement or advancement of expenses pursuant to this Agreement is intended to be retroactive and shall be available with respect to events occurring prior to the execution hereof. For greater certainty, the rights of the Indemnified Party hereunder shall vest irrevocably at the time of his or her appointment as a director or officer or in any capacity similar thereto of the Corporation or an Other Entity. 

		
	16.
	Cooperation. The Corporation and the Indemnified Party shall, from time to time, provide such information and cooperate with the other, as the other may reasonably request, in respect of all matters under this Agreement. The Indemnified Party shall cooperate fully with the Corporation and its insurers and provide any required information with respect to any matters relevant to or arising under any claims by the Corporation under any policy of directors’ and officers’ liability insurance in respect of or related to a Claim under this Agreement. Without limiting the foregoing, the Indemnified Party and his or her advisors shall at all times be entitled to review during regular business hours all documents, records and other information with respect to the Corporation which are under the Corporation’s control and which may be reasonably necessary in order for the Indemnified Party to defend against any Claim that relates to, arises from or is based on the Indemnified Party having acted in his or her capacity as a director or officer of the Corporation or an Other Entity or by reason of that association with the Corporation or an Other Entity, provided that the Indemnified Party shall maintain all such information in strictest confidence except to the extent necessary for the Indemnified Party’s defence.  Nothing contained herein shall abrogate any legal privilege (solicitor/client, litigation or otherwise) that may be asserted by the Corporation in respect of such documents, records or information to object to disclosure to the Indemnified Party.

		
	17.
	Effective Time. This Agreement shall be deemed to have effect as and from the first date that the Indemnified Party became a director or officer of the Corporation or an Other Entity, or began serving in a capacity similar thereto for the Corporation or an Other Entity.

		
	18.
	Insolvency. The liability of the Corporation under this Agreement shall not be affected, discharged, impaired, mitigated or released by reason of the discharge or release of the Indemnified Party in any bankruptcy, insolvency, receivership or other similar proceeding of creditors. The rights of the Indemnified Party under this Agreement shall not be prejudiced or impaired by permitting or consenting to any assignment in bankruptcy, receivership, insolvency or any other creditor’s proceedings of or against the Corporation or by the winding-up or dissolution of the Corporation.

		
	19.
	Subrogation. In the event of payment to the Indemnified Party under this Agreement, the Corporation shall be subrogated to the extent of such payment to all of the rights of recovery of the Indemnified Party. Without limiting the generality of Section 16 of this Agreement, the Indemnified Party shall execute all papers required and shall do everything that may be necessary to secure such rights, including the execution of such documents necessary to enable the Corporation to effectively bring suit to enforce such rights. 

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	20.
	Multiple Proceedings. No suit, action, litigation, claim, prosecution, investigation, inquiry, hearing or other proceeding brought or instituted under this Agreement and no recovery pursuant thereto shall be a bar or defence to any further suit, action, litigation, claim, prosecution, investigation, inquiry, hearing or other proceeding which may be brought under this Agreement.

		
	21.
	Term. This Agreement shall survive and continue indefinitely after the Indemnified Party has ceased to act as a director or officer of the Corporation and all Other Entities, and in all capacities similar thereto for the Corporation and all Other Entities.

		
	22.
	Deeming Provision. The Indemnified Party shall be deemed to have acted or be acting at the specific request of the Corporation upon the Indemnified Party’s being appointed or elected as a director or officer of the Corporation or an Other Entity, or into a capacity similar thereto for the Corporation or an Other Entity.

		
	23.
	Miscellaneous.

		
	a)
	Assignment. No party hereto may assign this Agreement or any rights or obligations under this Agreement without the prior written consent of the other parties hereto and any attempted or purported assignment in violation of this Section 23(a) shall be null and void.  This Agreement shall enure to the benefit of and be binding upon the parties hereto and their successors (including any successor by reason of amalgamation or other Control Transaction, as applicable), heirs, legal representatives and permitted assigns.

		
	b)
	Amendments and Waivers. No supplement, modification, amendment or waiver or termination of this Agreement and, unless otherwise specified, no consent or approval by any party hereto, shall be binding unless executed in writing by the party to be bound thereby.

		
	c)
	Notices. Any notice, consent or approval required or permitted to be given in connection with this Agreement (for the purposes of this Section 23.c), a “Notice”) shall be in writing and shall be sufficiently given if delivered, whether in person, by courier service or other personal method of delivery, or if transmitted by e-mail:

		
	(a)
	in the case of a Notice to the Indemnified Party at:

    
[NAME]
[ADDRESS]
Telephone:  [●] 
        E-mail:  [●]
		
	(b)
	in the case of a Notice to the Corporation at:

        
Cronos Group Inc. 
    720 King Street West, Suite 320
Toronto, Ontario M5V 2T3 
    Telephone:  416-504-0004
Attention:  General Counsel
E-mail:  legal@thecronosgroup.com
    
Any Notice delivered or transmitted to a party hereto as provided above shall be deemed to have been given and received on the day it is delivered or transmitted, provided that it is delivered or transmitted prior to 5:00 p.m. local time in the place of delivery or receipt. However, if the Notice is delivered or transmitted after 5:00 p.m. local time or if such day is not a day during which banks are open for business in the City of Toronto, Ontario, then the Notice shall be deemed to have been given and received on the next day during which banks are open for business in the City of Toronto, Ontario. Either party hereto may, from time to time, change its address by giving Notice to the other party in accordance with the provisions of this Section 23.c).
		
	d)
	Severability. If any part of this Agreement or the application of such part to any person, entity or circumstance shall, to any extent, be invalid or unenforceable, the remainder of this Agreement, or the application of such part to any other or person or circumstance, shall not be affected thereby and each provision of this Agreement shall be valid and enforceable to the fullest extent permitted by applicable law.

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	e)
	Further Assurances. The Corporation and the Indemnified Party shall, with reasonable diligence, do all such further acts, deeds or things and execute and deliver all such further documents as may be necessary or advisable for the purpose of assuring and conferring on the Indemnified Party the rights hereby created or intended, and of giving effect to and carrying out the intention or facilitating the performance of the terms of this Agreement.

		
	f)
	Governing Law. This Agreement is a contract made under and shall be governed by and construed in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein. The parties hereto hereby irrevocably submit and attorn to the jurisdiction of the courts of the Province of Ontario with respect to all matters arising out of or relating to this Agreement and all matters, agreements or documents contemplated by this Agreement. The parties hereto hereby irrevocably waive any objections they may have to the venue being in such courts including any claim that any such venue is in an inconvenient forum and appoint, to the extent such party is not otherwise subject to service of process in the Province of Ontario, [AGENT FOR SERVICE OF PROCESS], [ADDRESS], [CITY], Ontario, [POSTAL CODE] as its agent in the Province of Ontario for acceptance of legal process in connection with any such action or proceeding against any such party with the same legal force and validity as if served upon such party personally within the Province of Ontario. 

		
	g)
	Entire Agreement. This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all other prior and contemporaneous agreements, negotiations, understandings, representations and warranties, whether oral or written, with respect to such matters.

		
	h)
	Interpretation. The headings in this Agreement are for reference only and shall not affect the meaning or interpretation of this Agreement. Unless the context otherwise requires, words importing the singular shall include the plural and vice versa and words importing any gender shall include all genders and the words “including” and “includes” are meant to be illustrative and not limiting.

		
	i)
	Execution and Delivery. This Agreement may be executed by the parties hereto in counterparts and may be executed and delivered by facsimile and all such counterparts and facsimiles together shall constitute one and the same agreement.

[Remainder of page intentionally left blank.]

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IN WITNESS WHEREOF each of the parties hereto and the witness hereto has duly executed this Agreement.

CRONOS GROUP INC.

                                
By:    ______________________________
Name:
Title:

______________________________        ______________________________
Witness                    [Individual]

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SCHEDULE A
Insurance Policy

9EX-4.12

 Exhibit 4.12 

POPULAR, INC. 

DESCRIPTION OF THE REGISTRANT’S SECURITIES REGISTERED PURSUANT TO SECTION 12 OF THE SECURITIES EXCHANGE ACT OF 1934 

AS OF DECEMBER 31, 2019 

The following is a summary description of each class of securities of Popular, Inc. (the “Company”) that is registered under Section
12 of the Securities Exchange Act of 1934, as amended, consisting of (1) our Common Stock, (2) our 6.70% Cumulative Monthly Income Trust Preferred Securities and (3) our 6.125% Cumulative Monthly Income Trust Preferred Securities. 

In this summary, when we refer to the “Company,” “we,” “us” or “our” or when we otherwise refer to
ourselves, we mean Popular, Inc., excluding the Company’s subsidiaries, unless otherwise expressly stated or as the context requires; all references to “common stock” refer only to common stock issued by the Company and not to any
common stock issued by any subsidiary. 
 Description of Common Stock 

The following description of the Company’s Common Stock is a summary and does not purport to be complete. It is subject to and qualified
in its entirety by reference to the Company’s Restated Certificate of Incorporation (the “Charter”) and the Company’s Restated By-laws, (the “Bylaws”) each of which is filed as an
exhibit to the Annual Report on Form 10-K of which this exhibit is a part. We encourage you to read the Charter and Bylaws and the applicable provisions of the General Corporations Act of the Commonwealth of Puerto Rico for additional information.

 Authorized Capital Shares 
 Pursuant
to the Charter, the Company’s authorized capital stock consists of 170,000,000 million shares of common stock, $0.01 par value per share (“Common Stock”), and 30,000,000 shares of preferred stock without par value
(“Preferred Stock”). 
 Voting Rights 

The holders of the Company’s Common Stock are entitled to one vote per share on all matters brought before the stockholders. The holders
of the Common Stock do not have cumulative voting rights. The Charter provides that the approval of the Company’s merger, reorganization, or consolidation or the sale, lease or hypothecation of substantially all of the Company’s assets or
the approval of the Company’s voluntary dissolution requires the vote of the holders of 75% of the total number of the outstanding shares of Common Stock. In addition, the affirmative vote of the holders of not less than two-thirds of the outstanding shares of Common Stock are required to amend the Charter. 

  
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 Dividend Rights 

Subject to the rights of holders of any Preferred Stock outstanding, holders of the Common Stock are entitled to receive ratably such
dividends, if any, as the Company’s Board of Directors may in its discretion declare out of legally available funds. 
 Liquidation Rights 

In the event of liquidation, holders of the Common Stock are entitled to receive pro rata any assets distributable to a stockholder with
respect to the shares held by them, after payment of liabilities and such preferential amounts as may be required to be paid to the holders of the Company’s outstanding series of preferred stock and any preferred stock the Company may hereafter
issue. 
 Other Rights and Preferences 

The Company’s Common Stock has no sinking fund or redemption provisions or preemptive, conversion, exchange or call rights. 

Classification of the Board of Directors 

The Charter provides that the members of the Company’s Board of Directors are divided into three classes as nearly equal as possible. Each
class is elected for a three-year term. At each annual meeting of stockholders, one-third of the members of the Company’s Board of Directors are elected for a three-year term, and the other directors
remain in office until their three-year terms expire. Therefore, control of the Company’s Board of Directors cannot be changed in one year, and at least two annual meetings must be held before a majority of the members of the Company’s
Board of Directors can be changed. The Charter provides that a director, or the entire Board of Directors, may be removed by the stockholders only for cause. 

The Charter and the Bylaws also provide that the affirmative vote of the holders of at least
two-thirds of the combined voting power of the outstanding capital stock entitled to vote generally for the election of directors is required to remove a director or the entire Board of Directors from office
for cause. 
 Advance Notice Requirements 

The Company’s Bylaws establish advance notice procedures with respect to shareholder proposals relating to nominations or any other matter
to be brought before any meetings of shareholders of the Company. These procedures provide that notice of such shareholder proposals must be timely given in writing to the Secretary of the Company prior to the meeting at which the action is to be
taken. The required notice period varies depending on the timing of the proposal and the shareholders meeting to which it relates. The notice must contain certain information specified in the Bylaws and must otherwise comply with the amended and
restated Bylaws. 

  
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 “Blank Check” Preferred Stock 

The Charter authorizes the issuance of “blank check” preferred stock, which may be issued by the Company’s Board of Directors
without shareholder approval and may contain voting, liquidation, dividend and other rights superior to the Common Stock. 
 Listing 

The Common Stock is traded on The Nasdaq Stock Market LLC under the trading symbol “BPOP”. 

  
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 Description of (i) 6.70% Cumulative Monthly Income Trust Preferred Securities of
Popular Capital Trust I (Fully and Unconditionally Guaranteed by Popular, Inc.) and (ii) 6.125% Cumulative Monthly Income Trust Preferred Securities of Popular Capital Trust II (Fully and Unconditionally Guaranteed by Popular, Inc.). 

