Document:

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                                                                   EXHIBIT 10.21

                                 AMENDMENT NO. 1
                        TO INTEREST CALCULATION AGREEMENT

                                                                    May 12, 2000

         WHEREAS, the parties hereto have previously entered into an Interest
Calculation Agreement, dated as of September 24, 1996 (the "Interest Calculation
Agreement"), between Banco Popular de Puerto Rico, a banking association
chartered under the laws of the Commonwealth of Puerto Rico (the "Bank"), and
The Chase Manhattan Bank, as interest calculation agent (the "Calculation
Agent") relating to the issue and sale by the Bank of its Bank Notes; and

         WHEREAS, the Bank and the Calculation Agent wish to amend the Interest
Calculation Agreement as provided herein;

         NOW, THEREFORE, the Bank and the Calculation Agent hereby agree to
amend the Interest Calculation Agreement as follows:

         1.       As of any time on or after the date of this amendment: (i)
each reference in the Interest Calculation Agreement to the "Distribution
Agreement" shall mean and be a reference to the Distribution Agreement, dated as
of September 24, 1996, among the Bank and Merrill Lynch & Co., Merrill Lynch,
Pierce, Fenner & Smith Incorporated, Bear, Stearns & Co. Inc. and CS First
Boston Corporation (now Credit Suisse First Boston Corporation) as amended as of
the date hereof; (ii) each reference in the Interest Calculation Agreement to
the "Issuing and Paying Agency Agreement" shall mean and be a reference to the
Issuing and Paying Agency Agreement, dated as of September 24, 1996, between the
Bank and The Chase Manhattan Bank, as Issuing and Paying Agent, as amended as of
the date hereof ; and (iii) each reference in the Interest Calculation Agreement
to "this Agreement", "hereunder", "hereof" or words of like import referring to
the Interest Calculation Agreement shall mean and be a reference to the Interest
Calculation Agreement as amended hereby.

         2.       As of any time on or after the date of this amendment, the
Interest Calculation Agreement, as amended hereby, is and shall continue to be
in full force and effect and as so amended is hereby ratified and confirmed and
is binding on the parties hereto.

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

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         IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 1
to the Interest Calculation Agreement to be executed on their behalf as of the
day and year first above written.

                          BANCO POPULAR DE PUERTO RICO

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

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

                          THE CHASE MANHATTAN BANK,
                              as Calculation Agent

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

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                                                                   EXHIBIT 10.22

                            ADMINISTRATIVE PROCEDURES
                   FOR FIXED RATE AND FLOATING RATE BANK NOTES
                      With maturities of 7 days to 15 years
                           (Dated as of May 12, 2000)

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

         The Notes are being sold pursuant to a Distribution Agreement dated
September 24, 1996, as amended as of May 12, 2000 (the "Distribution
Agreement"), between the Bank and the Agents. The Distribution Agreement
provides both for the sale of Notes by the Bank to the Agents as principal for
resale to investors and other purchasers and for the sale of Notes by the Bank
through the Agents as agents and not as principal in which case the Agents will
act as agents of the Bank in soliciting Note purchases. The Notes will be issued
pursuant to an issuing and paying agency agreement dated as of September 24,
1996, as amended as of May 12, 2000 (the "Issuing and Paying Agency Agreement"),
between the Bank and The Chase Manhattan Bank, as issuing and paying agent (the
"Issuing and Paying Agent"). As used herein, the term "Offering Circular" refers
to the most recent offering circular, as such document may be amended or
supplemented, which has been prepared by the Bank for use by the Agents in
connection with the offering of the Notes.

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         The Notes will be issued in book-entry form (each beneficial interest
in a global Note, a "Book-Entry Note" and collectively, the "Book-Entry Notes")
and represented by one or more fully registered global Notes (each, a "Global
Note" and collectively, the "Global Notes") delivered to the Issuing and Paying
Agent, as agent for The Depository Trust Company, as depositary ("DTC," which
term includes any successor thereof), and recorded in the book-entry system
maintained by DTC. Book-Entry Notes represented by a Global Note are
exchangeable for definitive Notes in registered form, of like tenor and of an
equal aggregate principal amount, by the owners of such Book-Entry Notes only
upon certain limited circumstances described in the Offering Circular and the
applicable Global Note.

         In connection with the qualification of Book-Entry Notes for
eligibility in the book-entry system maintained by DTC, the Issuing and Paying
Agent will perform the custodial, document control and administrative functions
described below, in accordance with its respective obligations under the
Short-Term and Medium-Term Letters of Representations from the Bank and the
Issuing and Paying Agent to DTC, dated September 23, 1996, the Short-Term and
Medium-Term Bring-Down Letters of Representations from the Bank and the Issuing
and Paying Agent to DTC, dated May 12, 2000, and a Certificate Agreement, dated
December 2, 1988, as amended September 24, 1996, between the Issuing and Paying
Agent and DTC (the "Certificate Agreement"), and its obligations as a
participant in DTC, including DTC's Same-Day Funds Settlement System ("SDFS").

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

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

Maturities:                         Each Short-Term Note will mature on a date
                                    (the "Maturity Date") selected by

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                                    the purchaser and agreed to by the Bank
                                    which is not less than seven days and not
                                    more than one year from its Original Issue
                                    Date, as selected by the initial purchaser
                                    and agreed to by the Bank; and each
                                    Medium-Term Note will have a Maturity Date
                                    selected by the purchaser and agreed to by
                                    the Bank which is from more than one year to
                                    not more than 15 years from its Original
                                    Issue Date; provided, however, that Floating
                                    Rate Notes will mature on an Interest
                                    Payment Date.

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

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

Redemption/Repayment                The Notes will be subject to

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                                    redemption by the Bank on and after their
                                    respective Initial Redemption Dates, if any,
                                    Initial Redemption Dates, if any, will be
                                    fixed at the time of sale and set forth in
                                    the applicable Pricing Supplement and in the
                                    applicable Note. If no Initial Redemption
                                    Dates are indicated with respect to a Note,
                                    such Note will not be redeemable prior to
                                    its Maturity Date.

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

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

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

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                                    Supplement reflecting the terms of such
                                    Note.

Procedure for Changing              When the Agents are soliciting offers to
Rates or Other                      purchase the Notes from the Bank and a
Variable Terms:                     decision has been reached to change the
                                    interest rate or any other variable term on
                                    any Notes being sold by the Bank, the Bank
                                    will promptly advise the Agents and the
                                    Agents will forthwith suspend solicitation
                                    of offers to purchase such Notes. The Agents
                                    will telephone the Bank with recommendations
                                    as to the changed interest rates or other
                                    variable terms. At such time as the Bank
                                    advises the Agents of the new interest rates
                                    or other variable terms, the Agents may
                                    resume solicitation of offers to purchase
                                    such Notes. Until such time, only
                                    "indications of interest" may be recorded.
                                    Immediately after acceptance by the Bank of
                                    an offer to purchase at a new interest rate
                                    or new variable term, the Bank and the
                                    Presenting Agent shall follow the procedures
                                    set forth under the applicable "Settlement
                                    Procedures."

Suspension of                       While the Agents are soliciting offers to
Solicitation; Amendment             purchase Notes from the Bank, the Bank may
or Supplement:                      instruct the Agents to suspend solicitation
                                    of offers to purchase Notes at any time.
                                    Upon receipt of such instructions, the
                                    Agents will forthwith suspend solicitation
                                    of offers to purchase Notes from the Bank
                                    until such time as the Bank has advised them
                                    that solicitation of offers to purchase may
                                    be resumed. If the Bank decides to amend the
                                    Offering Circular (including incorporating
                                    any documents by reference therein) or
                                    supplement any of such documents (other than
                                    to change rates or other variable terms),