The following description of the Company’s 6.70% Cumulative Monthly Income Trust Preferred Securities (the “6.70% Capital
Securities”) and the Company’s 6.125% Cumulative Monthly Income Trust Preferred Securities (the “6.125% Capital Securities”, and together with the 6.70% Capital Securities, the “Capital Securities”) is a summary and
does not purport to be complete. It is subject to and qualified in its entirety by reference to (i) the Amended and Restated Declaration of Trust and Trust Agreement dated as of August 31, 2009 (the “6.70% Trust Agreement”),
among the Company, as depositor, The Bank of New York Mellon, as property trustee (the “Property Trustee”), BNY Mellon Trust of Delaware, as Delaware trustee (the “Delaware Trustee”), Jorge A. Junquera and Richard Barrios, as
administrative trustees (the “Administrative Trustees”), and the several Holders (as defined therein), as amended, amended and restated or supplemented from time to time, (ii) the Amended and Restated Declaration of Trust and Trust
Agreement dated as of August 31, 2009 (the “6.125% Trust Agreement”, and together with the 6.70% Trust Agreement, the “Trust Agreements”), among the Company, as depositor, the Property Trustee, the Delaware Trustee, the
Administrative Trustees and the several Holders (as defined therein), as amended, amended and restated or supplemented from time to time, (iii) the Prospectus Supplement (to Prospectus dated October 9, 2003) dated as of October 27,
2003, relating to the 6.70% Capital Securities (the “6.70% Prospectus Supplement”); and (iv) the Prospectus Supplement (to Prospectus dated November 18, 2004) dated as of November 24, 2004, relating to the 6.125% Capital
Securities (the “6.125% Prospectus Supplement”, and together with the 6.70% Prospectus Supplement, the “Prospectus Supplements”) each of which is incorporated by reference as an exhibit to the Annual Report on Form 10-K of which this exhibit is a part. We encourage you to read the Trust Agreements, the Prospectus Supplements and the Delaware Statutory Trust Act and the Trust Indenture Act for more information. 

The Capital Securities and the Common Securities (the “6.70% Common Securities”, and together with the 6.70 Capital Securities, the
“6.70% Trust Securities”) of Popular Capital Trust I (“Trust I”), a Delaware trust, represent beneficial interests in Trust I, and the Capital Securities and the Common Securities (the “6.125% Common Securities”, and
together with the 6.125% Capital Securities, the “6.125% Trust Securities”, and together with the 6.70% Common Securities, the “Trust Securities”) of Popular Capital Trust II (“Trust II”, and together with Trust I, the
“Trusts”), a Delaware statutory trust, represent beneficial interests in Trust II. Trust I holds the Company’s 6.70% junior subordinated debentures (the “6.70% Debentures”), and Trust II holds the Company’s 6.125%
junior subordinated debentures (the “6.125% Debentures”, and together with the 6.70% Debentures, the “Debentures”). 

For clarity, wherever in this description any reference is made to the Capital Securities, Common Securities, Trust, Trust Securities, Trust
Agreement, Guarantee that is or are “related” or “applicable” to (or words having similar import) one or more Debentures, such reference should be understood to mean (i) in the case of the 6.70% Debentures, the 6.70% Capital
Securities, the Common Securities of Trust I, the Trust Securities of Trust I, the Trust Agreement of Trust I, and the Guarantee Agreement for Trust I (and vice versa) or (i) in the case 

  
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of the 6.125% Debentures, the 6.125% Capital Securities, the Common Securities of Trust II, the Trust Securities of Trust II, the Trust Agreement of Trust II, and the Guarantee Agreement for
Trust II (and vice versa). 
 Each holder of the 6.70% Capital Securities has a beneficial interest in Trust I but does not own any specific
6.70% Debentures held by Trust I. However, the 6.70% Trust Agreement under which Trust I operates defines the financial entitlements of the 6.70% Capital Securities in a manner that causes those financial entitlements to correspond to the financial
entitlements of Trust I in the 6.70% Debentures it holds. 
 Each holder of the 6.125% Capital Securities has a beneficial interest in Trust
II but does not own any specific 6.125% Debentures held by Trust II. However, the 6.125% Trust Agreement under which Trust II operates defines the financial entitlements of the 6.125% Capital Securities in a manner that causes those financial
entitlements to correspond to the financial entitlements of Trust II in the 6.125% Debentures it holds. 
 The Trusts 

Each Trust is a statutory trust formed under Delaware law pursuant to a Trust Agreement and the certificate of trust filed with the Delaware
Secretary of State. 
 Each Trust exists for the exclusive purposes of: 

 

	•	 	 issuing the Trust Securities of such Trust; 

 

	•	 	 investing the gross proceeds of the Trust Securities of such Trust in an equivalent amount of the applicable
Debentures and holding such Debentures; and 

  

	•	 	 engaging in only those activities convenient, necessary or incidental to the activities described above.

 In addition to the 6.70% Capital Securities, the 6.70% Trust Agreement authorizes Trust I to issue 6.70% Common
Securities. All of the 6.70% Common Securities are directly or indirectly owned by the Company. The 6.70% Common Securities rank equally with the 6.70% Capital Securities and Trust I makes payment on the 6.70% Trust Securities pro rata, except that
upon certain events of default under the 6.70% Trust Agreement relating to payment defaults on the 6.70% Debentures, the rights of the holders of the 6.70% Common Securities to payment in respect of distributions and payments upon liquidation,
redemption and otherwise are subordinated to the rights of the holders of the 6.70% Capital Securities. The Company acquired 6.70% Common Securities in an aggregate liquidation amount equal to at least three percent of the total capital of Trust I.

 In addition to the 6.125% Capital Securities, the 6.125% Trust Agreement authorizes Trust II to issue 6.125% Common Securities. All of
the 6.125% Common Securities are directly or indirectly owned by the Company. The 6.125% Common Securities rank equally with the 6.125% Capital Securities and Trust II makes payment on the 6.125% Trust Securities pro rata, except that upon certain
events of default under the 6.125% Trust Agreement relating to payment defaults on the 6.125% Debentures, the rights of the holders of the 6.125% Common 

  
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Securities to payment in respect of distributions and payments upon liquidation, redemption and otherwise are subordinated to the rights of the holders of the 6.125% Capital Securities. The
Company acquired 6.125% Common Securities in an aggregate liquidation amount equal to at least three percent of the total capital of Trust II. 

The 6.70% Trust Agreement does not permit Trust I to issue any securities other than the 6.70% Trust Securities or to incur any indebtedness.
Likewise, the 6.125% Trust Agreement does not permit Trust II to issue any securities other than the 6.125% Trust Securities of Trust II or to incur any indebtedness. 

Each Trust’s business and affairs are conducted by its respective trustees. The Property Trustee acts as sole trustee under each Trust
Agreement for purposes of compliance with the Trust Indenture Act and also acts as trustee under the Guarantees (as defined below). 
 Each
Trust has a term of approximately 30 years, but may be terminated earlier as provided in the Trust Agreement governing such Trust. 
 The
Company pays all fees and expenses related to each of the Trusts. 
 DESCRIPTION OF THE CAPITAL SECURITIES 

General 
 The terms of the Capital
Securities of each Trust include (i) those stated in the Trust Agreement for such Trust, each as amended, amended and restated, or supplemented from time to time and (ii) those made part of each Trust Agreement by the Trust Indenture Act
and the Delaware Statutory Trust Act. 
 The Property Trustee acts as indenture trustee for purposes of compliance with the provisions of
the Trust Indenture Act with respect to each of the Trusts. The 6.70% Capital Securities and 6.125% Capital Securities each have a liquidation amount of $25. 

The payment of distributions out of money held by each Trust, and payments upon redemption of the Capital Securities of such Trust or
liquidation of such Trust, are guaranteed by the Company to the extent described under “Description of the Guarantees”. Each Guarantee, when taken together with the Company’s obligations under the Trust Agreement to which such Trust
relates, including the Company’s obligations to pay costs, expenses, debts and liabilities of such Trust, other than with respect to the Trust Securities of such Trust, has the effect of providing a full and unconditional guarantee of amounts
due on the Capital Securities of such Trust. The Property Trustee, in its role as the guarantee trustee with respect to each Trust, holds each Guarantee for the benefit of the holders of the Capital Securities of such Trust. The Guarantees do not
cover payment of distributions or amounts payable on redemption or liquidation of the Capital Securities of such Trust when such Trust does not have funds on hand available to make such payments. 

The Capital Securities of each Trust were issued in the form of one or more global securities deposited with The Depository Trust Company
(“DTC”). 

  
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 The 6.70% Capital Securities are securities of Trust I and are issued pursuant to the 6.70%
Trust Agreement. Under the 6.70% Trust Agreement, Trust I holds the 6.70% Debentures for the benefit of the holders of the 6.70% Trust Securities. The 6.70% Capital Securities are limited to $300,000,000 aggregate liquidation amount. The 6.70%
Capital Securities are traded on The Nasdaq Stock Market LLC under the trading symbol “BPOPN”. 
 The 6.125% Capital Securities
are securities of Trust II and are issued pursuant to the 6.125% Trust Agreement. Under the 6.125% Trust Agreement, Trust II holds the 6.125% Debentures for the benefit of the holders of the 6.125% Trust Securities. The 6.125% Capital Securities are
limited to $130,000,000 aggregate liquidation amount. The 6.125% Capital Securities are traded on The Nasdaq Stock Market LLC under the trading symbol “BPOPM”. 

Distributions 
 Distributions on the
Capital Securities of each Trust are fixed at an annual rate of (i) 6.70% of the stated liquidation amount of $25 per 6.70% Capital Security and (ii) 6.125% of the stated liquidation amount of $25 per 6.125% Capital Security. Distributions under
each of the Trust Agreements are cumulative. 
 With respect to the 6.70% Capital Securities, distributions under the currently effective
6.70% Trust Agreement are payable monthly in arrears on the first day of each month, commencing on September 1, 2009. Distributions under the Amended and Restated Declaration of Trust and Trust Agreement dated as of October 31, 2003 (the
“Initial 6.70% Trust Agreement”) were payable monthly in arrears on the first day of each month, commencing on December 1, 2003. Funds available for distributions with respect to the 6.70% Capital Securities are limited to payments
received from the Company on the 6.70% Debentures. 
 With respect to the 6.125% Capital Securities, distributions under the currently
effective 6.125% Trust Agreement are payable monthly in arrears on the first day of each month, commencing on September 1, 2009. Distributions under the Amended and Restated Declaration of Trust and Trust Agreement dated as of November 30,
2004 (the “Initial 6.125% Trust Agreement”) were payable monthly in arrears on the first day of each month commencing on January 1, 2005. Funds available for distributions with respect to the 6.125% Capital Securities are limited to
payments received from the Company on the 6.125% Debentures. 
 With respect to each Trust, if such Trust is terminated and its assets
distributed, for each Capital Security of such Trust, each holder is entitled to receive a like amount of the Debentures held by such Trust or the liquidation amount of $25 plus accumulated but unpaid distributions from the assets of such Trust
available for distribution, after it has paid liabilities owed to its creditors, subject to the rights of the holders of the Common Securities issued by such Trust to receive a pro rata distribution. Distributions to which holders of such
Trust’s Capital Securities are entitled and that are past due will accumulate additional distributions to the extent permitted by applicable law, at an annual rate of 6.70%, with respect to the 6.70% Capital Securities, and 6.125%, with respect
to the 6.125% Capital Securities, of the unpaid distributions, compounded monthly. The term “distribution” includes any additional distributions payable unless otherwise stated. 

  
 -7- 

 The term “like amount” as used in this description means: 

 

	•	 	 with respect to a redemption of any Trust Securities of a Trust, Capital Securities or Common Securities of such
Trust having a liquidation amount equal to that portion of the principal amount of the Debentures held by such Trust to be contemporaneously redeemed in accordance with the applicable Indentures, the proceeds of which are used to pay the redemption
price of the Capital Securities or Common Securities of such Trust; and 

  

	•	 	 with respect to a distribution of the Debentures held by a Trust to holders of any Capital Securities or Common
Securities of such Trust in exchange therefor in connection with a dissolution or liquidation of such Trust, Debentures held by such Trust having a principal amount equal to the liquidation amount of the Capital Securities or Common Securities of
the holder to whom such Debentures would be distributed. 

 Under each of the Trust Agreements, the amount of
distributions payable for any period less than a full distribution period is computed on the basis of a 360-day year of twelve 30- day months and the actual number of
days elapsed in a partial month in that period. Under each of the Trust Agreements, the amount of distributions payable for any full distribution period is computed by dividing the rate per annum by twelve. 