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                                    it will immediately notify, with
                                    confirmation in writing to follow, the
                                    Agents and will furnish the Agents and their
                                    counsel with copies of the proposed
                                    amendment (including any document proposed
                                    to be incorporated by reference therein) or
                                    supplement; provided, however, that the Bank
                                    shall be required to provide such notice and
                                    copies only to the extent that it is
                                    required to do so pursuant to the terms of
                                    the Distribution Agreement. One copy of such
                                    proposed amendment or supplement will be
                                    delivered or mailed to the Agents at the
                                    following respective addresses: Popular
                                    Securities, Inc., 209 Munoz Rivera Avenue,
                                    Suite 1020, Hato Rey, Puerto Rico 00918,
                                    (787)766-4200, telecopier: (787)766-3485,
                                    Attention: Ken McGrath; Merrill Lynch & Co.,
                                    World Financial Center, North Tower, 10th
                                    Floor, New York, New York 10281-1310,
                                    (212)449-0393, telecopier: (212)449-2234,
                                    Attention: Product Management-- Medium-Term
                                    Notes; Bear, Stearns & Co. Inc., 245 Park
                                    Avenue, New York, New York 10167,
                                    (212)272-6227, telecopier: (212)272-5371,
                                    Attention: Medium-Term Notes Department; and
                                    CS First Boston Corporation, 55 East 52nd
                                    Street, New York, New York 10038,
                                    (212)909-7198, telecopier: (212)318-1498,
                                    Attention: Short-Medium Term Finance Group.

                                    In the event that at the time the
                                    solicitation of offers to purchase from the
                                    Bank is suspended (other than to change
                                    interest rates, maturities, prices or other
                                    similar variable terms with respect to the
                                    Notes) there shall be any offers to purchase
                                    Notes that have been accepted by the Bank
                                    which have not been settled, the Bank will
                                    promptly advise the Agents whether such
                                    offers may be settled and whether copies of
                                    the Offering Circular, as

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                                    theretofore amended and/or supplemented may
                                    be delivered in connection with the
                                    settlement of such orders. The Bank will
                                    have the sole responsibility for such
                                    decision and for any arrangements which may
                                    be made in the event that the Bank
                                    determines that such orders may not be
                                    settled or that copies of such Offering
                                    Circular may not be so delivered.

Delivery of                         A copy of the most recent Offering Circular
Offering Circular:                  and Pricing Supplement must accompany or
                                    precede the earlier of (a) the written
                                    confirmation of a sale sent to a customer or
                                    his agent and (b) the delivery of Notes to a
                                    customer or his agent.

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

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

Business Day:                       "Business Day" means for any Bank Note, a
                                    day that meets all the following applicable
                                    requirements: (A) for all Bank Notes, is a
                                    Monday, Tuesday, Wednesday, Thursday or
                                    Friday that is not a bank holiday in Puerto
                                    Rico or a day on which banking institutions
                                    in New York City or in the city in which the
                                    Bank is headquartered generally are
                                    authorized or obligated by law, regulation
                                    or executive order to close; (B) if the Bank
                                    Note is a LIBOR Note (as defined in the
                                    Offering Circular), is also a London
                                    Business Day; and (C) if the

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                                    Bank Note has a specified currency other
                                    than U.S. dollars, is also a day on which
                                    banking institutions are not authorized or
                                    obligated by law, regulation or executive
                                    order to close in the principal financial
                                    center of the country issuing the specified
                                    currency; and "London Business Day" means
                                    any day on which dealings in the relevant
                                    index currency are transacted in the London
                                    interbank market.

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

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                                    terms, if any, and otherwise having
                                    identical terms and provisions
                                    (collectively, the "Floating Rate Terms"),
                                    will be represented initially by a single
                                    Global Note.

Identification:                     The Bank has arranged with the CUSIP Service
                                    Bureau of Standard & Poor's Ratings Group
                                    (the "CUSIP Service Bureau") for the
                                    reservation of one series of CUSIP numbers
                                    assignable to Notes with maturities more
                                    than one year and one series of CUSIP
                                    numbers assignable to Notes with maturities
                                    of 7 days or more up to and including one
                                    year, each of which series consists of
                                    approximately 900 CUSIP numbers which have
                                    been reserved for and relating to Global
                                    Notes, and the Bank has delivered to DTC
                                    such list of such CUSIP numbers. The Issuing
                                    and Paying Agent will assign CUSIP numbers
                                    to Global Notes as described below under
                                    Settlement Procedure C. DTC will notify the
                                    CUSIP Service Bureau periodically of the
                                    CUSIP numbers that the Issuing and Paying
                                    Agent has assigned to the Global Notes. The
                                    Issuing and Paying Agent will notify the
                                    Bank at any time when fewer than 100 of the
                                    reserved CUSIP numbers of any series remain
                                    unassigned to Global Notes and, if it deems
                                    it necessary, the Bank will reserve
                                    additional CUSIP numbers of such series for
                                    assignment to Global Notes. Upon obtaining
                                    such additional CUSIP numbers, the Bank will
                                    deliver a list of such additional numbers to
                                    the Issuing and Paying Agent and DTC.
                                    Book-Entry Notes having an aggregate
                                    principal amount in excess of $200,000,000
                                    and otherwise required to be represented by
                                    the same Global Note will instead be
                                    represented by two or more Global Notes
                                    which shall all be assigned the same CUSIP
                                    number.