Payment of Distributions 
 Each Trust pays
distributions on its Capital Securities to DTC, which credits the applicable accounts at DTC on the applicable payment dates, or if the securities certificate for the Capital Securities of such Trust is no longer held by or on behalf of DTC, such
Trust will make the payments by check mailed to the addresses of the holders as such addresses appear on the books and records of such Trust on the applicable record dates. However, a holder of $1 million or more in aggregate liquidation amount
of the Capital Securities of such Trust may receive distribution payments, other than distributions payable at maturity, by wire transfer of immediately available funds upon written request to such Trust not later than 15 calendar days prior to the
date on which the distribution is payable. The record date for distributions on the Capital Securities of each Trust is the fifteenth day of the month preceding the distribution date, whether or not a business day. 

Each Trust pays distributions through the Property Trustee of such Trust. The Property Trustee holds amounts received from the applicable
Debentures in the payment account for the benefit of the holders of the Trust Securities of such Trust. 
 If a distribution is payable
pursuant to either Trust Agreement on a day that is not a business day, then that distribution is to be paid on the next day that is a business day, and without any interest or other payment for any delay with the same force and effect as if made on
the payment date. 
 Each Trust Agreement defines a business day as a day other than a Saturday, a Sunday or any other day on which banking
institutions in New York, New York, San Juan, Puerto Rico or Wilmington, Delaware are authorized or required by law, regulation or executive order to remain closed or are customarily closed. 

  
 -8- 

 Deferral of Distributions 

As long as there is no event of default under a class of Debentures, the Company has the right to defer payments of interest on such Debentures
at any time and from time to time by extending the interest payment period for a period (an “Extension Period”) of up to 60 consecutive months, but not beyond the maturity of such Debentures. 

As a consequence, during an Extension Period, a Trust will defer payment of the monthly distributions on the applicable Capital Securities.
The accumulated but unpaid distributions will continue to accumulate additional distributions, as permitted by applicable law, at an annual rate of 6.70%, compounded monthly, with respect to the 6.70% Capital Securities, and at an annual rate of
6.125% compounded monthly, with respect to the 6.125% Capital Securities. 
 While the Company defers interest payments on a class of
Debentures, it will be restricted from: 
  

	•	 	 declaring or paying any dividends or distributions on, or redeeming, purchasing, acquiring or making a
liquidation payment on, any shares of its capital stock; and 

  

	•	 	 making payments on or repaying, repurchasing or redeeming any of its debt securities that rank equal or junior to
such Debentures. 

 If a Trust defers distributions, the deferred distributions, including accumulated additional
distributions, are to be paid on the distribution payment date following the last day of the Extension Period to the holders on the record date for that distribution payment date. Upon termination of an Extension Period and payment of all amounts
due on the 6.70% Capital Securities, the Company may elect to begin a new Extension Period with respect to the 6.70% Debentures, subject to the above conditions. Upon termination of an Extension Period and payment of all amounts due on the 6.125%
Capital Securities, the Company may elect to begin a new Extension Period with respect to the 6.125% Debentures, subject to the above conditions. 

Redemption 
 Repayment or Redemption of
the 6.70% Debentures 
 When the Company repays or redeems the 6.70% Debentures, whether at stated maturity or upon earlier redemption,
the Property Trustee will apply the proceeds from the repayment or redemption to redeem 6.70% Capital Securities having an aggregate liquidation amount equal to that portion of the principal amount of 6.70% Debentures being repaid or redeemed. The
redemption price per security is the $25 liquidation amount, plus accumulated but unpaid distributions to the redemption date. 

  
 -9- 

 If less than all of the 6.70% Debentures are to be repaid or redeemed, then the aggregate
liquidation amount of the 6.70% Trust Securities to be redeemed will be allocated approximately 3% to the 6.70% Common Securities and 97% to the 6.70% Capital Securities, except in the case of an event of default as a result of any failure by the
Company to make any principal or interest payments under the 6.70% Debentures when due. 
 The Company has the right, subject to any
required prior approval of the Federal Reserve, to redeem the 6.70% Debentures at a redemption price equal to 100% of the principal amount, plus accrued and unpaid interest to the date of redemption: 

 

	•	 	 on or after November 1, 2008, with respect to the 6.70% Capital Securities, in whole or in part, on one or
more occasions, at any time; and 

  

	•	 	 in whole, but not in part, at any time within 90 days following the occurrence and continuation of a Tax Event,
an Investment Company Event or a Capital Treatment Event, each as described below. 

 If less than all of the 6.70%
Debentures are to be repaid or redeemed on the date of redemption, then the proceeds from such repayment or redemption will be allocated to the redemption of 6.70% Trust Securities proportionately. 

A redemption of the 6.70% Debentures will cause a mandatory redemption of the 6.70% Trust Securities. 

Repayment or Redemption of the 6.125% Debentures 

When the Company repays or redeems the 6.125% Debentures, whether at stated maturity or upon earlier redemption, the Property Trustee will
apply the proceeds from the repayment or redemption to redeem 6.125% Capital Securities having an aggregate liquidation amount equal to that portion of the principal amount of 6.125% Debentures being repaid or redeemed. The redemption price per
security is the $25 liquidation amount, plus accumulated but unpaid distributions to the redemption date. 
 If less than all of the 6.125%
Debentures are to be repaid or redeemed, then the aggregate liquidation amount of the 6.125% Trust Securities to be redeemed will be allocated approximately 3% to the 6.125% Common Securities and 97% to the 6.125% Capital Securities, except in the
case of an event of default as a result of any failure by the Company to make any principal or interest payments under the 6.125% Debentures when due. 

The Company has the right, subject to any required prior approval of the Federal Reserve, to redeem the 6.125% Debentures at a redemption
price equal to 100% of the principal amount, plus accrued and unpaid interest to the date of redemption: 
  

	•	 	 on or after December 1, 2009, in whole or in part, on one or more occasions, at any time; and

  

	•	 	 in whole, but not in part, at any time within 90 days following the occurrence and continuation of a Tax Event,
an Investment Company Event or a Capital Treatment Event, each as described below. 

  
 -10- 

 If less than all of the 6.125% Debentures are to be repaid or redeemed on the date of
redemption, then the proceeds from such repayment or redemption will be allocated to the redemption of 6.125% Trust Securities proportionately. 

A redemption of the 6.125% Debentures will cause a mandatory redemption of the 6.125% Trust Securities. 

Tax Event; Investment Company Event; Capital Treatment Event 

A “Tax Event”, under each Trust Agreement, means the receipt by the Trust governed by such Trust Agreement of an opinion of counsel
experienced in such matters to the effect that as a result of: 
  

	•	 	 any amendment to, or change, including any announced prospective change, in the laws, or any regulations
thereunder, of the United States or any political subdivision thereof or Puerto Rico, or a taxing authority of the United States or Puerto Rico, affecting taxation; or 

 

	•	 	 any official or administrative pronouncement or action or judicial decision interpreting or applying such laws or
regulations; 

 there is more than an insubstantial risk that: 
  

	 	(1)	 such Trust is, or will be within 90 days of the delivery of the opinion of counsel, subject to United States
federal or Puerto Rico income tax with respect to income received or accrued on the Debentures held by such Trust; 

  

	 	(2)	 interest payable by the Company to such Trust on the Debentures held by such Trust is not, or will not be
within 90 days of the delivery of the opinion of counsel, deductible by the Company, in whole or in part, for Puerto Rico income tax purposes or for U.S. income tax purposes, to the extent applicable to the Company; or 

 

	 	(3)	 such Trust is, or will be within 90 days of the delivery of the opinion of counsel, subject to more than an
immaterial amount of taxes, duties or other governmental charges. 

 If a Tax Event has occurred and is continuing with
respect to the 6.70% Trust Agreement, and Trust I is the holder of all the 6.70% Debentures, the Company will pay any additional sums required so that distributions on the 6.70% Capital Securities will not be reduced by any additional taxes (other
than withholding taxes), duties or other governmental charges payable by Trust I as a result of the Tax Event. 
 If a Tax Event has
occurred and is continuing with respect to the 6.125% Trust Agreement, and Trust II is the holder of all the 6.125% Debentures, the Company will pay any additional sums required so that distributions on the 6.125% Capital Securities will not be
reduced by any additional taxes (other than withholding taxes), duties or other governmental charges payable by Trust II as a result of the Tax Event. 

  
 -11- 

 An “Investment Company Event”, under each Trust Agreement, means the receipt by
the Trust governed by such Trust Agreement of an opinion of counsel experienced in such matters to the effect that, as a result of the occurrence of a change in law or regulation or a written change, including any announced prospective change, in
interpretation or application of law or regulation by any legislative body, court, governmental agency or regulatory authority, there is more than an insubstantial risk that such Trust is or will be considered an “investment company” that
is required to be registered under the Investment Company Act. 
 A “Capital Treatment Event”, under each Trust Agreement, means
the reasonable determination of the Company that, as a result of any amendment to, or change in, including any announced proposed change in, the laws or regulations of the United States or any political subdivision thereof or therein, or as a result
of any official or administrative pronouncement or action or judicial decision interpreting or applying such laws or regulations, that there is more than an insubstantial risk that the Company will not be entitled to treat an amount equal to the
liquidation amount of the Capital Securities issued pursuant to such Trust Agreement as Tier 1 capital, or the then-equivalent thereof, for purposes of capital adequacy guidelines of the Federal Reserve, as then in effect and applicable to the
Company. 
 Redemption Procedures 

Redemption Procedures of the 6.70% Capital Securities 

Trust I may redeem the 6.70% Capital Securities only in an amount equal to the funds it has on hand and legally available to pay the redemption
price. The Property Trustee of Trust I will mail written notice of the redemption of the 6.70% Capital Securities to the registered holders at least 30 but not more than 60 days before the date fixed for redemption. If Trust I gives a notice of
redemption, then, by 12:00 noon, New York City time, on the date of redemption, if the funds are available for payment, the Property Trustee will, for 6.70% Capital Securities held in book-entry form: 

 

	•	 	 irrevocably deposit with DTC funds sufficient to pay the applicable redemption price; and 

 

	•	 	 give DTC irrevocable instructions and authority to pay the redemption price to the holders of the 6.70% Capital
Securities. 

 With respect to the 6.70% Capital Securities not held in book-entry form, if funds are available for
payment, the 6.70% Property Trustee will: 
  

	•	 	 irrevocably deposit with the paying agent funds sufficient to pay the applicable redemption price; and

  

	•	 	 give the paying agent irrevocable instructions and authority to pay the redemption price to the holders of the
6.70% Capital Securities upon surrender of the certificates evidencing the 6.70% Capital Securities. 

  
 -12- 

 Notwithstanding the above, distributions payable on or prior to the date of redemption for
6.70% Capital Securities called for redemption are payable to the holders of such 6.70% Capital Securities on the applicable record dates. 

Once notice of redemption pursuant to the 6.70% Trust Agreement is given and funds are deposited, then all rights of the holders of the 6.70%
Capital Securities called for redemption terminate, except the right to receive the redemption price, but without any interest or other payment for any delay in receiving it. If such notice of redemption is given and funds deposited as required,
such 6.70% Capital Securities then will cease to be outstanding. 
 If payment of the redemption price for the 6.70% Capital Securities
called for redemption is improperly withheld or refused and not paid either by Trust I or by the Company under the 6.70% Guarantee, then distributions on those 6.70% Capital Securities will continue to accumulate at the then-applicable rate, from
the date of redemption to the date of actual payment. In this case, the actual payment date will be the date fixed for redemption for purposes of calculating the redemption price. 

If less than all of the 6.70% Trust Securities are redeemed, then the aggregate liquidation amount of the 6.70% Trust Securities to be
redeemed normally will be allocated approximately 3% to the 6.70% Common Securities and 97% to the 6.70% Capital Securities. However, if an event of default has occurred as a result of any failure by the Company to make any principal or interest
payments under the 6.70% Debentures when due, holders of such 6.70% Capital Securities will be paid in full before any payments are made to holders of the 6.70% Common Securities. The Property Trustee of Trust I selects the particular 6.70% Capital
Securities to be redeemed on the pro rata basis described above not more than 60 days before the date of redemption by any method the Property Trustee deems fair and appropriate or, if such 6.70% Capital Securities are then held in book-entry form,
in accordance with DTC’s customary procedures. 
 Redemption Procedures of the 6.125% Capital Securities 

Trust II may redeem the 6.125% Capital Securities only in an amount equal to the funds it has on hand and legally available to pay the
redemption price. 
 The Property Trustee of Trust II will mail written notice of the redemption of the 6.125% Capital Securities to the
registered holders at least 30 but not more than 60 days before the date fixed for redemption. If Trust II gives a notice of redemption, then, by 12:00 noon, New York City time, on the date of redemption, if the funds are available for payment, the
Property Trustee will, for 6.125% Capital Securities held in book-entry form: 
  

	•	 	 irrevocably deposit with DTC funds sufficient to pay the applicable redemption price; and 

 

	•	 	 give DTC irrevocable instructions and authority to pay the redemption price to the holders of the 6.125% Capital
Securities. 