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

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

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

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

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                                    exchange for any remaining principal amount
                                    of such exchanged Global Notes representing
                                    such Book-Entry Notes (see "Denominations"
                                    below).

Denominations:                      All Book-Entry Notes will be denominated in
                                    U.S. dollars. Book-Entry Notes will be
                                    issued in minimum denominations of $100,000
                                    and integral multiples of $1,000 in excess
                                    thereof. Global Notes representing
                                    Book-Entry Notes will be denominated in
                                    principal amounts not in excess of
                                    $200,000,000. If one or more Book-Entry
                                    Notes having an aggregate principal amount
                                    in excess of $200,000,000 would, but for the
                                    preceding sentence, be represented by a
                                    single Global Note, then one Global Note
                                    will be issued to represent each
                                    $200,000,000 principal amount of such
                                    Book-Entry Note or Notes and an additional
                                    Global Note or Global Notes will be issued
                                    to represent any remaining principal amount
                                    of such Book-Entry Notes. In such case, each
                                    of the Global Notes representing such
                                    Book-Entry Notes shall be assigned the same
                                    CUSIP number. Each owner of a beneficial
                                    interest in one or more Book-Entry Notes is
                                    required to hold that beneficial interest in
                                    denominations of $100,000 principal amount
                                    or any integral multiple of $1,000 in excess
                                    thereof of each such Book-Entry Note at all
                                    times.

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

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

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

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

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

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

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

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

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

                                    Payments on the Maturity Date. On or about
                                    the first Business Day of each month, the
                                    Issuing and Paying Agent will deliver to DTC
                                    a written list of

                                      G-15
<PAGE>   16
                                    principal of, premium, if any, and interest
                                    on, each Book-Entry Note maturing on any
                                    Maturity Date, date of earlier redemption or
                                    Holder's Optional Repayment Date in the
                                    following month. The Issuing and Paying
                                    Agent and DTC will confirm the amounts of
                                    such principal of, premium, if any, and
                                    interest on, a Book-Entry Note on or about
                                    the fifth Business Day preceding the
                                    Maturity Date of such Book-Entry Note. On
                                    such Maturity Date, the Bank will pay to the
                                    Issuing and Paying Agent, and the Issuing
                                    and Paying Agent in turn will pay to DTC,
                                    the principal amount of such Book-Entry
                                    Note, together with interest and premium, if
                                    any, due on such Maturity Date, at the times
                                    and in the manner set forth below under
                                    "Manner of Payment." If any Maturity Date or
                                    date of earlier redemption or repayment of a
                                    Fixed Rate Book-Entry Note falls on a day
                                    which is not a Business Day, the related
                                    payment of principal of, premium, if any, or
                                    interest on, such Fixed Rate Book-Entry Note
                                    shall be made on the next succeeding
                                    Business Day with the same force and effect
                                    as if made on the date such payment were
                                    due, and no interest shall accrue on the
                                    amount so payable for the period from and
                                    after such Maturity Date or date of earlier
                                    redemption or repayment, as the case may be.
                                    Floating Rate Book-Entry Notes will mature
                                    on an Interest Payment Date. If any Interest
                                    Payment Date or date of earlier redemption
                                    or repayment with respect to any Floating
                                    Rate Book-Entry Note would otherwise be a
                                    day that is not a Business Day, such
                                    Interest Payment Date or date of earlier
                                    redemption or repayment will be the next
                                    succeeding Business Day, except that in the
                                    case of a LIBOR Note, if such Business Day
                                    is in the