  
 -13- 

 With respect to the 6.125% Capital Securities not held in book-entry form, if funds are
available for payment, the 6.125% Property Trustee will: 
  

	•	 	 irrevocably deposit with the paying agent funds sufficient to pay the applicable redemption price; and

  

	•	 	 give the paying agent irrevocable instructions and authority to pay the redemption price to the holders of the
6.125% Capital Securities upon surrender of the certificates evidencing the 6.125% Capital Securities. 

 Notwithstanding
the above, distributions payable on or prior to the date of redemption for 6.125% Capital Securities called for redemption are payable to the holders of such 6.125% Capital Securities on the applicable record dates 

Once notice of redemption pursuant to the 6.125% Trust Agreement is given and funds are deposited, then all rights of the holders of the
6.125% Capital Securities called for redemption terminate, except the right to receive the redemption price, but without any interest or other payment for any delay in receiving it. If such notice of redemption is given and funds deposited as
required, such 6.125% Capital Securities then will cease to be outstanding. 
 If payment of the redemption price for the 6.125% Capital
Securities called for redemption is improperly withheld or refused and not paid either by Trust II or by the Company under the 6.125% Guarantee, then distributions on those 6.125% Capital Securities will continue to accumulate at the then-applicable
rate, from the date of redemption to the date of actual payment. In this case, the actual payment date will be the date fixed for redemption for purposes of calculating the redemption price. 

If less than all of the 6.125% Trust Securities are redeemed, then the aggregate liquidation amount of the 6.125% Trust Securities to be
redeemed normally will be allocated approximately 3% to the 6.125% Common Securities and 97% to the 6.125% Capital Securities. However, if an event of default has occurred as a result of any failure by the Company to make any principal or interest
payments under the 6.125% Debentures when due, holders of such 6.125% Capital Securities will be paid in full before any payments are made to holders of the 6.125% Common Securities. The Property Trustee of Trust II selects the particular 6.125%
Capital Securities to be redeemed on the pro rata basis described above not more than 60 days before the date of redemption by any method the Property Trustee deems fair and appropriate or, if such 6.125% Capital Securities are then held in
book-entry form, in accordance with DTC’s customary procedures. 
 Generally 

Under each Trust Agreement, if any date fixed for redemption is not a business day, then payment of the redemption price will be made on the
next day that is a business day, without any interest or other payment for the delay. 
 Subject to the above and applicable law and
regulations, including United States federal securities laws and banking laws and regulations, the Company or its affiliates may, under each Trust Agreement, at any time and from time to time purchase outstanding Capital Securities issued pursuant
to such Trust Agreement by tender, in the open market or by private agreement, and may resell such Capital Securities. 

  
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 Ranking of Capital Securities 

Ranking of 6.70% Capital Securities 

Payment of distributions on, and the redemption price of and the liquidation distribution in respect of 6.70% Capital Securities and 6.70%
Common Securities, as applicable, are made pro rata based on the relative liquidation amount of such 6.70% Capital Securities and 6.70% Common Securities, except that upon certain events of default under the 6.70% Trust Agreement relating to payment
defaults on 6.70% Debentures, the rights of the holders of the 6.70% Common Securities to payment in respect of distributions and payments upon liquidation, redemption and otherwise are subordinated to the rights of the holders of the 6.70% Capital
Securities. 
 In the case of any event of default under the 6.70% Trust Agreement resulting from an event of default under the applicable
Indentures, the Company, as holder of the Common Securities of Trust I, will be deemed to have waived any right to act with respect to any such event of default under the 6.70% Trust Agreement until all such events of default have been cured, waived
or otherwise eliminated. Until all events of default under the 6.70% Trust Agreement have been so cured, waived or otherwise eliminated, the Property Trustee of Trust I will act solely on behalf of the holders of the 6.70% Capital Securities and not
on the Company’s behalf, and only the holders of such 6.70% Capital Securities will have the right to direct the Property Trustee to act on their behalf. 

Ranking of 6.125% Capital Securities 

Payment of distributions on, and the redemption price of and the liquidation distribution in respect of 6.125% Capital Securities and 6.125%
Common Securities, as applicable, are made pro rata based on the relative liquidation amount of such 6.125% Capital Securities and 6.125% Common Securities, except that upon certain events of default under the 6.125% Trust Agreement relating to
payment defaults on 6.125% Debentures, the rights of the holders of the 6.125% Common Securities to payment in respect of distributions and payments upon liquidation, redemption and otherwise are subordinated to the rights of the holders of the
6.125% Capital Securities. 
 In the case of any event of default under the 6.125% Trust Agreement resulting from an event of default under
the applicable Indentures, the Company, as holder of the Common Securities of Trust II, will be deemed to have waived any right to act with respect to any such event of default under the 6.125% Trust Agreement until all such events of default have
been cured, waived or otherwise eliminated. Until all events of default under the 6.125% Trust Agreement have been so cured, waived or otherwise eliminated, the Property Trustee of Trust II will act solely on behalf of the holders of the 6.125%
Capital Securities and not on the Company’s behalf, and only the holders of such 6.125% Capital Securities will have the right to direct the Property Trustee to act on their behalf. 

  
 -15- 

 Liquidation Distribution Upon Dissolution 

Liquidation of Trust I; Distributions with Respect to the 6.70% Capital Securities 

The amount payable on the 6.70% Capital Securities in the event of any liquidation of Trust I is the liquidation amount of $25 per 6.70%
Capital Security plus accumulated but unpaid distributions, subject to certain exceptions, which may be paid in the form of a distribution of 6.70% Debentures. 

The Company can at any time dissolve Trust I. If Trust I dissolves and it has paid the liabilities owed to its creditors, the 6.70% Debentures
will be distributed to the holders of the 6.70% Trust Securities. 
 Any distributions of the 6.70% Debentures may require approval of the
Federal Reserve. 
 The 6.70% Trust Agreement states that Trust I will dissolve automatically on November 1, 2034 or earlier upon: 

 

	 	(1)	 the bankruptcy, dissolution or liquidation of the Company; 

 

	 	(2)	 the distribution of 6.70% Debentures having a principal amount equal to the liquidation amount of the 6.70%
Trust Securities of the holders to whom such 6.70% Debentures are distributed, if the Company has given written direction to the Property Trustee of Trust I to dissolve Trust I, which direction, subject to the foregoing restrictions, is optional and
wholly within the discretion of the Company; 

  

	 	(3)	 the redemption of all 6.70% Capital Securities in connection with the redemption of all the 6.70% Debentures or
the stated maturity of such 6.70% Debentures; or 

  

	 	(4)	 the entry of an order for the dissolution of Trust I by a court of competent jurisdiction.

 If Trust I dissolves as described in clauses (1), (2) or (4) in the preceding paragraph, after Trust I pays all
amounts owed to creditors, holders of the 6.70% Capital Securities and holders of its 6.70% Common Securities will be entitled to receive 6.70% Debentures having a principal amount equal to the liquidation amount of such 6.70% Trust Securities of
the holders. 
 If Trust I cannot pay the full amount due on the 6.70% Trust Securities because it has insufficient assets for payment, then
the amounts Trust I owes on the 6.70% Capital Securities will be proportionately allocated. The holders of 6.70% Common Securities are entitled to receive distributions upon any liquidation on a pro rata basis with the holders of the 6.70% Capital
Securities, except that if an event of default under the 6.70% Debentures has occurred and is continuing as a result of any failure by the Company to make any principal or interest payments in respect of 6.70% Debentures when due, Trust I will pay
the total amounts due on the 6.70% Capital Securities before making any distribution on the 6.70% Common Securities. 

  
 -16- 

 After the liquidation date is fixed for any distribution of 6.70% Debentures, upon
dissolution Trust I: 
  

	•	 	 the 6.70% Trust Securities will no longer be deemed to be outstanding; 

 

	•	 	 DTC or its nominee, as the registered holder of the 6.70% Capital Securities, will receive a registered global
certificate or certificates representing the 6.70% Debentures to be delivered upon distribution with respect to such 6.70% Capital Securities held by DTC or its nominee; and 

 

	•	 	 any certificates representing such 6.70% Capital Securities will be deemed to represent the 6.70% Debentures
having an aggregate principal amount equal to the liquidation amount of the 6.70% Capital Securities, and bearing accrued but unpaid interest equal to accumulated but unpaid distributions on 6.70% Capital Securities, until the holder of those
certificates presents them to the security registrar for 6.70% Capital Securities for transfer or reissuance. 

Liquidation of Trust II; Distributions with Respect to the 6.125% Capital Securities 

The amount payable on the 6.125% Capital Securities in the event of any liquidation of Trust II is the liquidation amount of $25 per 6.125%
Capital Security plus accumulated but unpaid distributions, subject to certain exceptions, which may be paid in the form of a distribution of 6.125% Debentures. 

The Company can at any time dissolve Trust II. If Trust II dissolves and it has paid the liabilities owed to its creditors, the 6.125%
Debentures will be distributed to the holders of the 6.125% Trust Securities. 
 Any distributions of the 6.125% Debentures may require
approval of the Federal Reserve. 
 The 6.125% Trust Agreement states that Trust II will dissolve automatically on December 1, 2035 or
earlier upon: 
  

	 	(1)	 the bankruptcy, dissolution or liquidation of the Company; 

 

	 	(2)	 the distribution of 6.125% Debentures having a principal amount equal to the liquidation amount of the 6.125%
Trust Securities of the holders to whom such 6.125% Debentures are distributed, if the Company has given written direction to the Property Trustee of Trust II to dissolve Trust II, which direction, subject to the foregoing restrictions, is optional
and wholly within the discretion of the Company; 

  

	 	(3)	 the redemption of all 6.125% Capital Securities in connection with the redemption of all the 6.125% Debentures
or the stated maturity of such 6.125% Debentures; or 

  

	 	(4)	 the entry of an order for the dissolution of Trust II by a court of competent jurisdiction.

  
 -17- 

 If Trust II dissolves as described in clauses (1), (2) or (4) in the preceding
paragraph, after Trust II pays all amounts owed to creditors, holders of the 6.125% Capital Securities and holders of its 6.125% Common Securities will be entitled to receive 6.125% Debentures having a principal amount equal to the liquidation
amount of such 6.125% Trust Securities of the holders. 
 If Trust II cannot pay the full amount due on the 6.125% Trust Securities because
it has insufficient assets for payment, then the amounts Trust II owes on the 6.125% Capital Securities will be proportionately allocated. The holders of 6.125% Common Securities are entitled to receive distributions upon any liquidation on a pro
rata basis with the holders of the 6.125% Capital Securities, except that if an event of default under the 6.125% Debentures has occurred and is continuing as a result of any failure by the Company to make any principal or interest payments in
respect of 6.125% Debentures when due, Trust II will pay the total amounts due on the 6.125% Capital Securities before making any distribution on the 6.125% Common Securities. 

After the liquidation date is fixed for any distribution of 6.125% Debentures, upon dissolution Trust II: 

 

	•	 	 the 6.125% Trust Securities will no longer be deemed to be outstanding; 

 

	•	 	 DTC or its nominee, as the registered holder of the 6.125% Capital Securities, will receive a registered global
certificate or certificates representing the 6.125% Debentures to be delivered upon distribution with respect to such 6.125% Capital Securities held by DTC or its nominee; and 

 

	•	 	 any certificates representing such 6.125% Capital Securities will be deemed to represent the 6.125% Debentures
having an aggregate principal amount equal to the liquidation amount of the 6.125% Capital Securities, and bearing accrued but unpaid interest equal to accumulated but unpaid distributions on 6.125% Capital Securities, until the holder of those
certificates presents them to the security registrar for 6.125% Capital Securities for transfer or reissuance. 

 Exchanges 

Exchange with Respect to 6.70% Capital Securities 

If at any time the Company or any of its affiliates (a “Depositor Affiliated Owner”) is the owner of 6.70% Capital Securities, such
Depositor Affiliated Owner will have the right to deliver to the Property Trustee of Trust I all or such portion of its 6.70% Capital Securities as it elects and receive, in exchange therefore, a like amount of 6.70% Debentures. After the exchange,
such 6.70% Capital Securities will be cancelled and will no longer be deemed to be outstanding and all rights of the Depositor Affiliated Owner with respect to such 6.70% Capital Securities will cease. 

  
 -18- 

 In the case of an exchange described in the previous paragraph, Trust I will, on the date of
such exchange, exchange 6.70% Debentures having a principal amount equal to a proportional amount of the aggregate liquidation amount of its outstanding 6.70% Common Securities, based on the ratio of the aggregate liquidation amount of its 6.70%
Capital Securities exchanged divided by the aggregate liquidation amount of its 6.70% Capital Securities outstanding immediately prior to such exchange, for such proportional amount of its 6.70% Common Securities held by the Company (which
contemporaneously will be cancelled and no longer be deemed to be outstanding). 
 Exchange with Respect to 6.125% Capital Securities

 If at any time a Depositor Affiliated Owner is the owner of 6.125% Capital Securities, such Depositor Affiliated Owner will have the
right to deliver to the Property Trustee of Trust II all or such portion of its 6.125% Capital Securities as it elects and receive, in exchange therefore, a like amount of 6.125% Debentures. After the exchange, such 6.125% Capital Securities will be
cancelled and will no longer be deemed to be outstanding and all rights of the Depositor Affiliated Owner with respect to such 6.125% Capital Securities will cease. 

In the case of an exchange described in the previous paragraph, Trust II will, on the date of such exchange, exchange 6.125% Debentures having
a principal amount equal to a proportional amount of the aggregate liquidation amount of its outstanding 6.125% Common Securities, based on the ratio of the aggregate liquidation amount of its 6.125% Capital Securities exchanged divided by the
aggregate liquidation amount of its 6.125% Capital Securities outstanding immediately prior to such exchange, for such proportional amount of its 6.125% Common Securities held by the Company (which contemporaneously will be cancelled and no longer
be deemed to be outstanding). 
 Events of Default; Notice 

Any one of the following events constitutes an event of default of each Trust, regardless of the reason for such event of default and whether
it will be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body: 

 

	•	 	 the occurrence of an event of default under the applicable Indentures with respect to the Debentures held by such
Trust; or 

  

	•	 	 the default by the Property Trustee of such Trust in the payment of any distribution on the Capital Securities or
Common Securities of such Trust when such distribution becomes due and payable, and continuation of such default for a period of 30 days; or 

  

	•	 	 the default by the Property Trustee of such Trust in the payment of any redemption price of Capital Securities or
Common Securities of such Trust when such redemption price becomes due and payable; or 

  

	•	 	 the failure to perform or the breach, in any material respect, of any other covenant or warranty of the trustees
of such Trust in the Trust Agreement governing such Trust for 90 days after the defaulting trustee or trustees have received written notice of the failure to perform or breach of warranty in the manner specified in such Trust Agreement; or

  
 -19- 

	•	 	 the occurrence of certain events of bankruptcy or insolvency with respect to the Property Trustee of such Trust
and the Company’s failure to appoint a successor property trustee within 90 days. 

 Within ten days after any event
of default of a Trust actually known to the Property Trustee of such Trust occurs, the Property Trustee of such Trust will transmit notice of such event of default to the holders of the Capital Securities or Common Securities of such Trust and to
the Administrative Trustees of such Trust, unless such event of default shall have been cured or waived. The Company, as depositor, and the Administrative Trustees are required to file annually with the Property Trustee a certificate as to whether
or not the Company or the Administrative Trustees are in compliance with all the conditions and covenants applicable to the Company and the Administrative Trustees under the applicable Trust Agreement. 

The existence of an event of default under each Trust Agreement, in and of itself, with respect to the applicable Debentures does not entitle
the holders of the applicable Capital Securities to accelerate the maturity of such Debentures. 
 Removal of Trustees 

Unless an event of default under the applicable Indentures has occurred and is continuing, the Property Trustee and the Delaware Trustee of
each Trust may be removed at any time by the holder of the Common Securities of such Trust. The Property Trustee and the Delaware Trustee of each Trust may be removed by the holders of a majority in liquidation amount of the outstanding Capital
Securities of such Trust for cause or if an event of default under the applicable Indentures has occurred and is continuing. In no event will the holders of the Capital Securities of such Trust have the right to vote to appoint, remove or replace
the Administrative Trustees of such Trust, which voting rights are vested exclusively in the Company, as the holder of the Common Securities of such Trust. No resignation or removal of a trustee and no appointment of a successor trustee will be
effective until the acceptance of appointment by the successor trustee in accordance with the provisions of the Trust Agreement governing such Trust. 
 Co-Trustees and Separate Property Trustee 
 Unless an event of default under the applicable Debentures
has occurred and is continuing, at any time or from time to time, for the purpose of meeting the legal requirements of the Trust Indenture Act or of any jurisdiction in which any part of the trust property may at the time be located, the Company, as
the holder of the Common Securities of each Trust, and the Administrative Trustees of each Trust have the power to appoint one or more persons either to act as a co-trustee of such Trust, jointly with the
Property Trustee of such Trust, of all or any part of such trust property, or to act as separate trustee of any such property, in either case with such powers as may be provided in the instrument of appointment, and to vest in such person or persons
in such capacity any property, title, right or power deemed necessary or desirable, subject to the provisions of the Trust Agreement governing such Trust. If an event of default under the applicable Indentures has occurred and is continuing, the
Property Trustee of such Trust alone shall have power to make such appointment. 

  
 -20- 

 Mergers or Consolidation of Trustees 

Any person into which the Property Trustee or the Delaware Trustee of each Trust, if not a natural person, may be merged or converted or with
which it may be consolidated, or any person resulting from any merger, conversion or consolidation to which such trustee is a party, or any person succeeding to all or substantially all the corporate trust business of such trustee, will be the
successor of such trustee under the Trust Agreement governing such Trust, provided such person is otherwise qualified and eligible. 
 Mergers,
Consolidations, Amalgamations or Replacements of the Trusts 
 Each Trust may not merge with or into, consolidate, amalgamate, or be
replaced by, or convey, transfer or lease its properties and assets substantially as an entirety to the Company or any other person, except as described below or as otherwise described in the Trust Agreement governing such Trust. Each Trust may, at
the Company’s request, with the consent of the Administrative Trustees of such Trust but without the consent of the holders of the Capital Securities of such Trust, the Property Trustee or the Delaware Trustee of such Trust, merge with or into,
consolidate, amalgamate, or be replaced by, or convey, transfer or lease its properties and assets substantially as an entirety to, a trust organized as such under the laws of any state, the District of Columbia or the Commonwealth of Puerto Rico
if: 
  

	•	 	 such successor entity either: 

 

	 	•	 	 expressly assumes all of the obligations of such Trust with respect to the Capital Securities of such Trust, or

  

	 	•	 	 substitutes for such Capital Securities other securities having substantially the same terms as such Capital
Securities, or the “Successor Securities”, so long as the Successor Securities rank the same as the substituted Capital Securities in priority with respect to distributions and payments upon liquidation, redemption and otherwise;

  

	•	 	 the Company expressly appoints a trustee of such successor entity possessing the same powers and duties as the
Property Trustee of such Trust as the holder of the applicable Debentures; 

  

	•	 	 such merger, consolidation, amalgamation, replacement, conveyance, transfer or lease does not cause the Capital
Securities of such Trust, including any Successor Securities, to be downgraded by any nationally recognized statistical rating organization; 

  

	•	 	 such merger, consolidation, amalgamation, replacement, conveyance, transfer or lease does not adversely affect
the rights, preferences and privileges of the holders of the Capital Securities of such Trust, including any Successor Securities, in any material respect; 

  
 -21- 

	•	 	 such successor entity has a purpose substantially identical to that of such Trust; 

 

	•	 	 prior to such merger, consolidation, amalgamation, replacement, conveyance, transfer or lease, the Company has
received an opinion from independent counsel to such Trust experienced in such matters to the effect that: 

  

	 	•	 	 such merger, consolidation, amalgamation, replacement, conveyance, transfer or lease does not adversely affect
the rights, preferences and privileges of the holders of the Capital Securities of such Trust, including any Successor Securities, in any material respect, and 

 

	 	•	 	 following such merger, consolidation, amalgamation, replacement, conveyance, transfer or lease, neither such
Trust nor such successor entity will be required to register as an investment company under the Investment Company Act; and 

  

	•	 	 the Company or any permitted successor or assignee owns all of the Common Securities of such successor entity and
guarantees the obligations of such successor entity under the Successor Securities at least to the extent provided by the applicable Guarantee. 

Notwithstanding the foregoing, each Trust may not, except with the consent of holders of 100% in liquidation amount of the Capital Securities
of such Trust, consolidate, amalgamate, merge with or into, or be replaced by or convey, transfer or lease its properties and assets substantially as an entirety to any other entity or permit any other entity to consolidate, amalgamate, merge with
or into, or replace it if such consolidation, amalgamation, merger, replacement, conveyance, transfer or lease would cause such Trust or the successor entity to be classified as other than a grantor trust for United States federal or Puerto Rico
income tax purposes. 
 Voting Rights; Amendment of the Trust Agreement 

Except as otherwise provided below and as otherwise required by law and each Trust Agreement, the holders of each class of Capital Securities
have no voting rights. 
 The Company and the Administrative Trustees of each Trust may amend the applicable Trust Agreement without the
consent of the holders of the Capital Securities of such Trust, unless such amendment will materially and adversely affect the interests of any holder of the Capital Securities of such Trust, to: 

 

	•	 	 cure any ambiguity, correct or supplement any provisions in the applicable Trust Agreement that may be
inconsistent with any other provision, or to make any other provisions with respect to matters or questions arising under such Trust Agreement, which may not be inconsistent with the other provisions of such Trust Agreement; or

  

	•	 	 modify, eliminate or add to any provisions of the applicable Trust Agreement to such extent as will be necessary
to ensure that such Trust will be classified for United States federal or Puerto Rico income tax purposes as a grantor trust at all times that any applicable Capital Securities and Common Securities are outstanding or to ensure that such Trust will
not be required to register as an “investment company” under the Investment Company Act. 

  
 -22- 

 The Company, the Administrative Trustees of each Trust and the Property Trustee of each
Trust may generally amend each applicable Trust Agreement with: 
  

	•	 	 the consent of holders representing not less than a majority, based upon liquidation amounts, of the outstanding
Capital Securities of such Trust; and 

  

	•	 	 receipt by the trustees of an opinion of counsel to the effect that such amendment or the exercise of any power
granted to the trustees in accordance with such amendment will not affect such Trust’s status as a grantor trust for United States federal or Puerto Rico income tax purposes or such Trust’s exemption from status as an “investment
company” under the Investment Company Act. 

 However, without the consent of each holder of Trust Securities of such
Trust, the Trust Agreement governing such Trust may not be amended to: 
  

	•	 	 change the amount or timing of any distribution required to be made in respect of the Trust Securities of such
Trust as of a specified date; or 

  

	•	 	 restrict the right of a holder of Trust Securities of such Trust to institute a suit for the enforcement of any
such payment on or after such date. 

 So long as the Property Trustee of each Trust holds any applicable Debentures, the
trustees of such Trust may not, without obtaining the prior approval of the holders of a majority in aggregate liquidation amount of all outstanding Capital Securities of such Trust: 

 

	•	 	 direct the time, method and place of conducting any proceeding for any remedy available to the junior
subordinated trustee, or executing any trust or power conferred on the junior subordinated trustee with respect to such applicable Debentures; 

  

	•	 	 waive any past default that is waivable under the applicable Indentures; 

 

	•	 	 exercise any right to rescind or annul a declaration that the principal of all the applicable Debentures is due
and payable; or 

  

	•	 	 consent to any amendment, modification or termination of the applicable Indentures or such applicable Debentures,
where such consent will be required. 

 If a consent under the applicable Indentures would require the consent of each
holder of Debentures affected thereby, no such consent may be given by the Property Trustee of any Trust without the prior consent of each holder of the Capital Securities of such Trust. The Property Trustee may not revoke any action previously
authorized or approved by a vote of the holders of the applicable Capital Securities except by subsequent vote of the holders of such Capital Securities. The Property Trustee will notify each holder of Capital Securities of any notice of default
with respect to the applicable Debentures. In addition to obtaining the foregoing approvals of the holders of the applicable Capital Securities, before taking any of the foregoing 

  
 -23- 

 
actions, the trustees will obtain an opinion of counsel experienced in such matters to the effect that such action would not cause such Trust to be classified as other than a grantor trust for
United States federal or Puerto Rico income tax purposes. 
 Any required approval of holders of 6.70% Capital Securities may be given at a
meeting of holders of 6.70% Capital Securities convened for such purpose or pursuant to written consent. The Property Trustee of Trust I will cause a notice of any meeting at which holders of 6.70% Capital Securities are entitled to vote, or of any
matter upon which action by written consent of such holders is to be taken, to be given to each holder of record of 6.70% Capital Securities in the manner set forth in the 6.70% Trust Agreements. 

No vote or consent of the holders of 6.70% Capital Securities will be required for Trust I to redeem and cancel the 6.70% Capital Securities
in accordance with the 6.70% Trust Agreement. 
 Notwithstanding that holders of 6.70% Capital Securities are entitled to vote or consent
under any of the circumstances described above, any of the 6.70% Capital Securities that are owned by the Company or its affiliates or the trustees or any of their affiliates, will, for purposes of such vote or consent, be treated as if they were
not outstanding. 
 Any required approval of holders of 6.125% Capital Securities may be given at a meeting of holders of 6.125% Capital
Securities convened for such purpose or pursuant to written consent. The Property Trustee of Trust II will cause a notice of any meeting at which holders of 6.125% Capital Securities are entitled to vote, or of any matter upon which action by
written consent of such holders is to be taken, to be given to each holder of record of 6.125% Capital Securities in the manner set forth in the 6.125% Trust Agreements. 