                                      G-16
<PAGE>   17
                                    next succeeding calendar month, such
                                    Interest Payment Date or date of earlier
                                    redemption or repayment will be the
                                    immediately preceding Business Day. Promptly
                                    after payment to DTC of the principal of,
                                    premium, if any, and interest due on, the
                                    Maturity Date or Interest Payment Date of
                                    all Book-Entry Notes represented by a Global
                                    Note, the Issuing and Paying Agent will
                                    cancel such Global Note and deliver such
                                    Global Note to the Bank with an appropriate
                                    debit advice. On the first Business Day of
                                    each month, the Issuing and Paying Agent
                                    will deliver to the Bank a written statement
                                    indicating the total principal amount of
                                    outstanding Global Notes as of the close of
                                    business on the immediately preceding
                                    Business Day.

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

                                      G-17
<PAGE>   18
                                    each payment of principal of, premium, if
                                    any, and interest on, a Book-Entry Note on
                                    such date. Thereafter on such date, DTC will
                                    pay, in accordance with its SDFS operating
                                    procedures then in effect, such amounts in
                                    funds available for immediate use to the
                                    respective Participants in whose names
                                    Book-Entry Notes are recorded in the
                                    book-entry system maintained by DTC. Neither
                                    the Bank nor the Issuing and Paying Agent
                                    will have any responsibility or liability
                                    for the payment by DTC of the principal of,
                                    premium, if any, or interest on, the
                                    Book-Entry Notes to such Participants.

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

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

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

                                        1.  Taxpayer identification number of
                                            the purchaser.

                                        2.  Principal amount of such Book-Entry
                                            Notes.

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

                                      G-18
<PAGE>   19
                                             (i)      Interest Rate;
                                             (ii)     Interest Payment Dates for
                                                      Fixed Rate Book-Entry
                                                      Notes; and
                                             (iii)    Regular Record Dates for
                                                      Fixed Rate Book-Entry
                                                      Notes with maturities
                                                      of more than one year (if
                                                      other than the June 1 or
                                                      December 1 prior to each
                                                      Interest Payment Date).

                                             (b)      Floating Rate Book-Entry
                                                      Notes:
                                             (i)      Initial Interest Rate;
                                             (ii)     Interest Rate Basis;
                                             (iii)    Index Maturity;
                                             (iv)     Spread and/or Spread
                                                      Multiplier, if any;
                                             (v)      Regular Record Dates (if
                                                      other than the 15th day
                                                      prior to each Interest
                                                      Payment Date);
                                              (vi)    Maximum Interest Rate, if
                                                      any;
                                              (vii)   Minimum Interest Rate, if
                                                      any;
                                              (viii)  Interest Payment Dates;
                                              (ix)    Interest Payment Period;
                                              (x)     Interest Reset Dates;
                                              (xi)    Calculation Agent;
                                              (xii)   Interest Reset Period;

                                      G-19

<PAGE>   20
                                              (xiii)  Alternate Rate Event
                                                      Spread;
                                              (xiv)   LIBOR Screen, if any;

                                        4.  Price to public, if any, of such
                                            Book-Entry Notes (if such
                                            Book-Entry Notes are not being
                                            offered "at the market").

                                        5.  Trade Date.

                                        6.  Settlement Date (Original Issue
                                            Date).

                                        7.  Maturity Date.

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

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

                                        9.  Net proceeds to the Bank.

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

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

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

                                       13.  Default Rate.

                                      G-20
<PAGE>   21
                                        14.  Such other information specified
                                             with respect to such Book-Entry
                                             Notes.

                                    B.  If any offer to purchase a Note is
                                        accepted by the Bank, the Bank, with the
                                        approval of the Presenting Agent, will
                                        prepare a Pricing Supplement reflecting
                                        the information set forth in Settlement
                                        Procedure A above, and will transmit the
                                        Pricing Supplement to the Presenting
                                        Agent by electronic or facsimile
                                        transmission.