No vote or consent of the holders of 6.125% Capital Securities will be required for Trust I to redeem and cancel the 6.125% Capital Securities
in accordance with the 6.125% Trust Agreement. 
 Notwithstanding that holders of 6.125% Capital Securities are entitled to vote or consent
under any of the circumstances described above, any of the 6.125% Capital Securities that are owned by the Company or its affiliates or the trustees or any of their affiliates, will, for purposes of such vote or consent, be treated as if they were
not outstanding. 
 Payment and Paying Agent 

Payments on each class of Capital Securities are made to DTC, which credits the applicable accounts at DTC on the applicable distribution
dates. If any Capital Securities of either class are not held by DTC, such payments are made by check mailed to the address of the holder as such address appears on the register. 

The paying agent for each Trust is Banco Popular de Puerto Rico. The paying agent is permitted to resign as paying agent of each Trust upon 30
days’ written notice to the Administrative Trustees of such Trust and to the Property Trustee of such Trust. In the event that Banco Popular de Puerto Rico is no longer be the paying agent, the Property Trustee will appoint a successor to act
as paying agent, which will be a bank or trust company acceptable to the Administrative Trustees and to the Company. 

  
 -24- 

 Registrar and Transfer Agent 

Banco Popular de Puerto Rico Trust Division acts as registrar and transfer agent for each class of Capital Securities. 

Registrations of transfers of class of Capital Securities is effected without charge by or on behalf of the Trust which issued such Capital
Securities, but upon payment of any tax or other governmental charges that may be imposed in connection with any transfer or exchange. Each Trust is not required to register or cause to be registered the transfer of the Capital Securities of such
Trust after the Capital Securities of such Trust have been called for redemption. 
 Information Concerning the Property Trustee 

Other than during the occurrence and continuance of an event of default under the applicable Trust Agreement, the Property Trustee of each
Trust undertakes to perform only the duties that are specifically set forth in the Trust Agreement governing such Trust. After an event of default under the Trust Agreement governing such Trust, the Property Trustee of such Trust must exercise the
same degree of care and skill as a prudent individual would exercise or use in the conduct of his or her own affairs. Subject to this provision, the Property Trustee of each Trust is under no obligation to exercise any of the powers vested in it by
the Trust Agreement governing such Trust at the request of any holder of the Capital Securities of such Trust unless it is offered indemnity satisfactory to it by such holder against the costs, expenses and liabilities that might be incurred. If no
event of default under the applicable Trust Agreement governing each Trust has occurred and is continuing and the Property Trustee of such Trust is required to decide between alternative courses of action, construe ambiguous provisions the Trust
Agreement governing such Trust or is unsure of the application of any provision of the Trust Agreement governing such Trust, and the matter is not one upon which holders of the Capital Securities of such Trust are entitled under the Trust Agreement
governing such Trust to vote, then the Property Trustee of such Trust will take any action that the Company directs. If the Company does not provide direction, the Property Trustee of such Trust may take any action that it deems advisable and in the
best interests of the holders of the Trust Securities of such Trust and will have no liability except for its own bad faith, negligence or willful misconduct. 

The Company and its affiliates maintain certain accounts and other banking relationships with the Property Trustee of each Trust and its
affiliates in the ordinary course of business. 
 Trust Expenses 

Pursuant to each Trust Agreement, the Company, as depositor, has agreed to pay: 

 

	•	 	 all debts and other obligations of each Trust (other than with respect to the 6.70% Capital Securities, with
respect to Trust I, and other than with respect to the 6.125% Capital Securities, with respect to Trust II); 

  
 -25- 

	•	 	 all costs and expenses of each Trust, including costs and expenses relating to the organization of each Trust,
the fees and expenses of the trustees of each Trust and the cost and expenses relating to the operation of each Trust; and 

  

	•	 	 any and all taxes and costs and expenses with respect thereto, other than withholding taxes, to which each Trust
might become subject. 

 Governing Law 

Each Trust Agreement is governed by and construed in accordance with the laws of Delaware. 

Miscellaneous 
 The Administrative
Trustees of each Trust are authorized and directed to conduct the affairs of and to operate each Trust in such a way that it will not be required to register as an “investment company” under the Investment Company Act or characterized as
other than a grantor trust for United States federal or Puerto Rico income tax purposes. The Administrative Trustees of each Trust are authorized and directed to conduct their affairs so that the applicable Debentures will be treated as indebtedness
of the Company for Puerto Rico income tax purposes. 
 In this regard, the Company and the Administrative Trustees of each Trust are
authorized to take any action, not inconsistent with applicable law, the certificate of trust of each respective Trust or the Trust Agreement governing each respective Trust, that the Company and the Administrative Trustees of such Trust determine
to be necessary or desirable to achieve such end, as long as such action does not materially and adversely affect the interests of the holders of the Capital Securities of such Trust. 

Holders of each class of Capital Securities have no preemptive or similar rights. 

Neither Trust I nor Trust II may borrow money or issue debt or mortgage or pledge any of its assets. 

DESCRIPTION OF THE GUARANTEES 
 The
following description of the terms of the guarantees (the “Guarantees”) is a summary and does not purport to be complete. It is subject to and qualified in its entirety by reference to (i) the Guarantee Agreement for Trust I, dated as
of August 31, 2009; (ii) the Guarantee Agreement for Trust II dated as of August 31, 2009 (collectively, the “Guarantee Agreements”); and (iii) the Prospectus Supplements, each of which is incorporated by reference as an
exhibit to the Annual Report on Form 10-K of which this exhibit is a part. We encourage you to read the Guarantee Agreements and Prospectus Supplements for more information. 

General 
 The Company’s obligation to
make a Guarantee Payment (as defined below) to each Trust may be satisfied by direct payment of the required amounts to the holders of the applicable Capital Securities or by causing the applicable Trust to pay such amounts to such holders. 

  
 -26- 

 Each Guarantee does not apply to any payment of distributions by the applicable Trust except
to the extent such Trust has funds available for such payments. If the Company does not make interest payments on the Debentures held by such Trust, such Trust will not pay distributions on the applicable Capital Securities and will not have funds
available for such payments. See “— Status of the Guarantees”. Because the Company is a holding company, the Company’s rights to participate in the assets of any of the Company’s subsidiaries upon the subsidiary’s
liquidation or reorganization is subject to the prior claims of the subsidiary’s creditors except to the extent that the Company may itself be a creditor with recognized claims against the subsidiary. Except as otherwise described in this
exhibit, the Guarantees do not limit the incurrence or issuance by the Company of other secured or unsecured debt. 
 Each Guarantee, when
taken together with the Company’s obligations under the Debentures, the applicable Indentures and the applicable Trust Agreement, including the Company’s obligations to pay costs, expenses, debts and liabilities of the applicable Trust,
other than those relating to Capital Securities or Common Securities, provides a full and unconditional guarantee on a subordinated basis of payments due on the Capital Securities issued by the Trust to which that Guarantee relates. 

Guarantee Agreement of Trust I 

Under the Guarantee Agreement for Trust I, the Company irrevocably and unconditionally agrees to pay in full to the holders of the 6.70% Trust
Securities, except to the extent paid by Trust I, as and when due, regardless of any defense, right of set-off or counterclaim which Trust I may have or assert, the following payments, which are referred to as
“Guarantee Payments”, without duplication: 
  

	•	 	 any accrued and unpaid distributions that are required to be paid on the 6.70% Capital Securities, to the extent
Trust I has funds available for distributions; 

  

	•	 	 the redemption price, plus all accrued and unpaid distributions relating to any 6.70% Capital Securities called
for redemption by Trust I, to the extent Trust I has funds available for redemptions; and 

  

	•	 	 upon a voluntary or involuntary dissolution, winding-up or termination of
Trust I, other than in connection with the distribution of 6.70% Debentures to the holders of 6.70% Capital Securities or the redemption of all of its 6.70% Capital Securities, the lesser of: 

 

	 	•	 	 the aggregate of the liquidation amount and all accrued and unpaid distributions on such 6.70% Capital Securities
to the date of payment to the extent Trust I has funds available; and 

  

	 	•	 	 the amount of assets of Trust I remaining for distribution to holders of 6.70% Capital Securities in liquidation
of Trust I. 

  
 -27- 

 Guarantee Agreement of Trust II 

Under the Guarantee Agreement for Trust II, the Company irrevocably and unconditionally agrees to pay in full to the holders of the 6.125%
Trust Securities, except to the extent paid by Trust II, as and when due, regardless of any defense, right of set-off or counterclaim which Trust II may have or assert, the Guarantee Payments without
duplication: 
  

	•	 	 any accrued and unpaid distributions that are required to be paid on the 6.125% Capital Securities, to the extent
Trust II has funds available for distributions; 

  

	•	 	 the redemption price, plus all accrued and unpaid distributions relating to any 6.125% Capital Securities called
for redemption by Trust II, to the extent Trust II has funds available for redemptions; and 

  

	•	 	 upon a voluntary or involuntary dissolution, winding-up or termination of
Trust II, other than in connection with the distribution of 6.125% Debentures to the holders of 6.125% Capital Securities or the redemption of all of its 6.125% Capital Securities, the lesser of: 

 

	 	•	 	 the aggregate of the liquidation amount and all accrued and unpaid distributions on such 6.125% Capital
Securities to the date of payment to the extent Trust II has funds available; and 

  

	 	•	 	 the amount of assets of Trust II remaining for distribution to holders of 6.125% Capital Securities in
liquidation of Trust II. 

 Status of the Guarantees 

Each Guarantee is unsecured and ranks: 
  

	•	 	 subordinate and junior in right of payment to all the Company’s other liabilities in the same manner as the
applicable Debentures as set forth in the applicable Indentures; and 

  

	•	 	 equally with all other Guarantees that the Company issues. 

Each Guarantee constitutes a guarantee of payment and not of collection, which means that the guaranteed party may sue the guarantor to
enforce its rights under the respective Guarantee without suing any other person or entity. Each Guarantee is held by the respective guarantee trustee for the benefit of the holders of the applicable Trust Securities issued by the Trust to which
such Guarantee relates. Each Guarantee will be discharged only by payment of the Guarantee Payments in full to the extent not paid by the applicable Trust or upon the distribution of applicable Debentures. 

Amendments and Assignment 
 Each Guarantee
may be amended only with the prior approval of the holders of not less than a majority in aggregate liquidation amount of the outstanding applicable Capital Securities. No vote is required, however, for any changes that do not adversely affect the
rights of holders of the applicable Capital Securities in any material respect. All guarantees and 

  
 -28- 

 
agreements contained in each Guarantee bind the Company’s successors, assignees, receivers, trustees and representatives and will be for the benefit of the holders of the applicable Capital
Securities then outstanding. 
 Termination of the Guarantees 

Each Guarantee will terminate (1) upon full payment of the redemption price of all applicable Capital Securities, (2) upon
distribution of the applicable Debentures to the holders of the applicable Trust Securities or (3) upon full payment of the amounts payable in accordance with the applicable Trust Agreement upon liquidation of the applicable Trust. Each
Guarantee will continue to be effective or will be reinstated, as the case may be, if at any time any holder of applicable Capital Securities must restore payment of any sums paid under such Capital Securities or such Guarantee. 

Events of Default 
 Under each Guarantee,
an event of default will occur if the Company fails to perform any payment obligation or other obligation under such Guarantee. 
 With
respect to each Guarantee, the holders of a majority in liquidation amount of the applicable Capital Securities of the applicable Trust have the right to direct the time, method and place of conducting any proceeding for any remedy available to the
guarantee trustee in respect of the applicable Guarantee or to direct the exercise of any trust or power conferred upon the guarantee trustee under such Guarantee. Holders of each class of Capital Securities may institute a legal proceeding directly
against the Company to enforce the applicable guarantee trustee’s rights and the Company’s obligations under the applicable Guarantee, without first instituting a legal proceeding against the applicable Trust, the guarantee trustee or any
other person or entity. 
 As guarantor under both Guarantees, the Company is required to file annually with the guarantee a trustee
certificate pursuant to each Guarantee, as to whether or not the Company is in compliance with all applicable conditions and covenants under the Guarantees. 