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

                                      G-21
<PAGE>   22
                                        (ii) that such Global Note, when
                                        completed, authenticated and delivered
                                        pursuant to the Issuing and Paying
                                        Agency Agreement, will constitute the
                                        valid and legally binding obligation of
                                        the Bank. D. The Issuing and Paying
                                        Agent will communicate to DTC and the
                                        Presenting Agent through DTC's
                                        Participant Terminal System a pending
                                        deposit message specifying the following
                                        settlement information:

                                        1.  The information set forth in
                                            Settlement Procedure A.

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

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

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

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

                                        6.  Whether such Global Note represents
                                            any other Notes is-

                                      G-22
<PAGE>   23
                                            sued or to be issued in book-entry
                                            form.

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

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

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

                                      G-23
<PAGE>   24
                                    H.  In the case of Book-Entry Notes sold
                                        through an Agent acting as agent, the
                                        Presenting Agent will enter an SDFS
                                        deliver order through DTC's Participant
                                        Terminal System instructing DTC (i) to
                                        debit such Book-Entry Notes to the
                                        Presenting Agent's participant account
                                        and credit such Book-Entry Notes to the
                                        participant account of the Participants
                                        maintained by DTC and (ii) to debit the
                                        settlement accounts of such Participants
                                        and credit the settlement account of the
                                        Presenting Agent maintained by DTC in an
                                        amount equal to the initial public
                                        offering price of such Book-Entry Notes.

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

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

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

                                      G-24
<PAGE>   25

                                             written confirmation to such
                                             purchaser.

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

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

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

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

                                      G-25
<PAGE>   26
                                    Settlement Date.

Failure to Settle:                  If the Issuing and Paying Agent fails to
                                    enter an SDFS deliver order with respect to
                                    a Book-Entry Note pursuant to Settlement
                                    Procedure G, then the Issuing and Paying
                                    Agent may deliver to DTC, through DTC's
                                    Participant Terminal System, as soon as
                                    practicable a withdrawal message instructing
                                    DTC to debit such Book-Entry Note to the
                                    participant account of the Issuing and
                                    Paying Agent maintained at DTC. DTC will
                                    process the withdrawal message, provided
                                    that such participant account contains a
                                    principal amount of the Global Note
                                    representing such Book-Entry Note that is at
                                    least equal to the principal amount to be
                                    debited. If withdrawal messages are
                                    processed with respect to all Book-Entry
                                    Notes represented by a Global Note, the
                                    Issuing and Paying Agent will mark such
                                    Global Note "cancelled," make appropriate
                                    entries in its records and return such
                                    Global Note to the Bank. The CUSIP number
                                    assigned to such Global Note shall, in
                                    accordance with CUSIP Service Bureau
                                    procedures, be cancelled and not immediately
                                    reassigned. If withdrawal messages are
                                    processed with respect to some of the
                                    Book-Entry Notes represented by a Global
                                    Note, the Issuing and Paying Agent will
                                    exchange such Global Note for two Global
                                    Notes, one of which shall represent the
                                    Book-Entry Notes for which such withdrawal
                                    messages are processed and shall be
                                    cancelled immediately after issuance, and
                                    the other of which shall represent the other
                                    Book-Entry Notes previously represented by
                                    the surrendered Global Note and shall bear
                                    the CUSIP number of the surrendered Global
                                    Note.

                                    In the case of any Book-Entry Note

                                      G-26
<PAGE>   27
                                    sold through an Agent, acting as agent, if
                                    the purchase price for any Book-Entry Note
                                    is not timely paid to the Participants with
                                    respect to such Book-Entry Note by the
                                    beneficial purchaser thereof (or a person,
                                    including an indirect participant in DTC,
                                    acting on behalf of such purchaser), such
                                    Participants and, in turn, the applicable
                                    Agent may enter SDFS deliver orders through
                                    DTC's Participant Terminal System reversing
                                    the orders entered pursuant to Settlement
                                    Procedures G and H, respectively.
                                    Thereafter, the Issuing and Paying Agent
                                    will deliver the withdrawal message and take
                                    the related actions described in the
                                    preceding paragraph. If such failure shall
                                    have occurred for any reason other than
                                    default by the applicable Agent to perform
                                    its obligations hereunder or under the
                                    Distribution Agreement, the Bank will
                                    reimburse such Agent on an equitable basis
                                    for its loss of the use of funds during the
                                    period when the funds were credited to the
                                    account of the Bank.

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

                                      G-27

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