Information Concerning the Guarantee Trustee 

With respect to each Guarantee, prior to the occurrence of an event of default relating to such Guarantee, the guarantee trustee for that
Guarantee is required to perform only the duties that are specifically set forth in such Guarantee. Following the occurrence of an event of default, the guarantee trustee for such Guarantee will exercise the same degree of care as a prudent
individual would exercise in the conduct of his or her own affairs. Provided that the foregoing requirements have been met, the guarantee trustee for such Guarantee is under no obligation to exercise any of the powers vested in it by such Guarantee
at the request of any holder of applicable Capital Securities unless offered indemnity satisfactory to it against the costs, expenses and liabilities which might be incurred thereby. 

The Company and its affiliates maintain certain accounts and other banking relationships with the guarantee trustee for each Guarantee and its
affiliates in the ordinary course of business. 

  
 -29- 

 Governing Law 

Each Guarantee is governed by and construed in accordance with the internal laws of the Commonwealth of Puerto Rico. 

DESCRIPTION OF THE DEBENTURES 
 The
following is a brief description of the terms of the Debentures held by the Trusts. This summary does not purport to be complete and is subject to and qualified in its entirety by reference to the Junior Subordinated Indenture (the “Base
Indenture”), dated as of October 31, 2003, as supplemented by (i) the First Supplemental Indenture (the “First Supplemental Indenture”), dated as of October 31, 2003, as supplemented by the Supplement to First
Supplemental Indenture, dated as of August 31, 2009; (ii) the Second Supplemental Indenture (the “Second Supplemental Indenture”, and together with the Base Indenture and the First Supplemental Indenture, the “Indentures”),
as supplemented by the Supplement to Second Supplemental Indenture, dated as of August 31, 2009; and (iii) the Prospectus Supplements, each of which is incorporated by reference to the Annual Report on Form 10-K of which this exhibit is a
part. We encourage you to read the Indentures and the Prospectus Supplements for more information. 
 General 

The Debentures are unsecured, junior subordinated obligations of the Company. The Debentures are limited in aggregate principal amount to
$309,279,000, with respect to the 6.70% Debentures, and $134,021,000, with respect to the 6.125% Debentures. The aggregate principal amount of each class of Debentures is limited to the sum of: 

 

	•	 	 the aggregate stated liquidation amount of the applicable Capital Securities; and 

 

	•	 	 the amount of capital contributed by the Company in exchange for the applicable Common Securities.

 Each class of Debentures ranks junior to the Company’s senior debt, including the subordinated debt of the
Company. For information on the subordination of the Debentures, see “Description of the Debentures — Subordination”. 
 The
entire principal amount of the Debentures will become due and payable, with any accrued and unpaid interest thereon, on November 1, 2033, with respect to the 6.70% Debentures, and on December 1, 2034, with respect to the 6.125% Debentures.
There is no sinking fund for either class of Debentures. 
 The Company does not pay any additional amounts on either class of Debentures to
compensate any holder or beneficial owner for any Puerto Rico tax withheld from payments of principal or interest on either class of Debentures. 

The 6.70% Debentures are registered in the name of Trust I. The 6.125% Debentures are registered in the name of Trust II. The Property Trustee
holds the Debentures in trust for the benefit of the holders of the applicable Trust Securities. 

  
 -30- 

 Interest 

Interest on the 6.70% Debentures 

The 6.70% Debentures bear interest at an annual rate of 6.70%, from and including their date of issuance until the principal becomes due and
payable. Interest is payable monthly in arrears on the first day of each month, beginning December 1, 2003. Interest payments not paid when due accrue, to the extent permitted by applicable law, additional interest, compounded monthly, at the
annual rate of 6.70%, computed on the basis of a 360-day year of twelve 30- day months and the actual number of days elapsed in a partial month in such period. 

Interest on the 6.125% Debentures 

The 6.125% Debentures bear interest at an annual rate of 6. 125%, from and including their date of issuance until the principal becomes due and
payable. Interest is payable monthly in arrears on the first day of each month, beginning January 1, 2005. Interest payments not paid when due accrue, to the extent permitted by applicable law, additional interest, compounded monthly, at the
annual rate of 6.125%, computed on the basis of a 360-day year of twelve 30- day months and the actual number of days elapsed in a partial month in such period. 

Interest Payments Generally 

The Company pays interest on each class of Debentures to the holders of record on the applicable record date. The record date for interest
payments on each class of Debentures is the fifteenth day of the month preceding the payment date, whether or not a business day. 
 With
respect to each class of Debentures, the amount of interest payable for any period less than a full interest period is computed on the basis of a 360-day year of twelve
30-day months and the actual days elapsed in a partial month in that period. The amount of interest payable for any full interest period is computed by dividing the annual rate by twelve. 

If any date on which interest is payable on either class of Debentures is not a business day, then payment of the interest payable on that
date will be made on the next succeeding day that is a business day, without any interest or other payment in respect of the delay, with the same force and effect as if made on the date that payment was originally payable. 

The amount of additional interest payable for any full interest period is computed by dividing the annual rate by twelve. The term
“interest” as used in this description includes monthly interest payments, interest on monthly interest payments not paid when due, compounded interest and additional sums, as applicable. The interest payment provisions for each class of
Debentures correspond to the distribution provisions for each class of applicable Capital Securities. See “Description of the Capital Securities — Payment of Distributions” in this description. 

  
 -31- 

 Option to Extend Interest Payment Period 

With respect to each class of Debentures, as long as the Company is not in default under a class of Debentures, the Company has the right, with
respect to such Debentures, at any time and from time to time, to defer payments of interest during an Extension Period, of up to 60 consecutive months, but not beyond the maturity date of the Debentures. During an Extension Period, interest
continues to accrue and holders of such Debentures, or holders of applicable Capital Securities using the accrual method of accounting to determine their taxable income are required to accrue interest income for Puerto Rico income tax purposes. 

On the interest payment date following the last day of any Extension Period, the Company pays all interest then accrued and unpaid, together
with additional interest on the accrued and unpaid interest to the extent as permitted by law, compounded monthly, at the annual rate of 6.70%, with respect to the 6.70% Debentures, and 6.125%, with respect to the 6.125% Debentures, plus any
additional sums, as described below. 
 Before termination of an Extension Period for either class of Debentures, the Company may further
extend the payments of interest. However, no Extension Period, including all previous and further extensions, may exceed 60 consecutive months or extend beyond the maturity of such Debentures. With respect to each class of Debentures, if any
applicable Debentures are called for redemption before the end of an Extension Period relating to such Debentures, such Extension Period will end on that redemption date or an earlier date as determined by the Company. After the termination of an
Extension Period for either class of Debentures and the payment of all amounts due, the Company may begin a new Extension Period, as described above. There is no limitation on the number of times the Company may elect to begin an Extension Period
for either class of Debentures. Interest is not payable during an Extension Period of either class of Debentures, only at the end of the Extension Period for such class of Debentures. The Company may, however, prepay, on any interest payment date,
at any time all or any portion of the interest accrued during an Extension Period for such Debentures. 
 If the Property Trustee of the
applicable Trust is the sole holder of a class of Debentures, the Company will give the Property Trustee of such Trust and the Delaware Trustee of such Trust written notice of its election of an Extension Period , with respect to that class of
Debentures, at least one business day before the earlier of: 
  

	•	 	 the next succeeding date on which the distributions on the applicable Capital Securities are payable; and

  

	•	 	 the date the Property Trustee of such Trust is required to give notice to holders of the applicable Capital
Securities of the record or payment date for the applicable distribution. 

 The Property Trustee of such Trust will give
notice of the Company’s election of an Extension Period with respect to the applicable Debentures to the holders of the Capital Securities of such Trust. 

  
 -32- 

 With respect to either Trust, if the Property Trustee of such Trust is not the sole holder,
or is not itself the holder, of the applicable Debentures, the Company will give the holders of such Debentures and the indenture trustee written notice of its election of an Extension Period with respect to such Debentures at least one business day
before the next interest payment date for such Debentures. 
 Additional Sums 

With respect to either Trust, if, at any time while the Property Trustee is the holder of the applicable Debentures, such Trust is required to
pay any additional taxes (other than withholding taxes), duties or other governmental charges as a result of a Tax Event with respect to such Trust, the Company will pay as additional interest on such Debentures any additional amounts that are
required so that the distributions paid by such Trust will not be reduced as a result of any of those taxes, duties or governmental charges. 

Redemption 
 The Company has the right,
subject to any required prior approval of the Federal Reserve, to redeem each of the 6.70% Debentures or the 6.125% Debentures at a redemption price equal to 100% of the principal amount, plus accrued and unpaid interest to the date of redemption:

  

	•	 	 on or after November 1, 2008, with respect to the 6.70% Debentures, and on or after December 1, 2009,
with respect to the 6.125% Debentures, in each case in whole or in part, on one or more occasions, at any time; and 

  

	•	 	 in whole, but not in part, at any time within 90 days following the occurrence and continuation of a Tax Event,
an Investment Company Event or a Capital Treatment Event, each as described above. 

 For each class of Debentures, notice
of any redemption will be mailed at least 45 days but not more than 75 days before the redemption date. Unless the Company defaults in payment of the redemption price, on and after the redemption date, interest will cease to accrue on such
Debentures or portions thereof called for redemption. Each class of Debentures are not subject to any sinking fund and are not redeemable at the option of the holder. 

Restrictions on Certain Payments; Certain Covenants of the Company 

Any money that the Company pays to a paying agent for the purpose of making payments on either class of Debentures and that remains unclaimed
two years after the payments were due under such Debentures, will, at the Company’s request, be returned to the Company and after that time any holder of such Debentures can only look to the Company for the payments on such Debentures. 

With respect to each class of Debentures, the Company may not: 
  

	•	 	 declare or pay any dividends or distributions, or redeem, purchase, acquire, or make a liquidation payment on any
of its capital stock; or 

  
 -33- 

	•	 	 make any payment of principal of or interest or premium, if any, on or repay, repurchase or redeem debt
securities of the Company that rank equal or junior to such Debentures, 

 if at such time: 

 

	•	 	 there has occurred any event of default under such Debentures resulting from a failure to make principal or
interest payments on such Debentures or from certain events in bankruptcy, insolvency or reorganization of the Company; 

  

	•	 	 such Debentures are held by the applicable Trust and the Company is in default with respect to its payment of any
obligations under the applicable Guarantee; or 

  

	•	 	 the Company has given notice of its election of an Extension Period with respect to such Debentures and has not
rescinded this notice, and such Extension Period, or any extension thereof, is continuing. 

 The restrictions listed
above do not apply to: 
  

	•	 	 repurchases, redemptions or other acquisitions of shares of capital stock of the Company in connection with
(1) any employment contract, benefit plan or other similar arrangement with or for the benefit of any one or more employees, officers, directors, consultants or independent contractors, (2) a dividend reinvestment or stockholder stock
purchase plan, or (3) the issuance of capital stock of the Company, or securities convertible into or exercisable for such capital stock, as consideration in an acquisition transaction entered into prior to the Extension Period for such
Debentures; 

  

	•	 	 an exchange, redemption or conversion of any class or series of the Company’s capital stock, or any capital
stock of a subsidiary of the Company, for any other class or series of the Company’s capital stock, or of any class or series of the Company’s indebtedness for any class or series of the Company’s capital stock; 

 

	•	 	 the purchase of fractional interests in shares of the Company’s capital stock under the conversion or
exchange provisions of the capital stock or the security being converted or exchanged; 

  

	•	 	 any declaration of a dividend in connection with any stockholder’s rights plan, or the issuance of rights,
stock or other property under any stockholder’s rights plan, or the redemption or repurchase of rights pursuant to the plan; 

  

	•	 	 payments by the Company under the applicable Guarantee; or 

 

	•	 	 any dividend in the form of stock, warrants, options or other rights where the dividend stock or the stock
issuable upon exercise of such warrants, options or other rights is the same stock as that on which the dividend is being paid or ranks equal or junior to that stock. 

  
 -34- 

 In addition, as long as the applicable Trust holds the applicable class of Debentures, the
Company agrees, with respect to such class of Debentures: 
  

	•	 	 to continue to hold, directly or indirectly, 100% of the applicable Common Securities, provided that certain
successors that are permitted under the applicable Indentures may succeed to the Company’s ownership of such Common Securities; 

  

	•	 	 as holder of the applicable Common Securities, not to voluntarily dissolve, wind up or liquidate such Trust,
other than (a) as part of the distribution of the Debentures to the holders of the applicable Capital Securities in accordance with the terms of such Capital Securities or (b) as part of a merger, consolidation or amalgamation which is
permitted under the applicable Trust Agreement; and 

  

	•	 	 to use its reasonable efforts, consistent with the terms and provisions of the applicable Trust Agreement, to
cause such Trust to continue not to be taxable as a corporation for United States federal or Puerto Rico income tax purposes. 

Registration, Denomination and Transfer 

The Company registered each class of Debentures in the name of the Property Trustee on behalf of each Trust. The Property Trustee for each
Trust holds the applicable Debentures in trust for the benefit of the holders of the applicable Trust Securities. The Debentures are issued in denominations of $1,000 and integral multiples of $1,000. 

DTC acts as securities depositary for each class of Debentures. 

With respect to each class of Debentures, if such Debentures are in certificated form, payments of principal and interest will be payable, the
transfer of such Debentures will be registrable, and such Debentures will be exchangeable for such Debentures of other authorized denominations of a like aggregate principal amount. In such case, payment of interest may also be made at the option of
the Company by check mailed to the address of the holder entitled to the payment. Upon written request to the paying agent not less than 15 calendar days prior to the date on which interest is payable, a holder of $1,000,000 or more in aggregate
principal amount of such Debentures may receive payment of interest, other than payments of interest payable at maturity, by wire transfer of immediately available funds. 

Each class of Debentures may be presented for registration of transfer or exchange with an endorsed form of transfer, or a duly executed and
satisfactory written instrument of transfer, at the security registrar’s office in San Juan, Puerto Rico or the office of any transfer agent selected by the Company without service charge and upon payment of any taxes and other governmental
charges as described in the applicable Indentures. The Company has appointed Banco Popular de Puerto Rico as transfer agent and security registrar under each of the Indentures. The Company may at any time designate additional transfer agents with
respect to each class of Debentures. 

  
 -35- 

 With respect to each class of Debentures, in the event of any redemption, the Company and
the indenture trustee for such Debentures will not be required to: 
  

	•	 	 issue, register the transfer of or exchange such Debentures during a period beginning 15 calendar days before the
first mailing of the notice of redemption; or 

  

	•	 	 register the transfer of or exchange such Debentures selected for redemption, except, in the case of any such
Debentures being redeemed in part, any portion not to be redeemed. 

 At the request of the Company, funds deposited with
the indenture trustee or any paying agent held for the Company for the payment of principal, interest, and premium, if any, on any Debenture which remain unclaimed for two years after the principal, interest, and premium, if any, has become payable
will be repaid to the Company and the holder of the Debenture will, as a general unsecured creditor, look only to the Company for payment thereof. 

Limitation on Mergers and Sales of Assets 

Each of the Indentures generally permit a consolidation or merger between the Company and another entity. Each of the Indentures also permits
the sale or transfer by the Company of all or substantially all of its property and assets. Such transactions are permitted if: 
  

	•	 	 the resulting or acquiring entity, if other than the Company, is organized and existing under the laws of the
United States or any state, the District of Columbia or the Commonwealth of Puerto Rico and assumes all of the Company’s responsibilities and liabilities under the Indentures, including the payment of all amounts due on the applicable
Debentures and performance of the covenants in such Indentures; and 

  

	•	 	 immediately after the transaction, and giving effect to the transaction, no event of default under such
Indentures exists. 

 If the Company consolidates or merges with or into any other entity or sells or leases all or
substantially all of its assets according to the terms and conditions of each of the Indentures, the resulting or acquiring entity will be substituted for the Company in such Indentures with the same effect as if it had been an original party to
such Indentures. As a result, such successor entity may exercise the Company’s rights and powers under such Indentures, in the Company’s name and, except in the case of a lease of all or substantially all of the Company’s properties,
the Company will be released from all the Company’s liabilities and obligations under such Indentures and under the applicable Debentures. 

Modification of Indenture 
 With respect
to each class of Capital Securities, if any of such Capital Securities are outstanding: 
  

	•	 	 no modification may be made to the applicable Indentures that materially adversely affects the holders of such
Capital Securities; 

  

	•	 	 no termination of the applicable Indentures may occur; and 

  
 -36- 

	•	 	 no waiver of any event of default under the applicable Debentures or compliance with any covenant under the
applicable Indentures may be effective, without the prior consent of the holders of at least a majority of the aggregate liquidation amount of such outstanding Capital Securities unless and until the principal of and premium, if any, on the
applicable Debentures and all accrued and unpaid interest thereon have been paid in full and certain other conditions are satisfied. 

In addition, with respect to each class of Capital Securities, if any of such Capital Securities are outstanding, all holders of such Capital
Securities must consent if the Company wants to amend the applicable Indentures to: 
  

	•	 	 remove the rights of holders of such Capital Securities to institute a Direct Action (as defined below); or

  

	•	 	 modify a provision of such Indenture that requires the consent of all the holders of the applicable outstanding
Debentures. 

 Events of Default and the Rights of Capital Securities Holders to Take Action Against the Company 

An event of default under each of the Indentures means any of the following, with respect to the applicable Debentures: 

 

	•	 	 failure to pay interest on such Debentures for 30 days after the payment is due (subject to the deferral of any
due date in the case of an Extension Period with respect to such Debentures); 

  

	•	 	 failure to pay the principal of or any premium on any such Debentures of that series when due;

  

	•	 	 failure to perform any other covenant in such Indentures for 90 days after the Company has received written
notice of the failure to perform in the manner specified in the Indentures; 

  

	•	 	 certain events relating to a bankruptcy, insolvency or reorganization of the Company; or 

 

	•	 	 any other event of default that may be specified for such Debentures in such Indentures. 

With respect to each Trust, so long as such Trust holds applicable Debentures, the Property Trustee of such Trust and the holders of the
Capital Securities of such Trust will have the following rights under the applicable Indentures upon the occurrence of an event of default: 
  

	•	 	 the Property Trustee of such Trust and the holders of not less than 25% in aggregate liquidation amount of the
applicable Capital Securities of such Trust may declare the principal of and interest accrued on the applicable Debentures due and payable immediately; 

  

	•	 	 if all defaults have been cured, the consent of the holders of more than 50% in aggregate liquidation amount of
the Capital Securities of such Trust is required to annul a declaration by the applicable indenture trustee, such Trust or the holders of Capital Securities of such Trust that the principal of the applicable Debentures is due and payable
immediately; 

  
 -37- 

	•	 	 unless the default is cured, the consent of each holder of Capital Securities of such Trust is required to waive
a default in the payment of principal, premium or interest with respect to the applicable Debentures or a default in respect of a covenant or provision that cannot be modified or amended without the consent of the holder of each outstanding
Debenture; and 

  

	•	 	 unless the default is cured, the consent of the holders of more than 50% in aggregate liquidation amount of the
Capital Securities of such Trust is required to waive any other default. 

 If the event of default under a class of
Debentures is the failure of the Company to make payments of principal or interest on such Debentures when due, then a registered holder of applicable Capital Securities may bring a legal action against the Company directly for enforcement of
payment to such registered holder of amounts owed on such Debentures with a principal amount equal to the aggregate liquidation amount of such registered holder’s Capital Securities (a “Direct Action”). The Company may not amend
either class of Debentures to remove this right to bring a Direct Action without the prior written consent of the registered holders of all the applicable Capital Securities. The Company can offset against payments then due under the Debentures any
corresponding payments made to holders of applicable capital Securities by the Company in connection with a Direct Action. 
 The holders of
each class of Capital Securities are not able to exercise directly any remedies available to the holders of the applicable Debentures except under the circumstance described in the preceding paragraph. 

The Indentures Do Not Restrict the Company’s Ability to Take Certain Actions that may Affect the Debentures 

None of the Indentures contains restrictions on the Company’s ability to: 

 

	•	 	 incur, assume or become liable for any type of debt or other obligation; 

 

	•	 	 create liens on the Company’s property for any purpose; or 

 

	•	 	 pay dividends or make distributions on the Company’s capital stock or repurchase or redeem the
Company’s capital stock, except as set forth under “— Restrictions on Certain Payments” above. 

 None
of the Indentures require the maintenance of any financial ratios or specified levels of net worth or liquidity. In addition, none of the Indentures contain any provisions which would require the Company to repurchase or redeem or modify the terms
of any of the applicable Debentures upon a change of control or other event involving the Company which may adversely affect the creditworthiness of such debt securities. 

  
 -38- 

 Subordination 

Each class of Debentures is subordinated to all of the Company’s existing and future Senior Debt, as defined below. The Company’s
“Senior Debt” includes its senior debt securities and its subordinated debt securities and means: 
  

	•	 	 any of the Company’s indebtedness for borrowed or purchased money, whether or not evidenced by bonds, debt
securities, notes or other written instruments, 

  

	•	 	 the Company’s obligations under letters of credit, 

 

	•	 	 any of the Company’s indebtedness or other obligations with respect to commodity contracts, interest rate
and currency swap agreements, cap, floor and collar agreements, currency spot and forward contracts, and other similar agreements or arrangements designed to protect against fluctuations in currency exchange or interest rates, and

  

	•	 	 any guarantees, endorsements (other than by endorsement of negotiable instruments for collection in the ordinary
course of business) or other similar contingent obligations in respect of obligations of others of a type described above, whether or not such obligation is classified as a liability on a balance sheet prepared in accordance with generally accepted
accounting principles, 

 whether outstanding on the date of execution of the applicable Indentures or thereafter
incurred, other than obligations expressly on a parity with or junior to such Debentures. Such Debentures rank on a parity with obligations evidenced by any debt securities, and guarantees in respect of those debt securities, initially issued to any
trust, partnership or other entity affiliated with the Company, that is, directly or indirectly, the Company’s financing vehicle in connection with the issuance by such entity of capital securities or other similar securities. 

If certain events relating to a bankruptcy, insolvency or reorganization of the Company occur, the Company will first pay all Senior Debt,
including any interest accrued after the events occur, in full before the Company makes any payment or distribution, whether in cash, securities or other property, on account of the principal of or interest on each of class of Debentures. In such an
event, the Company will pay or deliver directly to the holders of Senior Debt any payment or distribution otherwise payable or deliverable to holders of such Debentures. The Company makes the payments to the holders of Senior Debt according to
priorities existing among those holders until the Company has paid all Senior Debt, including accrued interest, in full. Notwithstanding the subordination provisions discussed in this paragraph, the Company may make payments or distributions on each
class of Debentures so long as: 
  

	•	 	 the payments or distributions consist of securities issued by the Company or another company in connection with a
plan of reorganization or readjustment; and 

  

	•	 	 payment on those securities is subordinate to outstanding Senior Debt and any securities issued with respect to
Senior Debt under such plan of reorganization or readjustment at least to the same extent provided in the subordination provisions of such Debentures 

  
 -39- 

 If such events relating to a bankruptcy, insolvency or reorganization of the Company occur,
after it has paid in full all amounts owed on Senior Debt, the holders of such Debentures, together with the holders of any of the Company’s other obligations ranking equal with such Debentures, will be entitled to receive from the
Company’s remaining assets any principal, premium or interest due at that time on such Debentures and such other obligations before the Company makes any payment or other distribution on account of any of the Company’s capital stock or
obligations ranking junior to such Debentures. 
 With respect to each class of Debentures, if the Company violates the Indentures by making
a payment or distribution to holders of such Debentures before it has paid all the Senior Debt in full, then the holders of such Debentures will be deemed to have received the payments or distributions in trust for the benefit of, and will have to
pay or transfer the payments or distributions to, the holders of the Senior Debt outstanding at the time. The payment or transfer to the holders of the Senior Debt will be made according to the priorities existing among those holders.
Notwithstanding the subordination provisions discussed in this paragraph, holders of such Debentures are not required to pay, or transfer payments or distributions to, holders of Senior Debt so long as: 

 

	•	 	 the payments or distributions consist of securities issued by the Company or another company in connection with a
plan of reorganization or readjustment; and 

  

	•	 	 payment on those securities is subordinate to outstanding Senior Debt and any securities issued with respect to
Senior Debt under such plan of reorganization or readjustment at least to the same extent provided in the subordination provisions of those Debentures. 

Because of the subordination, if the Company becomes insolvent, holders of Senior Debt may receive more, ratably, and holders of each class of
Debentures may receive less, ratably, than the Company’s other creditors. This type of subordination will not prevent an event of default from occurring under each of the applicable Indentures in connection with such Debentures. 

With respect to each of the Indentures, any modification or amendment of such Indentures may not, without the consent of the holders of all
Senior Debt outstanding, modify any of the provisions of the applicable Debentures relating to the subordination of such Debentures in a manner that would adversely affect the holders of Senior Debt. 

None of the Indentures place a limitation on the amount of Senior Debt that the Company may incur. 

Concerning the Indenture Trustee 
 The
indenture trustee has all the duties and responsibilities specified under the Trust Indenture Act. Other than its duties in case of a default, the indenture trustee is under no obligation to exercise any of the powers under the Indentures at the
request, order or direction of any holders of Debentures unless offered reasonable indemnification. 

  
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 From time to time, the Company and certain of its subsidiaries maintain deposit accounts and
conduct other banking transactions, including lending transactions, with the indenture trustee in the ordinary course of business. 
 Governing Law

 Each of the Indentures and each class of Debentures are governed by, and construed in accordance with, the internal laws of the
Commonwealth of Puerto Rico. 

  
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